Cities Service Gas Company v. Federal Power Commission

• Decision Date: 15 July 1958
• Docket Number: No. 5666.,5666.
• Citation: Cities Service Gas Company v. Federal Power Commission, 255 F.2d 860 (10th Cir. 1958)
• Parties: CITIES SERVICE GAS COMPANY, a corporation, Petitioner, v. FEDERAL POWER COMMISSION, Respondent. Magnolia Petroleum Company, Intervenor.
• Court: U.S. Court of Appeals — Tenth Circuit

255 F.2d 860 (1958)

CITIES SERVICE GAS COMPANY, a corporation, Petitioner, v.FEDERAL POWER COMMISSION, RespondentMagnolia Petroleum Company, Intervenor.

No. 5666.

United States Court of Appeals Tenth Circuit.

May 14, 1958.

Rehearing Denied June 10, 1958.

Further Rehearing Denied July 15, 1958.

Conrad C. Mount and Robert R. McCracken, Oklahoma City, Okl. (O. R. Stites, Oklahoma City, Okl., was with them on the brief), for petitioner.

William W. Ross, Washington, D. C.(Willard W. Gatchell and Howard E. Wahrenbrock, Washington, D. C., were with him on the brief), for respondent.

Ross Madole, Roswell, N. M. (Frank C. Bolton, Jr., and William S. Richardson, Dallas, Tex., were with him on the brief), for intervenor.

Before PICKETT, LEWIS and BREITENSTEIN, Circuit Judges.

LEWIS, Circuit Judge.

The petitioner, Cities Service Gas Company, seeks to review and thereupon to set aside an order of the Federal Power Commission issued March 21, 1957, as modified May 17, 1957, accepting for filing a rate schedule submitted by the intervenor, Magnolia Petroleum Co. Authority for review is found in Section 19 (b) of the Natural Gas Act, 15 U.S.C.A. § 717r(b).

The Commission accepted the rate schedule as filed pursuant to the provisions of Section 4(c) of the Natural Gas Act, 15 U.S.C.A. § 717c(c) and the pertinent regulations, 18 C.F.R. 154.92(a) and 154.93.The filing included a gas purchase contract entered and executed by petitioner and Magnolia on June 17, 1946, which provided for a sale of gas at a basic six cents per Mcf16.4 p. s. i. a., and an order of the Kansas Corporation Commission, effective January 1, 1954, which set an eleven-cent minimum price, 14.65 p. s. i. a., on gas produced from the field covered by the contract.The Commission order was filed as Supplement 26.At such time petitioner had unsuccessfully attacked the authority of Kansas to regulate rates upon gas purchased for resale in interstate commerce, Cities Service Gas Co. v. Kansas Corporation Commission, 180 Kan. 454, 304 P.2d 528, but the subsequent reversal of the Kansas holding by the United States Supreme Court, 355 U.S. 391, 78 S.Ct. 381, 2 L.Ed. 2d 355, premises petitioner's present contentions.In harmony with the earlier holdings of Phillips Petroleum Co. v. State of Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035, andNatural Gas Pipeline Co. of America v. Panoma Corp., 349 U.S. 44, 75 S.Ct. 576, 99 L.Ed. 866, the U. S. Supreme Court found the Kansas Corporation Commission without authority to set rates upon the gas herein involved.The eleven-cent rate as evidenced by Supplement 26 was thus determined to be an invalid compulsion upon petitioner and Magnolia.

Since the issuance of the Kansas Corporation Commission order of January 1, 1954, petitioner has paid the eleven-cent rate under protest and in furtherance of its protest instituted an action against Magnolia in the U. S. District Court for the District of Kansas in which a determination of contract rights was sought.Pursuant to an order of that court, payments since July 22, 1955, have been made into court and the court has paid over to Magnolia amounts equal to the six-cent contract price and has impounded the remainder of the eleven-cent payment.The District Court action is still pending.

Magnolia's tendered rate schedule was accepted for filing by the Federal Power Commission on March 21, 1957, with recognition of the parties' existing controversy worded "subject, however to the express condition that such acceptance is without prejudice to any claims or contentions which have been made by or for Magnolia Petroleum Company or by or for Cities Service Gas Company in pending litigation concerning this particular sale of gas."Both companies petitioned for rehearing and clarification and the Power Commission then issued its order of May 17, 1957, "Modifying Order Accepting Rate Schedule for Filing and Denying Petitions for Rehearing."The modification to the original order was the removal of the condition set out above.Petitioner's further efforts for rehearing were rejected because "there is no provision under the Natural Gas Act nor in the Commission's rules for applications for rehearing of orders denying rehearing."

In support of review, petitioner now urges that the Power Commission erred in accepting the eleven-cent state-ordered minimum price as the rate to be paid by petitioner on and after June 7, 1954;¹ that the decision in Cities Service Gas Co. v. Kansas Corporation Commission, supra, rendered the order of that commission void ab initio; and that this court should adjudicate the contract price and effective rate as of June 7, 1954 to be six cents.The respondent Commission answers that the acceptance of a rate schedule for filing is not a determination by the Commission as to the validity or reasonableness of the rate and that the order complained of was merely procedural and interlocutory and not subject to review; the Commission concedes that petitioner should recover, in a proper action, any excess payments but contends that the Kansas order is and always has been but a nullity in the filing and cannot be the basis for any relief to petitioner.Magnolia urges that the Commission order is but interlocutory and not reviewable and that petitioner is not aggrieved and has not exhausted the administrative remedies; and pointing out that the eleven-cent rate was the actual amount paid on June 7, 1954, asserts that there is no error in the orders of the Power Commission.

We consider first the jurisdictional aspects of the review sought.

As was recognized in Phillips Petroleum Co. v. Federal Power Commission, 10 Cir., 227 F.2d 470, certiorari deniedMichigan Wisconsin Pipe Line Co. v. Phillips Petroleum Co., 350 U.S. 1005, 76 S.Ct. 649, 100 L.Ed. 868, Section 19(b) of the Natural Gas Act does not by its terms limit the review of orders of the Commission to those which are final in form and substance.But it is entirely proper, in order to keep in proper perspective the duties and powers of administrative bodies with respect to their specialized fields, for courts to avoid conflicts by refusing to interfere in matters yet within the consideration of the Commission.Thus it has been held that an order of the Commission is not reviewable unless there has been an application to the Commission for rehearing; nor is an order granting a rehearing subject to review.Federal Power Commission v. Metropolitan Edison Co., 304 U.S. 375, 58 S.Ct. 963, 967, 82 L.Ed. 1408.It is there said:

"The statute contemplates a case in which the Commission has taken evidence and made findings.Its findings, if supported by evidence, are to be conclusive.* * * The provision for review thus relates to orders of a definitive character dealing with the merits of a proceeding before the Commission and resulting from a hearing upon evidence and supported by findings appropriate to the case."

Such language must be read in relation to the facts of the case and, so limited, does not establish an inflexible standard requiring a conventional hearing and resulting in findings supported by evidence as a condition to review.Otherwise, the procedure for review could be successfully circumvented by a refusal to act upon a statutorily granted right.Pacific Power & Light Co. v. Federal Power Commission, 9 Cir., 98 F.2d 835.An order of an administrative body is reviewable when action taken in advance of hearings or adjudication result in the setting of legal consequences, Columbia Broadcasting System v. United States, 316 U.S. 407, 62 S.Ct. 1194, 86 L.Ed. 1563.The order of the agency is final for purposes of review when it imposes an obligation, denies a right, or fixes some legal relationship as a consummation of the administrative process, Isbrandtsen Co. v. United States, 93 U.S. App.D.C. 293, 211 F.2d 51, certiorari deniedJapan-Atlantic and Gulf Conference v. United States, 347 U.S. 990, 74 S.Ct. 852, 98 L.Ed. 1124 and cases cited therein.

The present case is comparable to that considered by us in Phillips, supra, 227 F.2d 475 wherein we stated:

"The orders sought to be reviewed here do not deal with the merits of the proceedings before the Commission in the sense that they were entered upon evidence concerning the reasonableness of the rates.They do not purport to finally determine Phillips\' wholesale rates.That matter is left to a conventional hearing in these proceedings.But the orders do purport to establish with finality the wholesale rates which Phillips was authorized to charge Michigan on June 7, 1954 and thereafter until changed by order of the Commission pursuant to hearing."

Also similar in impact to the case at bar is the order accepting a new schedule filed by a natural gas company in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373.

We consider, as did the Third Circuit in a similar case, Natural Gas...