The Federal Power Commission was urged by its staff to consider seeking criminal prosecution of Texaco, Inc., for violating the Natural Gas Act by taking for its own use huge amounts of the fuel dedicated to household heating and other interstate uses, it was learned yesterday.
Last Thursday, however, the commission foreclosed the possibilty of prosecution with an order to Texaco to stop taking public-domain gas from two fields in the Gulf of Mexico for its refinery at Port Arthur, Tex., and to "pay back" the approximately 200 billion cubic feet it has misappropriated starting in 1966.
Yesterday, Texaco gave the commission a proposal to resolve the matter, emphasizing that the plan shall not "be construed as an admission" that it or its wholly owned Sabine Pipe Line subsidiary had acted unlawfully. The commission is scheduled to consider the proposal today.
Meanwhile, Texaco continues to operate the refinery, its largest, mainly with gas from the Tiger Shoat Field, which is entirely in the federal domain off the Louisiana coast, and the Lighthouse point Field, which straddles the federal and Louisiana state domains. In 1976, the amount of federal-domain gas taken from the two fields for the refinery was sufficient to heat approximately 335,000 homes for one cold season.
Last month, PFC staff members made two separate recommendations looking toward referral of the case to the Justice Department. Both recommendations flowed from a three-month investigation centered on the certificate the agency gave Sabine in 1964 to transport gas to Port Arthur.
All of the staff members, and finally the commission, agreed that in drafting the certificate, Texaco "erroneously" had told the FPC that the gas in question would come from state lands - and didn't try to "purge the erroneous language" later, when it amended the certificate.
They also agreed that the company-drafted certificate, which referred to the source of gas as "fields . . . in the State of Louisiana and contiguous offshore waters," misused the word "contiguous" in a way "deliberately designed" to conceal that the FPC would be authorizing the taking of federal-domain gas.
In a draft order late last month, Deputy General Counsel Robert W. Perdue urged referral to the Justice Department, saying Texaco had engaged in a "willfull and knowing violation . . ."
But F.G. Gilmore, assistant general counsel of the Bureau of Natural Gas, and R.A. Frandsen, a bureau attorney, feared the record was insufficient for such a referral. And so, in a separate draft order, they urged the commission to hold a special proceeding that would build a record.
Perdue told a reporter that the commission rejected both recommendations after Commissioner John H. Holloman III, at a meeting two weeks ago, objected that referring the case to the Justice Department might lead to years of unproductive litigation.
Holloman's alternative, endorsed by Chairman Richard L. Dunham and Commission Don S. Smith, was the "pay back" of the 200 million cubic feet of gas, coupled with a refusal to allow Texaco to continue to take gas for the refinery. Asked why there could not be both a prosecution and a pay back, Perdue said that if prosecuted, Texaco might be able to get a court order restraining the pay back. A company spokesman declined to comment.
Under Texaco's settlement proposal:
The refinery's steam generating plants, which burn natural gas, would convert gradually to residual fuel oil by July, 1980 - one to five years sooner than the company has been saying would be required.
To facilitate the conversion, the FPC would let Sabine deliver to the refinery "additional limited quantitis" of federal-domain gas, ranging from 60 million cubic feet daily in late 1977 to none in July, 1980.
The company would reduce average daily volumes taken for Port Arthur from the current 132 million cubic feet to 50 million.
The company would agree to take 200 billion cubic feet of federal-domain gas from the Tiger Shoal and Lighthouse Point fields and sell it in interstate commerce, replacing the gas diverted to the refinery since 1966.
The company refused to comment on data in the proposal showing that in 1977 it would take 4 million more cubic feet of gas a day for the refinery than in 1976.