672 CLARK, J., dissenting. if anything, the independents at the producing end of the pipelines were likewise the victims of monopolistic practices by the pipelines. And our decisions have certainly indicated that the "gap" was at the distribution end of the transmission process. Thus, in Federal Power Commission v. Hope Natural Gas Co., 320 U. S. 591 (1944), the Court observed that "the Federal Power Commission was given no authority over 'the production or gathering of natural gas'" and that the producing states had the power "to protect the interests of those who sell their gas to the interstate operator." Id., at 612-613, 614. (Emphasis supplied.) Five years later, in Federal Power Commission v. Panhandle Eastern Pipe Line Co., supra, the Court said its approval of the Commission's inclusion of the cost of production and gathering facilities of an interstate pipeline in the latter's rate base "is not a precedent for regulation of any part of production or marketing." 337 U. S., at 506. (Emphasis supplied.) By today's decision, the Court restricts the phrase "production and gathering" to "the physical activities, facilities, and properties" used in production and gathering. Such a gloss strips the words of their substance. If the Congress so intended, then it left for state regulation only a mass of empty pipe, vacant processing plants and thousands of hollow wells with scarecrow derricks, monuments to this new extension of federal power. It was not so understood. The states have been for over 35 years and are now enforcing regulatory laws covering production and gathering, including pricing, proration of gas, ratable taking, unitization of fields, processing of casinghead gas including priority over other gases, well spacing, repressuring, abandonment of wells, marginal area development, and other devices. Everyone is fully aware of the direct relationship of price and conservation. Federal Power Commission v. Panhandle 288037 0-54-49 CLARK, J., dissenting. 347 U.S. Eastern Pipe Line Co., supra, at 507. And the power of the states to regulate the producers' and gatherers' prices has been upheld in this Court. Cities Service Gas Co. v. Peerless Oil & Gas Co., 340 U. S. 179 (1950); Phillips Petroleum Co. v. Oklahoma, 340 U. S. 190 (1950). There can be no doubt, as the Commission has found, that federal regulation of production and gathering will collide and substantially interfere with and hinder the enforcement of these state regulatory measures. We cannot square this result with the House Report on this Act which states that the subsequently enacted bill "is so drawn as to complement and in no manner usurp State regulatory authority." H. R. Rep. No. 709, supra, at 2. The majority rely heavily on Interstate Natural Gas Co. v. Federal Power Commission, 331 U. S. 682 (1947), to support their position. To be sure, there is language in that case which on its face seems to govern the present case. Id., at 692-693. But that case involved a materially different fact situation. The Interstate Gas Company was already subject to Federal Power Commission jurisdiction because of its interstate pipeline operations; and the company was affiliated with one of the pipelines to which it sold. In addition, the Court emphasized the fact that in Interstate no claim to state regulatory authority was made. Indeed, the Interstate Company had successfully resisted state attempts to regulate. Hence there was no possibility of conflict in that case; either the Federal Power Commission moved in or Interstate would have remained unregulated. But perhaps a more significant factual distinction in terms of the Court's reasoning in that case rests in the fact that of the total volume of gas Interstate sold, roughly 42% had been purchased from others who had produced and gathered it. This 42% was almost enough to supply all the needs of the three interstate pipelines to which Interstate sold. And the 42%, 672 CLARK, J., dissenting. already gathered and processed, moved into and through Interstate's branch, trunk, and main trunk lines. In short, Interstate was the equivalent of a middleman between gatherers and the pipelines for almost all the gas it sold to the pipelines and performed the function of transporting the gas it purchased from other gatherers through its branch, trunk, and main trunk lines. Phillips performs no such middleman or transmission function. In addition, the late Chief Justice Vinson in that case specifically stated that: "We express no opinion as to the validity of the jurisdictional tests employed by the Commission in these cases [Columbian and Billings, supra].” 331 U. S., at 690-691, n. 18. Since it was in those cases that the Federal Power Commission established the policy of declining jurisdiction over the rates charged by wholly independent producers and gatherers, it is difficult to see how Interstate can control the present case. If we look to Interstate for guidance, we would do better to focus on the following words of the late Chief Justice: "Clearly, among the powers thus reserved to the States is the power to regulate the physical production and gathering of natural gas in the interests of conservation or of any other consideration of legitimate local concern. It was the intention of Congress to give the States. full freedom in these matters. Thus, where sales, though technically consummated in interstate commerce, are made during the course of production and gathering and are so closely connected with the local incidents of that process as to render rate regulation by the Federal Power Commission inconsistent or a substantial interference with the exercise by the State of its regulatory functions, the jurisdiction of the Federal Power Commission does not attach." 331 U. S., at CLARK, J., dissenting. 347 U.S. Even a cursory examination of Phillips' operations reveals how completely local they are and how incidental to them are its sales to the pipelines. Moreover, federal regulation of these sales means an inevitable clash with a complex of state regulatory action, including minimum pricing. These were matters found by the Federal Power Commission in language obviously patterned after the above quotation. The clear import of the cited words is that Federal Power Commission jurisdiction "does not attach" in such a situation. In the words of MR. JUSTICE JACKSON, we believe "that observance of good faith with the states requires that we interpret this Act as it was represented at the time they urged its enactment, as its terms read, and as we have, until today, declared it, viz., to supplement but not to supplant state regulation." Federal Power Commission v. East Ohio Gas Co., supra, at 490. REPORTER'S NOTE. The next page is purposely numbered 901. The numbers between 698 and 901 were purposely omitted, in order to make it possible to publish the per curiam decisions and orders in the current advance sheets or "preliminary prints" of the United States Reports with permanent page numbers, thus making the official citations available immediately. |