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DOUGLAS, J., dissenting.

time, Phillips Petroleum Co. v. Wisconsin, 347 U. S. 672, giving the Commission authority over these producers, had not been decided. In Hope we assumed that the Act meant what it said in § 1 (b) when it did not extend federal control to the "production or gathering of natural gas." We were not then reviewing a federal order fixing wellhead gas prices for producers. Wellhead gas was not even involved in the Hope case. We were concerned there with abuses and overreaching by pipeline companies. We said:

"If the Commission is to be compelled to let the stockholders of natural gas companies have a feast so that the producing states may receive crumbs from that table, the present Act must be redesigned. Such a project raises questions of policy which go beyond our province." 320 U. S., at 614.

Now that Phillips has put the prices of producers under federal control, the interests of the producing States must be considered, appraised, and weighed as an important ingredient of the "public interest." Regulation of wellhead prices by the Commission directly influences the level and feasibility of production, and can significantly affect the producing States' regulation of production. See Phillips Petroleum Co. v. Wisconsin, supra, at 689-690 (dissenting opinion)."

As the Court today says in another context, price in functional terms can be "a tool to encourage" the production of gas. Ante, at 760. The effect of price on the regulatory responsibilities of the several States must therefore be weighed, unless contrary to the mandate of the Act regulation of production is to pass into federal hands.

What the merits may be on this issue we do not know. The matter is complicated. For example, it seems

See also H. R. Doc. No. 342, 84th Cong., 2d Sess., 2 (1956).

DOUGLAS, J., dissenting.

390 U.S.

that the revenues of the processing plants are derived primarily (about 80%) from the liquids which they extract from the casinghead gas, rather than from the sale of the residue gas. We do not know how to appraise the chances that this gas would be flared rather than processed if the price were too low. For example, it might be that the processing plants would continue to purchase and process casinghead gas as long as the revenues from the liquids extracted plus those from the residue gas processed exceeded the cost of gathering, processing, and marketing the gas. As long as there is a market for the residue gas remaining after extraction of the liquids, it might be that the processor would sell it at almost any price rather than flare it, in order to recover at least part of his costs. This assumes, of course, that the processor has already made the investment in equipment necessary to purify the residue gas to make it salable, and that the operating costs of this process are not prohibitive. Conceivably, the price of the residue gas could influence the processing plants in deciding whether to maintain or install the equipment and procedures necessary to make salable quality residue gas as the liquids are being extracted. We do not know how many processors do not now have that necessary equipment or the cost of operating and maintaining that equipment.

If the processor is willing to gather and process the gas because of the value of the liquids extracted, it might be that a producer would be willing to sell its casinghead gas rather than flare it, in order to obtain some payment for the gas. On the other hand, the price of the casinghead gas might well be critical for marginal producers, whose revenues from the sale of casinghead gas justify keeping their oil wells in production. But we have no

747

DOUGLAS, J., dissenting.

evidence concerning how many oil producers in the Permian Basin area could be termed "marginal."

It may be that the posture of Hope was the reason why this phase of the case was not developed. Whatever the reason, it must be developed if the interest of the producing States is not by judicial fiat to be subjected entirely to complete federal supremacy, contrary to the promise in the Natural Gas Act.

REPORTER'S NOTE.

The next page is purposely numbered 901. The numbers between 845 and 901 were intentionally omitted, in order to make it possible to publish the orders in the current advance sheets or preliminary prints of the United States Reports with permanent page numbers, thus making the official citations immediately available.