377 U.S. 33 (1964), 386, Federal Power Commission v. Texaco, Inc.

Docket Nº:No. 386
Citation:377 U.S. 33, 84 S.Ct. 1105, 12 L.Ed.2d 112
Party Name:Federal Power Commission v. Texaco, Inc.
Case Date:April 20, 1964
Court:United States Supreme Court
 
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377 U.S. 33 (1964)

84 S.Ct. 1105, 12 L.Ed.2d 112

Federal Power Commission

v.

Texaco, Inc.

No. 386

United States Supreme Court

April 20, 1964

Argued March 25, 1964

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

Syllabus

1. A Court of Appeals granted review of a Federal Power Commission (FPC) order concerning a contract performed in its circuit involving natural gas produced there by two respondent natural gas companies incorporated outside the circuit, the principal place of business of one (A) being within the circuit; that of the other (B) being without. Respondents proceeded under §19(b) of the Natural Gas Act, which provides for review in the court of appeals wherein the aggrieved natural gas company "is located or has its principal place of business."

Held: The Court of Appeals erred in failing to dismiss the petition of respondent B for lack of venue, since the term "is located" in §19(b) means more than having physical presence in a place, and refers in the case of a corporation to the State of its incorporation. Pp. 37-39.

2. Pursuant to §16 of the Natural Gas Act and § 4 of the Administrative Procedure Act, the FPC, after a hearing given to interested parties, including respondents, at which they were allowed to submit their views in writing, issued regulations providing for the summary rejection of contracts with pricing provisions other than those specified in the regulations as being "permissible." Under § 7 of the Natural Gas Act, which includes a provision for an FPC hearing, respondents each submitted an application for a certificate of public convenience and necessity to supply natural gas to a pipeline. Since the applications disclosed price clauses impermissible under its regulations, the FPC rejected the applications without a hearing. Its order on review was set aside by the Court of Appeals.

Held:

(a) The "hearing" satisfied the requirements of § 4 of the Administrative Procedure Act. P. 39.

(b) The requirement for a hearing under § 7 does not preclude the FPC from specifying statutory standards through the rulemaking process and barring at the outset those like respondent A whose applications neither meet those standards nor show why, in the public interest, the rule should be waived. United States v. Storer Broadcasting Co., 351 U.S. 192, followed. Pp. 39-41.

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(c) The present regulations pass on the merits neither of any rate structure nor of a certificate of public convenience and necessity; they merely prescribe qualifications for applicants. P. 42.

(d) The FPC need not proceed on a case-by-case basis where its policy outlaws all indefinite price-changing provisions. P. 44.

(e) A plenary adversary-type hearing under § 7 of the Natural Gas Act and § 5 of the Administrative Procedure Act would have been necessary had there been an adjudication on the merits as to whether respondent A could qualify for a certificate of public convenience and necessity. But the only determination made -- after the adequate rulemaking hearing under § 4(b) of the Administrative Procedure Act -- was not one on the merits, but only that respondent A's application was not in proper form because of the impermissible price-changing provisions in the contract upon which the application depended. Pp. 44-45.

317 F.2d 796 reversed.

DOUGLAS, J., lead opinion

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

The Federal Power Commission, in its regulation of independent producers1 of natural gas, has required them

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to file their contracts as rate schedules. This was done by regulations which evolved as a result of a series of rulemaking proceedings.2 The pertinent regulations presently provide that only certain pricing provisions in the contracts of independent producers are "permissible,"3 any other being "inoperative and of no effect at law."4 The regulations go on to say that any contract executed on or after April 2, 1962, containing price-changing provisions other than the "permissible" ones, "shall be rejected" so far as producer rates are concerned,5 that a producer's application for a certificate of public convenience and necessity under § 7 of the Natural Gas Act "shall be rejected" if any contract submitted in support of it contains any of the forbidden provisions,6 and that, so far as pipeline certificates are concerned, any producer contract executed after that date which has that

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infirmity "will be given no consideration in determining adequacy" of a pipeline company's gas supply.7

These regulations were adopted pursuant to the provisions of § 4 of the Administrative Procedure Act, 60 Stat. 238, 5 U.S.C. § 1003. General notice of the proposed rulemaking was published in the Federal Register as required by § 4(a) of that Act. The Commission also gave interested parties a "hearing" under § 4(b).8 No oral argument was had, but an opportunity was afforded for [84 S.Ct. 1108] all interested parties to submit their views in writing, and the two respondents in this case -- Texaco and Pan American -- along with others, did so.

Later, each respondent submitted an application for a certificate of public convenience and necessity under § 7 of the Natural Gas Act, to supply natural gas to a pipeline company. Section 7 provides, with exceptions not presently material, that the Commission "shall set" such an application "for hearing." Since, however, the applications disclosed price clauses that are not "permissible" under the regulations,9 the Commission without a hearing

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rejected the applications. 28 F.P.C. 551; 29 F.P.C. 378. Petitions for review were filed with the Court of Appeals, which set aside the orders of the Commission. 317 F.2d 796. It held that, while the regulations are valid as a statement of Commission policy, they cannot be used to deprive an applicant of the statutory hearing granted those who seek certificates of public convenience and necessity. The two cases are here in one petition for certiorari which we granted because of an apparent conflict between that decision and Superior Oil Co. v. Federal Power Comm'n, 322 F.2d 601, decided by the Court of Appeals for the Ninth Circuit. 375 U.S. 902.

I

A preliminary question, which concerns Texaco Inc., alone, is whether venue to review these orders of the Commission was properly in the Tenth Circuit. The governing provision is § 19(b) of the Natural Gas Act, which provides:

Any party to a proceeding under this Act aggrieved by an order issued by the Commission in such proceeding may obtain a review of such order in the court of appeals of the United States for any circuit wherein the natural gas company to which the order relates is located or has its principal place of business, or in the United States court of appeals for the District of Columbia. . . .

The term "is located" would have an ambivalent meaning if venue lay only in "any circuit" where the natural gas...

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