# Amicus Curiae Brief — Williams v. Overholser

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1951
- **Citation:** 340 U.S. 910

## Text

MAR 8 1954
Nos. 280, 281, 418 HAROLD 8. WiLLEY,

Jn the
Supreme Court of the Anited States

October Term, 1953

--~

No. 280
PHILLIPS PETROLEUM COMPANY,
Petitioner,
vs.
STATE OF WISCONSIN, et al.,
Respondents.
No. 281
STATE OF TEXAS, et al.,
Petitioners,
vs.
STATE OF WISCONSIN, et al.,
Respondents.
No. 418
FEDERAL POWER COMMISSION,
Petitioner,
vs.
STATE OF WISCONSIN, PUBLIC SERVICE COMMISSION OF WIS-
CONSIN, et al., Respondents.

JOINT BRIEF AMICI CURIAE

{ J. A.A. BURNQUIST A. HORGH
Atterney General Attorney General
State of Minneso State of Iowa

State Capitol

GEORGE B. SJOSELIUS Des Moines, Iowa

/ Deputy Attorney General

Attorney for the
State of Minnesota State of Iowa
102 State Capitol
St. Paul 1, Minnesota CLARENCE 8S. BECK
Attorneys for the Attorney General
State of Minnesota State of Nebraska

State 1
JOHN F. BONNER ' lance Nebraska
City Attorney ’ Attorney for the
City of Minneapolis Ss of Nebraska
Minneapolis, Minnesota : ~
Attorney for i
City of Minneapolis sab

MARCH 6, 1954.

Sa nneneteiendenenamennne rare
AT. 3539 Hayward-Court Brief Printing Co,, Minneapolis 15, Minn. AT. 3539

INDEX
Page
Opinions below ........-..:eseeeeeeeee re eeeeeees 1
JerteletiOM . ww. cece ccc cc ccvcccccccscccceves 2
Question presented ........---++seseeereerereees 2
Statute involved ...........:2 eee e cece cece eeeees 2
Statement of the case ........---- eee ee creer renee 3
Interest of Amici Curiae ..........-..-seeeeeeees 3
State of Minnesota ...........-0ceccececcecrees 5
City of Minneapolis .........-.6-+++eeeeeeeeees 5
EE ce perntecvevereseeresvesvevers 6
State of Nebraska ..........--:eeeceeeecsenees 7
Summary of argument ..........------+eeeereees 8
Argument ... .....--.e cece cere eet e ec eecerres 9
Rs cede cevewnsascteereseesesesurece 21
TABLE OF CONTENTS

CASES: Page

Colorado Interstate Gas Co. v. Federal Power Com-
mission, 324 U. S. 581 (1945) ........-..+-5-+- 16

Federal Power Commission v. Hope Natural Gas
Co., 320 U. S. 591 (1944) .........-.--- 16, 17, 19

Hartford Electric Light Co. v. Federal Power Com-
mission, 131 F. 2d 953 (2nd Cir. 1942), cert.

denied, 319 U. S. 741 (1943) .......-0-00-e sees 15
Illinois Natural Gas Co. v. Central Illinois Public
Service Commission, 314 U. S. 498 (1942) ..... 17

Interstate Natural Gas Co. v. Federal Power Com-
mission, 156 F. 2d 949 (5th Cir. 1946), affirmed,
fs ye £) |) rer rer ee 9
Interstate Natural Gas Co. v. Federal Power Com-
mission, 331 U. S. 682 (1947) ..........- 12, 16, 18
Jersey Central Power & Light Co. v. Federal Power
Commission, 319 U. S. 61 (1943) ............ 12
Michigan-Wisconsin Pipe Line Co. v. Calvert, Nos.
198, 199, U. S. Sup. Ct., Feb. 8, 1954 (22 U.S. Law
SS ocr ebeckeceseceesveveeree 11, 12, 19
Minis v. United States, 15 Pet. 423 (1841) ....... 14
Missouri ex rel. Barrett v. Kansas Gas Co., 265 U.
NR ce ghana se eeecera sane trernees 12
Re Northern Natural Gas Co., Federal Power Com-
mission Opinion No. 233 and accompanying order
of July 30, 1952, docket No. G-1881, 95 P. U. R.

= (WE, Bp 12GB . ccc ccccccccescvccecccvccsvcss 5

Panhandle Eastern Pipe Line Co. v. Calvert, Nos.
200, 201, U. S. Sup. Ct., Feb. 8, 1954 (22 U. S.
i voici vedvcceteoenenmineawe 11, 19

Panhandle Eastern Pipe Line Co. v. Indiana Public
Service Commission, 332 U. S. 507 (1947) ...10, 16

Peoples Natural Gas Co. v. Federal Power Com-
mission, 127 F. 2d 153 (D. C. Cir. 1942), cert.
eee as So de os pas bteepeansereead 9, 18

Re Phillips Petroleum Company, 10 F. P. C. 246
tt +. ».irihéeuddendaneusneeshena 1, 10, 11, 20

Public Utilities Commission v. Attelboro Steam &
Electric Co., 273 U. S. 86 (1927) .............. 12

Ryan v. Carter, 93 U.S. 78 (1876) .............. 15

Spokane & Inland Empire R. Co. v. United States,
Pe Se CE ciebvcesnsguceteeetorses 15

State of Wisconsin v. Federal Power Commission,
205 F’. 2d 706 (D. C. Cir. 1953) .............. 1, 11

United States v. Dickson, 15 Pet. 141 (1941) ..... 14

United States v. McElvain, 272 U. S. 633 (1926) .. 15

United States v. Morrow, 266 U.S. 631 (1925) ... 14

STATUTES:

Natural Gas Act of June 21, 1938, c. 566, 52 Stat.
821, as amended, 15 U.S. C. 717 et seq. (1946 ed.)
$1(a) andi(b) ..2, 8, 9, 10, 13, 14, 15, 17, 18
St oven ed dade eke sedbnenaswas seeetehe 18
28 U.S.C. § 1254 (1) (Supp. IV, 1946 ed.) ....... 2
52 Stat. 831 (1938),15 U.S.C. § 717r(b} (1946ed.) 2

OTHER CITATIONS:

In the matter of Northern Natural Gas Co., Federal
Power Commission docket No. G-2217

SEE sc cebovedeverceereveversees & @& 7
SEED Socrevcsducdeveveddeteséevedioce 21
DEE ME -orercccerecesevecesseseerteuese 21
DEED Seed ecvecdesedecdsesuoerzecanet 4
DEED dvvvcescevceveveceecoreseseeses 4
SEE GP vce crcccccocseccneseseesssacoee 4
BIE GD oc cc ccccccccsecssocsoeoreoccese 4

Rule 27 (9) (d) Rules of the United States Supreme

— } ee ee re ee

In the
Supreme Court of the United States

October Term, 1953

No 280
PHILLIPS PETROLEUM COMPANY,
Petitioner,
vs.
STATE OF WISCONSIN, et al.,
Respondents.
No. 281
STATE OF TEXAS, et al.,
Petitioners,
vs.
STATE OF WISCONSIN, et al.,
Respondents.
No. 418
FEDERAL POWER COMMISSION,
Petitioner,

vs.

STATE OF WISCONSIN, PUBLIC SERVICE COM-
MISSION OF WISCONSIN, et al., Respondents.

JOINT BRIEF AMICI CURIAE

OPINIONS BELOW

The opinion of the Court of Appeals for the District of
Columbia is reported in 205 F. 2d 706 (1953). The opin-
ion and accompanying order of the Federal Power
Commission is reported in 10 F. P. C. 246 (1951).

ess

2

JURISDICTION

The jurisdiction of this Court is invoked under 52
Stat. 831 (1938), 15 U. S. C. §717r(b) (1946 ed.) and 28
U.S. C. §1254(1! (Supp. IV, 1946 ed.).

QUESTION PRESENTED

Is Phillips Petroleum Company a “natural gas com-
pany” within the meaning of the Natural Gas Act so
that the Federal Power Commission has jurisdiction to
fix the rates at which Phillips sells natural gas to five
interstate pipeline companies for interstate transpor-
tation and resale for ultimate distribution to the pub-
lic?

STATUTE INVOLVED

The pertinent provision of the Natural Gas Act (Act
of June 21, 1938, c. 566, 52 Stat. 821, as amended, 15 U.
S. C. 717 et seq., 1946 ed.) is as follows:

“Section 1. (a) As disclosed in reports of the
Federal Trade Commission made pursuant to Senate
Resolution 83 (Seventieth Congress, first session)
and other reports made pursuant to the authority
of Congress, it is hereby declared that the business
of transporting and selling natural gas for ultimate
distribution to the public is affected with a public in-
terest, and that Federal regulation in matters re-
lating to the transportation of natural gas and the
sale thereof in interstate and foreign commerce is
necessary in the public interest.

“(b) The provisions of this act shall apply to
the transportation of natural gas in interstate com-
merce, to the sale in interstate commerce of natural
gas for resale for ultimate public consumption for
domestic, commercial, industrial, or any other use,
and to natural-gas companies engaged in such trans-
portation or sale, but shall not apply to any other
transportation or sale of natural gas or to the local

——_
3

distribution of natural gas or to the facilities used
for such distribution or to the production or gath-
ering of natural gas.”

STATEMENT OF THE CASE

Briefly, the facts concerning the sales made by Phil-
lips which raise the question here are these: Phillips
owns and operates natural gas gathering systems and
processing plants. Through progressively larger pipe-
lines it gathers gas that it produces from its own wells
and other gas that it buys, at common points in and near
its processing plants (R. 1743). At these plants it
processes the gas to make it salable or to recover ex-
tractable products or both (R. 1742-43). Phillips then
moves the gas a short distance to meters located either
just within or outside the plant enclosure. At these me-
ters the gas is delivered by Phillips to five interstate
pipeline companies ‘n fulfiliment of sales contracts pre-
viously made (R. 1691-1711, 1743-44). These pipeline
companies then transport the gas in interstate commerce
to the states where it is resold and ultimately distrib-
uted to the public (R. 1827-34).

e

INTEREST OF AMICI CURIAE

This brief is filed by the States of Minnesota, Iowa
and Nebraska and the City of Minneapolis pursuant to
Rule 27 (9) and (d) of the Rules of the United States
Supreme Court.

These amici curiae are all vitally concerned and will
be affected by the outcome of these cases. Northern
Natural Gas Company, through its subsidiary, Indepen-
dent Natural Gas Company, purchases gas from Phillips
Petroleum Company, the sales of which are involved in
these cases. (Northern Natural Gas Company will some-

———— i

4

times hereafter be referred to as “Northern” and Phil-
lips Petroleum Company as “Phillips.” )

The common interest and concern of Minnesota, Iowa
and Nebraska and the City of Minneapolis is evidenced
by the fact that natural gas is sold by Northern to di-
rect consumers of Northern, and to utility companies in
these three states who in turn distribute and sell the gas
to ultimate consumers. In 1953 Northern sold approxi-
mately 240,000,000 MCF of gas in these three states. In
1954 it is estimated that Northern will sell approximate-
ly 270,000,000 MCF of gas in these three states.

It is estimated by Northern that out of its total gas
purchases of approximately $40,000,000 in the year 1954,
approximately $10,000,000 will be paid to Phillips for
gas purchased by Northern to be distributed in the ap-
proximate volumes related below in the states of Minne-
sota, Iowa and Nebraska. See Exhibit 83, In the Matter
of Northern Natural Gas Co., Federal Power Commis-
sion docket No. G-2217 (hereinafter cited as “F. P. C.
docket No. G-2217.”)

Exhibit 6 in F. P. C. docket No. G-2217 discloses that
the total system-wide sales of Northern for the year
1954 are estimated at approximately 288,000,000 MCF.

Northern estimates that it or its wholly owned or
controlled subsidiaries will purchase from Phillips for
the year 1954 approximately 83,816,000 MCF. See Ex-
hibits 17, 80 and 82 in F. P. C. docket No. G-2217.

These figures disclose that the purchases estimated
to be made by Northern, or its subsidiaries, from Phil-
lips will constitute approximately 29% of the total sys-
tem-wide estimated sales of Northern for the year 1954.

The particular interest and concern of the sovereign
states and the City of Minneapolis, who are here amici
curiae, are as follows:

5

1. STATE oF Minnesota. The particular interest
and concern of the State of Minnesota in the outcome of
this case arises in part from the fact that the State of
Minnesota purchases gas as a direct customer from
Northern. It also purchases gas from distributing com-
panies which buy all of their gas from Northern. North-
ern is the only interstate pipeline company serving
natural gas in the State of Minnesota.

The total volume of gas bought by the State of Minne-
sota, in its sovereign capacity, for various State insti-
tutions, in the year 1953 amounted to 2,414,299 MCF, at
a cost of $428,701.32.

During 1952 Northern sold approximately 105,000,000
MCF of natural gas in the State of Minnesota which
would produce a total revenue to Northern at rates un-
der the Federal Power Commission’s opinion No. 233 and
accompanying order of July 30, 1952, docket No. G-1881,
95 P. U. R. (N. S.) 143, of approximately 25 million dol-
lars.

The total volume which Northern estimates it will sell
in the State of Minnesota for the year 1954 is approxi-
mately 125,000,000 MCF. See Exhibit 6 in F. P. C. docket
No. G-2217.

Approximately 43% of the total estimated sales of
Northern for the year 1954 will be made in the State of
Minnesota for ultimate public consumption.

2. Ciry oF MINNEAPOLIS. The particular interest and
concern of the City of Minneapolis in the outcome of this
case is based on the fact that:

(1) the City of Minneapolis purchased gas, through
its various governmental departments, from Min-
neapolis Gas Company during the year 1953 in the
amount of 272,098 MCF at a cost of $134,517.08;

(2) Minneapolis Gas Company purchases all of its gas
from Northern; and

(3) the Minneapolis Gas Company operates under a
franchise granted by the City of Minneapolis, which
involves the rates to be charged to the users of
gas within the city. It is therefore necessary for
the protection of the interests of the City of Min-
neapolis and citizen consumers of gas within the
the city, that the City of Minneapolis express its
concern and interest in the outcome of this case.

3. Strate or Iowa. The State of Iowa and many of
the citizens thereof are vitally concerned with the out-
come of this case. Northern sells natural gas to approx-
imately 75 communities in the State of Iowa, including
the cities of Des Moines, Council Bluffs, Ames, Boone,
Atlantic, Fort Dodge, Mason City and Sioux City. In 1953
the citizens of the State of Iowa purchased from North-
ern 57,656,000 MCF of natural gas.

Michigan-Wisconsin Natural Gas Company also sells
natural gas to many Iowa communities, including Fort
Madison, Fairfield, Burlington, Centerville, Mt. Pleas-
ant and Keokuk. In 1953 this company sold approxi-
mately 2,500,000 MCF of natural gas in the State of Iowa.

Natural Gas Pipeline Company of America, while not
directly concerned in the present litigation, will be di-
rectly affected with the decision rendered herein and that
Company sells natural gas to many Iowa communities,
including Davenport, Cedar Rapids and Clinton. In 1953
Natural Gas Pipeline Company sold 29,174,404 MCF in
the State of Iowa.

7

It can readily be seen that the State of Iowa and its
citizens have a direct and deep interest and concern in
the present litigation.

4. STATE oF NepraskKa. Not only the citizens of the
State of Nebraska, but the state government itself, are
consumers of large volumes of natural gas supplied by
interstate pipeline companies. Therefore, the State, on
behalf of itself and its citizens, is vitally concerned with
the outcome of the instant case.

There are approximately 224 cities and towns in the
state of Nebraska served natural gas from four inter-
state pipelines, namely, Northern Natural Gas Company,
Kansas-Nebraska Natural Gas Company, Inc., Natural
Gas Pipeline Company of America and North Central
Gas Company. There are also twenty-three major activi-
ties or institutions owned and operated by the State
of Nebraska which are so served natural gas.

During the year 1952, the interstate pipelines, operat-
ing in Nebraska, supplied approximately 70,000,000 MCF
of natural gas to the consumers in the state, from which
approximately $16,700,000 was paid to them.

In 1953 the State of Nebraska and its citizens pur-
chased solely from Northern Natural Gas Company ap-
proximately 49,000,000 MCF of natural gas, costing ap-
proximately $13,720,000. It is estimated that in 1954
Northern w'll sell 61,000,000 MCF of natural gas to the
State of Nebraska and its citizens. See Exhibit 6 in F.
P. C. docket No. G-2217. This volume of natural gas is
estimated to cost $18,300,000.

The State of Nebraska, during the year 1953, pur-
chased for its own institutions a total of 1,839,700 MCF
of natural gas from Northern and Kansas-Nebraska
Natural Gas Company, at a cost to it of $532,138.13.

a

Included among the cities so served in Nebraska are
Omaha, its largest city, and Lincoln, its capitol city. Rep-
resentative of the other cities are Beatrice, Fremont,
Hastings, Kearney, Norfolk, York, Scottsbluff, Grand
Island, Nebraska City and North Platte.

From the foregoing, we believe it is apparant that the
State of Nebraska and its citizens have a substantial
interest in the instant case and are genuinely concerned
in its decision.

SUMMARY OF ARGUMENT

The intent of Congress to regulate the sales in inter-
state commerce of natural gas for resale made by Phil-
lips here is obvious from the plain and unambiguous
language of §1 of the Natural Gas Act. It is clear from
the language of §1(b) of the Act that the “production or
gathering” proviso was intended to mean only the loca!
activities of physical production or physical gathering
which can be constitutionally regulated by a state. There-
fore, the “production or gathering” proviso of §1(b) does
not except the interstate sales made by Phillips here
from jurisdiction of the Federal Power Commission. Any
other construction would nullify the wholesome intent of

Congress.

ARGUMENT

L The sales made by Phillips to the five interstate pipe-
line companies are “sales in interstate commerce of
natural gas for resale for ultimate public consump-
tion” within the plain meaning of §1 of the Natural
Gas Act, and therefore, are subject to the rate-mak-
ing power of the Federal Power Coramission.

In resolving the question presented in this case it is
necessary to first determine whether the sales made by
Phillips to the five interstate pipeline companies are
within the purview of the Natural Gas Act. Only then is
it material to consider whether the proviso in §1(b) of
the Act regarding “production or gathering” ex-epts
these sales from the jurisdiction of the Federa) Power
Commission. For if the sales involved here were not cov-
ered by the Act, they would not be subject to federal
regulation and the proviso of £1(b) would have nothing
on which to operate. An activity not within the Act could
not be taken out of it.

The intent of Congress as to what activities are sub-
ject to federal regulation under the Natural Gas Act is
clearly evidenced by the plain and unambiguous lan-
guage of §1(b) of the Act. See Interstate Natural Gas Co.
v. Federal Power Commission, 156 F. 2d 949, 951 (5th
Cir. 1946), affirmed, 331 U. S. 682 (1947); Peoples
Natural Gas Co v. Federal Power Commission, 127 F. 2d
153, 155 (D. C. Cir. 1942), cert. denied, 316 U. S. 700.
Section 1(b) conveys an obvious and definite meaning;
the Natural Gas Act shall apply to three distinct things:

(1) the transportation of natural gas in interstate

commerce ;

10

(2) its sale in interstate commerce for resale; and

(3) -natural gas companies engaged in such trans-
portation or sale.
See Panhandle Eastern Pipe Line Co. v. Indiana Public
Service Commission, 332 U. S. 507, 516 (1947).

The reasons for federal regulation of the above inter-
state activities are set forth in the explicit language of
§1(a) of the Act:

(1) “the business of transporting and selling gas for

ultimate distribution to the public ig affected
with a public interest’; and

(2) “Federal regulation in matters relating to the
transportation and sale thereof in interstate
and foreign commerce is necessary in the public
interest.”

Thus, the coverage of the Natural Gas Act is succinctly
stated in language which is so clear and definite that the
intent of Congress is inescapable: the business of trans-
porting and selling natural gas in interstate commerce
for ultimate distribution to the public is affected with a
public interest and therefore is made subject to federal
regulation to protect that interest.

Are the sales here by Phillips within the affirmative
coverage of the §1(b) of the Act? Phillips admits in its
brief submitted to the Federal Power Commission (p.
38) and it is evident from the record that these sales
are sales “in interstate commerce of natural gas for re-
sale for ultimate public consumption.” The Commission’s
finding to this effect is undisputed (R. 1712, 1740; 16 F.
P. C. 246, 262, 276). The Commission also found that
Phillips’ operations here include the transportation of
natural gas in interstate commerce within §1(b) of the

—

11

Act. This interstate transportation by Phillips will not
be considered, however, because if the Commission has
jurisdiction over the interstate sales made by Phillips
here, the question of jurisdiction over the interstate
transportation by Phillips will be unnecessary to the dis-
position of this case. -

In its opinion (R. 1740, 10 F. P. C. at 270) the Com-
mission said:
“But for the exemption of production and gather-
ing in §1(b), as already noted, Phillips would be a
‘natural-gas company’. It concedes and on the record
here it could not deny, that the sales involved are
sales ‘in interstate commerce of natural gas for re-
sale for ultimate public consumption’ within §1(b)’s
affirmative stated coverage of the act, when con-
sidered independently of the exemption of produc-
tion and gathering.” (Italics added. )

The Commission’s finding on this point was cited with
approval by the Court of Appeals for the District of
Columbia in its review of the jurisdictional question
raised here in State of Wisconsin v. Federal Power Com-
mission, 205 F. 2d 706, 710 (D. C. Cir. 1953) :

“The Commission finds that the sales involved
here are sales in interstate commerce of natural gas
for resale. That finding is not disputed.”

That the sales of natural gas made by Phillips here
are sales in interstate commerce for resale is also shown
by the recent decision of this Court in the companion
cases of Michigan-Wisconsin Pipe Line Co. v. Calvert
and Panhandle Eastern Pipe Line Co. v. Calvert, Nos.
198-201, U S. Sup. Ct., Feb. 8, 1954 (22 U. S. Law Week
4119). The operations of the Michigan-Wisconsin Pipe
Line Company which presented the question in that de-
cision appear identical to the operations of Michigan-

12

Wisconsin here. In both instances Michigan-Wisconsin
accepted delivery of natural gas from Phillips at the me-
ter located just within the fence of the Sherman-Hans-
ford processing plant in Texas. After the gas was taken
into the Michigan-Wisconsin pipes, it moved, in a steady
and continuous flow, across state lines to consumers out-
side of Texas. (Compare R. 1690-1711, 10 F. P. C. at 251-
53, with Michigan-Wisconsin Pipe Line Co. v. Calvert,
supra at 4116-17.)

The question presented in the Michigan-Wisconsin and
Panhandle Eastern cases was (Michigan-Wisconsin Pipe
Line Co. v. Calvert, supra at 4116) :

“* * * whether the Commerce Clause is infringed
by a Texas tax on the occupation of ‘gathering gas’,
measured by the entire volume of gas ‘taken’, as ap-
plied to an interstate natural gas pipeline company,
where the taxable incidence is the taking of gas from
the outlet of an independent gasoline plant within
the State for the purpose of immediate interstate
transmission.”

In striking down the Texas occupational tax as an undue
burden on interstate commerce which violated the Com-
merce Clause, this Court held that the taking of gas by
Michigan-Wisconsin was essentially a part of interstate
commerce itself.

Earlier decisions of this Court further support the
finding by the Federal Power Commission that the sales
by Phillips to th= “ive interstate pipeline companies are
sales in inte. state commerce of natural gas for resale.
See Interstate Natural Gas Co. v. Federal Power Com-
mission, 331 U. S. 682, 688-90 (1947), Cf. Jersey Central
Power & Light Co. v. Federal Power Commission, 319
U. S. 61, 69 (1943) ; Public Utilities Commission v. Attel-
boro Steam & Electric Co., 273 U. S. 83, 86 (1927) ; Mis-

aa

—

souri ex rel. Barrett v. Kansas Gas Co., 265 U. S. 298, 308
(1924).

13

[l. The meaning of §1 of the Natural Gas Act is clear
and does not, by the “production or gathering” pro-
viso of §1(b), except the interstate sales made by
Phillips in this case from jurisdiction of the Fed-
eral Power Commission. From the language used,
the intent of congress is plainly evidenced that the
“production or gathering” proviso does not reach
the interstate sales here but is confined to local
activities of physical production and physical gath-
ering.

The purpose of Congress to regulate the sales by Phil-
lips here is evident from a reading of the affirmative
coverage provisions of §1(b) of the Act. Without more
it is clear that these interstate sales would be subject
to the rate-making jurisdiction of the Federal Power
Commission. It is necessary, however, to consider wheth-
er the proviso of §1(b) regarding “production or gather-
ing” affects the Commission’s jurisdiction over these in-
terstate sales by Phillips.

After affirmatively covering interstate transportation
and sales of natural gas for ultimate public consump-
tion, §1(b) then states that the Act shall not apply to
four activities:

(1) “any other transportation or sale of natural

gas” (other than those in interstate commerce] ;

(2) “the local distribution of natural gas”;

(3) “the facilities used for such [local] distribution’”’;

and

(4) “the production or gathering of natural gas.”
Are these activities consistent with federal regulation

‘ of interstate transportation and sales of natural gas or

14

do they exempt some phases of such transportation and
sales from jurisdiction of the Federal Power Commis-
sion?

The cardinal rule of statutory construction is to as-
certain and declare the intention of the legislature and
carry such intention into effect to the fullest degree.
Where the will of the lawmaking body is declared in plain
and unequivocal terms, a construction should not be
adopted which would nullify or defeat this intention. It is
evident from the clear and unambiguous language of $1
(a) and the affirmative coverage of §1(b) of the Act that
Congress intended to subject the interstate sales made
by Phillips in this case to federal regulation in the pub-
lic interest. The specific question is thus raised: does
the “production or gathering” proviso of §1(b) of the
Act carve out from jurisdiction of the Federal Power
Commission these interstate sales of natural gas made
by Phillips to the five pipeline companies?

The general purposes of a proviso were stated in the
decision of Minis v. United States, 15 Pet. 423, 445
(1841), where this Court said:

“The office of a proviso, generally, is either to ex-
cept something from the enacting clause, or, to
qualify or restrain its generality, or to exclude some
possible ground of misinterpretation of it, as ex-
tending to cases not intended by the Legislature to
be brought within its purview.” (Italics added.)

See United States v. Morrow, 266 U. S. 531, 534 (1925).
It is a fundamental rule of statutory construction that a
proviso should be strictly construed and held to include
no case not clearly within the purpose, letter or express
terms of the proviso. In United States v. Dickson, 15 Pet.
141, 165 (1841), this Court said:

“Passing from these considerations to another,
which necessarily brings under review the second

—

point of the objection to the charge of the court
below, we are led to the general rule of law which
has always prevailed, and become consecrated al-
most as a maxim in the interpretation of statutes,
that where the enacting clause is general in its
language and objects, and a proviso is afterwards
introduced, that proviso is construed strictly, and
takes no case out of the enacting clause which does
not fall fairly within its terms. Jn short, a proviso
carves special exceptions only out of the enacting
clause; and those who set up any such exception,
must establish it as being within the words as well
as within the reason thereof.” (Italics added.)

15

Cf. United States v. McElvain, 272 U. S. 633, 639 (1926) ;
Spokane & Inland Empire R. Co. v. United States, 241 U.
S, 344, 348 (1916) ; Ryan v. Carter, 93 U.S. 78, 83 (1876).
See Hartford Electric Light Co. v. Federal Power Com-
mission, 131 F. 2d 953, 962 (2nd Cir. 1942), cert. denied,
319 U.S. 741 (1943). Therefore, if it is possible, such con-
struction of a proviso should be adopted as is consistent
with, and not repugnant to, the purpose and intent of the
Act.

When § 1 of the Natural Gas Act is read in its entirety,
the intent of Congress, as to what shall be subject to
federal regulation, is evident from the clear and un-
ambiguous language employed. Section 1(a) states that
interstate sales and interstate transportation of natural
gas for ultimate distribution to the public must be sub-
ject to federal regulation in the public interest; section
1(b) affirmatively declares that the transportation of
natural gas in interstate commerce and its sale in inter-
state commerce for resale are subject to the Act; the
provisos in § 1(b) merely exclude any ground for mis-
interpreting the coverage of the Act by listing certain
local activities which can be constitutionally regulated

=

16

by the states and are not to be confused with interstate
sales for resale or interstate transportation of natural
gas. The provisos are only by way of explanation as to
what is covered by the Act.

Although the “production or gathering” proviso was
not prefaced by the descriptive term “local,” it is obvious
from the plain language used and the tenor of the other
provisos that Congress intended it to mean local physical
production and local physical gathering. Also, the defi-
nite meaning of § 1 of the Act cannot be avoided by any
technical semantic argument as to what is “production”
or what is “gathering.” The intent of Congress, as evi-
denced by the unambiguous language of the Act, to regu-
late the sales by Phillips here as sales “in interstate com-
merce of natural gas for resale,” is paramount and must
be given full effect.

The plain language of § 1 of the Natural Gas Act is
| nite by the purpose of the Act, as shown in its
egislative history, and the prior decisions of this Court.
The legislative history of the Act has been reviewed by
this Court on numerous occasions so there is no need to
repeat what has been said before, other than to briefly
comment on it. See Panhandle Eastern Pipe Line Co. v.
Indiana Public Service Commission, 332 U. S. 507, 520
(1947); Interstate Natural Gas Co. v. Federal Power
Commission, 331 U. S. 682, 689-90 (1947); Colorado In-
terstate Gas Co. v. Federal Power Commission, 324 U. S.
581, 601 (1945); Federal Power Commission v. Hope
Natural Gas Co., 320 U. S. 591, 609-10 (1944) ; Illinois
Natural Gas Co. v. Central Illinois Public Service Com-
mission, 314 U. S. 498, 506 (1942). As stated in these
opinions of this Court, the purpose of the Natural Gas
Act was to provide for the regulation of natural gas com-
panies transporting and selling natural gas in interstate

wd .

coramerce. What was sought to be reached were the
wholesale sales of natural gas in interstate commerce
which were national in character and not subject to state
regulation, even in the absence of Congressional action.

In Illinois Natural Gas Co. v. Central Illinois Public
Service Comm., supra at 506, this Court said:

“An avowed purpose of the Natural Gas Act of
June 21, 1938, was to afford, through the exercise of
national power over interstate commerce, an agency
for regulating the wholesale distribution to public
service companies of natural gas moving interstate,
which this Court had declared to be interstate com-
merce not subject to certain types of state regula-
tion. * * * By its enactment Congress undertook to
regulate a defined class of natural gas distribution
without the necessity, where Congress has not acted,
of drawing the precise line between state and federal
power by the litigation of particular cases.”
As this Court pointed out in Federal Power Commission
v. Hope Natural Gas Co., supra at 610, the Natural Gas
Act was passed to protect the public interest:
“The primary aim of this legislation was to pro-
tect consumers against exploitation at the hands of
natural gas companies.”

Because of the clear language of § 1 of the Natural
Gas Act and its purpose, it is hardly conceivable that
Congress intended that the “production or gathering”
proviso of § 1(b) remove from jurisdiction of the
Federal Power Commission the wholesale sales made by
Phillips in interstate commerce to the five pipeline com-
panies. The interstate sales involved in this case are one
of the things specifically intended to be covered by the
Act; therefore, it seems incongruous that Congress
would have removed them from the purview of the Act
by means of a proviso.

co

The identical jurisdictional question raised here was
before this Court in Interstate Natural Gas Co. v. Federal
Power Commission, 331 U. S. 682 (1947). That case in-
volved the jurisdiction of the Federal Power Commis-
sion to regulate sales made in the field by Interstate
Natural Gas Co. in Louisiana to three pipeline companies,
each of which transported the gas so purchased to mar-
kets in states other than Louisiana. The Interstate case
is not distinguishable from the instant situation merely
because Interstate Natural Gas Company happened to
be a natura] gas company within § 2(6) of the Act on
account of other operations conducted by it. The juris-
dictional question in the Interstate case turned solely
on the sales made in the field by Interstate and not by
the status of the company’s other operations. This Court
held: (1) the sales made in the Louisiana gas fields to
three pipeline companies for transportation to other
states and resale were “sales in interstate commerce”;
(2) the “production or gathering” proviso of § 1( b) of
the Act did not remove these sales from the Commis-
sion’s power of regulation. This Court concluded that
regulation of the interstate sales involved was pre-
dominantly a matter of national concern because un-
reasonable charges exacted at this stage of the inter-
state movement would have to be covered by rates

charged the ultimate consumers of the gas. The Natural
Gas Act was designed to specifically avoid such situa-
tions. See Peoples Natural Gas Co. v. Federal Power
Commission, 127 F. 2d 153, 155 (D. C. Cir. 1942), cert.
denied, 316 U. S. 700.

Additional judicial support for the plain meaning of
§ 1 of the Act that the scope of gathering and produc-
tion is confined to the local activities of physical gather-

—

ing and physical production and does not reach the in-
terstate transportation or sale of natural gas is found
in the recent cases of Michigan-Wisconsin Pipe Line Co.
vy. Calvert and Panhandle Eastern Pipe Line Co. v. Cal-
vert, Nos. 198-201, U. S. Sup. Ct., Feb. 8, 1954 (22 U.S.
Law Week 4119). In those cases the facts were almost
identical to the facts here regarding the sales by Phillips
to the five interstate pipeline companies. In holding that
the Texas occupational tax on gathering gas was void
because the incidence of the tax was on interstate com-
merce, this Court said (supra at 4118, 4119) :

“But the tax here is not levied on the capture,
gathering or production of the gas, but rather on
its taking into interstate commerce after produc-
tion, gathering and processing.

* * aa * *

19

«* * * But the processing, on which the tax is not
imposed, was done by Phillips and took place prior
to the taxable event of ‘taking’. As for the inter-
ference of title passing, appellees readily admit this
levy was designed to avoid taxing the sale; and we
think that, as a basis for finding a separate local
activity, the incidence must be a more substantial
economic factor than the movement of the gas from
a local outlet of one owner into the connecting inter-
state pipeline of another. Such an aspect of inter-
state transportation cannot be ‘carved out from
what is an entire or integral economic process,’ Nip-
pert v. Richmond, supra, at 423, by legislative
whimsy and segregated as a basis for the tax. The
separation must be realistic.”

The local aspects of production and gathering, as dis-
tinguished from the national aspects of interstate trans-
portation and sales of natural gas, were also recognized
by this Court in Federal Power Commission v. Hope
Natural Gas Co., 320 U. S. 591, 612-13 (1944):

a

20

“We do not mean to suggest that Congress was
unmindful of the interests of the producing states
in their natural gas supplies when it drafted the
Natural Gas Act. As we have said, the Act does not
intrude on the domain traditionally reserved for
control by state commissions; and the Federal
Power Commission was given no authority over ‘the
production or gathering of natural gas.’ § 1(b).
* * * Thus Congress was quite aware of the interests
of the producing states in their natural gas sup-
plies. But it left the protection of those interests to
measure other than the maintenance of high rates to
private companies. If the Commission is to be com-
pelled to let the stockholders of natural gas com-
panies have a feast so that the producing states
may receive crumbs from that table, the present act
must be redesigned. Such a project raises questions
of policy which go beyond our province.” (Italics
added. )

The administrative decisions of the Federal Power
Commission on the jurisdictional question in the instant
case which are contrary to the clear and unambiguous
language of the Natural Gas Act are entitled to no
weight here. The plain meaning of the Act cannot be dis-
regarded because the Commission, on occasion, has in-
terpreted it narrowly. For a complete analysis of the
course followed by the Commission, see the dissenting
opinion of Commissioner Buchanan in the instant pro-
ceeding, 10 F. P. C. 246, 307-15.

21

CONCLUSION

The simple question here is whether Federal Power
Commission should regulate the price of natural gas
sold in the field and subsequently resold for ultimate
public consumption. These amici curiae are gravely con-
cerned over the steadily increasing cost of natural gas
in the field in recent years.

Northern obtains its gas in Kansas, Texas, Oklahoma
and New Mexico and resells practicaliy all of such gas
in the states of Nebraska, South Dakota, Iowa and Min-
nesota. As of December 31, 1953, there were approxi-
mately 685,000 ultimate consumers on Northern’s sys-
tem in that area. This includes domestic, commercial
and industrial users. As of that date there were approxi-
mately 380,000 homes heated with natural gas in this
area from the system of Northern alone. The increase in
cost to the ultimate consumers in this area can be dem-
onstrated by the records in the recent F. P. C. docket No.
G-2217, a proceeding in which Northern filed for an in-
crease in its wholesale rates (the fourth increase filed in
the last four years). It is shown there that for twelve
months ending June 30, 1953, Northern sold 226,000,000
MCF of natural gas in the area named. Northern esti-
mates that in 1954 it will sell 279,000,000 MCF in the
same area (Exhibit 7 in F. P. C. docket No. G-2217).
This is an increase of 23.5% in volume. For the 226,000,-
000 MCF of natural gas Northern paid $21,175,640 and
for the 279,000,000 MCF it estimates it will pay $40,012,-
900 (Exhibit 16 in F. P. C. docket No. G-2217). This is
an increase of 88% in price. The Natural Gas Act was
passed to protect the ultimate consumers from such ap-
parently excessive charges.

We respectfully submit that the sales involved in the
instant case are within the rate-fixing jurisdiction of the

Federal Power Commission. This Court should affirm the
decision of the court below.

Respectfully submitted,

J. A. A. BURNQUIST,
Attorney General,
State of Minnesota,

GEORGE B. SJOSELIUS,
Deputy Attorney General,
State of Minnesota,
102 State Capitol,
St. Paul 1, Minnesota,
Attorneys for the State of Minnesota.

JOHN F. BONNER,
City Attorney,
City of Minneapolis,
Minneapolis, Minnesota,
Attorney for City of Minneapolis.

LEO A. HOEGH,
Attorney General, State of Iowa,
State Capitol,
Des Moines, Iowa,
Attorney for the State of Iowa,

CLARENCE S. BECK,
Attorney General, State of Nebraska,
State Capitol,
Lincoln, Nebraska,
Attorney for the State of Nebraska.

CERTIFICATE OF SERVICE

The undersigned, Assistant Attorney General for the
State of Minnesota, hereby certifies that on the 6th day
of March, 1954, he served a copy of the foregoing brief
upon each of the parties of record in this proceeding by
duly mailing a copy thereof by depositing the same in
the United States mail, properly addressed and with’
postage prepaid, to counsel of record for each of said

parties as follows:
ROBERT L. STERN (5 copies)
Acting Solicitor General of the
United States,
t of Justice,
Washington, D. C.

WILLIARL W. GATCHELL

(5 copies)
General Counsel, Federal Power
Commission,
1800 Ave. N. W

VERNON W. THOMSON,
Attorney General of Wisconsin.

STEWART G. HONECK,
= md Attorney General of
Wisconsin,

State Capitol,
Madison, Wisconsin.
Attorneys for
State of Wisconsin.

WILLIAM E. TORKELSON,
Chief Counsel, Public Service
Commission of Wisconsin.
1 West Wilson Street,
Madison, Wisconsin.
Attorney for Public Service C..m-
mission of Wisconsin.

aa

WALTER J. MATTISON,
City Attorney,
City of Milwaukee, Wisconsin.

HARRY G. SLATER,
First Assistant City Attorney,
City of Milwaukee, Wisconsin,

City of Milwaukee, Wisconsin.

GERALD K. O'BRIEN,
Prosecuting Attorney,
Wayne County, Michigan.

LEONARD SIMONS,

Wayne County, Michigan.

PRICE D
Attorney General, State of Texas.

J. PAULL MARSHALL,
Union Trust Building,
Washington 5, D. C.
Attorneys for State of Texas and
Railroad Commission of Texas.

MAC Q. WILLIAMSON,
Attorney General, State of
Oklahoma.

24

DAVID M. PROCTOR, FLOYD GREEN,
City Counselor, Conservation Attorney,
City of Kansas City, Missouri. “— of a
apitol ce Building,
JEROME M. JOFFER, Oklahoma City, Oklaoma
Special Utilities and Legislative
Counsel, City of Kansas City, J. PAULL MARSHALL,
Missouri, Union Trust Building,
2800 City Hall, Washington 5, D. C.
Kansas City, Missouri. Attorneys for Corporation Com.
Attorneys for mission of State of Oklahoma,
City of Kansas City, Missouri. JOE L. MARTINEZ,
PAUL T. DWYER, Attorney General,
Acting Corporation Counsel, State of New Mexico,
City of Detroit, Michigan. in ——— ta ed Mexico
rney for State of New Mexico
JAMES H. LEE, and Oil Conservation Commission,
Special Assistant Corporation State of New Mexico.
Counsel, City of Detroit, Mich.,
301 City Hall,
Detroit 26, Michigan.
Attorneys for

City of Detroit, Michigan.

JOSEPH J. BRIGHT,
Assistant Attorney General,
State of Minnesota,
102 State Capitol,
St. Paul, Minnesota.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386408_0055%3A09. Public record. Not legal advice.