The Federal Power Commission has overridden its staff and has approved a Texaco, Inc., proposal settling a case in which the company was accused of illegally burning in its Texas refineries vast amounts of offshore natural gas.
The gas, by law, was supposed to be put in interstate pipelines and shipped to consumers outside Texas, mainly in the Midwest and East.
The FPC, at a Tuesday night meeting, adopted an order making only modest changes in a settlement proposal made on July 14, by Texaco, which Fortune magazine ranks as the nation's fourth-largest industrial corporation.
An agency staff member said at the meeting that Texaco had created its "predicament" by designing the refineries, at Port Arthur, Tex. to burn natural gas, and then supplying them with federal-domain gas from offshore Louisiana. Commissioner Don S. Smith reportedly cut him off, saying he did not want to hear more such statements from the staff.
Texaco made the settlement proposal four months after the FPC's discovery that, without the agency's knowledge, the company had burned at Port Arthur refineries about 200 billion cubic feet of federal-domain gas - enough to heat at least 335,000 homes a year, Texaco moved the gas through its Sabine Pipe Line subsidiary.
After a recent field investigation, three FPC Bureau of Natural Gas staff members - Joseph L. Solters, Weldon L. Thomas and Jeanne M. Zabel - made a report Friday in which they acknowledged Texaco's need to continue, for a time, to take gas for the refineries from the federal domain.
But they urged the commission to end the taking two years from now and to require Texaco to pay back what it takes with non-interstate gas to which it has access.
Instead, FPC Chairman Richard L. Dunham and Commissioners Smith and John H. Holloman III accepted a Texaco proposal to take 107 billion cubic feet of federal-domain gas over the next three years and 50 million cubic feet annually thereafter - and to pay back none of it.
The proffered Texaco settlement set out conditions under which the company agreed to apy back the 200 billion cubic feet taken before July 1 by selling to interstate pipelines an equivalent amount of gas to be taken from the federal domain. The company would charge current prices, which are several times higher than they were when most of the gas was taken.
A second rejected staff recommendation arose from its conclusion, shared by the commissioners that Texaco and Sabine deliberately had concealed the taking of gas starting in 1966, and also from Texaco's noncompliance with a commission directive to stop taking federal-domain gas in the week starting July 7.
Saying that Texaco's settlement proposal. Would leave it "about as well off" as if if had complied with the law from the start, the staff said that they company "should not escape so easily from its self-created circumstance."
The staff renewed a recommendation for a hearing to determine whether Texaco's violation of the Natural Gas Act was "wilful" and terefore should be referred to the Justice Depertment for possible criminal prosecution.
The staff emphasized that a tentative July 14 order by the FPC "contains no specific reference to violations" and, in fact, doesn't use the word. Thus, the staff, "it appears that further consideration of the question of Texaco's past violations simply would be dropped."
Disagreeing in the modified new order, the commission said that such a hearing would interfere with its goal of resolving all issues in the case, including "the question of past violations," without producing litigation and without impeding payback of gas.
The new order requires Texaco to sell "payback" gas at the standard wellhead national price, and to favor interestate pipelines "with the greatest need."