RESPONDENT: Federal Power Commission
LOCATION: Beaumont Mills
DOCKET NO.: 72
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit
CITATION: 373 US 294 (1963)
ARGUED: Jan 09, 1963
DECIDED: May 20, 1963
Facts of the case
Media for Wisconsin v. Federal Power CommissionAudio Transcription for Oral Argument - January 09, 1963 (Part 2) in Wisconsin v. Federal Power Commission
Audio Transcription for Oral Argument - January 09, 1963 (Part 1) in Wisconsin v. Federal Power Commission
Kent H. Brown:
Your Honors, may it please the Court.
These cases present for review, a September, 1960 determination by the Federal Power Commission which is affirmed by a divided court below upon the basis of several fundamental misconceptions of its import and of its ramifications.
By its determination, the Commission for the second time in a decade, declined to apply the heart of the Natural Gas Act to Phillips Petroleum Corp -- Company, the largest independent producer of natural gas, supplying over 10% of the interstate market and to fix just and reasonable rates for its sales.
In a 1951 determination, the Commission had declined to do so under the erroneous impression that it lacked jurisdiction over sales by producers to interstate pipelines.
That was reversed by the court below in 1953 with a remand order which specifically directed the Commission to proceed to fix just and reasonable rates for all of Phillips interstate sales.
In June of 1954, this Court affirmed.
With that, the Commission’s responsibility was twofold.
First, it was duty bound to proceed with this batch to carry out the mandate of the courts.
Secondly and equally importantly, it was duty bound to take steps promptly to stabilize producer rates and charges in the interim, pending the completion of its first task.
As will be shown for six years owing 1954, it did neither and those charges soared.
Belatedly, following six successive Court of Appeals adjournments that this Court meant what it said in 1959 in the CATCO case about the Commission’s duty to stabilize and to hold the price line, pending the determination in the instant Phillip rate case.
The Commission did, in 1960, give a form of lip service to the duty to stabilize, at, I point out immediately, 1959 and 1960 levels, not 1954 levels.
It flatly refused however in the instant determination to perform its foremost function and that is why we, who have put on the penalty for the Commission’s procrastination and will continue to do so for the foreseeable future, are here today again as a last resort.
Upon receipt of the remand order in 1954, the Commission entered an order vacating its prior determination of the investigative proceedings it had instituted in 1948 against Phillips.
It did nothing, however, by way of scheduling the matter for hearing and two years elapsed during which time, Phillips exercising its prerogative under Section 4 of the Natural Gas Act filed successively 12 increases in particular sales which under Section 4 may be suspended for a maximum of five months after which they go into effect virtually automatically.
Finally, in 1956, the Commission entered an order consolidating those 12 rate increase proceedings with the pending Section 5 investigative future ratemaking proceeding and scheduled both as consolidated for hearing beginning June of 1956.
The hearings proceeded and were terminated in December of 1957.
During the course of the presentation, there were four separate cost-of-service studies presented to the examiner, carefully analyzed, cross-examined by all parties.
All used the 1954 as the test year adjusted to take into account known changes.
15 months later, on April 6, 1959, the examiner rendered a most exhaustive analysis of the record and his recommendations, for futu -- fixing the Phillips future rates.
Before analyzing the examiner's decision, I would digress momentarily to record developments during the interim and the date of this Court's order of remand and 1959, the date of the examiner's initial decision.
First, the period was marked by a multitude of Section 4 rate increase filings by Phillips and by others developing into what has come to be called a pancaking process; namely, a rate increase for one sale is filed, it goes into effect.
It is in effect subject to investigation which is never instituted, settlements included.
Finally, the company will file another increase for that same sale which goes into effect and supersedes the first increase.
This is the pancaking process.
This was done by Phillips and enormous amounts of money were collected by it subject to refund under Section 4 of the Natural Gas Act.
The period was also marked by a study upward spiral of similar nature in the initial prices for gas, new gas dedications.
The Commission's rationale for permitting of this was in those days it would investigate the propriety of those prices in subsequent Section 5 proceedings like this one should be instituted against each major producer.
They were instituted against virtually all of the major producing industry.
The period was also marked initially by a concerted refusal on the part of producers in the Section 4 and Section 5 cases that the Commission instituted to disclose in any way shape or form their costs of operation.