Appendix — Williams v. Overholser

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Volume I

JOINT

APPENDIX

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i

INDEX

Vo_ume I

Joint and Several Petition of State of

Wisconsin and Public Service Com-

mission of Wisconsin to Review Or-

ders of the Federal Power Commis-

sion in Its Docket G-1148, Filed No-

vember 20, 1951 2.00...

Petition of City of Milwaukee to Re-

view an Order of the Federal Power

Commission in Its Docket No. G-1148

Relating to an Opinion and Order

Entered by the Commission on Au-

gust 16, 1951 (Order No. 217, Issued

August 22, 1951), Filed November

15, 1951

Petition of City of Kansas City, Mis-

souri, for Review of Order of Federal

Power Commission, Filed November

eee

Petition of the City of Detroit, Michi-

gan, for Review of Order of Federal

Power Commission, Filed November

14, 1951

Motion of Phillips Petroleum Company

for Leave to Intervene, Filed Jan-

uary 29, 1952 ......

Record Appendix

Page Page

44-56

57-72

72-77

ii

Order of United States Court of Ap-

peals for the District of Columbia

Circuit permitting Phi:lips Petrol-

eum Company to Intervene, Dated

February 9, 1952, Filed February 9,

nnn

Motion of State of New Mexico, et al

for Leave to Intervene, Filed Febru-

ary 5, 1952 -....----------- — a

Order of United States Court of Appeals

for the District of Columbia Circuit

permitting State of New Mexico and

Oil Conservation Commission of State

of New Mexico to Intervene, Dated

March 3, 1952, Filed March 3, 1952 ...

Motion of the Corporation Commission

of the State of Oklahoma for Leave to

Intervene, Filed April 9, 1952 -...........

Answer of State of Wisconsin and Pub-

lic Service Commission of State of

Wisconsin to Motion of the Corpora-

tion Commission of the State of Okla-

homa for Leave to Intervene, Filed

April 16, 1952 ............-------------s--esee-ssenes

Motion of the State of Texas Through

the Railroad Commission of Texas for

Leave to Intervene, Filed April 10,

Record

Page

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Stipulation With Respect to the Mo-

tion to Intervene of the State of Texas

Through Its Railroad Commission and

the Corporation Commission of the

State of Oklahoma and the Motions

of the State of Wisconsin and Its Pub-

lic Service Cornmission to Dismiss the

Aforesaid Motions to Intervene, Filed

ee 106-111

Order of the United States Court of Ap-

peals for the District of Columbia

Circuit Permitting Corporation Com-

mission of State of Oklahoma to In-

tervene, Dated May 12, }952, Filed

Be Bey SE eeeeeenctntnemnnsentenene 111-114

Order of the United States Court of Ap-

peals for the District of Columbia Cir-

cuit Permitting the State of Texas

Through the Railroad Commission of

Texas to Intervene, Dated May 12,

1952, Filed May 12, 1952 114-117

WITNESSES

Testimony of:

Marsh, Edward (Presiding Examiner-

opening statement) —..0 7-9 118-119

Record

Page

Etchieson, W. S.

Direct examination by

CO ee 150-152

170

173

176-178

184-186

Walters, Mason G.

Direct examination by

GI LE 225-226

250-252

259-261

Etchieson, W. S. (recalled)

SG SE reve 265

292-302

396-311

317-319

325-326

Cross examination by Mr. Sparks.. 327

338-339

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Record Appendix

Page Page

Direct examination (resumed) by

seobeehdidbeaieenesiieanieiiad 645-646 170

657-658 171

734-737 171-174

Cross examination by Mr. Sparks 744 174

775-779 186-188

917-919 188-190

Eee 934 190

942-943 190

OAR EEE 993-1001 191-196

Cross examination by Mr. Sparks. 1001 197

Paris, A. W.

Direct examination by

OB 1002-1004 197-198

1018-1020 198-200

1034 200

1045-1046 200-201

1048-1049 201-202

1082-1084 202-203

1094-1095 204-205

1103-1105 205-206

1108-1112 206-209

1116 209-210

1119-1121

vi

Record Appendix

Page Page

Direct examination (resumed)

Rey Bile, FRODGID ccciccecmeencen 1122-1124 213-215

1131-1134 215-217 ©

1146-1148 217-218

Cross examination by Mr. Sparks..1157-1183 219-237

1191-1198 238-243

Walters, Mason G. (recalled)

Further direct examination by

es ED cnidhiccininticcinicewencseceenmminsan 1211 244

1213-1216 244-246

Markley, Howard

Direct examination by

Bs IID creccencrcsincnsnntnsneninnsitenamecien 1217-1220 246-248

1225 248

1227-1230 249-250

1232 250-251

1269-1274 251-255

1301-1303 256-257

1311-1315 257-261

1341 261

1344-1345 262

Examination by Mr. Torkelson .... 1372 262

1379 262-263

Cross examination by Mr. Sparks..1380-1385 263-267

1395-1396 267-269

1425-1427 269-270

1463-1466 270-273

Redirect examination by

I 1473 273

1486-1488 273-275

1541-1542 275-276

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Record Appendix

Page Page

Redirect examination (resumed)

by Mr. McAllister -................. 1545 276

1555-1556 276-278

Examination by Mr. Torkelson ....1562-1564 278-279

Examination by Mr. McAllister ....1568-1569 279-280

Recross examination by

SE II sedchetiaticteailepadaniciscabnnihs 1569 280

Roth, George C.

Direct examination by

By IEE sciuseenensivansipedanamansinabaned 1576-1587 281-288

1590-1593 288-290

Cross examination by Mr. Sparks..1602-1604 291-292

1657 292-293

Schumacher, A. H.

Direct examination by

eprcsunianpnibiaiitincwinmmsdinnnes 1666-1669 293-295

Stewart, Robert Boyd

Direct examination by

Walters, Mason G. (resumed)

Redirect examination by

Mr. McAllister ........................ ..--.-1744-1745 296-298

1786-1787 298

1789 298-299

Rippel, A. M.

Mr. McAllister

Bunn, George P.

Mr. McAllister

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Mr. Purdue ....

Direct examination by

Page

cnsingnmsosemtinninenanen 1796-1797

Markley, Howard (resumed)

Examination by Mr. McAllister ....

Rippel, A. M. (resumed)

Direct examination by

Direct examination by

1867

1869-1870

1881-1882

1898, 1902

1973, 1975

1977-1982

1985-1986

1990-1993

2014

2020-2022

2024-2026

2030-2032

2037-2038

2093-2094

2097-2098

2103-2104

2107-2108

2121-2123

2132-2134

2136-2137

2147-2148

Cross examination by Mr. Sparks..2157-2160

Record Appendix

Page

303-306

307-208

308-310

310-311

311-312

313-314

314-315

315

315-316

317

317-318

319-320

320-322

322-323

323-324

324-326

326-329

Record Appendix

Page

2166, 2172

2176

2178

2181-2185

2221

2256-2261

Stark, C. O. (resumed)

Examination by Mr. Torkelson ......

Beall, K. E.

Direct examination by

RS WHI excicsscctencsststermestntinbesnil

Examination by Mr. McAllister

2271-2272

2284-2285

2309

2355-2358

2421-2422

2466

2470-2471

2726

2726-2727

2729, 2732

.-2733-2734

2737

2742, 2747

2752

2759-2760

2812

Page

329

329

329-330

330-334

334

334-339

339

339-341

341

341-343

343-344

344

344-345

345

Record Appendix

Page Page

Bunn, George P. (resumed)

Direct examination by Mr. Sparks 2813 350

2819 350

2923-2926 350-353

2935 353

2939-2940 353-354

2949-2950 354-355

2999-3000 355

3049-3052 355-356

3055-3058 356-359

3094-3096 359-361

3109-3111 361-363

3140-3141 363

3146-3147 363-364

3208 364

3257-3268 364-374

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VOLUME 1 JOINT APPENDIX

Gnited States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 11247

STATE OF WISCONSIN AND PUBLIC SERVICE COMMISSION

OF WISCONSIN, Petitioners

versus

FEDERAL POWER COMMISSION, Respondent

PHILLIPS PETROLEUM COMPANY ET AL., Intervenors.

No, 11241

CITY OF DETROIT, MICHIGAN, Petitioner,

versus

FEDERAL POWER COMMISSION, Respondent

PHILLIPS PETROLEUM COMPANY ET AL., Intervenors.

No. 11242

CITY OF KANSAS CITY, MISSOURI, Petitioner,

versus

FEDERAL POWER COMMISSION, R

PHILLIPS PETROLEUM COMPANY ET AL., ieteovenens.

No. 11245

CITY OF MILWAUKEE, WISCONSIN, a Municipal Corporation, Petitioner,

versus

FEDERAL POWER COMMISSION, Respondent

PHILLIPS PETROLEUM COMPANY ET AL., Intervenors.

No. 11252

COUNTY OF WAYNE, MICHIGAN, Petitioner,

versus

FEDERAL POWER COMMISSION, Respondent

PHILLIPS PETROLEUM COMPANY ET AL., Intervenors.

Review of An Order of the Federal Power Commission

CONTENTS

Petitions For Review Orders of Intervention

Testimony—Record Pages 1-3268

nd

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JOINT AND SEVERAL PETITION OF STATE OF

WISCONSIN AND PUBLIC SERVICE COMMIS-

SION OF WISCONSIN TO REVIEW ORDERS OF

THE FEDERAL POWER COMMISSION IN ITS

DOCKET G-1148

11,247

To the Honorable, the United States Court of Appeals for

the District of Columbia Circuit:

The State of Wisconsin and Public Service Commission

of Wisconsin file their joint and several petition under

Section 19 (b) of the Natural Gas Act to review and set

aside an order of the Federal Power Commission issued

August 22, 1951 in connection with said Commission’s Opin-

ion No. 217, and the Commission’s order denying the appli-

cation of these petitioners for rehearing, which latter order

was issued September 28, 1951, aJ! of which was in a pro-

ceeding before said Commission entitled “In the Matter

of Phillips Petroleum Company, Docket G-1148.”

For their petition the State of Wisconsin and Public

Service Commission of Wisconsin respectfully allege as

follows:

1. Identity of Petitioners

(1) At all times herein mentioned the State of Wis-

consin was and is one of the forty-eight sovereign states

forming the United States of America. It appeared before

the Federal Power Commission in the proceeding entitled

“In the Matter of Phillips Petroleum Company, Docket

G-1148” and it petitions and appears herein in its sovereign

1

capacity and by its agency, the Public Service Commission

of Wisconsin, to protect a two-fold interest as follows:

(a) as the representative of the consuming public which

purchases natural gas in the State of Wisconsin from

distributing companies located in such states, which com-

panies in turn purchase said natural gas in the State of

Wisconsin frem Michigan-Wisconsin Pipe Line Company,

wuich latter company in turn purchases its entire supply of

said natural gas from Phillips Petroleum Company at a

point in the State of Texas, and (b) as a user or consumer

of natural gas purchased from a distributing company lo-

cated in the State of Wisconsin (Madison Gas & Electric

Company, Madison, Wisconsin), which distributing com-

pany purchases said gas from Michigan-Wisconsin Pipe Line

Company as above stated, by virtue of its being the pro-

prietor of certain public institutions, schools and buildings.

(2) The Public Service Commission of Wisconsin was

at all times herein mentioned an agency of the State of

Wisconsin created by and deriving its authority and powers

from statutory grant by the Wisconsin Legislature. The

authority and powers so granted the Public Service Com-

mission of Wisconsin appear in Chapters 195 and 196 of

the Wisconsin Statutes. Among other powers and authority

given to said Commission is that which follows from Sec-

tions 195.01, 196.01, 196.02, 196.03, 196.20 and 196.37, Wis-

consin Statutes, to regulate rates charged by and the

adequacy of service furnished by public utilities located

in the State of Wisconsin, including those which sell and

deliver natural gas to the public for ultimate consumption

for dornestic, commercial, industrial or any other use, to

the end that such rates shall be reasonable and just, and

that such public utilities furnish reasonably adequate serv-

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ice and facilities to the public. That the Public Service

Commission of Wisconsin is a “state commission” within

the meaning of the term as used in Sections 2 (8), 13 and

15 of the Natural Gas Act and Section 1.8 of the General

Rules and Regulations and Rules of Practice and Procedure

of the Federal Power Commission.

2. Nature of Proceedings As to Which Review Is

Sought

(3) By order dated October 28, 1948, issued October

29, 1948, pursuant to authority granted it by the Natural

Gas Act, the Federal Power Commission instituted an in-

vestigation of the natural gas operations of Phillips Petrol-

eum Company to determine:

(i) Whether it is a “natural-gas company” within the

meaning of the Natural Gas Act; and

(ii) Whether, in connection with any transportation or

sale of natural gas, subject to the jurisdiction of

the Commission, any rates, charges, or classifica-

tions demanded, observed, charged, or collected,

or any rules, regulations, practices or contracts

affecting such rates, charges, or classifications are

unjust, unreasonable, unduly discriminatory, or

preferential.

(4) On February 9, 1950 the Federal Power Commis-

sion issued another order in which reference was made,

among other things, to complaints filed by the City of

Detroit and Public Service Commission of Wisconsin and

the results of field investigations made by the staff of the

Federal Power Commission, as to the relation of Phillips

Petroleum Company to a number of pipe line companies.

In referring to Michigan-Wisconsin Pipe Line Company,

the Commission said:

“As stated above, the present annual sales capac-

ity of 56,575,000 Mcf is proposed to be increased to

125,195,000 Mcf and it appears from staff estimates that

the annual cost to Michigan-Wisconsin of 125,195,000

Mcf of natural gas which Phillips will supply to

Michigan-Wisconsin under the contract of December

11, 1945, as amended, and the two new contracts of

December 1, 1949, would be increased approximately

$5,000,000 annually over the cost under the original

contract. Furthermore, such contracts contain other

provisions which, upon becoming operative in the fu-

ture, may result in further substantial increases in the

cost of gas to be svpplied Michigan-Wisconsin.

“Phillips has contracted to sell and is selling large

volumes of natural gas from the Panhandle and Hugo-

ton gas fields to Panhandle Eastern Pipe Line Com-

pany, Northern Natural Gas Company, Independent

Natural Gas Company, and El Paso Natural Gas Com-

pany at various prices substantialiy lower than the

base prices specified in its contracts with Michigan-

Wisconsin.

“Wherefore, it appears to the Commission that:

“It is necessary and desirable in the public interest

that a public hearing be held to determine all relevant

facts and circumstances surrounding the natural gas

operations of Phillips Petroleum Company to enable

the Commission to determine (a) Whether Phillips

Petroleum Company is a ‘natural-gas company’ with-

in the meaning of the Natural Gas Act; (b) Whether

in connection with any transportation or sale of natural

gas subject to the jurisdiction of the Commission, in-

4

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cluding sales to Michigan-Wisconsin Pipe Line Com-

pany, any rates, charges, or classifications demanded,

observed, charged, or collected by Phillips Petroleum

Company, or any rules, regulations, practices, or con-

tracts affecting such rates, charges, or classifications

are unjust, unreasonable, unduly discriminatory or

preferential.

“The Commission orders:

“(A) A public hearing be held commencing at

10 a. m. (CST) on March 20, 1950, in the

Federal Court Room, U. S. Post Office Build-

ing, Bartlesville, Oklahoma, respecting all

matters and issues set forth in this order

and the Commission’s order of investigation

under date of October 28, 1948.

“(B) Interested State commissions may partici-

pate as provided by Sections 8 and 37 (f)

[18 CFR 1.8 and 1.37 (f)] of the Commis-

sion’s Rules of Practice and Procedure.”

(5) After a number of adjournments the Federal! Pow-

er Commission issued an order on February 28, 1951 setting

the matter for hearing in Bartlesville, Oklahoma com-

mencing April 3, 1951 at 10 a. m. Prior to said hearing a

number of persons, including your petitioners, representing

consumer interests, intervened in said proceeding, and are

listed as follows:

Public Service Commission of Wisconsin

State of Wisconsin

City of Detroit, Michigan

County of Wayne, Michigan

City of Kansas City, Missouri

5

City of Milwaukee, Wisconsin

Michigan Public Service Commission

In addition there were other intervenors including the

following:

State of New Mexico

State Corporation Commission, State of Kansas

Corporation Commission, State of Oklahoma

Railroad Commission of Texas

State of Texas

Oil and Gas Commission, State of Arkansas

Oil and Gas Board, State of Mississippi

Public Service Commission of West Virginia

Commissioner of Conservation, State of Louisiana

Texas County Land and Royalty Association

Texas Independent Producers and Royalty

Owners Association

Certain Royalty Owners in Old Ocean Field

Brasoria County, Texas

Old Ocean Royalty Owners

Independent Natural Gas Association of America

Port Neches Royalty Owners Association

(6) Prior to the hearing in Bartlesville, Oklahoma,

on April 3, 1951, Phillips Petroleum Company filed a mo-

tion with the Federal Power Commission requesting it to

amend its order of February 9, 1950 defining the issues so

as to limit the issue to be considered at said hearing to a

6

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" determination whether it was a “natural gas company”

within the meaning of the Natural Gas Act.

(7) Upon the opening of the hearing in Bartlesville,

Oklahoma on April 3, 1951, the presiding examiner made

the following statement (Tr. 7-9):

“* * * IT want to announce that I have received

from the Secretary of the Commission the following

memorandum, and I quote:

“March 30, 1951, Memorandum for: Presiding

Examiner Marsh, Bureau of Law, Bureau of Accounts,

Finance and Rates.

“‘For your information, the following is an ex-

cerpt from the minutes of a meeting of the Commission

held on March 29, 1951: “The Commission had before

it the Motion to Limit Issues filed on March 27, 1951,

by Phillips Petroleum Company in Docket No. G-1148,

but decided to defer action thereon until the other

parties to the proceeding have had the opportunity

provided for by the Rules to file answers to said motion.

Upon motion of Commissioner Draper, seconded by

Commissioner Wimberly, the Commission (Commis-

sion Buchanan dissenting) directed that, in the mean-

time, the Examiner designated to preside at the hearing

in said proceeding scheduled to commence on April 3,

1951, be instructed to confine the taking of testimony

to Paragraph (A) (i) of the order of the Commission

entered October 28, 1948, and issued October 29, 1948.”

Signed Leon M. Fuquay, Secretary.’ That memoran-

dum was accompanied by a memorandum of transmit-

tal, which reads as follows:

“Because of time limitations, we will not be able

to serve notice of this action upon the participants in

the proceeding. I will, therefore, apreciate it if you

7

will have it spread upon tle record at the opening

of the hearing.’ ”’

Thereupon your petitioners, the staff of the Federal Power

Commission, the Cities of Milwaukee, Kansas City and

Detroit, and possibly others, filed objection to said motion

with the Federal Power Commission. On April 17, 1951

the Federal Power Commission issued an order (Commis-

sioner Buchanan dissenting) limiting the issue at said hear-

ing to the so-called “jurisdictional question,” i. e., whether

Phillips Petroleum Company is a natural gas company

within the meaning of the Natural Gas Act. That said

order reads in part as follows:

“Upon consideration of the motion to limit issues

filed herein by Phillips on March 27, 1951, of the

Commission’s orders issued herein, and all of the fore-

going, the Commission finds:

ms bo

*(2)

*(3)

Although the Commission by order has set

forth the issues to be heard herein, the order

in which such issues shall be heard has not

been prescribed.

Orderly procedure requires that the follow-

ing issue, heretofore set forth in the Com-

mission’s orders issued herein, first be heard

at the hearing now in progress, viz: Whether

Phillips Petroleum Company is a ‘natural-

gas company’ within the meaning of the

Natural Gas Act.

Orderly procedure requires, and it is in the

public interest, that hearing be held upon

and a determination made by the Commis-

sion of the issue of whether Phillips Petrol-

eum Company is a ‘natural-gas company’

8

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within the meaning of the Natural Gas Act,

before hearing is held upon any other issue

in this proceeding.

Hearing upon issues herein other than that

set forth in paragraph (2) hereof should

be held as soon as practicable after hearing

upon said issue, at a time and place to be

fixed by further order of the Commission.

The motion to limit issues filed by Phillips

on March 27, 1951, should be granted to the

extent hereinafter ordered, and in all other

respects should be denied.

“The Commission orders:

“(A) The matters to be presented at the public

hearing now in progress shall be only those

relevant to the following issue set forth in

the Commission’s order of investigation is-

sued October 29, 1948, to-wit: Whether

Phillips Petroleum Company is a ‘natural-

gas company’ within the meaning of the

Natural Gas Act.

A public hearing he held upon the remaining

issues set forth in the Commission’s order

of investigation issued October 29, 1948, at

a time and place to be fixed by further order

of the Commission.

“(C) The Motion to Limit Issues, filed herein by

Phillips Petroleum Company on March 27,

1951, is granted to the extent herein ordered,

and in all other respects is denied.

“By the Commission. Commissioner Buchanan

dissenting.”

(8) Following the completion of the hearing on the

issue above stated, the so-called intermediate procedure

provided for by the Rules of Practice and Procedure of

the Federal Power Commission (see sec. 1.30 (c)) was

dispensed with, and following the submission of briefs and

oral argument before the Commission and order was issued

by said Commission on August 22, 1951, based on alleged

reasons stated in Opinion No. 217 and purported findings

(Commissioner Buchanan dissenting and Commissioner

Draper concurring in the result), which order reads as

follows:

“The Commission orders:

“That the proceeding initiated by the Commission’s

order of October 28, 1948, in Docket No. G-1148 be,

and the same hereby is, terminated.

“By the Commission. Commissioner Draper con-

curring in the result. Commissioner Buchanan dis-

senting.”

(9) Thereafter applications for rehearing from said

Opinion and order were filed by the following parties on

the dates specified:

Applicant Date

State of Wisconsin and Public Serv-

ice Commission of Wisconsin September 17, 1951

City of Milwaukee, Wisconsin September 12, 1951

City of Kansas City, Missouri September 10, 1951

City of Detroit, Michigan September 19, 1951

County of Wayne, Michigan September 19, 1951

10

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On September 28, 1951 the Federal Power Commission

issued an order (Commissioner Buchanan dissenting)

denying each of said applications for rehearing.

3. Facts and Statutes Upon Which Jurisdiction Is

Based

(10) The proceeding here is to review the aforesaid

order of the Federal Power Commission issued August 22,

1951 (Commissioner Buchanan dissenting) and order issued

September 28, 1951 denying the applications of your peti-

tioners and the others above mentioned for rehearing.

Jurisdiction of this court to review said orders is estab-

lished by Section 19 (b) of the Natural Gas Act.

(11) The State of Wisconsin is aggrieved by the afore-

said orders of the Federal Power Commission by which

it refuses to assume jurisdiction over Phillips Petroleum

Company as a “natural gas company” as defined by Sec-

tion 2 (6) of the Natural Gas Act, and particularly by its

refusal to assume jurisdiction over its sales of natural gas

to (a) Michigan-Wisconsin Pipe Line Company, (b) El

Paso Natural Gas Company, (c) Panhandle Eastern Pipe

Line Company, (d) Independent Natural Gas Company

for sale to Northern Natural, and (e) Cities Service Gas

Company. After taking delivery of said natural gas, said

pipe line companies carry the gas in pipe lines acgoss state

lines to markets in states other than those where Phillips

sells and delivers the gas to the Pipe Line Companies,

where the gas in turn is sold and delivered by the Pipe

Line Companies to others who in turn sell and distribute

said gas to the consuming public for domestic, commercial,

industrial and other uses. Phillips Petroleum Company

11

concedes, and the Federal Power Commission found, that

the sale of natural gas by Phillips to the five Pipe Line

Companies above mentioned are each a sale of natural gas

in interstate commerce for resale for ultimate consumption

for domestic, commercial, industrial or other use. More

specifically, so far as the situation in Wisconsin is concerned,

the Federal Power Commission by its orders refused to

take jurisdiction over the sale of natural gas by Phillips

Petroleum Company to Michigan - Wisconsin Pipe Line

Company in the State of Texas (which Phillips Petroleum

Company admits and the Federal Power Commission found

was a sale of natural gas in interstate commerce for pur-

poses of resale). The pipe line company then transports

the natural gas so purchased in pipe lines to points in the

State of Wisconsin (as well as in other states) where it

in turn sells said natural gas to distributing companies.

Said companies in turn sell and deliver gas to the public

for ultimate public consumption for domestic, commercial,

industrial or other use in the State of Wisconsin as well as

Michigan and other states. Phillips Petroleum Company is

the sole supplier of all natural gas transported by Michigan-

Wisconsin Pipe Line Company (delivering up to 343,000

Mcf per day) and said pipe line company in turn is the

sole supplier of natural gas to local distributing companies

serving the Cities of Madison (Madison Gas and Electric

Company) and Milwaukee (Milwaukee Gas Light Com-

pany), the two principal cities in Wisconsin, as well as

those serving other communities along the shore of Lake

Michigan and the Fox River Valley Area, the principal

industrial areas of the state. Consumers in such areas

form a substantial portion of the population of the State

of Wisconsin.

12

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(12) The price which Michigan-Wisconsin Pipe Line

Company pays Phillips Petroleum Company becomes a

factor in the amount the ultimate consumer in Wisconsin

must pay for natural gas in said state.

(13) The State of Wisconsin here petitions and appears

in this court in its sovereign capacity to represent and

protect as parens patriae the interest of tne consuming

public in Wisconsin which uses natural gas transported

into the state purchased by Michigan-Wisconsin Pipe Line

Company. Georgia v. Pennsylvania Railroad Co., 324 U. S.

439.

(14) The State of Wisconsin is also the proprietor of

institutions, schools and buildings and by reason thereof is

itself a consumer of natural gas purchased from Madison

Gas and Electric Company (among other companies) which

in turn purchases its entire supply of natural gas from

Michigan-Wisconsin Pipe Line Company. In the period

from December, 1949, when natural gas was first introduced

in Madison, Wisconsin, through March 31, 1951, the State

of Wisconsin purchased the following quantities of natural

gas from Madison Gas and Electric Company:

Amount of Gas _ Cost

State of Wisconsin, for Executive

IE ciceecssadseecsitheadtibtintenati 1,472.8 Mcf $ 1,558.10

State of Wisconsin, for University

RECURS 12,482.7 Mcf $13,479.84

(15) The price which Phillips Petroleum Company

charges Michigan-Wisconsin Pipe Line Company was and

is excessive and discriminatory. For the year ended De-

cember 31, 1950, the natural gas department of Phillips

13

Petroleum Company earned a return in excess of 16.5%

on a rate base consisting of a net investment as per its

books plus an allowance for materials and supplies and

working capital. This is shown by Exhibits 3 to 7 prepared

and offered by the staff of the Federal Power Commission

in the proceeding before the Commission in said Docket

G-1148, which were excluded from the record by the pre-

siding examiner on the alleged ground they were not

material to the jurisdictional issue. Said exhibits were later

adopted by Wisconsin as its own exhibits and an offer of

proof made (Tr. 5763) on the ground they were material

to the jurisdictional issue as showing the impact of an un-

regulated price between Phillips and the pipe line com-

panies upon the ultimate consumer, and the latter’s interest

in and need for regulation. See Section 1 (a), Natural

Gas Act, and Interstate Natural Gas Co. v. Federal Power

Commission, 331 U. S. 682, 693. The record in Docket

G-1148 further shows that the original contract of December

11, 1945 provided that Phillips supply Michigan-Wisconsin

Pipe Line Company up to specified quantities of gas at

5-cents Mcf for the first 5 years beginning July 1, 1948.

Then ‘by amendment of August 9, 1948 the price was

increased to 814-cents Mcf with a 1-cent increase for each

successive 5-year period. Said amendment included an

escalator clause which would bring increased revenue to

the company in an amount ranging between $15 and $20

million over the life of the contract. There were also sub-

sequent amendments, the effect of which nearly doubled

the cost of gas to Michigan-Wisconsin. Prior to the amend-

ment of August 9, 1948 Phillips expected to realize a return

of 9.5%, whereas after the amendment the expected return

would be 13.76%. The record in Docket G-1148 also shows

14

BLEED THROUGH

that as part of its operations Phillips “farmed out” 100

square miles of proven acreage under a lease of such acre-

age to Tascosa Gas Company (Exhibit 60). By this “farm-

out” Tascosa drills the wells, and resells the gas to Phillips

at a price which produces a handsome profit to Tascosa.

Thus we have a superfluous middleman in the picture also

taking its profit, which, if eliminated, would decrease the

amount which Phillips charges said pipe line companies

and still permit a fair return.

(16) Undue discrimination as to the price Phillips

charges Michigan-Wisconsin Pipe Line Company, as com-

pared to the other pipe line companies it sells gas to, is

shown by the figures taken from Exhibit 54 in Docket

G-1148 as follows:

1950

Gasoline Average Price

Plant Mcf.

Michigan- Wisconsin Sherman 8.17 cents

Panhandle Eastern Hansford 403 “

Borger Residue

System 403 “

El Paso Natural Gas Crane 469 “

Co. Eunice —

Fullerton 407 “

Goldsmith 4m “

Borger Residue

System 506 “

Independent Natural Pampa Residue

Gas Co. System 245 “

15

The average price on the total sales of residue gas by

Phillips for the year 1950 was 5.38-cents Mcf. Michigan-

Wisconsin paid 8.17-cents.

(17) The State of Wisconsin in its sovereign capacity

as parens patriae for consumers of natural gas in Wis-

consin and also as a consumer of natural gas itself is

aggrieved by the failure of the Federal Power Commission,

in issuing the orders previously mentioned, to determine

that it has jurisdiction over Phillips Petroleum Company

as a “natural gas company” as defined in Section 2 (b) of

the Natural Gas Act; and is further aggrieved by the failure

of said Commission to take jurisdiction over Phillips’ sale

of natural gas to the pipe line companies previously men-

tioned and by said Commission’s failure to regulate the

price or rate charged by Phillips for such gas, and particu-

larly the sale to Michigan-Wisconsin Pipe Line Company.

By such failure to take jurisdiction, there is precluded any

possibility of (1) securing a reduction in the excessive

rates and charges which Phillips exacts from Michigan-

Wisconsin and the other named pipe line companies; and

(2) effecting an elimination of the unduly discriminatory

rate or charge which now exists as between the rates or

charges exacted by Phillips from Michigan-Wisconsin Pipe

Line Company as compared to the other pipe line companies.

(18) The Public Service Commission of Wisconsin is

an agency of the State of Wisconsin. By statutes enacted by

the legislature of the State of Wisconsin (Chapters 195 and

196, Wisconsin Statutes), said Commission is given power

and authority to regulate the rates and charges exacted

by and the service rendered by public utilities operating

in the State of Wisconsin, and specifically has jurisdiction

16

BLEED THROUGH

given by Sections 196.01 (1), 196.03 (1), 196.20 and 196.37

to regulate the rates and charges imposed by public utilities

jn Wisconsin for sale of natural gas to consumers within

said state, to the end that rates and charges for sale of

natural gas must be “just and reasonable” and the service

rendered by public utilities selling natural gas shall be

reasonably adequate. As such it is a “state commission”

as defined by Section 2(8) of the Natural Gas Act and has

the right (as also does the State of Wisconsin) to file a

complaint with the Federal Power Commission against the

rate or charge of any natural gas company in connection

with the transportation or sale of natural gas. See Sections

5 (a), 4 (e), 13. As a state commission it is authorized to

intervene in a proceeding before the Federal Power Com-

mission as a matter of right by Section 1.8 of the Federal

Power Commission Rules of Practice and Procedure. See

Title 15 U.S. C. A. §717n.

(19) The Public Service Commission of Wisconsin

herein petitions and appears with the State of Wisconsin

as a representative of the consumers of natural gas in Wis-

consin served by distributing companies which receive

gas from Michigan-Wisconsin Pipe Line Company, and also

in its capacity as a state regulatory agency having the

jurisdiction above mentioned. Said Commission is aggrieved

by the orders of the Federal Power Commission previously

mentioned in the same manner alleged in paragraph num-

bered 17, supra. Said Commission is further aggrieved

by reason of the fact that the refusal of the Federal Power

Commission to accept such jurisdiction establishes a “gap”

in the regulatory scheme (the price at the city gate being

regulated by Federal Power Commission and to the ulti-

mate consumer in Wisconsin by the Public Service Com-

17

mission of Wisconsin) which impairs and prejudices the

regulatory effort by the Public Service Commission of Wis-

consin. Excessive and discriminatory charges at that stage,

i. e., the sale by Phillips to the pipe line company, become

perpetuated in the ultimate cost (see Interstate Natural

Gas Co. v. Federal Power Commission, 331 U. S. 682, 693)

and necesarily compel the Public Service Commission of

Wisconsin to fix a rate to the ultimate consumer which jis

higher than would or should otherwise be required.

(20) The status of the State of Wisconsin and the

Public Service Commission as an aggrieved party also is

recognized in Section 19 (a) of the Natural Gas Act which

reads as follows:

“Any person, State, municipality, or State com-

mission aggrieved by an order issued by the Commis-

sion in a proceeding under this act to which such

person, State, municipality or State Commission is a

party may apply for a rehearing within thirty days

after the issuance of such order. * * *”

(21) The foregoing, taken in conjunction with the

provisions authorizing inter alia the filing of complaints by

any state, state commission, or municipality (Sections 5

(a), 4 (e) and 13), evidences the intent of Congress that

a state regulatory commission (as well as the state or

any municipality) is aggrieved as a representative of the

consuming public, when, by reason of a ruling of the

Federal Power Commission, said consumers are deprived

of the benefit of rate reduction and the establishment of a

just and reasonable and nondiscriminatory rate. A state

regulatery commission is not ordinarily a consumer of

natural gas. The possibility that it may be aggrieved is

18

BLEED THROUGH

definitely recognized in Section 19 (a). Because of the un-

likelihood of a state commission being a consumer of natural

gas, it is plain it must be aggrieved in the respects above

mentioned. See Federal Communications Commission »v.

Sanders Radio Station, 309 U. S. 470; Scripps-Howard Radio

Inc. v. Federal Communications Commission, 316 U. S. 4;

Associated Industries v. Ickes, 134 F. 2d 694 (C. C. A. 2),

vacated and remanded on other grounds, 320 U. S. 707.

4. The Relief Prayed

(22) The relief prayed by your petitioners herein is

that the aforesaid order of the Federal Power Commission

in its Docket G-1148 issued August 22, 1951, and the order

dated September 28, 1951 denying the applications of peti-

tioners and others for rehearing, be set aside in their en-

tirety.

5. The Points Upon Which Petitioners Intend to Rely

(23) The points upon which the State of Wisconsin

and Public Service Commission of Wiscesin intend to

rely in prosecution of their petition for review ia this court

are those stated in their joint application and petition for

rehearing duly and timely filed with the Federal Power

Commission, which will be part of the record which will

be filed and certified with the court as provided in Section

19 (b) of the Natural Gas Act, which application and peti-

tion for rehearing is incorporated into this petition by refer-

ence with the same force and effect as if physically included

herein. A concise statement of said points is as follows:

19

ee

1.

PHILLIPS PETROLEUM WAS AND IS A NAT.

URAL GAS COMPANY AS DEFINED IN SEC.

TION 2 (6) OF THE NATURAL GAS ACT,

AND THE FEDERAL POWER COMMISSION

ERRED IN CONCLUDING CONTRARY.

WISE

1. Phillips Petroleum Company admits, and the Fed-

eral Power Commission correctly states in its Opinion No.

217, that sales of natural gas by Phillips Petroleum Com-

pany to the five pipe line companies involved are sales of

natural gas in interstate commerce for purpose of resale

for ultimate public consumption for domestic, commercial,

industrial or any other use.

2. The Federal Power Commission also correctly found

that the movement of natural gas by Phillips Petroleum

Company to the points of sale to the five pipe line com-

panies involved constitutes transportation of natural gas

in interstate commerce as a matter of constitutional law.

3. Such sales and transportation are each subject to

Federal Power Commission jurisdiction by reason of the

provisions of Section 1 (b) of the Natural Gas Act. Exist-

ence of either such sales or such transportation makes

Phillips Petroleum Company a natural gas company as de-

fined in Section 2 (6) of the Natural Gas Act.

a. Section 1 (b) applies to three separate things:

(1) The transportation of natural gas in interstate

commerce. :

(2) Its sale in interstate commerce for resale.

20

BLEED THROUGH

(3) Natural gas companies engaged in such trans-

; portation or sale.

Transportation and sale are viewed as separate subjects of

regulation. They have independent and equally important

places in the Act. The Federal Power Commission erred as

a matter of law in failing to find that by virtue of the

foregoing premises Phillips is a “natural gas company” and

subject to the jurisdiction of the Commission in the respects

provided in the Natural Gas Act.

II.

AS A MATTER OF LAW THE SALES IN QUES-

TION ARE NOT PART OF “PRODUCTION

OR GATHERING” WITHIN THE MEAN-

ING OF SECTION 1 (b) OF THE NATURAL

GAS ACT, AND THE FEDERAL POWER

COMMISSION ERRED AS A MATTER OF

LAW IN CONCLUDING TO THE CON.

TRARY

1. The above proposition is established beyond all

doubt by the decisions of the Federal Power Commission,

the Court of Appeals for the Fifth Circuit, and the United

States Supreme Court in the Interstate Case. In the Matter

of Interstate Natural Gas Co. v. Federal Power Commission,

D. C.) 127 F. 2d 153, hearing denied F. 2d 157, certiorari

Federal Power Commission, 331 U.S. 682.

2. All hold as a matter of law the sales of natural

gas in interstate commerce for purpose of resale are not

included in the phrase “production or gathering” contained

in Section 1 (b). The same proposition follows from Peoples

21

Natural Gas Co. v. Federal Power Commission, (U. S. App.

D.C.) 127 F. 2d 153, hearing denied 127 F. 2d 157, certiorari

denied 316 U. S. 700.

3. The basic purpose of the Natural Gas Act was to

fill the “gap” created by the decisions of the Supreme

Court in Missouri v. Kansas Natural Gas Co., 265 U. S. 298,

and Public Utilities Commission v. Attleboro Steam & Elec-

tric Co., 273 U.S. 83, and State Corp. Commission v. Wichita

Gas Co., 290 U. S. 561, to the effect that the states could

not constitutionally regulate sales of wholesale quantities

of natural gas (not local in character) at interstate com-

merce for purposes of resale even in the absence of con-

gressional action.

4. As applied here, this means that the sales of natural

gas by Phillips Petroleum Company to the five pipe line

companies (i. e., Michigan-Wisconsin Pipe Line Company,

El Paso Natural Gas Company, Panhandle Eastern Pipe

Line Company, Independent Natural Gas Company for

Northern Natural Gas Company, and Cities Service Gas

Company) for purposes of resale (involving as they do

enormous quantities of gas and being the sole supplier of

gas for distributing companies located in distant states),

are transactions national, and not local, in character, and

hence beyond the constitutional power of the state’s regu-

lation even in the absence of congressional action.

5. Because the states cannot constitutionally regulate

the sales by Phillips Petroleum Company to the five pipe

line companies, such sales cannot fall within the language

of “production or gathering” as it appears in Section 1 (b),

and the Supreme Court so held in Interstate Natural Gas

Company v. Federal Power Commission, 331 U. S. 682, 690.

22

BLEED THROUGH

6. The case of Cities Service Gas Co. v. Peerless Oil &

Gas Co., 340 U. S. 179, cannot in any way be construed as

holding that the states can now constitutionally regulate

the sales by Phillips in interstate commerce to the five pipe

line companies involved here for purposes of resale.

III.

ALTHOUGH UNNECESSARY SO TO CONTEND

(SINCE THE QUESTION MUST BE DECID-

ED ADVERSELY TO THE COMMISSIC®#S

DETERMINATION THAT THE SALES TO

THE FIVE PIPE LINE COMPANIES ARE

NOT PART OF “PRODUCTION OR GATH-

ERING” AS A MATTER OF LAW), THE

COMMISSION’S DETERMINATION THAT

SUCH SALES ARE PART OF “PRODUCTION

OR GATHERING” IS CONTRARY TO SUB-

STANTIAL EVIDENCE IN THE RECORD

1. The question as to what is included within the term

“production or gathering” as used in Section 1 (b) depends

upon the intention of Congress in enacting this section.

As shown under previous subheads, the sales by Phillips

to the five pipe line companies cannot be included in the

term “production or gathering” as a matter of law.

2. In any event, the question is one of application of

a legal standard and cannot be concluded by expert testi-

mony.

3. Opinion evidence that is inconsistent with undisput-

ed facts or with reason and common sense is not adequate

to meet the requirements of “substantial evidence.”

23

4. The testimony of witnesses A. R. Rippel and George

P. Bunn, employes of Phillips Petroleum Company, to the

effect that the sales to the five pipe line companies are

included within “production or gathering” are (a) in-

consistent with undisputed facts and (b) contrary to reason

and common sense, and are inadequate and cannot be

considered as substantial evidence.

IV.

THE DETERMINATION OF THE FEDERAL

POWER COMMISSION THAT THE SALES

BY THE PHILLIPS PETROLEUM COM.

PANY TO THE FIVE PIPE LINE COMPAN.

IES ARE SO CLOSELY CONNECTED WITH

THE LOCAL INCIDENTS OF “PRODUC.

TION OR GATHERING” AS TO RENDER

RATE REGULATION BY IT INCONSIST-

ENT WITH OR A SUBSTANTIAL INFER-

ENCE WITH THE EXERCISE BY THE

STATES OF OKLAHOMA, TEXAS AND

NEW MEXICO OF THEIR REGULATORY

FUNCTIONS IS ERRONEOUS AS A MAT-

TER OF LAW

1. In arriving at the above conclusion the Federal

Power Commission erroneously assumes that the states

could in any event regulate the sales in question. This is

not true as a matter of constitutional law.

The language of the supreme court at p. 690 of 331 U. S.

referring to “sales, though technically consummated in

interstate commerce, are made during the course of pro-

duction and gathering and are so closely connected with

24

BLEED THROUGH

the local incidents of that process as to render rate regu-

lation by the Federal Power Commission inconsistent or a

substantial interference with the exercise by the State of

its regulatory functions, the jurisdiction of the Federal

Power Commission does not attach.” It does not and cannot

refer to the sales by Phillips to the five pipe line companies,

since simple logic decrees that the court in using such

language could only mean sales which could constitution-

ally be regulated by the states.

2. “Local incidents” of the process of “production or

gathering” are not included within sales of natural gas in

interstate commerce for purposes of resale. They are wholly

different concepts.

3. If Federal Power Commission regulation can be suc-

cessfully denied on ground of interference with state regu-

lation in the present case, the Federal Power Commission is

ousted of jurisdiction in all cases. Such a claim would be

contrary to decisions of the supreme court sustaining Fed-

eral Power Commission jurisdiction in cases where it is

asserted that it does not exist by virtue of interference

with state regulatory efforts. Colorado Interstate Gas Co.

v. Federal Power Commission, 324 U. S. 581; Canadian

River Gas Co. v. Federal Power Commission, 324 U. S. 581;

Federal Power Commission v. Hope Natural Gas Co., 320

U. S. 591; Interstate Natural Gas Co. v. Federal Power

Commission, 331 U. S. 682, same case C. C. A., 156 F. 2d 949.

V.

ALTHOUGH UNNECESSARY TO SO CONTEND

(BECAUSE THE FEDERAL POWER COM.

MISSION’S DETERMINATION THAT ITS

JURISDICTION OVER SALE BY PHILLIPS

TO THE FIVE PIPE LINE COMPANIES

WILL INTERFERE WITH STATE REGULA.-

TORY EFFORTS IS ERRONEOUS AS A

MATTER OF LAW), THE DETERMINA-.

TION OF THE COMMISSION THAT ITS

ASSUMPTION OF JURISDICTION OVER

SUCH SALES WOULD INTERFERE WITH

STATE REGULATORY EFFORTS IS CON.

TRARY TO SUBSTANTIAL EVIDENCE IN

THE RECORD

1. The Federal Power Commission fails to state valid

reasons for a purported finding or conclusion that its as-

sumption of jurisdiction over the sale by Phillips to the

five pipe line companies will interfere with state regulatory

efforts, and also fails to refer to any facts on which such

finding could be based. The dissenting opinion of Com-

missioner Buchanan correctly suggests that the Commis-

sion’s determination rests upon bare assertion—‘“their own

ipsi dixit.”

2. All witnesses who testified upon the subject of al-

leged conflict between Federal Power Commission juris-

diction over the sales in question and interference with state

regulatory efforts were unable to point out any actual con-

flict. The only mention of conflict was based upon hypo-

thetical and assumed situations, none of which were shown

to exist.

26

BLEED THROUGH

_ 3. The evidence shows without question that the

Federal Power Commission has taken jurisdiction over a

number of companies which engage in substantial field

operations similar to those carried on by Phillips Petroleum

Company which are also subject to jurisdiction by regu-

latory agencies of the States of Texas, Oklahoma and New

Mexico, and no conflict was shown to exist between Federal

Power Commission jurisdiction in those cases and that of

regulatory commissions.

VI.

THE ATTEMPT OF THE FEDERAL POWER

COMMISSION TO CONSTRUE SEC. 1 (b)

OF THE ACT BY RESORT TO LEGISLA-

TIVE HISTORY, AND BY REVIEW OF

ADMINISTRATIVE AND JUDICIAL DECI-

SIONS WAS ERROR AS A MATTER OF LAW,

BECAUSE A STATUTE CLEAR AND UN-

AMBIGUOUS ON ITS FACE NEED NOT,

AND AS A MATTER OF LAW, CANNOT BE

“INTERPRETED” BY AN ADMINISTRA-

TIVE AGENCY TO CONTRADICT THE

CLEAR LANGUAGE OF THE STATUTE

A. Resort to Legislative History was Erroneous

as Matter of Law

In any event, if the legislative history of the Natural

Gas Act in any way forms part of the conclusions reached

by the Federal Power Commission in the instant case, the

Commission has erred in so interpreting such history. The

legislative history clearly supports the proposition that the

basic purpose of the Natural Gas Act was to fill the “gap”

27

created by decisions of the supreme court above mentioned

and to make the sales of natural gas for purposes of resale

of the kind made by Phillips Petroleum Company to the

five pipe line companies here involved subject to Federal

Power Commission regulation.

B. Resort to “Administrative Actions” Was Erron-

eous as Matter of Law

While it is not clear what purpose the Commission had

in so doing, we submit that if such purpose was to establish

an administrative interpretation claimed to be binding or

persuasive in the present case, the Commission has erred.

1. The rule of administrative interpretation is one of

many qualifications and in many instances the courts refuse

to follow it. In any event, it can have no application here

because (a) the material portion of the Natural Gas Act is

plain and unambiguous and not subject to construction,

and (b) the course followed by the Federal Power Com-

mission in administering the portion of the Natural Gas

Act material here does not meet the requirements that to

make the rule applicable the administrative construction,

first, must not be contrary to the language of the statutes

or erroneous and, second, must be uniform and of long

standing.

C. Review of Judicial Decisions Was Error as

Matter of Law

In support of its several erroneous findings of fact and

conclusions of law, the Federal Power Commission, in its

28

BLEED THROUGH

Opinion No. 217, has presumed to review the several judicial

decisions rendered in cases involving Sec. 1 (b) of the

Natural Gas Act, and to apply to the facts of the instant

proceeding its erroneous concept of the meaning and effect

of said decisions. In so doing said Commission erred in

failing to conclude that said decisions compel the legal

conclusion that Phillips’ sales of natural gas to the five pipe

line companies and the transportation of natural gas in

interstate commerce are not part of production and gather-

ing within the meaning of Sec. 1(b).

VII.

THE COMMISSION HAS ERRED IN FAILING

TO MAKE PROPER FINDINGS OF FACT

AND CONCLUSIONS OF LAW ACCORDING

TO STANDARDS LAID DOWN BY CON-

GRESS, [15 U. S. C. A. §717r (b), 4 F. C. A. title

15, 717r (b)] AS INTERPRETED BY THE

UNITED STATES SUPREME COURT

The failure to make proper findings of fact in the re-

spects specified herein, in and of itself constitutes error.

Colorado-Wyoming Gas Co. v. F. P. C., 324 U. S. 626, 634.

VIII.

THE COMMISSION ERRED IN ITS RULING

LIMITING THE ISSUE TO THE SO-CALLED

JURISDICTONAL ISSUE

The Commission erred in directing its Trial Examiner

by its order of April 6, 1951, to exclude all evidence to

29

determine whether any of Phillips’ rates, subject to the

Commission’s jurisdiction, are unjust or unreasonable, and

further erred in approving the exclusion of substantial

evidence offered by the staff of the Commission at such

hearing showing that Phillips’ rates are in fact unjust and

unreasonable, because such action of the Commission was

arbitrary and capricious, contrary to law and in violation

of the express terms of the Natural Gas Act.

WHEREFORE, your petitioners, jointly and severally,

pray that the court review the orders of the Federal Power

Commission in the latter’s Docket G-1148 which are com-

plained of, and that the court set aside such orders in their

entirety.

Dated at Madison, Wisconsin, this 13th day of No-

vember, 1951.

STATE oF WISCONSIN

By Watrter J. Kou.er, Jr. /s/

Walter J. Kohler, Jr., Governor

Vernon W. THOMSON /s/

Vernon W. Thomson, Attorney

General, and Its Attorney

of Record.

VERNON W. THOMSON,

Attorney General,

Stewart G. Honeck,

Deputy Attorney General,

Attorneys for State of Wisconsin.

P. O. Address:

State Capitol,

Madison, Wisconsin

BLEED THROUGH

Pue.ic Service COMMISSION OF WISCONSIN

Joun C. Doerrer /s/

John C. Doerfer, Commissioner

W. F. Wuirney /s/

W. F. Whitney, Commissioner

JaMEs R. DurFee /s/

James R. Durfee, Commissioner

WiLL1AM E. TorKELSON

Attorney for Public Service

Commission of Wisconsin

P. O. Address:

1 West Wilson Street,

Madison, Wisconsin

STaTE OF WISCONSIN

CoUnty or DANE

Water J. Kounter, Jr., being first duly sworn on oath

says that he is the duly elected, qualified and acting Gov-

ernor of the State of Wisconsin; that he makes this verifi-

cation in behalf of said State, being duly authorized so to

do; that he has read the foregoing petition and knows the

contents thereof and believes it to be true; that the reason

that this verification is made by affiant and not by the

State of Wisconsin is that said State is one of the sovereign

states of the United States and can act only through its

duly authorized agents and officers.

Water J. Konner, Jr. /s/

Walter J. Kohler, Jr.

Subscribed and sworn to before me this

13th day of November, A. D., 1951.

E.stz ELLEFSON /s/

Notary Public, Dane Co., Wisconsin

My comm. expires April 27, 1952.

(NoTARIAL SEAL)

31

STATE oF WISCONSIN

County or DaNnE

Vernon W. THomson, being first duly sworn on oath

says that he is the duly elected, qualified and acting Attor-

ney General of the State of Wisconsin; that he makes this

verification in behalf of said State, being duly authorized

so to do; that he has read the foregoing petition and knows

the contents thereof and believes it to be true; that the

reason that this verification is made by affiant and not by

the State of Wisconsin is that said State is one of the

sovereign states of the United States and can act only

through its duly authorized agents and officers.

Vernon W. THOMSON /s/

Vernon W. Thomson

Subscribed and sworn to before me this

13th day of November, A. D., 1951.

Iona FARRELL /s/

Notary Public, Dane Co., Wisconsin

My comm. expires March 1, 1953.

(NoTARIAL SEAL)

BLEED THROUGH

State or WISCONSIN }

County or Dane as

Joun C. Doerrer, W. F. Wurtney and James R. Durree,

being each duly sworn on oath says for himself that he is

a duly appointed, qualified and acting Commissioner of the

Public Service Commission of Wisconsin; that he has read

the foregoing petition, knows the contents thereof, and be-

lieves the same to be true.

Joun C. Dorerrer /s/

John C. Doerfer

W. F. Wuitney /s/

W. F. Whitney

JAMES R. DuRFEE /s/

James R. Durfee

Subscribed and sworn to before me this

13th day of November, A. D., 1951.

Frepa MILes /s/

Notary Public, Dane Co., Wisconsin

My comm. expires October 2, 1955.

(NoTARIAL SEAL)

PETITION OF CITY OF MILWAUKEE TO REVIEW

AN ORDER OF THE FEDERAL POWER COM.

MISSION IN ITS DOCKET NO. G-1148 RELAT.

ING TO AN OPINION AND ORDER ENTERED

BY THE COMMISSION ON AUGUST 16, 195]

(ORDER NO. 217, ISSUED AUGUST 22, 1951)

11,245

To the Honorable, the Judges of the United States Court

of Appeals for the District of Columbia:

The City of Milwaukee files its petition under Section

19 of the Natural Gas Act to review and set aside an order

of the Federal Power Commission dated August 16, 1951,

and issued by said Federal Power Commission on August

22, 1951, in connection with the Federal Power Commis-

sion’s opinion No. 217 and the Federal Power Commission’s

order terminating the proceedings initiated by said Com-

mission’s order of October 28, 1948, and from an order

of the Federal Power Commission denying the petition and

application of the above named petitioner, the City of

Milwaukee, for rehearing, which latter order was dated

September 22, 1951, and issued by the Federal Power

Commission on September 28, 1951, all of which were and

occurred in a proceedings entitled “In the Matter of Phillips

Petroleum Company,” Docket No. G-1148.

For its petition, the City of Milwaukee respectfully

alleges as follows:

1. Identity of Petitioner

That at all times hereinafter mentioned, the City of

Milwaukee was and now is a municipal corporation organ-

34

BLEED THROUGH

ized and existing under and by virtue of the laws of the

State of Wisconsin; that the City of Milwaukee derives its

powers from the State of Wisconsin and from the acts of

the Legislature of such State; that among its powers it

has a right to be represented by counsel in matters which

involve the public interest; that it has a population of

632,651.

That the City of Milwaukee is a large purchaser of

natural gas from the Milwaukee Gas Light Company, a local

public utility; that such gas is consumed and used by the

City of Milwaukee, and that the City of Milwaukee pays

a consideration therefor to the Milwaukee Gas Light Com-

pany; that the rates of the Milwaukee Gas Light Company

are in some part determined by the rates charged by

Phillips Petroleum Company; that a decrease in the rates

charged by Phillips Petroleum Company to the Michigan-

Wisconsin Pipe Line Company may directly affect the rate

to the City of Milwaukee; that the failure to regulate rates

by the Federal Power Commission, therefore, has an effect

upon the price of natural gas to the City of Milwaukee;

that under the provisions of the Natural Gas Act (52 Stat.

833; title 15 U. S. C. 717-717W), Section 2 (3) thereof, a

“municipality” is defined to mean a city; that a municipality

under the provisions of Section 5 (a) of the Natural Gas

Act may file a complaint with the Federal Power Com-

mission respecting any rate, charge, or classification de-

manded, charged, or collected by any natural gas company

in connection with any transportation or sale of natural

gas, subject to the jurisdiction of the Commission.

That under the provisions of Section 13 of the Natural

Gas Act, a municipality complaining of anything done or

35

omitted to be done by any natural gas company in contra-

vention of the provisions of the Natural Gas Act may apply

to the Federal Power Commission by petition; that the

City of Milwaukee did properly intervene in the proceed-

ings before the Federal Power Commission in the matter

of Phillips Petroleum Company, Docket No. G-1148.

That as a further basis of interest in the above en-

titled proceedings and in the proceedings had before the

Federal Power Commission, the City of Milwaukee demon-

strates that it has many thousands of inhabitants daily

purchasing natural gas from the Milwaukee Gas Light

Company, a local utility, which utility purchases its gas

from the Michigan-Wisconsin Pipe Line Company, the latter

purchasing its gas from the Phillips Petroleum Company;

that the public residing within the boundaries of the City

of Milwaukee is affected by the rates charged by Phillips

Petroleum Company, and that any decrease or increase

in rates tends to affect the ultimate price of natural gas

to the many thousands of consumers residing within the

City of Milwaukee as aforesaid.

2. Nature of Proceedings As to Which Review is

Sought

That on August 22, 1951, the Federal Power Com-

mission, hereinafter referred to as the “Commission,” issued

an order in Docket No. G-1148, entitled “In the Matter of

Phillips Petroleum Company,” in which said Commission

ordered as follows:

“That the proceeding initiated by the Commission's

order of October 28, 1948, in Docket No. G-1148 be,

and the same hereby is, terminated.”;

36

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|

———

that said Commission found in said proceedings as follows:

“(1) Phillips Petroleum Company is engaged in the

‘production and gathering’ of natural gas within

the meaning of Section 1(b) of the Natural Gas

Act.

“(2) Phillips’ movement of gas in interstate commerce

and its sales thereof for resale in interstate com-

merce, together with its processing operations, all

constitute a part of its gathering business, so that

such movement, processing, and sales come with-

in the exemption of productio: and gathering in

Section 1(b) of the Act.

“(3) Phillips Petroleum Company is not a ‘natural-gas

company’ within the meaning of Sections 1(b)

or 2(6) of the Natural Gas Act.”;

that the City of Milwaukee properly and duly intervened

in said proceedings before said Commission as aforesaid,

and was allowed to intervene by action of said Commission;

and that the City of Milwaukee has a vital and real interest

in the proceedings and is vitally affected by the determina-

tion, ruling, and order of said Commission, and feels itself

aggrieved thereby; that contrary to the provisions of law

said Commission refused to accept jurisdiction of the sub-

ject matter of the proceedings in the matter of Phillips

Petroleum Company, Docket No. G-1148, hereinbefore re-

ferred to.

That on August 22, 1951, as aforesaid, said Commission

issued its opinion, No. 217, and its order hereinbefore re-

ferred to, and made the findings hereinbefore set forth;

that the City of Milwaukee filed timely application and

petition for rehearing as is provided for by the provisions

of the Natural Gas Act, and that on September 28, 1951,

37

with respect to such application and petition, said Com-

mission ruled as follows:

“(1) No facts and no principles of law have been pre-

sented in said applications or any of them which

either were not fully considered by the Com-

mission before it entered such opinion and order,

or, having now been considered, justify a reversal

or modification of the Commission’s opinion and

order.

“(2) Good cause exists for denying said applications.”

3. Facts and Statutes Upon Which Venue is Based

That venue is established by Section 19(b) of the Nat-

ural Gas Act, which provides that any party to a proceeding

under the Natural Gas Act aggrieved by an order issued

by the Commission in such proceeding may obtain a review

of such order in the United States Court of Appeals for

the District of Columbia by filing in such court within sixty

(60) days after the order of the Commission, upon applica-

tion for rehearing, and upon written petition praying that

the order of the Commission be modified or set aside in

whole or in part; that the City of Milwaukee feels itself

aggrieved by the aforesaid order of the Commission, and

that it therefore seeks a review of such order pursuant to

said Act.

4. Relief Prayed For

Relief prayed for by your petitioner herein is that the

aforesaid order of said Commission in Docket No. G-1148,

dated August 16, 1951, and issued by the Commission on

38

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August 22, 1951, denying said Commission has jurisdiction

under the Natural Gas Act in the aforesaid proceedings,

and the order of said Commission of September 27, 1951,

issued September 28, 1951, in which said Commission denied

the application and petition of the City of Milwaukee, for

rehearing, be set aside in their entirety as being contrary

to law.

5. The Points Upon Which Petitioner Intends to Rely

The points upon which the City of Milwaukee intends

to rely in prosecution of its petition for ieview of the afore-

said order of said Commission are those stated in its joint

application and petition for rehearing timely filed with said

Commission, which will be part of the record and which

will be certified and filed with this Court, as is provided for

by the Natural Gas Act, and which application and petition

for rehearing is incorporated into this petition by reference

with the same force and effect as though physically and

specifically included herein. A concise statement of the

conclusions of said Commission in paragraphs (1), (2), and

(3), page 69, Opinion No. 217, is as follows:

“(1) Phillips Petroleum Company is engaged in the

‘production and gathering’ of natural gas within

the meaning of Section 1(b) of the Natural Gas

Act.

“(2) Phillips’ movement of gas in interstate commerce

and its sales thereof for resale in interstate com-

merce, together with its processing operations, all

constitute a part of its gathering business, so that

such movement, processing, and sales come within

the exemption of production and gathering in

Section 1(b) of the Act.

39.

“(3) Phillips Petroleum Company is not a ‘natural-gas

company’ within the meaning of Sections 1(b) or

2(6) of the Natural Gas Act.”

The Federal Power Commission has erred in making

each of the statements or conclusions contained in para-

graphs numbered (2) and (3), page 69 of Opinion No. 217,

afore set out. The statements or conclusions in said para-

graph numbered (1) afore set out, page 69 of Opinion

No. 217, are erroneous, if it is intended in any way to imply

that all of the activities of Phillips Petroleum Company

fall in the category of “production or gathering” within

the meaning of Section 1(b) of the Natural Gas Act.

The errors in the statements or conclusions afore set

out and contained in said paragraphs (1), (2), and (3),

page 69 of Opinion No. 217, are as follows:

(a) In concluding that the movement of natural gas

in interstate commerce by Phillips Petroleum Company, its

sales thereof for resale in interstate commerce, together

with its processing operations “all constitute part of its

gathering business or they are incidents of or activities

related to such business, so that such movement, processing,

and sales come within the exception of processing and

gathering in section 1(b) of the Act.”

(b) In concluding that the movement of natural gas

in interstate commerce by Phillips Petroleum Company is

part of the “gathering business” or an incident or activity

related thereto.

(c) In concluding that the sale of natural gas by Phil-

lips Petroleum Company to pipeline companies such as

Michigan-Wisconsin Pipe Line Company and Cities Service

40

BLEED THROUGH

Gas Company and other pipeline companies mentioned in

said Opinion, for purpose of resale, are part of the “gather-

ing business” or an incident or activity related thereto.

(d) In concluding that the processing operations of

Phillips Petroleum Company prior to the delivery and sale

of natural gas to said pipeline companies is part of the

“gathering business” or an incident or activity related

thereto.

(e) In concluding that said movement, sales for resale

and/or processing, either singly or together, come within

the exception of production or gathering in Section 1(b)

of the Natural Gas Act.

(f) In concluding that Phillips Petroleum Company

is not a “natural-gas company” within the meaning of

Section 1(b) or 2(6) of the Natural Gas Act.

The basis for and reasons relied on in support of the

foregoing specifications of error are as follows:

1. That the aforesaid statements and conclusions of

said Commission are contrary to law.

2. That the determination that “sales” are part of pro-

duction or gathering is contrary to the evidence.

3. That the determination that jurisdiction over sales

will interfere with state regulatory efforts is contrary to

law.

4. That the determination that said Commission’s juris-

diction will interfere with state regulation is contrary to

evidence.

5. That the Commission erred as a matter of law in

making an order terminating the proceedings.

4]

6. That the provisions of the Natural Gas Act vest

jurisdiction in said Commission.

That the foregoing represent the principal points upon

which your petitioner urges and seeks relief so that the

orders of the said commission previously referred to be

reversed; that citations are omitted and subsidiary points

and arguments relied upon are not included so as not to

constitute this petition a brief, instead of a petition.

WHEREFORE, your petitioner prays that the Court

review the complained of orders of the said Commission

in the latter’s Docket No. G--1148, and that the Court set

aside such orders in their entirety.

Dated at Milwaukee, Wisconsin, this 8th day of No-

vember, 1951.

CITY OF MILWAUKEE,

a municipal corporation

By WaAtrTerR J. Matrison

WALTER J. MATTISON,

City Attorney

HARRY G. SLATER,

First Assistant City Attorney

Attorneys for Petitioner

City of Milwaukee

801 City Hall

Milwaukee 2, Wisconsin

CHARLES S. RHYNE

National Institute of

Municipal Law Officers

730 Jackson Place, N. W.

Washington 6, D. C.

BLEED THROUGH

STATE OF WISCONSIN

MILWAUKEE COUNTY {°°

WattTer J. Martrison, being first duly sworn, on oath

deposes and says that he is an officer of the above named

petitioner, City of Milwaukee, to-wit: its City Attorney,

and makes this verification on its behalf, being thereunto

duly authorized; that he has read the foregoing petition of

the City of Milwaukee to review an order of the Federal

Power Commission in its Docket No. G-1148, knows the

contents thereof, and that the same is true of his own

knowledge except as to matters therein stated on informa-

tion and belief, and as to those matters he believes it to

be true; that the source of his knowledge and the grounds

of his belief are information obtained by affiant and state-

ments made to him by servants and agents of said corpora-

tion, all in the regular course of their respective duties, and

records on file in the above entitled proceedings. Affiant

says further that the reason why this verification is not

made by the City of Milwaukee is that said City is a munici-

pal corporation.

WALTER J. MatTison

Subscribed and sworn to before me

this 8th day of November, 1951.

Evsiz W. SuUTSCHEK

Notary Public, Milwaukee County, Wis.

My commission expires Dec. 30-1951

(NoTARIAL SEAL)

PETITION OF CITY OF KANSAS CITY,

FOR REVIEW OF ORDER OF FEDERAL POWER

COMMISSION

11,242

To the Honorable, the United States Court of Appeals for

the District of Columbia Circuit, and to the Judges thereof:

The City of Kansas City, Missouri, hereinafter called

the petitioner, believing itself adversely affected and

aggrieved by the final Order of the Federal Power Com-

mission, hereinafter referred to as “Respondent” or “Re-

spondent Commission”, issued August 22, 1951, entered in

that certain cause bearing Docket No. G-1148, entitled: “In

the Matter of Phillips Petroleum Company”, then pending

before said Respondent, respectfully petitions this Honor-

able Court to review and set aside such Order, and in

support of its Petition, states:

I.

Petitioner is a municipal corporation duly organized

and existing under the Laws of the State of Missouri, and

is a “municipality” as defined by Section 2(3) of the Natural

Gas Act (15 U.S. C. A., Sections 717, et seq.).

II.

Respondent is an administrative and regulatory body

created by statute, derives its authority and jurisdiction

herein under an Act of Congress known as the “Natural

44

BLEED THROUGH

Gas Act” (15 U.S. C. A., Sections 717, et seq.), and has its

principal office and place of business in the City of Wash-

ington, District of Columbia.

III.

Phillips Petroleum Company, hereinafter referred to

as “Phillips”, is a Delaware corporation, with its principal

office and place of business in Bartlesville, Oklahoma, and

is the “natural-gas company” to which the Order relates

that Respondent sought to be reviewed.

IV.

On October 28, 1948, Respondent ordered an investi-

gation to determine whether Phillips is a “natural-gas

company”, as that term is defined by Sections 1(b) and 2(6)

of the Natural Gas Act, and, if so, whether any of its rates,

subject to the Respondent’s jurisdiction are unjust or un-

reasonable. Petitioner intervened in such proceeding and

showed that in 1950 Phillips sold in interstate commerce

to Cities Service Gas Company, a “natural-gas company”,

for resale by it, more than 30 billion cubic feet of natural

gas, and delivered such gas to Cities Service Gas Company

in the State of Oklahoma. Some of this gas was sold and

delivered to Petitioner and its inhabitants through the pipe

lines of Cities Service Gas Company and the distribution

system of The Gas Service Company, a local gas distribut-

ing company. The inhabitants of Petitioner also bought

certain amounts of natural gas from Central West Utility

Company, another local gas distributing company, which

45

purchased such gas from Panhandle Eastern Pipe Line

Company, a “natural-gas company”, which in turn pur-

chased in interstate commerce for resale and received large

quantities of gas from Phillips in the States of Texas and

Oklahoma.

In 1950, Phillips admittedly transported natural gas in

interstate commerce and sold such gas to five “natural-gas

companies” in interstate commerce for resale by such com-

panies, including said Cities Service Gas Company and

Panhandle Eastern Pipe Line Company.

Hearings before an Examiner of the Respondent were

begun in Bartlesville, Oklahoma, on April 3, 1951, and

concluded on May 23, 1951. The staff of Respondent alleged

and were prepared to show tiat Phillips’ rates for natural

gas were excessive by several million dollars per year. By

Respondent’s Order of April 16, 1951, however, the Ex-

aminer was directed to confine the hearing to a determina-

tion of the first issue hereinbefore mentioned, namely,

whether Phillips is a “natural-gas company”, and that a

further hearing relative to the remaining issues be held

at a later date to be fixed by Respondent.

The transcript covers approximately 6000 pages, and

196 exhibits were received in evidence covering many addi-

tional thousands of pages.

Following the granting of an unopposed request by

the Respondent’s staff for omission of intermediate decision

procedure, the entire Respondent Commission hear oral

argument of the single issue, to-wit, whether Phillips is a

“natural-gas company”, for two days, July 9 and 10, 1951.

46

BLEED THROUGH

V.

As of August 22, 1951, Respondent found that Phillips

is not a “natural-gas company”, as defined by the Natural

Gas Act, as more specifically set out in this Petition. A true

copy of Respondent’s Opinion and Order entered as of

said August 22, 1951, marked “Exhibit A”, is attached hereto

and by reference made a part hereof. In the event Phillips

is found by this Court to be a “natural-gas company”, as

defined by Sections 1(b) and 2(6) of the Natural Gas Act,

Respondent will have jurisdiction to fix the maximum sell-

ing price which Phillips may charge for natural gas sold

to the aforesaid interstate pipeline companies that sell and

deliver such gas to the named distributing companies for

resale to Petitioner and its inhabitants. The price of natural

gas charged by Phillips to Cities Service Gas Company

and to Panhandle Eastern Pipe Line Company is not now

fixed by any regulatory authority.

Petitioner states that the Congress intended to protect

the ultimate consumer of natural gas when it enacted the

Natural Gas Act, but there is no such protection for the

ultimate consumers of natural gas, such as Petitioner and

its citizens, in the City of Kansas City, Missouri, if the price

of gas sold by Phillips remains unregulated. Moreover,

every cent paid for natural gas sold by Phillips to the

aforesaid pipeline companies is reflected and passed on in

the prices for gas charged the ultimate consumers thereof.

Hence, Petitioner is adversely affected and aggrieved

by the aforesaid final Order of Respondent and is a proper

party to petition this Court for review of the Respondent’s

Order under the provisions of Section 19(b) of the Natural

47

Gas Act, and Section 1009 of the Administrative Procedure

Act (5 U.S.C. A., Sections 1001, et seq.).

Vi.

As of August 22, 1951, Respondent made and entered

its Order which contained concluding findings, reading as

follows:

(1) Phillips Petroleum Company is engaged in the

“production and gathering” of natural gas within

the meaning of Section 1(b) of the Natural Gas

Act.

(2) Phillips’ movement of gas in interstate commerce

and its sales thereof for resale in interstate com-

merce, together with its processing operations, all

constitute a part of its gathering business, or they

are incidents of or activities related to such busi-

ness, so that such movement, processing, and sales

come within the exemption of production and

gathering in Section 1(b) of the Act.

(3) Phillips Petroleum Company is not a “natural-gas

company” within the meaning of Sections 1(b)

or 2(6) of the Natural Gas Act.

Respondent also entered the following Order:

That the proceeding initiated by the Commission’s

order of October 28, 1948, in Docket No. G-1148

be, and the same hereby is, terminated.

Chairman Wallgreen and Commissioners Smith and Wim-

berly concurred in the findings and Order, Commissioner

Draper concurred in the result and filed a short concurring

opinion, and Commissioner Buchanan filed a lengthy dis-

senting opinion.

48

BLEED THROUGH

vil.

On September 10, 1951, in form and manner and within

the time prescribed by the applicable rules and regulations

of the Commission, and Section 19(a) of the Natural Gas

Act, Petitioner filed with Respondent its “Petition of Inter-

yener Kansas City for Rehearing, Reconsideration and Va-

cation of the Opinion and Order of the Commission Herein,

Issued August 22, 1951.”

Thereafter, similar applications for rehearing of Re-

spondent’s Opinion and Order issued August 22, 1951, were

filed by other interveners, as follows: By the City of Mil-

waukee, Wisconsin, on September 12, 1951; by the State of

Wisconsin and Public Service Commission of Wisconsin on

September 17, 1951; and by the City of Detroit, Michigan,

and Wayne County, Michigan, on September 19, 1951; that

thereafter on September 28, 1951, Petitioner’s said Petition

for Rehearing of said Order of August 22, 1951, was denied,

and all of the said applications for rehearing of the other

interveners were likewise denied by Respondent; that

thereby and thereafter the said Order of Respondent of

August 22, 1951, became fixed and is now a final order and

judgment of said Respondent; that Petitioner is adversely

affected and aggrieved thereby, for the reasons herein

stated; and that Petitioner has exhausted its remedies be-

fore said Respondent and, therefore, now seeks review of

said final Order and judgment of said Respondent Com-

mission, all in form and manner as permitted and prescribed

by Section 19 of the Natural Gas Act.

VIII.

The jurisdiction and authority of this Court is invoked

under Section 19(b) of the Natural Gas Act aforesaid.

IX.

SPECIFICATIONS OF ERRORS

Respondent Commiss.on, in its said findings and Order,

committed errors in the following particulars, upon each

of which Petitioner intends to reply:

1. The Commission erred as a matter of law by order-

ing the above proceeding to be terminated, because there is

substantial evidence on the record that Phillips Petroleum

Company (Phillips) is a “natural-gas company” as defined

by the Natural Gas Act and, therefore, the Commission

does in fact and in law have jurisdiction of Phillips in this

proceeding.

2. The Commission erred in failing to find that Phillips

is a “natural-gas company” as defined by the Natural Gas

Act and as such is subject to the jurisdiction of the Com-

mission under such Natural Gas Act, because the record

shows and Phillips admits on the record that it is engaged

in the transportation of natural gas in interstate commerce

and also in the sale in interstate commerce of such gas for

resale, and, therefore, Phillips is in fact and in law a

“natural-gas company” and subject to the jurisdiction of

the Commission.

3. The Commission erred in its formal Finding No. (1)

that Phillips is engaged in the “production and gathering”

50

BLEED THROUGH

of natural gas within the meaning of Section 1(b) of the

Natural Gas Act, indicating thereby that Phillips is exempt

from the provisions of the Natural Gas Act, whereas the

record shows that Phillips’ operations are not confined to

the “production and gathering” of natural gas but Phillips

is engaged in the transportation of natural gas in interstate

commerce and in the sale in interstate commerce of such

gas for resale.

4. The Commission erred in its formal Finding No. (2)

that Phillips’ movement of gas in interstate commerce and

its sales thereof for resale in interstate commerce, together

with its processing operations, all constitute a part of its

“gathering” business, or they are incidents of or activities

related to such business, so that such movement, processing,

and sales come within the exemption of “production and

gathering” in Section 1(b) of the Natural Gas Act, because

such finding is contrary to and not supported by substantial

evidence on the record and is contrary to the law apper-

taining thereto.

5. The Commission erred in its formal Finding No. (3)

that Phillips is not a “natural-gas company” within the

meaning of Sections 1(b) or 2(6) of the Natural Gas Act

because such finding is not supported by substantial evi-

dence on the record and is contrary to the law appertaining

thereto.

6. The Commission erred in its conclusion that the

background and legislative history of the Natural Gas Act

did not encompass the activities of companies whose opera-

tions are confined to “production and gathering”, including

the movement and sale of gas as a part of that business,

and that Phillips was such a company, because such a con-

51

clusion is contrary to fact and in violation of the express

terms of the Natural Gas Act.

7. The Commission erred in its finding that Phillips’

operations, so far as relevant, consist of “production and

gathering”, or they are incidents of or activities related

to these functions, thus requiring their inclusion within

the exemption of the Natural Gas Act, because such finding

is not supported by substantial evidence on the record and

is contrary to law.

8. The Commission erred in its finding that Phillips’

processing at its various plants and the movement of gas

by Phillips to these plants constitute “gathering” within

the meaning of Section 1(b) of the Natural Gas Act, be-

cause such finding is not supported by substantial evidence

on the record and is contrary to law.

9. The Commission erred in its conclusion that the

movement of gas through each of the Phillips’ processing

plants is a part of Phillips’ “gathering” business or is at

least exempt as an incident of or an activity related to its

“gathering” process, because such conclusion is not sup-

ported by substantial evidence on the record and is contrary

to law.

10. The Commission erred in holding that the move-

ment of gas through certain large diameter pipe lines

leading to Phillips’ processing plants is exempt from the

provisions of the Natural Gas Act on the ground that such

lines leading to such plants served the function of “gather-

ing” and that the movement of gas through these lines

and the lines themselves are exempt under the Natural

Gas Act, because such conclusions are not supported by

substantial evidence on the record and are contrary to law.

52

BLEED THROUGH

11. The Commission erred in its finding that the sales

of gas made a short distance after the gas moves through

Phillips’ processing plants are the end product of “pro-

duction and gathering” and are a part of Phillips’ “gather-

ing” business, or at least an exempt incident thereof,

because such finding is not supported by substantial evi-

dence on the record and is contrary to law.

12. The Commission erred in its finding that such

sales of natural gas are so closely connected with the local

incidents of the process of “production and gathering” as

to render rate regulation by the Commission inconsistent

or a substantial interference with the exercise by the af-

fected states of their regulatory functions, because such

finding is not supported by substantial evidence on the

record and is contrary to law.

13. The Commission erred in its finding that the Com-

mission’s regulation of sales made by Phillips in the process

of “production and gathering” of natural gas would, by its

very nature, be inconsistent or constitute a substantial

interference with such regulation of producers and gather-

ers by the States of Oklahoma, Texas and New Mexico,

because such finding is not supported by substantial evi-

dence on the record and is contrary to law.

14. The Commission erred in failing to find that

Phillips’ sales of gas to the five interstate pipe lines, to-

wit: Panhandle Eastern Pipe Line Company, Michigan-

Wisconsin Pipe Line Company, Independent Natural Gas

Company, El Paso Natural Gas Company and Cities Service

Gas Company, were made after the completion of “pro-

duction and gathering”, because there was substantial evi-

dence on the record to support such a finding, and under

53

the provisions of the Natural Gas Act such finding should

have been rade.

15. The Commission erred in failing to find that sales

of gas made by Phillips to the aforesaid five interstate

pipe lines did not and never had created a conflict of inter.

ference with the exercise by the affected states of their

regulatory functions, because there was substantial evi.

dence on the record to support such a finding, and under

the provisions of the Natural Gas Act such a finding should

have been made.

16. The Commission erred in its finding that the fixing

of maximum rates for the sales of natural gas made by a

producer thereof under the Natural Gas Act would run

counter to state conservation efforts, through the fixing of

minimum well-head prices or otherwise, to insure maxi-

mum recovery of gas prior to abandonment of the well,

because such finding is not supported by substantial evi-

dence on the record and is contrary to law.

17. The Commission erred in directing its Trial Ex-

aminer by its order of April 6, 1951, to exclude all evidence

to determine whether any of Phillips’ rates, subject to the

Commission’s jurisdiction, are unjust or unreasonable, and

further erred in approving the exclusion of substantial

evidence offered by the staff of the Commission at such

hearing showing that Phillips’ rates are in fact unjust and

unreasonable, because such action of the Commission was

arbitrary and capricious, contrary to law and in violation

of the express terms of the Natural Gas Act.

BLEED THROUGH

_—

x.

Respondent also erred in overruling and denying said

“Petition of Intervener Kansas City for Rehearing, Re-

consideration and Vacation of the Opinion and Order of

the Commission Herein, Issued August 22, 1951.”

WHEREFORE, Petitioner respectfully prays:

(1) That upon the filing hereof, the Clerk of this

Court serve copy of this petition upon the Honorable

Thomas C. Buchanan, Acting Chairman of the Re-

spondent Federal Power Commission, and command

said Commission, within forty (40) days from the date

thereof, to certify and file with this Court transcript

of the record upon which the Order complained of was

entered, including all pleadings, orders, transcript of

testimony, exhibits, findings, conclusions and Order of

the Commission of date August 22, 1951, Petitioner’s

petition for rehearing, and Order denying said petition

for rehearing, all in form and manner prescribed by

law.

(2) That on final hearing and determination here-

of, the said findings, conclusions and Order of said

Respondent Commission of date August 22, 1951, be

in all things set aside, reversed and held for naught;

and that respondent Phillips Petroleum Company be

held by this Court to be a “natural-gas company”

within the meaning of the aforesaid Natural Gas Act,

and, therefore, subject to the jurisdiction of Respond-

ent Commission.

(3) For such other and further relief as shall ap.

pear to be just and equitable in the premises.

/s/ Davi M. Proctor

David M. Proctor

City Counselor

/s/ JERomeE M. Jorree

Jerome M. Joffee

Special Utilities and

Legislative Counsel

Attorneys for City of

Kansas City, Missouri,

Petitioner.

AFFIDAVIT

STATE OF MISSOURI

COUNTY OF JACKSON

Jerome M. Joffee, of lawful age, being first duly sworn,

upon his oath states that he is Special Utilities and Legis-

lative Counsel for Petitioner City of Kansas City, Missouri,

and as such is duly authorized to and makes this affidavit

for and on its behalf; that he has read the within and

foregoing Petition for Review and that the facts set out

therein are true, according to the best of his knowledge,

information and belief.

/s/ JEROME M. Jorree

Subscribed and sworn to before me this 8th day of

November, 1951.

/s/ Maurice E. Benson

Notary Public within

and for Jackson County,

Missouri

My commission expires February 4, 1955.

56

BLEED THROUGH

PETITION OF THE CITY OF DETROIT, MICHI-

GAN, FOR REVIEW OF ORDER OF FEDERAL

POWER COMMISSION

11,241

To the Honorable, the United States Court of Appeals for

the District of Columbia Circuit, and to the Judges thereof:

The City of Detroit, a municipal corporation of the

State of Michigan, hereinafter called the “Petitioner,” be-

lieving itself adversely affected and aggrieved by the final

Order of the Federal Power Commission, hereinafter called

the “Respondent,” issued August 22, 1951, entered in that

certain cause bearing Docket No. G-1148, entitled: “In the

Matter of Phillips Petroleum Company,” then pending

before Respondent, respectfully petitions this Honorable

Court to review and set aside such Order, and in support

of its Petition, states:

I

Petitioner is a municipal corporation duly organized

and existing under the Laws of the State of Michigan, and

is a “municipality” as defined by Section 2(3) of the Natural

Gas Act (15 U. S. C. A., Sections 717, et seq.).

II

Respondent is an administrative and regulatory body

created by statute, derives its authority and jurisdiction

herein under an Act of Congress known as the “Natural

Gas Act” (15 U.S. C. A., Sections 717, et seq.), and has its

57

principal office and place of business in the City of Wash.

ington, District of Columbia.

Ill

Phillips Petroleum Company, hereinafter referred to

as “Phillips”, is a Delaware corporation, with its principal

office and place of business in Bartlesville, Oklahoma, and

is the “natural-gas company” to which the Order relates

that Respondent sought to be reviewed.

IV

On October 28, 1948, Respondent ordered an investi-

gation to determine whether Phillips is a “natural gas

company,” as that term is defined by sections 1 (b) and 2(6)

of the Natural Gas Act, and, if so, whether any of its rates,

subject to the Respondent’s jurisdiction are unjust and un-

reasonable. Petitioner intervened in such proceeding and

showed that in 1950 Phillips sold in interstate commerce

to Michigan-Wisconsin Pipe Line Company, a “natural gas

company,” for resale by it, more than several million cubic

feet of natural gas, and delivered such gas to Michigan-

Wisconsin Pipeline Company in the State of Oklahoma.

Some of this gas was sold and delivered to Petitioner and

its inhabitants through the pipe lines of Michigan-Wisconsin

Pipe Line Company and the distribution system of the

Michigan Consolidated Gas Company, a local gas distribut-

ing company. The inhabitants of Petitioner also bought

certain amounts of natural gas from Michigan Consolidated

Gas Company, which purchased such gas from Panhandle

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— 5

Eastern Pipe Line Company, a “natural gas company”,

which in turn purchased in interstate commerce for resale

and received large quantities of gas from Phillips in the

States of Texas and Oklahoma.

In 1950, Phillips admittedly transported natural gas

in interstate commerce and sold such gas to five “natural

gas companies” in interstate commerce for resale by such

companies, including said Michigan - Wisconsin Pipeline

Company and Panhandle Eastern Pipe Line Company.

Hearings before an Examiner of the Respondent were

begun in Bartlesville, Oklahoma, on April 3, 1951, and

concluded on May 23, 1951. The staff of Respondent al-

leged and were prepared to show that Phillips’ rates for

natural gas were excessive by several million dollars per

year. By Respondent’s Order of April 16, 1951, however,

the Examiner was directed to confine the hearing to a

determination of the first issue hereinbefore mentioned,

namely, whether Phillips is a “natural gas company,” and

that a further hearing relative to the remaining issues be

held at a later date to be fixed by Respondent.

The transcript covers approximately 6000 pages, and

196 exhibits were received in evidence covering many ad-

ditional thousands of pages.

Following the granting of a request by the Respondent’s

staff for omission of intermediate decision procedure (Coun-

sel for this Petitioner not having participated in favor of

such request; not having consented to such request nor

condoned the same), the entire Respondent Commission

heard oral argument of the single issue, to-wit, whether

Phillips is a “natural gas company,” for two days, July 9

and 10, 1951.

59

Vv

As of August 22, 1951, Respondent found that Phillips

is not a “natural gas company,” as defined by the Natural

Gas Act, as more specifically set out in this Petition. A true

copy of Respondent's Petition and Order entered as of said

August 22, 1951, Marked “Exhibit A”, is attached hereto

and by reference made a part hereof. In the event Phillips

is found by this Court to be a “natural gas company,” as

defined by Sections 1(b) and 2(6) of the Natural Gas Act,

Respondent will have jurisdiction to fix the maximum

selling price which Phillips may charge for natural gas sold

to the aforesaid interstate pipeline companies that sell and

deliver such gas to the named distributing company for

resale to Petitioner and its inhabitants. The price of natural

gas charged by Phillips to Michigan Consolidated Gas Com-

pany and to Panhandle Eastern Pipe Line Company is not

now fixed by any regulatory authority.

Petitioner states that the Congress intended to protect

the ultimate consumer of natural gas when it enacted the

Natural Gas Act, but there is no such protection for the

ultimate consumers of natural gas, such as Petitioner and

its citizens, in the City of Detroit, Michigan, if the price of

gas sold by Phillips remains unregulated. Moreover, every

cent paid for natural gas sold by Phillips to the aforesaid

pipe line companies is reflected and passed on in the prices

for gas charged the ultimate consumers thereof.

Hence, Petitioner is adversely affected and aggrieved

by the aforesaid final Order of Respondent and is a proper

party to petition this Court for review of the Respondent’s

Order under the provisions of Section 19() of the Natural

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eer sere

Gas Act, and Section 1009 of the Administrative Procedure

Act (5 U. S. C. A., Sections 1001, et seq.).

VI

As of August 22, 1951, Respondent made and entered

its Order which contained concluding findings reading as

follows:

(1) Phillips Petroleum Company is engaged in the

“production and gathering” of natural gas within the

meaning of Section 1(b) of the Natural Gas Act.

(2) Phillips’ movement of gas in interstate commerce

and its sale thereof for re-sale in interstate commerce,

together with its processing operations, all constitute

a part of its gathering business, or they are incidents

of or activities related to such business, so that such

movement, processing, and sales come within the ex-

emption of production and gathering in Section 1(b)

of the Act.

(3) Phillips Petroleum Company is not a “natural gas

company” within the meaning of Sections 1(b) or 2(6)

of the Natural Gas Act.

Respondent also entered the following Order:

That the proceedings initiated by the Commission’s

Order of October 28, 1948, in Docket No. G-1148, be

and the same is, terminated.

Chairman Wallgren and Commissioners Smith and

Wimberly concurred in the findings and Order, Commis-

61

sioner Draper concurred in the result and filed a short

concurring opinion, and Commissioner Buchanan filed a

lengthy dissenting opinion.

VII

On September 18, 1951, in form and manner and with-

in the time prescribed by the applicable rules and regula-

tions of the Commission, and Section 19 (a) of the Natural

Gas Act, Petitioner filed with Respondent its “Petition

of Intervenor City of Detroit for Rehearing, Reconsidera-

tion and Vacation of the Opinion and Order of the Com-

mission Herein, Issued August 22, 1951.”

Similar applications for rehearing of Respondent's

Opinion and Order issued August 22, 1951, were filed by

cther intervenors, as follows: By the City of Milwaukee,

Wisconsin, on September 12, 1951; by the State of Wiscon-

sin and Public Service Commission of Wisconsin on Sep-

tember 17, 1951; and by the City of Kansas City, Missouri,

on September 19, 1951, and Wayne County, Michigan, on

September 19, 1951; that thereafter on September 28, 1951,

Petitioner’s said Petition for Rehearing of said Order of

August 22, 1951, was denied, and all of the said applications

for rehearing of the other intervenors were likewise denied

by Respondent; that thereby and thereafter the said Order

of Respondent of August 22, 1951, became fixed and is now

a final Order and judgment of said Respondent; that Peti-

tioner is adversely affected and aggrieved thereby, for the

reasons herein stated; and that Petitioner has exhausted

its remedies before said Respondent, and, therefore, now

seeks review of said final Order and J udgment of said

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Respondent Commission, all in form and manner as per-

mitted and prescribed by Section 19 of the Natural Gas

Act.

Vill

The jurisdiction and authority of this Court is invoked

under Section 19(b) of the Natural Gas Act aforesaid.

IX

SPECIFICATION OF ERRORS

Respondent Commission, in its said findings and Order,

committed errors in the following particulars, upon each

of which Petitioner intends to rely:

1. The Commission erred as a matter of law by order-

ing the above proceeding to be terminated, because there

is substantial evidence on the record that Phillips Petroleum

Company (Phillips) is a “natural gas company” as de-

fined by the Natural Gas Act, and, therefore, the Com-

mission does in fact and in law have jurisdiction of Phillips

in this proceeding.

2. The Commission erred in failing to find that Phil-

lips is a “natural gas company” as defined by the Natural

Gas Act and as such is subject to the jurisdiction of the

Commission under such Natural Gas Act, because the rec-

ord shows and Phillips admits on the record that it is

engaged in the transportation of natural gas in interstate

Commerce and also in the sale in interstate commerce of

63

such gas for resale, and, therefore, Phillips is in fact and

in law a “natural gas company” and subject to the jurisdic.

tion of the Commission.

3. The Commission erred in its formal Finding No,

(1) that Phillips is engaged in the “production and gather.

ing” of natural gas within the meaning of Section 1(b)

of the Natural Gas Act, indicating thereby that Phillips

is exempt from the provisions of the Natural Gas Act,

whereas the record shows that Phillips’ operations are not

confined to the “production and gathering” of natural gas

but Phillips is engaged in the transportation of natural gas

in interstate commerce and in the sale in interstate com-

merce of such gas for resale.

4. The Commission erred in its formal Finding No.

(2) that Phillips’ movement of gas in interstate com-

merce, and its sales thereof for resale in interstate com-

merce, together with its “gathering” business, or they are

incidents of or activities related to such business, so that

such movement, processing, and sales come within the

exemption of “production and gathering” in Section 1(b)

of the Natural Gas Act, because such finding is contrary

to and not supported by substantial evidence on the record

and is contrary to the law appertaining thereto.

5. The Commission erred in its formal Finding No.

(3) that Phillips is not a “natural gas company” within

the meaning of Sections 1(b) or 2(6) of the Natural Gas

Act because such finding is not supported by substantial

evidence on the record and is contrary to the law apper-

taining thereto.

6. The Commission erred in its conclusions that the

background and legislative history of the Natural Gas Act

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—

did not encompass the activities of companies whose opera-

tions are confined to “production and gathering”, including

the movement and sale of gas as a part of that business,

and that Phillips was such a company, because such a

conclusion is contrary to fact and in violation of the express

terms of the Natural Gas Act.

7. The Commission erred in its finding that Phillips’

operations, so far as relevant, consist of “production and

gathering”, or they are incidents of or activities related to

these functions, thus requiring their inclusion within the

exemption of the Natural Gas Act, because such finding

is not supported by substantial evidence on the record

and is contrary to law.

8. The Commission erred in its finding that Phillips’

processing at its various plants and the movement of gas

by Phillips to these plants constitute “gathering” within

the meaning of Section 1(b) of the Natural Gas Act, be-

cause such finding is not supported by substantial evidence

on the record and is contrary to law.

9. The Commission erred in its conclusion that the

movement of gas through each of the Phillips’ processing

plants is a part of Phillips’ “gathering” business or is at

least exempt as an incident of or an activity related to

its “gathering” process, because such conclusion is not sup-

ported by substantial evidence on the record and is con-

trary to law.

10. The Commission erred in holding that the moving

of gas through certain large diameter pipe lines leading

to Phillips’ processing plants is exempt from the provisions

of the Natural Gas Act on the ground that such lines leading

to such plants served the function of “gathering” and that

the movement of gas through these lines and the lines

themselves are exempt under the Natural Gas Act, be-

cause such conclusions are not supported by substantial

evidence on the record and are contrary to law.

11. The Commission erred in its finding that the sales

of gas made a short distance after the gas moves through

Phillips’ processing plants are the end product of “pro-

duction and gathering” and are a part of Phillips’ “gather-

ing” business, or at least an exempt incident thereof, be-

cause such finding is not supported by substantial evidence

on the record and is contrary to law.

12. The Commission erred in its finding that such sales

of natural gas are so closely connected with the local inci-

dents of the process of “production and gathering” as to

render rate regulation by the Commission inconsistent or

a substantial interference with the exercise by the affected

states of their regulatory functions, because such finding

is not supported by substantial evidence on the record and

is contrary to law.

13. The Commission erred in its finding that the Com-

mission’s regulation of sales made by Phillips in the process

of “production and gathering” of natural gas would, by

its very nature, be inconsistent or constitute a substantial

interference with such regulation of producers and gath-

erers by the States of Oklahoma, Texas and New Mexico,

because such finding is not supported by substantial evi-

dence on the record and is contrary to law.

14. The Commission erred in failing to find that

Phillips’ sales of gas to the five interstate pipe lines, to-

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wit: Panhandle Eastern Pipe Line Company, Michigan-

Wisconsin Pipe Line Company, Independent Natural Gas

Company, El Paso Natural Gas Company and Cities Service

Gas Company, were made after the completion of “pro-

duction and gathering”, because there was substantial evi-

dence on the record to support such a finding, and under

the provisions of the Natural Gas Act such finding should

have been made.

15. The Commission erred in failing to find that sales

of gas made by Phillips to the aforesaid five interstate pipe

lines did not and never had created a conflict of inter-

ference with the exercise by the affected states of their

regulatory functions, because there was substantial evi-

dence on the record to support such a finding, and under

such provisions of the Natural Gas Act such a finding

should have been made.

16. The Commision erred in its finding that the fixing

of maximum rates for the sales of natural gas made by

a producer thereof under the Natural Gas Act would run

counter to state conservation efforts, through the fixing of

minimum well-head prices or otherwise, to insure maxi-

mum recovery of gas prior to abandonment of the well,

because such finding is not supported by substantial evi-

dence on the record and is contrary to law.

17. The Commission erred in directing its Trial Ex-

aminer by its order of April 6, 1951, to exclude all evidence

to determine whether any of Phillips’ rates, subject to the

Commission’s jurisdiction, are unjust or unreasonable, and

further erred in approving the exclusion of substantial

evidence offered by the staff of the Commission at such

hearing showing that Phillips’ rates are in fact unjust and

67

unreasonable, because such action of the Commission wag

arbitrary and capricious, contrary to law and in violation

of the express terms of the Natural Gas Act.

18. The Commission erred by invoking a procedural

device termed “Omission of Intermediate Decision” and

therefore deprived the Petitioner of a full and fair hearing,

contrary to law and the provisions of the Natural Gas Act

and the Administrative Procedure Act in such cases made

and provided.

The Commission designated Edward B. Marsh as the

Trial Examiner, who, for a period of 39 days, conducted

the hearing at Bartlesville, Oklahoma. He was not accom-

panied by any member or members of the Commission,

so that he was the sole trier of the issues in the case. (In

effect he was the Federal Power Commission in the matter,

(Section 15 Natural Gas Act)). On July 27, 1951, four of

the five members of the Commission, by some sort of vote,

caused to be issued a “Release” announcing did not follow

any Findings of Fact; rather it preceded the determination

of fact and as of date August 15, 1951, no findings had been

made or filed by the Commission (see Opinion No. 217 dated

August 16, 1951). The major issue « the case is whether

Phillips is a “natural gas company” within the provisions

of the Natural Gas Act. This question is to be resolved

in the light of facts and these facts, in turn, are determin-

able upon the testimony of witnesses who appeared before

the Trial Examiner and testified. In this case the Trial

Examiner did not make any Findings of Fact. He was re-

lieved of that task and duty by an Order of the Commission

which, in-effect, is the process by which the Commission

usurps the jurisdiction of the Trial Examiner to decide

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BLEED THROUGH

the facts from the evidence adduced at the trial, hearing

or investigation.

The Findings of Fact, Conclusions of Law, and the

Order contained in and made a part of Opinion No. 217,

aforesaid, were promulgated by the majority of the Com-

mission in an arbitrary and capricious manner, beyond

the scope of their authority and contrary to the principles

of law and the Constitution of the United States, in that

“due process of law” was not followed and administered

by the Commission in the course of the conduct of the hear-

ing and investigation affecting said matter, and the Peti-

tioner has been deprived thereby of its statutory right to

a full and fair hearing. Section 14 of the Natural Gas Act

is the statutory authority for the conduct of investigations

(52 Stat. 828 (1938); 15 U. S. C. 717-n is the authority for

hearings. As a Trial Examiner was designated, as provided

by Section 15(a), it must be presumed that the proceeding

thus conducted was a “hearing” which, as a matter of law,

required that “the one who decides must hear” (Morgan

vy. United States, 298 U. S. 468). Contrary to the laws of the

United States, the Commission, without power so to do,

removed the matter from the hands of the Trial Exam-

iner, who had been designated by it; and thereafter under-

took to hear arguments of counsel, to make an alleged

Finding of Fact, and Conclusions of Law thereon. The

Natural Gas Act does not prescribe such a procedure and

no power is delegated to the Commission to assume such

iegislative authority as to enable it to do so.

By reason of the method used by this Commission to

decide that it did not have jurisdiction of Phillips, the Find-

ings of Fact upon the evidence, by the Trial Exarainer,

(who heard the testimony, and by virtue thereof, was the

only competent person to make such a finding from the

mass of conflicting testimony adduced before him) was dis.

pensed with by the Commission by invoking a procedural

device termed “Omission of Intermediate Decision”, thereby

depriving Petitioner of a full and fair hearing.

x

Respondent also erred in overruling and denying said

“Petition of Intervenor City of Detroit for Rehearing, Re-

consideration and Vacation of the Opinion and Order of

the Commission herein, issued August 22, 1951.”

CONCLUSION

WHEREFORE, Petitioner respectfully prays:

(1) That upon the filing hereof, the Clerk of this Court

serve copy of this petition upon the Honorable Thomas C.

Buchanan, Acting Chairman of the Respondent Federal

Power Commission, and command said Commission, within

forty (40) days from the date thereof, to certify and file

with this Court transcript of the record upon which the

Order complained of was entered, including all pleadings,

orders, transcript of testimony, exhibits, findings, conclu-

sions and Order of the Commission of date August 22, 1951,

Petitioner’s petition for rehearing, and Order denying said

petition for rehearing, all in form and manner prescribed

by law. a

(2) That on final hearing and determination hereof,

the said findings, conclusions and Order of said Respondent

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BLEED THROUGH

Commission of date August 22, 1951, be in all things set

aside, reversed and held for naught; and that respondent

Phillips Petroleum Company be held by this Court to be

a “natural gas company” within the meaning of the afore-

said Natural Gas Act, and, therefore, subject to the juris-

diction of Respondent Commission.

(3) For such other and further relief as shall appear

to be just and equitable in the premises.

CITY OF DETROIT

A municipal corporation of the

State of Michigan,

Petitioner,

Attorneys for said

Petitioner

301 City Hall

Detroit 26, Michigan

Telephone: WOodward 3-9640

(signed) Paut T. Dwyer,

Paul T. Dwyer

Acting Corporation Counsel

(signed) James H. Lez,

James H. Lee

Assistant Corporation Counsel

AFFIDAVIT

STATE OF MICHIGAN Ss

COUNTY OF WAYNE :

JAMES H. LEE of the City of Detroit, Wayne County,

Michigan, being duly sworn, deposes and says that he is

an Assistant Corporation Counsel of the City of Detroit, a

71

—

municipal corporation of the State of Michigan, and as

such is attorney for the City of Detroit, Michigan, a munici-

pal corporation of the State of Michigan, petitioner herein;

that he is authorized to sign the foregoing petition for and

and behalf of said petitioner and that he did so sign same;

that he knows the contents thereof and that the same is

true of his own knowledge except as to those matters there.

in stated to be upon information and belief, and as to those

matters, he believes it to be true.

Further depondent saith not.

JAMEs H. Lee

James H. Lee

Assistant Corporation Counsel

Subscribed and sworn to before me

This 12th day of November, A. D.

1951.

Gorpon N. McKee

Notary Public, Wayne County, Michigan (sEAL)

My commission expires March 23, 1954.

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

MOTION OF PHILLIPS PETROLEUM COMPANY

FOR LEAVE TO INTERVENE

Phillips Petroleum Company (hereinafter referred to

as “Phillips”) respectfully moves, pursuant to the Rule

38(c) of this Court, for leave to intervene, to be heard

upon brief and oral argument and otherwise to participate

fully in this proceeding as a party in support of the orders

72

BLEED THROUGH

of the Federal Power Commission (hereinafter referred to

as “Commission”) which petitioners seek to have reviewed

and set aside in this proceeding. In support of this motion,

Phillips respectfully states:

I.

Phillips is a corporation organized and existing under

the laws of the State of Delaware, with its principal oper-

ating office in Bartlesville, Oklahoma.

II.

The Commission action sought te be reviewed in this

proceeding directly affects Phillips. The proceeding below

was styled “In the Matter of the Phillips Petroleum Com-

pany, Docket No. G-1148,” and was instituted by an order

of the Commission dated October 28, 1948, which provided

in part:

“The Commission, upon its own motion, orders that:

An investigation of Respondent, Phillips Petroleum

Company, be and hereby is instituted for the purpose

of enabling the Commission:

(A) To determine with respect to the Respondent:

(i) Whether it is a natural-gas company within

the meaning of the Natural Gas Act; and

(ii) Whether, in connection with any transporta-

tion or sale of natural gas, subject to the

jurisdiction of the Commission, any rates,

charges, or classifications demanded, ob-

73

—

served, charged, or collected, or any rules,

regulations, practices or contracts affecting

such rates, charges, or classifications are un.

just, unreasonable, unduly discriminatory, or

preferential; and

(B) If it shall find, after hearing, that the Respondent

is a natural-gas company within the meaning of

the Natural Gas Act, and that any of Respondent’s

rates, charges, classifications, rules, regulations,

practices, or contracts, subject to the jurisdiction

of the Commission, are unjust, unreasonable, un-

duly discriminatory or preferential, to determine

and fix by order or orders just and reasonable,

nondiscriminatory or nonpreferentia! rates, charg-

es, classiications, rules, regulations, practices, or

contracts to be thereafter observed and in force.”

Hearings in said proceeding were begun before an

Examiner of the Commission on April 3, 1951, and con-

cluded May 23, 1951. By order dated April 16, 1951, the

Commission directed that the hearing be limited initially

to the issue of whether Phillips is a “ ‘natural-gas company’

within the meaning of the Natural Gas Act,” and that a

further hearing as to the remaining issues be held later,

if necessary. Counsel for Phillips participated in the pro-

ceeding before the Examiner and filed briefs and made an

oral argument before the Commission. The record before

the Commission included approximately 6,000 pages of oral

testimony and 196 exhibits.

In its Opinion and Order No. 217, dated August 16,

1951, issued August 22, 1951, the Commission found:

“(1) Phillips Petroleum Company is engaged in the

‘production and gathering’ of natural gas within

- 14

BLEED THROUGH

the meaning of Section 1(b) of the Natural Gas

Act.

(2) Phillips’ movement of gas in interstate commerce

and its sales thereof for resale in interstate com-

merce, together with its processing operations, all

constitute a part of its gathering business, or

they are incidents or activities related to such

business, so that such movement, processing, and

sales come within the exemption of production

and gathering in Section 1(b) of the Act.

(3) Phillips Petroleum Company is not a ‘natural-gas

company’ within the meaning of Sections 1(b) or

2(6) of the Natural Gas Act.”

Pursuant thereto the Commission ordered:

“That the proceeding initiated by the Commission’s

order of October 28, 1948, in Docket No. G-1148 be,

and the same hereby is, terminated.”

Petitioners herein thereafter filed with the Commission

a petition for rehearing. That petition was denied by the

Commission by an order dated September 27, 1951, and

issued September 28, 1951.

III.

Petitioners have filed in this Court a petition to review

and set aside (a) the order of the Commission dated August

16, 1951 and issued on August 22, 1951, holding that Phillips

is not a “natural-gas company” and that its sales of natural

gas and other natural gas operations are not subject to

regulation by the Commission, and (b) the order of the

Cormmission of September 28, 1951, denying petitioners’

75

86 FA ARTEL AND Shab A atop hein ae nial eel eae A

petition for rehearing. The petition herein asks this Court |

to determine generally that Phillips is a “natural-gas com. _

pany” within the meaning of the Natural Gas Act, and, as

such, subject to the jurisdiction of the Commission under

said Act and, more specifically, to determine that certain |

of Phillips’ sales of natural gas are subject to regulation by

the Commission.

IV.

The relief sought by petitioners, if granted, would sub-

stantially and directly affect Phillips and its operations,

Phillips, therefore, has a direct and immediate interest in

the outcome of this proceeding which is not completely

represented by any other party.

WHEREFORE, Phillips respectfully moves this Court

for leave to intervene, to be heard on oral argument and

on brief and otherwise to participate fully in this proceed-

ing as a party in support of the orders which petitioners

seek to have reviewed and set aside. }

Respectfully submitted,

Hucu B. Cox

Union Trust Building

Washington 5, D. C.

Raysurn L. Foster

Harry D. Turner

Warren M. Sparks

KENNETH HEADY |

c/o Phillips Petroleum Company

Bartlesville, Oklahoma

Attorneys for

Phillips Petroleum Company

Dated: January 25, 1952

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_— BLURRED COPY

CERTIFICATE OF SERVICE

The undersigned, attorney for Phillips Petroleum Com-

pany, hereby certifies that on January 28, 1952, he served

a copy of the foregoing motion to intervene upon each of

the parties of record in this proceeding by duly mailing

a copy thereof by registered mail, properly addressed and

with postage prepaid, to counsel of record for each of said

parties as follows:

Bradford Ross, Esq.

General Counsel for Federal Power Commission

1800 Pennsylvania Avenue, N. W.

Washington 6, D. C.

William E. Torkelson, Esq.

1 W. Wilson Street

Madison, Wisconsin

Attorney for the State of Wisconsin,

Petitioner

Stewart G. Honeck, Esq.

State Capital

Madison, Wisconsin

Attorney for Public Service Commission,

Petitioner.

HUGH B. COX

Attorney for

Phillips Petroleum Company

77

Bernier an. Sa) oer

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

No. 11,247 JANUARY TERM, 1952

State of Wisconsin and Public

Service Commission of Wisconsin,

Petitioners,

Vv.

Federal Power Commission,

Respondent.

No. 11,241 JANUARY TERM, 1952

City of Detroit, Michigan,

Petitioner,

Vv.

Federal Power Commission,

Respondent.

No. 11,242 JANUARY TERM, 195?

City of Kansas City, Missouri,

Petitioner,

v.

Federal Power Commission,

Respondent.

No. 11,245 JANUARY TERM, 1952

City of Milwaukee, Wisconsin,

a municipal corporation,

Petitioner,

v.

Federal Power Commission,

Respondent.

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BLURRED COPY

——_— eee

——— —

No. 11,252 JANUARY TERM, 1952

County of Wayne, Michigan,

Petitioner,

v.

Federal Power Commission,

Respondent.

Before: Stephens, Chief Judge, in Chambers

ORDER

Upon consideration of the motion of Phillips Petroleum

Company for leave to intervene in the above-entitled cases,

to be allowed to file a brief and to be allowed to argue

therein, and respondent having informed the Clerk of this

Court by letter that it has no objection thereto and it ap-

pearing that none of the petitioners herein have filed

objections to said motion, it is

ORDERED that the motion be, and it is hereby, granted.

Dated: FEB 9 - 1952

United States Court of Appeals

For the

District of Columbia Circuit

FILED FEB 9 1952

JOSEPH W. STEWART

Clerk

79

Bariccay.. nd

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

MOTION OF STATE OF NEW MEXICO, ET AL.

FOR LEAVE TO INTERVENE

Comes now the State of New Mexico, and the Oj]

Conservation Commission, of the State of New Mexico, by

its attorneys, Attorney General, Joe L. Martinez, and Peter

N. Chumbris, Special Assistant Attorney General, State of

New Mexico, and respectfully move, pursuant to the Rule

38(c) of this Court, for leave to intervene, to be heard

upon brief and oral argument and otherwise to Participate

fully in this proceeding as a party in support of the order

of the Federal Power Commission which petitioner seeks

to have reviewed and Set aside in this proceeding. In

support of this motion, State of New Mexico, Et al, respect-

fully state:

I.

That the Oil Conservation Commission is an agency

of the State of New Mexico.

II.

The Federal Power Commission action sought to be

reviewed in this proceeding affects the State of New Mexico,

and the Oil Conservation Commission. The proceeding be-

low was styled IN THE MATTER OF THE PHILLIPS

PETROLEUM COMPANY, DOCKET NO. G-1148 AND

WAS INSTITUTED BY AN ORDER OF THE FEDERAL

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a BLURRED COPY

POWER COMMISSION DATED OCTOBER 28, 1948. The

State of New Mexico, and the Oil Conservation Commission

of the State of New Mexico, filed a motion for leave to

intervene and were permitted to intervene in said matter

below.

Hearings in said proceeding were begun before an

Examiner of the Commission on April 3, 1951, and con-

cluded May 23, 1951. By order dated April 16, 1951, the

Commission directed that the hearing be limited initially

to the issue of whether the Phillips Petroleum Company is

a natural gas company within the meaning of the Natural

Gas Act, and that a further hearing as to the remaining

issues to be held later, if necessary. Counsel for the State

of New Mexico, Et al, participated in the proceeding before

the Examiner and filed briefs and made an oral argument

before the Federal Power Commission. The record before

the Commission included approximately 125 pages of oral

testimony and exhibits.

In its Opinion and Order No. 217, dated August 16,

1951, issued August 22, 1951, The Federal Power Commis-

sion found that it did not have jurisdiction over independent

producers and gatherers of natural gas. The petitioners,

State of Wisconsin and Public Service Commission of Wis-

consin, thereafter filed with the Federal Power Commission

a petition for rehearing. That petition was denied by the

Federal Power Commission by an order dated September

27, 1951, and issued September 28, 1951.

81

7

Ill.

The petitioners have filed in this Court a petition to

review and set aside (a) the order of the Federal Power

Commission dated August 16, 1951 and issued on August

22, 1951; and (b) the order of the Federal Power Com-

mission of September 28, 1951, denying the petitiorers

petition for rehearing. The petition herein asks this Court

to determine generally that Phillips Petroleum Company is

a natural gas Company within the meaning of the Natural

Gas Act.

IV.

The State of New Mexico and the Oil Conservation

Commission of the State of New Mexico, contended in the

proceeding below that they were constitutionally compe-

tent to regulate independent preducers and gatherers of

natural gas of which Phillips Petroleum Company was one.

and that in view of the decision in the Inter-State Natural

Gas Company, v. Federal Power Commission, 331 U. S. 682,

the State of New Mexico, Et al, intervened to substantiate

that contention which was upheld in the Opinion of the

Federal Power Commission.

V.

The relief sought by the petitioners, if granted, would

affect the jurisdiction of the Oil Conservation Commission

over independent producers and gatherers of natural gas,

of which Phillips Petroleum Company is one and, therefore,

82

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a - ee en

—

the State of New Mexico and the Oil Conservation Com-

mission of the State of New Mexico, have a direct and

immediate interest in the outcome of this proceeding which

is not completely represented by any other party.

WHEREFORE, the State of New Mexico and the Oil

Conservation Commission of the State of New Mexico, re-

spectfully move this Court for leave to intervene, to be

heard on oral argument and on brief and otherwise to

participate fully in this proceeding as a party in support

of the order which the petitioness seek to have reviewed

and set aside.

Respectfully submitted,

Jor L. MARTINEZ

JOE L. MARTINEZ

Attorney General

State of New Mexico

Santa Fe, New Mexico

Peter N. CHUMBRIS

Special Assistant Attorney General

State of New Mexico

322 West Gold Avenue

Albuquerque, New Mexico

Dated January 31, 1952.

CERTIFICATE OF SERVICE

The undersigned, attorney for State of New Mexico

and the Oil Conservation Commission of the State of New

Mexico, hereby certifies that on February 1, 1952, he served

a copy of the foregoing motion to intervene upon each of

the parties of record in this proceeding by duly mailing

83

Besos

a copy thereof, properly addressed and with postage pre.

paid, to counsel of record for each of said parties as follows:

Bradford Ross, Esq.

General Counse! for Federal Power Commission

1800 Pennsylvania Avenue, N. W.

Washington 6, D. C.

Stewart G. Honeck, Esq.

Attorney for State of Wisconsin,

William E. Torkelson, Esq.

Attorney for Public Service Commission.

State Capital

Madison, Wisconsin

Petitioners.

/s/ Peter N. Cuumpris

PETER N. CHUMBRIS

Special Assistant Attorney General

State of New Mexico, for

State of New Mexico, Et al.

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

No. 11,247 JANUARY TERM, 1952

State of Wisconsin and Public

Service Commission of Wisconsin,

Petitioners,

v.

Federal Power Commission,

Respondent.

Phillips Petroleum Company,

Intervenor.

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ee a .

| No. 11,241 JANUARY TERM, 1952

City of Detroit, Michigan,

Petitioner,

v.

Federal Power Commission,

| Respondent.

Phillips Petroleum Company,

Intervenor.

No. 11,242 JANUARY TERM, 1952

City of Kansas City, Missouri,

Petitioner,

v.

Federal Power Commission,

Respondent.

Phillips Petroleum Company,

Intervenor.

City of Milwaukee, Wisconsin,

a municipal corporation,

Petitioner,

Vv.

Federal Power Commission,

Respondent.

Phillips Petroleum Company,

Intervenor.

County of Wayne, Michigan,

Petitioner,

Vv.

85

ogee

No. 11,245 JANUARY TERM, 1952

No. 11,252 JANUARY TERM, 1952

*

Federal Power Commission,

Phillips Petroleum Company,

Intervenor.

Before: Stephens, Chief Judge and Proctor and Baze-

lon, Circuit Judges, in Chambers

ORDER

Upon consideration of the motion of the State of New

Mexico and the Oil Conservation Commission of the State

of New Mexico for leave to intervene in the above-entitled

cases, to be allowed to file a brief and to be allowed to

argue therein, and respondent having informed the Clerk

of this Court by letter that it has no objection thereto and

it appearing that none of the petitioners herein have filed

objections to said motion, it is

ORDERED by the Court that the motion be, and it is

hereby, granted.

Dated: MAR 3 - 1952

Per Curiam.

United States Court of Appeals

For the

District of Columbia Circuit

FILED MAR 3 - 1952

JoserH W. STEWART

Clerk

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———— 8 mee oe

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

MOTION OF THE CORPORATION COMMISSION

OF THE STATE OF OKLAHOMA

FOR LEAVE TO INTERVENE

The Corporation Commission of the State of Oklahoma

(hereinafter referred to as “Corporation Commission” )

moves the Court, pursuant to Rule 38(c) of this Court,

for leave to intervene, to file briefs and to otherwise par-

ticipate fully in the above proceedings as a party in support

of the orders of the Federal Power Commission which peti-

tioners seek to have reviewed and set aside and in support

of said motion respectfully alleges: .

1. The Corporation Commission is an agency of the

State of Oklahoma created by the Constitution of said

State and has, among other things, the duty, power and

authority to regulate the production and gathering of nat-

ural gas for the purpose of preventing waste and protecting

the correlative property rights of common owners.

2. The review of the orders of the Federal Power

Commission sought by petitioners would directly and ma-

terially affect the Corporation Commission in the discharge

of its duties to regulate the production and gathering of

natural gas.

3. The orders sought to be reviewed were entered in

a proceeding before the Federal Power Commission styled,

“In the Matter of Phillips Petroleum Company, Docket No.

G-1148.” The issue adjudicated in said proceeding was

whether certain sales of natural gas by Phillips Petroleum

Company (hereinafter referred to as “Phillips”) and its

87

“natural gas company” under the Natural Gas Act and

Subjected said sales and operations to the jurisdiction and

regulation of the Federal Power Commission.

operations in connection therewith rendered Phillips a |

4. Certain of the sales of Phillips involved in said |

proceeding were sales of gas produced in the State of

Oklahoma, namely, sales to Panhandle Eastern Pipe Line

Company, Michigan - Wisconsin Pipe Line Company and

Cities Service Gas Company. (See Exhibits 9(a), 11(a)

and 52.) As to all gas produced in Oklahoma and so sold

to said companies, this Corporation Commission regulates

the spacing, drilling and plugging of the wells, the pro-

duction of the gas (and oil, if any), the ratable taking of

the gas, the gathering, marketing and utilization of the gas

under a comprehensive system of conservation statutes,

rules and regulations. (See Exhibits 162, 162-A to 162-R

incl.)

5. A portion of the gas sold by Phillips to Panhandle

Eastern Pipe Line Company and to Michigan-Wisconsin

Pipe Line Company is produced from the Guymon-Hugoton

Field located in Texas County, Oklahoma. The Guymon-

Hugoton Field is a part of the largest single gas reservoir

in the United States which extends from the State of Kansas

through the Oklahoma Panhandle into the State of Texas

and from which several hundred wells are producing natur-

al gas.

The Corporation Commission after public hearing on

the 9th day of December, 1946, entered an order (Exhibit

120) fixing a price of 7¢ per thousand cubic feet as the

minimum price which must be realized by the producer

at the wellhead for gas produced in the Guymon-Hugoton

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Field. The validity of said order was sustained by the

Supreme Court of Oklahoma on January 17, 1950, against

attacks by Cities Service Gas Company and Phillips Petrol-

eum Company (220 P. 2d 279). Appeals were taken to

the Supreme Court of the United States, which on De-

cember 11, 1950, likewise affirmed the validity of said

order in Cities Service Gas Company v. Peerless Oil and

Gas Company, 340 U. S. 179, and Phillips Petroleum Com-

pany v. State of Oklahoma, 340 U.S. 190.

6. The gas sold by Phillips to Cities Service Gas Com-

pany is casinghead gas produced from the West Edmond

Field located in Oklahoma. Pursuant to authority vested

i the Corporation Commission by Title 52 O. S., §286.1

et seq., the Commission, after notice and hearing, on the

29th day of July, 1947, entered an order approving the

unitization of the West Edmond Hunton Lime Unit. (See

Exhibit 52.)

By virtue of said unitization and order, the owners of

the numerous oil and gas leases covering the field no longer

own the production from their segregated tracts, but in lieu

thereof receive a pro rata share of the oil and gas produced

from the Unit. Sohio Petroleum Company is the operator

of the Unit. By contract with the Unit, Phillips and other

owners of two gasoline plants located in the field gather

the gas from the wells, process it for its gasoline content

and deliver the residue gas to the purchasers (Cities Service

Gas Company being one) for the account of the Unit

Owners. Phillips is one of the Unit Owners by virtue of

its original ownership of leases covered by the unitization.

(See Exhibit 52.)

89

Ye aie

Sah

eons SOSA At Ah IA LOLY DY Bhi DERI Sait Pew eS

7. This Corporation Commission intervened in the pro-

ceeding before the Federal Power Commission contending

that the sales of Phillips, insofar as they involved gas

produced within the State of Oklahoma, were not subject

to the jurisdiction of said Commission for the reason that

said sales fell within the exception of such jurisdiction

stated by the Supreme Court of the United States in Inter-

state Natural Gas Company v. Federal Power Commission,

331 U. S. 682, 91 L. ed. 1742, 68 S. Ct. 30, in the following

language:

“Thus, where sales, though technically consum-

mated in interstate commerce, are made during the

course of production and gathering and are so closely

connected with the local incidents of that process as

to render rate regulation by the Federal Power Com-

mission inconsistent or a substantial interference with

the exercise by the State of its regulatory functions,

the jurisdiction of the Federal Power Commission does

not attach.”

8. At the hearing before the Federal Power Com-

mission, Ray C. Jones, a member of this Commission, and

Elmer Capshaw, a petroleum and natural gas engineer in

the employ of this Commission for 17 years, testified in

support of its position. The Corporation Commission filed

a written brief with the Federal Power Commission, and

the Attorney General of Oklahoma made an oral argument

in support of its contentions when the matter was heard

by the Federal Power Commission sitting en banc on July

9 and 10, 1951.

9. In its Opinion and Order No. 217 dated August 16,

1951, issued August 22, 1951, the Federal Power Commis-

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sion found that Phillips was not a “natural gas company”

within the meaning of the Natural Gas Act, and dismissed

the proceeding. As one ground for said conclusion and

order the Commission found:

“In addition to the conclusions we have already

reached, the evidence in this case supplies still another

type of barrier to our regulation of Phillips’ sales.

Though technically consummated in interstate com-

merce, these sales are made ‘during the course of pro-

duction and gathering.’ And we expressly find that

they are so closely connected with the local incidents

of that process as to render rate regulation by this

Commission inconsistent or a substantial interference

with the exercise by the affected States of their regu-

latory functions.”

Commissioner Draper in a special concurring opinion

agreed with this ground of the Commission’s decision say-

ing:

“The second ground for the majority decision is

its finding that inconsistency or substantial interference

with state regulation would result from regulation of

Phillips’ sales by this Commission. I agree with this

finding. My exhaustive study of the record in this case

convinces me that there would clearly result a conflict

of the sort contemplated by the language used in the

Interstate opinion. Since this is so, as the Court said

in that case, ‘The jurisdiction of the Federal Power

Commission does not attach.’ ”

10. Petitioners have filed in this Court petitions to

review and set aside the order of the Federal Power Com-

mission holding that Phillips is not a “natural gas company”

and that its sales of natural gas and other natural gas oper-

91

_ i)

ations, including those in the State of Oklahoma, are not

subject to regulation by the Federal Power Commission,

Said petitions in effect ask this Court to determine that

Phillips’ sales of gas to Panhandle Eastern Pipe Line Com-

pany, Michigan-Wisconsin Pipe Line Company and Cities

Service Gas Company and certain of its pipe line operations

are subject to regulation by the Federal Power Commission.

The regulation by the Federal Power Commission of said

sales or of any of the operations of Phillips conducted in

connection therewith in the State of Oklahoma would con-

stitute a substantial interference with the exercise of the

power of the State of Oklahoma through this Corporation

Commission to regulate the production and gathering of

such gas. Such regulation would directly interfere with

the power of, and its exercise by, the State of Oklahoma

through this Corporation Commission to fix and determine

the prices at which gas can be produced from wells located

within the State for the purpose of preventing economic

and physical waste of natural gas and protecting the cor-

relative property rights of all persons interested in common

sources of supply. The Federal Power Commission’s fixing

of the prices to be received by Phillips from such sales

would be inconsistent with and constitute a substantial

interference with the power of, and its exercise by, the

State of Oklahoma through this Corporation Commission

to promulgate and enforce rules, regulations and orders

relating to the production and gathering of natural gas

within the State of Oklahoma for the purpose of preventing

or minimizing waste and protecting correlative property

rights of owners in common sources of supply. Thus, the

relief sought by petitioners, if granted, would substantially

and directly affect this Corporation Commission in the dis-

92

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NON RS a Manca n ot at x

a, tn i Leniiediena oie sane 2

charge of its powers and duties and it therefore has a direct

and immediate interest in the outcome of these proceedings

which is not completely represented by any other party.

WHEREFORE, the Corporation Commission of the

State of Oklahoma respectfully moves this Court for leave

to intervene in these proceedings, to file briefs therein,

and to otherwise participate fully as a party in support

of the orders which petitioners seek to have reviewed and

set aside.

Respectfully submitted,

/s/ Mac Q. WILLIAMSON

Mac Q. Williamson

Attorney General for the

State of Oklahoma

State Capitol Building

Oklahoma City, Oklahoma

/s/ FLoyp GREEN

Floyd Green

Conservation Attorney for

the State of Oklahoma

State Capitol Office Building

Oklahoma City, Oklahoma

/s/ J. PAULL MARSHALL

J. Paul Marshall

Union Trust Building

Washington 5, D. C.

Attorneys for the Corporation

Commission of the State of

Oklahoma

93

CERTIFICATE OF SERVICE

The undersigned, attorney for the Corporation Com-

mission of the State of Oklahoma, hereby certifies that on

the 9th day of April, 1952, he served a copy o1 the foregoing |

motion to intervene upon each of the parties of record in

these proceedings by duly mailing a copy thereof by deposit-

ing the same in the United States mail, properly addressed

and with postage prepaid, to counsel of record for each of

said parties as follows:

Bradford Ross

General Counsel for Federal Power Commission

1800 Pennsylvania Avenue, N. W.

Washington 6, D. C.

William E. Torkelson

1 W. Wilson Street

Madison, Wisconsin

Attorney for the State of Wisconsin,

Petitioner

Stewart G. Honeck

State Capitol

Madison, Wisconsin

Attorney for Public Service Commission

Petitioner

James H. Lee

Assistant Corporation Counsel

301 City Hall

Detroit 26, Michigan

Attorney for City of Detroit, Michigan,

Petitioner

David M. Proctor

City Counselor

io aie ss

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—

2800 City Hall

Kansas City, Missouri

Attorney for City of Kansas City, Missouri

Petitioner

Walter J. Mattison

City Attorney

801 City Hall

Milwaukee 2, Wisconsin

Attorney for City of Milwaukee, Wisconsin,

Petitioner

Gerald K. O’Brien

Prosecuting Attorney, County of Wayne

3400 Guardian Building

Detroit 26, Michigan

Attorney for Petitioner

Hugh B. Cox

701 Union Trust Building

Washington 5, D. C.

Attorney for Phillips Petroleum Company,

Intervener

Rayburn L. Foster

c/o Phillips Petroleum Company

Bartlesville, Oklahoma

Attorney for Phillips Petroleum Company,

Intervener

Harry D. Turner

c/o Phillips Petroleum Company

Bartlesville, Oklahoma

Attorney for Phillips Petroleum Company,

Intervener

Warren M. Sparks

c/o Phillips Petroleum Company

95

Bartlesville, Oklahoma

Attorney for Phillips Petroleum Compan: |

Intervener

Price Daniel

Attorney General for the State of Texas

Charles E. Crenshaw

Everett Hutchinson

Assistant Attorneys General for the State of Texas

Capitol Station

Austin, Texas

Attorneys for Railroad Commission of Texas.

Intervener

Joe L. Martinez

Attorney General for the State of New Mexico

Santa Fe, New Mexico

Attorney for Oil Conservation Commission

of the State of New Mexico

Intervener

/s/ J. PAULL MARSHALL

Attorney for the

Corporation Commission of the ,

State of Oklahoma

IN THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

ANSWER OF STATE OF WISCONSIN AND PUBLIC

SERVICE COMMISSION OF STATE OF WISCON. |

SIN TO MOTION OF THE CORPORATION

COMMISSION OF THE STATE OF OKLAHOMA

FOR LEAVE TO INTERVENE

Come now the petitioners in No. 11,247, the State of |

Wisconsin and the Public Service Commission of Wis-

; |

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Se Re Se

a entetemeriententieite aati fae

consin, by the undersigned, their attorneys, and pursuant to

Rules 31 (b) and (g) of this court, and 6 (e) of the Federal

Rules of Civil Procedure, for their joint answer to the

motion for leave to intervene of the Corporation Commis-

sion of the State of Oklahoma, and deny and allege as

follows:

1. Respecting the allegations of paragraph 2 of said

motion specifically deny that the review of the orders of

the Federal Power Commission sought by petitioners would

directly and materially affect said Corporation Commission

in the discharge of its duties to gee the production and

gathering of natural gas.

2. Respecting the allegations of paragraph 7 of said

motion, admit that said Corporation Commission inter-

vened in the proceeding before the Federal Power Com-

mission and made the contention that the sales of Phillips,

insofar as they involved gas production within the State

of Oklahoma, were not subject to the jurisdiction of the

said Federal Power Commission, for the reasons alleged

therein; but specifically deny that the sales in question fell

within the exception of such jurisdiction as stated by the

supreme court of the United States in Interstate Natural

Gas Company v. Federal Power Commission, 331 U. S. 682.

Allege that said sales as a matter of constitutional law are

beyond the regulatory powers of the State of Oklahoma,

and deny that such sales are encompassed within the words

“production and gathering” as used in sec. 1 (b) of the

Natural Gas Act. Deny that the sales in interstate com-

merce of natural gas to the five pipe line companies involved

in this proceeding for resale for ultimate public consump-

tion are sales of the type mentioned by the supreme court

97

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=r

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| ¥

in the Interstate case, quoted in paragraph 7 of the mot‘» |

of the proposed intervenor. Alleges that the efforts of a |

‘ State to conserve natural gas cannot be sustained where

it amounts to a regulation of interstate commerce. Penn.

sylvania v. West Virginia (1923), 262 U. S. 553.

oe Satta NE EN

3. Respecting the allegations of paragraph 8 of said

motion, alleges that the most that was claimed by Okla-

homa’'s witnesses was by Ray C. Jones, member of the

Corporation Commission, who testified that regulation of

rates of interstate sales “might” conflict with orders of the

Oklahoma Commission fixing a minimum price (7-cents

Mcf) at the wellhead in the Guymon-Hugoton Field (R.

4533), but conceded that if the Power Commission fixed

a rate in excess of that minimum, there would be no con-

flict. The 7-cent minimum is met when 3-cents of the

liquid hydrocarbons are extracted from each Mcf and the

residue sold for any price in excess of 4-cents Mcf. Sales

by Phillips to Panhandle Eastern at Hansford Plant, which

includes gas originating in Oklahoma, at 4.67-cents Mef

have not been declared to be in violation of law. See

Exhibit 120-A. Sales to Michigan-Wisconsin Pipeline Com-

pany in 1950 are at an average of 8.17-cents Mcf.

4. Respecting the allegations of paragraph 10 of said

motion, deny that regulation by the Federal Power Com-

mission of the sales in question in the State of Oklahoma

would constitute a substantial interference with the exer-

cise of the power of the State of Oklahoma through the

movant Corporation Commission to regulate the production

and gathering of gas. Deny that such regulation would

J directly interfere with the power of, or the exercise by,

| the State of Oklahoma through movant Commission to fix

Nwexet: ) .

ce gabe, 8 OS

98

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and determine the prices at which gas can be produced

frem wells located within said state for the purpose of

preventing economic and physical waste of natural gas and

protecting the correlative property rights of all persons

interested in common sources of supply. Deny that the

regulation of rates by the Federal Power Commission for

the sales in question would be inconsistent with or consti-

tute a substantial interference with the power of or exer-

cise of power by the State of Oklahoma in the respects set

forth in said paragraph 10, and in answer thereto repeats

and incorporates into this paragraph by reference the al-

legations set forth in the preceding paragraph 3 hereof.

Wherefore, the State of Wisconsin and the Public Serv-

ice Commission of Wisconsin move this court for an order

denying the motion of the Corporation Commission of the

State of Oklahoma to intervene herein.

Respectfully,

Vernon W. THOMSON /s/

Vernon W. Thomson, Attorney General of

Wisconsin

Stewart G. Honeck $s

Stewart G. Honeck, Deputy Attorney

General of Wisconsin

Attorneys for Petitioner, State of Wisconsin

Wi._itiAM E. ToRKELSON s

William E. Torkelson, Chief Counsel

Public Service Commission of

Wisconsin

Attorney for Petitioner, Public Service

Commission of Wisconsin

April 15, 1952

or ete

Ra ;

MOTION OF THE STATE OF TEXAS THROUGH

THE RAILROAD COMMISSSION OF TEX4s

FOR LEAVE TO INTERVENE

Comes now the State of Texas through the Railrvad

Commission of Texas represented by Price Daniel, the

Attorney General of Texas, and respectfully moves this

Honorable Court, pursuant to Rule 38(c), for leave to iriter.

vene, to be heard upon brief and oral argument and to

participate fully in these proceedings as a party in support

of the order of the Federal Power Commission sought to

be reviewed and set aside by Petitioners herein. In support

of its motion, the Railroad Commission of Texas respect-

fully shows:

I.

The Railroad Commission of Texas is a governmental

agency of the State of Texas, created and existing under

the Constitution and laws of the State of Texas, having

the power, duty and responsibility to regulate the common

carriers and gas utilities doing business within the State

and having jurisdiction, authority and responsibility to ad-

minister the laws of the State relating to conservation and

prevention of waste of natural gas and petroleum and the

protection of correlative property rights. The members

of the Railroad Commission at the present time are Olin

Culberson, Chairman, W. J. Murray, Jr., and Ernest 0.

Thompson.

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II.

The matters involved in Federal Power Commission

order in Docket No. G-1148, sought to be reviewed and set

aside herein by Petitioners, directly affect the powers,

duties and responsibilities of the Railroad Commission of

Texas. In the hearings below the Railroad Commission of

Texas filed a Motion For Leave To Intervene and was per-

mitted to do so. The Railroad Commission of Texas, after

being permitted to intervene in the hearings below, took

an active part in the hearings, introducing evidence show-

ing that any action by the Federal Power Commission as-

serting jurisdiction over Phillips Petroleum Company would

amount to a substantial interference with the duties, powers

and jurisdiction of the Railroad Commission of Texas. In

support of its position, the Railroad Commission of Texas

filed briefs and made oral argument before the Federal

Power Cornmission. At the completion of the hearing, filing

of briefs and oral argument, the Federal Power Commission

in its opinion and order No. 217, dated August 16, 1951,

issued August 22, 1951, found that it did not have juris-

diction over Phillips Petroleum Company. Petitioners have

filed in this Court a petition to review and set aside (a)

the order of the Federal Power Commission dated August

16, 1951, and issued on August 22, 1951, and (b) the order

of the Federal Power Commission of September 28, 1951,

denying petition for rehearing. Further, the petitioners

herein ask this Honorable Court to determine generally that

the Phillips Petroleum Company is a natural gas company

within the meaning of the Natural Gas Act.

101

III.

The Railroad Commission of Texas has an interest in

the above entitled proceeding to the extent that the same

relates to the production, transportation, use, conservation

and prevention of waste, of natural gas within the State of

Texas, and the protection of correlative property rights.

The relief sought by Petitioners herein, if granted, would

substantially interfere with the power of the State of Texas

to regulate through the Railroad Commission of Texas the

production and gathering of gas. The regulation of prices

or sales of gas produced in Texas by Phillips Petroleum

Company or other like producers or gatherers of natural

gas are not subject to the jurisdiction of the Federal Power

Commission in that such sales, though technically consum-

mated in interstate commerce, are made during the course

of production and gathering and are so closely connected

with production and gathering as to render regulation by

the Federal Power Commission inappropriate and a sub-

stantial interference with the regulatory functions of the

Railroad Commission.

IV.

The State of Texas through its Railroad Commission

therefore is directly and vitally concerned over the issues

and questions involved in these proceedings. The interest

of the State of Texas is not completely represented by any

other party herein.

WHEREFORE, the State of Texas through its Railroad

Commission of Texas, respectfully moves this Honorable

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IO DORROR LEIS A! a Ses

Court for leave to intervene herein, to be heard on brief

and to be permitted to participate fully in these proceedings

as a party in support of the Federal Power Commission

order which Petitioners seek to have reviewed and set aside.

Respectfully submitted,

J. PauLL MARSHALL

J. Paull Marshall

Union Trust Building

Washington 5, D. C.

PricE DANIEL

Attorney General of the

State of Texas

CHARLES E. CRENSHAW

Executive Assistant

Attorney General

Capitol Station

Austin, Texas

Attorneys for the Railroad

Commission of Texas

Dated: April 10, 1952

| CERTIFICATE OF SERVICE

| The undersigned, attorney for the Railroad Commission

of Texas, hereby certifies that on April 10, 1952, he served

a copy of the foregoing motion to intervene upon each of

the parties of record in this proceeding by duly mailing a

| copy thereof by registered mail, properly addressed with

postage prepaid, to counsel of record for each of said parties

as follows:

103

ne Sey

Oo Rai eee |

ead

Bradford Ross

General Counsel for Federal Power Commission

1800 Pennsylvania Avenue, N. W.

Washington 6, D. C.

William E. Torkelson

1 W. Wilson Street

Madison, Wisconsin

Attorney for the State of Wisconsin,

Petitioner

Stewart G. Honeck

State Capitol

Madison, Wisconsin

Attorney for Public Service Commission

Petitioner

James H. Lee

Assistant Corporation Counsel

301 City Hall

Detroit 26, Michigan

Attorney for City of Detroit, Michigan,

Petitioner

David M. Proctor

City Counselor

2800 City Hall

Kansas City, Missouri

Attorney for City of Kansas City, Missouri,

Petitioner

Walter J. Mattison

City Attorney

801 City Hall

Milwaukee 2, Wisconsin

Attorney for City of Milwaukee, Wisconsin,

Petitioner

Gerald K. O’Brien

Prosecuting Attorney, County of Wayne

104

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We Nin) A facia

ow WO, VRPT ti 6 WEBER ANE Stat a8 EAL GLED ARAN EM Cit es:

3400 Guardian Building

Detroit 26, Michigan

Attorney for Petitioner.

Hugh B. Cox

701 Union Trust Building

Washington 5, D. C.

Attorney for Phillips Petroleum Company

Intervener

Rayburn L. Foster

c/o Phillips Petroleum Company

Bartlesville, Oklahoma

Attorney for Phillips Prdiom Company

Intervener

Harry D. Turner

c/o Phillips Petroleum Company

Bartlesville, Oklahoma

Attorney for Phillips Petroleum Company

Intervener

Warren M. Sparks

c/o Phillips Petroleum Company

Bartlesville, Oklahoma

Attorney for Phillips Petroleum Company

Intervener

Mac Q. Williamson

Attorney General for the State of Oklahoma

State Capitol Building

Oklahoma City, Oklahoma

Floyd Green

Conservation Attorney for the State of Oklahoma

State Capitol Office Building

Oklahoma City, Oklahoma

Attorneys for the Corporation Commission of

the State of Oi.lahoma

Intervener

105

ANA ACR AL Tele hel

Joe L. Martinez

Attorney General

State of New Mexico

Santa Fe, New Mexico

Peter N. Chumbris

Special Assistant Attorney General

State of New Mexico

322 West Gold Avenue

Albuquerque, New Mexico

Attorneys for State of New Mexico, et al.

Intervener

J. PAULL MARSHALL

J. Paull Marshall

Union Trust Building

Washington 5, D. C.

Attorney for the Railroad

Commission of Texas

IN THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

No. 11,247

State of Wisconsin and Public

Service Commission of Wisconsin

Petitioners,

Vv.

Federal Power Commission,

Respondent

106

BLEED THROUGH

BLURRED COPY

_— Pe RTA esracacaeeng ‘ ,

No. 11,241

City of Detroit, Michigan

Petitioner,

v.

Federal Power Commission

Respondent.

No. 11,242

City of Kansas City, Missouri

Petitioner,

V.

Federal Power Commission,

Respondent

No. 11,245

City of Milwaukee,

a municipal corporation

Petitioner,

V.

Federal Power Commission

Respondent

No. 11,252

County of Wayne, Michigan

Petitioner,

¥.

Federal Power Commission,

Respondent

107

AV ee ABIES RAD ES toe

Veo RAR TE ——

ee ee ae ,

iiaatielscainocua Prarie. Mae

STIPULATION WITH RESPECT TO THE MOTIONS

TO INTERVENE OF THE STATE OF TEXAS

THROUGH ITS RAILROAD COMMISSION AND

THE CORPORATION COMMISSION OF THE

STATE OF OKLAHOMA AND THE MOTIONS

OF THE STATE OF WISCONSIN AND ITS PUB.

LIC SERVICE COMMISSION TO DISMISS THE

AFORESAID MOTIONS TO INTERVENE

1. The State of Texas through its Railroad Commission

and the Corporation Commission of the State of Oklahoma

have petitioned to intervene in the foregoing proceeding

and the State of Wisconsin and its Public Service Commis-

sion have moved to dismiss the aforesaid motion to inter-

vene.

2. It is agreed by the parties that the withdrawal by

the State of Wisconsin and its Public Service Commission

of their motions to dismiss the motions to intervene shall

not in any way constitute an admission by the State of

Wisconsin or its Public Service Commission of the truth

of the allegations in the aforesaid motions to intervene, or

in any way be determinative of the merits of this proceed-

ing on appeal.

3. It is further agreed that the State of Wisconsin

and its Public Service Commission do hereby withdraw

their motions to dismiss the aforesaid motions of the States

of Texas and Cklahoma to intervene and will not object

to the grant of such motions.

Vernon W. Thomson

Attorney General

By Cnar.es S. RHYNE /s/

Charles S. Rhyne

Attorneys for the State of Wisconsin

108

BLEED THROUGH

BLURRED COPY

a

Selita e _

William E. Torkelson

Chief Counsel

By Cwar.es S. RHYNE /s/

Charles S. Rhyne

Attorneys for the Public Service

Commission of Wisconsin

Price Daniel

Attorney General

Charles E. Crenshaw

Executive Assistant Attorney General

By J. Pautt MarsHALL /s/

J. Paull Marshall

Attorneys for the Railroad

Commission of Texas

Mac Q. Williamson

Attorney General

Floyd Green

Conservation Attorney for the

State of Oklahoma

By J. PAULL MARSHALL /s/

J. Paull Marshall

Attorneys for the Corporation Com-

mission of the State of Oklahoma

BRADFORD Ross /s/

Bradford Ross

General Counsel Federal Power

Commission

Attorney for the Respondent

ERNEST W. JENNES /s/

Ernest W. Jennes

Attorney for Phillips Petroleum

Company

Intervener

109

4

4

4

%

4

=

CERTIFICATE OF SERVICE

I hereby certify that I have this day served the fore-

going Stipulation With Respect To The Motions To Inter-

vene of the State of Texas Through Its Railroad Commission

and the Corporation Commission of the State of Oklahoma

and the Motions of the State of Wisconsin and its Public

Service Commission to Dismiss the Aforesaid Motions to

Intervene by mailing a copy thereof to each of the following

persons at the respective addresses hereinafter specified.

James H. Lee

Assistant Corporation Counsel

301 City Hall

Detroit 26, Michigan

Attorney for City of Detroit, Michigan

Petitioner

David M. Proctor

City Counselor

2800 City Hall

Kansas City, Missouri

Attorney for City of Kansas City, Missouri

Petitioner ‘

Walter J. Mattison

City Attorney

801 City Hali

Milwaukee 2, Wisconsin

Attorney for City of Milwaukee, Wisconsin

Petitioner

Charles S. Rhyne

730 Jackson Place, N. W.

Washington 6, D. C.

Attorney for County of Wayne, Michigan

Petitioner

110

BLEED THROUGH

BLURRED COPY

Joe L. Martinez

Attorney General

State of New Mexico

Santa Fe, New Mexico

Peter N. Chumbris

Special Assistant Attorney General

State of New Mexico

322 West Gold Avenue

Albuquerque, New Mexico

Attorneys for State of New Mexico, et al

Interveners

Dated at Washington, D. C., May 6, 1952

CHARLES S. RHYNE /s/

Charles S. Rhyne

730 Jackson Place, N. W.

Washington 6, D. C.

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

No. 11,247 APRIL TERM, 1952

State of Wisconsin and Public

Service Commission of Wisconsin,

Petitioners,

Vv.

Federal Power Commission,

Respondent,

Phillips Petroleum Company,

Intervenor,

State of New Mexico and the Oil

Conservation Commission of the

State of New Mexico,

Intervenors.

1il

\rtaeephed. ines,

Tats NH Rees,

ie RUS aR TMI Faas s eie teen ies Ph

Pood PA Ke REPO IR S58 No

No. 11,241

City of Detroit, Michigan,

Petitioner,

Vv.

Federal Power Commission,

Respondent,

Phillips Petroleum Company,

Intervenor,

State of New Mexico and the Oil

Conservation Commission of the

State of New Mexico,

Intervenors.

No. 11,242

City of Kansas City, Missouri,

Petitioner,

v.

Federal Power Commission,

Respondent,

Phillips Petroleum Comnany,

Intervenor,

State of New Mexico and the Oil

Conservation Commission of the

State of New Mexico,

Intervenors.

No. 11,245

City of Milwaukee, a municipal

corporation,

Petitioner,

V

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