# Opposition Brief — Jupiter Corp. v. Federal Power Commission

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1289%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1970
- **Citation:** 397 U.S. 937

## Text

4

When the matter was brought to the Commission’s
attention by Phillips-Kerr-McGee (J.A. 329), the Com-
mission, in its Order of ‘April 3, 1968 (Pet. App. 1a,
J.A. 373), rejected petitioner’s argument and ordered
payment by it at the 18.5 cent per Mef rate set by the -
Commission in 1965. Petitioner’s petition for rehear-
ing of that Order (J.A. 394) was denied by the Com-.
mission’s Order of May 24, 1968 (Pet. App. I4a, J.A.
419), which repeated that petitioner was obligated to ,
restrict itself to a margin of 1 cent per Mef.- _

Petitioner still refused to comply with the Commis-. -
sion’s Orders.” The matter was again brought to the

Commission’s attention (J.A. 423, 431), and the Com-

mission then issued its Order of December | 13, 1968.
(Pet. App. 19a, J.A. 441).

In this Order the Commission again reviewed the. *
history of this case (Pet. App. 19a-22a, J.A. 441-44),
noted the Commission’s prior rejection of petitioner’s —
arguments but that petitioner continued to ignore the
Commission’s Orders requiring payment of 18.5 cents
per Mef to Phillips-Kerr-MeGee even though no stay
of ‘these Orders had been sought by petitioner (Pet.
App. 29a-23a, J.A. 444-45), entered the formal finding
that ‘The Jupiter Corporation has flouted the terms
of the Commission’s order of April 3, 1968” (Pet. App! ,

‘O8a, J. A. 450), and concluded that, in order for the

* Petitioner filed its petition to review the Commission’s April -
3 and May 24 Orders on July 23, 1968. Despite the express pro-
vision in §19(¢) of the Natural Gas Act, 15 U.S.C. § 717r¢e), that
the commencement of review proceedings ‘‘shall not, unless spe-
cifically ordered by the court, operate as a stay of the Commis-
sion’s order,”’ petitioner, without even seeking a stay) simply re-
fused to comply with the Commission’s April 3 and May 24 Orders.
It was only after the issuance of the December 13 Order that
petitioner sought a stay, which was denied by the court of sh oneas :
on February 6, 1969.

5

integrity of that Order to be maintained, it would have
to take action directed to Tennessee as well as peti-
tioner. (Pet. App. 23a, J.A. 445). The Commission
then, in formal ordering paragraphs, reaffirmed peti-
tioner’s preexisting obligation to pay Phillips-Kerr-
McGee at the 18.5 cent per Mef rate and ordered that
in the future, in light of petitioner’s intransigence,
‘Tennessee was to pay 18.5 cents per Mef directly to
Phillips-Kerr-McGee on petitioner’s account. (Pet.
App. 29a-30a, J.A. 450-51). Petitioner’s contentions
as to the invalidity of the December 13 Order were re-
jected by the Commission’s Order of January 22, 1969,
denying rehearing. ( Pet. App. 34a, J.A. 455).

The court of appeals affirmed all of the Commis-
sion’s Orders. It found that the 18.5 cent per Mef
rate, about which petitioner was complaining, was
valid and did not violate the rule of the Mobile case
(United Gas Pipeline Co. vy. Mobile Gas Service Corp.,
850 U.S. 332 (1956) ), as contended by petitioner. The
enforcement Order of December 13, 1968, the court
held, was authorized by Section 16 of the Natural Gas —
. Act, 15 U.S.C. §7170—which empowers the Commis-
sion to issue such orders ‘tas it may find necessary or
appropriate to carry out the provisions’? of the Aet—
in light of the long history of petitioner’s refusal to
comply with final and effective Commission Orders,

ARGUMENT

The Commission has been struggling since 1962,
when it instituted its investigation of petitioner's 5 rates
(see J.A. 283), effectively to regulate petitioner under
the Natural Gas Act. Sinee 1962 the Commission,
‘time and time again, has considered and rejected peti-
tioner’s arguments that its ‘‘spread”’ is beyond Com-
mission control and that petitioner cannot lawfully be

i ee

required to pay Phillips-Kerr-McGee at an 18.5 cent
per Mef rate. The court of appeals, in a very careful
and detailed opinion, considered and rejected all of peti-
tioner’s claims and upheld the Commission. Further
review by this Court is not warranted.

This case involves no important or novel legal prin-
ciples. It raises no issues that are of substantial sig-
nificance beyond the confines of this case. It presents
a unique factual situation that is unlikely to be re-
peated. The court of appeals decision does not con-
flict with any decision of any other court of appeals
and, contrary to petitioner’s argument, the decision
below presents no conflict with any prior decision of
this Court.

Petitioner, in seeking the intervention of this Court,
asserts (a) that the court of appeals erred in deciding
whether the contract between petitioner and Phillips-
Kerr-McGee called for payment by petitioner at less
than the 18.5 cent per Mcf rate set by the Commission
because, petitioner claims, this issue had not been de-
cided by the Commission and (b) that the Commis-
sion’s Order of December 13, 1968, violated Section |
19(a) of the Natural Gas Act, 15 U.S.C. § 717r(a);-
and the filed rate doctrine,and constituted a deprivation.
of petitioner’s property without due process of law.
There is no merit in either contention.

1. Throughout this proeceeding—both before the
Commission and in the court of appeals—petitioner
has argued, invoking United Gas Pipeline Co. v. Mobile °
Gas Service Corp., 350 U.S. 332 (1956), that it may
not be required to pay at the 18.5 cent per Mef rate
set by the Commission because, it claims, its contract
provides for payment at a lesser rate. (E.y., Pet.
App. 52a-53a). Its argument has been that its con-

th ae A cei a cal at Ne flee caal OO te ES

7

tractual ‘‘spread’’ of 2.4 cents per Mef cannot be regu-
lated by the Commission, in light of Mobile, because
any reduction ordered by the Commission in the amount
petitioner receives from Tennessee necessarily reduces,
by the same amount, the price it is contractually obli-
gated to pay Phillips-Kerr-McGee.

Contrary to petitioner’s current assertion, the aed
is clear that this argument was considered and rejected
by the Commission and, therefore, that there was no
bar to the court’s consideration of this issue. <As the
court of appeals noted (Pet. App. B3a), the Hearing
Examiner in the proceeding leading to the Commis-
sion’s 1966 rate Order, reviewed the underiying con-
tracts and determined that the contracts, properly in-
terpreted, did not support petitioner’s claim. (J.A.
202-06).* As the court of appeals further noted (Pet.
App. 56a-57a), petitioner thereafter conceded, in its
settlement proposals, that reformation of its contract
would be required in order for it to recover any
amounts from Phillips-Kerr-MecGee, in addition to the
‘‘spread”’ ordered by the Commission, as payment for
the asserted nonjurisdictional services performed by |
petitioner. (J.A. 235-36, 242). .

In its Order of April 3, the Commission, as peti-
tioner points out (Pet., pp. 8-9), acknowledged that it
would not resolve the contractual issue between the
parties as to whether petitioner was entitled to any
compensation for its asserted nonjurisdictional sery-
ices. The record is clear, however, that this reference
is only. to petitioner’s contract reformation claim and

* On the merits, the court upheld the Examiner’s reading of thé
underlying contracts, which were included in the administrative
record certified to the court of appeals and relevant portions of
which were included*by thé parties in the Joint Appendix béfore

the court of appeals., (See J.A. 12-26).

: Aes gk o

8

that the Commission rejected on the merits petitioner’s
argument that its contract prevented the regulation of
its *tspread.’? As the court of appeals stated:

** {T]he Commission has conceded nothing but the
possibility that Jupiter [petitioner] has an equi-
table claim, disputed by PKM_ [Phillips-Kerr-
McGee], for the reformation of its contract to re-
quire payment by PKM for nonjurisdictional serv-
ices now that their cost is no longer being absorbed
in an excessive charge to Tennessee. The Commis-
sion has never conceded that Jupiter is entitled un-
der the contract as written to recoup any reductions
in the spread chargeable to Tennessee from PKM.
Indeed, the Commission scarcely had reason or
occasion to do so. Jupiter’s contractual argument
was rejected by the examiner in the rate proceed-
ings, and its settlement proposals stated in bold-
faced type that reformation of its contract was
required to enable it to collect payment for con-
densate services. Jupiter-paid the 18.5 cent rate
for nearly a year before filing its suit, based on
its present theory of the contract, in the Cook
County Court. When Jupiter finally made its
position on, the. contract somewhat more explicit
in its petition for rehearing of the April 3 Order,
the Commission rejected it in the opinign denying
rehearing.” (Pet. App. 56a-57a, emphasis in
original). 7

Petitioner’s claim that the Commission did not re-
solve the basic contractual issue is further belied by
the December 13 Order, where the Commission stated:

“{L]f Jupiter were entitled to reformation of its
contract with Phillips-Kerr-MeGee in order to
establish some payinent for the remaining minor
nonjurisdictional services it performed for, Phil-
lips-Kerr-McGee, that reformation would have to
be done in a court of equity, outside the scope of
the contract on file with us as a rate schedule.”’
(Pet. App. 22a, J.A. 444).

9

Again, the Commission’s January 22 Order expressly
rejected petitioner’s contractual argument: —

‘“Jupiter’s argument as to the Commission’s
power to control the ‘spread’ charged under its
contract is the same argument which Jupiter,has
made, unsuccessfully, several times before. We
need go no further than to point out, again, that
the contract between Jupiter and Phillips-Kerr-
McGee is on file with this Commission,as the con-
tractual support’ for Phillips-Kerr-MeGee’s rate
schedule covering the sale of natural gas to Jupiter
and is subject to our jurisdiction as such. - Jupiter
may not evade its obligation to pay the filed rate by
offsetting other contract claims against such juris-
dictional rates.’’ (Pet. App. 36a, J.A. 457).

In short, contrary to petitioner’s current assertion,
the Commission explicitly held that it had reviewed
the contract between the parties and again rejected
petitioner’s Mobile argument that the contract pre-
vented regulation of petitioner’s ‘“‘spread.’’, The only
‘contract dispute’’ (Pet., p. 8) that the Commission
did not decide was whether contract reformation might
give petitioner some claim for compensation for ‘‘minor
nonjurisdictional services’? (Pet. App. 22a, J.A. 444),
an issue not presented in these proceedings and plainly '
left open by the court of appeals. (Pet. App. 63a).

Finally, it must be pointed out that thg—court of
appeals did not dee¢ide the Mobile ae la sponte.”

5FPC vy. Colorado Interstate Gas Co., 348 U.S. 492 (1955), is
of no help to petitioner. That-case holds that the Commission may
not be reversed on the basis. of an objection that had’ not been
urged before the Commission in an application for rehearing. The
teaching of that case, if at all relevant here, would be to preclude
petitioner from raising the Mobile issue in the court of appeals
‘in seeking to reverse the Commission, and to permit the court to
affirm the Commission without even reaching the issue. Cclorado
Interstate does not preclude affirmance of the Commission on any
ground that has record support, which the Commission’s and the
court’s contract interpretation clearly has.

10

This issue was specifically raised by petitioner, which
now—after the court of appeals has rejected its argu-
ment—incredibly takes the position ‘that the court
should not have decided the very issue that petitioner
invited it to decide. Having played -with fire, how-
ever, petitioner cannot now complain that it has been
burned.

. (a) Petitioner’s claim that the Commission’s De-
cember 13 Order constituted a modification of its prior
Orders, in violation of Section 19(a) of the Natural!
Gas Act, was properly rejected by the court of appea's
(Pet. App. 58a-59a), and we will not burden. this Court
with any further argument on this point.

(b). Petitioner’s claim that the December 13 Order
violated the filed rate doctrine was apparently viewed
by the court of appeals as so lacking in merit as not

even to warrant discussion. The fact is that that Order
does not change the parties’ basie contractual rights
and duties. The amount of petitioner’s ‘‘spread’’ is
not affected. The Order simply alters the method and
manner .of payfnent, not the rates themselves. In
fact, not only was there no violation of the filed rate
doctrine, but adoption of the Order was necessitated
by the doctrine—to require compliance by petitioner
with thé Commission- -approved filed rate applicable to
the sale of natural gas to petitioner.

(c) Finally, there is absolutely no“basis for peti-
tioner’s attempt to invoke the due process clause. The
most that due process can require iS that a person
subject to regulation by an agency be given the oppor-
tunity to seek judicial protection against unlawful and
arbitrary agency actien. The Natural Gas Act af-
forded petitioner this opportunity, petitioner in fact

il

sought judicial relief from the Commission’s action,

and the court determined

that petitioner was not en-

titled to any relief. The due process clause was plainly

satisfied, an@ none of ‘the
to the contrary.

cases cited by petitioner is

CONCLUSION

For the foregoing reasons, the petition for writ of
certiorari should be denied.

Boe

Respectfully submitted, ©

Of Counsel:

CovINGTON & BuRLING
888 Sixteenth Street, N. W.
Washington, D. C. 20006

Howarp C. WESTWoop
HERBERT DYM~ ~
888 Sixteenth Street, N. W.
Washington, D. C. 20006
Attorneys for
Phillips Petroleum Company .
and Kerr-McGee Corporation

KENNETH HEADY
JOHN R. REBMAN
Phillips Petroleum Company
Bartlesville, Oklahoma 74003
Attorneys for
Phillips Petroleum Company

WILLARD P. Scorr
DERRILL Copy
Kerr-McGee Corporation
Kerr-McGee Building
Oklahoma City, Oklahoma 73102
Attorneys for

?
, Kerr-McGee Corporation

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_1289%3A2. Public record. Not legal advice.