Pennzoil Co. v. Federal Power Commission

• Decision Date: 02 July 1976
• Docket Number: No. 75-2961,75-2961
• Citation: 534 F.2d 627
• Parties: PENNZOIL COMPANY et al., Petitioners, v. FEDERAL POWER COMMISSION, Respondent, and Consolidated Cases. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 627

534 F.2d 627

PENNZOIL COMPANY et al., Petitioners, v. FEDERAL POWER COMMISSION, Respondent, and Consolidated Cases. ^* No. 75-2961.

United States Court of Appeals Fifth Circuit.

July 2, 1976.

Alvin M. Owsley, Jr., J. Gregory Copeland, Houston, Tex., for pennzoil.

H. N. Burton, Dallas, Tex., for Atlantic Richfield Co.

Kirk W. Weinert, Houston, Tex., for Texaco, Inc.

Neal Powers, Jr., Houston, Tex., for Ecee, Inc., et al.

George C. Bond, Kenneth L. Riedman, Jr., Los Angeles, Cal., for Union Oil Co. of Cal.

Charles F. Wheatley, Jr., Wheatley & Miller, Washington, D. C., for American Public Gas Ass'n.

Malcolm H. Furbush, San Francisco, Cal., for Pacific Gas & Elec. Co.

Jeron Stevens, Baker & Botts, George F. Goolsby, Houston, Tex., Bruce F. Kiely, Washington, D. C., Vernon M. Turner, Michael B. Silva, A. Duncan Gray, Jr., Houston, Tex., for Tenneco.

John C. Christian, New Orleans, La., Justin R. Wolf, Washington, D. C., James B. Atkin, San Francisco, Cal., G. Howard Dearing, New Orleans, La., for the Cal. Co., a Div. of Chevron Oil Co.

William A. Sackmann, Findlay, Ohio, Carroll L. Gilliam, Philip R. Ehrenkranz, Craig W. Hulvey, Washington, D. C., for Marathon Oil Corp.

Philip R. Ehrenkranz, Carroll L. Gilliam, Washington, D. C., Grove, Jaskiewicz, Gilliam & Cobert, Tom P. Hamill, Robert D. Haworth, Robert E. Shaw, Houston, Tex., for Mobil Oil Corp.

Tom Burton, Houston, Tex., for Continental Oil Co.

Bernard A. Foster, Nancy J. Hubbard, Washington, D. C., David M. Whitney, Houston, Tex., for Burmah Oil & Gas Co. and Burmah Oil Development, Inc.

W. B. Wagner, Jr., Pat F. Timmons, Houston, Tex., Scott P. Anger, Washington, D. C., for Superior Oil Co.

Martin N. Erck, Paul W. Wright, Houston, Tex., for Exxon Corp.

Drexel D. Journey, Gen. Counsel, Allan Abbot Tuttle, Sol., FPC, Washington, D. C., for the F.P.C.

Petitions for Review of an Order of the Federal Power Commission.

Before THORNBERRY, COLEMAN and MORGAN, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge:

In this case, we review an order of the Federal Power Commission stating that certain information required of various off-shore natural gas producers will be made public. The producing companies object to the Commission's order contending that the information consists of trade secrets and confidential geophysical information, publication of which will significantly damage their financial interests. Since we find the Commission did not give adequate consideration to relevant factors in reaching its decision, we remand this case to the Commission.

Recently, the Federal Power Commission has attempted to create a rate structure that would insure a more nearly complete development of the nation's natural gas supply. Quite naturally, in determining this structure, the Commission has been deeply concerned with the actual amount of gas reserves that have already been discovered. Normally, the Commission has relied on reserve figures compiled by the American Gas Association Committee on Natural Gas Reserves (AGA). Recently a staff study, however, has indicated a disparity of approximately 1.7 trillion cubic feet between the AGA figures for the south Louisiana area and reserve figures supplied to the Commission by various pipeline companies. On March 21, 1974, the Commission first requested comments from various interested parties on the staff study. A conference was held on April 16, 1974, concerning this disparity but was unsuccessful in resolving the problem. On June 13, 1975, the Commission issued an "order instituting investigation to update prior staff study" that required certain companies who had wells in the south Louisiana area to produce detailed reserve information. ¹ The Commission stated:

All background data must also be submitted, including workpapers, such as electric well logs, core analysis data, well information, structure and isopachous maps, any calculated data such as reservoir pressure or temperature derived therefrom, plus any pressure decline, production decline, or material balance method data useful in making a reserve estimate. In addition, any further information relative to making a reserve estimate for the fields listed on Table I must also be submitted.

Finally, in its order the Commission concluded "all responses to this order will be a matter of public record."

The producers from whom information was requested immediately objected to the FPC's order. Before the Commission, they argued that the information sought consisted of confidential trade secrets. Basically, the producers contended that the possession of raw data concerning wells already drilled allows a company to estimate the potential productivity of nearby tracts. These tracts often have not yet been leased by the federal government. When the government decides to offer additional lands for lease, the information obtained from drilling previous wells will greatly facilitate the ability of a producer to predict the new area's possible productivity. In fact, the producers argue that one of the major reasons for their drilling in the area is to obtain information that would be useful in bidding on future leases. If they were required to make this information public, as the Commission's order stated, other companies who had not gone to the substantial expense of exploratory drilling would be equally able to estimate the worth of future leases.

On rehearing, the Commission responded briefly to the producer's objections. The relevant portion of the Commission's order states:

Particularly in the light of the nature of the investigation involved here, we think the value to the public of this information far outweighs the claimed pecuniary interest of the producer's in confidentiality. We recognize the disclosure of the reserve data requested by us may adversely affect the private interest of the producers, but such possible damage does not override in our view the public interest in disclosure. The regulatory process is a bond of consumer protection and the regulations and rates cannot proceed satisfactorily without full disclosure of the facts upon which the rates are to be determined.

Producers appealed to this court from the denial of their petition and requested a stay of the Commission's order. This court ruled that petitioners would have to supply the information to the Commission but pending any further order of this court the data would have to be "held in the strictest confidence of the Federal Power Commission." The producers supplied the requested information and all parties agree that the only issue remaining is whether such information should be made public.

I. FREEDOM OF INFORMATION ACT.

The producer's first argument is that the Freedom of Information Act (FOIA), 5 U.S.C. § 552, is an absolute bar to the release of this information. That statute states in relevant part:

(a) Each agency shall make available to the public information as follows: . . . (b) This section does not apply to matters that are . . . (4) trade secrets and commercial or financial information obtained from persons and privileged or confidential; . . . (9) geological or geophysical information and data including maps, concerning wells.

In this contention, the producers argue that exclusions (4) and (9) of FOIA clearly encompass the information that the Commission seeks to make public. ² The producers then argue that since the statute requires all information not in the exclusions to be made public the logical Congressional intent is that information within the exclusions is required to be kept confidential. According to the producers, once the information is determined to be encompassed by an exclusion of FOIA the inquiry is at an end; under no circumstances can that information be released.

We believe that this argument distorts the clear intent of the Freedom of Information Act. The Supreme Court has repeatedly stated that the basic thrust of the Freedom of Information Act is "to permit access to official information long shielded unnecessarily from public view." Environmental Protection Agency v. Mink, 410 U.S. 73, 80, 93 S.Ct. 827, 832, 35 L.Ed.2d 119 (1973). See also, NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 95 S.Ct. 1504, 44 L.Ed.2d 29 (1975); Kent Corp. v. NLRB, 530 F.2d 612 (5th Cir. 1976); Stokes v. Brennan, 476 F.2d 699 (5th Cir. 1973). The Court, moreover, has recently reaffirmed that the thrust of the Act is toward disclosure. Department of the Air Force v. Rose, --- U.S. ----, 96 S.Ct. 1592, 48 L.Ed.2d 11, 44 L.W. 4503 (1976). Interpreting the statute as an absolute bar to the release of certain information would be at war with the basic principles embodied in the Freedom of Information Act.

Several additional factors lead to the conclusion that the Act was not intended as a bar to disclosure. The statute simply states that "this section does not apply" to matters included in the exclusion. Secondly, the provision that confers jurisdiction in the federal courts speaks only in terms of a complainant that had been denied information. 5 U.S.C. § 552(a)(4)(B) (Supp.1976). Also, various statements by the Supreme Court strongly suggest that the statute is not an absolute bar to disclosure. Recently, in Department of the Air Force v. Rose, the Court said,

There are, however, exemptions from compelled disclosure. There are nine in number as set forth in § 552(b). But these limited exemptions do not obscure the basic policy that disclosure, not secrecy, is the dominant objective of the Act. --- U.S. at ----, 96 S.Ct. at 1599, 44 L.W. at 4505. (Emphasis added.)

The Court has also stated that the statute distinguishes between material that "may be withheld or must be disclosed." Environmental Protection Agency v. Mink, supra 410 U.S. at 79, 93 S.Ct. at 832. (Emphasis added.) Third, other courts that have dealt with this question have held that the statute is not a bar to releasing information. Charles River Park "A", Inc. v. HUD, 519 F.2d 935 (D.C.Cir...