Sun Oil Company v. Federal Power Commission

PETITIONER: Sun Oil Company
RESPONDENT: Federal Power Commission
LOCATION: Dry Docks at Reed, WV

DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 364 US 170 (1960)
ARGUED: Apr 26, 1960
DECIDED: Jun 27, 1960

Facts of the case


Media for Sun Oil Company v. Federal Power Commission

Audio Transcription for Oral Argument - April 26, 1960 in Sun Oil Company v. Federal Power Commission

Earl Warren:

Number 321, Sun Oil Company, Petitioner, versus Federal Power Commission.

Mr. Hoffman.

Leo J. Hoffman:

Mr. Chief Justice, may it please the Court.

In this case, Sun Oil Company versus Federal Power Commission, there are two orders of the Federal Power Commission involved.

I would like to state briefly the nature of those orders and then I think it would be worthwhile to inquire briefly into the chronology of the development of the facts in this case.

The first of the orders of the Federal Power Commission involved in this case is a letter order that was issued by the Federal Power Commission under date of September 12, 1957.

That order of the Power Commission purported to reject a new -- a new contract which Sun Oil Company, the petitioner, had filed as its initial rate schedule purported to reject the certificate application which was submitted by the petitioner covering the same new sale that was covered by that contract.

The order was -- the letter order was issued by the Commission on the ground that the -- that an earlier rate schedule and an earlier certificate were duplicated by the documents currently being submitted by Sun Oil Company, the petitioner in this case.

The second order of the Federal Power Commission which is involved in this case is a formal order under date of November 8, 1957 by which the Power Commission suspended the same new contract when it was resubmitted later by Sun on a protest as they changed in its earlier rate schedule.

Potter Stewart:

Could you tell us again just to know where the first order, the letter order rejected?

Leo J. Hoffman:

Rejected the submittal by Sun of -- of a new contract as a -- as an initial rate schedule.

Potter Stewart:

Upon the basis that -- this -- the -- the gases already being sold under an existing contract --

Leo J. Hoffman:

That's right.

Potter Stewart:

-- which had been approved.

Leo J. Hoffman:

The Power Commission in rejecting the submittal of that contract as an initial rate schedule said that in view of an earlier sale accomplished by an earlier contract, the new contract can only be changed in rate schedule and would have to be resubmitted as a change in rate schedule under Section 4 (d) of the Act if it were be considered at all by the Power Commission.

So the -- the submittal as an initial rate schedule and the submittal of an accompanying certificate application were both rejected by the first order.

I've stated the ground just then of the rejection of the rate schedule essentially the same basis was the basis for the rejection of the certificate application.

That wasn't the earlier certificate covering the earlier sale under an earlier contract covered continuing service are duplicated, the -- the current filing and therefore, the current filing was not in order.

And as I say, Sun resubmitted the contract as a change in rate schedule under protest so that Sun would not be further penalized pending an appeal of the Power Commission's first order.

And by the second order, the Commission did suspend the -- the submittal of that contract and as a change in rate schedule.

Now, the court below, with one dissent, affirmed the Federal Power Commission orders.

Now, I would to state briefly in chronological order, and I think it's worthwhile to do so, the development of the facts in this case.

The -- the facts are relatively simply, and I think can be briefly stated.

Chronologically, in the development of this -- of this story, the first order of the events was the making of a contract, the gas purchase and sales contract between Sun Oil Company and Southern Natural Gas Company.

Southern Natural Gas Company was the pipeline buyer under the -- under the contract.

The contract covered the sale by Sun Oil Company and the purchase by Southern Natural Gas Company of gas to be produced from Sun's properties in the Gwinville Field which is located in the southern part of the State of Mississippi.

The contract between the two parties which appears on the record of this case is, in our view, essentially in the typical form of a producer's gas sales contract.

There's nothing particularly unusual about it.

For purposes of this case, the most important feature of that contract was that it provided clearly for a specific term of 10 years.

The contract provided that disagreement shall remain enforced in effect for a period of 10 years commencing on the date on which the first delivery of gas is made by a seller to buyer hereunder.