Ralph B. Shank, Trustee for Nelson Bunker Hunt Trust Estate v. Federal Power Commission

236 F.2d 830
CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 21, 1956
Docket15832_1
StatusPublished
Cited by10 cases

This text of 236 F.2d 830 (Ralph B. Shank, Trustee for Nelson Bunker Hunt Trust Estate v. Federal Power Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ralph B. Shank, Trustee for Nelson Bunker Hunt Trust Estate v. Federal Power Commission, 236 F.2d 830 (5th Cir. 1956).

Opinion

BORAH, Circuit Judge.

Petitioner herein has invoked the jurisdiction of this Court under Section 19 (b) of the Natural Gas Act, 15 U.S.C.A. § 717r(b), to review two letter-orders of the Federal Power Commission dated July 1, 1955, and July 8, 1955, respectively.

The material facts are these: Petitioner has an interest in two producing gas wells in Starr County Texas, which it operates under joint operating and gas processing agreements with Sun Oil Company. Under these agreements, Sun Oil gathers petitioner’s gas into its field gathering system and runs it through its gas processing plant also located in Starr County. These agreements provide that during such time as petitioner fails to take or cause to be taken any portion of its residue gas, Sun Oil at its election may sell it for the account of petitioner, or may purchase such gas for its own account, or may refuse to receive or discontinue the receiving of petitioner’s gas to the extent of its failure to take the residue gas. The agreements further provide that Sun Oil has at any time the right to exercise any one or more of said options. As of June 7, 1954, petitioner had failed to take or cause to be taken from the processing plant its residue gas and on that date Sun Oil was exercising its election to dispose of such gas along with its own, by selling it to Transcontinental Gas Pipeline Corporation at a price of approximately 7 cents per Mcf. pursuant to the terms of Sun Oil’s gas sales contract with Transcontinental and subject to both petitioner’s and Sun Oil’s right to terminate such sales of petitioner’s gas at will.

*832 On June 7, 1954, the Supreme Court handed down its decision in Phillips Petroleum Company v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035. Thereafter and as set forth at length in Magnolia Petroleum Company v. Federal Power Commission, 5 Cir., 236 F.2d 785, the Commission issued its series of 174-Orders in which it promulgated rules and regulations applicable to “independent producers” 1 of natural gas subject to the jurisdiction of the Commission. Among other things these rules and regulations prescribed that: (1) the terms and conditions of service and all rates and charges effective on and after June 7, 1954, for the transportation and sale of natural gas in interstate commerce were to be set forth in a rate schedule to be filed with the Commission, and “rate schedule” was defined to mean “the basic eontract and all supplements or agreements amendatory thereof, effective and applicable on and after June 7, 1954 -s * * "; (2) no change in the June 7, 1954, íátes may be made except after thirty days’ notice to the Commission and subject to its right to suspend such •change; (3) independent producers should apply to the Commission for certificates of public convenience and necessity covering the sale of such gas as is ■subject to the jurisdiction of the Commission; and (4) sales or services rendered by independent producers must be •continued until termination was given the express approval of the Commission in accordance with Section 7(b) of the Act, 15 U.S.C.A. § 717f (b).

In compliance with these regulations, .petitioner on October 15, 1954, and with .jurisdictional reservations, filed with the Commission all of its contracts with Sun Oil which were effective on and after -June 7, 1954, together with the existing -contracts between Sun Oil and Transcontinental. In. addition, petitioner with like jurisdictional reservations filed an -application for a certificate of public convenience and necessity which included, inter alia, petitioner’s sales of natural gas which were made to Transcontinental under the documents described above. Meanwhile, petitioner had negotiated a new contract to sell its residue gas to Tennessee Gas Transmission Company, beginning on July 15, 1955. And in view of the fact that its initial filings had not been acted upon by the Commission, petitioner on June 13, 1955, and with full reservation of its original jurisdictional objections, filed a “Notice of Withdrawal of Application for Initial Certificate of Public Convenience and Necessity, etc.” insofar as it affected petitioner’s previously filed rate schedule covering the sales of its gas by Sun Oil to Transcontinental. On the same day petitioner also filed an amendment to its application for initial certificate of public convenience and necessity in which it requested that it be authorized to sell natural gas to Transcontinental until July 15, 1955, but not afterwards. Simultaneously with the filing of the partial withdrawal notice and the amendment to its application for initial certificate, petitioner also filed with the Commission the new contract with Tennessee Gas together with an application for an additional certificate of public convenience and necessity to cover its sale of residue gas from the processing plant to Tennessee Gas in accordance with the new gas sales contract.

Following the receipt of these supplemental filings, the Commission on July 1, 1955, and July 8, 1955, issued the two letter-orders sought to be reviewed herein. By the first order, the Commission rejected petitioner’s request to withdraw a portion of its application for an initial certificate of public convenience and necessity and stated that the Commission considered it as a request, for authority to abandon service under Section 7(d) of the Act. The Commission noted that petitioner’s application for authority to *833 sell natural "gas to' Tennessee Gas “involves the gas now sold to Transcontinental” and it requested petitioner to supplement its June 13, 1955, filing with evidence showing that the present or future public convenience and necessity permits the abandonment of sales to Transcontinental together with statements of position by Transcontinental and Tennessee Gas in regard to this abandonment. The second order, in material part, permitted petitioner to withdraw the previously filed rate schedule consisting of petitioner’s agreements with Sun Oil and the latter’s contracts with Transcontinental on the ground that-petitioner was not a signatory party to the basic sales contract between Sun Oil and Transcontinental.

Agreeable to the provisions of Section 19(a) of the Natural Gas Act, petitioner duly applied for a rehearing of these orders, and thereafter the Commission by letter-order dated August 25, 1955, affirmed its previous action, denied petitioner’s request for rehearing and asserted that the above matters would be set for hearing as promptly as possible. 2

Subsequent to the denial of its application for rehearing, petitioner filed the within petition for review, in which it attacks the lawfulness of the orders of July 1 and July 8, 1955, on numerous grounds which in brief it compresses into the following assignments of error:

“1. The Commission’s orders violate the statutory scheme of rate making and rate changing prescribed by the Natural Gas Act, because such orders deprive Petitioner of the right to initiate rates and changes in rates.
“2.

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236 F.2d 830, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ralph-b-shank-trustee-for-nelson-bunker-hunt-trust-estate-v-federal-ca5-1956.