PUBLIC SERV. COM'N, STATE OF NY v. FEDERAL POWER COM'N
| Decision Date | 24 August 1973 |
| Docket Number | No. 71-1828.,71-1828. |
| Citation | 487 F.2d 1043 |
| Parties | PUBLIC SERVICE COMMISSION FOR the STATE OF NEW YORK, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, Atlantic Richfield Co., et al., Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
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Peter H. Schiff, Gen. Counsel, Public Service Commission for the State of N. Y., Albany, N. Y., with whom Joseph J. Klovekorn, Staff Counsel, Public Service Commission for the State of N. Y., Albany, N. Y., and Michael H. Rosenbloom, Washington, D.C., were on the brief, for petitioner in No. 71-1828.
Carroll L. Gilliam, Washington, D. C., with whom Tom P. Hamill, Houston, Tex., and Philip R. Ehrenkranz, Washington, D. C., were on the brief for petitioners in No. 71-1836 and intervenor Mobil Oil Corp. in No. 71-1828.
John R. Rebman, Bartlesville, Okl., with whom Martin E. Erck, Houston, Tex., was on the brief, for petitioner in No. 71-1988 and intervenor Humble Oil and Refining Co. in Nos. 71-1828 and 71-1836 also argued for certain other producer petitioners.
George B. Mickum, III, Washington, D. C., with whom James L. McHugh, Jr., Washington, D. C., was on the brief for intervenor, Blanco Oil Co., in No. 71-1828.
Thomas G. Johnson, Houston, Tex., with whom Dan A. Bruce, Houston, Tex., was on the brief for petitioner in No. 71-1989 and intervenor Shell Oil Co. in Nos. 71-1828 and 71-1836, also argued for certain other producer intervenors.
Michael J. Manning, Atty., F. P. C., with whom Gordon Gooch, Gen. Counsel, Lee E. Forquer, Sol., and George W. McHenry, Jr., First Asst. Sol., F. P. C., were on the brief for respondent. J. Richard Tiano, First Asst. Sol., F. P. C., at the time the record was filed, also entered an appearance for respondent.
John Frederick Moring, Washington, D. C., with whom John E. Holtzinger, Jr., Washington, D. C., was on the brief for intervenor, Associated Gas Distributors in Nos. 71-1828 and 71-1988.
Edwin S. Nail, Tulsa, Okl., was on the brief for petitioner in No. 71-2025 and intervenor Amerada Hess Corp., in No. 71-1828.
W. H. Emerson, Tulsa, Okl., was on the brief for petitioner in No. 71-2020.
Tom Burton, Houston, Tex., was on the brief for petitioner in No. 71-1930 and intervenor Continental Oil Co. in Nos. 71-1828 and 71-1988.
Justin R. Wolf, Washington, D. C., and Paul W. Wright, Falls Church, Va., were on the brief for petitioner in No. 71-1991 and intervenor, The California Co.
Warren M. Sparks, Tulsa, Okl., was on the brief, for petitioner in No. 71-1911 and intervenor in Gulf Oil Corp.
Robert W. Henderson and Paul W. Hicks, Dallas, Tex., were on the brief for petitioners in No. 72-1071.
Kenneth Heady, Bartlesville, Okl., was on the brief for petitioner in No. 71-2055 and intervenor Phillips Petroleum Co. in Nos. 71-1828 and 71-1836.
Richard F. Remmers, Oklahoma City, Okl., was on the brief for petitioner in No. 71-1913 and intervenor Sohio Petroleum Co. in No. 71-1828.
H. W. Varner, Houston, Tex., and Frank P. Saponaro, Jr., Washington, D. C., were on the brief for petitioner in No. 71-1990 and intervenor Superior Oil Co. in No. 71-1828.
J. Donald Annett, Washington, D.C., Kirk W. Weinert and C. Fielding Early, Jr., Houston, Tex., were on the brief for petitioner in No. 71-2015 and intervenor, Texaco, Inc., in Nos. 71-1828 and 71-1836.
Tilford A. Jones and William A. Mogel, Bethesda, Md., were on the brief for intervenor United Distribution Companies in Nos. 71-1988, 71-1989 and 71-1990.
Charles F. Wheatley, Jr., Washington, D.C., was on the brief for intervenor, American Public Gas Assn. in No. 71-1828.
John T. McMahon, New Orleans, La., was on the brief for intervenor Ashland Oil Inc. in No. 71-1828. Richard F. Generally, Washington, D.C., also entered an appearance for intervenor Ashland Oil Inc., in No. 71-1828.
Charles E. McGee, Washington, D.C., was on the brief for intervenor Atlantic Richfield Co. in No. 71-1828.
Richard F. Generally, Washington, D. C., was on the brief for intervenors, Callery Properties, Inc., F. A. Callery Inc., Forest Oil Corp., General American Oil Co. of Texas in No. 71-1828.
Sam Riggs, Jr., Liberal Kan., was on the brief for intervenor Cities Service Oil Co. in No. 71-1828.
William A. Sackmann, Geneva, Switzerland, was on the brief for intervenor Marathon Oil Co. in No. 71-1828.
Cecil N. Cook, Houston, Tex., was on the brief for intervenor Puenticitas Oil Co. in Nos. 71-1828 and 71-1826.
Ronald J. Jacobs, Manchester, Conn., was on the brief for intervenor, Skelly Oil Co. in Nos. 71-1828 and 71-1836.
Stanley M. Morley, and Louis Flax, Washington, D.C., were on the brief for intervenor Sun Oil Co. in No. 71-1828.
John E. Watson, Saint Petersburg, Fla., was on the brief for intervenor, Tenneco Oil Co. in Nos. 71-1828 and 71-1836.
Dee H. Richardson, Los Angeles, Cal., was on the brief for intervenor, Union Oil Co. of California in No. 71-1828. Noble John Allen, Jr., entered an appearance for intervenor, Union Oil Co. of California in No. 71-1828.
Francis H. Caskin, Washington, D.C., entered an appearance for intervenor Sun Oil Co. in Nos. 71-1828 and 71-1988.
John S. White, Washington, D.C., entered an appearance for intervenor, Marathon Oil Co. in No. 71-1828.
Bernard A. Foster, III, Washington, D.C., entered an appearance for intervenor, Skelly Oil Co. in Nos. 71-1828 and 71-1836.
Graydon D. Luthey, Tulsa, Okl., entered an appearance for intervenor Cities Service Oil Co. in Nos. 71-1828 and 71-1836.
Lewis J. Ottaviani, Bartlesville, Okl., entered an appearance for intervenor, Phillips Petroleum Co. in Nos. 71-1828 and 71-1836.
William R. Choate, Houston, Tex., entered an appearance for intervenor Pennzoil Producing Co. in No. 71-1991.
Robert J. Haggerty, Washington, D. C., entered an appearance for intervenor, Getty Oil Co. in No. 71-2015.
Before BAZELON, Chief Judge, LEVENTHAL, Circuit Judge, and RICHEY,* United States District Judge of the District Court for the District of Columbia.
These petitions for review challenge the validity of the Federal Power Commission's order, establishing "just and reasonable rates," under Sections 4 and 5 of the Natural Gas Act, for sales of natural gas in interstate commerce from the Texas Gulf Coast producing area. The court remands the order to the Commission for further consideration.
The order is composed of two basic parts. The first is the schedule of base area rates. With respect to this, Chief Judge Bazelon files an opinion for the court, beginning at page 1087 infra. District Judge CHARLES R. RICHEY concurs in this opinion. Circuit Judge LEVENTHAL dissents for the reasons stated in Part VI of his opinion, pages 1063 to 1067 infra.
With respect to the second basic part of the order—the system of incentives—and the remainder of the issues in this case, Circuit Judge LEVENTHAL files an opinion in which Chief Judge BAZELON and District Judge CHARLES R. RICHEY concur. Thus, Parts I through V, pages 1051 to 1063 infra, and Parts VII and VIII, pages 1068 to 1080 infra, of Circuit Judge LEVENTHAL'S opinion also constitute the opinion of the court.
So ordered.
In the Order before us for review in this case,1 establishing "just and reasonable rates" under Sections 4 and 5 of the Natural Gas Act,2 the Federal Power Commission has provided both base rates and incentive provisions to govern interstate sales of natural gas produced in the Texas Gulf Coast Area. This area consists of 54 Texas counties stretching along the Gulf of Mexico from Louisiana to Mexico. It also includes over 3,560 square miles of underwater continental shelf within state jurisdiction and 20,000 square miles of underwater shelf within Federal domain.3 The FPC's approach of fixing gas producer rates by producing area rather than on a company by company basis was approved by the Supreme Court in the Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 344, 20 L.Ed.2d 312 (1968).4 The order in this area rate proceeding contains unusual features, which are challenged in the several petitions for review filed pursuant to section 19(b) of the Natural Gas Act, 15 U.S.C. § 717r. We shall first outline these features. The reasoning the FPC used in arriving at its results will be examined subsequently, in considering the challenges lodged against different aspects of the Order.
I. PROVISIONS OF THE FPC ORDER
The centerpiece of the FPC Order prescribing rates—a term used, for convenience, to identify the ceilings put on producers—is the provision for the Base Area Rates. This consisted of what is referred to as a three-vintage maximum rate system, with different maximum prices applied to casinghead and gas-well gas, depending on the date on which the producers contracted to deliver the gas. The prices per Mcf, determined on the basis of cost and noncost factors, depend on the three vintage periods of the contract, and then on the time of delivery, as follows:5
In sum, three "division dates" for contracts are set: 1961, 1968 and post 1968. Gas under contracts in each of these periods is given a different maximum price, depending on the delivery date. Thus the above table...
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