Phillips Petroleum Co. v. Texaco Inc.

It is conceded that there is no diversity of citizenship between the parties. Accordingly, Texaco relied, as the basis for federal jurisdiction, on 28 U. S. C. § 1331 (a), asserting that its claim “[arose] under the Constitution, laws, or treaties of the United States.” Phillips moved to dismiss for want of federal jurisdiction of the subject matter. The District Court granted this motion, and Texaco appealed to the Court of Appeals for. the Tenth Circuit, which by a divided vote reversed the District Court’s determination that federal jurisdiction was lacking. Phillips seeks certiorari to review the Tenth Circuit’s decision and contends that past decisions of this Court make clear that Texaco’s claim cannot be said to “aris[e] under the Constitution, laws, or treaties of the United States.”

The substantive claim in this case is an outgrowth of an earlier decision of the Tenth Circuit, Northern Natural Gas Co. v. Grounds, 441 F. 2d 704 (1971). That was a federal interpleader action, in which the Court of Appeals held that lessee-producers of natural gas could recover the reasonable value of helium contained in the gas that they produced and sold to pipeline companies, which later extracted and marketed the helium. The essence of the Grounds decision was its rejection of the buyers’ contention that the contract price paid for the natural gas was compensation for “the gas stream in its entirety and, absent an express reservation, [that] the buyer gets the whole stream for such purposes as it may determine.”^[1] Id., at 720 . The Court of Appeals reasoned that, as a result of the Helium Act Amendments of 1960, 74 Stat. 922 , which added § 11 (50 U. S. C. § 167i) to the Helium Conservation Act, 43 Stat. 1110 ,

the answer.” Moreover, “the complaint itself will not avail as a basis of jurisdiction in so far as it goes beyond a statement of the plaintiff's cause of action and anticipates or replies to a probable defense.” Gully, supra, at 113 . See also Metcalf v. Watertown, 128 U. S. 586 (1888); Tennessee v. Union & Planters’ Bank, 152 U. S. 454 (1894); Louisville & Nashville R. Co. v. Mottley, 211 U. S. 149 (1908); Taylor v. Anderson, 234 U. S. 74 (1914); Skelly Oil Co. v. Phillips Petroleum Co., 339 U. S. 667 (1950).

The Grounds case cannot properly be read as creating a federal cause of action, deriving from the Natural Gas Act and § 11 of the Helium Conservation Act, for the recovery of the reasonable value of helium contained in natural gas sold at rates sanctioned by the Federal Power Commission. Indeed, in commenting on its earlier Grounds decision, the Court of Appeals in the present case concluded that “satisfactory utility regulation does not permit a utility rate to be used to obtain a commodity which is not within the contemplation of that rate.” 481 F. 2d 70 , 73. (Emphasis added.) In other words, the Grounds case simply held that payment for natural gas at rates established or permitted by the Commission under the authority of the Natural Gas Act will not be regarded as payment for the helium constituent and cannot be asserted as a defense to a suit for the recovery of the value of that helium. In short, the federal statutory provisions do not under Grounds create a federal right of recovery, but only preclude the interposition of a plea of payment to defeat a quasi-contractual suit for the value of the helium.^[2]