The U.S. Court of Appeals here yesterday approved the issuance of broad subpoenas by the Federal Trade Commission in its investigation of allegedly declining natural gas reserves in Southern Louisiana.
The 4-to-2 ruling the appellate court fives the FTC wide-ranging authority to continue its probe into allegations that some natural gas producters were withholding information on gas reserves in order obtain higher rates from the Federal Powtr Commission.
Some natural gas producers had opposed the issuance of the detailed subpoenas for their records, and a U.S. District Judge had limited the scope of the FTC's demands more than two years ago. Yesterday's ruling reverses the lower court and restores the original subpoenas almost in full.
The decline in natural gas reserves was first reported in 1969, and came on the heels of a FPC order instituting an proceeding to reconsider rates for the offshore portion of Southern Louisiana. The Southern Louisiana area is generally acknowledged to be the most important gas-producing area in the nation, accounting for approximately one-third of the nation's domestic natural gas production.
After a Senate subcommittee heard allegations that the information on declining gas reserves may be misleading, the FTC began its investigation and issued its subpoenas.
In approving the subpoenas yesterday, U.S. Circuit Chief Judge David L. Bazelon said there "is no doubt that these subpoenas are board in scope, but the FTC's inquiry is a comprehensive one - and must be so to serve its purposes."
The narrowing of the subpoenas by the lower court judge "effectively blocked legimate avenues of the FTC inquire," Bazelon added. Agreeing with Bazelon in his 45-page opinion were U.S. Circuit Judge J. Skelly Wright, Spottswood Robinson III and Harold Leventhal.
The two dissenting judges, U.S. Circuit Judges George Mackinnon and Malcolm Wilkey, issued a 96-page opinion in which they said the majority ruling overstepped the bounds of appellate review.
"In our view, the majority is not only wrong in its evaluation of the details of this case and in its misconception of the economic facts of life in the gas industry, but more importanity, the majority has abandoned any standard of appellate review of the factual determinations of a trial court in proceedings to enforce an administrative subpeona," Judge Wilkey wrote.
The dissenting judges said in the opinion written by Wilkey that the majority ruling "has engaged in the standardless, directionless review of this case, and no euphemism can disguise this embarrassing fact."
"The enlarged role which te majority has assigned to this court in this case distorts the proper relationship between the federal agencies, the federal trial courts and the federal appellate dissent said they hoped the majority judges would "receive their just reward from an even higher authority" - apparently meaning a reversal in the U.S. Supreme Court.
Yesterday's ruling by the six judges came after a three-judge panel of the U.S. Appeals Court had approved the lower court's findings.