# Appendix — Standard Oil Co. v. Federal Trade Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1549%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1977 - **Citation:** 431 U.S. 974 ## Text — . _ a —— a — — . — a — Supieme Court, U. 8. FILED APR 15 1977 IN THE ~~ Supreme Court of the United States No. TEXACO INC., et al., Petitioners, v. FEDERAL TRADE COM MISSION, Respondents. PETITIONERS’ JOINT APPENDIX TO PETITION FOR WRIT OF CERTIORARI (List of Counsel Appears on Inside Cover) WILSON - EPES PRINTIMS CO.. INC. - RE 7-6002 - WASHINGTON, D.C. 20001 — —— — — ee = WILLIAM SIMON Rocer C. SIMMONS Howrey & SIMON 1730 Pennsylvania Ave., N.W. Washington, D.C. 20006 Rorert L. Norris 1728 Exxon Building Ilouston, Texas 77001 Attorneys for Petitioner Exxon Corporation J. WALLACE ADAIR TERRENCE C. Sure Jon Dy Q. Brices, III Howrey & SIMON 1770 Pennsylvania Ave., N.W. Washington, D.C. 20006 THOMAS G. JOHNSON One Shell Plaza Houston, Texas 77002 Attorneys for Petitioner Shell Oil Company JOHN W. ITowarpb P.O. Box 5910A Chicago, Illinois 60680 Attorney for Petitioner Standard Oil Company (Indiana) Ropert F. McGinnis 135 Fast 42nd Street New York, New York Attorney for Petitioner Texaco Inc. CHARLES F. RICE Mobil i! Corporation 150 East 42nd Street New York, New York 10017 Harry M. REASONER VINSON & ELKINS First City National tank Building Houston, Texas 77002 MICHAEL J. HENKE F. SHAUN BURNS VINSON & ELKINS 1701 Pennsylvania Ave., N.W. Washington, D.C. 20006 Attornens far Petitioner Mobil Oil Corporation LEE LOEFVINGER MARTIN MICHAELSON Joseriu C, BELL TIOGAN & ITARTSON 815 Connecticut Ave, N.W. Washington, D.C. 20006 Attorneys for Petitioner Standard Oil Company of California ABE KRASH DANIFL A. REZNECK ARNOLD & PORTER 1229 Nineteenth Street, N.W. Washington, D.C. 20036 Attorneys for Petitioner The Superior Oil Company TABLE OF CONTENTS En banc opinion, Federal Trade Commission v. Texaco Inc., (No. 74-1547, et al.) (D.C. Cir. Feb. 23, 1977) Order, United States Court of Appeals for the District of Columbia (March 24, 1977) 8 3 Order, United States Court of Appeals for the Distriet of Columbia (April 1, 1977) Porno Stipulation Re: Issues on Which Parties Have Agreed and Issues Which Remain to Be Resolved by the Court and Appendix A & B (May 19, 197652 Stiplations between Federal Trade Commission and Superior Oil Company (May 19, 1976) a) Stipulation b) ITC's Statement of Issues and Proposed Modi- fications PR LT eee TALIS ED A BY c) Statement of Superior Oil Company Order, United States Court of Appeals for the District of Columbia (April 21, 1976) ae Letter, Clerk, United States Court of Appeals for the District of Columbia Re: Wishes of the Court for Supplemental Memorandum (March 16, 1976) Order, United States Court of Appeals for the District of Columbia granting petition for rehearing en banc (February 6, 1976) Panel opinion, Federal Trade Commission v. Texaco Inc, 517 F.2d 137 (D.C. Cir. August 8, 1975) FTC Order denying Motion to Quash (June 27, 1972) FTC Resolution Directing Use of Compulsory Process in Nonpublic Investigation (June 3, 19717 * Affidavit and Exhibits, H. R. Hirns ĩ Correspondence re: Negotiations between Counsel for Mobil and Federal Trade Commission, (August- December, 1972) * Page 171 190 191 197 203 204 207 209 258 287 289 316 err F 3 2 x ; 3 1 —— 2 —— te A ee A-1 United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 74-1547 FEDERAL TRADE COMMISSION, APPELLANT v. TEXACO, INC. (Civil 1089-73) No. 75-1548 FEDERAL TRADE COMMISSION, APPELLANT V. STANDARD OIL COMPANY (Civil 1090-73) No. 74-1549 FEDERAL TRADE COMMISSION, APPELLANT V. THE SUPERIOR OIL COMPANY, INC., A CORPORATION (Civil 1091-73) No. 74-1550 FEDERAL TRADE COMMISSION, APPELLANT V. EXXON CORPORATION, A CORPORATION (Civil 1092-73) A-2 No. 74-1551 FEDERAL TRADE COMMISSION, APPELLANT V. SHELL OIL COMPANY, A CORPORATION (Civil 1093-73) No. 74-1553 FEDERAL TRADE COMMISSION, APPELLANT V. STANDARD OIL COMPANY OF CALIFORNIA, A CORPORATION (Civil 1095-73) No. 74-1554 FEDERAL TRADE COMMISSION, APPELLANT V. MOBIL OIL CORPORATION, A CORPORATION (Civil 1096-73) Appeals from the United States District Court for the District of Columbia Argued En bane April 19, 1976 Decided February 23, 1977 Gerald P. Norton, Deputy General Counsel, Federal Trade Commission, with whom Rex E. Lee, Assistant Attorney General, Gerald Harwood, Assistant General A-3 Counsel, Federal Trade Commission and Leonard Schait- man, Attorney, Department of Justice were on the brief for appellant. Robert E. Duncan, William Cerillo, Attor- neys, Federal Trade Commission and John K. Villa, Attorney, Department of Justice, also entered appear- ances for appellant. William Simon, with whom Roger C. Simmons and Robert L. Norris, were on the brief for appellee in No. 74-1550 also argued for appellees in Nos. 74-1547, 74- 1548 and 74-1551. Robert F. McGinnis, was on the brief for appellee in No. 74-1547. John W. Howard, was on the brief for appellee in No. 74-1548. J. Wallace Adair, Terrence C. Sheehy and Thomas G. Johnson were on the brief for appellee in No. 74-1551. W. C. Weitzel, Jr., also entered an appearance for appellee in No. 74-1547. Terrence C. Sheehy also entered an appearance for ap- pellee in 74-1550. Lee Loevinger, with whom Raymond E. Vickery, Jr., was on the brief for appellee in No. 74-1553. Martin Michaelson, also entered an appearance for appellee in 74-1553. Michael J. Henke, with whom Harry M. Reasoner was on the brief for appellee in No. 74-1554. Daniel A. Reznick with whom Abe Krash was on the brief for appellee in 74-1549. Before: BAZELON, Chief Judge, WRIGHT, LEVENTHAL, ROBINSON, MACKINNON, and WILKEY, Circuit Judges Opinion for the Court filed by Chief Judge BAZELON. Concurring Opinion filed by Circuit Judge LEVENTHAL. Dissenting Opinion filed by Circuit Judge WILKEY, with whom Circuit Judge MACKINNON joins. A-4 BAZELON, Chief Judge: These consolidated cases are be- fore the court en bane on appeals by the Federal Trade Commission (FTC) from orders of the district court granting enforcement in part and denying enforcement in part with respect to administrative subpoenas duces tecum issued by the FTC to appellees, seven natural gas producers.’ The subpoenas in question were authorized by the FTC in aid of a formal investigation into the procedures employed by various natural gas producers in reporting their gas reserves—an investigation stem- ming primarily from an unprecedented decline in these reported reserves. That this nation currently is in the midst of a energy crisis, however defined, need not be detailed by this court. The extent of the energy short- age, the reasons for it, and the appropriate governmental and industry responses to the problem are the focus of debate and investigation in various executive agencies and in Congress. Such questions are largely outside the province of the judiciary. In these cases we consider only the propriety of these investigative subpoenas in the context of the limited role assigned to the federal courts in enforcement proceedings. I. FACTUAL BACKGROUND A. The FTC Investigation The American Gas Association (AGA), a trade as- sociation composed of producers, distributors, and mar- keters of natural gas, is recognized as one of the prin- cipal sources of authoritative statistical data concerning the natural gas industry. In 1945 the AGA established a Committee on Natural Gas Reserves to formulate an- 1The FTC subpoena and the district court orders are re- produced in the appendix to this opinion. A-5 nual estimates of proved reserves for the benefit of the gas industry, the Government, and the general public. To facilitate this task, the Committee has subdivided the United States into ten regions and has assigned a sub- * The term “proved reserves” is central to the discussion herein. The following definition has been adopted by the AGA: Proved Reserves are the estimated quantity of natural gas which analysis of geologic and engineering data demonstrate with reasonable certainty to be recoverable in the future from known oil and gas reservoirs under existing economic and operating conditions. Reservoirs are considered proved that have demonstrated the ability to produce by either actual production or conclusive for- mation test. The area of a reservoir considered proved is that por- tion delineated by drilling and defined by gas-oil, gas- water contacts or limited by the structural deformation or lenticularity of the reservoir. In the absence of fluid contacts, the lowest known structural occurrency of hydrocarbons controls the proved limits of the reservoir. The proved area of a reservoir may also include the adjoining portions not delineated by drilling but which can be evaluated as economically productive on the basis of geological and engineering data available at the time the estimate is made. Therefore, the reserves reported should include total proved reserves which may be in either the drilled or the undrilled portions of the field or reservoir. Natural gas reserves take into account the shrinkage of the reservoir gas volume resulting from the removal of the liquefiable portions of the hydrocarbon gases and the reduction of volume due to the exclusion of non- hydrocarbon gases where they occur in sufficient quantity to render the gas unmarketable. The proved reserves estimated are to include all gas reserves regardless of size, availability of market, ulti- mate disposition or use. See “Reserves of Crude Oil, Natural Gas Liquids, and Natural Gas in the United States and Canada and United States Productive Capacity,” Volume 28, June 1974. The A-6 committee of its members to compile the gas reserve estimates for each area. Members of the subcommittees usually are employees of the gas producers, and each subcommittee member generally is assigned fields in which his employer is the major producer or has some other ownership interest.“ In May of 1969 the AGA for the first time reported a decline in the nation’s proved reserves, occurring in 1968. The reported decrease came on the heels of a Federal Power Commission (FPC) order instituting a proceeding to reconsider rates for the offshore portion of Southern Louisiana in light of the supply of gas reserves for that area.‘ The AGA report for 1969, issued first two paragraphs of this definition appear on page 103 of this publication, the third paragraph is derived from page 99, and the last paragraph is derived from pages 96 and 97. Essentially the concept of proved reserves is bottomed on the presence of enough technical data to ensure reasonably accurate measurement of a known reservoir. Even proved reserves are only estimates, however, and competent evalu- ators may produce slightly different figures based on different analyses of the geological data. See, e.g., Federal Power Com- mission Staff Report on the Updated 31 Lease Investigation, June 1976, at 16; Federal Power Commission Analysis of “Gas Reserve Estimation of Offshore Producible Shut-in Leases in the Gulf of Mexico,” May 1976, at 1-3. Gas producers may also denominate reserves as “speculative,” “possible,” “probable,” “recoverable,” or “ultimately recoverable“ —indicating the progression of knowledge as a field is developed—but there is no accepted use or definition of these terms by the industry. Only proved reserves are consistently defined, and only proved reserves are reported by the AGA. * App. III 537a-543a, 556a-558a. 41 F.P.C. 378 (Mar. 20, 1969). The FPC order mandated an investigation of “offshore gas supply and costs associated therewith.” Id. at 379; see further discussion infra at 12. In May of 1968 the Supreme Court had approved the FPC’s A-7 in May of 1970, revealed further declines in total re- serves for the United States and, this time, in Southern Louisiana reserves as well. The Southern Louisiana area is generally acknowledged to be the most important gas- producing area in the nation, accounting for approxi- mately one-third of our domestic natural gas production.* By letter of September 1, 1970 to Commissioner Me- Intyre of the FTC, Senator Philip A. Hart, chairman of, the Subcommittee on Antitrust and Monopoly of the Senate Judiciary Committee, stated that there were nu- merous allegations that natural gas producers were with- holding information on gas reserves in order to obtain higher rates from the FPC and recommended that the Commission conduct an investigation to determine whether any activities in violation of section 5 of the Federal Trade Commission Act had occurred.’ On October 13 the Secretary of the Commission replied that “in order that the possibility of collusion or other unlawful con- duct in this field may be more fully explored, we have today directed our staff to commence an investigation which will focus principally on the reporting, estima- functional use of price “as a tool to encoura i ge the production of appropriate supplies of natural gas.” Permian Basi Rate Cases, 390 U.S. 747, 796-98. 1 _* Mobil Oil Corp. v. FPC, 417 U.S. 283, 29 citing Southern Louisiana Rate Cases, 428 F.2d ph apes Cir. 1970). The area is defined by the FPC to include all parts of the state south of the thirty-first parallel, together with the offshore territory in the federal domain that would be bounded by Louisiana borders if Mexico. Id. if extended into the Gulf of Section 5 (a) (1) of the FTC Act, as amended. provi 40 5 : b 7 a that “Unfair methods of competition in or — — merce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.” 15 U.S.C. 8 45 (a) (1). A-8 tion, and deployment of reserves by the Natural Gas Industry in one selected area of the country.” ’ After informal investigative efforts proved inadequate, the Bureau of Competition determined that the issuance of subpoenas would be necessary and so advised the Com- mission. On June 3, 1971, the FTC issued a resolution directing the use of compulsory process in furtherance of a nonpublic investigation. The nature and scope of the investigation were stated 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 natu- ral gas, petroleum and petroleum products, and other fossil fuels in violation of Section 5 of the Federal Trade Commission Act.* During this period of the investigation the AGA co- operated with the FTC on a voluntary basis. Field-by- field estimates of each Southern Louisiana subcommittee member for the years 1966 through 1970 were made App. IX 1686a. Section 6(a) of the FTC Act, as amended, empowers the Commission To gather and compile information concerning, and to investigate from time to time the organization, busi- ness, conduct, practices, and management of any person, partnership, or corporation engaged in or whose busi- ness affects commerce, excepting banks and common carriers subject to the Act to regulate commerce, and its relation to other persons, partnerships and orporations. 15 U.S.C. § 46(a). o App. III 497a. A-9 available for the Commission’s inspection and analysis in October 1971. The FTC staff also obtained data from reports filed with the FPC pertaining to gas reserves in Southern Louisiana. These reports, known as Form 15 reports, are filed by interstate natural gas pipelines and list recoverable, saleable gas reserves committed to, collected by, or held by the reporting pipeline company. With information gained from these sources, as well as from numerous interviews and depositions, the FTC drafted a comprehensive subpoena duces tecum which was issued on November 24, 1971 to eleven natural gas producers.“ The FTC subpoena is premised on a thorough investi- gation of the producers’ estimation of gas reserves for the Southern Louisiana area, with a view towards com- parison of the various estimates used by producers in their internal procedures and business operations with those reported as proved estimates to the AGA. To sum- marize briefly, Specifications A through F of the sub- * Section 9 of the FTC Act, as amended, provides in perti- nent part: For the purposes of the [FTC Act] the Commission, or its duly authorized agent or agents, shall at all reasonable times have access to, for the purpose of examination, and the right to copy any documentary evidence of any per- son, partnership, or corporation being investigated or proceeded against; and the Commission shall have power to require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation. Any member of the Commission may sign subpoenas, and members and examiners of the Commission may admin- ister oaths and affirmations, examine witnesses, and re- ceive evidence. Such attendance of witnesses, and the production of such documentary evidence, may be required from any place in the United States, at any designated place of hearing. 15 U.S.C. § 49. A-10 poena demand background information such as the com- pany’s annual reports, subsidiaries, officers, customers, net production, and sales volume. Specification G re- quests documents and underlying data relating to all reserve estimates for the Southern Louisiana area made by the producers, both for internal purposes and for re- ports to the AGA, during the period 1962-1970. Specifi- cation H requires technical data concerning the location, operations, ownership interests, and drilling status of the fields and leaseholds for which estimates are provided pursuant to Specification G. Specification I seeks docu- ments commenting on or otherwise relating to the prep- aration of various reserve estimates, the procedures em- ployed therein, and the personnel involved. Specification I also requires, inter alia, documents relating to “lease nominations and bids, any agreements for joint or com- mon leasing, exploration, development, production, pur- chase or sale, or any cash flow or economic feasibility studies preparatory to leasing, exploring, developing, pur- chasing or selling, which involve Offshore South Louisi- ana acreage.“ Specification J requires various documents pertaining to reports of proved reserves to the AGA. Specification K asks for documents referring to any rela- tion between the reporting of proved reserves and the rates for natural gas permitted by the FPC. Finally, Specification L demands the names of all employees in- volved in the estimating and evaluating process, together with their areas of responsibility. All eleven gas producers filed motions to quash the subpoenas. On June 27, 1972, the Commission denied the motions. During subsequent negotiations between the Commission’s staff and the gas producers, the Commis- sion offered additional confidentiality protection for the information to be provided under Specifications G, H, and I;* as a result, two producers agreed to comply in * App. IV 625a, 643a. ——— ce ee Pet Mla — eee 1% 4 8 COS peat 2 ER mene ® — —ũe 2 A-11 full with the subpoenas and one producer agreed to com- ply in part. The remaining producers refused to comply. Accordingly, petitions for enforcement were filed in the district court on June 4, 1973.“ Shortly thereafter, one other firm agreed to comply. B. The FPC Proceeding Roughly concurrently with the FTC’s investigation, the Federal Power Commission was conducting a ratemaking proceeding for the Southern Louisiana area. Since this proceeding figures prominently in the arguments of the gas producers, it will be discussed at this point. The FPC began considering area rates for Southern Louisi- ana in the early 1960’s, (So La I), but a final decision was not rendered until 1968. Almost immediately, and while So La I was still under review by the Fifth Cir- cuit, the FPC instituted a new proceeding (So La II) to reconsider rates for the offshore portion of Southern 1 Section 9 of the FTC Act, as amended, provides in rele- vant part that .. . in case of disobedience to a subpoena the Commis- sion may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of documentary evidence. Any of the district courts of the United States within the jurisdiction of which such inquiry is carried on may, in case of contumacy or refusal to obey a subpoena issued to any person, partnership, or corporation issue an order requiring such person, partnership, or corporation to appear before the Commission, or to produce documentary evidence if so ordered, or to give evidence touching the matter in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. 15 U.S.C. § 49. 12 Area Rate Proceeding (Southern Louisiana), 40 F.P.C. 530 (Sept. 25, 1968), modified on rehearing, 41 F.P.C. 301 (Mar. 20, 1969), aff' d, Southern Louisiana Area Rate Cases, 428 F.2d 407 (5th Cir.), cert. denied, 400 U.S. 950 (1970). A-12 Louisiana;** a few months later, the Commission ex- panded the proceeding to include the entire area.“ The FPC was responding to numerous complaints that the supply-demand situation had changed significantly since the record in So La I was closed. The gas pro- ducers argued that present supplies were diminishing and that the rates established in So La I were inadequate to stimulate the development of new supplies. Various municipal distributors charged, however, that the pro- ducers were understating their reserves in reports to the AGA and were deliberately withholding natural gas. In December 1969 the FPC established procedures for the So La II proceeding and directed that a full evidentiary record be made on the reserve data question.” As part of a staff investigation into the accuracy of the AGA data, the FPC ordered producers to furnish data relating to “uncommitted” natural gas reserves in the Southern Louisiana area; these estimates were confirmed by a staff-supervised spot audit. From an analysis of the pertinent Form 15 reports, the results of the uncom- * 41 F. P. C. 378 (Mar. 20, 1969). 42 F. P. C. 1110 (Dec. 15, 1969). The FPC stated that evidence should be taken “with respect to the adequacy of gas supply and adequacy of service to consumers, the demand for gas, the cause of a gas shortage, if any, the effect of price on gas supply and demand, and other relevant economic evidence. .. 42 F.P.C. 1110, 1112 (Dec. 15, 1969). 43 F.P.C. 444, 445 (Mar. 17, 1970). The FPC already had data pertaining to gas reserves from Form 15 reports filed by pipelines. Form 15 applies only to reserves “com- mitted” or “dedicated” to interstate sale; thus, “uncommitted” reserves are unreported. The uncommitted reserves study was intended to supplement existing data in an effort to deter- mine if the trends reflected in Form 15 reports were an accurate cross-check of AGA reported reserves. See 46 F.P.C. 86, 113-114 (July 16, 1976). ——U—— 22 A-13 mitted reserves study, and testimony from AGA officials, the FPC staff concluded that the AGA data was re- liable. Following extensive evidentiary hearings before an administrative law judge, the record was certified to the entire Commission. The FPC issued its decision in So La II on July 16, 1971 (shortly after the FTC resolution authorizing com- pulsory process in its investigation). The Commission discussed in some detail both the staff’s investigation and the contentions of several intervenors that producers had underreported their reserves... The Commission con- cluded that the AGA reserve data was “reasonably re- liable for the [ratemaking] purposes used herein.” * C. Subsequent Litigation Pursuant to the FTC’s petitions for enforcement of the subpoenas against the seven companies still refusing to comply, the district court held hearings on July 30 and December 13, 1973, and considered extensive briefs and other evidentiary materials filed by the parties. The two orders at issue here were filed on March 22, 1974. One order deals with the subpoenas issued to appellees Texaco, Inc., Standard Oil Co. (Indiana), Standard Oil Co. of California, Mobil Oil Corp., Shell Oil Co., and „* Order and Opinion Determining Just and Reasonable Rates for Natural Gas Produced in the Southern Louisiana Area, 46 F.P.C. 86, 110-116 (July 16, 1971). 18 Jd. at 116. The Commission’s order was affirmed by the Fifth Circuit, Placid Oil v. FPC, 483 F.2d 880 (5th Cir. 1973), and the court of appeals subsequently was affirmed by the Supreme Court, Mobil Oil v. FPC, 417 U.S. 283 (1974). At the direction of Congress, the FPC began in 1971 a Na- tional Gas Reserves Study. The independent survey was con- ducted on a random sampling basis and produced estimates of gas reserves as of December 31, 1970. A staff report, pub- lished in May 1973, noted that the AGA total estimate was slightly higher than the NGRS total estimate. App. VI 1048a. A-14 Exxon Corp.; the other order pertains to the subpoena issued to Superior Oil Co., Inc. The orders granted in part and denied in part the FTC’s petitions. The exact basis for each modification made by the district judge is unclear. In the introductory paragraph of the first order, the court noted that the gas producers had contended “that the principles of primary jurisdic- tion and collateral estoppel preclude the Trade Com- mission from seeking the demanded documents or data for purposes of determining the validity or accuracy of natural gas reserve estimates, and. . . that certain demands of the subpoenas are irrelevant to any proper subject or area of investigation and are unduly broad and burdensome. . . .” Without specifically ruling on these arguments in relation to each demand in the sub- poenas, the court stated that: .. . being of the opinion that the Trade Commission is authorized to pursue the investigation to deter- mine whether there exists any evidence of conspir- acy in the reporting of proved natural gas reserve estimates to the American Gas Association by re- spondents, but that the subpoenas duces tecum are improper insofar as they seek data for the purposes of enabling the Trade Commission to attempt to determine natural gas reserves or the validity or accuracy of natural gas reserve estimates, matters already considered and ruled upon by the Federal Power Commission, and the Court being of the fur- ther opinion that the subpoenas are improper in other respects as well and should not be enforced as issued... .” In the first order the district court granted enforce- ment of Specifications A through F, dealing with back- ground data; these specifications were not really con- tested by the parties. For Specifications G, H, and I, production of documents was limited to the years 1969, 1970, and 1971 and to a random sample of 100 out of —ͤ * . A-15 approximately 225 offshore Southern Louisiana fields. Most importantly, production was limited to documents containing or underlying proved natural gas reserve es- timates; “raw field data, bid calculation data, and bid calculation files“ were specifically excluded. The court stated that all production pursuant to these three specifi- cations “shall be made for the sole purpose of permitting the Trade Commission to investigate whether there is a conspiracy in the reporting of natural gas proved re- serve estimates, and not for the purpose of permitting the Trade Commission to investigate or determine the amount of proved natural gas reserves.” In Specifica- tions J and K production was limited to documents re- lating to proved reserves in only those offshore fields which were included in reports for 1971 by the AGA subcommittee for Southern Louisiana, and to documents from 1966 through 1971 “which were exchanged between or among, or constitute, contain or refer to any agree- ment, arrangement or communication between or among, respondent or others, including the American Gas As- sociation”; production of intra-corporate documents was foreclosed. Specification L was limited to those employees who “acted with respect to proved natural gas estimates” for offshore Southern Louisiana during the period 1966 through 1971. For all specifications, the court granted the producer the option of producing the documents at the corporate office or field location where they were normally maintained, rather than at the FTC’s offices in Washington, D.C.; further, for documents furnished at a producer’s offices, the FTC was to bear any costs of. reproducing the documents. Finally, the court pro- vided further protection for any documents designated by the producer as confidential, ruling that, unless other- wise ordered by the court, such documents were to be held in the custody of the Commission’s Secretary, used only in the current investigation, inspected only by Com- mission employees assigned to the investigation, and re- A-16 turned to the producer at the completion of the in- vestigation. In the second order, relating to Superior, the district court enforced only Specifications A through F and R through L of the subpoena; Specifications G through J, requiring, inter alia, the production of reserve estimates, were quashed in their entirety. The same confidentiality protection accorded the other six producers also was granted to Superior. While no rationale was stated in the order, the different treatment for Superior apparently refiects an acceptance of Superior’s argument that be- cause it had never been a member of the AGA and had not furnished reserve estimates to the AGA, it could not be involved in any conspiracy to underreport reserves. On appeal, a panel of this Court affirmed the district judge’s orders, upholding all modifications of the sub- poena except the limitation to data from 1969-1971 in Specifications G, H, and I—the FTC’s demand for docu- ments from 1962-1971 was reinstated. The FTC pe- titioned for rehearing or rehearing en banc; on February 6, 1976 this court vacated the panel opinion and ordered the cases reheard en banc. II. CourT ENFORCEMENT OF ADMINISTRATIVE SUBPOENAS —THE APPLICABLE LEGAL PRINCIPLES The Supreme Court has made it clear that the court’s role in a proceeding to enforce an administrative sub- poena is a strictly limited one. The seminal case is Endicott Johnson v. Perkins, 317 U.S. 501 (1943). The Endicott Court held that, on application for enforcement of a subpoena issued by the Secretary of Labor in ad- ministrative proceedings against the petitioner under the Walsh-Healy Public Contracts Act, the district court lacked authority to determine whether the corporation’s activities were covered by the statute. Rather, the Court stated, since the evidence sought by the subpoena was A-17 not “plainly incompetent or irrelevant to any lawful purpose” of the Secretary, it was the district court’s duty to order its production for the Secretary’s consideration. Id. at 509. Shortly thereafter, in Oklahoma Press Pub- lishing Co. v. Walling, 327 U.S. 186 (1946), the Court applied the same principles to the enforcement of sub- poenas issued pursuant to an investigation under the Fair Labor Standards Act.“ Rejecting any power in the district court to adjudicate coverage, the Court ruled that so long as the investigation was for a lawfully authorized purpose, the documents sought were relevant to the inquiry, and the demand was reasonable, the Administrator had a right to judicial enforcement of the subpoenas. See id. at 209. Emphasizing the import- ance of the administrative mandate to search out viola- tions with a view to securing enforcement of the Act, the Court stated that while the Administrator may not act arbitrarily or in excess of his statutory authority, “this does not mean that his inquiry must be limited by forecasts of the probable result of the investigation’. ... Id. at 216, quoting Blair v. United States, 250 U.S. 273, 282 (1919). In a case dealing directly with the investigative powers of the Federal Trade Commission, United States v. Mor- ton Salt Co., 338 U.S. 632 (1950), the Court once again enunciated the standard: “. . . it is sufficient if the inquiry is within the authority of the agency, the de- mand is not toe indefinite and the information sought is reasonably relevant.” Jd. at 652. In upholding the Commission’s order requiring certain corporations to file special reports demonstrating continuing compliance with a cease and desist order, the Court distinguished the % Notably, the Fair Labor Standards Act incorporated sections 9 and 10 of the Federal Trade Commission Act for the purpose of any hearing or investigation. See 327 U.S. at 200, n.24. A-18 judicial process, which does not involve itself in so-called “fishing expeditions” to determine if violations of law have occurred, from the administrative function of in- vestigation : The only power that is involved here is the power to get information from those who best can give it and who are most interested in not doing so. Be- cause judicial power is reluctant if not unable to summon evidence until it is shown to be relevant to issues in litigation, it does not follow that an ad- ministrative agency charged with seeing that the laws are enforced may not have and exercise powers of original inquiry. It has a power of inquisition, if one chooses to call it that, which is not derived from the judicial function. It is more analogous to the Grand Jury, which does not depend on a case or controversy for power to get evidence but can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not. When investigative and accusatory duties are delegated by statute to an administrative body, it, too, may take steps to inform itself as to whether there is probable violation of the law. Id. at 642-43. Thus, while the court’s function is “neither minor nor ministerial,” Oklahoma Press Publishing Co. v. Walling, 327 U.S. at 217 n. 57, the scope of issues which may be litigated in an enforcement proceeding must be nar- row, because of the important governmental interest in the expeditious investigation of possible unlawful ac- tivity. As the Ninth Circuit has noted, the “very back- bone of an administrative agency’s effectiveness in car- rying out the congressionally mandated duties of in- dustry regulation is the rapid exercise of the power to investigate. FMC v. Port of Seattle, 521 F.2d 431, 433 (9th Cir. 1975). 20 The principles set down by the Supreme Court have been uniformly followed by the circuit courts of appeals. See, e.g., — * A-19 III. THE ISSUES With these standards in mind, we turn to the issues at hand. The FTC’s allegations of error in the district court’s modifications of the subpoenas, and the producers’ arguments in response, focus on four general areas: 1) limitations apparently grounded on relevance, 2) appli- cation of some form of collateral estoppel to preclude certain aspects of the FTC’s investigation, 3) limitations premised on burdensomeness, and 4) conditions on use and possible disclosure of the documents.” A. Relevance Determinations 1. Limitation to Documents Relating to Proved Reserve Estimates The gas producers contend that the district court properly limited production to those documents relating to United States v. Litton Industries, 462 F.2d 14, 16 (9th Cir. 1972) ; Genuine Parts v. FTC, 445 F.2d 1382, 1391 (5th Cir. 1971) ; FTC v. Browning, 435 F.2d 96, 102 (D.C. Cir. 1970); SEC v. Wall Street Transcript Co., 422 F.2d 1871, 1875 (2d Cir.) ; cert. denied, 398 U.S. 958 (1970); Adams v. FTC, 296 F.2d 861, 866 (8th Cir. 1961), cert. denied, 369 U.S. 864 (1962). 21 On the initial appeal to this court, Standard Oil of Cali- fornia maintained that the district court’s first order is not a final decision under 28 U.S.C. § 1291 and therefore is not ap- pealable. This argument was rejected in the panel decision, and Standard Oil has not pressed it on rehearing en banc. We nonetheless note that it is settled that an order of a district court granting or denying an agency’s petition for enforce- ment of a subpoena is final and appealable. Ellis v. ICC, 237 U.S. 434, 442 (1915); Int'l Brotherhood of Electrical Work- ers v. EEOC, 398 F.2d 248, 251 (3d Cir. 1968), cert. denied, 393 U.S. 1021 (1969). The district court’s retention of jur- isdiction for possible further relief after the documents were produced does not defeat finality. See FTC v. Feldman, 532 F.2d 1092, 1098 (1976). A-20 proved reserves on grounds of relevance.“ They argue that because the FTC’s investigation is targeted on a conspiracy to underreport reserves to the AGA, and only proved reserves are reported to the AGA, only proved reserves can be relevant to the inquiry. The FTC, on the other hand, maintains that its investigation cannot be so circumscribed, and that all reserve estimates made by the producers, both for various internal business purposes and for reports to the AGA, and however de- nominated, are relevant to assess whether violations of section 5 of the Federal Trade Commission Act have taken place. In resolving this controversy, we must determine whether the district judge’s limitation comports with the standard of “reasonable relevance.“ Where, as 22 As previously discussed, the district judge did not con- cretely state the reasons for the limitation to proved reserves in his order. During the hearings, however, the district judge appeared to accept the producers’ arguments that only proved reserves are relevant. App. II 398a-402a, 43la, 439a-443a. The limitation to proved reserves was also premised in part on an application of collateral estoppel. See discussion infra at 38. 28 This standard was urged by the FTC in its first brief on appeal. FTC’s Brief at 16. In its supplementary brief the FTC argues that the pertinent inquiry is whether the re- quested material is “plainly irrelevant” to the investigation. Supp. Brief at 5, 31. The “plainly irrelevant” language is derived, of course, from the Supreme Court’s statement in Endicott Johnson that the evidence sought by the subpoena was not “plainly in- competent or irrelevant” to any lawful purpose of the Secre- tary. 317 U.S. at 509. The issue before the Endicott Court was the authority of the district court to decide the ques- tion of statutory coverage; the appropriate standard of rele- vance was not directly addressed. In Oklahoma Press and Morton Salt, decided after Endicott, the Court spoke of infor- mation “relevant” and “reasonably relevant,” respectively, to the inquiry. 327 U.S. at 209; 338 U.S. at 652. More re- eee —— eS — — oe —— — 2 — ——— —— — : 2 —— — Perot +t A-21 here, no complaint has yet been formulated and the issues have therefore not yet been crystallized, some courts have concluded that an attenuated standard of relevance is appropriate.“ In our view, however, the better ap- proach is simly to recognize that in the pre-complaint stage, an investigating agency is under no obligation to propound a narrowly focused theory of a possible fu- ture case. Accordingly, the relevance of the agency’s subpoena requests may be measured only against the cently, the Court has stated that, for enforcement of an In- ternal Revenue Service summons for records, the Commis- sioner must demonstrate, inter alia, that the inquiry “may be relevant” to a legitimate purpose. United States v. Powell, 379 U.S. 48, 57 (1964). And in See v. City of Seattle, 387 U.S. 541 (1967), the Court noted, citing Morton Salt and Oklahoma Press, that when an administrative agency sub- poenas corporate books or records, the subpoena must be “sufficiently limited in scope, relevant in purpose, and spe- cific in directive so that compliance will not be unreasonably burdensome.” Id. at 544. While some courts of appeal have employed a “clearly” irrelevant standard in enforcement proceedings, see, e. g., FTC v. Feldman, 532 F.2d 1092, 1098 (1976) ; FTC v. Stand- ard American, Inc., 306 F.2d 231, 235 (3d Cir. 1962), most have utilized the “reasonably relevant” language of Morton Salt. See cases cited at 24, n. 20. In Moore Business Forms v. FTC, 307 F.2d 188 (D.C. Cir. 1962), a panel of this court stated it could not say that the subpoenaed information was “plainly irrelevant” to the charges in the complaint. Jd. at 189. Another panel of this court, however, has recited the “rea- sonably relevant” language. FTC v. Browning, supra n. 20, 435 F.2d at 102. Without deciding whether a “plainly irrelevant” standard actually is indicative of a more limited power of review, it suffices to dispose of this case that the material sought by the FTC is “reasonably relevant” to a permissible FTC pur- pose. See, e.g., Westside Ford v. United States, 206 F.2d 627, 632 (9th Cir. 1953); FTC v. Green, 252 F. Supp. 153, 156 (S.D.N.Y. 1966). A-22 general purposes of its investigation. The district court is not free to speculate about the possible charges that might be included in a future complaint, and then to determine the relevance of the subpoena requests by ref- erence to those hypothetical charges. The court must not lose sight of the fact that the agency is merely ex- ercising its legitimate right to determine the facts, and that a complaint may not, and need not, ever issue.“ Under this frame of reference, the district court’s de- termination that only proved reserve estimates are rele- vant cannot withstand scrutiny. The relevance of the material sought by the FTC must be measured against the scope and purpose of the FTC’s investigation, as set forth in the Commission’s resolution.“ Here, however, the gas producers have posited—and the district court has apparently accepted—an erroneous interpretation of the scope of the FTC’s inquiry, and they have then sought to limit the investigation to the confines of this dis- torted interpretation. There is no merit to the producers’ 25In Oklahoma Press, the Court emphasized that the pur- pose of the subpoena was “to discover and procure evidence, not to prove a pending charge or complaint, but upon which to make one if, in the Administrator’s judgment, the facts thus discovered should justify doing so.” 327 U.S. at 201. And in Morton Salt the Court stated that [e] ven if one were to regard the information in this case as caused by nothing more than official curiosity, nevertheless law-enforcing agen- cies have a legitimate right to satisfy themselves that cor- porate behavior is consistent with the law and the public interest.” 338 U.S. at 652. 20 Supra, p. 8. While the language of the resolution is broad, resolutions of this sort are not uncommon in the in- vestigative process, and the agency was not required to artic- ulate its purpose with greater specificity. See, e.g., FTC v. Feldman, supra n. 23, 532 F.2d at 1093; FTC v. Standard American, Inc., supra n. 23, 306 F.2d at 233-34; Westside Ford v. United States, supra n. 24, 206 F.2d at 630-31; FTC v. Green, supra n. 24, 252 F. Supp. at 154-56. — —U— — —— ——2— 2 — hh ante eee ae ee OO REA ARI h A-23 contention that the FTC is only investigating possible underreporting of proved reserves to the AGA. The FTC’s resolution does not even mention either the AGA or proved reserves; further, in addition to “conduct in the reporting of natural gas reserves,” the resolution obvi- ously incorporates a broad range of activities “relating to the exploration and development, production, or mar- keting of natural gas. Although the FTC has never denied that reporting to the AGA is one aspect of its inquiry, it has repeatedly stated that its investi- gation cannot be so narrowly defined.“ Basically, the gas producers would have us believe that all the FTC has in mind is a recomputation of proved reserve estimates submitted to the AGA. On the con- trary, the authorized inquiry envisions an examination of all phases of the estimating process. In particular, the FTC seeks to compare estimates prepared for various business purposes with those reported to the AGA. As Specification G of the subpoena indicates, producers may make reserve estimates in connection with bidding on or nominating leases; deciding whether or not to erect permanent platforms; compiling or inventorying total company reserves or supply; negotiating or contracting for the sale of natural gas, or for the joint or common exploration, development, production, purchase, or sale of acreage; obtaining bank loans; or filing depreciation expense schedules with the Internal Revenue Service. While some of these estimates may be labeled proved, some may not. Producers also may refer to certain re- serve estimates as, inter alia, speculative, possible, or = depending on the stage of development of the eld. In order to asses whether proved reserve figures ac- curately reflect economic reality, reserve estimates with pe foe Reply Brief at 304; FTC Supp. Brief at 32-34, TR. a , A-24 other labels may be important; the same or substantially similar underlying data may give rise to distinctly de- nominated reserve estimates. In other words, the FTC may fairly inquire whether the companies, through the use of an excessively restrictive approach, have ex- cluded awareness of certain realistic and reliable es- timates which are taken into account in making signifi- cant business decisions but which are not labeled “proved” and are therefore not included in the AGA reports. As counsel for the FTC stated to the district judge, in ex- plaining the relevance of the requested data, This is relevant in determining whether AGA re- serves reflect economic realities. Remember, those reserves are based on a definition of what constitutes a proved reserve but it may be that an examination of the company’s practices in the way it computes its reserves would show that the AGA reserve defini- tions are too restrictive, that in fact the companies themselves by their own conduct show that their reserves are more than what they would report to the AGA as proved reserves, or given a top and down estimate they may pick within a wide range, they may pick a top estimate for purposes where it serves their purposes, and a low estimate for other purposes where it serves their purpose. App. II 368a-369a. Thus, even if the FTC were investigating only the reporting of proved reserves (and we conclude that the inquiry is not so narrow), the analysis would certainly not be limited to whether the gas producers have ac- curately calculated their proved reserves. It is possible that such calculations are entirely in accord with the AGA’s definition of proved reserves, but that, in light of other estimates considered significant by the producers, this definition has an anti-competitive effect. The agree- ment of the producers, with each other and with and through the AGA, to use such a restrictive definition as ln A-25 the exclusive method of projecting the Industry’s posi- tion may have the effect—and, indeed, the purpose— of raising prices through its impact on purchasers and and government. The FTC’s investigation is for the purpose of enabling it to determine whether the com- panies’ practices constitute an “unfair method of eompe- tition.” An unfair method of competition may result from concerted action even though there is no conspiracy by the dark of the moon. And as Morton Salt noted, the FTC may investigate either to develop the existence of a vio- lation or to assure itself that none exists. 338 U.S. at 652. — It is thus clear that the development and reporting of estimates at various stages of the investment and develop- ment process is reasonably relevant to the FTC’s purpose. We therefore hold that the district judge’s limitation of enforcement of the subpoena to only proved reserve esti- mates was erroneous.” > * rd California on Rehearing En Banc (filed 15 April 292 8 “1 Affidavit of L. A. Swanson, A IX Corp.), App. XI at 205g. 6G. f Mobil on See our discussion of “purpose” in section IV- A supra. A-131 porting, * the District Court was eminently fair and reasonable (1) in limiting the disclosures required under the FTC’s subpoena to those documents relating to the reporting of proved reserves and (2) in not permitting the use of any such documents to reinvestigate or re- determine the amount of proved gas reserves in Southern Louisiana. By no stretch of the imagination can either of these limitations be characterized as an abuse of dis- cretion. On burdensomeness issues, the majority opinion recog- nizes the “abuse of discretion” standard (there’s too much binding authority on this point), but attempts to escape from the teeth of the abuse of discretion standard by arguing that the District Court’s determinations of burden were intimately tied to and colored by improper applications of collateral estoppel and relevance. There- fore, says the majority, we shall review these modifica- tions for “mere error.” * The majority cannot escape their obligatory standard so easily. In trying to do so, they have confused the overlap of some facts basic to more than one legal theory with an overlap of the legal theories themselves. Of course there is some overlap in the factual founda- tions underlying burdensomeness and collateral estoppel; to some extent both grounds rely upon the finding of fact discussed in Section II supra. (However, the third ground affirmance—relevance—is entirely independent of col- lateral estoppel and burden, both in terms of legal theory and underlying factual foundation.) Notwithstanding 119 As we demonstrated in Part II supra, the District Court’s factual determination that, for the years covered by the FTC’s subpoena, the Federal Power Commission had al- ready (1) determined natural gas reserves and (2) considered and ruled upon the validity and accuracy of such reserves, was soundly based on evidence in the record. 120 See Maj. Op. at 37-39. A-132 the overlap between FACTUAL foundations, burdensome- ness and collateral estoppel are independent LEGAL grounds for affirming the District Court’s “use” restric- tion. Similarly, burdensomeness and relevance are inde- pendent legal grounds for affirming the District Court’s PROVED reserve limitation. Each of these grounds would be sufficient without the others. Accordingly, there is no way, as the majority opinion puts it, that the District Court’s views on collateral estoppel and relevance could have somehow “infected” its determinations based on burden. Even if the legal theories of collateral estoppel and relevance had never been raised by appellee’s counsel or ever thought of by the District Court, the major modi- fications of the court’s order would be fully sustainable on burdensomeness grounds alone. There can be no question that the Trade issi has jurisdiction to determine whether the are or the FTCA has been violated. However, the District Court was entitled to conclude on the present record (1) that the Trade Commission desired all reserve data in the possession of appellees in order to recompute inde- pendently Southern Louisiana reserves, and (2) that the Power Commission, on the basis of a contested evidentiary hearing, had found that the industry’s figures for South- ern Louisiana reserves for the relevant years were ac- curate. Based on these findings, the District Court could reasonably have concluded that it would be unjust, un- reasonable, and unduly burdensome to require the pro- duction of every scrap of data which related to — of any kind. By limiting production to “documents con- taining or underlying proved natural gas reserve esti- mates” and by restricting the use of these documents to the sole purpose of permitting the Trade Commission to investigate whether there is a conspiracy in the report- ing of natural gas proved reserve estimates,” the court drew a reasonable balance between the investigatory A-133 needs of the Trade Commission and the producers’ bur- densomeness claims. Similarly, through its “use” restric- tion the court struck an equally reasonable balance be- tween the investigatory needs of the FTC and the pro- ducers’ collateral estoppel claims. The majority opinion has not only managed to confuse overlapping facts with overlapping law, in their effort to escape applying the abuse of discretion standard, but the opinion manages to confuse in which forum a burden of proof concept is applicable. The majority claims that t jhe burden of showing that the request is unreason- able is on the subpoenaed party.“ Of course it is— but in the District Court! On appeal we as an appellate court review the issue of burdensomeness with an abuse of discretion standard. Why the majority falls into this error is obvious. From the start, and continuing throughout, the majority opin- ion proceeds as if this court were reviewing directly an administrative agency decision.“ The majority ignores the intervening action of the District Court in modifying and enforcing the administrative subpoenas, which under the law requires us to review the action of the District Court—not the FTC—under certain well defined stand- ards. Having ignored the District Court and cast them- selves in that role, the majority unwittingly adopt a standard fitting for—and applied by—the District Court. A very revealing error. An error which goes a long way to support the Trade Commission’s effort to eliminate effective judicial review of administrative subpoenas.” Having stated, from the standpoint of burdensomeness, our position on the District Court’s two most important modifications, approving the court’s other minor modifica- 121 Maj. Op. at 39. 122 See our discussion under Part I.B. supra, pp. 8-10. 128 Part III supra, pp. 20-25. A-134 tions becomes almost an a fortiori exercise. Consequently, we will forego any detailed analysis of these modifications, and comment on them only very briefly in section VII. infra. VI. COLLATERAL ESTOPPEL We turn now to an analysis of the third independent ground supporting the District Court’s order—collateral estoppel. Initially, it is important to understand that appellees have never sought, and the District Court did not issue, an order halting the FTC’s inquiry in this proceeding. As stated in their initial brief to this court, “Respondents do not contend that the FTC has no au- thority to investigate the allegation of collusive report- ing or fabrication of reserve estimates.“ Appellees do contend that under the principles of collateral estoppel, and alternatively, in order to prevent the imposition of an unfair burden of compliance, the FTC should not be permitted to redo for a third time what has already been done by another equally competent agency of the federal government.“ Having already concluded in Section II supra that the District Court’s factual determination that the FPC had already (1) determined natural gas reserves and (2) considered and ruled upon the validity and accuracy of such reserves was correct (indeed, implicitly assumed by the majority opinion), we focus now on the question of law confronting the District Court after it made this important finding of fact: Under the circumstances of this case, is it appropriate to give this finding of fact collateral estoppel effect? Joint Brief fer Appellees Texaco, Inc., Standard Oil Co. (Indiana), Shell Oi Co., and Exxon Corp. (filed 5 Nov. 1974), at 3 (emphasis in original). 128 See note 18 supra. A-135 The Supreme Court and this court have clearly stated that an agency or a private party can be collaterally estopped in a later court proceeding if a relevant factual issue has already been resolved in a contested hearing before the agency.“ The Supreme Court recently af- firmed this principle in United States v. Utah Construc- tion Co.: Occasionally courts have used language to the effect that res judicata principles do not apply to admin- istrative proceedings, but such language is certainly too broad. When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose. Sunshine Coal Co. v. Adkins, 310 U.S. 381; Hanover Bank v. United States, 152 Ct.Cl. 391, 285 F.2d 455, Fairmont Aluminum Co. v. Commissioner, 222 F.2d 622; Seatrain Lines, Inc. v. Pennsylvania R. Co., 207 F.2d 255. See also Goldstein v. Doft, 236 F.Supp. 730, aff'd 353 F.2d 484, cert. denied, 383 U.S. 960, where collateral estoppel was applied to prevent relitigation of factual disputes resolved by an arbi- trator.’ 126 [nited States v. Utah Construction Co., 384 U.S. 394, 421-422 (1966) ; Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381 (1940); Pacific Seafarers, Inc. v. Pacific Far E. Line, Inc., 404 F.2d 804, 809 (D.C. Cir. 1968), cert. denied, 393 U.S. 1093 (1969) (“Principles of collateral estoppel may properly be applied in administrative cases.”) accord, Fair- mont Aluminum Co. v. Commissioner, 222 F.2d 622, 627 (4th Cir.), cert. denied, 350 U.S. 838 (1955); Tampa Phosphate R. K. v. Seaboard Coast Line R. R., 418 F.2d 387, 399 (5th Cir. 1969), cert. denied, 397 U.S. 910 (1970) ; International Wire v. Local 38, Int’i Bhd. of Elec. Workers, 357 F.Supp. 1018 (N.D.Ohio 1972), aff d, 475 F.2d 1078 (6th Cir.), cert. denied, 414 U.S. 867 (1973). 187 384 U.S. at 421-22. A-136 The Supreme Court has also held that collateral estoppel can be applied when the prior proceeding involved a different government agency because, for collateral estop- pel purposes, agencies of the same government are in privity with one another: Where the issues in separate suits are the same, the fact that the parties are not precisely identical is not necessarily fatal. As stated in Chicago, R. I. & P. Ry. Co. v. Schendel, 270 U.S. 611, 620 “Identity of parties is not a mere matter of form, but of sub- stance. Parties nominally the same may be, in legal effect, different, . and parties nominally different may be, in legal effect, the same.” A judgment is res judicata in a second action upon the same claim be- tween the same parties or those in privity with them. Cromwell v. County of Sac, 94 U.S. 351. There is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in relitigation of the same issue between that party and another officer of the government. Other Circuits have applied both these principles in appropriate cases. The Eighth Circuit in George H. Lee, Co. v. FTC” has held that the FTC was collaterally #8 Sunshine Anthracite Coal Co. v. Adkins, supra, 310 U.S. at 402-03. See also French v. Rishell, 40 Cal.2d 477, 254 P.2d 26 (1953) (en banc). Another requirement for the application of collateral es- toppel is that [tj he determination made of the issue in the prior action must have been necessary and essential to the resulting judgment.” 1B J. MooRE, FEDERAL PRACTICE ] 0.443[1] (2d ed. 1974). Apparently acknowledging that a determination of the validity and accuracy of AGA proved reserve estimates was necessary and essential to the FPC’s — task, the FTC does not argue this issue in this appeal. 113 F. 2d 583 (8th Cir. 1940). A-137 estopped from claiming use of unfair methods of com- petition where the claim was based on factual issues re- solved favorably for defendants in a prior proceeding instituted under the Food and Drug Act. Reciprocally, the Seventh Circuit in United States v. Willard Tablet Co. upheld the defense of collateral estoppel in a pro- ceeding under the Food and Drug Act where a prior pro- ceding before the FTC held that defendant’s labeling claims were not deceptive. More recently, in Safir v. Gibson ™ the Second Circuit held that the Maritime Ad- ministration, an agency within the Department of Com- merce, was estopped from re-investigating and redeter- mining an issue previously decided by the Federal Mari- time Administration. In Safir the Second Circuit gave collateral estoppel effect to the FMC’s prior determination that the rates of a conference of water common carriers were unjustly discriminatory and unfair to plaintiff Safir’s company. Writing for the court, Judge Friendly explained, . . . While the issues here may not have been purely factual, they were fully litigated before the agency designated to determine them.. . The Restatement of Judgements, § 70, says that even determinations of questions of law are conclusive between the par- ties on a different cause of action unless injustice would result. It is the FMC, not the Maritime Administration, that has the expertise to pass on whether rates are unfair or unduly discriminatory, . . . and it would be quite unseemly for the Maritime Administration to conclude that its sister agency had been wrong on a fully litigated issue the decision of which Con- gress had confided to it.... 130 141 F.2d 141 (7th Cir. 1944). 181 432 F.2d 187 (2d Cir. 1970), cert. denied, 400 U.S. 942 (1970). A-138 We recognize there is a general rule against judi- cial interference with administrative proceedings prior to the issuance of a final order. . . . Never- theless we believe. it appropriate for us to direct conformity with our views on the preclusive effect of the FMC decision here and now. . [T]he reason for applying res judicata to administrative agencies is not only to “enforce repose” but also to protect a successful party from being vexed with needlessly duplicitous proceedings. . If the latter interest is not protected at the outset of the second proceeding, it will be lost irreparabl ) We conclude that the Trade Commission is now in the same position as the Maritime Administration was in Safir, as the United States was in Willard Tablet, and as the FTC itself was in George H. Lee. Regardless of the general applicability of res judicata and collateral estoppel principles between administrative adjudications involving different agencies, on the facts of this case application of the doctrine of collateral estop- pel is particularly warranted. The Power Commission is the federal agency with special technical and scientific expertise on factual issues involving the oil and gas in- dustry (¢.g., the accuracy of AGA proved reserve esti- mates), and as such its findings of fact on oil and gas matters are entitled to the respect of other government agencies. The Trade Commission knew of the Power Commission’s adjudicatory proceeding in So La II when it initiated its own investigation into gas reserve report- ing and could have intervened in the Power Commission’s ongoing investigation. This way, perhaps the Trade Com- mission could have avoided the charge leveled so per- suasively by the producers in the District Court—that some of the documents called for under the Trade Com- mission's subpoena were sought for the sole purpose of 182 Jd. at 148 (citations omitted). A-139 collaterally attacking a Power Commission finding of fact on an oil and gas matter. The District Court, although it found the producers’ charge to be perfectly valid, decided not to restrict pro- duction to only those documents which could never be used to attack collaterally the FPC’s prior finding. In- stead, the court took the less restrictive approach of plac- ing the following “use” restriction on all data produced pursuant to specifications G, H, and I: All production... shall be made for the sole pur- pose of permitting the Trade Commission to investi- gate whether there is a conspiracy in the reporting of natural gas proved reserve estimates, and not for the purpose of permitting the Trade Commission to investigate or determine the amount of proved natural gas reserves.“ Thus, even though some data containing or underlying proved reserves, and ordered to be produced by the court, could conceivably be used by the Trade Commission in a collateral attack on the Power Commission’s reserve es- timates finding, this “use” was strictly proscribed by the court’s order. It is this “use” restriction, soundly based on either collateral estoppel or burdensomeness grounds, which the Trade Commission attacks so vigorously in this appeal. Having briefly explained why it is appropriate to give the Power Commission's reserve estimates finding col- lateral estoppel effect, we now direct our attention to the reasons which the FTC and a majority of this court give for reaching an opposite result. Generally, they conclude that the doctrine of collateral estoppel has no applica- bility here because (1) it is inappropriate to consider 188 Six-Company Order, App. IV at 807a (J 2. (d)). For a similar “use” restriction formulated in another investigative subpoena enforcement proceeding, see Lynn v. Biderman, 586 F.2d 820 (9th Cir. 1976). A-140 the issue of collateral estoppel at the subpoena enforce- ment stage of an investigatory proceeding, (2) the Power Commission’s reserve estimates finding was made in the context of a quasi-judicial ratemaking proceeding, and (3) the Power Commission found the AGA reserve fig- ures “reasonably reliable” for ratemaking purposes only. To our mind, none of these reasons are valid or should preclude application of administrative collateral estoppel. A. The Appropriateness of Considering the Issue of Collateral Estoppel in this Subpoena Enforcement Proceeding The issue of collateral estoppel is not an issue on the merits that must be deferred until an administrative complaint has issued; far from it, deferring considera- tion does violence to the sound policy justifications un- derlying the doctrine. Thus collateral estoppel is ap- propriately at issue in this enforcement proceeding. As the Trade Commission itself recognizes, “Collateral estop- pel is now seen as an immensely practical doctrine, rooted in considerations of fairness and the public policy favoring finality in litigation.” These fairness and public policy considerations, including “. . . finality to litigation, prevention of needless litigation, [and] avoid- ance of unnecessary burdens of time and expense[,] are as relevant to the administrative process as to the ju- dicial.” **° One important consideration which argues for applying collateral estoppel at this stage of the instant proceeding Supplemental Brief for Appellant on Rehearing En Banc (filed 31 March 1976) at 10. 10% A. Duda & Sons Cooperative Ass’n v. United States, 495 F.2d 193, 197 (5th Cir. 1974), quoting from Painters Dist. Council No. 38, Bhd. of Painters, Decorators and Paper- | hangers v. Edgewood Contracting Co., 416 F.2d 1081 (5th Cir. 1969). A-141 is the need for a consistent and final determination of a — oil and gas issue by the expert agency in the oil and gas field. Early consideration of the issue — sures that judieial and administrative resources, as — as the resources of the litigants, will not be wasted need- lessly. In addition, the Trade Commission s inquiry into alleged underreporting of reserves 1s neither stymied — prohibited by the District Court’s “use restriction. e only restriction is that the Trade Commission must ac- cept the Power Commission’s factual finding with re- spect to the reliability and accuracy of AGA proved re- served estimates. No administrative agency, including the Trade Commission, has carte blanche authority to re- investigate and relitigate a factual issue simply — it disagrees with another agency’s finding. The collater estoppel doctrine serves the essential purpose of pro- tecting the agencies, the courts, and the parties from such unnecessary and wasteful expenditures of time and money. Endicott Johnson Corp. v. Perkins, Oklahoma Press Publishing Co. v. Walling and other cases refusing to consider at the investigative stage certain defenses which should be raised on the merits against a formal com- plaint, illustrate the generally-accepted principle that courts should not interrupt the administrative process except under exceptional and ne rrowly-defined circum- stances. . , rt Collateral estoppel, as applied by the District Court, is easily distinguishable from the jurisdiction and statu- tory coverage questions dealt with in Endicott Johnson, Oklahoma Press and their progeny.™ 1 317 U.S. 501 (1943). 137 327 U.S. 186 (1946). 138 h as FMC v. Port of Seattle, 521 F.2d 431 (9th Cir. 998)? SEC v. Savage, 513 F.2d 188 (7th Cir. 1975); SEC A-142 First, in this case the main poucy goal behind non- intervention has been fulfilled; the expert agency in the oil and gas field (the Power Commission) was allowed initially to apply its expertise and make the factual de- termination on which ultimate decisions will later be based. Second, in contrast to the Endicott Johnson line of cases, here the District Court’s limited application of collateral estoppel would not preclude the Trade Com- mission from exercising its full statutory and jurisdic- tional authority in pursuing its investigation of possible Section 5 violations. The District Court here did not intrude on the jurisdiction of the Trade Commission or decide a jurisdictional question of statutory coverage. This simply is not an ENDICOTT JOHNSON-type case. Endicott itself dealt not with the issue of collateral estoppel, but with the question of whether the Secretary of Labor could subpvena data for the purpose of de- v. Brigadoon Distrib. Co., 480 F.2d 1047 (2d Cir. 1973), cert. denied, 415 U.S. 915 (1974); FTC v. Gibson, 460 F.2d 605 (5th Cir.). % This, as the Supreme Court recognized in Oklahoma Press, was the gravamen in both Endicott Johnson and Okla- homa Press: [I]n the Endicott Johnson case [we] hold that under the Walsh-Healy Act . . the district court was not au- thorized to decide the question of coverage or, on the basis of its adverse decision, to deny enforcement to the Secretary’s subpoena seeking relevant evidence on that question, because Congress had committed its initial de- termination to [the Secretary] .... We think. . that Congress has authorized the Ad- ministrator, rather than the district courts in the first instance, to determine the question of coverage in the — investigation of possibly existing viola- ae 827 U.S. at 211 & 214. A-143 a — red by (ie., termining if a company’s activities were cove within the jurisdiction of) the Walsh-Healy Act. 1 — ing enforcement of the Secretary s subpoena. — ve had the effect of preventing a determination of —— age issued by the very person (the Secretary) authoriz inate Specifically, by the statute to make that determination. the Walsh-Healy Act directed the Secretary to make , , hich . . . findings of fact after notice and hearing, w findings shall be conclusive upon all agencies of the United States, and if supported by the 1 of the evidence, shall be conclusive in any court 0 the United States; and the Secretary of Labor . a shall have the power, and is hereby authorized, make such decisions, based upon findings of fact, as are deemed to be necessary to enforce the provisions of this Act.“ i i found ith this lan in mind, the Supreme Court pee , . — oy ol statute determination of [the cover age] issue was primarily the duty of the Secretary . . . and not the district court.*” we have no such statutory authorization; the 8 Trade Commission Act clearly does not make the estimation of natural gas reserves primarily the duty of the Trade Commission and cut out the Power Com- mission; nor does it make the Trade Commission s find- ings of fact on oil and gas matters “conclusive upon all agencies of the United States” (i.e., upon the Power Commission). Quite to the contrary, the conceded expert on all technical aspects of the oil and gas industry is the 1% Endicott Johnson Corp. v. Perkins, 317 U.S. at 503 (quoting from Walsh-Healy Act § 5). 141 Id. at 507. 142 Id. A-144 Power Commission, not the Trade Commission. In So ) La II the information necessary to reach a determination > the gas supply question was placed before the Power mmission, the agency most qualified to make such a determination, and that agency made specific findings of fact based on a lengthy (over 30,000 pages) and , sh 14 1 4 findings are now fully available as à matter of law and — — abe un The Second Circuit’s opinion in Safir stror our position. There, in concluding — — — was applicable to an administrative proceeding at ‘the investigative stage, Judge Friendly pointed out that the concepts of collateral estoppel and res judicata differ from —— — a like Endicott Johnson and Okla- homa , where the pas te oe Be 3 contended that the (T]he reason for applying res judi i — agencies is ab to a my but * proteet a successful party from being vexed — needlessly duplicitous proceedings. . If the — interest is not protected at the outset of the — d proceeding, it will be lost irreparably n this respect, a claim of res judicata differs from But even if the determination of th i = -_ yy the duty of the FPC, the Trade Hcg — — ou d still be estopped from re- investigating and re- —1 ry (i. e., collaterally attacking) the prior findings of — A 2 A not more) competent sister agency. seed eee 0 is case, application of collateral estoppel — Age upon a primary jurisdiction-like policy. Indeed + gpa e could hold that the reserves question fell within ee Ogee on —— pee * 7 FPC (and correspondingly ma urisdiction of the would probably need to await an initial A Rte: J ‘a j onal question by the FTC. See Safir v. Gibson, 432 F.2d at 144; ef. Endi Aa f. Endicott Johnson Corp. v. Perkins, 317 A-145 a claim that an administrative agency has no juris- diction over the subject matter of the investigation an issue which Congress meant to be decided in the first instance by the agency itself.“ In accusing the writers of this dissent and the District Court of (1) attempting to discern the shape of the merits, (2) trying to divine all possible issues that could arise in the course of an FTC investigation, (3) attempt- ing to forecast the ultimate conclusion of the FTC’s proposed investigation, and (4) generally putting our cart before our horse, the Trade Commission and our colleagues repeatedly overlook the difference between res judicata and collateral estoppel, i. e., the difference between claim preclusion and issue preclusion. When this difference is understeod it becomes apparent how both we and the District Court are able to apply the doctrine of collateral estoppel to the facts of this case without so much as a passing glance into our crystal ball. The FTC is fully aware of the difference between issue and claim preclusion, and it has even had occasion to admonish parties appearing before it that lateral estoppel preeludes the redetermination of factual issues while res judicata forecloses entire claims or ultimate issues: _ . Strictly speaking the doctrine of res judicata refers to the merger or bar of a subsequent action based on the same cause of action as opposed to the doctrine of collateral estoppel under which the de- termination of a question of fact essential to a judg- ment is conclusive between the parties (and their privies) in a subsequent action on a different cause of action.“ 144 432 F.2d at 143-44 (citations omitted) (emphasis added). 1 Dollar Vitamin Plan, Inc., 69 F. T. C. 933, 971 n.2 (1966). A-146 Thus, to apply the doctrine of collateral doctrine of res judicata) Meg the facts 22 — — need not attempt to forecast the ultimate conclusion or even the ultimate issue, of the FTC's proposed investiga- tion; we need only define ONE FACTUAL ISSUE (the ac- curacy of AGA proved reserve estimates) which has al- ready been determined by the Power Commission. The Trade Commission has a free investigative rein on ALL ULTIMATE issues (e. g., have appellees committed or con- spired to commit an unfair trade practice; have appellees engaged or conspired to engage in a price-fixing scheme; are appellees guilty of an attempt to monopolize) and on all relevant factual issues except th proved reserve estimates, eer Thus two recent decisions of the Sixth Circuits, relied on by the Trade 1 rp conflict with our position here, nor with the decisions in Safir and others which we believe govern this case. In FTC v. Feldman * and FTC v. Markin* two taxicab companies argued that a 1947 holding that they had not been engaged in interstate commerce barred the FTC from now investigating the industry. First, it is obvious that changed facts and changed law might justify an investigation after 29 years. In our case the Trade Commission proposes to examine the reporting of proved reserves in the same time frame as the Power Commis- sion did. It „ as on precisely this point that the Seventh Cireuit distinguished Feldman from the panel opinion in our case, with which this dissent agrees. Second, in both Feldman and Markin the private litigants sought to stop the whole investigation, i. e., claim preclusion Here the appellee producers have never sought to bar the Trade Commission investigation, they have never as- 532 F.2d 1092 (7th Cir. 1976). 632 F.2d 541 (6th Cir. 1976). A-147 serted that the Power Commission’s inquiries immunized them against further investigation; they have only as- serted that the Power Commission’s determination of one factual issue, the accuracy of the proved reserve report- ing during the same time span, must be taken as es- tablished under the doctrine of collateral estoppel, i. e., issue preclusion. Unlike the situation in Endicott Johnson and similar cases, the District Court here was not making a juris- dictional determination; or arrogating to itself a factual determination that was primarily the duty of the Trade Commission. In accordance with well-established prin- ciples of collateral estoppel, the District Court simply applied an already-found fact to the proceedings before it. The court did not try the issue of underreporting itself; nor did it delve into the same conflicting materials that the Power Commission had previously considered in So La II. The Trade Commission was foreclosed on collateral estoppel grounds from reinvestigating and re- 148 Regrettably, the majority opinion, at 34 n.41 and accom- panying text, thoroughly confuses what it means by “these jurisdictional questions” and tries to lump in statutory cov- erage (jurisdiction) and collateral estoppel with the only “jur- isdiction” argument the appellees made, i.e., “primary juris- diction.” Endicott Johnson and that entire line of cases relied on by the majority deal with “jurisdiction” as referring to a statutory coverage issue, which is properly held to be decided by the responsible agency and not subject to judicial review until afte- the administrative proceeding is completed. Utah Construction, Safir, and other decisions relied on in this dissent deal with collateral estoppel by a previous factual issue deter- mination, do not deal with statutory coverage, and hold that administrative collateral estoppel must be considered at the outset of the proceeding, else the sole purpose and benefit of the doctrine will be lost. The issue of “primary jurisdiction” relates to none of the above, has been abandoned by appellees on this appeal, and all reference to it in the majority opinion is most unfortunately misleading and confusing. A-148 determining this one question of fact, not by the Dis- trict Court, but by the Power Commission, a sister agency of at least equal competence on oil and gas matters.“ Likewise, the Power Commission was not arrogating to itself a factual determination that was primarily the duty of the Trade Commission. On this one question of fact, the Trade Commission simply began its investigation too late. On 24 November 1971, when these subpoenas issued, the FTC was estopped from collaterally attacking any finding of fact essential to the FPC’s ratemaking de- terminations in So La II (issued on 16 July 1971). Having to accept this one finding of fact can have the effect of conferring antitrust and Section 5 immunity on appellees only insofar as the FTC’s antitrust theories necessarily require an opposite finding. If it turns out that all of the FTC’s antitrust and Section 5 theories do require a finding that AGA proved reserve estimates for the years 1962-1970 were inaccurate, then the prob- lem here is not an overly restrictive enforcement order, but a poorly aimed investigation. Compare Endicott Johnson Corp. v. Perkins, 317 U.S. at 508 and 509 where the Court found that . . . the District Court refused to order . . production, tried the issue of coverage itself, and decided it against the Secretary. Io perform her function [the Secretary of Labor] must draw inferences and make findings from the same conflicting materials that the District Court considered in anticipating and foreclosing her conclusions. (emphasis added) % The Trade Commission itself has relied on something closely akin to the doctrine of administrative collateral es- toppel when it works to its advantage See National Ass’n of Women & Children’s Apparel Salesmen, Inc. v. FTC, 479 F.2d 139 (5th Cir.), cert. denied, 414 U.S. 1004 (1978), where, in a collateral proceeding, the FTC relied heavily on a previous NLRB holding. A-149 B. Giving Collateral Estoppel Effect to a Finding of Fact Made in the Context of a FPC Ratemaking Proceeding As the Supreme Court made clear in United States v. Utah Construction & Mining Co., When an administrative agency is acting in a judi- cial capacity and resolves disputed issues of fact properly before it which the parties have had an 2 *,? t adequate opportunity to litigate, the courts have no hesitated to apply res judicata to enforce repose. its use of the words, “[wJhen . . . acting in a judicial pr eto we do not believe the Court intended to engraft on the doctrine of administrative collateral estoppel the drastic restrictions advocated by the Trade Commission. The fact that the Power Commission’s ratemaking pro- ceeding in So La II was “quasi-judicial” in nature, rather than purely “judicial”, does not mean that the facts found therein are not entitled to collateral estoppel effect. The crucial, threshold requirement for any applica- tion of collateral estoppel is a truly adversary proceed- ing, i.e, a proceeding sufficiently adverse to guarantee that opposing interests are adequately represented and that the facts established can withstand the test of oppo- sition. When facts are established as a result of the ad- versary process (i. e., when they have been challenged and controverted by opposing interests), they acquire an added dimension of respectability and are therefore ac- corded a binding effect on parties (and their privies) in subse ent proceedings. If there is no adversariness in a proceeding, then there is no assurance that the facts have been truly established; the facts found may well be inaccurate since they have not been tested by an opposing interest. We submit that so long as there is sufficient adversariness in a quasi-judicial, ratemaking 10 884 U.S. at 422 (emphasis added). A-150 proceeding, the necessary guarantee of trustworthiness is present. Accordingly, the facts found therein should be given collateral estoppel effect. There is little room to quarrel over the adversariness of the Power Commission’s proceedings in So La II. All evidence was developed in an adversarial environment with public and private parties representing sharply op- posing interests participating at all stages.“ Witnesses were subjected to rigorous cross-examination, and an op- portunity for rebuttal testimony or rebuttal evidence was provided.“ Based on this record, the Power Commission’s staff concluded in its initial brief in So La II that the validity and reliability of the reported AGA reserves data [was established] beyond any reasonable doubt.” “ In So La II itself the Power Commission specifically 2 As mentiondd earlier, a group of municipal distributor intervenors played a very active role in the proceedings. See So La I, 428 F.2d at 414 & n.3. 88 See So La II, 46 F. P. C. at 113 & 115. Examination of the transcript in So La II (admitted into the record of these proceedings by stipulation, App. III at 620a-21a) indicates that witnesses were vigorously cross-examined on the relia- bility of AGA data and the procedures used in the FPC’s independent NGRS audit. See Transcript of So La II at 4126-61, 4170-93, 4303-34, & 4652-4753. The FPC staff mem- bers in charge of the NGRS audit appeared, testified in de- tail, and were cross-examined on the methods and proce- dures followed in performing the audit. See Transcript of So La II at 5190-5207A & 5421-72. Other oil and gas ex- perts on the FPC staff testified and were cross-examined on the reliability of AGA reserve data. See Transcript of So La IT at 4003, 4055, 4074-75, 4132, 4137, & 4166.. Brief Reprinted in Hearings on Concentration by Com- peting Raw Fuel Industries in the Energy Market & Its Im- pact on Small Business Before the Subcomm. on Special Small Business Problems of the House Select Comm. on Small Business, 92d Cong., Ist Sess. at A72 (1971) (herein- after 1971 House Concentration Hearings). A-151 found that the AGA reserve estimates had not been “im- peached or substantially contradicted” ** and that they were “reasonably reliable“ for ratemaking purposes.“ This area rate proceeding, bringing together as it did sharply divergent economic interests in the same arena to do battle, provided an excellent context in which to determine finally the accuracy of AGA proved reserve estimates. Discussing the problem of how and where to draw the line between “judicial” and “nonjudicial” action for pur- poses of collateral estoppel and res judicata, Professor Davis in his Administrative Law Treatise suggests, The best approach is to avoid the labels that have been attached to various functions for other purposes and to determine what is judicial or nonjudicial for purposes of res judicata by emphasizing factors which relate to res judicata. For instance, the Supreme Court has held that because the granting of broad- casting licenses is nonjudicial, that function cannot be vested in the Supreme Court. But a function may be nonjudicial for one purpose and judicial for an- other purpose. The Supreme Court’s holding that a court ought not to grant and deny licenses may be entirely sound, for practical reasons relating to qualifications, and it is natural for the court to say in such a context that the function is nonjudicial. But if an agency having the licensing power con- ducts a full hearing and adjudicates a controversy about past facts concerning the applicant, the deter- mination should ordinarily be res judicata; for want of a better set of terms, the conclusion may even be announced that the action is deemed judicial. The question is not what is judicial in the abstract or for some other purpose. The question is whether considerations relating to res judicata require that 185 46 F. P. C. at 113. 10% Id. at 116. —— A-152 the particular action be regarded as judicial or non- judicial.“ Like the FCC in Professor Davis’ example, the Power Commission in So La II conducted a full hearing and adjudicated a controversy about past facts concerning appellees. Hence, the Power Commission’s findings of fact with respect to that controversy are entitled to col- lateral estoppel effect. For purposes of administrative collateral estoppel, the only litmus test is adversariness (1.E., a FULL hearing adjudicating a CONTROVERSY about past facts), not whether the administrative proceeding is labeled “licensing” or “ratemaking”. As this court has recognized on prior occasions, there is no clear, bright line between adjudicative (judicial) proceedings and rulemaking (legislative or nonjudicial) proceedings. On one side of this coin is our decision in Mobil Oil v. FPC;** on the other side our decision today. In Mobil Oil we recognized that even in a legisla- tive rulemaking proceeding under APA § 553, the cir- cumstances of the case might call for “some kind of hearing.“ Today, however, the majority refuses to recognize that where there is sufficient adversariness in a quasi-judicial, ratemaking proceeding, the principles of collateral estoppel should apply in the same way they do in pure judicial proceedings. In Mobil Oil the re- quirement of “some kind of hearing” derived from the circumstances of the case; here the application of col- lateral estoppel should derive from the circumstances of this case—the adversariness of the hearings in So La II. ** K. Davis, Administrative Law Treatise, § 18.08 at 598 (1958) (footnote omitted and emphasis added). 0 483 F.2d 1238 (D.C. Cir. 1978). See Friendly, Some Kind of Hearing, 123 U. Pa. L. Rev. 1267 (1975). A-153 In a suit for refund of income taxes paid upon a deficiency assessment the Fifth Circuit has given col- lateral estoppel effect to a prior Internal Revenue Service determination letter revoking a taxpayer’s tax-exempt status.“ Despite the fact that an IRS determination letter bears little resemblance to a “judicial” proceeding, the court held that “. . . the revocation of appellee’s exemption must be considered a judicial act for the pur- pose of res judicata.“ » Factors influencing the Fifth Cireuit's decision included, inter alia, finality to litiga- tion, prevention of needless litigation, and avoidance of unnecessary burdens of time and expense; that the agency’s action was directed specifically at the taxpayer and was not a general rule applicable to all organizations of a given class; that the agency’s action had an im- mediate effect upon the status of the taxpayer; and that the taxpayer was well-informed of the progress of the agency’s proceedings.“ These same factors militate in favor of giving the findings of fact in So La II collateral estoppel effect. There, in a proceeding bearing all the hallmarks of the adversary system, the issue of the accuracy of the AGA proved reserve estimates was fully considered and finally determined. C. Giving Collateral Estoppel Effect to a Finding of Fact Made for Ratemaking Purposes In So La II the Power Commission specifically found that. . . the AGA reserve data is reasonably reliable 100 4. Duda & Sons Cooperative Ass’n v. United States, 495 F.2d 193 (5th Cir. 1974). 161 Jd, at 197 (emphasis added). 162 Id. A-154 for the purposes used herein.” *** The Trade Commission interprets this to be a statement intended to limit and qualify the Power Commission’s acceptance of the AGA data. Taken as a whole, the record in So La II clearly does not support this inference. In fact, in its initial brief in So La II the FPC staff concluded that the record establishe[d] the validity and reliability of the reported AGA reserves data beyond any reasonable doubt.” * Furthermore, the statement “for the purposes used herein” can just as easily be taken on the positive side to mean that these figures are good enough even for the FPC’s use in calculating just and reasonable rates or it can be taken as a relatively meaningless and gra- tuitous expression intended to have no substantive effect whatsoever. Whatever its meaning, we doubt seriously that the Power Commission intended it to limit the sub- sequent collateral estoppel effect of th ing i — ppe of the finding it pre Arguing along this same line, the Trade Commissi makes much of the fact that the ultimate purpose of its investigation (determining if there has been a violation of Section 5 of the FTCA) differs from the ultimate purpose of So La II (determining the just and reasonable area rate for the Southern Louisiana area). However since the FTC now seeks to determine whether the pro- ducers are underreporting reserves and are thereby vio- lating the FTCA," we must agree with appellees that 5 46 F. P. C. at 116 (emphasis added). 164 See 1971 House Conc i i id. at ATS. entration Hearings at A56. See also In its supplemental reply brief the FTC states, This case touches upon two distinct questions w the companies repeatedly confuse or fail to — is there a natural gas shortage, and have natural gas com- panies taken action having the purpose or effect of mis- stating the extent of any such shortage? The questions A-155 any distinction based on different ultimate purposes is purely illusory. No matter how ingenious or how far- fetched it is, any antitrust or unfair trade practice theory must have at its core an illegal activity having some effect (or at least some intended effect) on area rates.“ Hence, are related but independent. While the first question is of primary concern to the FPC, the second is the one of particular concern to the FTC. Reply Supplemental Brief for Appellant on Rehearing En Bane (filed 13 April 1976) at 2. We agree with the FTC; the purpose of their investigation is to determine whether ap- pellees have. .. taken action having the purpose or effect of misstating [i.e., exaggerating through underreporting] the extent of any . .. shortage.” See also id. at 14 where the FTC explains, “If a complaint were at issue, for example, the FTC (more particularly its staff) would be the proponent of a claim that some of the companies had engaged in concerted activities to underreport their proved reserves.” Thus, if the FTC investigation is on reporting or mis- stating, then the FTC’s only concern is with proved reserves, because these are the only reserves reported or about which statements have ever been made. (See our discussions of Rele- vance, Part IV, supra.) 1% In its supplemental brief on rehearing en banc, the FTC virtually concedes this point with the following admission: We do not dispute that one of the causes for the FTC’s concern about the possibility of unlawful conduct concerning the reporting of reserves is that such conduct might result in artificial understatement of reserves which, because of the FPC’s reliance upon such data, could result in higher rates. Supplemental Brief for Appellant on Rehearing En Bane (filed 31 March 1976) at 28-29. The Trade Commission then goes on to claim another “cause for concern” : [I]t is quite possible that one or more of the com- panies has engaged in conduct concerning their devel- opment and reporting of reserves which has not yet suf- ciently ripened so that it would have caused the AGA data to be substantially inaccurate . . . . Similarly, one or more . A-156 the Power Commission’s finding of reliability, even if for ratemaking purposes only, cannot be nonchalantly brushed aside as a limited and irrelevant factual determination. While this was indeed a finding of fact made for rate- making purposes, it was nevertheless a determination that the only estimates (i.e., AGA proved reserve data) which could possibly affect rates were reliable and ac- curate. (We repeat: since the only supply estimates relied upon by the Power Commission are AGA proved reserve estimates, only these data can ever affect the rates set by the Commission.) For basically the same reasons, the majority’s reliance on United States v. RCA is misplaced. In RCA the broadcasting company argued that the Federal Communi- cations Commission’s prior approval of its agreement to of the companies may have attem to engage i unlawful conduct without success — . * Id. at 29 (footnote omitted). This second all “cause concern” is totally fallacious for at least — Mian Pou only proved reserve estimates are ever reported and the FTC does at least concede that its investigation is aimed in part at tas the possibility of unlawful conduct concerning the re- porting of reserves * (Emphasis added.) Second, since the only reserve data relied upon by the FPC are AGA proved reserve estimates, only these figures can ever have any ef. ect on FPC-determined rates. Third, as we have painstakingly demonstrated in section IV supra, there is no correlation whatsoever between proved reserve estimates and the earlier speculative, nonproved reserve estimates. After drilling (and the immediately following determination whether any proved reserves are present), all former nonproved reserve estimates become superseded, irrelevant, and probably misleading. With- ous some nexus between AGA proved reserve estimates and other nonproved reserve data, the FTC’s allegation that the producers may be engaged in “. . . conduct that may even- tually affect, but has not yet affected, reserv . makes utterly no sense. in — **7 358 U.S. 884 (1959). A-157 exchange a television station in Cleveland for one in Philadelphia immunized that agreement from a future antitrust attack by the Justice Department. In other words, the broadcasting company urged the court to give res judicata or collateral estoppel effect to the FCC's determination that this agreement was “in the public interest” (the ultimate issue before the FCC). Here, ap- pellees are not asking this court to give res judicata or collateral estoppel effect to the FPC’s ratemaking de- termination (the ultimate issue in So La II); nor do they claim any immunity from the antitrust laws or the FTCA. The accuracy of AGA proved reserve data was a factual issue in controversy in So La II, and it is only this one factual issue, not appellees’ antitrust or Section 5 liability, which the FTC is estopped from re-investigating and redetermining. In RCA there was no finding of fact by the FCC on the antitrust question which con- cerned the Justice Department; nor could there have been since the FCC was not authorized to decide antitrust issues as such.“ Here, in comparison, there was a find- ing by the FPC on a factual issue concerning the FTC. Additionally, there can be no contention here that the FPC, the expert agency on oil and gas matters, was not empowered to determine the accuracy of the AGA proved reserve estimates. In its supplemental reply brief on rehearing en banc, the FTC takes one final desperate stab at a “ratemaking purposes” argument, asserting that “factual determina- tions in ratemaking proceedings are not ‘final’ even 168 In RCA the Supreme Court concluded, [T]he legislative history of the [Federal Communica- tions] Act reveals that the Commission was not given the power to decide antitrust issues as such, and that Commission action was not intended to prevent enforce- ment of the antitrust laws in federal courts. Id. at 346. öS A-158 among the parties, and hence are not entitled basis for applying collateral estoppel in other 44 Unfortunately, the FTC overstates its case. As the Trade Commission itself recognizes in the sentence that im- mediately precedes this statement, the only case in point indicates that .. . an agency is ordinarily free cas to reconsider factual determinations in the light of new evidence. * Thus, on factual issues (e. g., the accuracy of AGA proved reserve data) the FPC can change its mind if new evidence or changed circumstances arise.’ But this observation applies with equal force to the factual determinations of a judicial proceeding. Ac- cordingly, it does not preclude application of collateral — = — If it did, no factual determina- , be i nistrati judici i — — —4 or judicial, could ever be given VII. CONFIDENTIALITY AND PRODUCTION AT SITus The District Court attached the followi iti ng condi the disclosure of documents designated — — 5 _ (1) The Secretary of the Federal issi is designated the custodian of the then - ama % Reply Supplemental Brief f : Bane (filed 18 April 1976) af 3. on Rehearing En *° Tagg Bros. i (2980). ros. & Moorhead v. United States, 280 U.S. 420 ** Reply Supplemental Brief for A pellan Rehearing t . Bane (filed 13 April 1976) at 8 —— added). 32 * Of course, on policy matters affecting i , the ulti — 5 — ae ed and 4742 ; , FPC is always free to change its * cording to its current perception of “the public Bages Thais A-159 (2) The documents (and presumably any documents or memoranda derived therefrom) must be kept in a de- pository with access restricted to the FTC employees as- signed to the investigation ; (3) Documents can only be removed from the deposi- tory or used for other purposes with the court’s permis- sion; and (4) Upon the termination of the investigation, the doc- uments (and presumably all copies of documents) must be returned to their owner.“ The Trade Commission does not question the confiden- tial nature of the documents it seeks disclosed. Rather, its position is that the FTCA and the Commission’s Rules of Practice provide appellees with adequate protection. Quite to the contrary, the FTCA and the Rules of Prac- tice merely state that the public disclosure of geophysical data or information and trade secrets is within the dis- cretion of the Commission. The FTC’s rules governing in camera orders, the release of confidential information, and requests for disclosure of records clearly indicate that the Trade Commission will decide ultimately whether records exempt from disclosure under the Freedom of Information Act (as most of these records probably would be) will be disclosed.** The District Court was not required to rely on the unbounded discretion of the Trade Commission to keep the producers’ estimates confidential.“ In addition, we avs Six-Company Order, App. IV at 809-10a ({ 8) ; Superior Order, App. III at 469a-71a. 1. 16 C. F. R. 88 3.45, 4.10 & 4.11 (1976). See also 15 U.S.C. § 46(f) (1970). 178 See note 3 supra. The action of the Trade Commission, in acceding to the telephoned demand of a Congressman for immediate access to the documents in so short a period of time as to preclude resort to a court, underlines the wisdom —ꝓ — — A-160 fail to see how the minor protective procedures fashioned by the court will impose any substantial burden on the FTC’s investigation especially since the parties have agreed that this portion of the court’s order may be modi- fied by the addition of the following provisos: Provided that, nothing in this order shall prohibit disclosure of materials produced by respondents to commissioners of the FTC in connection with the per- formance of said commission s' official functions; nothing in this order shall pi aibit employees of the Trade Commission from referring to or relying on any of the materials produced by respondents in con- nection with the presenting of any recommendation to the Trade Commission for or against issuance of a complaint; and nothing in this order shall prohibit the Trade Commission from referring to or relying on any of the materials produced by respondents in connection with any determination for or against 9 of any complaint based such materials. a In the event the Trade Commission desires to release any confidential material, it shall so notify and reasonableness of the District Court’s protective order on confidentiality. The Federal Rules on Civil Procedure cur- rently provide for motions to quash duly authorized bpoenas, but not telephone calls. 3 In order to protect confidential commercial information and trade secrets, District Courts frequently have required appropriate protection as a precondition to enforcement of FTC investigative subpoenas. See, e. g., FTC v. St. Regis Paper Co., 304 F.2d 731, 732 n. 1 (7th Cir. 1962) ; Graber Mfg. Co. v. Dixon, 223 F. Supp. 1020 (D. D. C. 1963); FTC v. Bowman, 149 F.Supp. 624 (N. D. Ill.) af d, 248 F.2d 456 (7th Cir. 1957); FTC v. Menzies, 145 F.Supp. 164, 171 (D. Md. 1956), af d, 242 F.2d 81, 84 (4th Cir.), cert. i denied, 353 U.S. 957 (1957). Accord, FTC v. Lonning, 589 F.2d 202 (D.C. Cir. 1976). A-161 the Court and each affected respondent, specifying the material it desires to release, and each such respondent may, within ten days of receipt of such notice, file with the Court opposition to such release. The respondents shall bear the burden of proving the material is entitled to confidential treatment upon notice that the Trade Commission intends to release any such material. No such data may, how- ever, be released until this Court shall enter its order permitting such release. (J 8(b)) Provided that, in the event the Trade Commission issues a formal complaint, at the conclusion of the investigation, the coniidential material produced by respondents may be offered and received in evidence in the complaint proceeding, provided that each af- fected respondent shall be given opportunity to re- quest appropriate confidential treatment of such material. (8 (e) We would adopt these modifications (as the majority opinion does to some extent, ¢.g., the ten day notice re- quirement) and hold that the District Court did not abuse its discretion when it attached the conditions listed above to the disclosure of information by all seven ap- pellees. The Trade Commission also complains about the option permitting the production of documents for ; inspection where they are stored. The Supreme Court in CAB *. Herman upheld the enforcement of a subpoena “with appropriate provisions for assuring the minimum inter- ference with the conduct of the business of respondents.’ The Second Circuit has also upheld a similar provision. It noted that “[rJequiring records to be produced away from the place where they are ordinarily kept may im- 117 Six-Company Stipulation (filed 19 May 1976) at 3-4. 178 858 U.S. 322, 323 (1957). A-162 pose an unreasonable and unnecessary hardship which in itself would make the issuance of the subpoena, otherwise requiring: the Trade Commission to copy and transport the AGA. Since the FTC issued identical subpoenas to all producers, it was obvious to the District Court that several specifications, those relating to reporting and par- ticipating in the AGA, were not relevant to Superior. As a result, the District Court simply refused to enforce specifications G through J. In all other respects, the court Falling v. American Rolbal Corp., 135 F.2d 1008, 1005 (2d Cir. 1943). The Trade Commission’s and the majority’s arguments notwithstanding, it is common for a district court to require the administrative agency to inspect subpoenaed records or documents at the place where they are stored. NLRB v. Fried- 630; FTC v. Mensies, 145 F.Supp. at 171. In addition, the ‘ each company shall designate no more than one cor- porate office in each state in which documents located within that state shall be produced for inspection and copying. Six-Company Stipulation (filed 19 May 1976) at 3. A-163 de the Commission with the required — ~ — formation that were being re quired of the ether cix proGusare, and subject to the oume confidentiality protections previously discussed. —— not understand, and the majority opinion does not be to explain, how this logical factual determination can j abandoned standard of appellate review rA — — d i rt’s findings of fact as questions of law an —— S8 judgment for that of the trial court. concern over the majority’s approach thus derives, By a disagreement over the application of the ac- cepted standard of appellate review to the particular fac- tual setting in this case, but rather from a more basic apprehension over the consequences of the undefined standard of review which was employed. ority has engaged in a standardless, direction- 1 in this case, and no euphemism can disguise . 2715 2214 14 89 f 1H 11 i 875 1 E 1 12 S2 8. chooses to disregard these precedents, tes of logic should serve as an adequate substi- te. failure to focus on the FTC’s purpose in turn causes majority to roam into those areas committed 2 E 7 8 court. A particularly striking example of this is to be found in the majority’s decision to ignore the scientific and economic realities of the gas industry which the Dis- trict Court correctly took into account. The enlarged role which the majority has assigned to this court in this case distorts the proper relationship between the federal agencies, the federal trial courts, and the federal appellate courts. In so doing, the majority sets a pernicious precedent for future trials de novo which would leave the Court of Appeals as the primary determinant of factual matters more properly suited for the District Court. The strength of this sloppy precedent is, of course, weakened by the composition of the en banc court in this case; here the majority consists of only four of our col- leagues. It is our hope that the approach adopted by this diminished majority of the court will not be carried over into future cases. If it is attempted to be so applied in the future, it will be a divergence from accepted prac- tice of such magnitude that a close examination by our full court will be warranted, if the errors of our four colleagues have not already received their just reward from an even higher authority. A-165 UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Term, 1976 Filed March 24, 1977 No. 74-1547 FEDERAL TRADE COMMISSION, Appellant, V. Texaco, INC. (Civil 1089-73) and Consolidated Case Nos. 74-1548, 74-1549, 74-1550, 74-1551, 74-1553, 74-1554 peals from the United States District Court for the 7 District of Columbia : BAzELON, Chief Judge, WRIGHT, LEVENTHAL, * ROBINSON, MACKINNON and WILKEY, Circuit Judges ORDER ideration of the motion of appellant Federal 4 — clarification of the Opinion for the Court filed in this proceeding on February 23, 1977, of the joint response of appellees thereto, and of appellant’s reply memorandum, it is inion for the ORDERED, by the Court, that the Opinion Court be, and it hereby is, amended by adding a foot. note on Page 44 thereof following the words ‘to do so. A-166 in line 3, to be designated footnote 64, and which shall be and read as follows: The Court is not herein adopting a rule of gen- eral applicability for a 10-day notice provision. It is rather adopting for purposes of this case a proposal for confidentiality advanced by FTC, even though this was put as a basis for settlement and no settle- ment was reached. It should be noted that the settlement conference was initiated by this court. Pursuant to an order of this Court dated April 21, 1976, counsel for the FTC and Superior conferred for the purpose of seeking agreement as to the issues which still divided them on this appeal. On May 19, 1976, these parties filed a Stipulation with the court, indicating that they were “unable to agree on any modifications of the district court’s order of March 22, 1974, con- cerning Superior which would eliminate or narrow the issues remaining for decision by this Court.” Attached to this Stipulation was a document entitled “FTC’s Statement of Issues and Proposed Modifica- tions,” which included certain “modifications the FTC is willing to accept but which Superior Oil Company (‘Superior’) has not agreed to.“ Paragraph 9 of this latter document, which sets forth the modi- fications of the district court’s confidentiality protec- A-167 (a) With respect to an official request for such documents from a committee or subcom- mittee of Congress or a court (by compulsory process), the FTC will advise the Congressional committee or subcommittee or the court that Superior considers the material to be confiden- tial, and will give Superior ten days’ prior no- tice where possible, and in any event, as much advance notice as can reasonably be given, be- fore releasing or granting access to the docu- ments. [footnote omitted] (b) The above notice provisions shall not apply to any information which (1) is now in the public domain; (2) enters the public domain from a source other than the FTC or its em- ployees; (3) was in the FTC’s possession prior to disclosure to the FTC by Superior; or (4) is supplied to the FTC or its employees by a third party lawfully in possession thereof. (e) In the event that the investigation with respect to which the subpoena issued results in issuance of an adjudicative complaint, the con- fidential status of the documents and the limi- tations on their disclosure shall be governed solely by the applicable provisions of the FTC’s Rules of Practice, Part 3—Rules —— —— —— tion that the FTC was willing to accept, reads as And it is 1 FURTHER ORDERED, by the Court, that the foot- notes on pages 44 and 45 of the Opinion for the Court, Subject to the exceptions set forth below, the e heretofore designated footnotes 64, 65 and 66, be, and FTC will not disclose any of the documents pro- duced which Superior designates confidential to any person outside the employ of the FTC (other than an outside consultant retained by the FTC who has agreed not to disclose the documents) without first giving Superior ten days’ notice of its intention to do so. A-168 they hereby are, renumbered as footnotes 65, 66 and 67, respectively. Per Curiam For the Court /3/ George A. Fisher GEORGE A. FISHER Clerk Circuit Judges MacKinnon and Wilkey did not partici- pate in the foregoing order. A-169 UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT September Term, 1976 {Filed April 1, 1977] No. 74-1547 FEDERAL TRADE COMMISSION, Appellant V. TEXACO, INC. Civil 1089-73 and Consolidated Case Nos. 74-1548 74-1551 74-1549 74-1553 74-1550 74-1554 BEFORE: Bazelon, Chief Judge; Wright, Leventhal, Robinson, MacKinnon and Wilkey, Circuit Judges ORDER Upon consideration of appellees’ motion for a stay of the Court’s mandate and for a stay of the Court’s en- forcement order, and of the opposition of appellant Fed- eral Trade Commission thereto, it is ORDERED by the Court that appellees’ motion is granted insofar as it requests a stay of the issuance of the mandate for a period of thirty days, and the Clerk A-170 is directed not to issue the mandate in this case prior to April 18, 1977. Per Curiam For the Court: /8/ George A. Fisher Gores A, Fisner Clerk A-171 UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Nos, 74-1547, 74-1548, 74-1550, 74-1551, 74-1658, 74-1554 FEDERAL TRADE COMMISSION, Appellant, V. TEXACO INC., et al., Appellees, STIPULATION RE ISSUES ON WHICH PARTIES HAVE AGREED AND ISSUES WHICH REMAIN TO BE RESOLVED BY THE COURT WHERBAS, this Court has ordered the parties to con- fer for the purpose of seeking an agreement on (1) those issues as to which there is no further need for this Court to intervene; and (2) those issues which remain to be resolved by this Court in the above-captioned Fed- eral Trade Commission (“Appellant”) subpoena enforce- ment proceedings regarding certain subpoenas issued in the course of a Commission investigation into natural gas reserve estimate reporting procedures (FTC Investi- gation File No, 711 0042) ; WHEREAS, the parties have met on May 5 and 12, 1976, and have discussed the issues remaining in this case pursuant to the Court’s Order; and WHEREAS, the Appellant, on the one hand, and Texaco Ine, Standard Oil Company (Indiana), Exxon Corporation, Shell Oil Company, Standard Oil Company of California, and Mobil Oil Corporation (collectively re- ferred to hereinafter as “Appellees”’), on the other hand, have reached agreement as to certain issues which need A — — A-172 not be decided by the Court on this appeal, have agreed to narrow other issues but continue in disagreement as to some issues which remain for resolution by the Court; A. IT IS HEREBY STIPULATED AND AGREED by and between Appellant and Appellees that neither party has any objection to the first sentence of paragraph 1, paragraph 5, subparagraph 8(d) and paragraph 9 of the Order.“ (517 F.2d at 160, 161, 162.) B. APPELLEES HAVE PROPOSED AND THE AP- PELLANT HAS AGREED, without prejudice to the Appellant’s position that the Order should be vacated or further modified, and without prejudice to Appellees’ position that the Order should be affirmed, as follows: 1. Subparagraph 2 (a) of the Order (517 F.2d at 160) may be modified by addition of the following proviso: “Provided that, to the extent otherwise called for, any and all proved reserve data contained in bid calculation files and relating to tracts covered by subparagraph 2 (e) shall be produced.“ 2. Subparagraph 2 (e) of the Order (517 F.2d at 160) may be modified by addition of the following proviso: “Provided that, where a respondent had no owner- ship interest in a field but nevertheless an employee of such respondent had reporting responsibility to the Southern Louisiana Subcommittee of the Ameri- can Gas Association Committee on Natural Gas Re- serves for such field, production by such respondent shall also include data otherwise called for as to each field for the period when such reporting re- sponsibility existed,” Order“ as used herein refers to the order entered by the District Court on March 22, 1974, as modified by the opinion of the panel of the Court of Appeals (reported at 517 F.2d at 187-62), A-178 8. Subparagraph 3 (b) of the Order (517 F.2d at 161) may be modified by addition of the following proviso: “Provided that, this subparagraph shall not be con- atrued to exclude internal documenta, .., documents generated and/or circulated solely within one com- pany.” 4. Paragraph 7 of the Order (517 F.2d at 161) may be modified by addition of the following proviso: “Provided that, each company shall designate no more than one corporate office in each state in which documents located within that state shall be pro- duced for inspection and copying.” 5. Subparagraph 8(a) of the Order (517 F.2d at 161) may be modified by addition of the following proviso: “Provided that, nothing in this order shall prohibit disclosure of materials produced by respondents to commissioners of the FTC in connection with the performance of said commissioners’ official functions; nothing in this order shall prohibit employees of the Trade Commission from referring to or relying on any of the materials produced by respondents in connection with the presenting of any recommenda- tion to the Trade Commission for or against issuance of a complaint; and nothing in this order shall prohibit the Trade Commission from referring to or relying on any of the materials produced by re- apondents in connection with any determination for or against issuance of any complaint based on such materials, 6. Subparagraph 8 (b) of the Order (517 F.2d at 161) may be modified by addition of the following qualifying language : “In the event the Trade Commission desires to re- lease any confidential material, it shall so notify the A-174 Court and each affected respondent, specifying the material it desires to release, and each such re- spondent may, within ten days of receipt of such notice, file with the Court opposition to such re lease. The respondents shall bear the burden of proving the material is entitled to confidential treat- ment upon notice that the Trade Commission intends to release any such material, No such data may, however, be released untii this Court shall enter its order permitting such release,” 7. Subparagraph 8 (e) of the Order (517 F.2d at 161- 62) may be modified by addition of the following proviso: “Provided that, in the event the Trade Commission issues a formal complaint, at the conclusion of the investigation, the confidential material produced by respondents may be offered and received in evidence in the complaint proceeding, provided that each af- fected respondent shall be given opportunity to re- quest appropriate confidential treatment of such material,” C, APPELLANT HAS PROPOSED AND APPEL- LEES HAVE AGREED, without prejudice to Appellees’ position that the Order should be affirmed, and without prejudice to Appellant’s position that the Order should be vacated and further modified, as follows: 1, The Order may be affirmed insofar as it excludes raw field data, subject to the FTC's right to seek access to or producti [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1549%3A2. Public record. Not legal advice.