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Current Decisions and Problems in the Regulation of Independent Natural Gas Producers

Justin R. Wolf, Proceedings of 2nd Annual Rocky Mountain Mineral Law Institute (1956)

Current judicial decisions respecting the regulation of the independent producer by the Federal Power Commission have dealt largely with procedural rather than substantive questions and in the main have sustained the Commission's actions. The problems of the independent producer remain many and complex; for the most part, the principal problems have yet to be resolved by either the Commission or the courts.

A brief historical review may well be helpful to the discussion contained in this paper. In 1951, In the Matter of Phillips Petroleum Company,1the Federal Power Commission held that it had no jurisdiction over the business and activities of the independent producer, including the independent producer's sales to interstate pipeline transporters. The rationale of the Commission's decision was to be found in the proviso clause of Section 1(b) of the Natural Gas Act2 which provides, in pertinent part, The provisions of this Act ... shall not apply ... to the production or gathering of natural gas. In short, the business of the independent producer, including sale, was the business of the production and gathering of natural gas and as such beyond the Commission's jurisdiction.

[200] The Commission's decision was challenged in the courts3 by representatives of states and other public bodies which had intervened in the case before the Commission. On June 7, 1954