Federal Energy Regulatory Commission v. Pennzoil Producing Company

PETITIONER: Federal Energy Regulatory Commission
RESPONDENT: Pennzoil Producing Company
LOCATION: United States District Court for the District of Columbia

DOCKET NO.: 77-648
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 439 US 508 (1979)
ARGUED: Nov 28, 1978
DECIDED: Jan 16, 1979

ADVOCATES:
Barnett -
Jeron Stevens - for respondent Pennzoil Producing Co
Thomas G. Johnson - for respondent Shell Oil Co

Facts of the case

Question

Media for Federal Energy Regulatory Commission v. Pennzoil Producing Company

Audio Transcription for Oral Argument - November 28, 1978 in Federal Energy Regulatory Commission v. Pennzoil Producing Company

Audio Transcription for Opinion Announcement - January 16, 1979 in Federal Energy Regulatory Commission v. Pennzoil Producing Company

Warren E. Burger:

The judgment and opinion of the Court in 648, Federal Energy Regulatory Commission against Pennzoil will be announced by Mr. Justice White.

Byron R. White:

The principal issue in this case is whether into what extent the Federal Energy Regulatory Commission has authority to grant special rate relief to natural gas producers who's royalty cost have escalated they are tied to the price of natural gas in unregulated market, the intrastate market.

The Commission in its initial opinion seemed to indicate that it was without authority to grant such relief.

The Court of Appeals for the Fifth Circuit disagreed and strongly indicated that the Commission should grant such relief if it was necessary to maintain the profit margins of the producers.

We granted certiorari and we have filed an opinion that does not exactly agree with either of the Commission or the Court of Appeals.

If the Commission is to be read in its opinion as indicating that it has no jurisdiction to grant such relief, we think it was clearly and error and we agree with the Court of Appeals in that respect.

On the other hand, we think the Court of Appeals confine far too narrowly the discretion of the Commission when such rate relief is at issue and particularly we do not belief the standard is the standard that the Court of Appeals announced.

We do think the -- however that the entire case should be returned to the Commission so that the Commission may dispose of the case under the right standards.

And this remand of the Commission carries with it also a related issue about abandonment on which we think the Court of Appeals also erred.

The judgment of the Court of Appeals is accordingly vacated and that Court is directed to return the case to the Commission.

Mr. Justice Stewart and Mr. Justice Powell took no part in the consideration or decision of this case.

Warren E. Burger:

Thank you Mr. Justice White.