555 F.2d 862 (D.C. Cir. 1977), 74-1547, F. T. C. v. Texaco, Inc.
|Docket Nº:||74-1547 to 74-1551, 74-1553 and 74-1554.|
|Citation:||555 F.2d 862|
|Party Name:||FEDERAL TRADE COMMISSION, Appellant, v. TEXACO, INC. FEDERAL TRADE COMMISSION, Appellant, v. STANDARD OIL COMPANY. FEDERAL TRADE COMMISSION, Appellant, v. The SUPERIOR OIL COMPANY, INC., a corporation. FEDERAL TRADE COMMISSION, Appellant, v. EXXON CORPORATION, a corporation. FEDERAL TRADE COMMISSION, Appellant, v. SHELL OIL COMPANY, a corporation.|
|Case Date:||February 23, 1977|
|Court:||United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit|
Argued En Banc April 19, 1976.
Certiorari Denied June 13, 1977.
See 97 S.Ct. 2939, 2940.
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Gerald P. Norton, Deputy Gen. Counsel, F. T. C., Washington, D.C., with whom Rex E. Lee, Asst. Atty. Gen., Gerald Harwood, Asst. Gen. Counsel, F. T. C. and Leonard Schaitman, Atty., Dept. of Justice, Washington, D.C., were on the brief for appellant. Robert E. Duncan, William Cerillo, Attys., F. T. C. and John K. Villa, Atty., Dept. of Justice, Washington, D.C., also entered appearances for appellant.
William Simon, Washington, D.C., with whom Roger C. Simmons, Washington, D.C., and Robert L. Norris, Houston, Tex., were on the brief for appellee in No. 74-1550 also argued for appellees in Nos. 74-1547, 74-1548 and 74-1551. Robert F. McGinnis, New York City, was on the brief for appellee in No. 74-1547. John W. Howard, Chicago, Ill., was on the brief for appellee in No. 74-1548. J. Wallace Adair, Terrence C. Sheehy, Washington, D.C., and Thomas G. Johnson, Houston, Tex., were on the brief for appellee in No. 74-1551. W. C. Weitzel, Jr., New York City, also entered an appearance for appellee in No. 74-1547. Terrence C. Sheehy, Washington, D.C., also entered an
appearance for appellee in No. 74-1550.
Lee Loevinger, Washington, D.C., with whom Raymond E. Vickery, Jr., Washington, D.C., was on the brief for appellee in No. 74-1553. Martin Michaelson, Washington, D.C., also entered an appearance for appellee in No. 74-1553.
Michael J. Henke, Washington, D.C., with whom Harry M. Reasoner, Houston, Tex., was on the brief for appellee in No. 74-1554.
Daniel A. Reznick, Washington, D.C., with whom Abe Krash, Washington, D.C., was on the brief for appellee in No. 74-1549.
Before BAZELON, Chief Judge, and WRIGHT, LEVENTHAL, ROBINSON, MacKINNON and WILKEY, Circuit Judges.
Opinion for the Court filed by BAZELON, Chief Judge.
Concurring Opinion filed by LEVENTHAL, Circuit Judge.
Dissenting Opinion filed by WILKEY, Circuit Judge, with whom MacKINNON, Circuit Judge, joins.
BAZELON, Chief Judge:
These consolidated cases are before the court en banc on appeals by the Federal Trade Commission (FTC) from orders of the district court granting enforcement in part and denying enforcement in part with respect to administrative subpoenas duces tecum issued by the FTC to appellees, seven natural gas producers. 1 The subpoenas in question were authorized by the FTC in aid of a formal investigation into the procedures employed by various natural gas producers in reporting their gas reserves an investigation stemming primarily from an unprecedented decline in these reported reserves. That this nation currently is in the midst of an energy crisis, however defined, need not be detailed by this court. The extent of the energy shortage, the reasons for it, and the appropriate governmental and industry responses to the problem are the focus of debate and investigation in various executive agencies and in Congress. Such questions are largely outside the province of the judiciary. In these cases we consider only the propriety of these investigative subpoenas in the context of the limited role assigned to the federal courts in enforcement proceedings.
I. FACTUAL BACKGROUND
The FTC Investigation
The American Gas Association (AGA), a trade association composed of producers, distributors, and marketers of natural gas, is recognized as one of the principal sources of authoritative statistical data concerning the natural gas industry. In 1945 the AGA established a Committee on Natural Gas Reserves to formulate annual estimates of proved reserves 2 for the benefit of the gas
industry, the Government, and the general public. To facilitate this task, the Committee has subdivided the United States into ten regions and has assigned a subcommittee of its members to compile the gas reserve estimates for each area. Members of the subcommittees usually are employees of the gas producers, and each subcommittee member generally is assigned fields in which his employer is the major producer or has some other ownership interest. 3
In May of 1969 the AGA for the first time reported a decline in the nation's proved reserves, occurring in 1968. The reported decrease came on the heels of a Federal Power Commission (FPC) order instituting a proceeding to reconsider rates for the offshore portion of Southern Louisiana in light of the supply of gas reserves for that area. 4 The AGA report for 1969, issued in May of 1970, revealed further declines in total reserves for the United States and, this time, in Southern Louisiana reserves as well. The Southern Louisiana area is generally acknowledged to be the most important gas-producing area in the nation, accounting for approximately one-third of our domestic natural gas production. 5
By letter of September 1, 1970 to Commissioner McIntyre of the FTC, Senator Philip A. Hart, chairman of the Subcommittee on Antitrust and Monopoly of the Senate Judiciary Committee, stated that there were numerous allegations that natural gas producers were withholding information on gas reserves in order to obtain higher rates from the FPC and recommended that the Commission conduct an investigation to determine whether any activities in violation of section 5 of the Federal Trade Commission Act had occurred. 6 On October 13, the Secretary of the Commission replied that "in order that the possibility of collusion or other unlawful conduct in this field may be more fully explored, we have today directed
our staff to commence an investigation which will focus principally on the reporting, estimation, and deployment of reserves by the Natural Gas Industry in one selected area of the country." 7
After informal investigative efforts proved inadequate, the Bureau of Competition determined that the issuance of subpoenas would be necessary and so advised the Commission. On June 3, 1971, the FTC issued a resolution directing the use of compulsory process in furtherance of a nonpublic investigation. The nature and scope of the investigation were stated as follows:
The purpose of the authorized investigation is to develop facts relating to the acts and practices of . . . (certain named corporations) to determine whether said corporations, and other persons and corporations, individually or in concert, are engaged in conduct in the reporting of natural gas reserves for Southern Louisiana which violates Section 5 of the Federal Trade Commission Act, or are engaged in conduct or activities relating to the exploration and development, production, or marketing of natural gas, petroleum and petroleum products, and other fossil fuels in violation of Section 5 of the Federal Trade Commission Act. 8
During this period of the investigation the AGA cooperated with the FTC on a voluntary basis. Field-by-field estimates of each Southern Louisiana subcommittee member for the years 1966 through 1970 were made available for the Commission's inspection and analysis in October 1971. The FTC staff also obtained data from reports filed with the FPC pertaining to gas reserves in Southern Louisiana. These reports, known as Form 15 reports, are filed by interstate natural gas pipelines and list recoverable, saleable gas reserves committed to, collected by, or held by the reporting pipeline company. With information gained from these sources, as well as from numerous interviews and depositions, the FTC drafted a comprehensive subpoena duces tecum which was issued on November 24, 1971 to eleven natural gas producers. 9
The FTC subpoena is premised on a thorough investigation of the producers' estimation of gas reserves for the Southern Louisiana area, with a view towards comparison of the various estimates used by producers in their internal procedures and business operations with those reported as proved estimates to the AGA. To summarize briefly, Specifications A through F of the subpoena demand background information such as the company's annual reports, subsidiaries, officers, customers, net production, and sales volume. Specification G requests documents and underlying data relating to all reserve estimates for the Southern Louisiana area made by the producers, both for internal purposes and for reports to the AGA, during the period 1962-1970. Specification H requires technical data concerning the location, operations, ownership interests, and drilling status of
the fields and leaseholds for which estimates are provided pursuant to Specification G. Specification I seeks documents commenting on or otherwise relating to the preparation of various reserve estimates, the procedures employed therein, and the personnel involved. Specification I also requires, inter alia, documents relating to "lease nominations and bids, any agreements for joint or common leasing, exploration, development, production, purchase or sale, or any cash flow or economic feasibility studies preparatory to...
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