STATE OF OKL., ETC. v. Federal Energy Reg. Com'n
| Decision Date | 04 June 1980 |
| Docket Number | No. CIV-78-01251-T.,CIV-78-01251-T. |
| Citation | 494 F. Supp. 636 |
| Parties | The STATE OF OKLAHOMA, By and Through Larry DERRYBERRY, Attorney General of the State of Oklahoma; David L. Boren, Governor of the State of Oklahoma; the State of Texas, by and through John L. Hill, Attorney General of the State of Texas; Dolph Briscoe, Governor of the State of Texas; the State of Louisiana, by and through William J. Guste, Jr., Attorney General of the State of Louisiana; Edwin Edwards, Governor of the State of Louisiana; Shirley McNamara, Secretary of the Louisiana Department of Revenue and Taxation, and William C. Huls, Secretary of the Louisiana Department of Natural Resources, Plaintiffs, The State of Wyoming, By and Through its Attorney General; Ralph L. Harvey, Individually and as president of Marlin Oil Corporation, Intervening Plaintiffs, v. FEDERAL ENERGY REGULATORY COMMISSION, Defendant, United States of America, Intervening Defendant. |
| Court | U.S. District Court — Western District of Oklahoma |
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Larry Derryberry, Jan Eric Cartwright, Attys. Gen., John F. Percival and Charles S. Rogers, Asst. Attys. Gen., Oklahoma City, Okl., for State of Oklahoma.
John L. Hill, Mark White, Attys. Gen., John W. Fainter, Jr., Ted L. Hartley, David Hughes and Stuart Fryer, Asst. Attys. Gen., Austin, Tex., for State of Texas.
William J. Guste, Jr., Atty. Gen., Gary L. Keyser, David C. Kimmel and Carmack M. Blackmon, Asst. Attys. Gen., Baton Rouge, La., for State of Louisiana.
John D. Troughton, Atty. Gen., Thomas J. Carroll, III and Bernard Broderick, Asst. Attys. Gen., Cheyenne, Wyo., for State of Wyoming.
William Pannill, Houston, Tex., for Ralph L. Harvey and Marlin Oil.
Howard E. Shapiro, Sol. and Joanne Leveque, Atty., Federal Energy Regulatory Commission, Washington, D. C., Larry D. Patton, U. S. Atty. and Stan Twardy, Asst. U. S. Atty., Oklahoma City, Okl., Barbara Allen Babcock, Asst. Atty. Gen., Dennis G. Linder, Paul A. Gaukler, Dina R. Lassow, and C. Max Vassanelli, Attys., Dept. of Justice., Washington, D. C., for defendant and intervening defendant.
Daniel J. Papeo, Washington, D. C., Gregory Meyer, Local Counsel, Oklahoma City, Okl., for Washington Legal Foundation.
David E. Engdahl, Engdahl, Renzo & Reid, Denver, Colo., for David E. Engdahl.
Toney Anaya, Atty. Gen. of the State of New Mexico, Santa Fe, N. M., filed a Complaint in Intervention on January 8, 1979, it was dismissed on April 19, 1979.
The Natural Gas Policy Act of 19781 was signed into law on November 9, 1978, along with four other bills, as part of a comprehensive energy program. Broadly characterized, the Natural Gas Policy Act (hereafter NGPA or the Act) is intended to encourage production by providing price incentives for the exploration and production of new gas sources, with eventual deregulation of certain wells, while facilitating interstate transportation and supply. The NGPA represents the first federal regulation of wholly intrastate gas.
Oklahoma, Louisiana, and Texas challenge the NGPA as unconstitutional, alleging, in their complaint as amended and supplemented (hereafter amended complaint) that all provisions thereof which purport to affect intrastate gas (§§ 2, 101-103, 105-109, 121, 122, 201-206, 301-304, 311-315, 504, and 602) exceed the power of Congress to regulate "commerce among the several states," and abrogate the Tenth Amendment, as well as being a denial of equal protection and due process (count I). Plaintiff States allege that the provisions of the Act which "attempt to coerce plaintiffs" into enactment of legislation, assignment of state employees, and expenditure of state funds for the purpose of implementing federal policy (§§ 304, 312, 501, 503-506) are an invasion of state sovereignty and intergovernmental immunity, a violation of the constitutional guaranty of a republican form of government, a denial of equal protection, due process, and Tenth Amendment guarantees, and in excess of Congress' commerce clause power (count II). The states of Texas and Oklahoma further allege that federal regulation of natural gas produced from the public lands within those states violates the terms of their admission into the Union (count III)2. Count IV of plaintiffs' amended complaint alleges that all provisions of the Act which authorize the allocation and distribution of intrastate gas into interstate pipelines (§§ 201-206, 301-304, 311-315, 504) exceed Congress' commerce clause power, and invade state sovereignty and immunity, as provided in the Tenth Amendment, equal protection, and due process clauses. Plaintiffs pray for a declaratory judgment that the named provisions of the Act are unconstitutional.
The complaint in intervention of intervening plaintiff Wyoming raises substantially the same issues.3 Intervening plaintiff Ralph Harvey, individually and as president of Marlin Oil Corporation, also attacks the regulation of intrastate gas as exceeding Congress' commerce clause power. Additionally, Harvey asserts that certain subsections of § 102 which provide price ceilings for certain categories of gas lack any rational basis and are violative of due process. Harvey alleges that § 106(b) arbitrarily discriminates against individuals in favor of states and Indian tribes, in violation of equal protection and due process guarantees, and that the bifurcated system of administrative review of price determination provided in § 503, i. e., initial determination in the appropriate state agency with review in the Federal Energy Regulatory Commission and the United States Courts of Appeals, violates state sovereignty and the Tenth Amendment. Harvey prays that the referenced sections be declared unconstitutional.
Defendant Federal Energy Regulatory Commission (FERC) and intervening defendant United States (hereafter defendants) have answered, asserting certain defenses and denying plaintiffs' claims.
Pursuant to agreement of counsel at pretrial conference, simultaneous motions were filed by all parties. Defendants have moved to dismiss the claims of plaintiffs with respect to certain sections of the Act, asserting that those claims are either not ripe for review or are not properly before this Court. Defendants have further moved to dismiss the claims of intervening plaintiff Harvey (with the exception of his claim that the regulation of intrastate gas exceeds Congress' commerce power), alleging that he has no standing to raise the issues in his complaint. Defendants have moved for summary judgment on the remaining claims of plaintiffs. Plaintiff States, joined by intervening plaintiff Wyoming (hereafter plaintiff and intervening plaintiff States will be referred to as plaintiffs) have moved for summary judgment on their amended complaint, and Harvey has moved for summary judgment on his complaint in intervention. Responses to the motions have been filed by adverse parties. Amicus briefs have been received from the Washington Legal Foundation and from David Engdahl. Oral arguments on the motions were had, the issues have been exhaustively briefed and the Court herein renders its opinion on all pending motions.
Brief summaries of both the Natural Gas Policy Act and prior controls over the natural gas industry will perhaps be helpful at the outset.
In 1938, the Natural Gas Act (NGA)4 was enacted by Congress, regulating the transportation and sale of natural gas in interstate commerce. The NGA left certain matters involving natural gas production and sale unregulated, particularly gas produced, sold, and consumed within a state. The Federal Power Commission5 regulated many aspects of interstate gas, including pricing following the decision of the Supreme Court in Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954). As part of the regulatory scheme, once gas had been dedicated to the interstate market, it could not be withdrawn without FPC approval. Wholly intrastate gas was not subject to FPC price regulation and the price of such gas has not been regulated in any of the plaintiff States, resulting generally in higher prices of intrastate gas. The plaintiff States assert that the unregulated intrastate market is highly advantageous to the interstate market, as higher intrastate prices encourage new production and development, creating a surplus which is diverted into the interstate market once intrastate demand is met, and further discouraging wasteful consumption. Defendants assert, and the legislative history of the NGPA recites,6 that unregulated intrastate prices have resulted in shortages of natural gas in nonproducing states, as the intrastate market, with its higher price advantage, is able to secure the lion's share of new gas production. The NGPA was Congress' solution to the necessity of encouraging production and exploration of new natural gas sources and maintaining adequate supplies of natural gas in the interstate market.7
Title I of the Act establishes price ceilings for all first sales of natural gas without regard to its interstate or intrastate character. These prices are by reference to a base period, with adjustment monthly for inflation and, in some cases, for real growth. Section 102 sets maximum rates for newly discovered gas which meets certain qualifications; § 103 sets rates for new, onshore production wells; § 104(b)(1) defines ceiling rates for gas dedicated to interstate commerce and subject to FERC's jurisdiction prior to the Act; § 105(b)(1) provides that gas sold under intrastate contracts in effect on the date of passage of the Act will be as provided in the contract, adjusted for inflation, or the "new" gas price; § 106 sets rates for "rollover contracts", i. e., contracts for the first sale of gas subject to a contract in effect on the date of passage of the Act, but...
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