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Jupiter Corp. v. Federal Power Commission

June 8, 1966


Duffy, Knoch and Kiley, Circuit Judges.

Author: Duffy

DUFFY, Circuit Judge.

A proceeding is pending before the Federal Power Commission designated Docket No. AR61-2 et al., Area Rate Proceeding (Southern Louisiana Area). This proceeding was instituted on May 10, 1961 (25 FPC 942) to establish just and reasonable rates for all natural gas produced on-shore in Louisiana south of the 31st degree parallel, and off-shore thereof, and sold in interstate commerce for resale.

Petitioner Jupiter, which owns and operates a comparatively small under-water natural gas pipeline system, off-shore Vermillion Parish, Louisiana, within the "South Louisiana Area", was originally made a party to this proceeding. However, by order of February 18, 1963, the Federal Power Commission deleted Jupiter on the ground that it "performs transportation services" and "does not have any production in the area."

Two months earlier, on December 5, 1962, the Commission had instituted a proceeding under Section 5(a) of the Natural Gas Act, to determine the reasonableness and lawfulness of Jupiter's rates. Docket No. RI63-212, 28 FPC 942. This separate proceeding also is presently pending before the Commission.

Jupiter obtains natural gas from two connected platforms in the Gulf of Mexico and carries it through its system to the on-shore lines of Tennessee Gas Transmission Company (now Tenneco Corporation, and hereinafter referred to as "Tennessee") in Southern Louisiana.

The gas is initially collected at individual well-heads by three large producing companies, Pure Oil, Phillips and Kerr-McGee, and then delivered to large central off-shore platforms where Jupiter receives the gas in its own pipe lines and through such means, brings it on-shore. Thereafter, the gas is transported through Tennessee's lines to a plant operated by Jupiter twenty-nine miles on shore where Jupiter separates the liquid condensate from the gas and re-delivers the gas to Tennessee.

Originally, Jupiter's transactions with Pure Oil and Tennessee were on a sale and resale basis. However, in 1957, their arrangement was reconstituted so that the title of the gas was to pass directly from Pure to Tennessee. A fixed fee was received by Jupiter from Pure for its service, but Pure's selling price to Tennessee included reimbursement for Jupiter's charge.

In its rate case, Jupiter is contesting the jurisdiction of the Commission. Jupiter claims that its operations are exclusively "gathering" and, therefore, its charges for moving Pure Oil gas and for the sale of the gas it purchases from Phillips, Kerr-McGee are exempt from Commission regulations under the statutory exemption of production and gathering. However, in the instant proceeding, Jupiter expressly states that it is not raising any jurisdictional issues.

On January 6, 1966, the Examiner in the Jupiter rate case issued his decision holding that Jupiter's movement of gas from the two platforms to the shore is a transportation function and not "gathering" as claimed by Jupiter; that the Commission has jurisdiction and that the just and reasonable charge for these services is.632 cents per Mcf which is about 1/5th of the amount Jupiter is presently charging. Objections to the Examiner's decision have been filed and the proceeding is awaiting Commission determination.

Prior to the issuance of the Examiner's opinion (March 10, 1965), Jupiter had moved that its rate case be dismissed or, in the alternative, that it be consolidated with the Area Rate Proceeding. This motion was denied on April 29, 1965.

On May 4, 1965, Jupiter filed its petition to intervene in the Area Rate Proceeding. This petition was denied. Jupiter then moved for a rehearing. This was treated as a motion for reconsideration and was denied. It is from these orders refusing to allow Jupiter to intervene in the Area Rate Proceeding that Jupiter now appeals.

The statute governing intervention under the Gas Act is 15 U.S.C. ยง 717n(a), which empowers the Commission to admit "interested" parties or others whose participation may be in the public interest.

The rule of the Commission with respect to intervention, 18 CFR 1.8(a) and (b) provides in part: "A petition to intervene may be filed by any person claiming a right to intervene or an interest of such nature that intervention is necessary or appropriate to the administration of the statute under which the proceeding is brought * * * Such right or interest may be * * * (2) An interest which may be directly affected and which is not adequately ...

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