Petition for Writ of Certiorari — Moss v. Federal Power Commission

7 Meal 7

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SUPREME COURT, % a

No 74-104.

IN THE

Supreme Court of the United States

OctToser Tenn, 1974

JOHN E. Moss, ET AL, PETITIONERS

v.

FEDERAL POWER COMMISSION, RESPONDENT

CONDITIONAL CROSS-PETITION FOR A WRIT OF

CERTIORARI TO THE UNITED STATES COURT OF

Morton L. Simons

Barbara M. Simons

1629 K Street, N. w.

Washington, D.C. 20006

Attorneys for Petitioners

February 20, 1975

IN THE

aue Mails a tha ith Sei

Octoser TERM, 1974

No.

JOHN E. Moss, ET AL, PETITIONERS

v.

FEDERAL POWER COMMISSION, RESPONDENT

CONDITIONAL CROSS-PETITION FOR A WRIT OF

CERTIORARI TO THE UNITED STATES COURT OF

Petitioners John E. Moss et al. petition

for a writ of certiorari to review the judgment

of the United States Court of Appeals for the

District of Columbia Circuit, entered August 15,

1974, said writ to issue only in the event the

Court should determine to grant a writ of certi-

orari in Federal Power Commission v. John E.

Moss et al., No. 74-883, filed January 17, 1975,

which seeks review of only one of the issues

decided by the court below.

OPINIONS BELOW

The opinion of the court of appeals is

reported at 502 F.2d 461, and is reprinted as

Appendix A to the petition for certiorari in

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No. 74-883 (hereinafter FPC Pet.). The order

of the Federal Power Commission (Order No.

455) is reported at 48 FPC 218 (FPC Pet. App.

D), and the Commission's order denying rehear-

ing (Order No. 455-A) is reported at 48 FPC 477

(FPC Pet. App. E).

The judgment of the court of appeals was

entered on August 15, 1974 FFC Pet. App. B).

and petitions for rehearing were denied on

September 19, 1975 (FFC Pet. App. C). On

December 12, 1974, this Court extended the

time for filing a petition for writ of certiorari

until January 17, 1975, and on Jamary 17 the

FPC filed its petition, FPC v. Moss, No. 74-

883.

Cross-petitioners Moss et al., while not

previously of the view that certiorari was

essential on the issues decided adversely to

them, believe that the issue raised by the

Commission's petition, assuming it is cert-

worthy, cannot meaningfully be considered in

isolation from the other issues decided contem-

poraneously by the court of appeals. Thus, the

necessity for the instant conditional cross-

petition did not arise until after the filing of

the Commission's petition on January 17, 1975,

and this cross-petition is being filed within 30

days of receipt of the Commission's petition.

The procedure followed by cross-petitioners

conforms to the procedure approved by this

Court in Ray v. Pierson, cert. granted, 384 U.S.

938. See also Texaco Inc. v. FPC, No. 1231, |

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O. T. 1966 (renumbered No. 82, O.T. 1967);

Texaco Inc. v. FPC, No. 628, O.T. 1967.

Whether the Federal Power Commission

has power, under the Natural Gas Act, to

adopt an optional procedure" for new pro-

ducer sales that permits producers (1) to

charge rates in excess of the just and reason-

able area rate ceilings, (2) to collect, free

from refund obligation during the period prior

to Commission certification, cont~act rates

that ou certification are found to be excessive,

(3} to effectuate future rate increases free

from contemporaneous Commission review,

and (4) to abandon service at the end of the

contract term without the further Commission

approval required by Section 7(b) of the Act.

STATUTE INVOLVED

Sections 4, 5, and 7 of the Natural Gas

Act, as amended, 15 U.S.C. §§717c, 717d,

and 717f, are set out in FPC Pet. App. F.

STATEMENT

The facts of this case are fully and

accurately set forth in the Brief of Moss

et al, in Opposition filed February 20, 1975

in FPC v. Mosse, No. 74-883, .

The Commission's purpose in promul-

gating its "optional procedure" rule was to

establish a method outside the statutorily —

required regulatory scheme for permitting

the producers more than could be gtanted =

ther under regulation: higher pr regi este

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freedom from refund obligation, freedom from

rate review, and freedom to abandon service at

the end of the contract term,

Since the purpose of the Commission's new

rule could not lawfully be achieved under a long

line of decisions of which F. P, C. v. Texaco Inc.,

417 U.S, 380, was merely the latest, the court

of appeals interpreted the substantive rate stand-

ard aad the rate increase procedure in a manner

that would render them lawful (while simultane-

ously and necessarily depriving them of their

intended effect). On the remaining two issues

the court of appeals apparently ws" anable to

arrive at an interpretation that wou i render

them lawful, and, in effect, compromised,

holding the no-refund provision lawful, and

the "pregranted abandonment" provision un-

lawful. While we believe the latter holding

was correct, we submit that the former was

not. : <4

* To permit the collection of 8 rates

free from refund obligation defeats the essen-

tial statutory purpose of assuring consumers

a complete, permanent and effective bond of

protection from excessive rates and charges, “

Atlantic 675 5 Co, v. Public Service Com-

mission, 360 U.S. 378 at 388 (1959); see also

United Improvement Co, v. Callery Prop-

30 1965};

ape e 362 U. 223 at 229- ;

Public Service Commission v. L. E. S., 329

F.2d 242 at 249 119880. cert, denied, 377 U.S.

963; T Oil Co v EPC, 442 F.2d 489

at 492, 225 aS. Cir. 1971

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The more important question raised by the

approach of the court of appeals, however, is

whether its legitimization-by-interpretation of

the basic, rate-determination standard under the

optional procedure was appropriate in light of

the fact that "optional procedure" (like the

small-producer exemption condemned in Ler-

aco, and like the essentially standardless emer-

gency and limited-term sales now under attack

in other court proceedings) was intended to pro-

vide producers with a higher than just-and-

reasonable price, i. e., a price made unlawful

by the basic organic statute under which the 2

Commission operates. As this Court noted

last Term under parallel circumstances:

IT he Act makes unlawful all rates

‘which are not just and reasonable,

and does not say a little unlawfulness

is permitted.“ F.P.C. v. Texaco Ince,

417 U.S. 380 at 399.

And, asa practical matter, the pernicious

consequences of permitting formalized extra-

legal procedures to remain in effect pending a

determination of their legality cannot be ignored.

The new procedures--of which optional pricing

is the most important--were promulgated shortly

after the Commission had fixed the just and rea-

sonable ceiling for the major producing areas at

26¢ per Mef. Given the choice of e their

* The Commission's action--FPC Opinion No.

598, 46 FPC 86 (1971)--was affirmed by this

Court only last June, oiuc v.

. — —— — WW — 2 — |

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new sales at the 26 ceiling or me 40¢-50¢

allowed under the alternative procedures,

which subordinated or ignored just-and-

| reasonable standards, the producers chcse

) the above-ceiling prices, see FPC Release

No. 21087, Feb. 3, 1975, pp. 24-26; and while

the 40¢-50¢ above-ceiling level totally sup-

planted the 26¢ ceiling price for new supplies,

the volume of new supplies did not increase.

The Commission's response to this devel-

opment, however, was to raise the just-and-

reasonable ceiling to the 40¢-50¢ level permit-

ted by its extraordinary procedures, FPC

Opinion No. 699 (June 21, 107. While origi-

nally indicating that it would limit future use

of emergency and limited-term certificates,

the Commission subsequently reinstated these

procedures, essentially on the industry's repre-

sentation that even the new 50¢ level would not

assure adequate supplies, Opinion No. 699-B

(Sept. 9, 1974).

The latest turn of the wheel is provided

598 was itself 30-40% above prior ceilings,

and was adopted upon produce: representa-

tions that it would provide the requisite incen-

tive for exploration and dedication of new

reserves to the interstate market.

* On rehearing, the level was raised to 50¢-

60¢ per Mcf, Opinion No. 699-H (Dec. 4, 1974).

Appeals from Opinion No, 699 and 699-H are

presently pending in five circuits, with ultimate

venue not yet determined.

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by a recent FPC notice of a proposed sale

from the offshore Louisiana area under the

optional procedure at $1.44 per Mcf, Coleve,

a Joint Venture, C1I75-438, notice issued

February 14, 1975.

Thus, the basic practical difficulty with

loopholes like the optional procedure is that,

by offering a price in excess of the just and

reasonable ceiling, they undercut the ceiling

rate and continually force it upward to what-

ever the market will bear. The basic legal

difficulty is that Congress, by enacting the

Natural Gas Act, intended to assure that

natural gas prices would not be based on a

standard of what the market will bear.

No basis exists for permitting such a

gross departure from the statutory plan.

Since the only purpose of the optional pro-

cedure is to provide an unwarranted excep-

tion to Commission-determ ined just-and-

reasonable ceilings, the appropriate solu-

tion to the optional procedure is not reform

through interpretation but outright reversal.

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CONCLUSION

For the foregoing reasons, it is respect-

fully submitted that in the event the Court

should grant the petition for a writ of certio-

rari in No, 74-883, this petition for a writ

of certiorari should likewise be granted.

Respectfully submitted,

Morton L. Simons

Barbara M. Simons

1629 K Street, N.W.

Washington, D.C. 20006

Attorneys for Petitioners

February 20, 1975

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