File Trade Commission v. Texaco, Inc.

517 F.2d 137, 170 U.S. App. D.C. 323, 1975 U.S. App. LEXIS 13244
CourtCourt of Appeals for the D.C. Circuit
DecidedAugust 8, 1975
DocketNos. 74-1547 to 74-1551 and 74-1553, 74-1554
StatusPublished
Cited by34 cases

This text of 517 F.2d 137 (File Trade Commission v. Texaco, Inc.) 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
File Trade Commission v. Texaco, Inc., 517 F.2d 137, 170 U.S. App. D.C. 323, 1975 U.S. App. LEXIS 13244 (D.C. Cir. 1975).

Opinion

WILKEY, Circuit Judge:

This litigation is an outgrowth of a Federal Trade Commission (FTC) investigation into the reporting of natural gas reserves by natural gas producers in Southern Louisiana.1 Specifically, we have before us seven consolidated appeals by the FTC from orders entered by the District Court granting enforcement in part and denying enforcement in part of subpoenas duces tecum issued by the Commission to appellees, seven large natural gas producers, in connection with its investigation. The subpoena issued to each of the appellees and the orders issued by the District Court are reproduced as appendices to this opinion.

I. The Facts and the Issues

The American Gas Association (AGA) is a trade association of producers, distributors, and marketers of natural gas. Through its Committee on Natural Gas Reserves, the AGA has since 1946 been providing the industry, the Government, and the general public with annual estimates of the proved natural gas and natural gas liquid reserves of the United States.2 For the purposes of gathering reserve data, the nation is divided into ten geographical districts. A member of the Committee on Natural Gas Reserves is assigned to each district; the committee member in turn appoints a subcommittee to assist him in gathering reserve data within the district. The FTC’s investigation focuses on the activities of the South Louisiana subcommittee.

In May 1969 when the AGA reported its 1968 figures, they indicated a decline in proved reserves nationally, the first such decline ever reported. Before the year was out, this and other information reaching the Federal Power Commission prompted a reopening of its just-concluded Southern Louisiana Area Rate Pro[327]*327ceeding. Those proceedings will be discussed in more detail below. The May 1970 report for 1969 showed even further declines for total United States reserves and total Southern Louisiana reserves.

In late 1970 the Federal Trade Commission began an investigation into the reporting of proved natural gas reserves in Southern Louisiana. In June 1971 the investigation took on more formal status when the Trade Commission issued a resolution authorizing the use of compulsory process in furtherance of a nonpublic investigation. In that resolution the nature and scope of the investigation was defined as follows:

The purpose of the authorized investigation is to develop facts relating to the acts and practices of [certain named corporations] to determine whether said corporations, and other persons and corporations, individually or in concert are engaged in conduct in the reporting of natural gas reserves for Southern Louisiana which violates Section 5 of the Federal Trade Commission Act, or are engaged in conduct or activities relating to the exploration and development, production, or marketing of natural gas, petroleum, and petroleum products, and other fossil fuels in violation of Section 5 of the Federal Trade Commission Act.3.

From the beginning of its investigation the AGA had been cooperating with the Trade Commission on a voluntary basis. As a result the Commission was able to obtain the field-by-field estimates of proved reserves made by each Southern Louisiana subcommittee member for the years 1966 through 1970.4 The Commission had also obtained reserve information from Form 15 reports filed with the Federal Power Commission. These reports are filed by interstate natural gas pipelines and list recoverable, saleable gas reserves committed to, collected by, or held by reporting pipelines.

Approximately one year after beginning its investigation, on 24 November 1971, the Commission’s staff issued identical administrative subpoenas duces tecum to eleven natural gas producers. All eleven producers moved to quash the subpoenas. The motions to quash or limit were denied by the Commission on 27 June 1972.5 Following the Commission’s denial, the Trade Commission’s staff, after negotiations with the gas producers, offered additional safeguards for the confidentiality of information to be supplied. As a result two producers agreed to comply fully with the subpoenas and [328]*328one agreed to comply in part. (Soon after petitions for enforcement were filed in the District Court, one more firm agreed to comply with the subpoena.)

Petitions for enforcement of the remaining subpoenas were filed in the District Court on 4 June 1973. On 30 July 1973 the District Court held a hearing on preliminary motions and also heard a preliminary presentation of the issues posed by the case. Subsequently evidentiary materials and briefs were filed by all parties. A second hearing was held on 13 December 1973 at which time the issues were fully argued to the court over a period of several hours.

The two orders here under review were filed on 22 March 1974. One order covered the subpoenas issued to appellees Texaco, Inc., Standard Oil Co. (Indiana), Shell Oil Co., Exxon Corp., Standard Oil Co. of California, and Mobil Oil Corp. The other order related to the subpoena issued to the Superior Oil Co., Inc. (hereinafter Superior). The former order enforced specifications A, B, C, D, E, and F in full; however, it only granted partial enforcement of the remaining specifications, G through L.

The District Court found the subpoenas to be overly broad and unduly burdensome because they sought to duplicate activities of the Federal Power Commission which had already resulted in a finding that AGA proved reserve estimates were valid and accurate. As a result, specifications G through L were modified so that raw field data, bid calculation data, and bid calculation files need not be produced. However, all documents containing or underlying proved reserve estimates in the offshore Southern Louisiana area are to be produced.

The court, in an attempt to make the subpoenas less burdensome, limited production of these documents to a random sample of 100 out of approximately 225 relevant fields and to the years 1969, 1970, and 1971. Specifications J, K, and L were similarly modified so that only documents relating to proved natural gas reserve estimates in the offshore Southern Louisiana area need be submitted. However, the court enforced the subpoena as regards any documents prepared between 1966 and 1971, inclusive, “which were exchanged between or among, or constitute, contain or refer to any agreement, arrangement or communication between or among, respondents or others, including the American Gas Association.” The subpoenas were also modified so that additional protections were afforded to confidential information. In addition, producers were accorded the option of producing records for inspection where they were stored.

Superior was in a different position from the other six producers. Superior had never been a member of the AGA nor had it ever furnished proved reserve figures to the AGA. Superior’s employees also had not participated in the work of AGA’s committees or subcommittees. As a result, the District Court enforced specifications A through F and K through L in full and denied enforcement of specifications G, H, I, and J. Identical confidentiality protections were afforded Superior.

Because the producers have not cross-appealed, the issues before us relate solely to the limiting modifications made by the District Court.

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Bluebook (online)
517 F.2d 137, 170 U.S. App. D.C. 323, 1975 U.S. App. LEXIS 13244, Counsel Stack Legal Research, https://law.counselstack.com/opinion/file-trade-commission-v-texaco-inc-cadc-1975.