Federal Power Comm v. Amerada Peteroleum Corp, 585
| Citation | 85 S.Ct. 632,13 L.Ed.2d 605,379 U.S. 687 |
| Decision Date | 01 February 1965 |
| Docket Number | No. 585,585 |
| Parties | FEDERAL POWER COMM'N v. AMERADA PETEROLEUM CORP. et al |
| Court | United States Supreme Court |
See 380 U.S. 959, 85 S.Ct. 1081.
Solicitor General Cox, Richard A. Solomon, Howard E. Wahrenbrock, Robert L. Russell and Peter H. Schiff, for petitioner.
William H. Webster, Edwin S. Nail and Joseph W. Morris, for respondent Amerada Petroleum Corp.
William R. Allen and Cecil E. Munn, for respondent Signal Oil & Gas Co.
Montana-Dakota (MDU) is an interstate natural gas pipeline company, selling and transporting gas in Montana, North Dakota, South Dakota, and Wyoming. The lines involved here run to the east and west from the Tioga processing plant in North Dakota, jointly owned by Amerada and Signal, producers of natural gas in North Dakota. Also, running north from the Tioga point is a line extending to the gasoline extraction plants of Hunt-Herbert and TXL (now Texaco), both in North Dakota.
On a peak winter day in 1962—1963 MDU was expected to purchase a total of 70,000 Mcf of North Dakota-produced gas from these four producers: 55,000 Mcf from Amerada-Signal, 10,000 Mcf from TXL, and 5,000 Mcf from Hunt-Herbert. Of the 55,000 Mcf from Amerada-Signal, 50,000 Mcf would flow to the east and be consumed in North Dakota. All of the Hunt-Herbert and TXL gas, plus the remaining 5,000 Mcf of the Amerada-Signal gas, would flow to the west—a total of 20,000 Mcf. Of this westward-flowing gas, 10,200 Mcf would be consumed in North Dakota; the remaining 9,800 Mcf would flow across the state boundary into Montana for consumption outside of North Dakota.
On an average summer day MDU would take about 45,000 Mcf from Amerada-Signal, while continuing to take about 15,000 Mcf from Hunt-Herbert and TXL. Of the Amerada-Signal gas, 13,000 Mcf would flow westward, commingled with the 15,000 Mcf from Hunt-Herbert and TXL. Only 1,680 Mcf of this stream would be consumed in North Dakota; the remaining 26,320 Mcf would flow into Montana to be held in storage for ultimate redelivery to all parts of MDU's interstate system. 32,000 Mcf of gas would flow eastward, all from Amerada-Signal. In contrast to the situation on a peak winter day, only 7,280 Mcf of this east-ward-flowing gas would be consumed in North Dakota, while 24,720 Mcf would cross the state boundary and go into storage.
The contracts for the purchase of gas from Hunt-Herbert and TXL admittedly constitute sales of gas for resale within the meaning of § 1(b) of the Natural Gas Act, 15 U.S.C. § 717. These sellers applied for and were granted certificates of public convenience and necessity by the Commission. 27 F.P.C. 1092.
Prior to entering into the Hunt-Herbert-TXL contracts, MDU entered into contracts with Amerada and Signal which are here in issue. First, MDU concluded the so-called 'North Dakota Contracts' with both Amerada and Signal. Under these contracts MDU must buy at least two-thirds of its annual North Dakota requirements from Amerada-Signal, and it may buy up to all of its North Dakota requirements from them if it so elects. The contracts recite that 'all gas purchased by Buyer under this agreement shall be transported, used and consumed entirely within the State of North Dakota.' Soon thereafter, MDU entered its separate 'Interstate Contracts' with Amerada and Signal. These contracts provide that MDU must take or pay for a certain number of Mcf per year (and per day) if available, 'less the quantity of gas which Buyer shall pay for with respect to such calendar year under the Amerada (or Signal) North Dakota Contract.'
Respondents Amerada and Signal contended before the Federal Power Commission that sales to MDU under the 'North Dakota Contracts' would be 'non-jurisdictional' since they were not sales in interstate commerce for resale. Relying on its decision in Lo-Vaca Gathering Co., 26 F.P.C. 606 (reversed, Lo-Vaca Gathering Co. v. Federal Power Commission 323 F.2d 190, reversed, People of State of California v. Lo-Vaca Gathering Co., 379 U.S. 366, 85 S.Ct. 486), the Commission rejected the contention and asserted its jurisdiction over the sales. 30 F.P.C. 200. The Court of Appeals reversed. 334 F.2d 404. The Commission has petitioned for writ of certiorari.
All of the gas purchased by MDU from Amerada-Signal under both sets of contracts is delivered into the pipeline at the Tioga plant. According to the testimony of MDU's engineer, on a peak winter day the pipeline would elect to purchase all of the Amerada-Signal gas under the 'North Dakota Contracts.' Yet, as previously shown, on such a day some of the Amerada-Signal gas flows westward, in a commingled stream with gas from other sources, and is...
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