American Public Gas Association v. Federal Power Commission, Shell Oil Company, Intervenors. Continental Oil Company v. Federal Power Commission, Aztec Oil and Gas Company, Intervenors

498 F.2d 718
CourtCourt of Appeals for the D.C. Circuit
DecidedJuly 17, 1974
Docket71-1812
StatusPublished
Cited by11 cases

This text of 498 F.2d 718 (American Public Gas Association v. Federal Power Commission, Shell Oil Company, Intervenors. Continental Oil Company v. Federal Power Commission, Aztec Oil and Gas Company, Intervenors) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Public Gas Association v. Federal Power Commission, Shell Oil Company, Intervenors. Continental Oil Company v. Federal Power Commission, Aztec Oil and Gas Company, Intervenors, 498 F.2d 718 (D.C. Cir. 1974).

Opinion

498 F.2d 718

162 U.S.App.D.C. 176, 6 P.U.R.4th 255

AMERICAN PUBLIC GAS ASSOCIATION, Petitioner,
v.
FEDERAL POWER COMMISSION, Respondent, Shell Oil Company et
al., Intervenors.
CONTINENTAL OIL COMPANY, Petitioner,
v.
FEDERAL POWER COMMISSION, Respondent, Aztec Oil and Gas
Company et al., Intervenors.

No. 71-1812, 71-1873.

United States Court of Appeals, District of Columbia Circuit.

Argued Oct. 26, 1972.
Decided May 23, 1974, Rehearing Denied July 17, 1974.

Charles F. Wheatley, Jr., Washington, D.C., for petitioner in No. 71-1812.

Thomas H. Burton, Houston, Tex., for petitioner in No. 71-1873.

Joan E. Heimbigner, Atty., Federal Power Commission with whom Gordon Gooch, Gen. Counsel, Leo E. Froquer, Sol., and George W. McHenry, Jr., First Asst. Sol., Federal Power Commission were on the brief, for respondent. J. Richard Tiano, First Asst. Sol., Federal Power Commission at the time the record was filed, also entered an appearance for respondent.

John R. Rebman, Bartlesville, Okl., with whom Martin N. Erck and J. Kirby Ellis, Houston, Tex., were on the brief, for intervenors, Humble Oil and Refining Co.

Tilford A. Jones, Bethesda, Md., with whom William A. Mogel, Bethesda, Md. whom William A. Mogel, Bethesda, Md., was on the brief, for intervenor, United Distribution Companies.

Kenneth Heady and John L. Williford, Bartlesville, Okl., were on the brief for intervenor, Phillips Petroleum Co.

Thomas G. Johnson and Dan A. Bruce, Houston, Tex., were on the brief for intervenor, Shell Oil Co.

Kirk W. Weinert and C. Fielding Early, Jr., Houston, Tex., were on the brief for intervenor, Texaco, Inc. J. Donald Annett, Washington, D.C., also entered an appearance for intervenor, Texaco Inc.

Edwin S. Nail, Boston, Mass., was on the brief for intervenor, Amerada Hess Corp.

John E. Watson, Houston, Tex., entered an appearance for intervenor, Tenneco Oil Co. in No. 71-1873.

Charles E. McGee, Washington, D.C., entered an appearance for intervenor, Atlantic Richfield Co. in No. 71-1873.

Oliver Barr McClellan entered an appearance for intervenor, Aztec Oil and Gas Co. in No. 71-1873.

Before DANAHER, Senior Circuit Judge, and MacKINNON, and ROBB, Circuit judges.

PER CURIAM:

This case presents three questions: (1) whether the Federal Power Commission properly determined initial rates for independent producer areas under its rulemaking authority; (2) whether the procedures adopted by the Commission met the requirements of due process; and (3) whether the initial rates established by the Commission for the Rocky Mountain area are supported by substantial evidence. We answer each question in the affirmative.

The case commenced on June 17, 1970 when the Commission issued a Notice of Investigation and Proposed Rulemaking in Docket No. R-389, 35 Fed.Reg. 10152 (1970). In its notice the Commission proposed to issue rules fixing the terms and conditions under which it would issue permanent certificates of public convenience and necessity for any sales of natural gas subject to the Commission's jurisdiction in the Permian Basin area. The rules were to apply to any sales of natural gas under contracts dated after the date of issuance of the rules. The notice stated: 'The rates to be set pursuant to this rulemaking will be firm rates, not subject to refund obligation. However, any rate set will be subject to prospective modification at the conclusion of the new Permian Basin area rate proceeding which we have today instituted by separate order in Docket No. AR70-1, 35 F.R.'

On July 17, 1970 the Commission issued a further notice of proposed rulemaking in Docket No. R-389A, 35 Fed.Reg. 11638 (1970), expanding the scope of the proposed rulemaking in Docket No. R-389 from the Permian Basin area to include all new sales of natural gas, nationwide.

The Commission's notices stated:

As an aid to interested parties (hereinafter 'parties') in preparing responses, and as notice to those who may be examined in this investigation, we set forth specific areas of inquiry, the purpose of which is to determine the terms and conditions which will result in an adequate supply of natural gas for consumers at the lowest rate consistent with maintaining an industry structure capable of providing, and motivated to provide, service with its attendant risks. (J.A. 45.)

Specifically, the Commission called on all parties to submit three types of information: (1) an estimate of the current nationwide cost of finding and producing nonassociated natural gas, using the costing methods of Opinions Nos. 468 and 546; (2) rate of return and other factors discussed in Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312, rehearing denied, 392 U.S. 917, 88 S.Ct. 2050, 20 L.Ed.2d 1379 (1968), and Austral Oil Co. v. F.P.C., 428 F.2d 407 (5th Cir.), cert. denied, 400 U.S. 950, 91 S.Ct. 243, 27 L.Ed.2d 257 (1970); and (3) the weight to be given to contract prices, terms and inducements or commodity value, in considering producer rates, and whether the market mechanism would protect consumer interests.

The Commission required parties to serve copies of their comments on all other parties (R. 2472) and scheduled public hearings in several locations, to allow interested persons to state their views in lieu of filing written comments. (R. 2471, 2490, 2544.) The Commission provided an opportunity to reply to original submittals. (R. 2472.)

The Commission also designated two staff attorneys as investigative officers empowered to receive evidence and documents deemed relevant and material to the inquiry. These officers conducted an investigation of intrastate sales by 48 large natural gas producers in the Permian Basin area and 70 large producers in other areas. (R. 2493-95, 2551-53, 2504, 2561-62.) The officers directed the producers to appear, checked their contracts and responses to a questionnaire, and compiled therefrom a composite of weighted average rates and range of rates for intrastate sales in each area. (R. 2506-11, 2519-20, 2565-2611.) These data were received by the Commission on August 14, 1970, and September 9, 1970.

On their petitions to intervene, the Commission, by order dated October 19, 1970, granted intervention to ten cities, state regulatory commissions, and states (R. 1105-06.) Sixty-nine written initial submittals were received by the Commission from parties, including our petitioner Continental Oil Company and other producers (R. 1314-22, 1987-2082) and the Commission staff. (R. 1107-2292.) Public hearings were held in eight major cities1

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