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December 20, 1954


The opinion of the court was delivered by: HOLTZOFF

This is a suit by a producer of natural gas to enjoin the Federal Power Commission from attempting to enforce certain of its orders against the plaintiff, on the ground that the plaintiff claims not to be subject to the Natural Gas Act, and on the further ground that the orders are said to have been illegally issued. The matter came on for a hearing on the defendants' motion to dismiss the complaint on the ground that the action does not lie.

The Natural Gas Act, Act of June 21, 1938, 52 Stat. 821, 15 U.S.C.A. § 717, places under the regulation of the Federal Power Commission certain activities of natural gas companies. These concerns are defined as persons engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale, 15 U.S.C.A. § 717(a). In Phillips Petroleum Co. v. State of Wisconsin, 347 U.S. 672, 74 S. Ct. 794, the Supreme Court placed a broader construction on the definition of natural gas companies than had been attributed to that term by the Federal Power Commission for a number of years, and as a result of this decision a number of additional producers and gatherers of natural gas were brought within the scope of the statute. With a view to implementing the decision of the Supreme Court in the Phillips case, the Commission on July 16, 1954, issued Order No. 174 consisting largely of regulations governing the filing of rate schedules and applications for certificates of public convenience and necessity by those producers and gatherers of natural gas which are also natural gas companies.

 Order No. 174 was superseded by Order No. 174(a) on August 6, 1954, the differences between the two being immaterial for the purposes of this case. The order was to become effective on December 1, 1954. Prior to that time, the plaintiff filed with the Commission a petition for a rehearing, in an effort to secure a determination that the orders did not apply to the plaintiff and that, in any event, the orders were illegally issued. No decision has been rendered on this petition and it apparently is still pending. On the eve of the effective date of the regulations this suit for an injunction was brought.

 The plaintiff seeks to secure a ruling that it is not subject to the provisions of the Natural Gas Act. It claims that it is not within the terms of the statute, even under the broader definition enunciated in the Phillips case, contending that it is engaged solely in producing natural gas and selling it at the wellhead, but performs no gathering service or transportation. It further prays for an adjudication that the regulations contained in Order No. 174(a) are invalid, in that the order was issued without a hearing, which the plaintiff claims was a prerequisite.

 The defendants move to dismiss the complaint on the ground that it fails to state a claim on which relief may be granted, in that the plaintiff has mistaken its remedy, and further in that the action is premature. They assert that no justiciable controversy has as yet come into being. Each of these two grounds will be separately considered.

 First, it is contended by counsel for the Commission that the only available form of judicial review is that provided by the Natural Gas Act, namely by a petition directly to the United States Court of Appeals, Natural Gas Act, Section 19(b), 15 U.S.C.A. § 717r(b). This provision, however, is limited to authorizing any party to a proceeding under the Act aggrieved by an order issued by the Commission in that proceeding, to obtain a review of the order in a United States Court of Appeals. Obviously this remedy is inapplicable in this instance, because the plaintiff has not been a party to any proceeding before the Federal Power Commission. Actually, there was no proceeding before it, since the orders were issued ex parte and without a hearing. In fact, counsel for the Commission candidly concede that if the plaintiff sought to invoke this remedy, they would then assert that the plaintiff has no standing to pursue it.

 Counsel for the defendants further argue that the plaintiff has an administrative remedy under the Administrative Procedure Act, 5 U.S.C.A. § 1004(d), by applying to the Commission for a declaratory order. It appears from the allegations of the complaint, however, that the plaintiff has in fact filed with the Commission a petition for rehearing, which still remained undetermined when the regulations were about to go into effect, and this action was brought. An administrative agency may not obstruct an appeal to the courts by unreasonably delaying a decision on an application for administrative redress and then turning around and claiming that the party has not exhausted his administrative remedies.

 The court is of the opinion that the present remedy is available to the plaintiff under the Administrative Procedure Act, which explicitly permits actions for injunctions to review the validity of agency action to be brought by any person adversely affected or aggrieved thereby, 5 U.S.C.A. §§ 1009(a) and (b). It has been expressly and specifically stated that an action for an injunction lies to determine the validity of a regulation promulgated by the Federal Power Commission, United Gas Pipe Line Co. v. Federal Power Commission, 86 U.S.App.D.C. 314, 318, 181 F.2d 796; Carolina Aluminum Co. v. Federal Power Commission, 4 Cir., 97 F.2d 435, 438. In the last cited case Judge Parker wrote as follows on this point:

 'Or, if * * * the company apprehends an attempt on the part of the officers of the government to enforce the penalties of the act against it * * * and thinks such threatened action to be without legal basis, it may sue to enjoin them from taking such action and test its rights in that way.'

 The second and more difficult question is whether this action is premature. This problem, in turn, involves the query whether a justiciable controversy has arisen as between the plaintiff and the Commission. It is natural for any person who is in doubt whether certain regulatory statutes or regulations are applicable to his business, to wish to obtain an official and binding determination on this point, in order that he may govern his course of action accordingly. Such desires have been increasing because of the growing complexities of modern business and the expansion in the scope and the intricacies of the regulatory activities of the Government. On the other hand, we must sedulously safeguard the tripartite division of Government. One of its basic principles is that the Courts may not encroach on executive and legislative powers by giving advisory opinions and that judicial power may be invoked and exercised only for actual cases of controversies. In other words, there must be a justiciable controversy in order to justify the application of the judicial process.

 The plaintiff points to the following circumstances in an effort to demonstrate that an actual justiciable controversy exists in this instance. The order of the Commission, to which the plaintiff objects, requires every natural gas company subject to the provisions of the Natural Gas Act to file its schedule of rates with the Commission. These rates must be those that the company was charging as of June 7, 1954. The order further provides that these rates may not be modified except by filing a change in the rates with the Commission 30 days in advance of the date on which the new rate is to take effect. In other words, the rates to be charged by all natural gas companies subject to the Act, were retroactively frozen as of June 7, 1954, and may not be changed except on 30 days' notice to the Commission. Moreover, the statute authorizes the Commission to reduce rates. Further the order requires every natural gas company subject to the Act to apply to the Commission for a certificate of public convenience and necessity as a condition of continuing in business. If the plaintiff subjects itself to the jurisdiction of the Commission by filling its rate schedule and submitting an application for a certificate of public convenience and necessity, its rates will become frozen as of June 7, 1954, irrespective of any contracts that it may have made with its customers. Moreover, by applying for and accepting a certificate of public convenience and necessity, the plaintiff will become disabled from making any changes in the service that it renders, without the consent of the Commission. The plaintiff claims that it is subject to the jurisdiction of certain State regulatory bodies and may find itself in the position of having to obey conflicting directions. On the other hand, if the plaintiff ignores the recent order of the Commission, and declines to comply with it, and if it should later be decided that its position was erroneous and that the statute in fact applies to the plaintiff and that the order is valid, it will have incurred the risk of onerous penalties. A fine of $ 500 a day for wilful and knowing violations of any rules, regulations, or orders made or imposed by the Commission, is prescribed by the Act, 15 U.S.C.A. § 717t(b). Moreover, the plaintiff asserts that if it fails to comply, some of its customers may decline to continue dealing with it, in order to place themselves in a safe position and not incur the possible hazards consequent upon transacting business with a concern that may be violating the law. Thus the plaintiff, in effect, claims that it finds itself between Scylla and Charybdis. It contends that in view of these circumstances, it is not requesting merely an advisory opinion, but is confronted with a serious and immediate problem that gives rise to an actual justiciable controversy.

 On the other hand the defendants point to the fact that they have as yet taken no steps to enforce the statute or the order as against the plaintiff and have made no threats to do so. They say, therefore, that no controversy in the eyes of the law has arisen and that consequently the action is premature. They, in effect, urge that the plaintiff must make its own decision and is not entitled to guidance by a judicial opinion at this juncture.

 Were it not for the circumstances about to be considered, this decision would constitute clear authority for maintaining the suit involved in the instant case. In the Columbia Broadcasting System case, however, Mr. Justice Frankfurter dissented, expressing the view that the action did not lie and that judicial review was premature at the stage at which it was requested. On the other hand several years later In Eccles v. Peoples Bank, 333 U.S. 426, 68 S. Ct. 641, 92 L. Ed. 784, involving a similar situation, there having been a change in the personnel of the Supreme Court in the meantime, Mr. Justice Frankfurter wrote for the majority, holding that an action for a declaratory judgment brought by a member bank of the Federal Reserve System against the Federal Reserve Board to secure an adjudication of invalidity of a condition attached to the admission of the plaintiff to the Federal Reserve System, could not be maintained, inasmuch as the Board had taken no steps or made any threats to enforce the condition. Although this conclusion seems manifestly contrary to that reached in the Columbia Broadcasting System case, in which Mr. Justice Frankfurter wrote the minority opinion, he does not refer to the ...

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