Magnolia Petroleum Co. v. FEDERAL POWER COM'N, No. 15320

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: PER CURIAM
• Citation: 236 F.2d 785
• Parties: MAGNOLIA PETROLEUM COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent. The OHIO OIL COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent. The SUPERIOR OIL COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent. Wesley WEST, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.
• Decision Date: 21 August 1956
• Docket Number: 15354.,15352,No. 15320,15321

236 F.2d 785 (1956)

MAGNOLIA PETROLEUM COMPANY, Petitioner,
v.
FEDERAL POWER COMMISSION, Respondent.
The OHIO OIL COMPANY, Petitioner,
v.
FEDERAL POWER COMMISSION, Respondent.
The SUPERIOR OIL COMPANY, Petitioner,
v.
FEDERAL POWER COMMISSION, Respondent.
Wesley WEST, Petitioner,
v.
FEDERAL POWER COMMISSION, Respondent.

Nos. 15320, 15321, 15352, 15354.

United States Court of Appeals Fifth Circuit.

June 30, 1956.

Rehearing Denied August 21, 1956.

236 F.2d 786

Ross Madole, Jack E. Earnest, Dallas, Tex., John E. McClure, Washington, D. C., Chas. B. Wallace, Earl A. Brown, Dallas, Tex., for Magnolia Petroleum Co.

Willard W. Gatchell, Gen. Counsel for Federal Power Commission, Washington, D. C., Lambert McAllister, Asst. Gen. Counsel, William J. Grove, Asst. Gen. Counsel, Louis C. Kaplan, Washington, D. C., for respondent.

W. Hume Everett, Houston, Tex., C. F. Currier, Shreveport, La., Clayton L. Orn, Findlay, Ohio (Wheat, May & Shannon, Washington, D. C., of counsel), for Ohio Oil Co.

Willard W. Gatchell, Gen. Counsel for Federal Power Commission, Washington, D. C., Lambert McAllister, Asst. Gen. Counsel, William J. Grove, Asst. Gen. Counsel, Louis C. Kaplan, Washington, D. C., for respondent.

Roger H. Doyle, New Orleans, La., Cullen R. Liskow, Lake Charles, La., Willard B. Wagner, F. P. Jones, Jr., Houston, Tex., for Superior Oil Co. (Liskow & Lewis, Lake Charles, La., of counsel).

Willard W. Gatchell, Gen. Counsel for Federal Power Commission, William J. Grove, Asst. Gen. Counsel, Washington, D. C., Lambert McAllister, Asst. Gen. Counsel, Louis C. Kaplan, Washington, D. C., for respondent.

Jacques P. Adoue, W. H. Skipwith, Jr., Houston, Tex., for Wesley West.

Willard W. Gatchell, Gen. Counsel for Federal Power Commission, William J. Grove, Asst. Gen. Counsel, Washington, D. C., Lambert McAllister, Asst. Gen. Counsel, Louis C. Kaplan, Washington, D. C., for respondent.

Before BORAH, RIVES, and BROWN, Circuit Judges.

BORAH, Circuit Judge.

These are separate but companion cases and since they involve substantially similar facts and the same issues of law and come to us on one record they may conveniently be disposed of in one opinion. All of the petitioners herein have invoked the jurisdiction of this Court, under Section 19(b) of the Natural Gas Act, 15 U.S.C.A. § 717r(b), to review certain orders of the Federal Power Commission which petitioners seek to have set aside, vacated and nullified. And all, save Ohio Oil Company, also claim that this Court is empowered under Section 10 of the Administrative Procedure Act, 5 U.S.C.A. § 1009, to review the action of the Commission in issuing said orders.

It is believed that a history of the occurrences which give rise to these petitions for review will be helpful to an understanding of the questions involved. On June 7, 1954, the Supreme Court rendered its decision in Phillips Petroleum Company v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 795, 98 L.Ed. 1035, holding that Phillips, a natural-gas producer and gatherer, was a "`natural-gas company'" within the meaning of that term as defined in the Natural Gas Act, and that certain of its admitted sales in interstate commerce of natural gas for resale were subject to the jurisdiction of and regulation by the Federal Power Commission.¹ This decision was contrary to the Federal Power Commission's prior interpretation of its jurisdiction over such activities,² and its immediate impact was to charge

236 F.2d 787

the Commission with the regulation of a great number of hitherto unregulated jurisdictional sales. Thus confronted with numerous practical considerations in adjusting its activities to the Court's interpretation of its regulatory sphere, the Commission on July 16, 1954, without prior notice or hearing, issued its Order 174 amending and supplementing its long-existent rules and regulations under the Natural Gas Act, 18 C.F.R., Chapter 1, Subchapters A and E through G. These original rules were directed principally to interstate pipeline companies, but since by their terms they speak only of "natural-gas companies",³ the Commission concluded that save for the issuance of Order 174, they would have been applicable also to jurisdictional sales in the production and gathering portion of the natural-gas business.⁴

The Commission's long-established rules, as well as Order 174, were issued under the rule-making authority vested in the Commission by Section 16 and were designed to implement Sections 4, 7, and 8 of the Act.⁵ Order 174 prescribed rules and regulations applicable only

236 F.2d 788

to "independent producers," that is, natural-gas companies in the producing and gathering area of the business, and they were therein defined as "any person * * * who is engaged in the production and gathering of natural gas and who transports * * * or sells natural gas in interstate commerce for resale, but who is not primarily engaged in the operation of an interstate pipeline." Among other things these rules and regulations prescribed the procedure to be followed by all independent producers, who, on or since June 7, 1954, had engaged in the interstate transportation or sale of natural gas subject to the Act, by providing that they were to: (1) file on or before October 1, 1954, their rate schedules in force on June 7, 1954, and the contracts effective as of June 7 were permitted to be filed as such "rate schedules"; (2) make no changes in the June 7, 1954, rates except after thirty days' notice to the Commission and subject to its right to suspend such changes; (3) apply to the Commission for certificates of public convenience and necessity covering the sale of such gas as is subject to the jurisdiction of the Commission; and (4) continue any sales or services rendered until termination was given the express approval of the Federal Power Commission in accordance with Section 7(b) of the Act. The Commission contends that the rules and regulations provided by Order 174 were formulated with these fixed objectives in view: (a) to relieve independent producers of accounting requirements and the maintenance of accounts under the Commission's Uniform System of Accounts; (b) to provide for simplified filing of gas sales contracts instead of converting such contracts into tariff form before filing and for simplified rate change procedures; and (c) to provide for simplified requirements and limited data in support of applications for certificates of public convenience and necessity

Thereafter and upon further consideration, the Commission on its own motion amended and modified Order 174 by the superseding Order 174-A which was issued on August 6, 1954. Following the action of the Commission, petitioners in company with more than one hundred other persons and corporations applied for a rehearing and stay of Order 174-A. In their applications the validity of the order was challenged on numerous grounds, and, with the exception of Ohio Oil Company, each of the petitioners in its application for rehearing sought to have the Commission make a separate jurisdictional finding that it was not a "natural-gas Company" within the meaning of that term as defined in the Natural Gas Act. By an order issued on September 8, 1954, the Commission afforded all applicants who had questioned the lawfulness of Order 174-A an opportunity to submit briefs and oral argument on the applications for rehearing, but denied all requests for stay, assigning as reasons therefor the following:

"In the absence of the rules provided by Order No. 174-A, the more stringent rules generally in effect and applicable to all natural-gas companies would be applicable to producers and gatherers who are also natural-gas companies under the Natural Gas Act (18 CFR, Chap. I, Parts 154 and 157). Accordingly, request for stay of Order No. 174-A is without reasonable justification and must be denied." 19 Federal Register 5952.

After the filing of briefs and after oral arguments were had, the Commission, on September 24, 1954, amended Order 174-A in a respect immaterial to the petitions here, and extended the time for compliance with the regulations prescribed therein from October 1 to December 1, 1954, but took no further action at that time on the applications for rehearing. Following this action by the Commission,

236 F.2d 789

each of the petitioners herein filed in this Court a petition for review requesting a stay of Order 174-A pending final hearing on their petitions for review. Stays were granted to Magnolia Petroleum Company and to Ohio Oil Company, but not to either Superior Oil Company or Wesley West

On December 17, 1954, which was subsequent to the time when true and correct copies of the documents reflecting all of the action taken by the Commission in issuing Orders 174 and 174-A had been certified and filed in this Court, the Commission further amended Order 174-A and expressly denied all applications for rehearing thereof. The revised sections were published together with the unchanged portions of that order and the order as so revised was designated as Order 174-B.⁶ Thereupon Magnolia filed a supplemental petition for review in which it directed against Order 174-B all objections which it had previously made against Order 174-A. Superior by way of a responsive pleading likewise requested that its original petition be considered as directed against and as equally applicable to both orders. In the meantime the Commission had filed motions to dismiss against Magnolia and Ohio and had moved to vacate the stay orders which had been granted to those petitioners, but no motions to dismiss were filed as to Superior and Wesley West.

At the outset it should be noted that the Commission urged no objection to this Court's considering the two supplemental requests for review of Order 174-B. While we are of opinion that the ultimate result in these cases will not be affected in the slightest degree by our consideration of Order 174-B, we are nevertheless and by...