Petition for Writ of Certiorari — Mondakota Gas Co. v. Federal Power Commission

IN THE

Supreme Court of the United States

Ocroner Trea, 19956

VMoxnpakova Gas CoMPaNy, a eorporation; Montana

Uris GAs Company, a corporation; Bowporn

Gas Company, a corporation; THe Heart Moun-

mix SYNpteare, a Voluntary association; and

Piererer Epwanps, Pililiouers,

Vs.

Tur Preperar Pewer Comission, be spoudent,

Mownrana-Dakora Uriniries Company, Intervenor,

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

Leie Erickson

247 N. Last Chanre Giulel

Helena, Montana

James R. Brow Nite

Eiaias LyoNxs

1021 Tower Building

Washington 5, D. ©.

' Atlorneys for Petitioners

j

Ls Press or Byron S. ADAMS, WASHINGTON, d.c

INDEX

Page

i Meee eTee TTT ee ee eer ere rrr Ty erty T 2

I os in an ada wk bo UCASE TEA be Rew Ew aes aed 2

Cnet PPPOE noe ck cen ic ccekinesa penned 2

Statutes Involved:

Section 28 of the Mineral Leasing Act of 1920 ..... 3

Amendment of August 12, 1953 .................. 3

IOS: Sku dgax Gabkcocindeda ceeene hes easakackase 4

}

Reasons for Granting the Writ ..........00 ........ 8

MN uc komen chunks €K04ek0eee aaah eC KRGRY beh 12

iD © PMN Consck cance say ian ken ak eeunek eet haes la

Opinion of Court of Appeals for the District of Co-

SENN RIE bh wv as 00% conn ea' va eke eke een la

Judgment of Court of Appeals for the District of

| IEE: REE vcs vcdbaeet ccbascccpexauneens 8a

Cases CrvTep:

Ex Parte Collett, 337 U. S. 55, 61 ................ 12

Fullerton-Krueger Lumber Co. v. Northern Pacific

pemy We, eT. TE OD co on vicncn kndcntieyess 11

Gemsco v. Walling, 324 U. S. 244, 260 ............ 12

Montana-Dakota Utilities Co. v. Federal Power Com-

mission, 169 F. (2d) 392 (C.A. 8) cert den—

| Ee Sia MG SE 0:65 5d sk cAhaee DR. chenae ea RREEUKES 5

Schwab v. Doyle, 256 U. S. 529 ............0008: 11

United States v. Heth, 3 Cranch 399, 413 ........ 11

ComMitTEE Reports:

H. Rep. 764, 83rd Congress, Ist Sess. ............ 12

S. Rep. 578, 83rd Congress, Ist Sess. ............. 12

H. Rep. 1032, 83rd Congress, Ist Sess. ..........-. 12

SRS Fe: >

IN THE

Supreme Court of the United States

OcToBeR TERM, 1956

No. ———

Monpakora Gas Company, a corporation; MONTANA

Urinities GAs Company, a corporation; Bowporn

Gas Company, a corporation; THE Hrarr Moun-

TAIN SYNDICATE, a Voluntary association; and

FuercHer Epwarps, Petitioners,

vs.

THe Feperat. Power Comission, Respondent,

Monrana-Dakota Uritities Company, Jntlervenor.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

Petitioners pray that a writ of certiorari issue to

review the judgment of the United States Court of

Appeals for the District of Columbia Circuit, entered

on March 15, 1956, which affirmed an order of the

Federal Power Commission permitting the intervenor,

Montana-Dakota Utilities Company, to withdraw and

cancel its common-carrier tariffs for the transportation

of natural gas through its pipelines built in part upon

and passing through the public domain.

OLS Me ee

J

OPINION BELOW

The opinion of the Court of Appeals for the District}

of Columbia Circuit (R. 43-49) is not yet officially

reported. The decision, findings and conclusions, and

order of the Federal Power Commission’s Presiding

Examiner are set forth in the Record at pages 14-26,

and the order of the Federal Power Commission

affirming the decision of the Presiding Examiner is

set forth in the Record at page 34.

JURISDICTION

The judgment of the Court of Appeals (R. 50),

affirming the order of the Federal Power Commission

(R. 34) was entered on March 15, 1956. The Court

of Appeals had jurisdiction of the cause under the pro-

visions of Section 19 of the Natural Gas Act, 52 Stat.

831,15 U.S.C. 717(7). The jurisdiction of this Court

is invoked under 28 U.S. C. 1254(1).

QUESTION PRESENTED

Section 28 of the Mineral Leasing Act of 1920

authorized the Secretary of the Interior to grant

rights-of-way through the public lands for pipe-line

purposes for the transportation of natural gas upon

the express condition, among others, that ‘*such pipe-

lines shall be constructed, operated and maintained as

common-carriers * * *.’? On August 12, 1953 the said

section 28 was amended so that the common-earricr

provisions ‘shall not apply to any natural gas pipeline

operated by any persons subject to regulation under

the Natural Gas Act * * *.’? The question presented

is whether the amendment of August 12, 1953. is

applicable to a pipe line which was a common-earrier

under a right-of-way granted pursuant to Section 28

of the Mineral Leasing Act of 1920 prior to the amend-

- 3

ment of 1953, or whether the amendment is applicable

only to rights-of-way to be g ‘anted by the Secretary

after the amendment.

STATUTES INVOLVED

1. Section 28 of the Mineral Leasing Act of 1920,

as amended, 41 Stat. 449, 49 Stat. 678, 30 U.S. C. 185,

prior to the amendment of August 12, 1953, provided

in pertinent part as follows:

“Rights-of-way through the public lands * * *

may be granted by the Secretary of the Interior

for pipe-line purposes for the transportation of

oil or natural gas to any applicant possessing the

qualifications provided in Section 181 of this title,

to the extent of the ground oceupied by the said

pipe line, and twenty-five feet on each side of the

same under such regulations and conditions as to

survey, location, application, and use as may be

prescribed by the Secretary of the Interior and

upon the express condition that such pipe lines

shall be constructed, operated and maintained as

common carriers, and shall accept, convey,

transport, or purchase without discrimination, oil

or natural gas produced from government lands

in the vicinity of the pipe line in such propor-

tionate amounts as the Secretary of the Interior

may, after a full hearing, with due notice thereof

to the interested parties and a proper finding of 3

facts. determine to be reasonable, provided * * *.”°

2 The amendment of August 12, 1953, 67 Stat. 557,

added at the end of the quoted portion of Section 28 of ‘

the Mineral Lands Leasing Act, above, the following:

“That the common carrier provisions of this

section shall not apply to any natural gas pipeline p

operated by any person subject to regulation under j

the Natural Gas Act, or by any public utility

subject to regulation by a State or municipal :

4

regulatory agency having jurisdiction to regulate

the rates and charges for the sale of natural gas

to consumers within the State or municipality:

*# @ & 99

STATEMENT

Intervenor, Montana-Dakota Utilities Company,

(hereinafter referred to as ‘*Montana-Dakota’’)

operates an integrated natural gas pipe line system in

the States of Wyoming, Montana, North Dakota and

South Dakota. It produces, purchases, transports and

sells natural gas in interstate commerce for resale and

is a natural gas company within the meaning of the

Natural Gas Act. The system is constructed in part

over public lands. The principal lines in Montana,

North Dakota and South Dakota were built) under

rights-of-way granted by the Secretary of the Interior

upon the condition that the lines be operated as a

common-carrier within the meaning of the provisions

of section 28 of the Mineral Leasing Act.'

The order of the Federal Power Commission, which

was affirmed by the court below, grew out of a series

of complaints and applications which were con-

~olidated for hearing before the Commission's Presid-

ing Examiner (R. 16). Prior to the time these pro-

ceedings were instituted before the Commission,

'The foregoing paragraph is part of the third paragraph of the

Counterstatement of the Case at page 2 of the Joint Brief of

Respondent and Intervenor in the court below. The entire third

paragraph has been stipulated as correct (R. 13). The remainder

of the paragraph is as follows: ‘‘The line from Worland, Wyo-

ming to Baker, Montana, was built prior to the effective date of the

August 12, 1953 amendment to the Mineral Leasing Act, but no

right-of-way instrument was executed prior to the amendment by

the Seeretary of the Interior since there was dispute as to. the

exact terms to be incorporated in the right-of-way instrument.”’

i)

Montana-Dakota had been required to file and publish

a tariff for the transportation of natural gas as a

common-earrier (R. 15). And petitioner Mondakota

and Industrial Gas Company had services agreements

with Montana-Dakota under its common carrier tariff

(R. 2, 15, 45).

The proceedings before the Federal Power Com-

mission, Which were consolidated for hearing, may be

briefly summarized as follows:

The first application before the Federal Power Com-

mission was instituted by intervenor Montana-Dakota

on July 23, 1953 seeking an order authorizing it to

abandon common-carrier transportation of natural gas

where the shipper, in the absence of satisfactory credit

arrangements, had not provided bond required by the

tariff (R. 14-15). On May 27, 1954, intervenor

Montana-Dakota filed an application for authority to

suspend common-carrier transportation services for

alleged non-payment of past services rendered by it to

Industrial Gas Co. Responses to this application were

filed by Mondakota and Industrial stating that the

charges had been paid (R. 15). Another similar peti-

tion Was filed on October 1, 1954 (R. 16). On June 24,

1954, intervenor Montana-Dakota filed a proposed

revised tariff providing contract-carrier service in

lien of common-earrier service. The Commission

2 Mondakota Development Company, predecessor of petitioner

Mondakota Gas Company (hereinafter referred to as *‘*Mon-

dakota’’), a producer and shipper of natural gas, had instituted

proceedings in 1941 to secure the publication of a common-carrier

tariff by Montana-Dakota, a result which was finally achieved by

the decision in Montana-Dakota Utilities Co. v. Federal Power

Commission, 169 F. (2d 392 (C.A. 8) cert. den. 335 U.S. 853.

That decision details the history of Montana-Dakota’s refusal to

comply with the provisions of the Mineral Leasing Act.

6

suspended the proposed tariff and provided for a

hearing (R. 15).

On July 2, 1954, Industrial Gas Co. and petitioner

Mondakota filed a joint application for a determination

of the reasonableness of intervenor’s original gas

common-carrier tariff (R. 15-16). On September 7,

1954, intervenor filed a complaint against Industrial

Gas Co, and petitioner Mondakota and others claiming

that the operations of the named defendants, with

respect to natural gas transportation through the pipe

lines of intervenor, were in violation of Section 7(c)

of the Natural Gas Act. 15 U.S.C. 717( 1). Answers

to this charge were filed by Mondakota and Industrial

and others (R. 16).

Finally, on October 1, 1954, petitioner Mondakota

filed an application for a certificate of publie con-

venience and necessity pursuant to Section 7(¢) of the

Natural Gas Act (15 U.S. C. 717(f)), authorizing it

to sell natural gas to Eastern Clay Products Co.

(R. 15).

By orders issued on November 15 and December 3,

1954 all of the complaints and applications were con-

solidated for hearing to commence on December 7,

1954 (R. 17). Mondakota and Industrial requested a

postponement of the hearing on the ground that the

time allowed was insufficient to prepare adequately

for issues so complex and of such far reaching im-

portance (R. 6,17). The motions were denied (R. 6,

17) and hearings were held on December 7 and 8, 1954

(R. 6).

On the second day of the hearings, and without prior

notice, Montana-Dakota moved orally that all their

tariffs ‘trelating to common carriage as well as con-

7

tract carriage be entirely and in all respects withdrawn

and removed from the files and cancelled” (R. 20). At

the conclusion of the hearing on December 8, 1954,

petitioner Mondakota filed a motion for adjournment

and on January 7, 1955 it filed a petition for reopening

the record for further hearing. These were denied by

the Examiner because ‘tthe issues presented are legal

in nature and no useful purpose could be served by

reopening the record for further proof” (CR. 17).

On February 1, 1955, the Presiding Examiner

rendered his decision (R. 14-26). Among other things

he concluded “that the obligations of Moutana-Dakota

as a common-carrier of natural gas under the Mineral

Leasing Act are terminated by the aforesaid amend-

ment of August 12, 1953°" (R. 20) and he granted

Mondakota’s oral motion made at the hearings above

referred to (R. 24-25).

Exceptions were taken to the Examiner's decision

(R. 26-33), but by order dated March 16, 1955, the

Commission affirmed the decision of the Presiding

Examiner (R. 34). A timely petition for rehearing

(R. 34-41) was denied on April 27, 1955 (R. 42).

A petition for review was filed by petitioner in the

court below on June 24, 1955 (R. 2-11). By stipulation

of all parties, approved by the court below CR. 11-15),

it was agreed that the issues in the court below were

(1) **Whether petitioners are aggrieved by the order

of the Federal Power Commission herein, within the

meaning of Section 19(b) of the Natural Gas Act

* * * and Section 10 of the Administrative Procedure

Act * * * and (2) ‘*Whether the Act of August 12.

2Tn addition, all the other proceedings were either dismissed or

terminated. (R. 25).

S

1953 * * * amending Section 28 of the Mineral

Leasing Act * * * applied to pipelines operated by

Montana-Dakota Utilities Co., a natural gas company

subject to regulation under the Natural Gas Act, which

pipelines were constructed prior to August 12, 1998,

over the publie domain under rights-of-way granted

by the Secretary of the Interior (except that the pipe

line from Worland, Wyoming, to Cabin Creek Com-

pressor Station in’ Montana, although constructed

prior to August 12, 1953, is on rights-of-way issued by

the Secretary of the Interior subsequent to the passage

of said Act).”’

The court below concluded that petitioner ** Monda-

kota has a sufficient interest to obtain review”? and

found it ‘‘unnecessary to consider the status of the

other petitioners’? (R. 46). On the merits, it con-

cluded (R. 46-49) that the Act of August 12, 1953,

amending Section 28 of the Mineral Leasing Act,

applied to pipelines which were, at the time of the

amendment, already subject to the common-carrier

provisions of Section 28, end, accordingly, it affirmed

the Commission's order (R. 50).

REASONS FOR GRANTING THE WRIT

The court below, in deciding that the amendment of

August 12, 1953, 67 Stat. 557, served to retieve natural!

gas pipe lines from the common-carrier obligations

whieh had initially been imposed upon them as condi-

tions to the granting of their rights-of-way through

the public lands, has decided an important question

of federal law which has not been, but should he,

settled by this Court. The question is | important

because in the western section of our country an inter-

state pipe line necessarily passes through publie lands,

9

and by the decision below all of such pipe lines have

been relieved of their former obligations to transport

gas for others as common-earriers, The decision of

the court below, if it is not reversed by this Court, will

result in the loss of substantial investments of peti-

tioner Mondakota, and of others similarly situated,

in gas wells, gathering lines, compressor plants, and

contracts. It will deprive producers and shippers of

competitive markets for their gas. In addition, those

who purchased gas from petitioner Mondakota will

now be deprived of the right to purchase gas at com-

petitive prices, On what seems to petitioners to be

most doubtful legal grounds, the decision below has

rendered ineffective over 20 years of effort on the part

of the petitioner Mondaketa, its predecessors and

principal officers, to establish competitive prices for

natural gas.

The court below was in error in its interpretation

ef the amendment of August 12, 1953. In rejecting

petitioners’ argument that the amendment applied

only to natural gas pipelines granted rights-of-way

after August 12, 1953, the court below stated

(RR. 47-48):

The 1953 amendment provides that pipe lines

otherwise hound by the common-carrier provisions

shall be exempt where they are operated = by

persons subject to specified public regulation. The

exemption rests upon operation. According to the

terms of the amendment, if the operation of the

pipe line is subject to the regulation specified in

the amendment, the common-earrier provisions

do not apply. The amendment makes no reference

to conditions in grants of rights-of-way; it refers

directly to operation. It speaks in the present,

referring to present operation, Tf Congress had

meant its exemption proviso to apply only to

aie

Ba aby

IS RS he te Ore

10

carriers thereafter securing rights-of-way, we

think it would have east its enactment ina

different mold. It would have referred to condi-

tions in grants.

The above quotation from the opinion of the court

below highlights its error, The fact is that the Con-

gress did precisely what the court below said it would

have done if it had intended the exemption proviso to

apply only to carriers thereafter sccuring rights-of-

way. The Congress, in enacting the amendment of

August 12, 1953, did not merely provide after the

enacting clause that the common-carrier provisions

of section 28 of the Mineral Leasing Act should not

apply to any natural gas pipe line operated by a

regulated person. Lf it had done so, the court below

might have been correct. Instead, the Congress, in

the amendment of August 12, 1953, provided that

section 28 of the Mineral Leasing Act ‘tis amended by

inserting after ‘Provided,’ the following:’’, in-

corporating the exemption as an actual part of

section 28. The amendmen’ of August 12, 1953 does

not exist independently; it is now an integral part of

section 28. That section, as now amended, provides, in

pertinent part, as follows:

Rights-of-way through the public lands * * *

may be granted by the Secretary of the Interior

for pipe-line purposes for the transportation of

* * * natural gas * * * under such regulations

* * * as may be prescribed by the Secretary of the

Interior and upon the express condition that such

pipe lines shall be constructed, operated, and

maintained as common earriers * * * Provided,

that the common carrier provisions of this section

shall not apply to any natural gas pipeline

operated by any person subject to regulation

under the Natural Gas Act * * *.”

————

— r

When the exemption proviso of the August 12, 1953

amendment is read as part of section 28, as the

Congress expressly provided it should, it is abundantly

clear that the entire section applies to future grants

of rights-of-way. Contrary to what the court below

stated (R. 47) the amendnient does make reference

to conditions in grants of rights-of-way, because it

sets forth the circumstances under which the common-

carrier conditions, referred to earlier in the section,

will not be required. The entire section 28, as it now

reads, merely sets forth the powers and limitations

of the Secretary of the Interior in granting future

rights-of-way through the public lands for natural gas

pipe lines.

We think that our interpretation of the amendment

of August 12, 1953 is the only permissible one. Any

other. view retroactively destroys valuable rights of

petitioner Mondaketa and relieves) Montana-Dakota

of pre-existing obligations. Such a retroactive inter-

pretation is net te he chosen unless the words in the

statute are so clear, strong, and imperative that no

other meaning can be annexed to them. United States

v. Meth 3 Craneh 399, 413; see also Padlerton-Krucger

Lumber Co. Vv. Northern) Pacific Railway Co, 266

U.S. 485: Scehirab vy. Doyle, 258 CLS. 5294 Not only

does the language of the amendment not el arly

evidenee an intent to relieve pipe lines which were

previously ‘constructed, ope ‘ated and maintained”

0 U.S. ©2185) as common-earriers from. their

obligations as such earriers, but the amendment, when

'The court below was of the opinion that its interpretation did

not render the amendment retroeative (R. 48). To be sure, the

amendment applies to present and future operation, but what the

court overlooked was that its interpretation in| 1955 wiped out

rights obtained, and obligations incurred, many years before.

12

incorporated into section 28, as Congress expressly

declared it should be, can be read only as removing a

limitation on the Secretary of Interior’s authority in

eranting new rights-of-way through the public lands

in the future.

CONCLUSION

For the reasons stated, it is respectfully submitted

that this petition for a writ of certiorari should be

granted

Let Erickson

347 N. Last Chance Gulch

Helena, Montana

James R. BrowNinc

Kis Lyons

1021 Tower Building

Washington 5, D.C.

Attorneys for Petitioners

June, 1956.

>We think the language is so clear that resort to the legislative

history is unwarranted. Er Parte Collett, 337 U.S. 55, 61; Gemseo

v. Walling, 824 U.S. 244, 260. But, in any event, the Committee

and Conference Reports on the bill (HI. Rep. 764, S. Rep. 578,

H. Rep. 1032, 88rd Cong. Ist Sess.) in no sense require the con-

clusion of the court below. Nowhere do they state that the pur-

pose of the amendment was to exempt pipe lines which already

were obligated to perform common-carrier services. The purpose

to ‘relieve’? pipe lines (R. 48) of the common-carrier obligations

is at best ambiguous and suggests a prospective application only,

just as well as an application to existing common-carriers. — In-

deed, the Senate Report (S. Rep. 578, 83rd Cong., Ist Sess.) indi-

cates a future application only when it states **The purpose of

this proposed legislation is to amend section 28 of the act of

February 25, 1920 * * * to permit companies subject to regulation

under the Natural Gas Act * * * to cross United States Govern-

ment land without incurring the obligation fo become a common

earrier.’’ (Italics supplied).