Backus v. Panhandle Eastern Pipe Line Co.

• Decision Date: 30 June 1977
• Docket Number: No. 76-1301,76-1301
• Citation: Backus v. Panhandle Eastern Pipe Line Co., 558 F.2d 1373 (10th Cir. 1977)
• Parties: R. L. BACKUS, Appellee, v. PANHANDLE EASTERN PIPE LINE COMPANY, a Foreign Corporation, Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1373

558 F.2d 1373

R. L. BACKUS, Appellee, v. PANHANDLE EASTERN PIPE LINE COMPANY, a Foreign Corporation, Appellant.

No. 76-1301.

United States Court of Appeals Tenth Circuit.

Argued and Submitted May 17, 1977.

Decided June 30, 1977.

James A. Kirk, Oklahoma City, Okl. (James P. Linn, Linn, Helms, Kirk & Burkett, Oklahoma City, Okl., on the briefs), for appellee.

Coleman Hayes, Oklahoma City, Okl. (William L. Robertson, Associate Gen. Atty., on the briefs), for appellant.

Before LEWIS, Chief Judge, BREITENSTEIN and DOYLE, Circuit Judges.

BREITENSTEIN, Circuit Judge.

This is a suit by an Oklahoma farmer to compel an interstate pipeline to furnish him gas for the operation of irrigation pumps and to recover damages for failure to deliver gas. The district court granted judgment for the plaintiff on the ground that an Oklahoma statute required that the gas be furnished. The pipeline appeals. We reverse.

Plaintiff-appellee Backus owns and farms the SW1/4 of section 30 and NW1/4 of section 31, Texas County, Oklahoma. In 1966, and for several years thereafter, he also rented and farmed the NE1/4 of section 31 owned by Charles Reust. Defendant-appellant Panhandle Eastern Pipe Line Company is a natural gas company transporting natural gas in interstate commerce.

An Oklahoma statute, 52 Okla. Stat. § 10 (1971) provides that a pipeline company on request shall furnish gas to one whose premises are crossed by its pipeline. In 1965 plaintiff purchased a one acre, 33 foot wide strip of land in the SE1/4 of section 20 which was crossed by a Panhandle pipeline. Plaintiff secured easements for, and constructed, a pipeline connecting a meter on a Panhandle line in the NE1/4 of section 19 to an irrigation well of his in the NW1/4 of section 31.

A Panhandle line crossed land owned by Reust but not the land rented by Reust to plaintiff. In 1966 Reust and Panhandle entered into a gas contract. The line built by plaintiff was connected with the Panhandle meter in section 19 and the gas obtained was used to pump water for irrigation of the land owned by plaintiff and the land rented from Reust. Bills for the gas used were paid by plaintiff to Panhandle. Controversy over the validity and effect of the Reust-Panhandle contract is not pertinent to the determination of this appeal.

Plaintiff farmed the land rented from Reust until 1968. Thereafter the gas was used only to pump water for the irrigation of the land owned by plaintiff. Plaintiff and Reust were involved in a dispute and Reust requested Panhandle to cancel his gas contract. Panhandle did cancel in 1973 and plaintiff brought this action in state court. On the petition of Panhandle, it was removed to federal court. Federal jurisdiction is based on diversity and federal question.

The federal court entered a "temporary mandatory injunction" requiring Panhandle to continue furnishing gas. The plaintiff filed an amended complaint asserting that Panhandle was required to furnish gas under the Oklahoma statute, and that plaintiff as third party beneficiary and assignee of the Reust-Panhandle contract was entitled to specific performance and monetary damages. Depositions were taken and a stipulation of facts filed. Each party moved for summary judgment. The trial court held that the Oklahoma statute required Panhandle to furnish gas to the plaintiff and gave judgment in his favor.

Section 10, Title 52, Okla. Stat. (1971) authorizes the construction and maintenance of gas pipelines across highways, bridges, and other public places and then says:

"provided, however, that whenever any gas pipe line crosses the land or premises of any one outside of a municipality, said corporation (pipeline owner) shall, by request of the owner of said premises, connect said premises with a pipe line and furnish gas to said consumer at the same rate as charged in the nearest city or town."

Panhandle contends that the Oklahoma statute violates both the Commerce Clause, Art. I, § 8, cl. 3, and the Supremacy Clause, Art. VI, cl. 2, of the United States Constitution.

The transmission of gas from one state to another for sale and consumption is interstate commerce. Pennsylvania v. West Virginia, 262 U.S. 553, 596, 43 S.Ct. 658, 67 L.Ed. 1117. See also Federal Power Commission v. Natural Gas Pipe Line Co., 315 U.S. 575, 582, 62 S.Ct. 736, 86 L.Ed. 1037. The fact that the gas which plaintiff receives comes from a gathering line and has not crossed a state line before reaching plaintiff's pump does not exclude that gas from the operation of the Commerce Clause, see California v. Lo-Vaca Co., 379 U.S. 366, 369, 85 S.Ct. 486, 13 L.Ed.2d 357, and Deep South Oil Co. of Texas v. Federal Power Commission, 5 Cir., 247 F.2d 882, 887, cert. denied 355 U.S. 930, 78 S.Ct. 410, 2 L.Ed.2d 413 or of the Natural Gas Act, see Saturn Oil & Gas Company v. Federal Power Commission, 10 Cir., 250 F.2d 61, 64-67, cert. denied 355 U.S. 956, 78 S.Ct. 542, 2 L.Ed.2d 532.

Federal Power Commission v. Louisiana Power & Light Co., 406 U.S. 621, 633, 92 S.Ct. 1827, 32 L.Ed.2d 369, recognizes that state curtailment of natural gas deliveries which operates "to withdraw a large volume of gas from an established interstate current" is a prohibited interference with interstate commerce. The quantity of gas furnished for the operation of one irrigation pump does not have a substantial effect on interstate commerce. Cumulative withdrawals for landowners under the Oklahoma statute might interfere with interstate commerce.

In Phillips Petroleum Co. v. Corporation Commission of Oklahoma, Okl., 312 P.2d 916, the Oklahoma Supreme Court was concerned with an Oklahoma statute which required a natural gas producer to make gas available to pump water for irrigation purposes on the land from which the gas was produced. The court held the statute unconstitutional because of denial of due process. Ibid. 312 P.2d at 921-922. In so doing the court said, Ibid. 312 P.2d at 919:

"If the producer of gas can be required to serve a small area, and a few people, we see no reason why he could not be required to serve a larger area and more people."

In the instant case no evidence was adduced on the extent of gas use by persons whose lands are crossed by pipelines or on the future potential of such use.

A finding of substantial interference with interstate commerce, is unnecessary to a determination of this case. The Natural Gas Act, 15 U.S.C. § 717 et seq., delegates to the Federal Power Commission the power to regulate (1) the transportation of natural gas in interstate commerce, (2) its sale in interstate commerce for resale, and (3) natural gas companies engaged in such transportation or sale. See Panhandle Eastern Pipe Line Company v. Public Service Commission of Indiana, 332 U.S. 507, 516, 68 S.Ct. 190, 92 L.Ed. 128, and Federal Power Commission v. Louisiana Power & Light Company, 406 U.S. 621, 636, 92 S.Ct. 1827, 32 L.Ed.2d 369. Each of the mentioned powers is "an independent grant of jurisdiction." 406 U.S. at 636, ...