Interstate Natural Gas Co. v. FEDERAL POWER COM'N

• Decision Date: 01 October 1946
• Docket Number: No. 10701.,10701.
• Parties: INTERSTATE NATURAL GAS CO., Inc., v. FEDERAL POWER COMMISSION et al.
• Court: U.S. Court of Appeals — Fifth Circuit

156 F.2d 949 (1946)

INTERSTATE NATURAL GAS CO., Inc., v. FEDERAL POWER COMMISSION et al.

No. 10701.

Circuit Court of Appeals, Fifth Circuit.

August 3, 1946.

Rehearing Denied October 1, 1946.

Henry P. Dart, Jr., and H. Grady Price, both of New Orleans, La., Alden T. Shotwell, of Monroe, La., and William A. Dougherty and C. W. Cooper, both of New York City, for petitioner.

Bradford Ross, Gen. Counsel, Federal Power Commission, Charles E. McGee, Asst. Gen. Counsel, Federal Power Commission, Louis W. McKernan and Milford Springer, Principal Attys., Federal Power Commission, all of Washington, D. C., for the Federal Power Commission.

W. C. Perrault, First Asst. Atty. Gen., of Louisiana, for respondent Louisiana Public Service Commission.

Warren O. Coleman, Edward Rightor, and Francis P. Burns, all of New Orleans, La., for City of New Orleans, La. (intervener).

Roland C. Kizer, of Baton Rouge, La., for respondent City of Baton Rouge, La.

Donald C. McCreery, of Denver, Colo., for Independent Natural Gas Association of America, amicus curiae.

Before SIBLEY, HUTCHESON, and WALLER, Circuit Judges.

HUTCHESON, Circuit Judge.

The proceeding under review here was brought under Section 5(a)¹ of the Natural Gas Act² as a general investigation of the reasonableness of all the rates of petitioner, subject to the jurisdiction of the commission.

Petitioner, as to all of its rates sought to be investigated, denied that any of them were unreasonable, and as to sales of natural gas, made by it in the Monroe Gas Field to certain pipe line companies,³ it insisted that the rates and charges were not within the jurisdiction of the commission, that, indeed, as part of the production and gathering of the gas, they were by the statute expressly withdrawn from its jurisdiction.

The Commission found that all of the sales to these companies were "sales in interstate commerce of natural gas for resale for ultimate public consumption" within the meaning of Section 1(b),⁴ the jurisdictional section of the act, and that the charges made were unreasonable. Its order required reductions in these rates from 7.39¢ to 4.66¢ per M.c.f.

Petitioner is here complaining: (1) that the sales were not within, but were expressly excluded from, the jurisdiction of the commission; and (2) that the order as to them is confiscatory. In support of its first position, it relies not only on the language of the act, but on what it calls "authorized statements of commission representatives", and "legislative history". In support of its second position it points to the fact that the charges the order fixed as reasonable are considerably less than the average price, 5.5¢, which petitioner pays for gas purchased by it in the field, and that 1.1¢ must be added to this as gathering costs. Thus for gas which cost it 6.6 cents, the order allows it to charge only 4.66 cents.

In answer to petitioner's first position, the Commission points to the precise language of the section, that the provisions of the act "shall apply to the sale in interstate commerce * * * for resale for ultimate public consumption * * *"; to the undisputed fact admitted by petitioner that the sales the order deals with are in interstate commerce; to the legislative history of the act in question as distinguished from the history of prior acts introduced but not enacted into law, on which petitioner relies; and to Peoples Natural Gas v. The Commissioner, 75 U.S.App.D.C. 235, 127 F.2d 153; and other cases which it claims support its view.

As to petitioner's second point, that the order was confiscatory, the Commission invokes the settled principle that the rate order must be viewed not piecemeal but in its entirety, that, in short, if as a whole the order affords just compensation, the fact that some particular rate in the schedule of rates, viewed by itself alone, may appear to be low, is immaterial. Basing on that principle, it points to the admitted fact that the rate schedules as a whole established by the order are producing a 6.5% return on the rate base fixed. As to the precise rates, the Commission insists that since petitioner operates an integrated pipeline system in which both produced and purchased gas are commingled and disposes of a great part of its gas to others than these pipelines in question, there is no way of knowing just what is the source of the gas delivered to petitioner's pipeline customers. By figures it demonstrates that the cost of the gas produced is less than the 4.66¢ allowed, and it insists that it is not, and cannot be, made to appear that that charge even by itself is confiscatory.

We agree with the Commission that the rates are within its jurisdiction and that petitioner has failed to show that they are confiscatory.

Disposing first of the question of compensation, we need not inquire whether, if it stood alone, the rate allowed would be confiscatory. It is sufficient to say that the Commission is correct in its position that the rate order must be viewed in its entirety, and that "it is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end." Federal Power Comm. v. Hope Natural Gas, 320 U.S. 591, 64 S.Ct. 281, 288, 88 L.Ed. 333; Panhandle v. Federal Power, 324 U.S. 635, 65 S.Ct. 821, 89 L.Ed. 1241; Cities Service Co. v. Federal Power Comm., 10 Cir., 155 F.2d 694.

On the jurisdictional point, we think the language employed in the bill as it finally passed, "The provisions of this act shall apply * * * to the sale in interstate commerce of natural gas for resale for ultimate public consumption, and to natural gas companies engaged in such transportation or sale" leaves in no doubt that the sales in question are within its purview. That they are sales in interstate commerce, we think is settled by the authorities.⁵ That the gas was sold for resale for ultimate public consumption, we think may not be doubted. This being so, the exception of the statute that it shall not apply to "any other * * * sale of natural gas" is unavailing to petitioner, for if the sale is the kind named in the first quoted clause, it certainly cannot be "any other sale".

We think petitioner's difficulties in construction and interpretation arise out of the fact that, treating unlike things as alike, it tries to read the exception with respect to production or gathering as an exception with respect to sales. There is no warrant in the act for so doing. It is very simply and plainly written. After stating what it shall apply to, it then states what it shall not apply to. Under familiar rules of construction, a negation in or exception to a statute will be construed so as to avoid nullifying or restricting its apparent principal purpose and the positive provisions made to carry them out. No conflict with them will, therefore, be found unless the conflict is clear and inescapable and then only in the precise point of the conflict. Cf. Hartford v. Federal Power, 2 Cir., 131 F.2d 953. Here the statute was drawn to regulate, it picked out for inclusion "sale in interstate commerce of natural gas for resale for ultimate public consumption." It excluded from the scope of the act sales other than of this kind. It included transportation in interstate commerce. It excluded local distribution of natural gas.

Unnecessarily perhaps but in the interest of making clear that the act gave jurisdiction only over sales and transportation of the kind described in it, it used language removing from any doubt that the Commission was not to have jurisdiction over properties used for production and local distribution or the activities of production and gathering. It did this by expressly providing that the act should not apply "to the facilities used for such i. e. local distribution or to the production or gathering of natural gas."

In Peoples Natural Gas Co. v. Federal Power Comm., 75 U.S.App.D.C. 235, 127 F.2d 153, the court found that a sale in Pennsylvania to an interstate pipeline company which immediately transported it to New York was a sale of natural gas in interstate commerce for resale, and, so finding, held that the provision that the act did not apply to production or gathering did not limit the commission's jurisdiction over such sales.⁶

In the Canadian River Gas case, 324 U.S. 581 at pages 602-603, 65 S.Ct. 829, 839, 89 L.Ed. 1206, the Supreme Court rejected the argument which petitioner advances here that unless the meaning it contends for is given to the provision with respect to gathering and distribution, that provision will be meaningless. It said:

"That does not mean that the part of § 1 (b) which provides that the Act shall not apply `to the production or gathering of natural gas' is given no meaning. Certainly that provision precludes the Commission from any control over the activity of producing or gathering natural gas. For example, it makes plain that the Commission has no control over the drilling and spacing of wells and the like. It may put other limitations on the Commission. We only decide that it does not preclude the Commission from reflecting the production and gathering facilities of a natural gas company in the rate base and determining the expenses incident thereto for the purposes of determining the reasonableness of rates subject to its jurisdiction."

A careful reading of petitioner's brief, especially of that portion of it devoted to the legislative history, shows that its difficulties flow from the fact that it does not distinguish between the Lea Bill, House Bill No. 11,662, proposed in 1936, but never passed, and the bill which became the law now under review. Legislative history "cannot be resorted to for the purpose of construing a statute contrary to the natural import of its terms. * * * If the language be clear, it is conclusive." Peoples Natural Gas Co. v. Federal Power Comm., supra 127 F.2d 159, quoting from United...