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U.S. Supreme Court

Sunray Mid-Continent Oil Co. v. FPC, 364 U.S. 137 (1960)

Sunray Mid-Continent Oil Co. v. Federal Power Commission

No. 335

Argued April 26-27, 1960

Decided June 27, 1960

364 U.S. 137


An independent producer of natural gas contracted to sell to an interstate pipeline company from specified reserves a specified amount of gas each year at specified prices for a term of 20 years, and it applied to the Federal Power Commission under the Natural Gas Act for a certificate of convenience and necessity authorizing it to make such sales for a term of 20 years only. Instead, the Commission tendered a certificate without any time limitation. The producer accepted it, reserving the right to object, on review, to the unlimited nature of the certificate.

Held: the Commission did not exceed its authority in issuing a certificate unlimited as to time. Pp. 364 U. S. 138-158.

(a) To hold that the Commission must place a time limitation upon such a certificate (1) would greatly impair its control under § 7(b) over the abandonment by natural gas companies of their facilities and services subject to the jurisdiction of the Commission, and (2) would make unavailable the procedural safeguards under §§ 4(d) and 4(e) which are applicable to rate changes. Pp. 364 U. S. 141-147.

(b) A different conclusion is not required by the language of § 7(e) authorizing the Commission to issue a certificate "authorizing the whole or any part of the operation, sale, service, construction, extension, or acquisition covered by the application." Pp. 364 U. S. 147-151.

(c) The authority of the Commission to issue a certificate unlimited as to time should not be denied on the theory that it could accomplish the same result indirectly, either (1) by denying all application for limited certificates or (2) by prescribing conditions under § 7(c) that the certificates be permanent. Pp. 364 U. S. 151-152.

(d) The conclusion here reached is supported by the consistent administrative practice of the Commission in making a clear distinction between the underlying "service" to the public and the contractual means by which it is implemented. Pp. 364 U. S. 152-154.

Page 364 U. S. 138

(e) The conclusion here reached is not inconsistent with that reached in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U. S. 332. Pp. 364 U. S. 154-156.

(f) An initial application of an independent producer to sell natural gas in interstate commerce leads to a certificate of public convenience and necessity under which the Commission controls the basis on which the gas may be initially dedicated to interstate use, Atlantic Refining Co. v. Public Service Commission, 360 U. S. 378; and, once so dedicated, there can be no withdrawal of that supply from continued interstate movement without Commission approval. P. 364 U. S. 156.

(g) Other objections to the Commission's order either are not properly before this Court or are without merit. Pp. 364 U. S. 156-158.

267 F.2d 471 affirmed.

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