# Brief in Opposition — United Gas Pipe Line Co. v. Federal Power Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386412_0005%3A04 ## Record - **Collection:** Supreme Court brief - **Document type:** Brief in Opposition - **Published:** January 1, 1966 - **Citation:** 385 U.S. 83 ## Text Ol Bites! DMS ae fa .a6c .9 @60L {2 onl. , ae 72, DIe ~yia., PO 0.05 0X I op t his ; AY 7A) L cansaee Page Qpimions below... .....-055 F- 1 Questions presented _ . 3545 -23.2.-L 44- -A- Here r- 2 Statutes myplyed £15 0-- 1374.33 ‘ es : an oar gh eagle shoes $545! reimbursement (R. 195).* ‘The Johnson Bayou Field is adjacent’ to: United’s 16-inch Mud Lake transmission line,’ which ‘extends westward from Southwest Louisiana into’ the Beau- mont, ‘Texas, area; / Continental agreéd to deliver’ the gas here involved to a central point near this previ- ously constructed line. To permit delivery, ‘Conti- nental’ ‘eonstructed 4,400 feet: of 24-inch line, two separators ‘and several storage tanks, while United construdted. ‘a separator) al meter station; about 65 feet ‘of inch’ line’ and) valves?!) fe ' On! October ¥23, 1962, futediint the » vaibcadt, Continental advised United that’ it' ¢hdse‘to’ terminate the.contract at the end of ‘the primary termi,\ sie, on January 31; 1963 (R.'397). After’attempts to nego- tiate a new contract had failed, Coritinental filed with the Commission a-supplement ‘to its: existing’ rate schedule providing’ for a unilateral’ inerease’ in price to 14 vents ‘per Mef ‘plus 1.75. cents for tax réimburse- mae ier plerenagper tii pu 31, 1968 (R307-908). oii niogo. old ‘United objected’ to the Alig on the seivihint’ theit Continental Had ino’ authority ‘té' make such: ‘a ‘uni- CL eee A: “On January 4, 1986, the Commission inmed Continental G. 2046 and #940, 6t a, onder ionued January 4 1068 ‘Seo 18 FRC 1000, 7.4 62 128 0% forces und ¥O ‘Fagin 4 Qn: February, 25, 1955, the Conaminsion, iatned for: Unitedie. eontinead: seemephetepiion etsana tenes head Bayou Field) and 'the operation of the facilities} used: for. transportation. United Gas Pipe Line Co., 14 FPC 582. 4 lateral’ change. ..The Commission, however, accepted the increased rate filing since*it was not above the area guideline price for increased rates, which was then; as now, 14¢. plus tax reimbursement.’ The in- creased rate was not suspended, and United’s applica- tion for rehearing was denied. Continental Oil Co., 29. FPC 525. United did not seek judicial review of that order. United thereafter notified ocitinenbial: that pur- ohenee from the Johnson Bayou Field would cease as . of 7:00 am., January 31, 1963 (R. 251, 398). On February 1, Continental petitioned the Commission to. direct . United “* * * to show cause why it should not be required to continue to take deliveries of gas produced by Continental in the Johnson Bayou Field * * .* at the currently filed and effective,zate’’ and to order United to take. such. gas, during the pendency of. such action (R. 242, 398). The Com- mission directed United to show eause ‘‘why it should not. be required to apply for and obtain the. permis- sion and approval of the Federal Power Commission before ceasing the operation of all or any portion of the facilities heretofore operated by United to pur- chase natural gas from Continental * * *”’ an 267- 271, 398-399). '*The. Southern ‘Sivaiaianw guideline price announced on October 25, 1960, for initial (new) service was 21.5¢ exclusive of tax reimbursement.’ ‘This was changed on October 81, 1961, to 21.25¢ inclusive of State taxes: Fourth Amendment to ' Statement of General Policy No. 61-1, 26 FPC 661. The guideline price for rate changes has, sitite. September 28, 1960, remain fixed at 14¢ exclusive: ‘of tax reimbursement of 1.75¢. Statement of General Policy No. 61-1, 24 FPC 818. — 5 After a full hearing, intermediate decision and argument, the Commission held that United’s inten- tion not to use, for an indeterminate time, the facili- ties for the purchase of gas from Continental consti- tuted an abandonment within the meaning of Section 7(b) of. the Natural Gas Act. Accordingly, it re- quired United to resume purchasing gas: consistently with Continental’s filed rate. schedule (R. 407, 408). The court of, appeals sustained the Commission’ 8 order. a ARGUMENT 1, The court of appeals correctly euthinel the Com: mission’s conclusion that United was required by Sec- tion 7(b) of the Natural Gas Act to obtain Commis- sion approval before it could discontinue its purchases from Continental. The Commission found that in ter- minating its purchases, United had abandoned “juris- dictional gas purchasing facilities” (R. 396, 407-408) that had been ‘‘constructed: and operated; by United for the sole purpose, of receiving Continental’s Johu- ~ son Bayou Field gas” and were ‘‘concededly. facilities used for the ‘transportation of natural gas in. inter- state comimerce’ within. Section 1(b)” (R.,396, 21.:1), Although Seetion 1(b) does not explicitly bring within the Commission’s regulatory powér the; purchase of natural gas, it does give the Commission. authority. over. ‘‘transportation of natural gas in interstate;com- merece,” United was engaged in such transportation, and.to the extent, that. it wished to terminate, this phase of its operations it was required to obtain Com- mission approval. The Commission’s construction of Section 7(b) does * 6 not conflict’ with’ ‘Sunray Mid-Continent Oil Co. v. Federal Power Commission, 364 U.S. 137: ‘Indeed, the’ reaions of policy stated by this Court in support of its’ décision' in Sunray"and ‘in’ Sun Oi Co. v. Fed- eral Power Commission, 864’ U'S"'170, ‘affirmatively stipport' the resiilt ‘readhed here. For to allow United to abandon its purchase and transportation’ of natural _ gas’ without! Comniission! authorization ‘would’ effec- tively prevent Continental’s‘continuéd sale of its gas to the public, with the Same Mra ag effect * * * upon the policies of the Act” that the Court noted in ‘réawhihg its décision in’ Sunray: See 364 U.S. at 141-142) The interstate market would be deprived of this ‘supply of@yas from’ Contitiéntal’s reserves with: out the presétibed Commission finding “that the avail- able ‘ ‘aupply '6f ‘natural! gas’ tsdepleted to the ‘extent that the eontifuanes Gf ‘service is unwarranted, or that the “presext or futuré' public eorivénience or necessity it such abaridéninent:” ‘Section 7(b); pp: 16417, a. * As'in' Sunray, the consequence would be that is eonsumer’ ultimately would pay’ the bill for the ‘re- arrangément”” of services as between the = hemi drid-énother’ pipeline. 964 U.8.°at 143°) “ifn “addition, unregulated ‘termindtion ‘by’ United of its ‘avrarigemerit With Contimental would’ have other ~~ sétiotis “ practiced) ‘¢onsequences”’ on consumiers—quite like the’ producér’s termination in’ ‘Sunray. “See 364 US atom,” ‘If United tate freely permitted to ter- eget ‘new Aspegerernie mn ight’ Sette ED tty sax wrt Tess © on on . “s * ‘ 7 . . . ‘ 290 {d)5 1O1J99G4 TO MOU IEAM & Howey a 7? quired t6 make up for those abandoned would be tiade at new-gas prices, which are normally higher. f The fact that United was not required to obtain a certificate of public conveniente and necessity to pur- chasé gas does not, as petitioner contends (Pet. 9), en- title it to discontinue the purchase and transportation a8 soon as its contractual obligation terminates. Relf- ing on J. M. Huber Corporation v. Federal Power Com- mission, 236 F. 24 550 (C.A. 3), certiorari denied, 352 U.S. 971, the Commission held that even without such a certificate, United’s facilities are ““‘dedicated to the public use and cannot be abandoned absent a showing under Section 7(b)” (R. 399, n. 5). The abaridon- ment provision is not, by its terms, limited to those holding: certificates, and the policy of the Act extends to pipelines like United whether or not they’ possess certificates. This position is not inconsistent with this Court’s assumption in Sunray that a limited-time cer- tificate would permit a producer to discontintie its op- érations ‘at the certificate’s expiration. In that case, tlé Court assumed only that approval of such a limita- tion amounted to an authorization under Section 7(b) * Thus, ,while. United was declining to take gas from Con- tinental at the 15.75¢ guideline price (14.0¢ plus 1 5784 tax reim- bursement) for changed rates in the Southern Louisiana aréa involved (see Federal Power Commission Rules of Practice and Procedu pie ders 18 C.F.B. (1961 revision, 1965 Supp.) § 2.56; 2 FPC 81 and 26 FPC 661), the record shows it entered into soem Dar Paniliniee of, Gap 2 Peseet tongs Getwesy, 194 and 19.7. (BE. 23-27, 330). There are indications that these pur- ses were not made to compensate for the termination of the supply from Continental (#bid.), but this, of Rf Pein’ be that could be more full; developed andoi ment ennetng initiated by U: Vailed, to abandon the .certificated service at the conclusion of the certificated period.’ : ' . In any event, although the Commission did not a on the terms of any certificate, United had, in fact, obtained a certificate on February 25, 1955, for the “continued transportation of natural gas” over the facilities involved here. FPC Docket No. G-2818, 14 In a of the comprehensive purposes of the Nat- mea Gas - Act, the Commission’ s ruling _ obviously effectuates a desirable symmetry | between the obliga- tions of sellers and purchasers subject to the Com- Iission’s jurisdiction. . .United’s obligation . not, to . terminate its purchase arrangements .without Com- mission approval is the correlative of Continental’s obligation not to cut -off. the source of supply. {In analogous circumstances, this Court construed the abandonment provisions of the Interstate Commerce . Act, to apply not merely | to a carrier conducting the | operations which were to be terminated but also to the property owner over whose facilities the carrier was conducting such operations. Thompson vy. Texas _ Mexican R. Co., 328 U.S. 134, 144-145. 7 - 2, Since United was required ‘to dhthin'” Cécimnie- sion approval. before abandoning its purchase. .ar- "Nor does this Court's reference in Sunray to the seller’s’éon- =» tinuing obligation in that case to deliver gas to the purchaser” “on. the latter’s request” (364 U.S. at 155) support petitioner’s _ ras that 2 purchaser is free to abandon his purchases at involved in Suncoy, to all for co additional supply of gas 7 e of the specified annual amount. 364 US. oa Ye ~~ ae a ma “ ‘ x raligement with Continental, the’ Commission was entirely justified in requiring United to continue its purchaées at the outstanding lawful rate while an application for abandonment, if any ‘were filed, was being considered and determined. United objected to the rate filed by Continental only on the ground that it was unauthorized¥and not ‘because it was unjust, unreasonable or discriminatory. It did not ask that © the sate be suspended or that it be collected subject to refund. Having been filed arid not having been ‘sus- pended by the Commission, Continental’s rate be- came the lawful rate, atid United was required to ‘ abide by it until it received abandonment’ authoriza- tion under Section 7 (b). Nothing said by this Court in United Gas Pipe Line Co. v. Mobile Gas Corp., 350 U.S. 332, is to- the contrary. Before any agreement is entered ‘into, sellers and buyers may, of course, negotiate as to price, and the seller has no power\beyond that of an offeror; he may set his price and then seek out “pro- spective customers.” 350 U.S. at "843. But this Court noted in both United Gas Pipe Line Go. ‘v. Memphis Light, Gas & Water Division, 358 U.S. 103, and in Sunray, supra, that if a contract authorizes the filing of a new rate ex parte or if the contract term expires, the seller may make rate changes with- out the purchaser’s consent. See 358 U.S. at 112-113; 364 U.S. at 155. The purchaser, of course,:is not left without rate protection. If the seller attempts té raise his rate, the purchaser may attack it as unjust, unreasonable, discriminatory or preferential, and may seek to have it suspended or collected subject to ~~“ cE iG ~ acfand.;, Alternatixaly, # purchaser may request per: mission under Section 7(b) to discontinue the seller’s gas. United invoked none of. these remedies, but chose ingtead to attack the rate filing as impermissible under the Act. The Commission properly rejected that course. Finally, we do not believe that the present decisiqn will have a significant impact upon the price of gas to the pipelines or ultimate consumers. Many pur- ‘chase contracts have already expired, but the present case appears to be the first in which the parties have failed to reach a further agreement upon the expira- tion of the initial contract term. If producers do.file higher rates at the expiration of contract periods, pipelines and their customers may be protected from undue inereases by the Commission’s. power (1) to suspend the rates, and, after the expiration of the statutory suspension period, to order refunds with interest on any excessive amounts collected, and (2): to authorize the pipeline to abandon its facilities if it an demonstrate that its gas needs can be met from cheaper sources. > — Shall give to the hearing and decision of such - questions preference over other questions pend- ing ward it and decide the same as. speedily ~ Sac 3. Ca) Whenever the Commission, after "} had upon its. own motion or upon pa of any State, municipality, State commission, or gas distributing company, shall _ find that any rate, charge, or elasaifieation de- manded, observed, " 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, or that any _ Tule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory, or prefer- _ ential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter _ observed and in force, and shall fix the same by order: Provided, however, That the Commis- sion shall have no power to order any increase in any rate contained in the currently effective schedule .of such natural-gas company on file bt se the Commission, unless such inerease is in _aécordance with a new schedule filed by such, natural gas co pany; shat the Commission may” order a. mticav aga f ere existing rates are un- _ just, unduly rrnaclermse Eng preferential, other- wise unlawful, or are not the lowest reasonable rates. * * * ; +. * Sno. 7: 9:7. .% »_(b) No natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the permission and approval of the Commission first had and obtained, after due hearing, and a finding by the Commission that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or necessity permit, such; abandonment, * @ay < * eo j [52 Stat. 830 (1938); 15 U.S.C. § 7170} ‘ + eo * - = 17 or that the present or future publie eonvenience Szc. 16. The Commission shall have power to | perform any and all acts, and to prescribe, is- sue, make, amend, and rescind such’ orders, rules, and regulations as it may find necessary or appropriate to carry out the provisions of this Act. Among other things, such rules and regulations may define accounting; technical, and trade terms used in this Act; and may prescribe the form or forms of all statements, declarations, applications, and reports to be filed with the Commission, the information which they shall @¢ontain, and the time within which they shall be filed. Unless a different date is specified therein, rules and regulations of the Commission shall be effective thirty days after publication in the manner which the Commission “shall prescribe. Orders of the Commission shall be effective on the date and in the manner which the Commission shall prescribe. For the purposes of its rules and regulations, the Commission may elassify per- sons and matters within its jurisdiction and prescribe different requirements for different classes: of persons or matters. All rules and — regulations of the Commission shall be filed with its secretary and shall be kept open in convenient form for public inspection and ex- amination during reasonable business hours. * Suc. 19, ° * ° Ste (b) Any party to a proceeding under this Act aggrieved by an order issued by the Commission in such proceeding may obtain a re- view of such order in the court of appeals of the United States for any circuit wherein the natural-gas company to which the order relates is located or has its principal place of business, or in the United States Court of Ap- 18 posls for the District of Columbia ‘by filing in such court, within sixty days after the order of * the Commission upon the application for re- -hearing,'’a written petition |p: that the order, of the. Commigsion. be ified or set -in. whole jor in part. A:-copy. of such shall: forthwith be transmitted by the See clerk of the court to.any member of the Com- mission. and thereupon the Commission shall file with. the court ‘the record upon which the order complained of ,was entered, as provided in section 2112 of title 28, United States Code. Upon the filing of such petition. such court |. shall: have jurisdiction, which upon the filing of the veoiad with. it shall be. exclusive, to affirm, modify, ‘or .set aside such order in whole:.or in: part. No objection to.the order of the, Sasiiiedken shall be considered by the court .unless such objection shall have been urged -before| the Commission in the applica- tion ary rehearing unless there is reasonable groune kor failure, so'to do... The finding of the ion as to the facts, if supported by substantial evidence, shall be conelusive. If any party shall apply to the court for leave to me additional. evidence, and shall show to the satisfaction of the court that such addi- tional evidence is material and that there were reasonable grounds for. failure to adduce such evidence in the proceedings before the Commis- sion, the: court may order such additional evi- dence to be taken before the Commission and _ to be adduced upon the hearing in such man- ner and upon such terms and conditions as to the court may seem proper. The Commission may modify its findings as to the facts by rea- ea oF the ” dditional avidenes so taken, and it ° shall. file with the court such modified or new findings; which if supported by . substantial evidence, shall be conclusive, and its. recom- fing dation, if any, for the modification or set- B aside of the original order. The judg- 19 — ment and decree of the court, affirming, mod- ifying, or setting aside, in whole or in any. such order of the Commission shall be ject to review by the Supreme Court of the United States upon certiorari or certifica- tion as provided in [former] sections 239 and 240 of the Judicial Code, as amended (U.S.C., title 28 [sec. 1254]). U.S. GOVERNMERT PRINTING OFFICE: 1966 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386412_0005%3A04. Public record. Not legal advice.