Texaco, Inc. v. Federal Power Commission

290 F.2d 149
CourtCourt of Appeals for the Fifth Circuit
DecidedApril 14, 1961
DocketNos. 18349, 18354, 18357, 18364, 18366, 18379, 18394, 18398, 18542, 18543
StatusPublished
Cited by12 cases

This text of 290 F.2d 149 (Texaco, Inc. 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
Texaco, Inc. v. Federal Power Commission, 290 F.2d 149 (5th Cir. 1961).

Opinion

TUTTLE, Chief Judge.

These cases, consolidated for argument and to some extent for briefing in this court are brought to review an order of the Federal Power Commission. The order complained of granted to El Paso Natural Gas Company and to certain independent producers certificates of public convenience and necessity authorizing the construction and operation of pipeline and other facilities by El Paso and it authorized the sale of gas by the producers to El Paso at an initial price of 17.7 cents per Mcf. The original contracts between the producers and El Paso had provided for an initial price of 20 cents per Mcf. The order also, pursuant to the temporary authorizations which the Commission had previously issued and under which the producers were then operating, directed refunds by the producers to El Paso of amounts collected in excess of 17.7 cents per Mcf. and required payment of interest on the refunds at 6 percent.

The applications before the Commission were eighteen in number, one being by El Paso and the other seventeen- being independent producers. The state of California intervened in the proceedings.

Fourteen of the independent producers and the State of California sought and were denied rehearing of the Commission’s order. They are now parties to this petition for review. In addition, the Navajo tribe of Indians filed a brief as amicus curiae, claiming to have an interest to protect as owners of most of the land on which the producing leases lie. In general, the producers and the Navajo Indians contend that on the record before it there was no basis for the Commission to grant a conditional certificate and even if any condition was authorized, the Commission in any event had no authority to condition the certificate on the adoption of an initial price less than that contained in the schedule filed by the applicants. The State of California took the position that there was no basis for a finding of public convenience and necessity at the 17.7 cent rate and it argues here that no rate in excess of 12.69 cents per Mcf would be warranted on the record.

Without setting out the separate contentions of each party, we think all of the substantial issues presentedyin these petitions for review can be summarized in rather brief compass.

■ The producers’ petitions contend that when a section 7 application for certificate is filed the commission cannot validly impose a condition that -a lower initial price be filed than that agreed upon between the parties if the evidence establishes that there is a critical need for the gas and that the proposed price will not result in a triggering of general price raises or an increase in existing rates. Petitioners also contend that they should not be required to make refunds of the difference between the 17.7 cent rate and the 20 cent rate that has been charged under the temporary certificate, because, they say, the conditions in the temporary certificate were so broadly and indefinitely stated as to nullify the condition. Finally, they state that since the tern-[153]*153porary certificate conditions did not expressly provide for the payment of interest on refunds, the Commission’s final order, now appealed from, could not validly require the payment of 6 percent interest on such refunds.

The petitioners’ first contention is broken down into two parts. The first is that on the record before us there was no justification for the Commission’s denying the grant of a certificate at the initial price fixed in the contracts, that is, 20 cents per Mcf. This they say is true because the great demand for the gas outweighs any evidence in the record that might otherwise warrant the Commission’s requiring a price condition as a result of its duty to give “most careful scrutiny and responsible reactions to initial price proposals of producers.” See Atlantic Refining Company v. Public Service Commission, 360 U.S. 378, 79 S.Ct. 1246, 1255, 3 L.Ed.2d 1312.

The second is that even though the record warranted the Commission’s granting a certificate at 20 cents conditioned upon a refund of any sums collected in excess of the amount later determined to be just and reasonable, the Commission rnnder no circumstances had the power to condition the grant of a certificate in the manner which it did; that is, by requiring the filing of a new initial price ■of 17.7 cents in lieu of the contract price of 20 cents.

There can be no doubt, in light of the Supreme Court’s decision in the Atlantic Refining Company case (hereafter referred to as CATCO), that in a proper case the Commission has the power to attach such conditions in the granting of a certificate as may be necessary. We have carefully examined the record here and are fully satisfied that the Commission had the power to decline to issue a certificate at the 20 cent rate or in ■the alternative to grant a conditional •certificate under the principles declared in the Atlantic Refining Company case and as recently applied by us in United Gas Improvement Company v. Federal Power Commission, 5 Cir., 1961, 290 F.2d 147. This leaves the question whether or not it could legally attach a condition that the initial price be fixed at a figure lower than that agreed upon between the parties.

Paragraph D, the conditional paragraph of the order, requires that new schedules be filed providing for a rate of 17.7 cents per Mcf in lieu of the initial price contained in the producer contracts.

Producers’ complaint of this runs this way: (1) The making of initial rates is left by law to the parties by contract and may not be done by the Commission; (2) the substitution of the 17.7 cent rate for the 20 cent rate in a contract which provides for payment to the producers of 20 cents for five years, then for an increase of 4 cents, would amount to the making of an initial rate by the Commission, since it would fix a rate that the parties themselves had not agreed on; and (3) such a requirement would be particularly objectionable because if the producers filed such new schedule it would be impossible for the producers ever to get the 20 cent rate even though the Commission should ultimately find 20 cents to be just and reasonable. This, they reason, follows because this would amount to a modification of the producers’ contract with the pipeline companies, so that the latter would be entitled by contract to purchase the gas at 17.7 cents for the first five year period for which the contract initially required them to pay the 20 cents. Producers say that under United Gas Pipe Line Co. v. Mobile Gas Service Corporation, 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373, they would be prohibited by the new contracts (schedules) with their purchasers from filing a schedule of 20 cents, or of any figure higher than 17.7 cents during the five year period, because the purchasers could claim the benefit of the substitution of 17.7 cents for 20 cents as the initial price and they could not be forced to pay the 20 cents which they had originally agreed to pay because other terms of the contract required that the initial price (now 17.7 cents) continue in effect for five years.

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Bluebook (online)
290 F.2d 149, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texaco-inc-v-federal-power-commission-ca5-1961.