Cities Service Gas Co. v. State Corp. Commission
| Citation | 180 Kan. 454,304 P.2d 528 |
| Decision Date | 08 December 1956 |
| Docket Number | 40403,Nos. 40402,s. 40402 |
| Parties | CITIES SERVICE GAS COMPANY, a Corporation, Appellant, v. STATE CORPORATION COMMISSION of Kansas, Harry Snyder, Jr., Chairman, Richard C. Byrd and John I. Young, as Members of said Commission, and their respective successors in Office, Appellees. The CITY OF BELOIT, Kansas, and 145 Other Kansas Cities, (Anthony, Atchison, Augusta, Axtell, Baldwin, Barnard, Baxter Springs, Belle Plaine, Belleville, Blue Rapids, Bogue, Buffalo, Buhler, Burns, Burr Oak, Cedar Vale, Chapman, Cherryvale, Chetopa, Clay Center, Clifton, Coffeyville, Colwich, Conway Springs, Council Grove, Countryside, Dearing, Dighton, Downs, Edgerton, Elgin, Ellinwood, Ellis, Emporia, Ensign, Esbon, Formoso, Fort Scott, Fowler, Frankfort, Galena, Garfield, Garnett, Gem, Geuda Springs, Girard, Glasco, Goodland, Great Bend, Greensburg, Gypsum, Haddam, Halstead, Hanover, Hays, Herington, Hill City, Hillsboro, Holton, Horton, Huron, Independence, Iola, Jetmore, Junction City, Kanapolis, Kensington, Kingman, Laharpe, Lawrence, Leavenworth, Lebanon, Lenexa, Leroy, Lincoln Center, Lindsborg, Little River, Longton, Luray, Lyndon, McPherson, Macksville, Madison, Mahaska, Mankato, Marysville, Meriden, Miltonvale, Minneapolis, Morrill, Mulvane, Munden, Merriam, Narka, Natoma, Neodesha, Ness City, Newton, Norcatur, Norton, Oakley, Osawatomie, Osage City, Plainville, Pomona, Prairie Village, Pratt, Preston, Quenemo, Ramona, Rantoul, Reserve, Roeland Park, St. Francis, St. Marys, Scammon, Scott City, Sedan, Sedgwick, Seneca, Shawnee, Silver Lake, Sterling, Stockton, Sylvan Grove, Thayer, Topeka, Toronto, Turon, Wa-Keeney, Wamego, Washington, Waterville, Waverly, Weir, Wellington, Westmoreland, Whitewater, Whiting, Williamsburg, Wilson), Appellants, v. STATE CORPORATION COMMISSION, et al., Appellees. |
| Court | United States State Supreme Court of Kansas |
Syllabus by the Court.
1. In Kansas, under legislation relating to the production and conservation of natural gas to prohibit waste (G.S.1949, 55-701 to 55-713, incl.), the production and distribution of natural gas for light, fuel and power is a business of public nature, the control of which belongs to the state, and under such sections of the statute the power to prevent waste and conserve natural gas is vested in the State Corporation Commission.
2. The provisions of the statute mentioned in the first paragraph of this syllabus give the State Corporation Commission power and authority to make an order fixing a minimum wellhead price for natural gas taken from a common source of supply, as a condition precedent for withdrawal of the gas from such common source of supply, when--as here--the evidence before the Commission warrants its conclusion such an order is necessary in order to prevent waste and to secure the relative rights of owners of real property from which such gas is produced from the common source of supply. Following Kansas-Nebraska Natural Gas Co. v. State Corporation Commission, 169 Kan. 722, 222 P.2d 704.
3. A conservation order of the State Corporation Commission, similar to the order referred to in paragraph two of the syllabus, construed as meaning that from and after the effective date of such order no person, firm or corporation--first of all the producer--can lift, or take gas in its natural state from the depths of the Hugoton Gas Field in Kansas to a point further than the wellhead without, as a condition precedent to its withdrawal, first attributing thereto the minimum price prescribed by the terms of such order.
4. In the light of the facts of record and with the order construed as set forth in paragraph three of the syllabus it is held that such order falls squarely within the excluding provisions of the Natural Gas Act (15 U.S.C.A. § 717[b]) providing that the terms of such Act do not apply to the production of natural gas.
5. The record further examined, and it is held, that under the facts, conditions and circumstances set forth at length in the opinion, the trial court did not err in its judgment upholding and sustaining the order of the Commission as a lawful and reasonable order.
Mark H. Adams, Wichita, and Joe Rolston, Oklahoma City, Okl., argued the cause, and M. F. Cosgrove, Topeka, D. B. Lang, Scott City, Conrad C. Mount, O. R. Stites and Gordon J. Quilter, Oklahoma City, Okl., were with them on the briefs for appellant Cities Service Gas Co.
Ralph W. Oman, Topeka, argued the cause, and Robert L. Webb, Philip E. Buzick, Robert A. McClure, and James D. Waugh, Topeka, were with him on the briefs for appellant Cities Service Co.
C. C. Linley, Gen. Counsel, State Corp. Commission, Cimarron, and Dale M. Stucky, Special Counsel, Wichita, argued the cause, and Charles R. Escola, Asst. Gen. Counsel, Topeka, and Howard T. Fleeson and Wayne Coulson, Wichita, of counsel, and Don C. Smith, Special Counsel, Dodge City, were with them on the briefs for appellees.
The present appeals, consolidated for purposes of review in this court, challenge the validity of an order of the State Corporation Commission (hereinafter referred to as the Commission) subsequently upheld in a review proceeding by the district court of Finney County, fixing a minimum price of eleven cents per thousand cubic feet, 14.65 No. p.s.i.a., at the wellhead for all persons, firms or corporations taking gas or causing gas to be taken from the Hugoton Gas Field in Kansas on or after January 1, 1954.
The salient facts essential to a proper understanding of the issues involved will be related as briefly as the state of a lengthy record permits.
On August 18, 1952, the Southwest Kansas Royalty Owners Association, a corporation, and other individuals, commenced the proceedings by filing with the Commission a petition, alleging in substance that a previous minimum gas price order made by that body was no longer adequate to conserve and prevent waste of natural gas and protect correlative rights in its common source of supply in the Hugoton Field and requesting that, pursuant to authority conferred upon it by the provisions of G.S.1949, 55-701 to 55-713, incl., the Commission set a minimum price, for such gas in such field, of not less than fourteen cents per M.c.f. measured on a pressure basis of 16.4 pounds per square inch or not less than 12 cents per M.c.f. measured on a pressure basis of 14.65 pounds per square inch.
Shortly after the commencement of the proceedings the appellants herein intervened and filed written protests. In its protest the Cities Service Gas Company (hereinafter referred to as the Gas Company) alleged that it was a foreign corporation, a natural gas company as defined in the Natural Gas Act as amended 15 U.S.C.A. § 717 et seq., was engaged generally in the business of producing and purchasing natural gas for transportation and sale in interstate commerce for resale by means of an integrated pipeline system extending through several states and protested the granting of the relief sought by the petitioners on numerous grounds, the one here involved being that under the facts and circumstances currently existing in the Kansas-Hugoton Field, and operation of the protestant therein, the Commission had no jurisdiction or authority, either on application of petitioners or otherwise, to fix or determine either a minimum or other price for natural gas produced in and from such field. In their protest the appellants, the City of Beloit, Kansas, and the other Cities listed in the title of this opinion (hereinafter referred to as the Cities), alleged that they were interested parties because their inhabitants were purchasers, users and consumers of natural gas for divers domestic, household and industrial purposes and then, for purposes here in question, protested the granting of the relief sought by petitioners on grounds practically the same as those relied on by the Gas Company in its protest.
On December 2, 1953, effective January 1, 1954, the Commission, after hearings consuming approximately thirteen days, promulgated and issued a minimum value attribution and/or price order for the Kansas portion of the Hugoton Gas Field. For present purposes it may be said that the all important portion of such order reads:
'That all persons, firms or corporations which take gas or cause gas to be taken from the Hugoton Gas Field in Kansas on and after January 1, 1954, 12:01 A.M., shall, as a condition precedent for withdrawal from the common source of supply, pay or attribute to all gas taken, except gas for the operations of leases, for all purposes including payments to producers, landowners, lease-owners and royalty owners, the fair and reasonable minimum price of not less than eleven cents (11cents) per Mcf. (14.65# psia.) at the wellhead until further order or orders of this Commission.'
By reference the Commission made a memorandum opinion a part of the foregoing order. This order is lengthy and in such form its averments cannot be readily summarized. However, it leaves no doubt and eliminates all confusion as to the purpose of the Commission in making the order and the grounds on which it based its action. For these reasons we attach a copy of such memorandum to this opinion as an appendix where it will be available for ready reference.
The Gas Company and the Cities each filed motions for rehearings. These were considered by the Commission and overruled. Thereupon such parties filed their separate actions for judicial review of the order of the Commission by the district court of Finney County, as authorized by G.S.1949, 55-707, in the manner provided in G.S.1949, 55-606. Ultimately these actions were consolidated for trial by such district court and heard together. What happened during the trial and the results thereof are best reflected in identical journal entries of judgment. With respect to such matters these journal entries, omitting three paragraphs thereof relating to motions to dismiss by ...
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