# Appendix — Morial v. United Gas Pipe Line Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_2272%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1984 - **Citation:** 469 U.S. 1019 ## Text G4 4 4B fcc sper: om vs NO. |, gep 10 1988 2 ee L. STEVAS, In the CLERK Supreme Court of the United States OCTOBER TERM, 1984 ERNEST N. MORIAL, ET AL and the Class they Represent, Petitioners vs. UNITED GAS PIPE LINE COMPANY, Respondent ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT PETITION FOR WRIT OF CERTIORARI VOLUME II—APPENDICES DONALD R. MINTZ CONSTANCE CHARLES WILLEMS (Counsel of Record) ELLIS B. MUROV GENE W. LAFITTE WINTHROP G. GARDNER McGLINCHEY, STAFFORD, MINTZ, CELLINI & LANG 643 Magazine Street New Orleans, Louisiana 70130 Telephone: (504) 586-1200 Counsel for Petitioners A B Letter Service, Inc., 327 Chartres St., New Orleans, La. (504) 581-5555 i TABLE OF CONTENTS PAGE APPENDIX ‘“A’’—Minute Entry, Livaudais, Magistrate, Allowing Ernest N. Moriai Et Al Leave to Intervene Permissively (E.D.La.) Ge TBS yCta e ay er A-l APPENDIX ‘“‘B’’—Judgment, Mitchell, Judge, Granting Review of November 6, 1981 Order; Affirming Denial of Intervention of Right and Reversing Granting of Leave for Permissive Intervention (E.D.La.) (Feb. ER RES RGNS! S ce ER a A-3 APPENDIX “‘C’’—Opinion by Goldberg, Williams and Garwood, Circuit Judges, Fifth Circuit Court of Appeals Granting Leave to Intervene of Right and Permissively (Nov. 8, 1982)....... A-5 APPENDIX ‘D’’—Order Denying Rehearing En Banc and Granting Rehearing for Limited Purpose Fifth Circuit Court of Appeals Denying Intervention as of Right and Granting Permissive Intervention (12/27/82), and Order on Granting of Rehearing En Banc, Fifth Circuit Court of Appeals (Feb. 23, 1983)....... A-31 APPENDIX “E’’—Order Vacating Hearing Case En Banc, Fifth Circuit Court of Appeals SE erie a .... A-B5 APPENDIX ‘‘F’’—Order Denying Petition for Rehearing and Suggestion for Rehearing En Banc, Fifth Circuit Court of Appeals I en kb nv y sce ses A-37 APPENDIX ‘“‘G’’—Order Granting Renewed Suggestion for Rehearing En Banc, Fifth Circuit Court of Appeals (Oct. 26, 1983)....... A-39 APPENDIX ‘‘H’’—En Banc Opinion Denying ntervention as of Right and Permissively ; City Officials and Class, Fifth Circuit ourt of Appeals (May 21, 1984)............. A-44 ii APPENDIX “I’’—Order Denying Petition for Rehearing of City Officials and Class, Fifth Circuit Court of Appeals (June 21, 1984)....... A-91 APPENDIX “J’’—Judgment by Judge Connolly in the Civil District Court for the Parish of Orleans, State of Louisiana (August 24, 1984). . A-93 A-1 APPENDIX “A” MINUTE ENTRY LIVAUDAIS, M. NOVEMBER 4, 1981 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA CIVIL ACTION NO. 81-2199 SECTION: “‘F’”’ (5) NEW ORLEANS PUBLIC SERVICE, INC. versus UNITED GAS PIPELINE ZOMPANY HEARING ON MOTION PRESENT: MS. CONSTANCE C. WILLEMS HARRY McCALL, JR., ESQ. C. MURPHY MOSS, ESQ. MOTION: (1) OF ERNEST N. MORIAL ET AL FOR LEAVE TO INTERVENE. ___CONTINUED TO: ___NO OPPOSITION -_1 OPPOSITION ORDERED ___DISMISSED AS MOOT. A-2 _1 DENIED—Pursuant to Rule 24(a) F.R.C.P. _1GRAN*ED IN PART—Pursuant to Rule 24(b) F.R.C.P. Applicants, Ernest Morial, Joseph I. Giarrusso, Sidney J. Barthelemy, Bryan Wagner, James M. Singleton, Mike Early, Lambert Boissiere and Phillip C. Ciaccio are granted ieave to intervene herein individually, not as a class. /S/ Signed MARCEL LIVAUDAIS, JR. United States Magistrate CLERK TO NOTIFY COUNSEL OF RECORD DATE OF ENTRY NOV. 6 1981 A-3 APPENDIX “B” MINUTE ENTRY MITCHELL, J. FEBRUARY 16, 1982 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA CIVIL ACTION NO. 81-2199 SECTION: “F”’ NEW ORLEANS PUBLIC SERVICE, INC. VERSUS UNITED GAS PIPELINE CC MPANY This matter was submitted to this Court at an earlier date. After careful consideration of the applicable law, and of the briefs and arguments of counsel, the Court now rules: IT IS ORDERED, ADJUDGED AND DECREED that the motion of Applicants for Intervention, Ernest N. Morial, et al, Individually and as representatives of a class, for review of the Magistrate’s November 6, 1981 order and the motion of defendant, United Gas Pipeline Company, for review of the Magistrate’s November 6, 1981 order are hereby GRANTED. IT IS FURTHER ORDERED, ADJUDGED AND DECREED that that part of the Magistrate’s November 6, 1981 order denying intervention of right is AFFIRMED; that part granting leave for permissive intervention by Ernest Morial, et al, as individuals is REVERSED.! ! To be entitled to intervention of right F.R.C.P. 24(a) provides A-4 /S/ Signed UNITED STATES DISTRICT JUDGE (Footnote 1 continued) that the applicant must claim ‘‘an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest,’ and he must show that his interest will not be adequately represented by existing parties. None of the ap- plicants for intervention herein however have a direct, legall:’ protected interest in this contract action between the two parties to the contract. Diaz v. Southern Drilling Corp., 427 F.2d 277 (CA5-1970); U.S. v. Perry County Bd. of Educ., 567 F.2d 277 (CA5-1978). The contract here in dispute does not contemplate a benefit to third parties such as to make it a stipulation pour autrui conferring rights upon the applicants. Allen & Currey Mfg. Co., Ltd. v. Shreveport Water Works Co., 113 La.1091, 37 So.980 (1905); City of Shreveport v. Gulf Oil Corp., 431 FS 1 (WD La.1975), aff'd. per curiam 551 F.2d 93 (CA5-1977). Further, the ap- plicants have not overcome the presumption that New Orleans Public Service, Inc. can adequately represent existing mutual interests. Ord- nance Container Corp. v. Sperry Rand Corp., 478 F.2d 844 (CA5-1973); Martin v. Kalvar Corp., 411 F.2d 552 (CA 5-1969); Florida Power and Light Co. v. Belcher Oil Co., 82 F.R.D. 78 (SD Fla. 1979). Furthermore an applicant for intervention cannot be allowed to per- missively intervene pursuant to F.R.C.P. 24(b) where he has failed to show independent grounds for the exercise of this Court’s jurisdiction. Smith Petroleum Service, Inc. v. Monsanto Chemical Co., 420 F.2d 1103, 1113 (CA5-1970); Clanton v. Orleans Parish School Board, 72 F.R.D. 164 (ED La. 1976). Though the applicants herein are diverse as to United, the claim presented represents separate interests and not an undivided one such that each individual claim may be cumulated to meet the $10,000 minimum requirement. Zahn v. International Paper Co., 414 U.S. 293 (1973). Also no Federal Question is presented by allegation of private rights of action under the Natural Gas Act, 15 USC §§717 et seq. Clark v. Gulf Oil Corp., 570 F.2d 1138 (CA3-1977), cert. denied, 435 U.S. 970 (1978); City of Gainesville v. Florida Power & Light Co., 488 FS 1258 (SD Fla.1980). Furthermore the individually named city officials are not members of a regulatory agency charged with administering either state contractual rights or the Natural Gas Act thus this Court would not be construing policy without the participation of responsible parties. F.R.C.P. 24(b). No other basis for this Court’s jurisdiction has been seriously presented. A-5 APPENDIX “C”’ NEW ORLEANS PUBLIC SERVICE, INC., Plaintiff, Ernest Morial, et al., Movants-Appellants, v. UNITED GAS PIPE LINE COMPANY, Defendant-Appellee. No. 82-3194. United States Court of Appeals, Fifth Circuit. Nov. 8, 1982. McGlinchey, Stafford & Mintz, Donald R. Mintz, Constance Charles Willems, New Orleans, La., for movants-appellants. Lemle, Kelleher, Kohlmeyer & Matthews, C. Murphy Moss, Jr., Robert G. McIver, Victoria L. Knight, New Orleans, La., James M. Costan, Kevin W. McLean, Douglas Knox Bemis, Jr., W. DeVier Pierson, Washington, D.C., for defendant-appellee. Appeal from the United States District Court for the Eastern District of Louisiana. Before GOLDBERG, WILLIAMS and GARWOOD, Circuit Judges. A-6 JERRE S. WILLIAMS, Circuit Judge: Consumers and certain city officials bring this ap- peal from a district court order denying their motion under Fed.R.Civ.P. 24(a) and (b) for leave to intervene in this lawsuit. We find that the consumers have no right to in- tervene. However, we reverse the decision denying in- tervention to the government officials, and remand. I. BACKGROUND New Orleans Public Service, Inc., (NOPSI), is a private corporation holding a franchise agreement with the City of New Orleans to supply public utility service to the Parish of Orleans. NOPSI provides both natural gas and electricity to its customers. In July 1952, NOPSI executed a contract with the United Gas Pipe Line Co. (United) for the purchase of natural gas that NOPSI would use both for airect resale to its gas customers (resale gas) and as fuel in its electric power plants (power plant gas). Only the power plant gas under the contract is involved in this dispute. The 1952 Contract set a sale price for the power plant gas. Both parties performed under the Contract without serious difficulty until 1975. A few months before the 1952 Contract was due to expire in 1975, United and NOPSI ex- ecuted a letter agreement for the continued supply of power plant gas. This 1975 Letter Agreement changed the price and the method of price determination provided in the prior contract.! The 1975 Letter Agreement was amended on Subpart 4A.2 of the 1975 Letter Agreement, the ‘‘redetermina- tion clause,” provides as follows: A-7 two occasions in 1978 to alter some provisions of the con- tract for deliveries effective August 1, 1978. Acting under the terms of the 1975 Letter Agree- ment, on March 3, 1981, United proposed a ‘‘redetermined rate’’ on power plant gas, a polite euphemism for a price in- crease, covering gas deliveries effective May 3, 1981. NOPSI protested the new rates and United amended cer- tain provisions of its March, 1981 proposal. United submit- ted a final proposal to NOPSI on April 9, 1981. NOPSI asserts that it initially considered the pro- posed redetermined price to be merely a power play, and United granted NOPSI two extensions of time to consider the proposals. United informed NOPSI, though, that if it did not accept the proposed price of $3.60 to $4.00 per mcf, United would charge the full market price for its gas.” (Footnote 1 continued) Effective on or after June 1, 1976 at 7 a.m., Seller shall have the right to periodically institute a redetermined rate. The initial redetermined rate, or any redetermined rate that may be established thereafter pursuant to the terms and conditions herein stated, shall remain in effect for a period of at least twelve (12) months from the date such redetermined rate is instituted. Seller shall give Buyer not less than sixty (60) days’ writ- ten notice of the redetermined monthly rate to be instituted by Seller for gas delivered hereunder and Buyer shall notify Seller within thirty (30) days of the date such redetermined rate is to be instituted whether Buyer agrees to such rate and desires to continue purchasing gas from Seller subject thereto. In the event Buyer does not agree to such redeter: mined rate, Buyer shall cease taking gas on the date such re- jected redetermined rate was to be instituted. 2 United could not close the valves on power plant gas deliveries without FERC authorization, 15 U.S.C. § 717f(b), but could charge a “fair market price’’ for its deliveries. A-8 United estimated the market price at $6.00 to $8.00 per mcf. NOPSI officials believed that United’s power play was an il- legal form of economic coercion, but their discussions and correspondence with United generated more heat than light. NOPSI’s management eventually submitted to the new rate, but only under an express protest that the redetermined rate was impermissible under state law. NOPSI signed the agreements in mid-May, 1981, and filed suit in Louisiana court on May 26, 1981. United, invoking diversity jurisdic- tion, petitioned for removal to federal district court on June 1, 1981. The dispute covers the validity of the NOPSI-United agreements, the proper rate for power plant gas, and the method of refund, if any. This appeal, however, does not touch the merits of this dispute. Shortly after the suit was removed to federal court, the mayor of the City of New Orleans moved for leave to in- tervene in the controversy, pursuant to Fed.R.Civ.P. 24(a) and 24(b). His original claim was as representative of a proposed class of NOPSI’s ratepayers. He later amended his motion to include various private electric ratepayers and several members of the New Orleans City Council. Some of the mov- ing parties had paid enough in claimed overcharges on elec- tric bills since the May, 1981, rate redetermination to meet the $10,000 jurisdictional amount in diversity cases. 28 U.S.C. 1332(a). The federal district judge referred the motion to a magistrate, who accepted briefs and held hearings on the matter. The magistrate ruled that the consumer members of the proposed class, either individually or as a class, had no right to intervene in the action. He further found that the governmental parties had a right to intervene permissively, pursuant to Fed.R.Civ.P. 24(b). The district judge overturn- ed the order of the magistrate in part, holding that neither A-9 the consumers nor the government officials could in- tervene. The district court also denied a stay of pro- ceedings pending an appeal. The attempted intervenors then plugged their appeal into the Circuit, pursuant to 28 U.S.C. § 1291. We agree with both the magistrate and the district judge that the consumers have no proper claim to interven- tion as of right under Rule 24(a). Further, we find that the denial to the consumers of permissive intervention under Rule 24(b) was not an abuse of discretion. The mayor and members of the City Council are in a different situation, however. They have a statutory mandate to oversee the operations of public utilities within New Orleans, such as NOPSI. La.Const., art. 6, §§ 4, 6; State ex rel. Guste v. Council of the City of New Orleans, 309 So.2d 290, 292 (La.1975). We hold that the denial of their intervention was both erroneous under the requirements of 24(a), interven- tion as of right, and an abuse of discretion under Rule 24(b), permissive intervention. II. GOVERNMENTAL OFFICIALS AS PARTIES We find that the government officials have both a statutory right and a clear interest in making a contribu- tion to the disposition of this case. We therefore find that the district court erred in denying the government parties leave to intervene as of right, and, in any event, the denial of leave for permissive intervention was an abuse of discretion. A. Intervention as of Right Intervention as of right in the federal courts is A-10 covered by Fed.R.Civ.P. 24(a).2 This Circuit has developed a four-pronged framework for interpreting motions for in- tervention as of right. Howse v. S/V ‘‘Canada Goose I”’, 641 F.2d 317, 320 (5th Cir. 1981); International Tank Terminals Ltd. v. M/A Acadia Forest, 579 F.2d 964, 967 (5th Cir. 1978). First, the application for intervention must be time- ly. Second, the applicant must have an interest relating to the subject matter of the litigation. Third, the applicant must be so situated that the outcome of the case may, as a practical matter, impair or impede the applicant’s ability to protect that interest. Finally, the interest must be one not adequately represented by existing parties. Examining intervention as of right, we find that each of the four necessary factors for intervention is present. Howse, supra at 320. First, the motion to intervene was timely, having been made approximately one month after the original federal lawsuit was tiled. Second, the members of the City Council have an interest relating to this transac- tion. Under the city’s home rule charter, the New Orleans City Council operates in place of the Louisiana Public Ser- vice Commission in regulating the rates of public utilities within the City of New Orleans. La.Const., art. 6, §§ 4, 6; State ex rel. Guste v. Council of the City of New Orleans, supra. The members of the City Council apparently have 3 Rule 24(a) provides: Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of the United States confers an unconditional right to in- tervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the ac- tion and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to pro- tect that interest, unless the applicant’s interest is adequate- ly represented by existing parties. A-11 entered this action pursuant in part at least to a June 18, 1981, motion which in turn resulted in a September 17, 1981, resolution of the New Orleans City Council authoriz- ing intervention to protect the public interest. Federal courts are not bound to permit governmental parties to intervene in private suits whenever the agency purports to protect the public interest. The agency, for ex- ample, may be seeking to protect a public interest already present before the court or governed by a different govern- ment agency. See, e.g., United States v. Local 638, Enter- prise Ass’n of Steam, Hot Water, Hydraulic Sprinkler, Pneumatic Tube, Compressed Air, Ice Machine, Air Condi- tioner and General Pipefitters, 347 F.Supp. 164 (S.D.N.Y.1972) (city permitted to intervene in civil rights suit against unions only upon a showing that plaintiff U.S. Department of Justice was not representing city residents’ interests adequately). Yet even these limits are not meant to discourage state or local government intervention as parens patriae. See Nuesse v. Camp, 385 F.2d 694, 700 (D.C.Cir.1967) (state banking commissioner granted right to intervene despite presence of federal officials as parties). In this dispute the City officials are the only govern- ment parties seeking to intervene, and they have a statutory obligation to oversee NOPSI’s fiscal and public responsibilities. The City Council acts as the regulator of NOPSI’s rates. It will have the obligation in the future to determine whether NOPSI’s recovery, if any, is sufficient to recover whatever overcharges may have passed through to consumers as a result oi the disputed portions of the NOPSI-United Letter Agreement. Determining the proper redetermined rate for power plant gas in a federal court while excluding the rate A-12 regulators would cause needless duplication of the same basic factual testimony. The 100% pass-through of the price increase makes clear the effect that the contract in question will have on rates in the future. In this dispute, the government’s interests are sufficient to permit in- tervention as of right. See Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 87 S.Ct. 932, 17 L.Ed.2d 814 (1967) (State of California permitted interven- tion as of right in antitrust action involving local gas supplier). The third requirement for intervention as of right, that the potential intervenor be so situated that an adverse decision will impair his rights, is satisfied here as well. If NOPSI does not pursue this lawsuit adequately or fully, it might not establish its full legal rights vis a vis United. In the absence of the City Council in the case, it would only be later when the Council sits to determine the proper fuel cost allowance to be passed through to consumers that it would discover whether NOPSI had obtained all that it was entitled to legally. At that point, seeking additional recovery for the benefit of consumers would be an onerous burden. United would be exempt from further action under the principle of res judicata. NOPSI’s shareholders would resist any charge-back against NOPSI’s corporate assets. Further, any charges that lowered earnings to NOPSI’s shareholders would result in a higher cost of capital. It would also raise issues relating to the well-established fair return on investment requirement. See, e.g., United Gas Public Service Co. v. State of Texas, 303 U.S. 123, 142, 158 S.Ct. 483, 492, 82 L.Ed. 702, reh’g denied, 303 U.S. 625, 58 S.Ct. 483, 82 L.Ed. 702 (1938). Higher bond interest ex- penses or lower stock prices ultimately would reflect in higher electric bills, just the opposite of what the City Council intends. A-13 Fourth, intervention as of right requires an interest that is not represented sufficiently by the parties. The in- terest at stake here is the regulator’s interest, which is ex- ercised on behalf of the public. Although NOPSI correctly represents that it is seeking ratepayer recovery, NOPSI’s authority to do so comes from its franchise agreement from the New Orleans City Council. But the City Council is undertaking to insure that its regulatory interests are ade- quately represented. It cannot be said that the regulator's interests and the interests of the regulated are identical. This is one of the classic governmental confrontations. The regulators have independent interests in this litigation that NOPSI does not represent. The Council members have a right to believe that the case will be resolved more ac- curately and more quickly with their presence, thus keep- ing the cost of litigation down, and ultimately electric rates down as well. We hold that the New Orleans City Council has the right to intervene under Fed.R.Civ.P. 24(a). B. Permissive Intervention An alternative basis for the City Council’s motion for intervention is Fed.R.Civ.P. 24(b), Permissive Interven- tion, which is set forth in the margin.4 Since we find a 4 Rule 24(b) provides: Permissive Intervention. Upon timely application anyone may be permitted to intervene in an action: (1) when a statute of the United States confers a conditional right to in- tervene; or (2) when an applicant's claim or defense and the main action have a question of law or fact in common. When a party to an action relies for ground of claim or defense upon any statute or executive order administered by a federal or state governmental officer or agency or upon any A-14 right to intervene under Rule 24(a), we discuss permissive intervention only briefly as a means of forestalling a possi- ble assertion by United that the issue would be settled in its favor by a revesal of our holding on intervention as of right. Rule 24(b)(1) is not applicable here since the basis of the City Council’s regulatory authority is state rather than federal law. Rule 24(b)(2) requires, as a threshold considera- tion, a common question of law or fact with the main dispute. The determination is not discretionary; it is a question of law. Stallworth v. Monsanto Co., 558 F.2d 257, 269 (5th Cir. 1977). The government parties are asking to participate in the analysis of the same contract that has created the initial NOPSI-United dispute. There can be no question but that the government parties are presenting similar questions to those in the main suit. The only issue remaining is whether permitting intervention will further the efficient resolution of this controversy. We fail to see how the City’s intervention wil! substantially complicate the federal court proceedings. The district court has procedural tools at its disposal to limit duplicative arguments or wasteful testimony. Intervention will, though, help to eliminate future litigation by settling related legal claims simultaneously. Nor will intervention prejudice the rights of the existing parties. Since the (Footnote 4 continued) regulation, order, requirement, or agreement issued or made pursuant to the statute or executive order, the officer or agency upon timely application may be permitted to in- tervene in the action. In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties. A-15 government rate regulators will need to determine the reasonableness of any recovery and the method of any refund to consumers, government intervention will not take away any rights from NOPSI or United. United will continue to defend the underlying contract dispute as it would in the absence of additional parties. NOPSI’s discretion to fashion its claims and propose recovery procedures is limited by the supervisory powers of its rate regulators. The City Council’s intervention does not limit NOPSI’s authority to pursue this suit; rather, it merely accelerates the public sector review of claims that eventually will require public scrutiny in any event. The chief advantage of government intervention is that it will heighten protection of the public’s interests in this litigation. This will minimize any future protests that con- sumers otherwise might have against the City Council for failure properly to carry out its governmental regulatory responsibilities. See White v. Louisiana Public Service Comm’n, 259 La. 363, 250 So.2d 368, 371 (1971) (private sec- tor action against PSC on allegations of arbitrary and capricious actions); 45 La.Stat.Ann. § 1192 (West 1951) (per- mitting judicial reviews of PSC actions). See generally Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 SCt. 814, 28 L.Ed.2d 136 (1971); Natural Resources Defense Council, Inc. v. EPA, 489 F.2d 390 (5th Cir. 1974), rev ‘d on other grounds sub. nom. Train v. Natural Resources Defense Council, Inc., 421 U.S. 60, 95 S.C. 1470, 43 L.Ed.2d 731 (1975). We hold today that it constituted an abuse of discretion on the facts of this case to deny a motion for leave to intervene by the government authorities with rate regulatory responsibilities affecting both the underlying dispute and an existing party to the suit.° > The government parties satisfy subject matter jurisdictional A-16 III. CONSUMER INTERVENTION A. Who pays the bills? The remaining members of the proposed class are various consumers of electricity in the Parish of Crleans. Some of these are named consumers who claim to have paid over $10,000 each in alleged overcharges for power plant gas, in an apparent effort to invoke independent diversity jurisdiction.® Other named consumers and the unnamed members of the proposed class are NOPSI customers who do not necessarily pay enough for electricity to meet the jurisdictional amount. Although we are not unsympathetic (Footnote 5 continued) requirements under the diversity provision, 28 U.S.C. § 1332. We therefore need not reach the question of whether independent grounds for subject matter jurisdiction are necessary to examine the claims of parties intervening under Rule 24(b). At least some cases suggest such a requirement. Smith Petroleum Service, Inc. v. Monsanto Chemical Co., 420 F.2d 1103, 1113 (5th Cir. 1970) (dictum); Humble Oil & Refining Co. v. Sun Oil Co., 190 F.2d 191, 197 (5th Cir. 1951) cert. denied, 342 U.S. 920, 72 S.Ct. 367, 96 L.Ed.2d 687 (interpreting pre-1966 version of cur- rent Rule 24(b)); Clanton v. Orleans Parish School Board, 72 F.R.D. 164 (E.D.La.1976) (citing pre-1966 authority). Yet in Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 87 S.Ct. 932, 17 L.Ed.2d 814 (1967), the Supreme Court recognized that the current, 1966 version of Rule 24 expands the opportunities for intervention. Jd. at 133-34, 87 S.Ct. at 935-936. In that case, the Court permitted the State of Califor- nia to intervene in an antitrust action involving a major gas supplier to the State. Yet in cases where jurisdiction depends on factors other than the very nature of the claim, the jurisdictional requirements may require a court to draw the line somewhere on parties seeking to intervene. ‘It is not always easy to draw the line,” Jd. at 134, 87 S.Ct. at 936, quoting Central Trust Co. of New York v. Chicago, R. I. & P. R. Co., 218 F. 336, 339 (2d Cir. 1914). 6 Since we find no grounds for permitting consumer intervention in this case, we need not reach the question of whether an independent ground for subject matter jurisdiction is necessary under Rule 24(b). See note 5, supra. A-17 to the issues that the consumers raise, we do not find them sufficient to support a motion to intervene under either Rule 24(a) or 24(b). The consumers present a number of claims in sup- port of their motion to intervene. Central to all of them, however, is their contention that they have more to lose than NOPSI in the resolution of the contract dispute. The consumers point out that NOPSI is not at risk as to any of the additional costs of power plant gas. Under current rate structures, 100% of the cost increase of power plant gas is passed through to the consumer through electric rate adjustments. NOPSI’s rate structure for electricity, while perhaps complicated in its specifics, is clear on its face. Each mon- thly consumer bill includes both a basic charge for the amount of electricity used and a fuel cost adjustment, which reimburses NOPSI for the cost of power plant gas under the United contract. Any increase in the cost of power plant gas is added to the fuel cost adjustment, sub- ject to the periodic review of the government regulators. The consumers assert that their financial stake in the out- come of this suit, stemming from NOPSI’s ability to pass through the entire cost increase in power plant gas, com- pels a finding of intervention as of right. We do not agree. B. Who’s got the power? Intervention as a matter of right under Rule 24(a) re- quires four factors to be met, as this Court set out in Howse v. S/V “Canada Goose I", supra. As noted above, failure to meet any one of these requirements negates the right to intervene. A-18 1. Timely application.—First, the application for in- tervention must be timely. There was a timely application for intervention in this case. Move to intervene was made shortly after the filing of suit, during the preliminary stages of discovery. 2. Related interest.—Next, the applicant must have an interest relating to the property or transaction which is the subject of the action. We conclude that the consumers do not have the requisite interest. The consumers make a number of contentions on this point. First, they claim to be third party beneficiaries of the United contract. They claim, as a matter of Louisiana law, that they are beneficiaries of a stipulation pour autrui under the NOPSI- United agreement. Article 1890 of the Louisiana Civil Code provides: A person may also, in his own name, make some advantage for a third person the condition or con- sideration of a commutative contract, or onerous donation; and if such third person consents to avail himself of the advantage stipulated in his favor, the contract can not be revoked. The consumers are not in a position to claim the ad- vantage of a stipulation pour autrui. First, under Louisiana law a stipulation pour autrui is valid only if the benefit to the third party is a condition of or consideration to the con- tract. There is every indication that NOPSI entered into its agreements with United in the ordinary course of its business, not with the express intention of conferring a pecuniary benefit upon the customers. City of Shreveport v. Gulf Oil Corp., 431 F.Supp. 1, 4 (W.D.La.1975), aff'd per curiam, 551 F.2d 93 (5th Cir. 1977). Furthermore, a stipula- tion pour autrui is void for uncertainty under Louisiana law A-19 if the declared benefit to the third party is not fixed. Miller v. Crusel, 135 La. 649, 65 So. 873 (1914). The consumers evidently assert a fixed benefit was assigned when the con- tracts were prepared. There is no evidence to show that this was a formal assignment, or even that a benefit to the con- sumers resulted. There is no way to ascertain the rate con- sumers would have paid for gas without this contract; it therefore cannot be gainsaid that the third party berefit is fixed. Finally, while it is possible that the consumers have enjoyed a benefit from the bulk contracting power of NOPSI over the years, such benefit is a mere incident of be- ing a direct customer of NOPSI, not of any formal third party beneficiary relationship. The consumers’ next claim is that the United-NOPSI agreements amount to a cost-plus contract in favor of the consumers. They then infer a right to intervene on the analogous notion that a buyer under a pre-existing cost- plus contract may have standing to bring suit for viola- tions of the antitrust laws. They rely upon the United States Supreme Court’s analysis in Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968). In Hanover Shoe, the antitrust defendants contended that the plaintiff wholesalers had no injury, since they had merely incorporated the illegal over- charges into their resale price. They claimed that any cause of action was in the hands of consumers, who were not pre- sent in the iitigation. The Court rejected this argument, fin- ding that the direct buyer and not the ultimate purchaser has standing to sue in antitrust. It reasoned that a con- trary result would place an unreasonable burden on private antitrust enforcement. However, the Hanover Shoe Court recognized a possible exception where the wholesaler is merely a conduit for a consumer under a cost-plus contract. In such a case, the Court noted that the proper party to the A-20 suit might be the ultimate purchaser rather than the mid- dleman. /d. at 494, 88 S.Ct. at 2232. But see Donson Stores, Inc. v. American Bakeries Co., 58 F.R.D. 481, 483 (S.D.N.Y.1973) (interpreting Hanover Shoe) (consumer class has no right to intervene in private antitrust action against baking companies, despite showing that baked goods are sold through retailers on a cost-plus basis). The consumers asking intervention in this case contend that this exception noted in the Hanover Shoe dictum covers their right to intervene. We must short-circuit the consumers’ attempt to stretch this exception to cover their position. First, there is no policy consideration encouraging private enforcement of private contract disputes as there is behind the antitrust laws. Second, this case differs from a typical commercial suit in that the ‘‘wholesaler” here, NOPSI, is also obligated to serve in the public interest and thus in the interests of its customers, and to protect those interests adequatelv. NOPSI is seeking recovery for itself to keep its rates down and please its regulator. But it is also seeking recovery for its ratepayers. Absent a showing that the combined forces of NOPSI and the City Council are not fulfilling this second or public duty, we cannot find the consumers’ interest unrepresented, as they might be in an antitrust framework. Next, the consumers contend that they have an economic interest in the litigation sufficient to confer a right to intervene. There are several problems with such a claim. The consumers offer no specific showing that economic injury is certain upon an outcome of the case un- favorable to their interests. While it is likely that electric rates have gone up as a result of United's alleged improper actions and might go up further in the future, it is also possible that rates would have gone up even more if the A-21 consumers had been the ultimate sufferers of another method of contracting for power plant gas. The record shows that when the contested redetermined rate for power plant gas rose to between $3.60 and $4.00 per mcf, the open market price was $6.00 to $8.00 per mcf. The consumers make no showing that the economic injury was real. Other federal courts, on occasion, have permitted in- tervention based in part on economic interests. Courts per- mitting intervention for economic interests generally have found additional factors for their decision, however. For ex- ample, the court in Ford Motor Co. v. Bisanz Bros., 249 F.2d 22, 28 (8th Cir. 1957), allowed Ford to intervene in an injunction proceeding that would have severed Ford's only rail link to one of its manufacturing plants. Even though Ford could not show that the existing parties to the dispute owed Ford any duty to keep the rail link intact, the court found that as a practical matter Ford would be bound by the result and suffer a permanent deprivation of an “‘essen- tial’’ economic interest. The court found that the ‘practical necessities” created an absolute right to intervene under Rule 24(a). Id. In Shultz v. United Steelworkers of America, 312 F.Supp. 538 (W.D.Pa.1970), a union member sought to in- tervene in a challenge of the union election that named him district director. The court permitted intervention by fin- ding a property interest in employment. Similarly, in New York Public Interest Research Group, Inc. v. Regents of University of State of New York, 516 F.2d 350 (2d Cir. 1975), pharmacists were permitted to intervene in a case evaluating regulations of the pharmacy profession. The Se- cond Circuit found that the pharmacists’ interests in the continued health of their profession, coupled with the economic impact the rules would have on them, justified A-22 intervention. Jd. at 352. Yet in these and similar cases, courts at least have identified the source, if not the exact strength, of the declared interest. We acknowledge that the consumers will pay for the majority of, if not the entire, increase in the cost of gas. This financial burden makes consumers justifiably in- terested in the progress of this litigation. Yet the con- sumers created a governmental regulatory body to protect their interests in their dealings with the ‘‘natural monopo- ly’’ of NOPSI. See Otter Tail Power Co. v. United States, 410 U.S. 366, 389, 93 S.Ct. 1022, 1035, 35 L.Ed.2d 359 (1973) (Stewart, J., dissenting); L. Sullivan, Antitrust § 239 at 744 & n.1 (1977). NOPSI’s business dealings are imbued with a public duty, and government regulators supervise NOPSI’s performance of that duty. The regulator, the City Council, by its motion to intervene has shown a strong desire to protect the consumer economic interests which lie behind the NOPSI-United dispute. Absent a showing that the regulating body is ill-equipped or unwilling to protect the consumers’ economic interests, we find no satisfactory justification for direct consumer intervention on grounds of their possible financial burden.’ This is not a situation where the consumers attack the actions of the regulatory body. This case is one large step removed. It is a private contract dispute between a private sector utility and a natural gas supplier. Even the regulator is only indirectly involved since it has no power to deal with the terms of the contract as such. The con- sumers are even further removed. " See Environmental Defense Fund, Inc. v. Higginson, 631 F.2d 738, 740 (D.C.Cir.1979) (where governmental parties already present in casé, private parties must make more than a minimal showing of inade- quate representation). A-23 By denying the consumers their right to participate directly in this contract dispute, we do not foreclose any future challenge to the rate regulator’s actions, if such a challenge would be appropriate. Office of Communication of the United Church of Christ v. FCC, 359 F.2d 994 (D.C.Cir.1966) (public interest challenge of administrative action); Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608 (2d Cir. 1965) cert. denied, 384 U.S. 941, 86 S.Ct. 1462, 16 L.Ed.2d 540 (1966) (same). But such an ac- tion necessarily is overhasty before the rate regulators have had an opportunity to intervene on behalf of the public interest. Mississippi Valley Gas Co. v. FERC, 659 F.2d 488, 497 (5th Cir. 1981) (requirements of ripeness for review of agency action). Finally, the consumers claim a right to intervene bas- ed on the Natural Gas Act, 15 U.S.C. § 717-717w. It is true that the Federal Energy Regulatory Commission (FERC) may permit consumer interests to intervene in agency pro- ceedings under the Natural Gas Act.8 However, the case 8 18 C.F.R. § 1.8 (1982) provides in part: (b) Who may petition. A petition to intervene may be filed by any person claiming a right to intervene or an interest of such nature that intervention is necessary or appropriate to the administration of the statute under which the proceeding is brought. Such right or interest may be: (1) A right conferred by statute of the United States. (2) An interest which may be directly affected and which is not adequately represented by existing par- ties and as to which petitioners may be bound by the Commission's action in the proceeding (the following may have such an interest: Consumers served by the applicant, defendant, or respondent; holders of securities of the applicant, defendant, or respondent; and competitors of the applicant, defendant, or respondent). A-24 before this Court is not subject to the agency’s jurisdiction. The merits of the case turn on a proper rate for power plant gas, a rate over which the FERC has no jurisdiction. The fact that some issues under the Natural Gas Act may arise in the suit is not sufficient to confer a right to intervene. The consideration of standing in a federal court differs from that of an administrative agency, because an “‘agen- cy’s responsibility for implementation of statutory pur- poses justifies a wider discretion, in determining what ac- tions to entertain, than is allowed to the courts by either the Constitution or the common law.” Ecee, Inc. v. FERC, 645 F.2d 339, 349-50 (5th Cir. 1981) (examining standing to protest in FERC proceedings). Furthermore, there is no im- plied private right of action under the Natural Gas Act. Pennzoil Co. v. FERC, 645 F.2d 360, 384 n.49 (5th Cir. 1981), cert. denied, 454 U.S. 1142, 102 S.Ct. 1000, 71 L.Ed.2d 293 (1982). 3. Disposition Will Not Impair Consumer Rights.— The third requirement for intervention as of right is that the consumers must be so situated that an adverse decision would impair their own rights. Such is not the case here. NOPSI has made vigorous representations in district court that any recovery they make in this action will be passed through in its entirety to the consumers. NOPSI share- holders will not share in any part of the recovery, if there (Footnote 8 continued) (3) Any other interest of such nature that petitioner’s participation may be in the public interest. a Subsection (b)(2) provides authority for a consumer right of in- tervention not unlike the requirements of Fed.R.Civ.P. 24(a), while subsection (b)(3) allows for a permissive right to intervene similar to Rule 24(b). We need not reach the question of whether these regulations should be interpreted more broadly than the corresponding Rules of Civil Procedure, since the substantive dispute at bar does not involve issues falling under FERC jurisdiction. A-25 is one. The consumers have presented no evidence that a decision in this case in their absence would impair their rights. NOPSI has the financial resources to pursue this lawsuit aggressively. It apparently has been doing so up to this point, even if it is assumed it is not directly at stake financially. In this case, however, NOPSI does have a pesonal financial stake in defending the lawsuit vigorously. The company is closely regulated by government authorities, and it is permitted to charge only rates that are reasonable and in the public interest. It has a duty to minimize the ultimate ccost to the consumer, whether that cost is hidden in the basic electric rates or explicit through a cost sur- charge. If NOPSI does not defend this lawsuit vigorously, the governmental rate regulators will not permit NOPSI to recover the costs of defense from consumers. 45 La.Rev.Stat. § 1176.2 Furthermore, future rate increases and fuel adjustment pass-throughs could be diminished to reflect NOPSI’s failure to pursue the most cost-effective course on behalf of its customers. Even if NOPSI were not to defend this lawsuit vigorously, the intervention of the City Council puts before the court the regulatory body charged with representing 9 45 La.Rev.Stat. § 1176 (West 1951) provides in part: ‘The commission and any parochial or municipal body hav- ing similar powers in the fixing of just and reasonable rates charged or to be charged by public utilities...shall have the power to disallow as an operating expense of any public utili- ty such part of the amount so paid by it under any such con- tract or agreement as the commission or parochial or municipal body may find, after hearing, to be unjust or unreasonable....”’ ry) A-26 the interests of consumers. The consumers would also have the right to challenge the adequacy of that representation in later proceedings before the City Council. It will properly be the role of the City Council, not that of the federal courts, initially to determine whether NOPSI is meeting its enfranchised duty to provide cost-effective electric service. The New Orleans City Council has by its intervention undertaken to insure that any disposition of this federal court case will not impair consumer rights. 4. Overlapping of Parties’ Interests.—The final re- quirement for intervention as of right is that the intervenor must have an interest that is not represented adequately by the existing parties. The consumers fail in this showing, as well. The consumers are not attempting to show any greater interest than their general interest as consumers. The consumer interest is already being represented in this litigation by NOPSI and by the City Council. The represen- tation by NOPSI and the City Council together is protec- tion of the consumer interest. The consumers have made no showing that NOPSI and the City Council will fall short of adequate representation of their interests especially since they have the later right to challenge the adequacy of that representation. We affirm the denial of intervention as of right to the consumers. C. Consumer Permissive Intervention. The consumers urge additionally that they should be permitted to intervene permissively under Fed.R.Civ.P. 24(b). We find no abuse of discretion in the district court denying permissive intervention. Rule 24(b)(2) requires a threshold determination that ‘the applicant’s claim or defense and the main action have A-27 a question of law or fact in common.”’ Fed.R.Civ.P. 24(b)(2); Howse v. S/V “Canada Goose I”’, supra at 322; Stallworth v. Monsanto Co., 558 F.2d 257, 269 (5th Cir. 1977). If this requirement is met, then the district court may exercise its discretion in determining whether to permit intervention. We do find that the consumers pose similar questions of law and fact with the main action. Indeed, they seek the same basic recovery that NOPSI is seeking on their behalf. Yet, examining the trial judge’s discretion, we do not find it patently unreasonable that he denied a consumer class leave to intervene. The central question in examining a motion for per- missive intervention is whether or not such intervention would further the interests of justice, the rights of the par- ties, and efficient judicial administration. In this case, the common interests are being represented by both NOPSI and the City Council. The trial judge properly exhibited concern about the costs to judicial economy of permitting unnecessary parties to join the litigation. His conclusion evidences his belief that the parties to the contract were capable of resolving their contract disputes without the in- tervention of the buyer’s customers. We add that with the intervention of the City Council any doubts about the representation of the somewhat remote interests of the con- sumers are removed. We find no error in the denial of intervention to con- sumers as of right, and no abuse of discretion in the denial of permissive intervention. Since a denial of permissive in- tervention, absent an abuse of discretion in the district court, is not an appealable order, we therefore must dismiss the appeal as it pertains to the consumers and Rule 24(b) permissive intervention. Woolen v. Surtran Taxicabs, Inc., 684 F.2d 324 (5th Cir. 1982); Weiser v. White, 505 F.2d 912 A-28 (5th Cir. 1975), cert. denied, 421 U.S. 993, 95 S.Ct. 1998, 44 L.Ed.2d 482 (1975). IV. CONCLUSIONS We hold that the public officials and agencies have a right to intervene under Fed.R.Civ.P. 24(a). In addition, the denial of their motion to intervene permissively under Rule 24(b) was an abuse of discretion. However, we affirm the denial of the private consumers’ attempt to intervene as of right under Rule 24(a). And, finding no abuse of discretion in denial of the consumers’ request for permissive interven- tion, Rule 24(b), we dismiss that portion of the appeal. THEREFORE, AFFIRMED IN PART, DISMISS- ED IN PART, REVERSED IN PART AND REMANDED. GARWOOD, Circuit Judge, specially concurring: I join in so much of the majority opinion as affirms the denial of the consumers’ attempted intervention as of right under Rule 24(a) and as holds there was no abuse of discretion in denying their request for permissive interven- tion under Rule 24(b). I likewise join in that portion of the majority opinion holding that it was an abuse of discretion to deny the city officials’ requested permissive interven- tion under Rule 24(b). I therefore find it unnecessary to reach the question of whether the city officials were entit]- ed to intervene as of right under Rule 24(a), although I have serious doubts whether the requisite legally protectable in- terest has been shown. As I understand it, the city officials seek to intervene only to assert rights having their exclusive source in the A-29 contract between NOPSI and United. Normally, only those who are parties to a contract, or those holding under them, or third-party beneficiaries, possess any of the substantive rights arising from the contract. We have held, correctly I believe, that none of those seeking intervention are third- party beneficiaries. And none of them claims to be a party to the contract or to hold any of NOPSI’s rights under the contract. Accordingly, this case is quite unlike one where those seeking intervention do so for the purpose of asser- ting a right grounded in statute or in some general rule of law, a right whose existence does not depend on the agree- ment of the parties to the lawsuit and which the parties to the lawsuit lack legal power to abrogate. One may be allow- ed to intervene to complain of or prevent a statutory viola- tion, for example, even though his injury may be more remote and indirect than that of the existing party plaintiff or even though the existing plaintiff is the only one authorized to institute the suit. But that is not this case. I do not understand the appellants to contend, for example, that it would be illegal for NOPSI and United to have voluntarily agreed to the price which United claims they did so agree to, or for NOPSI and United to now so agree, should they wish to. There is no claim of conspiracy or im- proper collusion between NOPSI and United. Nevertheless, NOPSI and the City have a special relationship. As the majority points out, the City has the duty to regulate NOPSI’s electric rates, and in doing so to disallow as an operating expense, otherwise recoverable through NOPSI’s charges for electricity, fuel costs found to be unjust or unreasonable. While this protects the City to a large exter:t, it also reflects the City’s particular in- terest in NOPSI’s acquisition of fuel at reasonable costs. This alone, however, would not necessarily mean that in- tervention should be granted, for the city officials do not A-30 suggest that NOPSI has no right to contract for fuel without their permission.* The City’s regulatory right, however, is NOPSI’s risk. If NOPSI fails to prevail in this case to the extent the City believes it should, NOPSI faces the prospect that in subsequent proceedings with the City it will have to “swallow” all increased fuel costs. Perhaps NOPSI has the right to run that risk. But it has chosen not to do so. It has supported the City’s intervention. In one proceeding, with all parties bound, NOPSI’s rights can be determined, thus serving the interests of judicial economy and preventing possibly inconsistent results. Intervention by the city officials does not significantly prejudice United, for NOPSI remains in the suit and no rights are asserted against United which could not be and are not being fully asserted against it by NOPSI. If the intervention of the ci- ty officials prejudices any party’s rights, it is NOPSI which is prejudiced in its ability to enforce, defend and set- tle its rights under the contract. But NOPSI has supported the intervention. * Nor, would I suppose that the City’s and its citizens’ general economic interest in NOPSI’s financial health, which would ultimately tend to be reflected in NOPSI’s rates due to cost of capital considera- tions, allows the City to intervene in any suit to which NOPSI is a party and which may have a material effect on its balance sheet. A-31 APPENDIX “D”’ NEW ORLEANS PUBLIC SERVICE, INC., Plaintiff, Ernest Morial, et al., Movants-Appellants, v. UNITED GAS PIPE LINE COMPANY, Defendant-Appellee. No. 82-3194. United States Court of Appeals, Fifth Circuit. Dec. 27, 1982. Opinion on Granting of Rehearing En Banc Feb. 23, 1983. McGlinchey, Stafford & Mintz, Donald R. Mintz, Constance Charles Willems, New Orleans, La., for movants-appellants. Lemle, Kelleher, Kohlmeyer & Matthews, C. Murphy Moss, Jr., Robert G. McIver, Victoria L. Knight, New Orleans, La., James M. Costan, Kevin W. McLean, Douglas Knox Bemis, Jr., W. DeVier Pierson, Washington, D.C., for defendant-appellee. A-32 Appeal from the United States District Court for the Eastern District of Louisiana. ON PETITIONS FOR REHEARING AND SUGGESTIONS FOR REHEARING EN BANC Before GOLDBERG, WILLIAMS and GARWOOD, Circuit Judges. JERRE S. WILLIAMS, Circuit Judge: No member of this panel and no Judge in regular ac- tive service on the Court having requested that the Court be polled on rehearing en banc (Rule 35, Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 16), the sug- gestions for rehearing en banc are DENIED. The petition of defendant-appellee United Gas Pipe Line Company for rehearing is GRANTED for the limited purpose set out below. The petition for rehearing brings to our attention the fact that by vote of the citizens of the City of New Orleans, the New Orleans City Council ceased to have the power to regulate the rates of public utilities within the City of New Orleans as of January 1, 1982. We, therefore, withdraw our holding that the ‘‘public officials and agencies have a right to intervene under F.R.Civ.P. 24(a)’’ as stated in the Con- clusion of our original opinion, New Orleans Public Service, Inc. v. United Gas Pipe Line Co., 690 F.2d 1203, at 1215 (5th Cir.1982). We also withdraw that portion of the opi- nion designated II A, which considers intervention as a matter of right by the public officials. We emphasize that we do not withdraw our holding ef A-33 that it was an abuse of discretion for the district court to deny the motion of the members of the City Council to in- tervene permissively under Rule 24(b). That portion of our opinion, designated II B, stands unchanged except for in- cidental references to the rate making power of the New Orleans City Council. We reaffirm the holding that the members of the City Council are proper parties to this pro- ceeding by virtue of their motion for permissive intervention. Treating suggestions for rehearing en banc as mo- tions for rehearing by the panel, they are DENIED except as stated above. GARWOOD, Circuit Judge, dissenting: I respectfully dissent from so much of the majority opinion on rehearing as holds that it was an abuse of discre- tion to deny the city officials’ requested permissive in- tervention under Rule 24(b). As relief is sought only under the private contract between NOPSI and United, and the contract creates no rights in third parties, the city has no rights to enforce against United in this suit. And since the Louisiana Public Service Commission (which does not seek to intervene), and not the city, has all the rate and other relevant regulatory authority over NOPSI, as we have now been made aware, intervention by the city will not significantly promote dispute resolution economy or pre- vent the possibility of inconsistent results. Accordingly, in my opinion denial of permissive intervention by the city of- ficials was not an abuse of discretion. A-34 ON PETITION FOR REHEARING AND SUGGESTION FOR REHEARING EN BANC 2-23-83 Before CLARK, Chief Judge, BROWN, GOLDBERG, GEE, REBIN, REAVLEY, POLITZ, RAN- DALL, TATE, JOHNSON, WILLIAMS, GARWOOD, JOLLY and HIGGINBOTHAM, Circuit Judges. BY THE COURT: A member of the Court in active service having re- quested a poll on the application for rehearing en banc and a majority of the judges in active service having voted in favor of granting a rehearing en banc, IT IS ORDERED that the cause shall be reheard by the Court en banc with oral argument on a date hereafter to be fixed. The Clerk will specify a briefing schedule for the filing of supplemental briefs. A-35 APPENDIX “E” NEW ORLEANS PUBLIC SERVICE, INC., Plaintiff, Ernest Morial, et al., Movants-Appellants, v. UNITED GAS PIPE LINE COMPANY, Defendant-Appellee. No. 82-3194. United States Court of Appeals, Fifth Circuit. June 2, 1983. McGlinchey, Stafford & Mintz, Donald R. Mintz, Constance Charles Willems, New Orleans, La., for movants-appellants. Lemle, Kelleher, Kohlmeyer & Matthews, C. Murphy Moss, Jr., Robert G. McIver, Victoria L. Knight, New Orleans, La., James M. Costan, Kevin W. McLean, Douglas Knox Bemis, ./r., W. DeVier Pierson, Washington, D.C., for defendant-appellee. Appeal from the United States District Court for the Eastern District of Louisiana; Lansing L. Mitchell, Judge. A-36 Before BROWN, GEE, REAVLEY, POLITZ, RAN- DALL, JOHNSON, WILLIAMS, GARWOOD and HIG- GINBOTHAM, Circuit Judges. BY THE COURT: Of the 13 judges constituting all of the judges in ac- tive service and participating in the poll which put the case en banc, four are now disqualified. To avoid any doubts the remaining nine judges were repolled. As those voting to put the case en banc were less than seven and did not con- stitute as required a “‘majority of the circuit judges of the circuit who are in regular active service’ 28 U.S.C. § 46(c) the previous order putting the case en banc is VACATED, 694 F.2d 421, the setting of the case for oral argument for June 6, 1983 is cancelled and the panel’s opinion, 690 F.2d 1203, is reinstated. ee A-37 APPENDIX “FP” NEW ORLEANS PUBLIC SERVICE, INC., Plaintiff, Ernest Morial, et al., Movants-Appellants, v. UNITED GAS PIPE LINE COMPANY, Defendant-Appellee. No. 82-3194. United States Court of Appeals, Fifth Circuit. June 8, 1983. Appeal from the United States District Court for the Eastern District of Louisiana. ON PETITION FOR REHEARING AND SUGGESTION FOR REHEARING EN BANC (Opinion November 8, 1982, 5 Cir., 1982, 690 F.2d 1203). Before GOLDBERG, WILLIAMS and GARWOOD, Circuit Judges. PER CURIAM: The Petition for Rehearing is DENIED, and a ma- jority of the Circuit Judges who are in regular active A-38 service not having voted in favor of it, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 16) the Suggestion for Rehearing En Banc is also DENIED. A-39 APPENDIX “G”’ NEW ORLEANS PUBLIC SERVICE, INC., Plaintiff, and Ernest N. Morial, et al., Individually and as Representatives of a Class, Applicants for Intervention-Appellants, v. UNITED GAS PIPE LINE COMPANY, Defendant-Appellee. No. 82-3194. United States Court of Appeals, Fifth Circuit. Oct. 26, 1983. Public utility brought suit against gas company in dispute over validity of agreement between utility and company, proper rate for power plant gas, and method of refunding overcharges. On motion of consumers and cer- tain city officials to intervene, the United States District Court for the Eastern District of Louisiana, Lansing L. Mitchell, J., entered order denying motion, and appeals were taken. The Court of Appeals, 690 F.2d 1203, affirmed in part, dismissed in part, reversed in part, and remanded. On petitions for rehearing and suggestions for rehearing en banc, the Court of Appeals, 694 F.2d 421, first denied sug- gestions for rehearing en banc, and granted petition for A-40 rehearing for limited purposes, and then reconsidered ac- tion and entered order reciting that poll had been taken and majority of judges in regular active service on the Court had voted in favor of granting rehearing en banc. Thereafter, the Court of Appeals, 707 F.2d 834, determined that four of the judges in active service who participated in poll which put case en banc were disqualified and, upon repolling, majority of judges voted against granting rehearing en banc, and thus vacated prior order. On renew- ed suggestion for rehearing en banc, the Court of Appeals, Clark, Chief Judge, held that status of certain circuit judges as direct rate-payers of utility and therefore members of putative class and potential parties to action did not disqualify them from participating in poll of the Court of Appeals on petition for rehearing en banc, at least where class had not been certified but only claimed, and certification issue would not be involved in en banc rehear- ing, but remained to be decided by the district court; accor- dingly rehearing en banc would be granted. Rehearing en banc ordered. McGlinchey, Stafford & Mintz, Donald R. Mintz, Constance Charles Willems, New Orleans, La., for ap- plicants for intervention-appellants. Lemle, Kelleher, Kohlmeyer & Matthews, C. Murphy Moss, Jr., Robert G. McIver, Victoria L. Knight, New Orleans, La., James M. Costan, Kevin W. McLean, Douglas Knox Bemis, Jr., W. DeVier Pierson, Washington, D.C., for defendant-appellee. Appeal from the United States District Court for the Eastern District of Louisiana. A-41 ORDER GRANTING RENEWED SUGGESTION FOR REHEARING EN BANC CLARK, Chief Judge: Because of the unique procedural turns this appeal has taken since the panel opinion was published on November 8, 1982 (690 F.2d 1203), the developments that lead to today’s order are detailed below: On December 27, 1982, the panel announced that no judge in regular active service on the court had requested a poll of the court on the petition for rehearing en banc and that the suggestion for rehearing en banc was denied. Judge Garwood dissented. 694 F.2d 421. On February 23, 1983, this action was reconsidered and an order was entered reciting that a poll had been taken and a majority of the judges in regular active service on the court had voted in favor of granting rehearing en banc. On June 2, 1983, four days prior to scheduled oral argument before the en banc court, the court vacated the grant of rehearing en banc. 707 F.2d 834. The reason for this action was the belated realization by four judges in regular active service on the court that as direct ratepayers of New Orleans Public Service, Inc., they were members of a putative class and therefore potential parties to this action. All four judges determined to disqualify themselves and suspend their votes in the en banc poll until advice could be sought on the propriety of their participation in this cause from the Advisory Committee on Codes of Conduct of the Judicial Conference of the United States. A letter was dispatched to that Committee detailing the status of the A-42 judges and the posture of the cause. Pertinent extracts from the Committee’s response are set out below: The Committee interpreted your inquiry as related to the necessity of disqualification on the part of four judges. As direct bill-payers, the judges felt that they could be considered members of a claimed class party to the litigation. It appears from your letter that the class has not been certified but has merely been claimed. It fur- ther appears that the matter to be reheard en banc involves only the right of the mayor and city council to intervene, that the question of whether the applicants for intervention do represent a class has yet to be decided by the district court, and that establishment of the class will not be in- volved in the en banc rehearing. Where the utility is a party, the ratepayer status of a judge is not disqualifying. If a judge is a member of a class which has been declared, and the class is a party to the litigation in which the judge is considering participation, that judge would be disqualified. Canon 3C(1)(d)ii). In light of the Committee’s advice, the four judges who previously disqualified themselves have determined to withdraw their disqualifications and reinstate their previous votes. It is therefore unnecessary to discuss the issue raised by the renewed suggestion for rehearing en banc concerning whether disqualified judges are to be counted as judges in regular active service of the court for purposes of determining whether a majority of judges have voted for rehearing en banc. See Hall v. FERC, 700 F.2d 218 (5th Cir.1983) (Clark, C.J., dissenting); Arnold v. Eastern Airlines, 681 F.2d 186 (4th Cir.1983). A-43 A majority of judges in regular active service of the court having voted in favor of rehearing the cause en banc, it is ordered that the cause be reheard by the court en banc with oral argument on a date hereafter to be fixed. Any par- ty who wishes to supplement the briefs previously filed with matters which have developed subsequent to their fil- ing may submit a letter memorandum to the clerk of court, with thirteen copies, not later than December 20, 1983. A-44 APPENDIX ‘“‘H”’ NEW ORLEANS PUBLIC SERVICE, INC., Plaintiff, aud Ernest N. Morial, et al., Individually and as Representatives of a Class, Applicants for Intervention-Appellants, v. UNITED GAS PIPE LINE COMPANY, Defendant-Appellee. No. 82-3194. United States Court of Appeals, Fifth Circuit. May 21, 1984 Appeal from the United States District Court for the Eastern District of Louisiana. Before CLARK, Chief Judge, BROWN, GOLDBERG, GEE, RUBIN, REAVLEY, POLITZ, RAN- DALL, TATE, JOHNSON, WILLIAMS, GARWOOD, JOLLY, HIGGINBOTHAM and DAVIS, Circuit Judges.* GARWOOD, Circuit Judge: * Judge Goidberg, a senior judge of this circuit, is participating as a member of the panel initially deciding the appeal now subject to en banc review. 28 U.S.C. § 46ic). * A-45 This diversity case brings to our en banc considera- tion questions pertaining to the entitlement of third parties to intervene as plaintiffs in a contract action brought by a local electric utility against its major fuel supplier. The district court denied all requested intervention. The deci- sion of the panel, as modified on rehearing, though declin- ing to disturb both the denial of intervention to the elec- tricity consumers and the determination that officials of the city which franchised the electric utility were not entitl- ed to intervene as of right, held that the district court abus- ed its discretion in denying the city officials permissive in- tervention. 690 F.2d 1203, modified on rehearing, 694 F.2d 421 (5th Cir.1982). This court en banc, disagreeing with the latter determination, now holds that the city officials were properly denied intervention. CONTEXT FACTS _NOPSI and United New Orleans Public Service, Inc. (““NOPSI’’), a Loui- siana corporation, plaintiff in this action, is an investor- owned utility providing natural gas and electricity to residential, business, industrial and other end use con- sumers in New Orleans, Louisiana. NOPSI is a subsidiary of Middle South Utilities, Inc., a much larger concern hav- ing other electric utility subsidiaries in the region. United Gas Pipe Line Company (‘‘United’’), defendant below and appellee here, a Delaware corporation headquartered in Teas, owns and operates an interstate natural gas transmission system, and transports and sells natural gas in interstate commerce in Texas, Louisiana, and other states to gas distribution concerns which resell the gas to local residential and other gas consumers. United also sells directly to industrial customers which use the gas in their A-46 Own operations, and to other interstate pipeline systems. NOPSI purchases gas from United both for resale to its gas consumer customers (‘Resale Gas’’), and for NOPSI’s own use as boiler fuel to generate the electricity which NOPSI sells to its electricity consumer customers (‘‘Power Plant Gas’’). Though initially NOPSI’s purchases from United of both Power Plant Gas and Resale Gas were covered by a single contract, subsequently the Power Plant Gas came to be covered by a separate contract between those parties. The instant litigation relates solely to the Power Plant Gas contract, particularly its pricing provisions. United is a principal supplier—perhaps the principal supplier—of boiler fuel used in NOPSI’s three electric generation plants. NOPSI acquires some Power Plant Gas from suppliers other than United, but these sources ap- parently are not able to furnish more than a fraction of NOPSI's total fuel requirements.! NOPSI’s plants, or at least the two larger ones, are also capable of burning all grades of fuel oil, and NOPSI has from time to time used fuel oil for the boiler fuel in these plants, when it was cheaper than gas and when gas deliveries were curtailed. However, NOPSI prefers to use gas, as it is cleaner and more efficient. In 1952 NOPSI aad United entered into a contract for NOPSI to purchase from United, during a term ' This fraction appears to be in the neighborhood of one sixth at peak summer loads, though larger during the winter when the re- quirements are about halved. NOPSI also from time to time “imports” or “‘exports”’ electricity from or to other electric utilities in the region which are also subsidiaries of Middle South Utilities, Inc. See also Metropolitan New Orleans Chcpter of the Louisiana Consumer's League, Inc. v. Council of the City of New Orleans, 423 So.2d 1213. 1216-17 (La.App.1982). cert. denied, 430 So.2d 77 (La.1983). (i A-47 expiring on June 1, 1975, all NOPSI’s Resale Gas, and Power Plant Gas to the extent of all the fuel requirements of NOPSI'’s electric power plants.” The contract contained provisions for maximum daily amounts of Power Plant Gas, and of all gas, which United would be required to deliver, as well as provisions for increasing these max- imums, and in general allowing NOPSI tc acquire its power plant fuel elsewhere to the extent that United would not meet requested deliveries over the maximums. A clause was also included generally providing for ratable curtail- ment, first of Power Plant Gas and then of Resale gas, “‘in the event a shortage of gas renders Seller unable to supply the full gas requirements of all its customers, including Buyer....’’ Power Plant Gas was priced at 13 cents per thou- sand cubic feet (mcf) until 1960, with provision for in- creases at five-year intervals thereafter, to be determined by negotiation based on United’s estimated increased costs. Resale Gas was priced according to rate schedules filed and to be filed with the Louisiana Public Service Com- mission (initially listing 19 cents per mcf for ‘‘domestic”’ gas). When the contract was executed the gas all came from 2 The contract's initial ‘“‘whereas”’ clause states: “WHEREAS, Buyer owns and operates distribution lines and facilities in the Parish of Orleans, Louisiana, and two steam electric power plants in said Parish known as Buyer's Market Street and Industrial Canal Stations, and desires to purchase from Seller gas for resale and distribution through said distribution lines and facilities to Buyer's residential, commercial and industrial consumers in the Parish of Orlears, Louisiana, and for the fuel requirements of said two power plants and any additional such plant or plants that Buyer may construct and operate in said Parish of Orleans..." Our description of the terms of this and subsequent contracts is given as part of the general background of this litigation and is not intended to be complete and precise in all details. A-48 a Louisiana intrastate system then operated by United, and was hence not subject to federal regulation under the Natural Gas Act. Thereafter, United apparently caused this system to become a part of its interstate system. As a result, in 1973 the Federal Power Commission (‘‘FPC,”’ now the Federal Energy Regulatury Commission, ‘““FERC’”’) granted United a ‘‘certificate’’ under the Natural Gas Act covering its furnishing of gas to NOPSI and the price at which United sold NOPSI Resale Gas became and remains regulated by that federal agency. However, the price of United’s Power Plant Gas sales to NOPSI is not and was not regulated under either federal or state law.? ° The Natural Gas Act, 15 U.S.C. § 717 et seg., provides for the regulation of the transportation of natural gas in interstate commerce, o: the sale in interstate commerce of natural gas ‘for resale,’ and of companies engaged in such transportation or sale. 15 U.S.C. §§ 717(b), 717a(6). Under the Act, sales of gas in interstate commerce for resale, such as United’s sales of Resale Gas to NOPSI, must be at “just and reasonable”’ prices and are subject to FERC rate regulation. 15 U.S.C. §§ 717c, 717d. State regulation of such interstate sales for resale is for- bidden. Missouri ex rel. Barrett v. Kansas Natural Gas Co., 265 U.S. 298, 44 S.Ct. 544, 68 L.Ed. 1027 (1924). But the Natural Gas Act does not speak to, or authorize FERC rate regulation respecting, the price at which gas is sold in not-for-resale or ‘‘direct’’ sales, such as United's sale of Power Plant Gas to NOPSI; and the states are free to provide rate regulation of such “‘direct’’ sales, even those in interstate commerce. Pennsylvania Gas Co. v. Public Serv. Comm'n, 252 U.S. 23, 40 S.Ct. 279, 64 L.Ed. 434 (1920); Panhandle Eastern Pipe Line Co. v. Public Serv. Comm'n, 332 U.S. 507, 68 S.Ct. 190, 92 L.Ed. 128 (1947). See also Cities Service Gas Company v. United States, 500 F.2d 448, 205 Ct.Cl. 16 (1974). Louisiana, nevertheless, does not regulate such ‘‘direct”’ sales, whether intrastate or interstate. LSA-R.S. 45:1163. The Natural Gas Act does provide, however, that the furnishing of gas in interstate com- merce, including that to ‘‘direct’’ sales (as well as resale) customers, must be pursuant to a FERC certificate cf public convenience and necessity, and that no portion of such service can be abandoned without prior FERC approval. 15 U.S.C. § 717f(b) & (c). See FPC v. Louisiana Power & Light Co., 406 U.S. 621, 92 S.Ct. 1827, 32 L.Ed.2d 369 (1972). While United's transformation of its Louisiana intrastate system into an interstate one has been subject to attack in other proceedings. A-49 The 1952 contract was amended on at least one occa- sion, a 1965 amendment having increased the price of Power Plant Gas to 23 cents per mcf. On January 31, 1975 United and NOPSI entered into two separate agreements. One, a ‘‘Service Agreement,” pertained only to Resale Gas, expressly superseded and canceled the 1952 agreement so far as it covered Resale Gas, and was to ‘“‘become effective on such date as allowed by the Federal Power Coramission”’ and to remain in effect until June 1, 1985.4 The other, that pertinent here, was a January 31, 1975 letter agreement dealing with Power Plant Gas. This letter states that it is an “interim agree- ment with respect to Power Plant Gas.” It recites that the 1952 contract, as amended, will expire on June 1, 1975, has been replaced as to Resale Gas by the Service Agreement, and will not be renewed as to Power Plant Gas. The letter (Footnote 3 continued) see FPC v. Louisiana Power & Light Co., supra, all here concerned ad- mit, at least for purposes of this litigation, that United’s seles to NOPSI of Resale Gas are, and of Power Plant Gas are not, subject to FERC rate regulation, that neither is subject to any direct state or municipal regulation, and that United's furnishing to NOPSI of each kind of gas is subject to the abandonment requirements of the Natural Gas Act (15 U.S.C. § 717f(b)). Moreover, while United’s various gas curtailments, commencing in the early 1970's, including those ‘‘authorized"’ by the FPC, have sparked considerable litigation between United and various of its customers, including NOPSI, see State of Louisiana v. FPC, 503 F.2d 844 (5th Cir.1974); City of New Orleans v. United Gas Pipe Line Company, 390 F.Supp. 861 (E.D.La.1974), such controversies are not in- volved in the present litigation. * The Service Agreement provides that the price of gas sold thereunder was that “xe i by United's current rate schedule, or any ef- fective superseding. schedule, on file with the FPC, and that it was subject to the Generai ferms and Conditions of the rate schedule as filed with the FPC. The Service Agreement also stated a Maximum Daily Quantity of gas which United was obligated to deliver and NOPSI to take thereunder. A-56 then makes essentially two sets of substantive provisions. First, it amends parts of the 1952 contract so far as it per- tains to Power Plant Gas sold from January 1, 1975 until its June 1, 1975 expiration, principally by fixing the price during that period at United’s Weighted Average Cost of Gas (““WACOG,”’ apparently then about 50 cents per mcf). The second set of provisions are those with which we are concerned. They deal with the sale of Power Plant Gas after June 1, 1975, when the 1952 agreement expires. In this con- nection, it is recognized that United may apply to the FPC for abandonment of its Power Plant Gas service to NOPSI “effective on or after June 1, 1975,” and the “parties agree that any controversy over whether Power Plant Gas ser- vice should continue after the expiration of the [1952] Con- tract will be resolved solely in the abandonment pro- ceedings before the Federal Power Commission.’’ No obligation is imposed on NOPSI to take Power Plant Gas after June 1, 1975. United is authorized, without liability to NOPSI, to curtail deliveries after June 1, 1975 ‘“‘pursuant to Seller’s Impairment of Deliveries provisions from time to time in effect under Seller’s Federal Power Commission Gas Tariff.’ Paragraph 4 of the 1975 letter agreement deals with the price of Power Plant Gas delivered from June 1, 1975 ‘until Seller is authorized to abandon Power Plant Gas ser- vice.’’ Under paragraph 4A1, this price is initially fixed at 61.84 cents per mcf in excess of United’s WACOG for each respective billing month.® That price was to remain in > Provision is made for a possible penalty payment by United to NOPSI in the event United’s deliveries to NOPSI during the period June 1, 1975 to June 1, 1976 total less than United's deliveries to NOP- SI from January 1, 1975 to June 1, 1975. 6 This was actually expressed as $1.0125 per mcf, plus or minus the amount by which United’s WACOG for the billing month exceeded A-51 effect until June 1, 1976, or the date on which United in- stituted a ‘“‘redetermined rate,’’ whichever was later. The present controversy particularly relates to paragraph 4A2 of the 1975 letter, providing that United could, at any time or times after June 1, 1976, unilaterally ‘“‘institute a redetermined rate,’’ to remain in effect not less than one year, by giving NOPSI sixty days’ notice of the specified new rate. If NOPSI did not within thirty days notify United that it agreed to that rate, then NOPSI would ‘‘cease taking gas on the date such rej»cted redetermined rate was to be instituted.” The WACOG plus 61.84 cent per mcf price remained in effect until the January 31, 1975 letter agreement was amended by another letter agreement dated August 22, 1978.’ This amendment apparently came about because the price of available fuel oil dropped below that of United’s Power Plant Gas on an equivalent Btu basis, and NOPSI accordingly reduced its Power Plant Gas purchases from United and began burning fuel oil instead.® The August 1978 amendment modified paragraph 4A1 of the (Footnote 6 continued) or was less than its July 1974 WACOG. As the July 1974 WACOG was 39.41 cents per mcf, the effect was a price per mcf equal to whatever United’s WACOG was from time to time, plus 61.84 cents ($1.0125 minus .3941). 7 This agreement recites that the 1952 contract had expired June 1, 1975 and that the January 31, 1975 letter constituted the parties’ agreement as to the price of Power Plant Gas delivered after the 1952 contract’s expiration. 8 On United's inquiry concerning the reduction, NOPSI respond- ed that fuel oil was cheaper and it was going to buy the lowest cost fuel. The NOPSI vice president concerned also stated that NOPSI’s objec- tive in those 1978 negotiations was “‘to arrive at a price that we could justify to our regulatory body that we were doing the besi we could for our customers insofar as the impact that the fuel costs have on the cost of electricity to them.” A-52 1975 agreement, dealing with the price of Power Plant Gas sold after June 1, 1975, by providing that, from August 1, 1978 ‘‘until Seller is authorized [by FERC] to abandon Power Plant Gas Service,’’ the price for Power Plant Gas furnished each month would be the cost to NOPSI of the #6 fuel oil with equivalent Btu content used that month as boiler fuel at NOPSI’s Michoud electric generating station. However, the price per mcf would in no event be greater than 71.84 cents, nor less than 51.84 cents, in excess of United’s WACOG for the same month. It was also provid- ed that no ‘‘redetermined rate’’ would be put in effect prior to August 1, 1979. A November 1978 amendment increas- ed the maximum and decreased the minimum price, each by five cents per mcf, so that the maximum became 76.84 cents, and the minimum 46.84 cents, in excess of United’s WACOG for the billing month. Within that range, the price remained the price of NOPSI’s fuel oil, on a Btu equivalent basis, as provided in the August 1978 agreement.2 This Power Plant Gas price formula continued in ef- fect, and there were no further amendments to the i975 agreement, until on March 3, 1981 United sent NOPSI a notice, pursuant to paragraph 4A2 of the 1975 agreement, of a ‘‘redetermined price’’ of Power Plant Gas to take effect May 3, 1981, thus precipitating the present litigation. This “‘redetermined rate’’ provided for a price equal to United’s WACOG for the month in question plus 91 cents per mcf for minimum quantities nominated in advance by NOPSI, generally on a take-or-pay basis. For gas in excess of the minimum, the price would be the current regional #6 fuel oil price on an equivalent Btu basis but not less than 61 cents 9 The November 1978 agreement made no other changes, and ap- parently left in effect the ‘‘redetermined price’’ provisions of paragraph 4A2 of the 1975 letter agreement as modified by the August 1978 agreement. A-53 per mcf, nor more than $1.06 per mcf, in excess of United's WACOG for the month.!9 NOPSI calculated that this would produce an average increase over the ensuing year of about 25 cents per mcf, or 7.5 percent, in the cost of Power Plant Gas purchased from United.!! NOPSI protested the increase and negotiations ensued. After granting NOPSI additional time to respond and making certain technical modifications NOPSI had requested, United informed NOPSI by letter of April 27, 1981 that if NOPSI did not accept the ‘“‘redetermined rate’ by May 19, 1981 ‘“‘United will charge NOPSI the fair market value for any gas taken by NOPSI on and after May 3 inasmuch as no contractual or other understanding would exist as to price.” On May 18, 1981 NOPSI signed the United letter agreements providing for the ‘“‘redetermined rate,” con- temporaneously informing United that NOPSI was doing so with reservation of rights and because United’s April 27 letter had said United would otherwise charge fair market value. 10 The method of calculating United’s WACOG was also changed to United’s advantage to the extent of approximately four cents per mcf, and provision was made for future adjustments, based on changes in the Producer Price Index for Finished Goods, in the $1.06 and 91 cent figures. United also would have the right to institute ‘‘redetermined rates’’ ater May 1982. 11 These prices were apparently below the then current fuel oil prices, so that the 91 cent and $1.06 (over United’s WACOG) maximums would likely be applicable. The estimate of increase, however, proved somewhat conservative. When the ‘‘redetermined rate’ went into effect May 3, 1981 it appears to have increased the cost of United’s Power Plant Gas from $3.5967 to $3.9558 per mcf. Fuel oil cost to NOPSI, relative to the cost of United’s Power Plant Gas, varied: in June 1981 the cost of such gas was about 3.5 percent less than the fuel oil on a Btu equivalent basis; in April 1981 the gas cost was some 2.5 percent more than the fuel oil cost. A-54 Proceedings Below On May 26, 1981 NOPSI instituted the present litigation by filing suit against United.12 NOPSI’s com- plaint outlined the history of its relations with United, in- cluding the 1952 contract, which it alleged ‘‘terminated on 1 June 1975,” and the January 31, 1975 letter agreement and its August and November 1978 modifications.!° It alleges that on “January 31, 1975 United and NOPSI entered into a letter agreement for the purpose of definitively determining the rate or price per thousand cubic feet (Mcf) NOPSI would pay and United would receive for all Power Plant Gas delivered by United on and after 1 June 1975 and until United obtained FPC abandon- ment authorization,’’ and quotes paragraph 4A1 of the 1975 letter providing for a price fixed at United’s billing month WACOG plus 61.48 cents per mcf. It further alleges that in the August and November 1978 letters ‘“‘NOPSI and United agreed upon a price to be paid by NOPSI for Power Plant gas ‘... until Seller [United] is authorized by the Federal Energy Regulatory Commission (formerly the Federal Power Commission) to abandon Power Plant Gas service’ as therein provided.”’ The complaint states that NOPSI agreed to United's 1981 redetermined rate ‘‘under the duress” of United’s “threat” by its April 27, 1981 letter to charge “‘fair market value” for the Power Plant Gas and United’s subsequent oral statement ‘‘that it would contend that a fair market 12 The suit was filed in state court and promptly removed by United to federal court on grounds of diversity of citizenship. 13 Copies of the 1975 and 1978 letter agreements were attached to the complaint. A-55 value for Power Plant Gas on and after May 3, 1981 would be $6.00 to $8.00 per Mcf,’’ which would be more than dou- ble what NOPSI paid United for Power Plant Gas in 1980.14 It also alleges that the provision of paragraph 4A2 of the 1975 agreement authorizing United to institute a ‘‘redetermined rate’’ is ‘‘invalid and unenforceable because the redetermined rate therein provided for is an uncertain price, being neither fixed nor determinable by some objec- tive criterion or by agreement,’’ and hence violates specified articles of the Louisiana Civil Code.!5 According- ly, it is claimed that the price provision of paragraph 4A1 14 NOPSI did not claim that United expressly or impliedly threatened to suspend or curtail Power Plant Gas (or Resale Gas) deliveries or to seek FERC permission to abandon. Indeed NOPSI alleg- ed that ‘‘United has never applied for’’ or been granted such permission. The duress, as NOPSI stated in its answers to requests for admission, was that “if United had carried out its threat (to charge $6 to $8 per mcf if NOPSI did not agree to the “‘redetermined rate’’] NOPSI would have found it necessary to immediately approximately double its electric rates or run the risk of a great financial loss should the courts hold that United’s threatened increase was valid...” 15 The articles cited are LSA-C.C. articles 1764 subd. A, par. 1 (‘‘a price is essential to the contract of sale’’), 2439 (for a contract of sale there must be “‘the thing sold, the price and the consent’’}, 2456 (sale perfected between parties ‘‘as soon as there exists an agreement for the object and for the price thereof’), 2464 (‘‘the price of the sale must be certain...fixed and determined by the parties”), and 2465 (price may be left to arbitration, but if arbitrator unable or unwilling to estimate “there exists no sale’). The complaint further alleges, ‘in the alter- native, and only in the event’”’ that the provision authorizing United to institute a “‘redetermined rate”’ is not invalid under the cited articles, that it is invalid because its unlimited and unilateral character “without providing for consultation with NOPSI”’ violates “the requirements of equity” of LSA-C.C. articles 1964 (‘‘equity’’ may “supply...incidents”’ to a contract) and 1965 (‘‘when the law of the land, and that which the par- ties have made for themselves by their contract, are silent,’’ courts will determine “incidents to a contract” according to the principles of the golden rule and against one enriching himself ‘“‘at the expense of another’’). A-56 of the 1975 agreement, as modified by the August and November 1978 agreements, is controlling. 16 The only relief sought is declaratory judgment in four respects: (1) that NOPSI’s consent to the 1981 redetermined rate ‘‘is void as having been procured by duress”’; (2) that the provi- sion of paragraph 4A2 of the 1975 agreement (and the similar provision in paragraph 4 of the August 1978 agree- ment) authorizing unilateral price redetermination by United ‘‘are void and unenforceable’’; (3) that ‘‘the price at which defendant is obligated to sell and NOPSI to buy Power Plant Gas until United is authorized by the Federal Energy Regulatory Commission to abandon Power Plant Gas Service to NOPSI is that specified in Paragraph 4A1 of the letter agreement of January 31, 1975’’ as amended by the August and Noven ber 1978 letter agreements; and (4) that any payments by NOPSI to United for Power Plant Gas under the “‘redetermined rate”’ instituted as of May 3, 1981 ‘“‘be refunded to NOPSI”’ to the extent they exceed the amounts payable under the price provisions of paragraph 4A 1 of the 1975 letter agreement as amended by the August and November 1978 agreements. United filed its answer on June 16, admitting the basic facts alleged in NOPSI’s complaint and taking the position that United engaged in no duress respecting NOR SI’s agreement to the 1981 redetermined rate and that NOPSI was bound thereby; that with respect to a redeter- mined rate NOPSI had the choice of agreeing to it, or of ceasing to take Power Plant Gas from United, or of purchas- ing such gas from United at its fair market value; that the price redetermination provision of paragraph 4A2 of the 16 Namely, the price tied to NOPSI’s Btu equivalent #6 fuel oil costs, but not less than 46.84 cents, nor more than 76.84 cents, in excess of United’s WACOG for the billing month. A-57 1975 agreement (as amended by the August 1978 agree- ment) was valid; and that NOPSI was barred by laches, waiver and estoppel from contending otherwise. !7 On August 26, 1981 Ernest Morial moved to in- tervene in the litigation ‘‘as a party plaintiff,’ individually and as representative of the class of NOPSI electric customers.!8 No action was taken on this motion. On Oc- tober 6, 1981 an amended motion was filed seeking in- tervention ‘‘as party plaintiffs herein’’ under Rule 24(a), Fed.R.Civ.P., on behalf of Morial, several other persons and businesses, and the City of New Orleans, in each case individually and as representatives of the class composed of all NOPSI electric rate payers. The then tendered amended petition in intervention recites that the in- tervenors are NOPSI electricity customers, that ‘‘the City of New Orleans, acting through its City Council, is, in addi- tion to being a purchaser of electricity, a rate regulatory body, and, through its City Council, establishes NOPSI’s 17 At the same time, United also filed a counterclaim against NOPSI which additionally took the positions: that in the event the court determined that NOPSI’s agreement to the 1981 redetermined rate was not binding, then United should have judgment against NOPSI for the excess of the fair market value of Power Plant Gas taken by NOPSI from United since May 3, 1981 over what NOPSI had paid therefor (the redetermined rate); and that in the event that the court determined that not only was NOPSI’s 1981 agreement not binding on it but also that the price redetermination provision of paragraph 4A2 of the 1975 agree- ment was invalid and not binding on NOPSI, then United should have judgment against NOPSI for the excess of the fair market value when delivered of Power Plant Gas taken by NOPSI from United since June 1, 1975 over what NOPSI had paid United therefor. NOPSI filed its answer to the counterclaim on July 6, 1981. 18 Though not stated in the motion or accompanying papers, Morial was and is the Mayor of New Orleans. When the motion was filed some preliminary discovery had already taken place, including oral depositions of United and NOPSI officers and interrogatories from each party to the other. A-58 , rates,’ and that “‘the increased cost of power plant gas, which NOPSI uses to generate electricity, is charged to In- tervenors in the form of increased fuel adjustment charges. Intervenors are thus paying the most significant portion of the increased cost of power plant gas."19 The amended 19 Generally, about 60 percent of the cost of electricity to NOPSI consumers is represented by the cost to NOPSI of the boiler fuel used in its electric generating plants. Under Louisiana law electric utilities such as NOPSI, and the rates they charge their consumer customers, are regulated by the Loui- siana Public Service Commission (the ‘‘Commission”’), except that home- rule cities, such as New Orleans, perform this regulatory function within their borders, unless the city voters approve transfer of that function to the Commission. LSA- Const. Art. 4 § 21(B) & (C). See State ex rel. Guste v. Council of City of New Orleans, 309 So.2d 290, 292-93 (La.1975). The 1922 ordinance under which NOPSI holds its franchise from the City of New Orleans provides that NOPSI is “authorized to charge and collect such fair and reasonable rates for electrical energy furnished and delivered in the City of New Orleans as may be established by the City of New Orleans and or other regulatory authority in accordance with law.’’ By virtue of an election held November 28, 1981, pursuant to an ordinance adopted by the City on July 23, 1981, effective January 1, 1982, all the City’s rate and other regulatory authority over NOPSI (and certain other utilities) was transferred to the Commission so that, as the ordinance states, the City shall ‘‘no longer have any powers of supervi- sion, regulation and control over gas, heat, power and electric public utilities.”’ The City and the Commission, during their respective periods of regulating NOPSI’s rates, approved its electricity rate schedules con- taining a ‘‘fuel adjustment clause’’ by which NOPSI has been generally authorized to increase its electric charges every month to the extent of (but without a profit margin on) increases in its boiler fuel and purchas- ed power costs incurred in the second preceding month, with this item separately identified on the customer's bill. We understand that the Commission holds monthly hearings on the cost figures used in these computations. The City Council apparently did not hold such hearings as a matter of course, but did ‘‘audit NOPSI's records on an ongoing basis to protect against overcharges” in this connection. See Metropolitan New Orleans Chapter of the Louisiana Consumer's League, Inc. v. Council of the City of New Orleans, 423 So.2d 1213, 1217 (La.App.1982), cert. denied, 430 So.2d 77 (La.1983). Plainly, under Loui- siana law neither the City nor the Commission is required to authorize A-59 petition in intervention expressly adopts the allegations of (Footnote 19 continued) use or continued use of ‘‘fuel adjustment” clauses in filed rate schedules, such clauses being simply a procedural device employed by the regulatory authority in carrying out its rate-fixing function. Under LSA-R.S. 45:1176, the Commission and any ‘municipal body having similar powers in the fixing of just and reasonable rates...charged by public utilities, shall investigate the reasonableness and justness of all contracts, agreements and charges entered into or paid by such public utilities...and shall have the power to disallow as an operating expense of any public utility such part of the amount so paid...as the commission...or municipal body may find, after hearing, to be unjust or unreasonable and designed for the purpose of concealing, abstracting or dissipating the net earnings of the public utility.”” See Central La. Elec. Co. v. Louisiana Pub. Serv. Comm'n, 373 So.2d 123 (La.1979); Sout Cent. Bell Tel. v. Louisiana Pub. serv. Comm'n, 373 So.2d 478, 484 (La.1979) (recognizing ‘‘the Commission’s authority to regulate the industry as an efficient enterprise, rather than as a lux- urious one...’’). We understand that Commission rules authorize any party ‘‘ac- tually in interest,”’ local officials and ‘‘every civic and trade organiza- tion,” including consumer groups, to appear and participate in rate pro- ceedings. While the Commission at one time amended these rules so it could deny such parties intervenor status (apparently necessary for ap- peal to the courts from Commission orders), this amendment was held invalid on procedural grounds, Louisiana Consumers’ League, Inc. v. Louisiana Pub. Serv. Comm'n, 351 So.2d 128 (La.1977), and we are in- formed that the previous rule, authorizing intervention, remains in force. Under LSA-R.S. 45:1192, an appeal may be filed within three months after a Commission order, and Louisiana courts have entertain- ed appeals by rate payers from Commission rate orders. See, e.g., Monochem, Inc. v. Louisiana Pub. Serv. Comm'n, 172 So.2d 670 (La.1965); Louisiana Power & Light Co. v. Louisiana Pub. Serv. Comm'n, 369 So.2d 1054 (La.1979). With Commission-sanctioned security, a utility may effectuate an increased rate before its approval by the Commission, but if the rate is not ultimately approved refund must be made, as it must also if a Commission-approved rate is implemented and later overturned on court appeal. LSA-Const. Art. 4 § 21(D); LSA-R.S. 45:1163.1. However, where a utility recovers from a supplier excess charges paid in respect to periods when a utility’s rates were Commission approved and un- challenged in court, it is unclear whether the Commission can order the utility to make a true refund to the rate payers. The Commission has A-60 NOPSI's complaint, but does not otherwise allege any substantive claim or ground for relief. It also seeks precise- ly the same relief as sought in NOPSI's complaint, with the sole exception of requesting that the refunds which NOP- SI's complaint seeks from United be paid ‘‘to NOPSI and the [rate payer] Class jointly” (instead of just to NOPSI). In a supporting memorandum filed with the amend- ed petition in intervention, the intervenors claimed the right to intervene because the contract between NOPSI and United was a stipulation pour autrui, or third-party beneficiary contract, in their favor, and because they paid, through electricity charges paid to NOPSI, the amounts received by United from NOPSI in excess of what United was entitled to be paid under its contract with NOPSI. They also asserted NOPSI’s representation was inade- quate because NOPSI requested that the refund sought from United be paid to NOPSI, rather than to NOPSI and the rate payers, but did not allege that NOPSI was in collu- sion with United or had not vigorously pursued its suit against United or would not do so. United opposed the intervention. The amended mo- tion to intervene was heard by the magistrate, who, by a (Footnote 19 continued) apparently done so in at least one instance, but there is authority that it lacks this power. See City of New Orleans v. United Gas Pipe Line Co.., 438 So.2d 264 (La.App.), writs denied, 442 So.2d 463 (La.1983). Cf Loui- siana Power & Light Co. v. Louisiana Pub. Serv. Comm'n, 377 So.2d 1023, 1027-29 (La.1979). The City and the Commission, while each regulated NOPSI's rates, have apparently allowed NOPSI's increased fuel costs resulting from United's May 3, 1981 price increase to ‘‘pass through” in the form of higher electric rates, seemingly without any regulatory action being attempted by the regulatory bodies themselves or third parties to pre- vent, minimize or condition this. A-61 November 6, 1981 minute entry, allowed Morial (the Mayor), and the seven individual intervenors who compris- ed the New Orleans City Council, to permissively intervene under Rule 24(b) “‘individually, not as a class.”’ All other re- quested intervention was denied. United and the in- tervenors each sought review in the district court. Follow- ing a December 1981 hearing, the district court in February 1982 denied all intervention.2° It ruled, inter alia, that the contract was not a third-party beneficiary contract under Louisiana law, that ‘‘none of the applicants for intervention...have a direct, legally protected interest in this contract action between the two parties to the con- tract,” and that the applicants had not overcome the presumption of adequate representation by NOPSI. This appeal by the applicants for intervention followed. Previous Consideration by This Court On original submission, a panel of this court held that the rate payers were not entitled to intervene as of right and that the district court did not abuse its discretion in denying them permissive intervention. 690 F.2d 1203. However, the panel further held that the individuals who 20 NOPSI made neither formal consent nor opposition to the at- tempted intervention, and did not seek to appeal either the magistrate’s order or that of the district court. At the December hearing, NOPSI did not oppose the intervention, stated “‘we welcome’’ the intervenors into the litigation, and advised the court that NOPSI intended to prosecute its suit against United and that “if we make any recovery at all, then the amount of recovery will be credited or refunded to the rate payer.” When specifically questioned by the district court in the latter connec- tion, NOPSI reiterated its position and advised thai its recovery would be “subject to the jurisdiction of the City Council, they will direct whether it will be credited or refunded.” Although the district court did not rule at that time, it expressed its concern that if intervention were allowed, “‘you are going to complicate litigation” and “you are going to have the most gosh awful jumbled mess you ever saw in this thing.” A-€2 were City officials ‘Mayor Morial and the Council members) were entitled to intervene as of right, because of the City’s assumed status as NOPSI’s rate regulatory authority, and also that the district court abused its discre- tion in denying them permissive intervention. Jd. On rehearing, the panel, in December 1982, due to the informa- tion that all the City’s relevant regulatory authority over NOPSI had been transferred to the Louisiana Public Ser- vice Commission (see note 19, supra), partially granted United’s motion for rehearing and unanimously held that the City officials were not . «titled to intervene as of right, but, one judge dissenting, adhered to its previous holding that they were entitled to permissive intervention. 694 F.2d 421. At the same time, intervenors’ petitions for panel and for en banc rehearing were wholly denied. Jd. United then filed a second petition for en banc rehearing, directed to the panel’s opinion on rehearing, but no such petition was filed by intervenors. Thereafter, this court ordered the case reheard en banc, id. at 422, but in June 1983 that order was withdrawn when four judges recused themselves because of their status as NOPSI rate payers. 707 F.2d 834. Advice having been received from the Advisory Com- mittee on Codes of Conduct of the Judicial Conference of the United States that recusal was unnecessary in that, in- ter alia, ‘“‘the matter to be reheard en banc involves only the right of the mayor and city council to intervene”’ and there had been no ruling respecting rate payer class certification or representation, the judges concerned withdrew their dis- qualifications and the order directing the case to be reheard en banc was reinstated. 719 F.2d 733. We accordingly determine that the questions prin- cipally before us are those pertaining to the entitlement of the City officials to intervene. A-63 DISCUSSION Intervention of Right Respecting intervention under Rule 24(a)(2), Fed.R.Civ.P.,21 we adhere to the statement in /nterna- tional Tank Terminals, Ltd. v. M/V Acadia Forest, 579 F.2d 964, 967 (5th Cir.1978): “It is well-settled that to intervene as of right each of the four requirements of the rule must be met: (1) the application for intervention must be timely; (2) the applicant must have an interest relating to the property or transaction which is the subject of the action; (3) the applicant must be so situated that the disposition of the action may, as a practical matter, impair or impede his ability to protect that interest; (4) the applicant's in- terest must be inadequately represented by the existing parties to the suit.” Interest of Applicant Here our focus is on the second requirement, that the applicant for intervention have an interest relating to the transaction which forms the subject matter of the action. “1 Rule 24(a) provides: “(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of the United States confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.” It is undisputed that clause (1) is wholly inapplicable here. A-64 What kind of interest is required? We have recognized that the 1966 amendments to Rule 24(a) eliminated the former general requirement that the applicant be legally bound by the result of the action, substituting the more flexible and practical criteria of the third requirement in the rule’s cur- rent version. Otherwise, however, the kind of interest necessary was not affected. See Diuz v. Southern Drilling Corp., 427 F.2d 1118, 1124 (5th Cir.), cert. denied sub nom.., Trefina A.G. v. United States, 400 U.S. 878, 91 S.Ct. 118, 27 L.Ed.2d 115 (1970)); Hobson v. Hansen, 44 F.R.D. 18, 24 (D.D.C.1968) (‘‘while one’s interest need no longer be decisively affected before intervention will be allowed, there is nothing in the new rule or in its attendant commen- tary to indicate that it effected a change in the kind of in- terest required”’).22 Nor is it necessary that ‘‘the interest has to be of a legal nature identical to that of the claims asserted in the main action.”’ Diaz at 1124. Nevertheless, as we stated in Diaz, ‘intervention [of right] still requires a ‘direct, substantial, legally protectable interest in the proceedings’.”’ Id. (quoting Hobson). Although we have described it as ‘‘a somewhat narrow reading of the term ‘in- terest’,’’ United States v. Perry County Board of Educa- tion, 567 F.2d 277, 279 (5th Cir.1978), we have never departed from, and have in several cases reiterated, the “direct, substantial, legally protectabale’’ definition of the required interest. Id. See Piambino v. Bailey, 610 F.2d 1306, 1321 (5th Cir.), cet. denied, 449 U.S. 1011, 101 S.Ct. 568, 66 L.Ed.2d 469 (1980); Howse v. S/V “‘Canada Goose I,”’ 641 F.2d 317, 320-21 (5th Cir.1981). Several other cir- cuits likewise employ this definition of the interest re- quired. See Westlands Water Dist. v. United States,700 “