Petition for Rehearing — Grounds v. Northern Natural Gas Co.

Excerpt From Brief of United States in

NE BE FID csi nti cso insiemseteions 13

Transcript of Oral Argument of Floyd France

on Behalf of United States in Court of Appeals ....20

Petition of United States for Rehearing

ts OUI CE TI eric ninciceteineenigiann 25

TABL® OF CASES

Andrews v. United States, 373 U.S. 334, 10 L.ed.2d

583, 08 80% TI iirc 4

Bakery & Pastry Drivers v. Wohl, 315 U.S. 769, 86

Cae. SE ee ee I hcicccncdircbalemsaes 2

Brady v. Terminal R. R. Ass’n., 302 U.S. 678, 82

6, Sa. Dee ee Fe vocesencencinticnaeoaae 2

Cafeteria Employees Union v. Angelos, 319 U.S. 753,

Be I SE | sivemneeniciasaninaiiieecaentiesnantitainenonincitntiieiionn 2

Collins v. Miller, 252 U.S. 364, 64 Led. 616,

| E __- g ROR RUNES 4

Hohorst v. Hamburg-American Packet Company, 148

US. 262, 37 L.ed. 443, 13 S.Ct. 590 -..............2.-- 4

Meagher v. Minnesota Thresher Manufacturing

Company, 145 U.S. 608, 36 L.ed. 834,

RAE Oe FA X20 Re oe 4

National Bank of Rondout v. Smith, 156 US. 330,

Se Ee Re | Pease mn e 4

United States v Adams, 383 U.S. 39, 15 L.ed.2d

cece 4

United States v. Crescent Amusement Co., 323 U.S.

173, 89 Led. 160, ke Ue. | ean 4,5

United States v. Girault, 52 U.S. (11 How.) 22, 13

IE cc sitsseshestnwieensceineieiscaeidicttieatamiicsninssudabtiennnniane 4

United States v. Healy, 376 U.S. 75, 11 L.ed.2d 527,

I nee ce aenieneaidiihencauneiiaaee 4

IN THE

OCTOBER TERM, 1971

NO. 71-218

RALPH GROUNDS, HENRY HITCH, ET AL.

(LANDOWNERS)

Petitioners,

vs.

NORTHERN INATURAL GAS COMPANY, ET AL.

(HELEX GROUP)

| and

SOCONY MOBIL OIL CO., INC.

(MOBIL OIL. CORPORATION substituted),

ET AL. (LESSEE-PRODUCERS)

Respondents.

On Petition For Certiorari

LANDOWNERS’ PETITION FOR REHEARING

OF DENIAL OF PETITION FOR CERTIORARI

Grounds For Rehearing

1. For purposes of certiorari the judgment of the

Court of Appeals became final only when it was final as

to all parties and as to all issues.

2. The filing of timely petitions for rehearing by

some parties rendered the judgment interlocutory as to all

parties until the petitions were ruled upon.

Argument

The petition for certiorari was denied as untimely. If

that dismissal was based upon a misapprehension of the

record, as we believe it was, the case is peculiarly one for

2

consideration upon petitica for rehearing. Brady v. Termin-

al R. R. Ass’n., 302 U.S. 678, 688; Bakery & Pastry Drivers

v. Wohl, 315 U.S. 769, 773; Cafeteria Employees Union

v. Angelos, 319 U.S. 753, 778.

In the trial court six interpleader cases and two suits

against the United States under the Tucker Act and the Tort

Claims Act were consolidated for trial. Landowners were

patties in all eight cases. The United States was not a party

to the interpleader cases. Judgment was rendered in favor

of the helex group in the interpleader cases and in favor of

the United States in the other two cases.

In the Court of Appeals the appeals were consolidated

for all purposes with a single caption and elaborate time

rules for filing a single consolidated brief were prescribed.

(Order Directing Procedure, A. 9)

As construed by all the parties the cite? order created

a single case with multiple issues to which all parties in the

consolidated cases became parties.

The understanding of the United States of the effect

of the order is shown by its brief in the Court of Appeals.

In that brief was presented an argument under the heading

“Section 11 Of The Helium Act Amendments Of 1960

Does. Not Abrogate The Gas Sales Contracts Insofar As

Conveyance Of Or Payment For Helium Is Concerned.” The

Opening sentence under that heading reads, “This issue

relates primarily to the interpleader actions in which the

lessee-producers are parties and the United States is not but,

as already noted, the United States may be affected by the

outcome of those cases.” (A. 13-20)

PERE Siren EA Mee PIER aw eae

3

In the Court of Appeals, Mr. Floyd France, counsel

for the United States in that court and in this court, made an

oral argument upon that issue, although, apact from the

consolidation into a single case, the issue was not involved

in the two cases to which the United States was a party.

(Transcript of oral argument of Floyd France, Esq. before

Court of Appeals, A. 20-24)

The Court of Appeals decided that issue in favor of

lessee-producers and against the contention of the United

States. The United States filed a petition for rehearing on

that issue, (A. 25-28), which was considered by thc

Court of Appeals along with petitions for rehearing by

other members of the helex group. All were overruled on

May 20, 1971. (App. to Petition for Certiorari p. 186)

Landowners filed their petition for certiorari on August 16,

1971.

In this court the United States filed a memorandum in

support of petitions for certiorari in Northern Natural Gas .

Company, et al. v. Mobil Oil Corporation, et al., No. 71-238

and Panhandle Eastern Pipe Line Company, et al. v. Mobil

- il Corporation, et al., No. 71-243. Except for the consoli-

dation into a single case in the Court of Appeals, the United

States would not have been a party in either case.

The petition for certiorari in the case at bar seeks re-

view of the same judgment as the cases mentioned in the

preceding paragraph. It was filed before either of them were

filed.

The filing in the Court of Appeals of timely petitions

for rehearing by the Unized States and by the helex com-

4

panies rendered the judgment of the Court of Appeals inter-

locutory. United States v. Healy, 376 U.S. 75, 11 L.ed.2d

527; United States v. Adams, 383 U.S. 39, 41, f.n.1, 15

L.ed.2d 572, 574, 86 S.Ct. 708.

It has been the rule of this court since its earliest days

that a judgment is not final until it is final as to all parties

and as to all issues. United States v. Girault, 52 U.S. (11

How.) 22, 13 Lied. 587; Meagher v. Minnesota Thresher

Manufacturing Company, 145 U.S. 605, 36 L. ed. 834;

Hohorst v. Hamburg-American Packet Company, 148 U.S.

262, 37 L.ed. 443; National Bank of Rondout v. Smith,

156 U.S. 330, 39 Lied. 441; Collins v. Miller, 252 US.

364, 64 L.ed. 616; United States v. Crescent Amusement

Co., 323 U.S. 173, 89 L.ed. 160; Andrews v. United States,

373 US. 334, 10 L.ed.2d 383.

The reason for the rule is stated in Collins v. Miller,

252 U.S. 364, 376. 64 L.ed. 616, 618 as follows:

““* * A case may not be brought here by appeal or writ

of error in fragments. To be appealable the judgment

must be not only final, put complete. [Citing cases. ]

And the rule requires that the judgment, to be appeal-

able, should be final not only as to all the parties, but

as to the whole subject-matter and as to all the causes

of action involved. [Citing cases. ] The seeming excep-

tion to this rule by which an adjudication final in its

nature, of matters distinct from the general subject

of the litigation, like a claim to property presented by

intervening petition u: a receivership proceeding, has

been treated as final, so.as to authorize an appeal with-

out awaiting the termination of the general litigation

below [Citing cases], has no application here. * * *

a

>)

Here a single judgment deals with the detention on

three affidavits. Only one branch of the case has been

finally disposed of below, therefore none of it is ripe

for review by this court.”

Landowners were indispensable parties to every one

of the eighty-eight consolidated appeals. Certainly neither

the helex companies nor the United States could have sought

review’ of the judgment of the Court of Appeals during the

penacncy of their petitions for rehearing. Since they could

not, landowners could not. A judgment becomes final as to

all parties at one and the same time. Petition for certior-

ari by landowners prior to disposition of the petitions for

rehearing filed by the helex companies and by the United

States would have sliced off and placed in this court only a

portion of the controversy, a procedure which has been dis-

approved throughout the history of the court.

In United States v. Crescent Amusement Co., 323 U.S.

173, 177, 89 L.ed. 160, 165, the trial court rendered a

final judgment. Plaintiff United States appealed on the

sixtieth day thereafter. On that date timely motions by cer-

tain defendants to amend the findings were pending. Those

motions had nothing whatever to do with the portion of

the judgment about which the United States complained.

Nevertheless it was held that the‘appeal by the United States

was premature and it was dismissed. A subsequent appeal

perfected withi sixty days after the date the motions were

overruled was held to be timely.

A red herring has been injected into the case by some

of the respondents. In the Court of Appeals landowne::

filed a motion for leave to file a petition for rehearing out

6

of time to bring before the court a decision of the Supreme

Court of Oklahoma rendered subsequent to the decision by

the Court of Appeals. That motion was denied.

Landowners did not in their petition for certiorari and

do not now rely upon that motion to extend the time for

filing petition for certiorari. Landowners rely upon the fact

that the judgment became final as to all parties and all issues

on the date the petitions for rehearing were denied. Land-

- owners’ petition for certiorari was filed within ninety days

after that date.

Conclusion

Landowners pray that the order denying landowners’

petition for certiorari as out of time be set aside, that the

petition be considered on its merits and the writ granted.

Respectfully submitted,

of Counsel:

KRAMER, NORDLING &

NORDLING

P. O. Box 969

Hugoton, Kansas 67951

FLEESON, GOOING, COULSON

& KITCH

P. O. Box 997

Wichita, Kansas 67201

STIPE, GOSSETT & STIPE

323 East Carl Albert Parkway

McAlester, Oklahoma 74501

BERNARD E. NORDLING

LELAND E. NORDLING

P. O. Box 969

Hugoton, Kansas 6795i

WAYNE COULSON

DALE M. STUCKY

16th Floor, 125 N. Market

P. O. Box 997

Wich:ta, Kansas 67201

GENE STIPE

RICHARD L. GOSSETT

323 East Carl Albert Parkway

McAlester, Oklahoma 74501

LEO WINTERS

P. O. Box 53411

Oklahoma City, Oklahoma 73102

W. A. secre Halen

Hightower Buildin

OklakLoma City, i 73102

Attorneys for Landowners

DONALD I. MITCHELL

Federal Land Bank

P. O. Box 458

Wichita, Kansas 67201

Attorney for Federal Land Bank

PETITIONERS

5

CERTIFICATE OF COUNSEL

The undersigned counsel for petitioners does hereby

certity, pursuan. to Rule 56 § 2, that this petition for rehear-

ing is presented in good faith and not for purposes of delay

and that the matters presented herein relate to issues which

arose subsequen< to the filing of the petition for certiorari.

DALE M. STUCKY

8

APPENDIX

Order Directing Procedure in Court of Appeals sienatasens 9

Excerpt From Brief of United States in Court

ee IE caret cry sedan akaceannere na ceinwn sc bitatnns 13

Transcript of Oral Argument of Floyd France on

Behalf of United States in Court of Appeals ........ ee

Petition of United Statés for Rehearing in Court

I I a pcensccaesan an esilage ni nab eieponia See duel nas dennentn 25

9

SEPTEMBER TERM, SEPTEMBER 10, 1969

Before Honorable Alfred P. Murrah, Chief Judge

Northern Natural Gas

Company, et al

(Helex Group)

Appellees and

Cross-Appellants

VS.

Ralph Grounds, Henry Hitch,

et al (Landowners)

Appellants and

Cross-Appellees,

and

Socony Mobil Oil Co., Inc.

(Mobil Oii Corporation

substituted ) et al.

( Lessee-Producers )

Appellants and

Cross-Appellees.

307-69, 308-69, 309-69,

310-69, 311-69, 312-69,

313-69, 314-69, 315-69,

316-69, 317-69, 318-69,

319-69, 320-69, 321-69,

322-69, 361-69, 362-69,

363-69, 364-69, 365-69,

366-69, 367-69, 368-69,

369-69, 370-69, 371-69,

372-69, 373-69, 374-69,

375-69, 376-69, 377-69,

378-69, 379-69, 380-69,

381-69, 332-69, 383-69,

384-69, 385-69, 386-69,

387-69, 388-69, 389-69,

390-69, 391-69, 392-69,

393-69, 394-69, 395-69,

396-69, 397-69, 398-69,

399-69, 400-69, 401-69,

402-69, 403-69.

ORDER DIRECTING PROCEDURE

On stipulation of al! parties, it is ORDERED:

First: All present and future appeals from the judg-

ment of the United States District Court in the consolidated

cases entitled Northern Natural Gas Company, et al. v.

Ralph Grounds, Henry Hitch, et. al., Civil Action No.

10°

KC-1969 and Consolidated Civil Actions, Nos. KC-1945,

KC-1946, KC-1947, KC-1948, KC-1980, W-3009 and

W-3159 are consolidated for hearing in this court.

Second: The consolidated cases shall bear the title

stated in the caption of this order.

Third: All pending motions and proposed orders are

withdrawn.

Fourth: The time for transmitting the record or docu-

ments in lieu thereof and for docketing the appeals is ex-

tended to September 28, 1969.

Fifth: No docketing statement shall be required and

the appeals are assigned to the general calendar.

Sixth: Typewritten briefs of appellant landowners and

lessee-producers shall be served within forty-five days after

the record or documents in lieu thereof is transmitted and

the clerk so notifies all parties. Designations of contents of

appendix shall be served at the same time.

Seventh: Typewritten briefs of the Helex group ( Pipe

Line Companies, Helex Extraction Companies, and United

States of America) shall be served within sixty days after

service of the later served brief of landowners and lessee-

producers. Designation of contents of appendix shall be

served at the same time.

Eighth: Typewritten reply briefs of landowners and

lessee-producers and answers to briefs of appellant Pipe Line

Companies and Helex Extraction Companies shall be served

within sixty days after service of Helex group briefs.

11

Ninth: Typewritten reply briefs of appellant Helex

group shall be served within thirty days after service of the

later filed answer brief of landowners and lessee-producers.

Tenth: Original briefs of landowners and _ lessee-

producers shall not exceed 150 printed pages. Original

briefs of Helex group shall not exceed 200 pages. Reply

briefs by all parties shall not exceed fifty pages.

Eleventh: All parties shall be entitled to designate

supplements to the appendix within fifteen days after ser-

__ vice of the last brief provided for herein. Within thirty days

after service of the last brief provided for herein, a composite

designation of the appendix, including all prior supplemen-

tal designations, will be filed by landowners.

Twelfth: All appellants elect not to have the append‘x

printed under the direction of the clerk, but landowners and

lessee-producers assume in equal shares the payment to the

clerk of the sum of $250 for the assistance of the clerk in

the preparation of the appendix, such payn.ent to be taxed

as costs.

Thirteenth: Landowners and lessee-producers shall be

allowed sixty days after final designations of the appendix

within which to print it. Forty extra copies of the appendix

shall be printed.

Fourteenth: It shall be unnecessary to include the

pleadings in the appendix, relevant portions of the pretrial

order being sufficient. Any party may designate portions of

the pleadings for inciusion in the appendix, but such desig-

nations shall be kept to a minimum.

12

Fifteenth: Printed briefs shail be served within thirty

days after receipt of the printed appendix.

Sixteenth: The record shall remain in the office of the

clerk of the district court.

Seventeenth: All parties shall co-operate in furnishing

the clerk of the district court with an index to exhibits.

Eighteenth: The appeals will be set for argument at

the September, 1970, session in Wichita, Kansas, unless the

court otherwise directs.

13

UNITED STATES COURT UF APPEALS

TENTH CIRCUIT

a

NORTHERN NATURAL

GAS COMPANY, etal.

(Helex Group),

Appellees and

Cross-Appellants

V.

RALPH GROUNDS,

HENRY HITCH,

et al. (Landowners),

Appellants and

Cross-Appellees

and

SOCONY MOBIL OIL CO.,

INC. (MOBIL OIL COR-

PORATION substituted )

et al. ( Lessee-Producers ) ,

Appellants and

Cross-Appellees

307-69, 308-69, 309-69,

310-69, 311-69, 312-69,

313-69, 314-69, 315-69,

316-69, 317-69, 318-69,

319-69, 320.69, 321-69,

322-69, 361-69, 362-69,

363-69, 364-69, 365-69,

366-69, 367-69, 368-69,

369-69, 370-69, 371-69,

372-69, 373-69, 374-69,

375-69, 376-69, 377-69,

378-69, 379-69, 380-69,

381-69, 382-69, 383-69,

384-69, 385-69, 386-69,

387-69, 388-69, 389-69,

390-69, 391-69, 392-69,

393-69, 394-69, 395-69,

396-69, 397-69, 398-69,

399-69, 400-69, 401-69,

402-69, 403-69, 486-69,

487-69, 488-69, 489-69,

490-69, 491-69, 492-69,

493-69, 494-69, 495-69,

496-69, 497-69, 498-69,

499-69, 500-69, 501-69,

502-69, 503-69, 504-69,

505-69, 506-69, 507-69,

508-69, 509-69, 510-69,

511-69, 512-69, 513-69,

514-69, 515-69.

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF KANSAS

BRIEF FOR THE UNITED STATES, APPELLEE

14

[p. 34]

II

SECTION 11 OF THE HELIUM ACT AMEND-

MENTS OF 1960 DOES NOT ABROGATE THE

GAS SALES CONTRACTS INSOFAR AS CON-

VEYANCE OF OR PAYMENT FOR HELIUM IS

CONCERNED.

This issue relates primarily to the interpleader actions

in which the lessee-producers are parties and the United

States [p- 35] is not but, as already noted, the United States

may be affected by the outcome of those cases. This is par-

ticularly so in view of the position taizen by the lessee-

producers on this appeal.

In the court below, the lessee-producers claimed that

the leases conveyed title to the helium cunstituent of the

gas but that the gas sales contracts did not. Apparently, they

have not urged either point in this Court but argue that by

reason of Section 11 of the Helium Act Amendments of

1960, 50 U.S.C. sec. 167i, the gas sales contracts are abro-

gated insofar as they embrace payment for the helium con-

stituent of the natural gas stream sold. They then ask this

Court to award them as a separate additional payment the

value of the helium constituent of the gas sold and delivered

under the contracts. It is not clear whether they contend that

this results in a title failure. If the Court holds that it does,

then the provisions of the contracts between the United

States and the Helex Companies relating to title failure

might come into play.

The argument of the lessee-producers completely ig-

nores the purposes of Section 11 of the Helium Act Amend-

15

ments of 1960. As already noted, that Section has two

principal objectives. First, Congress desired to preserve the

arrangement under which the Bureau of Mines has been

responsible for helium production. It likewise desired to

continue without interference from the [p- 36] Bureau of

Mines, the regulation of the natural gas industry by the

Federal Power Commissicn as it had done since the Natural

Gas Act of 1938, 52 Stat. 821, 15 U.S.C. secs. 717-717W.

The second purpose to be accomplished by Congress

in Section 11 was to provide that revenues from the sale of

helium shall not be used by the Federal Power Commission,

and certain costs shall be excluded, in determining rates of

a natural gas company. These purposes are abundantly clear

from the wording of Section 11 and also from the legisla-

tive history wh.ch is discussed at length in the memorandum

opinion of the court below, pp. 106-113, and ic the brief

of the Helex Group. Historically, the Department of the

Interior, acting through the Bureau of Mines, has been the

agency upon which Congress has conferred the duty of mak-

ing helium available for essential uses, including conserva-

tion for future needs, Acts of March 3, 1925, 43 Stat. 1110,

September 1, 1937, 50 Stat. 886, and September 13, 1960,

74 Stat. 918. Likewise, the Federal Power Commission has

been charged by Congress with the responsibility for the

regulation of the transportation and sale of gas in interstate

commerce for resale.

The Department of the Interior has carried out its

functions without experiencing any difficulties arising out

of the exercise by the Federal Power Commission of its

16

[p- 37] jurisdiction over natural gas under the Natural Gas

Act. The Federal Power Commission has exercised its juris-

diction under the Natural Gas Act without interference from

ariy of the helium activities of the Department of the Inter-

ior (Wheeler, R. Vol. 66: 6342-6344; App. 887-9). This

has never required the Commission to deal with less than

the entire gas stream. The Commission’s jurisdiction, of

course, does not extend to certain constituents of a gas

stream, such as sulphur compounds, when considered as «

separate commodity.

By Section 11 of the Helium Act Amendments of

1960, Congress clearly continued the pre-existing situation

under which the Department of the Interior administered

the Government’s helium program and the Federal Power

Commission regulated, to the extent directed by Congress,

the natural gas industry. This is the thrust of the opinion

of the Court of Appeals for the Eighth Circuit in Panhandle

Eastern Pipeline Co. v. F.P.C., 359 F.2d 675 (CA. 8,

1966). That opinion clearly upholds the jurisdiction of

the Federal Power Commission over the entire gas stream,

even though it may contain helium in a significant amount

which is being or may be treated for helium extraction. The

Eighth Circuit found such jurisdiction necessary for the

Federal Power Commission to carry out the responsibilities

conferred upon it by Congress. The Eighth Circuit points

out that the legislative i ‘story fully supports its view.

[p. 38] The second purpose of the Section also is im-

portant from the standpoint of the United States. Represent-

atives of the Department of the Interior objected before

17

Congressional commitiees to revenues of sales from helium

to the United States being used for the purpose of reducing

rates on natural gas sold to fuel or other consumers. This, of

course, would have made it more difficult for the Depart-

ment of the Interior to contract with private industry since

it was anticipated the helium extraction companies would

not be satisfied with a public utility rate of return (Wheeler,

R. Vol. 66:6336; App. 887). At the same time, repre-

sentatives of the Federal Power Commission objected to

the original wording of the legislation on the ground that

it would eliminate from Federal Power Commission juris-

diction gas containing helium in significant amounts. The

proposed legislation was amended to take care of the

objections. The Senate Committee on Interior and Insular

Affairs, S. Rept. No. 1814, 86th Cong., p. 5, R. Vol. 183,

Hel. 281 Jt.; App. 2111, states that the revised Section 11

“makes it clear that the Federal Power Commissicn retains

jurisdiction over natural gas containing helium but has no

jurisdiction over helium itself.” Thus, the Committee clearly

understood that the Federal Power Commission was to

have “no jurisdiction over helium itself” as a separate

commodity but that ic “retains jurisdiction over natural gas

containing helium.” [p. 39] As the Eighth Circuit pointed

out in the Panhandle decisicn, this must mean that the

Federal Power Commission retains jurisdiction over the

whole gas stream if it is to carry out the responsibility

entrusted to it by Congress. For the reasons stated, it is the

Government’s position3/ that the Federal Power Commis-

3/ Undersigned counsel do not purport to represent the Federal Power

Commission. But see the position taken by F.P.C. and sustained in

Panhandle Eastern Pipeline Co. v. F.P.C., 359 F.2d 675 (C.A. 8, 1966).

18

sion rate schedules apply to the entire gas stream subject

only to the exclusion of nonjurisdictional constituents such

as sulphur and helium when dealt with as separate com-

modities.

The lessee-producers contend that Section 11 abro-

gated their gas sales contracts at least to the extent of

making the prices paid fur gas sold to pipelines applicable

only to combustibles, or at least not applicable to the

helium. There is absolutely nothing in the legislative history

indicating an intent on the part of Congress to abrogate

any contracts and the lessee-producers have pointed out

none. The partial abrogation of the contracts is in no way

essential or beneficial to the [p- 40] helium conservation

program and there is no reason why Congress should have

been interested in this question which at that time was

entirely between the lessee-producers and the pipelines.

The contracts between the Helex Companies and the

United States did not come into existence until several

years later. The interpretation urged by the lessee-producers,

if it had been included in Section 11, would only have

made it more difficult and costly for the Government to

negotiate the contracts necessary to carry out the helium

conservation program.

The lessee-producers also fail to point out that their

interpretation of Section 11 would give them an increase

in price, but without action by the Commission, for that

portion of the stream which they allege remained subject

to F.P.C. jurisdiction. There seems to be no question but

that prior to Septemver 13, 1960, the prices stated in the

19

gas sales contracts or the rates established by tke F.P.C.

covered the entire stream. The lessee-producers say that,

subsequent to that date, those prices or rates cover some- .

thing less than the entire stream. But they continued to

receive the same price based upon the total volume delivered.

There was no reduction in price or in volume due to the

alleged partiai abrogation of the contracts eliminating he-

lium (and possibly other noncombustibles). They point to

[p. 41] nothing in Section 11 or in the legislative history

showing Congress intended such a windfall, completely

apart from what they may or may not receive for the

helium, which would result if their interpretation is adopted.

An intention should not be lightly imputed to Congress to

effect a rate increase for natural gas without sanction of

the Federal Power Commission.

CONCLUSION

For the foregoing reasons, as well as those stated in

the memorandum findings of fact and conclusions of law

of the court below and the brief of the Helex Group, the

judgment of the District Court should be affirmed insofar

as:

a. It holds that oil and gas leases convey title to the

helium and dismisses the landowners’ claims against the

United States on the merits;

b. It holds that the defendant, the United States,

take nothing on its claims against the third party defendants

in the government actions; and

c. It holds that neither the landowners nor the lessee-

20

producers have a valid claim to title or additional compensa-

tion for the helium constituent of the natural gas processed

for helium extraction by the Helium Companies and sold

to the Usiited States [p. 42] under the four contracts be-

tween the Helex Companies and the United States.

Transcript of Oral Argument of Floyd France on

Behalf of United States in Court of Appeals

[p. 197] MR. FRANCE: May it please the Court, the

contentions made now by the lessee-producers raise a ques-

tion of statutory construction. As usual, in determining ques-

tions of statutory construction the controlling factor is the

intent of Congress. Here the intent of Congress, we submit,

is readily available, both from the Act itself — the 1960

Act itself — and from the legisiative history. Prior to the

enactment of the 1960 Act, the primary purpose of the

Federal helium program was to furnish helium for current

uses of the Government and of industry.

The increasing demands for helium during the 1950's

demonstrated a need for a conservation program. The

resources were being wasted and not used, and so in order

to meet this need for future anticipated need for helium,

Congress passed the 1960 Act, the Helium Act Amend-

ments of 1960, which authorized a large scale long-range

helium conservation program. Actually, it is rather a simple

program. Under it the Government purchases crude helium,

extracted from the gas stream in pipelines going from the

Hugoton field, and it is stored in an underground reservoir

until needed at some time in the future.

21

This gas is produced under the oil and gas leases by

the lessee-producers, and by the lessee-produ-ers [p. 198]

it is sold and delivered to the pipeline companies uader

gas sales contracts which are and for some time have been

subject to regulation by the Federal Power Commission.

Each of thes. contracts contains a warranty of title and I

believe one of the features of the contracts which remains

effective, notwithstanding FPC regulation, is the warranty

of title provisions. The contracts prior to 1960 clearly

covered the entire gas stream, including the inerts such as

nitrogen and helium, and the warranty of title extended

to all of these constitutents.

The question now before this Court, therefore, is

whether Congress in 1960 intended to interfere with or

abrugate in any way the contractual arrangements then

existing between the lessee-producers and the pipeline com-

panies in those particular instances where the pipeline

companies or their subsidiary companies extracted the he-

lium and sold it to the United States. .

Now, the purpose of the 1960 Act was clearly con-

servation of helium and it was not necessary in order to

obtain this conservation of helium for Congress to interfere

in any way with the existing contractual relationship be-

tween the lessee-producers and the pinelines. The fact is

that if that existing contractual relationship is inverfered

with, it will not help the conservation program. It will

[y- 199] only interfere with it, make it more difficult for

the Bureau of Mines to carry out that program and make

the program more expensive. Certainly, Congress did not

intend this result when it enacted the 1960 Act.

—

22

Now, that is looking at the Act as a whole, at its

general purpose to conserve helium. Tne lessee-producers

rely particularly upon Section 11, and so we will take a

further look at the purposes of Section 11. Now, prior to

this time the Federal Power Commission had followed the

practice of taking profits from non-jurisdictional activities

of the pipeline companies, taking those profits into con-

sideration when it fixed the rates of the pipeline companies

or of the producers. If the Federal Power Commission were

to do the same with respect to the sale of helium to the

United States, it would make it more difficult for the

Bureau of Mines to contract, to negotiate contracts with

the helium companies; if the helium companies could retain

the profits they would be much more eager to enter into

it than it would be if the profits were going to be used

for rate-making purposes.

So when Congress enacted Section 11, it provided

that profits from the sale of helium as a separate com-

modity, and also certain joint costs, should not be taken

into consideration by the Federal Power Commission in

fixing [p- 200] rates for gas.

The second purpose of Section 11 was to continue

the historic separation of duties between the Federal Power

Commission and the Bureau of Mines. The Federal Power

Commission fer many years had been the Government

agency responsibie for the regulation of the natural gas

industry. The Bureau of Mines for an even longer period

had been the Government agency responsible for the pro-

duction of helium to meet the demands of both the Gov-

23

ernment and private industry. Obviously, Congress desired

to continue this separation of powers, desired that the Fed-

eral Power Commission continue its supervision or regula-

tion of the natural gas industry, continue the Bureau of

Mines to have the responsibility for the helium production

program and also for che new helium conservation program.

Now, again, it was not necessary at all for Congress

to interfere in any way with the contractual relationship

theretofore existing between the lessee-producers and the

pipeline companies in order to put into effect these two

purposes of Section 11 of the Helium Act Amendments.

Again, if Congress had interfered in any way with the con-

tractual relationship it wouidn’t help but it would hinder

the helium conservation program. The Act itself gives no

indication whatever that Congress. intended any interfer-

ence [p- 201] whatever with the contractual relationship.

The legislative history is even more clear as discussed

by Mr. Blaes and by Mr. Richardson, and I may say that

the Government supports fully the statements made by

Mr. Blaes and Mr. Richardson and I will not repeat any

of them. However, as pointed out by them, as pointed out

by the court below and as pointed out in the briefs, the

legistative history is very clear as to the intent or Congress.

Congress intended the Federal Power Commission continue

its regulation of helium-bearing natural gas the same as it

had done before.

The fact that the Helium Act Amendments, or Section

11 in particular, might in any way whatever interfere with

the contractual relationship existing between the lessee-

24

producers and the pipeline companies is not mentioned in

the 1960 Act and that possiblity is not even mentioned

in the legislative history. In other words, the particular

contentions that are being made by the lessee-producers

here were never presented to Congress, they were never

considered by Congress, and were never acted on by Con-

gress. The intent of Congress was simply the conservation

of helium and the preservation of the historic separation

of powers between the two Government bureaus: the Fed-

eral Power Commission and the Bureau of Mines. That can

be accomplished [p. 202] without any abrogation of the

contracts.

Now, the court below has considered this and the

Court found that if the lessee-producers’ claims are to be

allowed that would amount to a partial abrogation of the

existing contracts. The trial court considered these questions

very carefully, they are discussed in the trial court’s opinion,

and I respectfully submit the trial court’s findings in this

connection should be affirmed in every respect.

Thank you.

JUDGE BREITENSTEIN: Thank you, Mr. France.

25

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

No. 307-69, etc.

NORTHERN NATURAL GAS COMPANY, et al.,

(Helex Group)

Appellees and Cross-Appellants

v.

RALPH GROUNDS, HENRY HITCH, et al.,

Appellants and Cross-Appellees

and

SOCONY MOBIL OIL CO., INC. (Mobil Oil

Corporation substituted), et al.,

( Lessee-Producers )

Appellants and Cross-Appellees

ON APPEALS FROM THE UNITED STATES

DISTRICT COURT

FOR THE DISTRICT OF KANSAS

PETITION FOR REHEARING

OF THE UNITED STATES

The United States of America, appellee, presents this

petition for rehearing. In support thereof, the United States

adopts, insofar as applicable to it, the reasons set forth in

support of the petitions for rehearing being filed by Pan-

handle Eastern Pipe Line Company and National Helium

Corporation and by the Cities Service Companies and the

Northern Companies. The United States specifically sets

forth and emphasizes the following points:

—=

26

1

It is submitted that, after determining that the gas

sales contracts are not abrogated, this Court committed

error in determining that the Federal Power Commission

(F.P.C.) rice superseded the contract price as to the

helium constituent and that the lessee-producers are entitled

to the re.sonable value of the helium’ where the gas is

processed. The point is whether in these circumstances,

the lessee-producers are entitled to the ..ontract price or

the reasonable value of the helium.

The basis on which this Court finds the lessee-pro-

ducers are entitled to any additional payment (they have

already received either the contract price or the F.P.C. price

for the full volume of gas delivered including the helium)

is its finding that under the Helium Act Amendments of

1960, the F.P.C. jurisdiction does not extend to the helium

constituent. If F.P.C. jurisdiction does not extend to the

helium constituent (a conclusion with which we disagree) ,

then the F.P.C. price cannot supersede the contract price

as to the helium constituent. It is plainly contradictory for

the Court to find that the helium is not subject to F.P.C.

jurisdiction, but that the contract price is superseded in some

fashion by F.P.C. regulation. As set forth in the Helex

Companies’ brief, the holding that the Helium Act Amend-

ments of 1960 and F.P.C. regulation in some manner

vitiated the price provisions of the gas sales contracts in

a manner not necessary to the puiposes of the Natural Gas

Act of 1938, as amended, raises serious constitutional

problems.

€

a?

II

The holding of the Court is too broad in requiring

that the Helex and Pipe Line Companies pay the lessee-

producers the reasonable value of the helium constituent

of all gas delivered and processed. The holding is based to

some extent, and presumably entirely, on the effect of

F.P.C. regulation of the natural gas industry. If so, the

holding must be limited to the extent that the industry

is subject to F.P.C. regulation. This would require elimina-

tion from the Court’s holding of.gas purchased and pro-

cessed under the following conditions:

A. All gas delivered under sales contracts where the

contract price does not exceed the F.P.C. price since in

those cases it cannot be found that the F.P.C. price super-

sedes the contract price.

B. All situations where there is no gas sales contract

subject to F.P.C. regulation. This would include the situ-

ation where the Pipe Line or Helex Company is the pro-

ducer, and also all gas sold and delivered after March 18,

1971, by small producers exempted from F.P.C. regulation

by F.P.C. Order No. 428 dated March 18, 1971, Docket

No. R-393.1/

There may be other situations which would require

special attention.

1/ If H.R. 2513, 92nd Cong., 1st sess., exempting small sales of gas from

F.P.C. regulations should become law, it would require another ex-

emption.

28

CONCLUSION

For the foregoing reasons, this petition for rehearing

should be granted.

Respectfully submitted,

SHIRO KASHIWA,

Assistant Attorney General.

RICHARD E. OXANDALE

Assistant United States Attorney,

Wichita, Kansas 67202.

EDMUND B. CLARK,

FLOYD L. FRANCE,

Attorneys, Department of Justice,

Washington, D. C. 20530.

APRIL 1971

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