Continental Oil Co. v. Federal Power Commission, s. 75-1496
| Decision Date | 15 September 1975 |
| Docket Number | 75-1740,75-1498,75-1748,Nos. 75-1496,75-1519,75-1765 and 75-2232,s. 75-1496 |
| Parties | CONTINENTAL OIL COMPANY, the Superior Oil Company, Mitchell Energy Corporation, and Mapco Inc., Petitioners, v. FEDERAL POWER COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Tom Burton, Houston, Tex., for petitioners in No. 75-1496.
W. B. Wagner, Jr., Pat F. Timmons, Houston, Tex., for petitioners in Nos. 75-1740 and 75-1498.
Homer J. Penn, Houston, Tex., for petitioners in Nos. 75-1765 and 75-1519.
Joseph C. Johnson, Tom Burton, Houston, Tex., for petitioners in No. 75-1748.
William W. Ross, Toni K. Golden, Washington, D. C., Eugene G. Bell, Royse M. Parr, Tulsa, Okl., for petitioners in No. 75-2232.
Kirk W. Weinert, C. Fielding Early, Jr., Roger L. Brandt, Houston, Tex., for intervenor Texaco, Inc.
George C. Bond, Kenneth L. Riedman, Jr., Los Angeles, Cal., Platt W. Davis, III, Washington, D. C., for intervenor Union Oil Co.
Frank P. Saponaro, Jr., Washington, D. C., for Mitchell Energy Corp.
Leo E. Forquer, Gen. Counsel, George W. McHenry, Jr., Sol., Thomas M. Walsh, Atty., Federal Power Com'n, Washington, D. C., for respondent in No. 75-1496.
Drexel D. Journey, Gen. Counsel, George W. McHenry, Jr., Sol., Federal Power Com'n, Washington, D. C., for respondent in Nos. 75-1740, 75-1765, 75-1748 and 75-2232.
Leo E. Forquer, Gen. Counsel, George W. McHenry, Jr., Sol., Federal Power Com'n, Washington, D. C., for respondent in Nos. 75-1498 and 75-1519.
Petitions for Review of Orders of the Federal Power Commission (Texas Case).
Before BELL, CLARK and RONEY, Circuit Judges:
Acting under its rulemaking power and after notice, the Federal Power Commission (FPC) issued Order No. 521, requiring disclosure by interstate natural gas companies of detailed intrastate sales information, including the names of purchasers, date and location of the sale, pressure base, annual sales volume and price terms. 1 Four natural gas companies 2 petition for review of the order. While acknowledging that their interstate gas sales are subject to
The attack on the authority of the
The provisions of this Act shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.
The Supreme Court said in Panhandle Eastern Pipe Line Co. v. Public Service Commission of Indiana, 332 U.S. 507, 516, 68 S.Ct. 190, 194, 92 L.Ed. 128 (1947): Clearly, the
Sections 4, 5 and 7 of the Act 4 authorize the
Order No. 521 finds that the information sought is vital to effective administration of the Natural Gas Act and that it will serve a regulatory need, especially with regard to rate making responsibilities in this language: "Because of the existing gas shortage and the current national energy crisis, it is imperative that the Commission have current information concerning sales of natural gas which are not subject to its ratemaking jurisdiction in order that it may formulate adequate policies concerning sales of natural gas in interstate commerce and for other regulatory purposes." The order also takes note of the following matters. Intrastate rates for new gas are increasing rapidly, thus making a scarce commodity even scarcer in the interstate market and compounding the difficulty interstate pipelines have experienced in contracting for needed supplies. No federal or state agency now collects intrastate sales information on a comprehensive basis. A continuing source of reliable information on intrastate sales will assist the
The petitioners assert additionally that the specific grant of power to investigate and determine costs of production and transportation of gas which cannot be regulated under § 5(b), reflects a Congressional intent to limit the
In past years the
Alternatively, the petitioners maintain that the information should not be made public. The thrust of their argument is that this information comes within the "trade secrets" exception to the Freedom of Information Act, (FOIA) which provides: "(b) This section does not apply to matters that are . . . (4) trade secrets and commercial or financial information obtained from a person and privileged or confidential . . . ." 12
National Parks and Conservation Association v. Morton, 162 U.S.App.D.C. 223, 498 F.2d 765 (1974) aids in interpreting this section. "In order to bring a matter (other than a trade secret) within this exemption, it must be shown that the information is (a) commercial or financial, (b) obtained from a person, and (c) privileged or confidential." 498 F.2d at 766. For the purposes of the FOIA, a corporation comes within the definition of person, 13 and since the information is commercial or financial, the dispute comes down to whether the information is confidential. "(C)ommercial or financial matter is 'confidential' for purposes of the exemption if disclosure of the information is likely to have either of the following effects: (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained." National Parks and Conservation Ass'n v. Morton, 498 F.2d at 770.
The information to be furnished is detailed a contract by contract, field by field exposition of the petitioners' product marketing. Prices, names of purchasers, terms and times of price renegotiation must be disclosed. The likelihood that delivery of these intimate facts to petitioners' competitors would be harmful is apparent. Not only could it affect sales by enabling competitors to learn contract termination dates but it also affects product acquisition. Natural gas companies lease drilling and exploration rights from owners of mineral rights. The latest leasing innovation is the "market value" lease, under which the royalty payment to a mineral lessor is based on market value of the gas rather than the proceeds of every specific sale. Disclosure of individual field prices will disrupt lessor-lessee relationships where the market value is less than the highest price reported in the area. The compilation and disclosure to petitioners' competitors, purchasers and suppliers of information as to extent of supply and competitive prices in each market area would alter industry custom and existing relationships to the disadvantage of petitioners' competitive positions.
The This is not to say, however, that the information gathered must be kept from the public altogether. Only confidential information is protected. To the extent that confidentiality can be secured by composite disclosure and by deletion of the filing party's name and other identifying characteristics, petitioners do not dispute its release. See National Cable Television Ass'n, Inc. v. FCC, 156 U.S.App.D.C. 91, 479 F.2d 183, 195 (1973). The only requirement in today's case is that the rights of those required to divulge be protected. In Evans v. Dept. of Transportation, 446 F.2d 821 (5th Cir. 1971), we explained the necessity of balancing public and private interests in interpreting the FOIA. Assurance as to accuracy in the determination of volume and pricing of intrastate sales, not the identity of the parties to each such transaction, is the critical public factor. An impersonal disclosure of the data filed will protect both interests. We leave to
We affirm the portion of Order No. 521 which requires jurisdictional companies to disclose fully their intrastate natural gas transactions to the
C to order disclosure of information relating to intrastate sales of natural gas is based on language expressly excluding such sales from regulation under the Natural Gas Act. Section 1(b) of the Act 3 states:
C to oversee the justness and reasonableness of interstate rates and to assure continued, reliable service. Section 14(a) 5 authorizes the
C to conduct investigations to aid in enforcement of the Act. The investigation of intrastate market conditions contemplated by the order is within the ambit of this authority, because the information is essential to effective ratemaking. Other provisions of the Act provide additional and complementary authority. Section 5(b) 6 allows the Commission to investigate and determine the cost of production or transportation of natural gas even where it has no authority to set
rates. Section 8 7 is directed to keeping accounts, records and memoranda of companies subject to the
C's jurisdiction; Section 10 8 covers periodic and special reports by natural gas companies. Section 15 9 provides for establishment of formal hearings and investigations. Section 16 10 is a general provision giving the Commission power to perform any and all acts and to make such orders, rules and regulations as may be necessary or appropriate to carry out the provisions of the Act.
C has recommended to Congress that its investigatory powers under § 14 be enlarged to include powers similar to those given it under § 311 of the Federal Power Act. 11 Petitioners contend this is an admission that it lacks authority to pass the instant order. It is not. Section 311 allows the
C urges that the exemption means no more than that an agency...
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CHAPTER 10 HANDLING CONFIDENTIAL INFORMATION
...developers successfully challenged the disclosure of industry information was Continental Oil Company v. Federal Power Commission, 519 F.2d 31 (5th Cir. 1975), cert. denied sub nom. Superior Oil Co. v. Federal Power Commission, 425 U.S. 971 (1976). In that case several natural gas companies......