Utah Public Service Commission v. El Paso Natural Gas Company, 776

• Decision Date: 16 June 1969
• Docket Number: No. 776,776
• Citation: 23 L.Ed.2d 474,89 S.Ct. 1860,395 U.S. 464
• Parties: UTAH PUBLIC SERVICE COMMISSION, Appellant, v. EL PASO NATURAL GAS COMPANY et al
• Court: U.S. Supreme Court

395 U.S. 464

89 S.Ct. 1860

23 L.Ed.2d 474

UTAH PUBLIC SERVICE COMMISSION, Appellant,

v EL PASO NATURAL GAS COMPANY et al.

No. 776.

Argued April 29, 1969.

Decided June 16, 1969.

[Syllabus from pages 464-465 intentionally omitted] Vernon B. Romney, Salt Lake City, Utah, for appellant.

Leon Payne, Houston, Tex., for appellee, El Paso Natural Gas Co.

Richard B. Hooper, Seattle, Wash., for appellees, Cascade Natural Gas Corp., et al.

John F. Sonnett, New York City, for appellee, Colorado Interstate Corp.

Iver E. Skjeie for appellee, State of California.

Sol. Gen. Irwin N Griswold for appellee, The United States, at the invitation of Court.

William M. Bennett, San Francisco, Cal., consumer spokesman.

Mr. Chief Justice WARREN delivered the opinion of the Court.

This is before us on appellant's motion to dismiss its appeal under Rule 60. Ordinarily parties may be consensus agree to dismissal of any appeal pending before this Court.¹ However, there is an exception where the dismissal implicates a mandate we have entered in a cause.² Our mandate is involved here. We therefore ordered oral argument at which all parties concerned were afforded an opportunity to be heard on the question whether there had been compliance with the mandate. 394 U.S. 970, 89 S.Ct. 1453, 22 L.Ed.2d 751. At the oral argument a number of appellees supported appellant's motion. They included the United States, the State of California, El Paso Natural Gas Company, Cascade Natural Gas Corporation, Intermountain Gas Company, Northwest Natural Gas Company, the Wash- ington Water Power Company, Washington Natural Gas Company, Idaho Public Utilities Commission, Public Utility Commissioner of Oregon, Washington Utilities and Transportation Commission, Colorado It erstate Corporation, Southern California Gas Company, and Southern Counties Gas Company of California. The motion was opposed by John J. Flynn and I. Daniel Stewart, by brief amicus curiae, and by William M. Bennett, who appeared for the State of California when the case was last here, Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 131, 87 S.Ct. 932, 935, 17 L.Ed.2d 814 (1967), and now presents himself, and argued orally, as 'consumer spokesman.'

This is a Clayton Act § 7 case, 38 Stat. 731, 15 U.S.C. § 18, in which the acquisition of the stock and assets of Pacific Northwest Pipeline Corporation by El Paso Natural Gas Company raised the 'ultimate issue' whether 'the acquisition substantially lessened competition in the sale of natural gas in California.' United States v. El Paso Natural Gas Co., 376 U.S. 651, 652, 84 S.Ct. 1044, 1045, 12 L.Ed.2d 12. We ordered divestiture 'without delay.' Id., at 662, 84 S.Ct. at 1050. That was in 1964. The United States later agreed to settle the case. As to that we said:

'We do not question the authority of the Attorney General to settle suits after, as well as before, they reach here. The Department of Justice, however, by stipulation or otherwise has no authority to circumscribe the power of the courts to see that our mandate is carried out. No one, except this Court, has authority to alter or modify our mandate. United States v. E. I. du Pont De Nemours & Co., 366 U.S. 316, 325, 81 S.Ct. 1243, 6 L.Ed.2d 318. Our direction was that the District Court provide for 'divestiture without delay.' That mandate in the context of the opinion plainly meant that Pacific Northwest or a new company be at once restored to a position where it could compete with El Paso in the California market.' 386 U.S., at 136, 87 S.Ct. at 937.

We set aside that consent decree and remanded for additional findings and a new solution, saying:

'In the present case protection of California interests in a competitive system was at the heart of our mandate directing divestiture. For it was the absorption of Pacific Northwest by El Paso that stifled that competition and disadvantaged the California interests. It was indeed their interests, as part of the public interest in a competitive system, that our mandate was designed to protect.' Id., at 135, 87 S.Ct. at 937.

On remand the District Court decided it should choose from among the various applicants the one that is 'best qualified to make New Company a serious competitor' in the California market. United States v. El Paso Natural Gas Co., 291 F.Supp. 3. That court chose Colorado Interstate Corp., the only gas pipeline operator among the various applicants.

Under the plan approved by the District Court, El Paso receives 5,000,000 shares of New Company nonvoting preferred stock, convertible into common stock at the end of five years. What the conversion ratio will be is not known; but, it is said, there will be provisions to restrict El Paso control over the New Company. The New Company also assumes approximately $170,000,000 of El Paso's system-wide bond and debenture indebtedness, an amount designated the Northwest Division's pro-rata share of that indebtedness.

Utah's jurisdictional statement, which she now moves to dismiss, was filed here Noveme r 25, 1968. That jurisdictional statement presents the question whether the decree entered below satisfies our mandate. It is the filing of that jurisdictional statement that brings the question here. See United States v. E. I. duPont De Nemours & Co., 366 U.S. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318. In fact, in its jurisdictional statement, Utah urged that the decree does not meet the requirements of duPont. We thus need not decide whether the papers filed by amicus curiae or Mr. Bennett properly presented the question of compliance. We find that the decree of the District Court does not comply with our mandate: it does not apportion the gas reserves between El Paso and New Company in a manner consistent with the purpose of the mandate, and it does not provide for complete divestiture. We therefore vacate the judgment and remand the case for further proceedings.

I.

When the case was last here we said, 'The gas reserves granted the New Company must be no less in relation to present existing reserves than Pacific Northwest had when it was independent; and the new gas reserves developed since the merger must be equitably divided between El Paso and the New Company. We are told by the intervenors that El Paso gets the new reserves in the San Juan Basin—which due to their geographical propinquity to California are critical to competition in that market. But the merged company, which discovered them, represented the interests both of El Paso and of Pacific Northwest. We do not know what an equitable division would require. Hearings are necessary, followed by meticulous findings made in light of the competitive requirements to which we have adverted.' 386 U.S., at 136—137, 87 S.Ct. at 937.

The District Court awarded 21.8% of the San Juan Basin reserves to the New Company saying that was 'no less in relation to present existing reserves' than Northwest had when it was independent. The District Court also gave the New Company more than 50% of the net additions to the reserves developed since the merger. Concededly the total reserves of the New Company will not be sufficient to meet the old Northwest's existing requirements and those of a California project.

This attempt to paralyze competition in the California market started years ago; the Clayton Act suit was filed in 1957. The record up to the entry of the present decree shows, as the District Court found, that delay has strengthened El Paso's position. First, the delay has strengthened El Paso's hold on the California market, making it more and more difficult for a new out-of-state supplier to enter. Second, an additional out-of-state supplier has entered the California market during this 12-year period, taking what well might have been the place of the old Northwest Company had not its competition been stifled. Third, permits for new pipelines from Texas to California are now pending before the Federal Power Commission.

The purpose of our mandate was to restore competition in the California market. An allocation of gas reserves should be made which is 'equitable' with that purpose in mind. The position of the New Company must be strengthened and the leverage of El Paso not increased. That is to say, an allocation of gas reserves particularly those in the San Juan Basin—must be made to rectify, if possible, the manner in which El Paso has used the illegal merger to strengthen its position in the California market. The object of the allocation of gas reserves must be to place New Company in the same relative competitive position vis-a -vis El Paso in the California market as that which Pacific Northwest enjoyed immediately prior to the illegal merger.

A reallocation of gas reserves under this standard may permit an applicant other than Colorado Interstate Corporation to acquire New Company and make it a competitive force in California. Thus, the District Court is directed to effect this reallocation of gas reserves, and, in light of the reallocation, to reopen consideration of which applicant should acquire New Company. Suh consideration should, of course, include whether an award to a particular applicant will have any anti-competitive effects either in the California market or in other markets.

II.

Our mandate directed complete divestiture. The District Court did not, however, direct complete divestiture. Neither appellant nor any party supporting the dismissal argues that the District Court did so. Rather they argue that the disposition made by the District Court was the best that might be made without complete divesture. Clearly this does not comply with our mandate. United States v. E.I. du Pont De Nemours & Co., 366 U.S. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318, was another § 7 case in which we ordered 'complete divestiture.' Id., at 328, 81 S.Ct. at 1251. One plan proposed was a distribution of General Motors shares held by du Pont, most of them to be distributed pro rata over a 10-year period to du Pont...