Amicus Curiae Brief — FPC v. Louisiana Power & Light Co.

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IN THE

Supreme C 3 of the United States

‘Oxtoher Term 1971 -

Salt Nos. 71-1016 and 71A040 Bn ste S

FEDERAL POWER COMMISSION, Petitioner, |

. oy. |

LOUISIANA POWER & LIGHT COMPANY ; ET AL., Respondents.

UNITED GAS PIPE LINE CO., ET AL., Petitioners, —

. “y . e° .

LOUISIANA POWER & LIGHT CQ., ET AL.; Respondents,

On Writs of Ceztiorari Jo the United States Court of Appeals

=. for the Fifth Circuit

BRIEF OF SLATE OF LOUISIANA ae

, ~ AMICUS CURIAE. .

THE HON. JOHN J. McKEITHEN

Governor of the State of Louisiana

State Capitol Building.

Baton Rouge, Louisiana _

HON. JACK:P. FsGREMILLION - ©

Attorney General of the State of

Louisiana - mean? Gan

State Capitol Building

Baton Rouge, Louisiana

. * FPREDG.BENTON,SR. E

“Benton & Moseley: : ,

114 St. Louis Street

-\Baton Rouge, Louisiana 70801

ARNOLD D. BERKELEY |

Suite 1200, 1819-H Street, N.W.

‘~ . Washington, D.C. 20006

tC ASId LAS PRE ss INC —1717 K Street N\ Ww Washingto D a « 223 122 .

wege

- TABLE OF CONTENTS

UOURSANAS OITEREBT eg et

- SUMMARY, OF ARGUMENT’... . - 2... 2. 8

"ARGUMENT eae ee cae

F’ THE FPC HAS NO STATUTORY AUTHORITY:

TO REALLOCA‘IE GAS SUPPLIES OF. DIRECT . |

SALE CUSTOMERS TO RESALE CUSTOMERS .. - 18

A. Fhe FPC Does Not Have Any Emergency ©

, Statutory Power To Ration Gas Deliveries.

Among The Customers Of An Interstate ne

Pipeline Because Of A Systemwide Or » ee

Nationwide Gas sical oe...

B™The FPC’ Has No Statutory Power ee

—~ Change The Terms Of ‘Direct Sal

'. Contracts Governing Deliveries = OF Bu mie

sie ee fe 5 25 7

a C. The Rate And Tariff Sections Of The Act °

,: Grant The FPC Limited, Not Plenary, ~ - ;

-- Power Over. Service And. Apply was | ieee aed S70 5

ee Customers eae wi a eee

D. The. EPC Has No: hidiiiieg Power Over + .

_Disctimination In ‘Service Between Direct | |

And ‘Resale Customers tas we eo ee

E. The RPC Lacks Statutory Power To .- >

Reallokate Gas Supplies From Direct: ,.

“ ” Sale Clistomers To Resale Customers Se he eee

-" * .

(ai).

APPENDICES yy - *

; | | Page ©

APPENDIX “A” — Gas Exporting States Ranked

- in Orde: of Production ar oe — ne la

_APPENDIX “B™ — Five Largest Gas Producing States * =.

Ranked in Order of 1969 Gross Production. . . 2a

APPENDIX “C™ — Five Largest Gas Producing States ¢ ;

Ranked in Order of 1969 Net Rroduction . . . . 3a

APPENDIX “D”™" Five Largest Gas Production ‘States *

Ranked in Order of 1969\Marketed Production. a

APPENDIX “E~ — Analysis of Interstate Gas - . — Sa

APPENDIX “F"— Analysis of Netural-Ges Supply... * 6a

APPENDIX “G" - Trend of Eaports gf Natural Gu

Produced im Louisiana «Ci. Tae e « ae

APPENDIX “H™ — Couisiana’ Recoverable Reserves,

New Field and Beservoir Djscoweries a5 a ‘

Percentage of the Nation «~ .-. . . - . “Dh Sa

‘APPENDIX “I”. — Analysis of Netutal Ges Supply

tor Untead Ges Pipe Line Company o . . 9a

APPENDIX “J” Py en of Percentage of -

Estimates Prowed Recdwesable Reserves of Natural

ee ee ee See a ae ae

and Firm Generation, Percent Firm of Tow . . Ila

APPENDIX “ - Gas Requirements, Electric

op Uaneratiqn, Percent Firm of Total Electric

Ce Oe oN te So a fs <>

3 ee)

APPENDIX “Mm” - Gas Requirements Percent Firm

of Total. a ee oe ee ae

APPENDIX “N” — Congressional ae -

— PP. 1084-1 1085 .

APPENDIX “0” ~ Excerpt fre Appeliestt’s Brief In

, Panhandle Eastern Pipe Liné Co. v, Public

Service Commission of Indiane, 332 U.S. 507 .

APPENDIX “P” — Comperison of C urtailment

Provisions of United’s FPC Gas Tariff in Effect

Until November 14, 1971 and ie United

mane Sale Contract. . oie ene

APPENDIX “Q” — Louisiana Public Service Commission ~

‘Compfaint for Temporary Restraining Order,

Preliminary and Permanent Injunction ee ee

APPENDIX “R” — -Louisiana Public Service C omeniqsion

Special Order =a mL : —

APPENDIX “s” ecaaie Public Sivas Cominwssion,

Special Order ‘No. 17-71 (Order Affirming

Jurisdiction And To Show Cause).

APPENDIX “T” — Lguisidna Public Service Commission,

Special Order No. 27- 77 (Ordes Denying Request

For Relief Prom: Operating Restrictions)...

47a

_ LIST OF AUTHORITIES

Co.,.358 US. 133, 146 .

Arkansas-Louisiana Gas €o.,

27 FPC 697, 703 .

4 are

’ American Trucking Associations v. Frisco Trangapriation,

City of Chicago v. Atchison, T & SF. Railway Co.,-

277 US.°77 .

City ‘of Detroit. v. FPC.

230 F.2d 810, 816-817 (CADC) .- .

Lity of Detroit ¥. Panhandle Eastern Pipe Line Co.,

6 FPC 196, 197, 203-204

Civ of Hastings. Nebraska v. FPC,

221. F.2d 31, 32-33, 36-39 (CADC) cert. denied

349 US. 920 -

Central ‘West Utility Co. v. FPC. Sie See.

247- F.2d 306, 310-313 (CASS).

ee *

Coastal Transmission Corp.,

26 FPC 318, 324-325.

Civ Aeronautics Board vy. Delta Airlines.

367 US. 316, 321. .

Commonwealth of Pennsylvania v. State oF West

Virginia, 262 US: 7” $98 -.:

‘ Colorado Interstate Gas Co. v. FPC,

185 F.2d 357, $59, ee Gee Or Os

_ Deering. Milliken, hie v. gag

me 8 kk eee ee

"Dixie Pipe Line Co, “yen i,

are Ge be... es eee

> 41

P (vi)

Florida Parishes, Louisiana Public. Service

Commission ,v. FPC, 359 F.2d8$25(C.A. 5) . . . . - 68

FPC v. East Ohio )Gas, Tt tater =

ae og ers gt Mees Par eee Were eS

FPC ». Hope Natural Gas Co.,

320 US. $91, 608614 | 3ST

FPC vy. Hunt,

* 376 US. S15, 519-524.

FAC » Rasande Eom Pipe Line Co. |

337 US. 499, 503, 504, 507-508". 2 2: 2. . 33, 62

FPC rv. Panhandlt Easier Pipe. Line Co.. iy

172 F.2d 57. 59-60, affd 337 US. 499, 514515

FPC v. Sierra Pacific Power Co, on

_ 0 Sm See, Sey ee. es, ke

FPC y.. Transcontinental Gas Pipe Line Corp.”

ae URt .. ae

Pedéral Trade Commission y. Bunte Bros, inc.,

Wz US. 3, FIO oss sc ee cae

- Fuels Research Council, Inc. v. FPC.. 9

| 374 F.2d 842, BS2853, 853-854 (CA. 7) . . . . 34,35 -

Granite City Steel Co. v. FPC. .

“~~ S90 6.28.91, 713 CO). te

Houston; E & W.T-R. Co. v. United States, , *

734 US. 362, 359590 2... tt Tw 8

-Leedom . Kyne, ae *-

OF ORI. 5c Senate ea cla ee

Michigan Consolidated Gas Co. v. Panhandle Eastem

Pipe Line Co., (CA. 6) 173 F.2d. 784-789. . > . 37, 97

- .*

Michigam Consolidated Gas Co. v. FPC. *

203 F.2d 895, 905 (C.A. 3)

Pan American Peiroteum Corp. y. Superior

Court of the State of Delaware in and for

_ New Castle County,.366 U.S. 656, 665-666

Panhandle.Eastern Pipe Line Co

22 FC 679; 681, 683.685 Re re hee |

ae - 4 y

- Pan Eastern Pipe Line Co.,

14° FPC 26% affirmed, 236 F.2d 289 (CA. 3)

Panhandle Eastern Pipe Line v. Michigan

Consolidated Gas-Co., 177 F.2d 943,. ee

oS (C.A. 6).

Panhandle Eastern Pipe Line Co. v. FPC,

204 F.2d 675, 679, 680 (CA. 3)

PBihandle Eastern: Pipe Line-Co. v. Michigan -

. Public Service Commission,

341 US. 329, 334-33@¢ 337

Panhandle Eastern Pipe Line Co. vy. FPC

324 US. = a ma. *

Panharidic\ Eastern Pipe Line Co: v. FPC,

232 F.2d 467 (C.A. 3), ceft. denied,

352 US. 1. ee

Panhandle Eastern Pipe Line Co. ‘v: FPC,

247 2d 306; 310-313 (C.A. 3).

Panhandle Eastern Pipeline Co. v. FPC.

. 359 F.2d 675, 682.(C.A. 8) ©:

Panhandle Eastern” 3 Co. y. Public Service

Commission of I

332 US. 507, 20S 543-514, $16-519, $23-.

un eee

‘2 Se. 9042

. x.

-—

7— Skinner, & Eddy Comp. v. United States,

249. U.S. 557, 562. gee

Turnbull. & Zoch “ad Ca, Operator, :

, 26 FPC 678, 40 .

United Gas Pipe Line Co. v. FP€, . 3

388 F.2@ 385, 388 (CA. 5)

‘United Gas Improvement Co. vy. Continna Oil Co.,

» 381 :US.; 392, 404... _ ae

United Gas Pipe ‘Line Co, ds tee

385 US. 83, 91

‘United Gas Pipe ae Co. v. Memphi? Light, Gas,

Water Division, 358 U.S. 103, 112, 113-114 — ;

United Gas Pipe Line Co: v. Mobile. Gas

Servic Co., 350 US. 341, 342,

343, 344, 348, 353

’ s *

United s tates v. Seatrain Lines, -

329 US. 424, 428432 . ,

Watson Bros. Transportation Corp. uy United States,

132 F. Supp. acs (D.C. = Affd.

350 U.S. 927.

- a Willmut Gas & re €o. y. Undead Gas Pretn Co.,

- «42. FPC * 132, 138-139 oS

~ . +. Constitution a,

..'. Fifth Amendment... . . . . . . .

‘Tenth Amendment. . . ... . . -.

eae

50,51

(ix)

oe ge : - | Page

Statutes

ap Bituminous Coal Act of 1937; 50 Stat. 72 rer: ee

Federal Power Act, 49 Stat. 487, amended - oa

67 Stat. 461, Part I. | mS ae

Section 202 Ghee Ra Saar oe eee We ey EL ee

satan tate x AE OH Woke SO Ie REE ae eI Pa Le

ne RM Ae Pea Nt Retermie Foa TAR

t -

Fair Labor Standards Act of 1938, 52 Stat. ohh Meet ee es 58

_ Louisiana Constitution, Article. Vi, Section 4

National Labor Relations Act of 1935, 49 Stat. 449... - 58

Natural’Gas Act, 52 Stat. 821-833 .as amended;

4-15 U.S.C. 717-717

/— Section 1b) © 22) 5. 26,32,33,39,41,42

Section 4°." 2 0. 5 2 2s .)) 32,33,34,35, 37,47"

Section 4a . ee eee ee cme eee ee Te Go

a a a. we Se eee

" Section 4(b)(1) or or eae an

<M a@. wk Fe ee

Section 40). HE a ee EO

"Section 4(e-) 7. 2 2 2. rl. we 1. + 26,43, 53; 54

Wes Sh ea iG.

Section S(a). 2 2. |... 33,38, 35,42,55

Section 7 a Ln. 24, 36,37, 38,46

Section (a). 2. 2. we ge ete gs 19, 20,40

Section ?(b) . .. . -

‘

- FPC Annual Report, 195

——

. Section 7(c)

* Section 7(e)” :

Section 16.

EPC Annual Report, 1951 _.

-FPC Annual Report, 1953

FPC Annual Report, 1954 -

FPC Annual Report, 1955

FPC Annual Report, 1956

. FPC Annual Report, 1957

FPC Annual Report, 1958

FPC Annual Report, "1963.

FPC Annual Report, 1970. 2. .-. . 2 8

FPC Ges Tasiff, United Gas Pipe Line €o..

ss 12.1 Proration of ,mpaired Deliveries .

Secretary of the Amy, Atlantic Seaboatd, * :

_ FAC Dkt. No. CP°66-179 |.

FPC Regulations, Under Nattiral Gas Act,

~ Section 157.14{a) (10)

FPC Order No. 431, 36 F.R. 7505

FPC Order Suspending Proposed Tariff Sheets, .

E] Paso ‘Natural Gas Co., Dkt, RP 724.

H. P. 982,.1949. 2 2

Louisiana Constitution, :

. Article VI, Sec. 4-2

: Aarne 61

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Supe Court of the sited Btates

October Term 1971

_ Nos. 71-1016 and 71-1040

. eer. . ere

_ FEDERAL POWER COMMISSION, Petitioner,

‘

__ LOUISIANA POWER & LIGHT COMPANY, ET AL’, Respondents. °

UNITED GAS PIPE LINE COZ ET AL., Petitioners, -

} . v. . ; '

LOUISIANA Sela & LIGHT CO., ET AL., Respondents.

ts 7

. On Writs of Centon to the Usiited States Court of Appeals

for the Fifth Circuit

_ BRIEF OF STATE OF LOUISIANA —

AMICUS CURIAE —

: LOUISIANA’S INTEREST

—" .* z

*oubions is the largest gas ‘exporting state and the sect,

: ona: largest gas producing state in the nation. ! It delivers to |

other states 44.9% of all natural gas exported by. producing .

states to meet the wider’ of other states which cannot supply

their own requirements.” Louisiana marketed psoduction of

7,427,8 826 trillion cubic feet. of natgiral gas was 34: 9% oe

“United States production in 11969. 3

| Appendices A, B. and C,-1a-3a.

mle i as ‘

Appendix.A, ‘la. ex ;

3 Appendix D, 4a.

. 4) : . 2s eee

Over 73% of its total organ is exjeintiea to other

states, on a net delivery basis* During the last. decade, gas

exports have increased dramatically. Using 1960 as a base

‘year, exports increased by 31 .8% in 1965 and by 100.4% in

1970.5

In 1960, 31.5% of locally produced gas.was consumed

- within the state. By 1965, this percentage declined to 27. 2%

and in 1970 to only 20. 67°

Plainly, Louisiana contributed more than its ‘ae share

to the national pool of natural gas and retains only a a of.

its own gas production for interstate use. '

‘Historically, gas producing states have certain advan-

tages over states which do not have their own gas supply.

Their very proximity to the source of production attracts

industries which use-gas as the raw’ material without which .

their plants could not operate. The lower transportation-costs

of délivering gas to other ‘industrial and commercial users

' . .within the state makes its use particularly attractive for such

| applications. Jt is not surprising, therefore, that producing

states have a higher proportion of industrial-commercial con-

sumption of total gas consumed and of firm gas than consum- -

ing states. Louisiana utilizes 84% of the total quantity of firm

' gas sold in the state for industrial and power plant generation

: purposes, in comparsion toa national average average of only

37% :

Louisiana’s economy is heavily dependent upon the

availability of a firm, Teliable and uninterrupted supply of

natural gas.. Statewide investment by industrial category

4 Appendix E, 5a. -

3 Appendix F, 6a.

Appendix F, 6a.

Keni K, I la.

clearly reflects the predominance of petroleum, refineries and

chemicals which represented $465,297,370 or ge of a total

industrial investment of $609,578,850 in 1970.8 Apart from

these industries which use natural gas-a process gas without

which, their plants cannot function, the state’s electric utili-

ties are completely dependent upon natural gas as fuel for |

electric generators. “ith is ve

: Ti hus, the. neomuieile welfare of the state hinges upon the

continued delivery of the volumes of gas itsreceived and used

prior to United's curtailment and upon the ability to draw

' upon-greater volumes. Otherwise, its economy will be frozen . 7

at or below its present level. This is not true ‘of other states in

which natural gas plays a subsidiary rather than a dominant. ;

role in the overall economy “of the ‘state and in which the —

electrical utilities have alternate power sources. such as coal,

imported liquified natural gas and inexpensive liy droelectric

power. te tg ee

The state currently has an unemployment rate of 8.3%

as of June 1971. This is. the highest rate for the month of ©

- June since 1962. While the sete rdte was: increasing, the’

_ national fate dropped to 5. 6%. hy

| Other, more fostunately situated states, have as their,

_principal economic assets resources which are neither deplet-

able nor of only temporary value. Louisiana’s wealth is in its

- oil and natrual gas energy resources, which are, by definition,

a wasting asset. It is fact of life that each cubie foot.of gas

produced generates only one-time non-recurring income for

rae 7 : . : a

, <e Louisiana Horizons, Publication of the Louisiana Depertment

of Commerce and-Industry, Winter, 1971, p. 5.

¢ Louisiana Aabor. Market, Department of Employment

Security, June 1971.

SS .

‘the State of Louisiana.. Furthermore, the cost of docating, -

drilling and: producing natural gas in Louisiana is higher than

_ the cost of producing gas in other states. Its gas wells are 50%

deeper but cost twice the national average. Even dry holes in

Louisiana are three times as. costly. as the national average.! °

Because of thesé unique and adverse factors, Louisiana’s pres-

ent predominance as a supplier of energy to the nation is

exposed to a g uine and substantial threat that unlimited

supplies of atomic energy used to generate electricity will,

within the next two decades, supplant natural gas. Thus, if

Louisiana is deprived of the opportunity to use an-equitable

share—which is far less than the share it exports—of its tem-

poratily valuable natural gas resources, it will be inequitably

and irreparably injured.

United Gas Pipe Line Company (United) operated an

‘integtated interstate natural gas system extending across

several states'' before the enactment of the Natural Gas Act

(Act). A grandfather certificate of public service and neces-

sity covering the operation of such interstate facilities was

issued on November 10, 1942.'? United has also operated,

on a completely separate basis, intrastate pipeline systems in

Southern’ Louisiana which have always been regulated ex-

clusively by -the Louisiana Public Service Commission

(LPSC). Such regulation has fever hampered or impaired the

effectiveness of regulation of United’s interstate activities by

fhe Federal Power Commission (FFC) and no such claim has

been made.

10 Louisiana Oil and Gas Facts. Eleventh. Edition, Louisiana-

Arkansas Division, Mid-Continent Oil and Gas Association.

1! United Gas Pipe Line Company, 3 FPC 562-~

12 Id. at 863.

————— anne

w 4

United is the principal supplier of gas used within Louis-

iana. But, the share of the state’s total gas requirements sup-

plied by that pipeline has been consistently declining because

it is using ever increasing quantities of state produced eas to

meet the needs of its interstate customers. .

In 1960, United supplied 6).4% of all gas consumed

within the state. In 1965, it supplied only 58.6% of. such. gas. .

In 1970, it supplied only 47.5% of such gas.'3 ‘In 1965, |

United hac increased its.exports of Louisiana gas by 6.5% <j

——from +960. By 1970, however, this percentage had increased |

to 62. 1%" If this trend continues, and an- assumption of

certificate jurisdiction by ‘the FPC is. certain to accelerate it,

gas volumes delivered to United’s. intrastate customers in

Louisiana will be constantly and progressively diminished.

The FPC’s assertion of power to reallocate’ diem direct -

Sale gas to resale customers will have «an abnormally severe _ i iene

impact on Louisiana- As€ommission Carver noted in his dis-

t to Opinion No. 610, 68% of the gas volumes delivered in

United’s New Orleans District (Green System—East) repre-

sent direct industrial sales.'4°. Furthermore, only 110,797

million cubic feet of the total of 1,607,609 million cubic feet

of firm’ gas used within Louisiana is iy. Hp paronwrnas and

commercial uses and purchased for resale. 4¢ In addition, the

FPC’s assertion of further power to control the end-use of

natural gas by ultimate consumers will have an equally dis-

- proportionate impact on Louisiana as compared to its impact

on other states. In the nation as a whole, only 37% of ali firm

gas purchased is used for industrial and-power plant genera-

3 Appendix F, 6a.

14a Appendix F, 6a. ii

14b United Pet. ‘fin. l, 28a.

14 Appendix M, 13a.

tion purposes while the corresponding. figure. for Louisiana is

84%, Agatn, firm gas used for electric generation is 89% of all .

“gas used for such purposes in Louisiana, as conipared to 49%

in, the -nation as a whole.! 44 The FPC’s end-use testlis-

regards the long established and universally recognized service

priorities of firm over interruptible gas. Thus, although 93%

_of_all ‘gas used in Louisiana is firm, 2s compared with aa -

it will bear the economic burden .

_and dislocation of United’s curtailments to a far greater eX-_-

-national average of 69%!4¢

tent than other states atves by this pipeline. - -

"Apart from ay considerations, the EPC S arbitrary.

_and capricious refusal to even consider the State’ ‘s ‘siggestion

of a nationwide allocation proceeding to fairly distribute

interstate gas supplies between states, leaving to such state

the responsibility for controlling the ‘end-use of gas by its”

own citizens, casts its so-called curtailment plans in a frame- .-

_work which i ignores such oppressive and severe discrimination

“and excludes any consideration of the equities of a producing

‘state.! 48 Finally, United’s Louisiana customers obtain all of

their requirements from. this pipeline; have no peak shaving

facilities or. underground storage. By way of contrast, its re-

sale pipeline custamers and their distributor customers obtain

only part of their requirements from United and have*both

14d Appendix L, 12a.

I4e- ia ties: M, 13a.

2. : - et

14f Opinion No. 606- A in the curtailment case denied the State’s

‘request, on rehearing, that the issues. -remanded to the examiner to.

-encompass consideration of suth \natters on ‘the basis of a single sen- ,

‘tence comprising the circular statement that “...we have determined

‘that the proper scope of this proceeding is that set forth in Opinion

606.” Commissioner Carver dissented from the denial of rehearing

principally because he’felt that, the FPC had missed an opportunity to -

correct some of the extravagances of its jurisdictional assertions (Sol.

Gen. Pet., Sa), ae” &. ‘

_ «+

peak shaving and underground storage capabilities.

In an “Environmental Impact Statement” ‘submitted by

United in the curtailment case on March 24, 1972, ‘it. admit-

ted that Gulf States customers have borne the brunt of its -

_vurtailments, Stating: - aa “¢

“The onan of United’s siltiienes to i

‘_ gates, power plants. and industrials within the

Gulf-South: from. Texas to Florida, as shown in EIS

_Exhibit 1, has, to date, indirectly resulted in the

only substantial impact upon\the ; environmen én

- ° any way.attributable to United’3/ curtailment: pro.

gram, since United's pipeline customers have been:~

able to offset the effect of United’ s curtailment by

utilizing alternate sources of gas. ' The geographical . ,

distribution area served by ‘these , /pipeline cus- x

\ tomers may also be taken into account’ because.

\United’s average day’ curtailment is spread:

equitably among all of United’ S$: ‘direct. and indirect ,

customers. As noted, however, the primary effect

of \ United’s _curtailment Secsen is in the-area

served directly by United.’’-

. Nia Gas Pipeline ce of America is an ex-

an but it obtains only a very small part. of .its total,

requirements from United.” (Emphasis,added).

| 4 e- or

vat

—

..Furthermore, the gas. volumes reallocated from ‘Louisi-

ana direct sale customers to resale customers are used to meet

the needs of. industriaf—not domestic and com. .

mercial—castomers in other states. United’s initial brief to

‘the FPC blandly admits that:

“The pipelines have significant interruptible on

Z which are served both directly and indirectly

through distributors (tr. 3270). Sales to these inter-

ruptible loads have continued in very substantial fA

eae 8

| quantities despite United’s curtailment (Item by

Reference -Z).” (Emphasis — .

tn othe words, the purpose of United’ s curtailment plans is

to divert firm direct sale gas to interruptible industrial con- -

“sumers served by.its pipeline gistributor, resale customers. -

SUMMARY OF ARGUMENT

THE FPC HAS NO STATUTORY POWER TO RE-

ALLOCATE THE GAS SUPPLIES OF DIRECT

SALE CUSTOMERS TO RESALE CUSTOMERS |

A. The FPC asserts an urgent need for statutory author-

ity. to override the terms -of direct sales contracts in times of

- emergency caused by a pipeline’s inability to meet its’ con-

tract committments to deliver firm gas. The thrust of the

arguments is that this court must construe the Act broadly,

and in disregard of the deliberate and meticulous exclusion of

direct sales from the scope of the agency’s regulatory powers

,_by Section I(b), because a new and unforeseen situation has +

“created. an emeTgency. But, Congress was fully aware of the ~

total dependence of pipelines and. their customers upon.a

depleting asset in finite supply: Section 7(b) is the only pro-*° *

vision of the Act which. specifically refers.to, gas shortages

and it permits an abandonment only upon findiiigs of We

pletion of the gas supply or that the public ‘interest peng

- such action. Certificates of public convenience gnd. necessity

3 Ea are granted onty upon.a showihg of satisfactory gas reserve

_ _ + lives and deliverability volumes.

classes of customers and fixing the rights and liabilities of the

seller and buyer- when the pipeline improvidently, assumes

obligations to deliver firm gas in quantities exceeding either

its gas supply or transmission capacity. Congress intended

_ interstate pipelines to have an absolute and ungonditional ,

obligation tec meet such firm delivery commitments. This ex-

plains why it did not equip fhe FPC with express statutory

powers to deal with the abnormal and extraordinary situation

of either an individual pipeline systemwide,, ora ‘nationwide,

gas ‘shortage. Congress delegated cxpress emergency authority’

to deal .with ghortages of electrical energy to the FPC in

Sections | 202(c) and 202(d) of the Federal Power Act. This

omission was deliberate and reflected an awareness of the

vital differences between the natural. gas and electric utility

industries. i

The FPC has repeatedly, and unsuccessfully, sought an

~ dmendment of the Natural Gas authorizing it to itt the |

available gas supply in emergency situations.

B. Petitioners. admit that *the FPC tacks rate and tariff

jurisdiction over direct sale contracts. Nevertheless, the FPC’s

_ order No. 431 required United and all other .pipelines to file

curtailment plans applicable | to such contracts as tariffs.

Thus, despite ifs disclaimer of jurisdiction, ‘the FPC is chang: -

ing the terms of suth contracts: by a a method clearly pro-

scribed ‘by Section 1(b). In asking: Congress to amend the Act: ,

by: granting authority to regulate the price and other terms,

of such contracts, the FPC has twice ve that it Was no

_sueh statutory authority... ae Ba

C. The FPC i is seeking to improve upon the provisions of

- the Act, by asserting plenary jurisdiction in an area where it has

been expressly granted only limited jurisdiction over the gas

delivery obligations of pipelines. Sections 4 and 5 of. the Act a

. authorize the regulation of service as welt as otigies. The —

All ditect. and resale contracts contain impairment of

deliveries terms establishing definite service priorities between

‘

eer

—

| °° ‘ ° ‘

prohibitions against undue preference or-advantage between

customers and. against unreasonable differences in services

between localities or classes of serviee apply to the allocation’

' of inadequate mainline transmission capacity of an interstate |

pipeline, among its resale customers (Michigan Consolidated °

Gas Co, v. Panhandle Eastern Pipe Line Co., {73 F.2d 784,.

789 (CA 6); Michigan Consolidated Gas Co. v. FPC, 203 F.2d :

895, 901 (CA 3); Panhandle Eastern’ Pipe Line Co. v. FPC,

204 F.2d675, 679-(CA 3)). Such authority can only be,

exercised “upon express findings that the pipeline’s service |

_priorities are unduly preferential or discriminatory. No such

ye . P iis 4 m ° “ 1 oa .

findings have. ever. been made with respect to either United’s

drect sale or resale impairment of delivery contract terms.

Both the ‘plain language and structure of Sections 4 and

5 of the Act limit the FPC’s powers to regulate rates and nie

_ services to gas delivered by an interstate pipeline to.a resale .

customer. The term “‘persons”.in Section 4(b)(1), and the .

powers of the FPC to change unduly discriminatory or pre-

: ferentia¥ rate designs under Section 5(a), are limited'in scope

to resale rates affecting gas distributors and the ultimate cen-—

- sumers purchasing from them. (Fuels Research Council, Bac.

v. FPC, 374 F.2d 842, 852-853). v

_D..:Petitioners claim that if direct sale cugtomers-obtain

gas for industrial purposes while resale customers are unable

to meet all of theif needs for domestic and commetcial use,

_there will be an undue preference to the former class of

service. On this premise; they atgue that the Court of

Appeals holding that the FPC lacks curtailment jurisidction’ - .

over direct salgs is inconsistent with, and underimines, the

‘_» agency’s jurisdiction under Sections 4 and 5. However, the

-“ FPC lacks statutory authority to consider the énd-use of gas

or conservation{actors in proceedings under-Sections 4 aij

Research Council, Inc. v./PC, 374 F'2d 842, 853-854)

7); City of Detroit v. FPC, 230 F.2d 810, 816-817 (CADC)).

i See ar

nae

. : . ; 4 = |

id $

(FPC.v: Hope Natural Gas Co., 320 U.S. 591, 608-614; tus “4S

PN,

2d ROBART RAMEE, EE CIEL MOD ial NS NABI RE a oes! pe ae ,

‘

Piainly then, the FPC chnnot establish priorities, regulating

different classes of end-use by ultimate consumers, in, the

exercise of its rate and tariff jurisdiction. Nor’can it eliminate

don

ptice discrimination between resafe ‘and diréct sale customers _

to equalize rates and charges’ between these Classes of service.

(Panhandle Eastern Pipe Line Co. v. FPC 3240. S. 635, 647).

By the same token, it cannot remedy servic&. discrimination

arising from more. favorable impairment of dglivery terms in:

digect sale contracts. , ot oat &

E. “The FPC has no statutory: sisi to reallocate gas Be

supplies betweén direct sale and resale customers or to con-

trol the end- -use of-natural gas by ultimate consumers, ..n ¥FPC

_v. Transe ontinental Gas Pipe Line Corp., 365 U.S. 1, +7: this

Court held “... the. Commission’ S here under: Section ‘y-

"are, by definition, limited. . .”’; it “. ..cannot ordeg a natural

gas «company to sell gas att ees that it favors; it can only

"exercise‘a veto power over proposed trghsportation and it can

only do this when a balance of ail the circumstances weight .

against certification.” An effort by the FPC to reallocate ‘the

portion of the mainline transmission capacity. of an interstate:

pipeline in excess of its delivery commitments to/firm (jis

tomers from direct sale “industrial users ‘to resale ¢ mers

_.was held unlawful under’ Section’7(a) of the Act bec: duse it

- would impair the pipeline’s ability to render adequate Service

to its existing customers. In that.case, the FPC was exercising © °

its Section 5(a) authority to eliminate unduly discriminatory

or preferential practices or contracts and its Section 7(a) au-_

- thority upon. a finding that¥t was in the public interest for

the ipeline to supply additional capacity to its resale cus- -

tomers. CGranite City. Steel Co., v. FPG 320 F.2d 711, 713

(C. A. D.C.) monatail

| a; | 7 i“

‘F. There is no merit to the EPC’ s novel ‘and. oes

dented theory that it has concurrent and coextensive juris-

diction over interstate, transportation and sales for resale

under Section I(b). This one of the Act is designed to

fie

: | .

a...

-- evade the prohibition in the very samé section against regula-

tion of any aspect of the prices and terms of direct sales. This

is an argument that the FPC can achieve indirectly what Con-_

gress has prohibited it to do directly,

In any event, Section I(b) is-nof a grant of any self-

executing substantive power. Rather; it is a mere definition

of the scope of the regulatory powers conferred by the Act

which is cast.in terms of the types of transportation and sale -

transactions Congress committed to federal regulation and ~

reserved to state regulation. Each of the substantive sections

of the Act empowers the FPC to regulate a different subject.

and the indiyidual powers thereby conferred must be exer-

cised in accordance with the specific procedures prescribed

by Congress. Furthermore, in implementing its powers under

any section of the Act, the FPC cannot claim implied power

which was expressly withheld in another séction of the Act.

(Panhandle Laster Pipe Line Co. v. FPC, 204 F.4d 675}

679-680 {CA 3); Panhandle Eastern Pipe Line Co. v. FPC.

247 F.2d ™, | 310-313 (CA 3)).

In a completely parallel situation, this Court has spec-.

ifically condemned an attempt by the FPC to combine Sec-

‘tions 1(b), 4, 5, 7, and 16 for the purpose of circumventing a

specific exemption in Section 1(b), concerning production or

gathering (FPC v. Panhandle Eastern Pipe Line Co., 337 U.S.

499, 504, 507-508).

G. Petitioners’ attempts to imply coextensive and con-

current. power over transportation and sale also run afoul of

the interrelationship between the certificate and rate sections

of the Act. Section 7 is, the statutory vehicle for initially

dedicating natural gas supplies to interstate movement and

_ for initially authorizing the use of pipeline ‘facilities for the

interstate transportation ‘or sale of such gas supplies. The

powers granted to the FPC in Section 4 and 5 only become

operative aftef such initial certification of natural gas in inter-

ee Oe *

NSS ek im i <A Pets a.

state commerce by means of a permanent certificate. This

’ very contention was specifically rejected in United Gas Pipe

‘Line Co. v. FPC, 388 F.2d 385, 388 (CA 5), where the FPC

justified its classification of wholly unregulated direct saleS as

regulated ‘business activities, Nor the purpose of applying its

consolidated tax return savings formula, on the ground that.

such sales were subject to its certificate jurisdiction with

respect to transportation. The Court of Appeals held that the

FPC’s “certificate jurisdiction is not the same as its rate-juris-

diction”. ~

In any event, even if the FPC had coextensive and con-

tinuing jurisidiction under the certificat®and rate sections of

the Act, its claimed power,:o reallocate gas supply volumes

would only be exercised if such transportation authority is of

a continuing nature. But, it is hornbook law that an admin- —

istrative agency cannot alter, or amend a previously issued

_ permanent certificate in order to implement a changed regu-

latory policy unless its enabling act specifically provides for

modification or revocation of such certificates {United States

v. Seatrain Lines, 329 U.S. 424, 428-432; American Trucking

Association vy. Frisco Co., 358 U.S. 133, 146; Watson Bros.

Transportation Co. .v. United States, 132 F. Supp. 905 (D.C.

Neb.) aff'd. 350 U.S. 927). The FPC’s reallocation of gas

supplies is such a change in posey and the act vo. not

confer such authority.

;

€)

H. United filed with the FPC tariff peovisions, appli-

~ cable for the first time to its direct sale customers ang to its

resale customers served by the’ separate intrastate pipeline

systems. in Southern Louisiana regulated by the LPSC and in.

derogation of their contract rights, Which the agency made

effective without any statutory findings that the existing con-

tract terms were unduly preferential or discriminatory or that

the revised terms were fair and lawful. But, the’FPC cannot

utilize the tariff tevision procedures of Section 4 to change

either the rates or terms of service rendered.to even interstate

14-

resale customers subject to its jurisdiction, unless they, have

consented io such unilateral changes by pipeline suppliers in

their contract rights. (United Gas Pipe Linc Co. v. Mobile Gas

Service Corp., 350 U.S. 333, 342-344: United Gas Pipeline

Co. v. Memphis Light, Gas and Water Division, 358 U.S. 103,

112-143), The FPC seeks.to evade the rule of Mobile on the,

strained and tenuous theory that although a pipeline cannot

unilaterally change the terms of its contracts governing ser-

vice priorities in the event of a gas shortage, the agency may

‘order such companies to formulate curtailment plans real-

. locating their gas supplies from direct sale to resale customers

and to file such plans as tariffs. This is a brazen and trans-

parent. attempt to circumvent the éxpress requirement of

Section S(a) that as a condition precedent to the exercise of

its power to prescribe any rate, practice or contract the

agency must find the existing tariff provision unlawful. . .

|. Petitioners claim that unless that the FPC has power to

override the terms of direct sale contracts dealing with impair-

ment of Weliveries, there: will be an “attractive gap” in the

regulatory scheme” |

However, Congress committed to the-excfusive regulatory

‘control of the states the rate, licensing and service aspects of

direct sales made -by use of the interstate facilities of a juris-

dictional pipeline (Panhandle Eastern Pipe Line Co. v. Public”

Service Commission of Indiana, 332 U.S-507, 512, 513-514,

516-519; Panhandle Eastern Pipe Line Co. v, Michigan Public

~ Service Commission , 341 U.S. 329, 333-337). The Act with-

-held from the FPC power to remedy undue discrimination or

preference between such state regulated direct industrial con-

sumers and federally regulated-resale distributors and pipelines,

and the industrial consumers they serve, because the granting

of such power would have invaded the constitutional prerog-

atives.of the states to regulate such commerce which have not

_been limited by the, Act. Thus, the FPC’s regulation of direct

sales violates the Act and invades powers reserved to the States’

”~

- under the Tenth Arnendment to the United States Constitu-

- power to change: the. price or terms of direct Sale contracts

and that agency’s repeated and unsuccésful attempts to have |

tion.

Apart from these considerations, the FPC’s individual

pipeline company, systemwide basis for rationing and re-

allocating gas deliveries creates, rather than corrects, undue

and unlawful discrimination and preference between end-

users of the same class in each state and in different stafes. It

can insure, dt most, only equal treatment to all customers of

the same pipeline. It cannot afford equal treatment to end-

users of the sdme class whether they are located in the same

state or in different states. However, the State’s suggested

nationwide approach of -allocating gas supplies to states,

leaving to each state the responsibility for controlling the

end-use of gas by its own citizens, would treat all states and —

localities fairly.

Moreover, the FPC is exceeding its statutory powers and

invading prerogatives Congress deliberately left to the states

when it seks to control the end-use of gas by ultimate con-

sumers. Each state is entitled to-its own choice of service

priorities and is not obliged* to’ make them identical with

those. of other states. While admitting that it lacks jurisdiction

to control end-use of riatural gas by ultimate consumers, the

FPC is uatewieny exercising such jurisdiction.

The State submits that the explicit language of the Act,

which leaves no latitude for inference concerning Congres-

sional intent; its clear legislative history; the consistent ad-

ministrative interpretation of the Act by the FPC that it lacks

the Act amended to grant such authority compel the con-

clusion that uniform federal regulation is neither appropriate

nor lawful insofar as direct sales are concerned.

<_<

THE COURT OF APPEALS JUDGMENT THAT

UNITED’S GREEN SYSTEM IS AN IENTRA- —

STATE PIPELINE WAS NOT AN ABUSE OF ITS *.

JUDICIAL DISCRETION ee

The issue decided on the merits by the the Court of Appeals

‘was whether, by the-self-serving and u unlawful acts of United,

this intrastate system: has been converted to an interstate

system to oust the LPSC ef its lawful jurisdiction. This i is not

the normal situation of a dispute between a private party and

a federal administrative agency concerning a matter within its

- established statutory powers to.which the doctrine of ex-

haustion 6f administrative remedies applies. Rather, this is a

‘controversy concerning conflicting and mutually exclusive.

claims. of jurisidction between Louisiana and the Federal

Power Commission. The supremacy clause of the Consti-

tution is inapplicable to resolution of this issue unless and

until the courts have rendered a final judgment in favor of

the FPC. The FPC has no authority at alk over intrastate

commerce and Section I(c) of the Act reserves regulation of

intrastate pipelines and of local distribution systems entirely

to state regulation. The FPC must defer to the-states on

matters of such poy local concern.

Even if this case is regarded as a conventional injunction

proceeding, the Court of Appeals did not abuse its judicial

discretion. The cases .cited by petitioners involve attempts

by a private party challenging the jurisdiction of a federal

administrative agency to enjoin or to otherwise terminate. by

declaratory judgments, administrative proceedings: concerned

with the determination oT agony. jurisidictional facts”

which will determine whether that pafty is subject to regula-

tio No- such effort was:made here and the administrative

and judicial review process continue completely unimpeded

, and uninterrupted. |. . ?

li]

«17 :

This Court wn rejected the primary meen made here

that the, FPC is the sole competent judge of the scope of its

own jurisdiction and that courts must defer to the pendency

of its administrative proceedings until it can determine its

own power and the necessity-.of its exercise (FPC v.Pan-

handle Eastern Pipe Line Co., 172 F.2d-57, 59-60, atfd,

_337 US. 499, 514-515). Where an agency is clearly acting in

excess of its statutory authority exhaustion of administrative,

remedies is unnecessary (Leedom v. Ayne, 358 U. S. 184).

Unlike the cases cited by putiionciis where the ‘only

exposure to injury of the parties seeking court relief was the

burden and expense ‘of participating: in an agency hearing

which this Court ‘does not view as “irreparable injury

(Petroleum Exploration, Inc. v. PSC, 304 U. S’.209, 220-221),

LPL alleged clear irreparable injury. The question of certifi-

cate jurisdiction was decided by the Fifth Circuit upon the

basis of undisputed ficts and purely as a matter of statutory

interpretation and the applicability of judicial: precedents.

Such issues are within the, specialized competence of the

courts, not that of the FPC. If petitionérs’ exhaustion view

has merit, the FPC’s issuance of a final opinion and its denial

of reharing moot the very procettral issue they seek to hav

reviewed by this Court.

a oon

° j <

ARGUMENT _ ©

THE FPC HAS NO STATUTORY POWER TO

REALLOCATE THE GAS SUPPLIES OF

DIRECT SALE CUSTOMERS TO RESALE CUS-

TOMERS ©

A. THE FPC DOES NOT HAVE ANY EMERGENCY

STATUTORY POWER TO RATION GAS DE- .

LIVERIES AMONG THE CUSTOMERS OF AN IN-

TERSTATE PIPELINE BECAUSE OF A SYSTEM-

WIDE OR NATIONWIDE GAS. maree SHORT-

AGE i

The FPC asserts that there is a “need for'Commission.

authority to override the terms of the [direct sale] contract

in times of emergency such as when a pipeline cannot meet

its contractual conimitment because of inadequate gas sup- .

‘ phies.”"'> The FPC also argues that its express statutory

power to authorize -abandonments under Section’ 7(b) of

the Act is not sufficiently flexible to deal with: temporary

shortages of gas during a period of emergency,'® although

it pointedly ignores the possibility of a conditional aban-

- deénment which would permit resumption of full contract

deliveries when the shortage ends. The. thrust of the FPC’s

arguments, supported by United, is that this Court must

broadly construe the Ket in disregard of the deliberate and

- meticulous exclusion of direct sales from the scope of the’

agency’s regulatory powers by Section 1(b) bee: ause a new

and unforeseen situation has created an meergency. The

State saa, epee that Congress was fully aware of the

ia LB. at 18.

16 1B at 18-19, ftn. 15.

~ : /

| ~ & “ fo

19 ; eee

. /

i : e

‘

possibility of gas ‘supply shortages when if ‘eenstetilé Nat-

ural Gas Act aid has. repeatedly refused the FPC’s requests

for express spueted to deal with such emergency. short:

oe. Ctti«‘in ; ; >

The natural gas pipdline: industry is completely de-

pendent upon a depleting asset in. finite <iipply. Congres-

sional awareness of this circumstance -is reflected in pivotal

provisions of the Natural Gas Act designed to insure a

dependable and uninterrupted supply of gas to the ultimate

consumers served directly or indirectly by interstate pipe-

lines.’ :

‘Section .7(b) prohibits a-partial or total. abandonment

of any facilities or service subject to-FPC jurisdiction unless’

basis of a specific finding that . the available supply: of-

. natural gas is depleted to the extent that the continuance

of service is unwarranted” or’ that the public interest per-

mits such abandonment. Both the FPC and the; courts have

held that this statutory protection encompasses a reduction

in the volumetric quantities of gas delivered as well as a

complete cessation of service (Dixie Pipelitte Co., 14 FRC

106, 114; Panhandle: Eastern Pipe Line Co.,. 22 FPC 674,

681 683-684; Panhandle Eastern. Pipe Line Co:, 14 FPG

264 affirmed 236 F.2d 289 (CA.3); Willmut Gas and Oil

Co., v. United Gas Pipe Line Co., 12 FPC 132, 138-139;

Panhandle Eastern Pipe Line @o., v..Michigan Consolidated

Gas Co,, 177 F.2d 943, 945 (CA 6). -

~_—"— . ;

Section 7(a) authorizes the FPC to require exteasions

of pipeline transmission iacilities to serve the needs of gas

distributors in communities adjacent to such main lines but

“expressly. prohibits any ‘compulsory physical connection or

‘that agency. authorizes such action, after application by the

pipeline company, full evidentiary hearings and upon the -

sale of natural gas which would impair the pipeline’s:

_ability to render adequate service to its customers’.

' The FPC has always insisted upon a showing that there are

eee

adequate gas reserves firmly committed under contracts: to

support the construction and’ operation of any facilities -

‘. extentions sought to be certificated under Section He)?

and Section 157.14(a)10) of the Regulations under the ”

Natural Gas Act requires a ‘comprehensive showing by the

applicant. to establish satisfactory gas reserve tines and de-

liverability volumes.

Both direct sale customers and resale customers of —

interstate pipelines have shown equal awareness of the need ©

to protect themselves against the danger of a gas shortage

in the event that their pipeline supplier improvidently as-~

sumes obligations to deliver firm gas in quantities qrcee ding

either its gas stipply or transmission capacity, Thus, direct

sales ‘contracts and. resale tariffs invariably contain impair-

ment of déliveries” provisions establishing se rvice priortties

. between different classes of customers and ‘defining the

respec tive rights and liabilities of the seller.and buver in the

event of a failure to meet contractual delivery obligations.

Interstate pipelines differ from conventional public

utilities because’, they are not legally obligated to meet

service demands by. potential new customers or to furnish:

additional service to existing customers. The Natural Gas_

Act leaves such companies free to choose their clstomers

andgto make voluntary business judgments concerning the

~ expansion of their transmission capacity and the assump-

tion of contract obligations to deliver additional volumes of

gas. 18 Section 7(a). specifically withholds from fhe FPC the

authority to conipel the enlargement of transportation facil-

17 Trunkline Gas Co., 21 FPC 706: Te as Illinois Natural Gas

Pipeline Co., 24 FPC 980, Tennessee Gas —" -» 30 FPC

764.

18 Panhandle Eastern Pipe Line ©o., 204 F.2d 675, 680 (CA

*3). . ‘ . ; ‘ e

ities.

—_ been geared to the present and future aeeds of

Renee oo eae on te See i SS MMP Nathl 9 PN

31. e-

‘ ae a e

'9\Pipeline transmission capacity and gas reserves has

resale and direct sale customers. |

r ; \

| ‘ ss

These background considerations conclusively dem, d-

strate that Congress intended interstate pipelines to have an

absoliite and ‘unconditional obligation to meet their con-

tract commitments’ to direct sale and resale customers and

explain why it did not find it nécessary to.equip the FPC

‘ with express statutory powers to d&al_ with athe abnormal

and extraordinary situation or either an individual pipeline

with a systemwide Bas shortage or with a nationwide gas

shortage, i. ; :

Congress was faced with ‘a different situation in fram-

ing the statutory scheme of the Federal Powsr Act for the

regulation. of interstate cléctric utilities. .Electricity .is an

intangible “commodity whereas natural gas is ‘a tangible

‘commodity. Electrical energy cannot be stored whereas _

natural gas occurs in producing wells which are inherently

‘storage facdities permitting withdrawal at-Known maximum

-deliverdbilt¥ rates. For i. cse reasons, Congress specifically

authorized the FPC to deal with emergency shortages of

electrical energy in Part Il of that: Act. Section 202¢c)?9_

provides that during a war, 6r whenever the agency, deter-

’ Central West Utility Co » EPC. 247 F.2d 306, 310-313

(CA 3).

20 sStion 202(c): During the continuance. of any war in

which the United States is engaged, or whenever the Commission _

determines that an emergency exists by reason of a sudden increase

in the demand for electric “nergy, or a shortage of electric energy or

of facilities for the generation of transmission of electric energy, or

~of fuel or water for generating facilities, or other causes, the Commis-

sion shall have authority, either upon its own. motion or upon

complaint, with or without notice, hearing, or-report, to require by

(Cont. next page)

, :

‘

‘mines that an emergency exists by ‘reason of :a“%sudden

“increase ino demands for electric energy or that. there’ is a

shortage of energy -or of facilities or. materials for its-gener-

ation Or *ransmission, the FPC shall require temporary.

connections of facilities and such other: generation, delivery,

interchange and transmission. arrangements ‘as well best -

meet. the emergency ners and serve the public itterest.

Section 02a)?! expressly exenipts from FPC_ juris-

diction: any Cmporary connections or facilities made or

cojistructed to deal with such an’emergency by an inter-

* (20°Cont.) — RAS pas

“ ,

order such temporary age facilities and such generation,

delivery, interchange, er transmésion, Qt electric energy as in its

judgment. will best meet the emefgency and:serve the public interest.

If the parties affected by such order fail ‘to -agree upon the terms of .

any artdangement between them in’ carrying out such order, the

C ommission, after Nearing held either before’ or after such order takes

effect, ‘may ‘prescribe by supplemental order such terms as it finds to

be just’'and reasonable, including the compensation or — ;

which should be paid to or by _ such, party. (49 Stat..849. |

USC o824a (c)).

=| Section 202(d): During the continuance of any emergency

requiting immediate action,.any- person engaged in the transmission or

‘sale of electric ‘energy and fiot otherwise subject to the jurisdiction of

“the Commission may+make such temporary connections with any

public utility subject to the jurisdiction of the Commission’ or may

construct such temporary’ *tacilities. for athe transmission of electric

energy in interstate commerce as may ‘be ‘necessary oF appropriate to

meet such. emergency, and shall not become subject to the Jaris-

diction of the Commission -by reason of such temporary, connection

or temporary construction; provided, that such temporary connection

shall be discontinued or such temporary construction removed ot

. otherwise disposed of upon the - termination: of such emer-

gency: Provided further, that upon approval, of the Commission

permanent connections for emergesicy use orffy may be ‘made here-

under. (49 Stat. 849: a6 U.S.C .\824a(d)). F

e°

“a

‘

time it modeled the - propose

~ of the’ broad. grant of -authority to deal with a national

8 8s, °

state electric. utility. It also limits the duration of such

temporary connections and’ construction to the. period - of

_emergency, and permits permanent connections for emer-

“gency, use to be _continued thereafter: only er specific

approval by - the FPC. a, “, 8

Congress delegated. such . express emergency authority a

to the FPC with respect to electric utilities on August 26,

(1935. But, it failed to make~any corresponding delegation

of emergency authority in the Natural Gas “Act enacted on

June 21, 1938. The State submits that this was not an

_- Oversight but a deliberate omission’ and attributable to Con-

gressional awareness of the vital differences between the Bas

pipeline and electric utility industries. :

The FPC has-long been aware ‘that it lacked authority

to deal with emergency situations arising from a ‘shortage of

‘natural gas. “it repeatedly» requested) that the Natural Gas

Act be .amended “to provide specifically for control by the

~ Commission of the end-use of natural gas. when required for

nationak defense or to safeguard the available supply” (31

FPC Ann. Rep. -145 (1951); 32 FPC Ann. Rep. 152 (1952)

and .22 FPC Ann. Rep. 154 (1953)). For. four years begin-

ning in 1954, it requested narrower legislation. “to provide

specifically for control by the Commission .of the allocation

of natural gas when required’ for national défense or’ to

safeguard the available supply in -emergency situations”

(Emphasis. added).- 34 FPC Ann. Rep. 170 (1954); 35 FPC

Ann: Rep. 182° (1955);’36 FPC ‘Ann. Rep. 18 (1956): 37

FPC Ann. Rep. 24 (1957): 38 FPC Ann. Rep. 16 (1958)):

In: January, 1970 the FPC again formally asked Congress to

enact legislation granting it ir ney powers and: this

ud Wwgislation-upon the pattern

-emergency vontained in’ Section 202 of the Federal Power °

Act. , The FPC’s Annual Repott for 1970 summarizes this .

request:.. : 7 ee ee

. _ ; - . ed iiss

pm,

a“

ny,

——

‘2

“Spot shortages of natural gas which became

apparent -during the fiscal year and which are

expected to to increase in the foreseeable future

Suggest urgent need for Congressional action to

alleviate these problems and, that the Commis-

sian’s jurisdiction to do so should not be subject

0 to challenge. This proposal which would add 4

new subsection, to Section 7 of the Natural Gas

Act would enable the Commission to determine

when an emergency exists so_as to require the

construction of temporary connections’ of facil-

ities and extensions of facilities. and the delivery,

-~ interchange, transportation, load-curtatlment and

allocation of gas by any gas company, whether or

net it is otherwise subject to the Commission’s

jurisdiction. Undisputed authority to meet such

crises as they arise is necessary for effective regu-

: /lation of the natural gas industry (p. 8).” (Em-

’ / phasis added). ee a a

/ . Thtse repeated and unsuccessful attempts to obtain

sxplicit. emergency powers caset grave doubt upon the

. /FPC’s present claims that it has plenary jurisdiction under

‘its enabling Act to deal with the alleged nationwide gas

supply emergency or with United’s systemwide gas shoit-

age.

. -The only provision of, the Natural Gas Act granting

emergency powérs is the portion of 7(c?? which applies

22 Section 7(c): Provided, however, that the Commission may

issue a temporary certificate in cases of emergency. to assure main-

tenance of adequate servicé or to serve particular customers, without

notice or hearing. pending the determination of an application for a

certificate, and may by regulation exempt from the requirements af

this section temporary acts or operations for which the issuance of a

certificate will not be requiréd in the public interest.

. <

iad -

. .

only to the limited situation where issuance of a temporary

certificate,-without notice or hearing. to a pipeline is neces-

sary “to assure maintenance of adequate service to to serve

particular customers” during the pendency of hearings.

. Such .emergency authority cannot be utilized to- impair

adequate service or terminate service to particular custom-

ers under curtailment plans. This specific and limited au

' thorization negates the FPC’s effort to imply much broader

and wholly different emergency powers which were request-

ed from, but denied by, C ongrens. fe .

In any event. the FPC’s ‘efforts to characterize the

curtailment plans of United and other pipelines as attempts

to deal with an emergency situation are inaccurate and

misleading. Neither United nor such other pipelines have :

proposed that the reduction in contract delivery volumes be

effective for-only a specified and limited period of time.

Rather, these “pipelites have requested both thier direct sale

and resale customers to execute new long term contracts ~

permanently reducing their present delivery entiflements.

B. THE FPC HAS NO STATUTORY POWER -TO

CHANGE THE TERMS OF DIRECT SALE CONTRACTS

GOVERNING DELIVERIES OF GAS DURING SHORT-

AGES -_ ‘

‘ The -impairment of deliveries provisions if direct sale

contracts are “terms” governing the service provided in the

event of a gas shortage. The FPC cannot abrogate and

nullify these contrag terms concerning the liabilities and

rights of fhe pipeline and its-direct customers merely be-

caase the contingency to which they are drawn has mater-

ialized. Any effort by this agency to regulate such matters

is a direct and prohibited assertion of power over direct

sales. 2

Bee. aes 6

Both. the FPC23 and. United?4 admit that the agency

‘lacks ‘rafe jurisdiction over direct industrial sales. Neverthe-

less. the FPC’s Order No. 43175 Required United to file a

plan providing for the curtailment of direct sales in the’

form of new and amended tariff sheets which become .

effective, under the provisions of Section 4(e) of the Act,

during the pendency of an investigation of the reason-

ableness and lawfulness of such plans. Thus, despite its

disclaimer of rate and tariff jurisdiction over direct sales,

the FPC_ is changing the terms of direct sale contracts. This

clearly violates ‘the express prohibition of Section kb)

which excludes from the regulatory powers of the FPC any

regulation of sales for consumptive use. : ‘

The FPC plainly lacks the authority to require “a pipe-

line to file a tariff covering the pnce and terms Of a direct

sale because this would give it the continuing rate and

service jurisdiction tt exercises over sales for resale as op-

posed to the initial . certification jurisdigtion it has over

transportation. An.attempt by a ‘divided FPC. to, require a

pipeline to file a tariff applicable to direct sales contracts in

order to obtain such continuing sales jurisdiction was found

unlawful in Colorado Inte?state Gas Co. v. FPC, 185 F.2d

357 359, 360 (CA 3), where the court stated: ;

“The power of the Commission to regulate -

the sale of natural gas by Colorado Interstate

extends only to sales to buyers for resale and_not

to sales to buyers for their own consumption.

That being the extent of the authority which

Congress has conferred upon the Commission that

bedy is without’ authority to compel Colorado

*9 36 Fed. Reg. 7505, FPC I,B., pp. 50-54.

Interstate to make its gas ‘tariff applicable to any

sales other than those ‘for resale. It is beyond the

power of the Commission to require a natural gas

‘company within its jurisdiction to make its tariff

applicable to sales which are not within the regu-

latory power of the Commission for this would

be in effect to regulate such sales. Indeed, the

Commission itself recognized this in 1945 when

in accepting Colorado interstate’s earliér tariff

changes for filing it specified that they were to

be effective only for sales ‘for resale ‘for ultimate ~

public consumption’.” (Emphasis Added).

The FPC also cannot amend an interstaje pipeline’s ©

filed rate tariffs to compel continued deliveries of gas under

a resale rate schedule- for the purpose of permitting the

purchaser to divert such volumes from resale channels to

direct consumptive use in a power plant. In City of Hast-

ings, Nebrasks v: FPC, 221 F.2d 31, 32-33, 36-39 (CADC

cert. denied, 349 U.S. 920) the court held such action

beyond the scope of the FPC’s statutory powers as ‘a

prohibited regulation of a direct sale, stating:

“In effect, the Commission says when the

City cancelled its contract ‘for power plant gas, it

put itself into the position of having no no.con-

tract for, and no right to; power plant gas, and

the Commission is unable to write a new contract

for the parties. The Commission says it may not,

because it cannot, although it has recommended

to Congress that it be given authority to, regulate

sales not now governed by the statute. -\t there-

‘fore concludes that the complaint must be dismis-

sed.”’ (Emphasis Added). :

As the District of Columbia: Court of Appeals observed

in City of Hastings, cited supra, p. 12, the FPC had re-

ee er ere |

Se ne 28 -

_ quested authority to regulate direct sales before 1954.

* Again, in “1963, tKe FPC recognized its lack of statutory

authority to regulate either the rates or terms of direct

industrial sales and asked C congress for such legislative au-

thority:

“At the time the Natural Gas Act was adopted in

1938, it- was not believed that Commission regu-

lation of the rates dnd terms of such sales was

necessary to protect the purchasers from disc rim-

ination or unduly ‘high ratés, or that such sales

could have any adverse effect upon as “eM

sales for resale. Both of these views have ptovedn

to be incorrect in a significant: number of situa-

tions. Thus, while the Commission is not suggest- veal

ing that this type of sale if inherently improper

or should be generally prohibited — on the con-

trary, in many situations they have been shown.

to be mutually beneficial” to all interested parties

- it is believed that bringing sucli sales within the

range of Commission regulations would materially

‘enhance the effectiveness. of Commission regu-

lation of natural gas in the public interest. (1963

FPC Annual Report, pp. 405). (Emphasis Added),

‘ The FPC justified the proposed legislation by ‘referente

to the freedom of interstate pipelines under the Natural

Gas Act to engage in discriminatory practices, respecting

service, by preferring industrial consumers they served -

directly to, industrial consumers served by their resale cus-

tomers and by diverting natural gas from superior domestic

use to industrial use.(Appendix-N,14a-21a). In a letter dated

June 12, 1963, from then FPC Chairman Joseph C. Swidler

td President of the Senate Lyndon P. Johnson; the FPC

‘stated: : wet

“Under existing law the Commission’s au-

wry Lee E “

thoxity is limited to sales for resale in interstate

commerce: ‘hence, the price and, other terms of a

direct-sale by a pipeline to an industrial consumer

are outside the sphere of this Commission’s regu-

ent authority.

. the Commission strongly recommends

that it.be giyen jurisdiction over direct industrial

sales by natural gas companies. This authority

will enable the Commission to require that inter-

state #ndustrial gas sales will be made at such -

piicgs and on such terms as to realize the poten-

*tial benefits of such sales to both industrial and

domestic consumers.’ (Cong. -Rec. 11084,

l 1085). (Emphasis Added).

The FPC cannot cite a single agency decision, whether

or not litigated in the courts, in which it has changed either

the price or any. term in a direct sale contract authorizing

the interstate transportation of natural-gas under a perma-

nent certificate of public convenience and necessity.

C.. THE RATE AND TARIFF SECTIONS OF THE

“ACT GRANT THE FPC LIMITED, NOT

PLENARY, POWER OVER SERVICE AND

APPLY ONLY TO RESALE CUSTOMERS |

~The FPC claims plenary authority to approve or pre-

. scribe * ‘curtailment plans” which allocate reduced gas deliv--

ery volumes to both the direct sale and resale customers of

an interstate’ pipeline in derogation of its contract and

certificate obligations. Its exercise ef such authority, which

is asserted for the*first time in its history, will have drastic

and far-reaching consequences.

The FPC proposes to obliterate judicially sanctioned

differences in treatment: between existing and few custom-

ers and the universally recognized service priorities of firm

ee a

over interruptible customers. It has-accepted for filing, and

permitted to become. effective pending a determination on

the merits, the curtailment plans of United and of other

pipelines which reduce gas deliveries to direct sales custom-

ers and reallocate such gas volumes to resale customers.

Such curtailment plans are effective as to, both preserit and 1

potential gas. shortages. While asserting an urgént need for

such plenary authgeffy to deal with a nationwidy’gas supply

shortage, the FPC has permitted curtailments by pipelines -

who are not experiencing such a shortage but ‘have elected

to fail to proivde additional’ transmission capacity needed

to meet firm contract obligations jo existing customers

because of the. additional risk of investing: in new (or en-_—

larged facilities when there is a possibility that potential

future shortages will diminish profit margins.?® .

Furthermore, the FPC has made manifest its intention

to insure that pipeline rates and charges for direct sale and

_ resale service will be “fully compensatory” and thus pro-

vide financial incentive to” encourage exploration for and

- development of new gas reserves.2? The State submits that

s gas allocation proceedings are not the proper vehicle for.

dealing with this problem and that the alleged emergency is

being used as a pretext to circumvent the limited powers of

the FPC to relieve United of financial obligations to direct

sale customers*® which were profitable but no longer: pro-

26 Order Suspending Proposed Tariff Sheets, ‘ete., p. 4, issued

August 5, 197! in El Paso Natural Gas Company, Docket RP 72-6:

Sec. 11.3 Curtailment Procedures, El Paso Natural Gas Co., FPC Gas

Tariff, issued July 2,.1971. ,

27 Opinion 606, FPC Pet. 70a; Louisiana Power and Light Co.

v. United Gas Pipe Line — F.2d (CA 5), January 14, 1972,

_” Jd. at Ja. h -

on .

? :

28 See Di cussion, infra at p. 56.

: ee

; k "

31.

vidé as great a profit as that pipeline can earn by diverting

the gas volumes fron) those customers who purchased under

low price, long term contracts to restae customers who

must pay substantially higher and continuously escalating

prices under rates fixed by the FPC.

No provision of the Act grants the FPC any authority

to override: and supersede all existing contracts between a

pipeline: and its direct sale and resale customers, as well as

the certificate obligations of such pipelines. The term “‘eur-

_ tailments”’ is alien to the Act, as is the concept of “plenary

jurisdiction’ over the gas delivery obligations of pipelines.

~The FPC is seeking to improve the Act, from its stand-

point, by inducing this Court to accept a strained and

tenuous interpretation of statutory provisions which delib-

erately denied it any authority over the prices and terms of

direct | sale service and only limited authority of the type

‘sought to be exercised ¢ over "resale service.

Sections 4 and 5 of-the Act authorize the regulation °

of service and well as of rates. The prohibitions-of Section ‘

4(b) against the action of a natural gas company in accord-

ing any undue preference or advantage to one resale cus-

tomer over another or in maintaining any unreasonable

‘difference as between localities or classes of service has

been held applicable to the allocation of inadequate main-.

line transmission capacity, of an interstate pipeline,.among

its resale customers (Michigan Consolidated Gas Co. v. Pan-

handle Eastern Pipe Line Co., 173 F.22d.784, 789 (CA 6):

Michigan Consolidated Gas Co. \v. FPC, 203 F.2d 898. 901

(CA 3); Panhandle Eastern Pipe\ Line Co. v. FPC, 204 F.2d°*

675, 679 (CA 3)). But, the FPC. can only invoke its

authority under these gsections - upon a finding that the

pipeline’s service priorities are unduly preferential or dis-

criminatory stnce its authority to regulate service: is based’

upon the implementation of the statutory objective of

a2 "32

remedying such unlawful practices (Michigan Consolidated

Gas Co. v. Panhandle Eastern foal Line Co., ‘cited supra, at

789). og

The FPC itself-has recognized these limitdtions upon

its powers to control and limit gas delivery volumes in the

only case in which it has ever exercised such authority,

City of Detroit v. Panhandle. Eastern Pipe Line’ Co., 6 FPC

196, 197, 203, 204, and a series of relafed cases all involv-

ing the same parties and a single interstate pipeline. These

cases are distinguishable in several vital. respects. They rela-

ted to a shortage of pipeline transmission capacity rather

' than to a gas supply shortage. The .reduced gas volume.

»* allocations were made effective by FPC orders only with

- respect to Panhandle’s resale customers, gas distributors and

other interstate pipelines. Panhandle’s contracts with these

jurisdictional resale customers were filed with the FPC as

tate schedules under Section 4(c) of .the Act ‘but did ‘not

contain ‘‘any provisions respecting curtailment of firm serv-_

-ice when demands on ‘the pipeline system exceed its

delivery capacity.” (at 202) No party ever’ challenged in

court the validity. of the Emergency Service Rules and

Régulations prescribed by the FPC which were of Ifmited

duration. The rights of firm. direct sale ‘customers weré

neither at issue nor affected in such cases. None of these

circumstances are present here.

_ An analysis of the structure of Sections 4 and 5

clearly reveals that the FPC’s rate and servite powers can

be exercised only with respect to. gas delivered by an

interstate pipeline to a resale customer. Each \of the. opera-

_tive paragraphs of Section 4-and of Section. 5 repeats the

~CXpress- limitation. of the powers thereby —_grantad. to: the

_, “transportation or sale of natural gas subject to the juris-

.-% diction of the Commission” for the purpose of excluding

therefrom the matters expressly exempted from. the cover-

age of the Act by Section 1(b). These include sales not tor

- >

e ,

. Tesale,.i.e., any. direct sale of ‘gas to be’ consumed .by the

purchaser. To read the word “transportation” in this limit-

sa, clause as conte rring upon the FPC under Sections 4 and

, the very powers over the prices and terms of direct sales

aro by Section. I(b) and again excluded by the in-

corporation at such limited clauses in each ‘of such sections

would nullify and subvert the clear intention of Congress

(F PC. v. Panhandle Eastern Pipe Line Co., 337 U.S... 499,

$03, 508). Yet the FPC and United © request such a con-

struction by this Court.

Section 4(a) requires all resale rates ‘and charges, and

rules and regulations affecting them,. to *be-just and reason-.

“able. Section 4(b) prohibits any natural gas company, with

respect to any resale rate or service, from subjecting any

person to.any undue prejudice or disadvantage and from |

maintaining any unreasonable difference in rates, service,

facilities or in any other respect between localities or

classes of such. service. Section 4(c). requires the tiling, i

the formi of tariffs, of schedules embodying all résale alley

_» classifications, practices, and regulations affecting such rate,

“together with all contracts affecting such matters. “Séttion

4(d) requires the filing, on thirty days notice, . of tariffs

proposing changes in such resale rates and services. ‘Section

4(e) provides for hearings, upon complaint or on the FPC’ Ss

- OWN initiative, concetning the lawfulness ,of such resale

-_Tates, classifications or service. Section 5(a) authorizes the

FPC when it finds that any! resale rate of classification, or.

any regulation, ‘practice, or contract affecting ‘such rate or

classification is unjust, unreasonable, unduly discriminatory

or. preferential to prescribe ‘the lawful rate or service to be -

thereafter effective. '

These cui based upon the plain text of the

Act -establish that the limited powers of- the FPC to

regulate service for the purpose of preventing discrimination

or preference can anly be exercised with respect to gas sold”

+ ae ° Pie

for resale. The Court of Appeals for, the Seventh Circuit

reached the. same conclusion in Fuels - -Resgarc A Council,

Inc..v. FPC, 374 F.2d 842, 852-853. That decision con- °

-strued the term “persons”: in Section 4(b}(1) and_ the

’ powers of the FPC to change. tnduly discriminatory or

perferential rate designs under Section 5(a), to be limited in

‘scope to. resale: rates affecting . gas distributors -and_ the

ultimate consumers purchasing from them.

_* 4

D. THE FPC HAS NO STATUTORY POWER OVER ~

DISCRIMINATION IN - SERVICE BETWEEN |

DIRECT AND RESALE CUSTOMERS

‘The FPC’s only satacnite to prevent undue and sisbione:

ful discrimination or preference derives ffom Sections 4 and

5 of the Act. The FPC?9 and United? contend that if

direct’ sale customers obtain gus ‘for industrial. purposes,

while resale customers requiring gas for ultimate consump-"

tion by domestic end-users are curtailed; there will be an

— undue’ preference to the former class of service. They. argue

from ‘this premise that the Court of Appeals holding that

the FPC lacks curtailment jurisdiction. over direct sales in

inconsistent with, and undermines, the agency’s jurisdiction

under Sections 4-and 5. This argument erroneously assumes

’ that the rate, service and tariff provisions of. the Act. are ‘

designed for the mutual and reciprocal protection of direct

sale and resale customers. It fugther erroneously assumes

that the FPC has been invested by Congress. with authority

to control and regulate, in rate proceedingsethe end-use of ;

gas by different classes of ultimate consumers.

29 Pei. 18-19. my

~ 2 I.B. at 15,

cnet

: aa

only the protection “and regulation by the EPC: ‘of resale

customers. Furthermore, the FPC lacks statutory authority

to consider the end-use of gas or conservation ’ factors in

ee under Sections 4 and § (FPC vy. Hope ‘Natural .

Gus Co.. 320 U.S. 591. 608-614: Fuels Research Counc il,

Inc. v..FPC, 374 F.2d 842, 853-854 (CA’ 7): ‘City of

Detroit: v. EPC, 230 F.2d 810. 816-817 (CADC)):- The

claim of discrimination ugainst’, resale customers. is based

solely on the unfounded assumption | that» the FPC is

authorized to establish service priorities, regulating different

classes of end-use by ultimate consumers, in the exercise of:

its rate and Jariff jurisdiction. Thus, the alleged discrimina-

“tion is eo beyond the statutory powers of this. agency.

The FPC3?- and United rely upon . a ‘ike ium - in Pane:

handle Eastern Pipe Line Co. v. FPC, 324 US. 634%, 647, to.

support the thesis that direct sales contracts are within the

scope of its Section S(a) powers to prevent discrimination

and preference. But, Panhandle did not present any: issue as

to the agency's powers {to nullify, or vary either-the price or ..

ternis of such cofftracts. Wt devided only that the FPC did

not abuse its administratiYe discretion by. allocating excess

~ earnings or the combined jurisdictional ind nonjurisdr-

tional busingss’ of an inte

resale business. This, Court nated that Panhandle: earned

more than a 200 percent. protit on its industrial sales and »

held:

“It js a. fairly, obvjous. indication that: the

« Fegulated business is being ‘saddled with* costs |

. Which in fairness should be borne ‘by direct indus-

‘trial sales. That is an .extremely relevant. con-

sideration for the Soe to take into ac-

4 . ; .

31 1B. ftn. ‘ta at 22. a | ons

State, pipeline .to_ its regulated ©

——_—

a. er

‘count when ‘it determines What costs are fairly

’ attributable to each business and what the re-.

sultant rate for the wholesale business should be.

Section Sa) does not of course give the Commis-

sion authority to- disregard the jurisdictional lines .

which” COWgress has drawn between interstate

~ wikollesale ‘sales and direct industrial sales sv as to

level the profits beiween the two classes of busi-

ness.” (At 647). (Emphasis Added).

Clearly: the decision recognized that the FPC could not

, eliminate price discrimination between resale dnd direct sale

customers. A fortiori, it cannot remedy service discrimin

tion between these two classés of customers because Sec

tion 5(a) cannot_possibly. be construed as granting great®r

powers over practi@es or contracts witich do not, than over

those .which do, affect a jurisdictional resale. “rate, chatge.

or classification™. 32 Allocation 6r assignment, of the regula-

ted portion of a pipeline’s total business ‘clearly and di--

_ fectly affects jurisdictional resale rates. Reduction of gas

delivery: obligations by allocations undet curtailment’ plans

have ‘nd such impact. . .

The FPC soc hes socom that it facks necessary

Statutory autherity to remetly undue preference and df&-

crimination between different direct~ sale Scustomers or

between localities. caused by cither unequal rate levels or

* 32 This Court's statement that direct sales contracts are within

Section Sta} - specifically apy to the statutory language that

‘. .. whenever the C ‘steal find that. any tate. charge. or

classification demanded. observed, charged. or collected by any natu-

ral gas Company in cbnnegtion with; any Sportation or sale of |

natural gas, subject to the jurisdiction of berry or that anv

rule, regulation, practice, of contract affecting such rate, » Td

classification ts unjust, unreasonable, unduly discruninaton 4 prefer

ential, the Cummission shall determine the just ad reas nable rate.” ~

tp. 647) (Enuphasis original).

“by curtailment practices concerning interruptible ditect cus: |

(Coastal. Transmission Corp. 26. FPPC 318.-

BES, | |

. E. - THE FPC LACKS STATUTORY POWER TO. RE-

ALLOCATE GAS SUPPLIES FROM DIRECT SALE

‘ CUSTOMERS TO RESALE CUSTOMERS

The PPC claims plenary ‘jurisdiction. by virtue of its —

authority over the interstate transportation of natural gas.

to reallocate gas supplics between Wirect sale and resale

customers and abso to control the end-use of natural gas by

ultimate. consumers. As already demonstrated. such powers

cannot be derived fromy Sections 4 and $. They afe not

expressly conferred by - any section of the Act and could~

only be implied under the certificate provisions of “the Act.

Section 7. That section authorizes. by issuance of a certi- ©

. ficate of public convenience and necessity, the regulation of

- any transportation or natural gas in interstate commerce

utilizing thefacilities of a pipeline. N provides the statutory

vehicle for authorizing the dedication of ‘a natural gas

supply .to ‘interstate movement and the installation of any

new of improved facilities used to transport such gas. either

on a transportation service for hire basis or on sale for

_ resale bas. -

In determining whether . the public conventence and-

nécessity, requires the issudnce of a certificate. the FPC

must consider all aspects of the ‘proposed use of interstate -

transportation facilities in orde? to degide whether the

granting of .the requested authorization ‘will impair the ¢

pipeline’s ability to continue adequate service f its existing @

customérs, including those purchasing under direct sale con- _

tracts. When the proposed-use of facilities. and the service

to be rendéred thereby. inyolve ,a direct sale tp industrial

consumers the FPC may initially certificate facilities used

for the “transportation” of gas although the “sale” qf such

38 ae

gas is beyond its regulatory powers a! PC v. Franse ontinen-

tal Gas Pipe Line Corp..." 365 U.S. ; Panhandle Eastern

Pipe Line Co. v. FPC, 359 F.2d om 682 (CA 8); Pan- —

handle. .Eastern Pipe Line Co. v. FPC, 232 F.2d 467 (CA 3),

cert. denied, 352 U.S. 891; Coastal Transmission Corp., 26

FPC 318, 324).

Such certificate jurisdiction does not involve any regu:

lation of the price or other. terms of a direct sale or

represent an assertion of jurisdiction over the purchaser. In

the framework of initial certification, transportation and

sale are separate subjects of regulation. But, this indirect

and limited jurisdiction does not detract from the force and ©

SCOPE of the complete exclusion of; direct sales from the’

regulatory powers of the FPC in other situations and undef

other sections of the Act, such as. Sections 4 and.5. As tltis

Cc ourt held, in Transcontinental, cited supra at 4,.a direct

sale “...is not subject to the Commission’s jurtsdiction

except insofar as Section 7 requires the Commission to-

certificate the transportation of gas pursuant to the sale.”

(Emphasis Added). | ee

In any event, the FPC’s powers urder Section 7 are

limited in nature and fall far short of the complete alloca-

tion power it claims to divert .gas supplies from direct sale

industrial use to resale domestic <and commereial use. Tra-

scomtinental, cited suprae at 17, decided that “... the Com- .

mission’s pewers .under Section 7 are, by Jefinition, limit-

ed...": it “... cannot order a natural gas company to sell

gas to users that it favors; it can only exercise: a veto power

over proposed transportation and it can only do this when

a balance of all the cigcumstances -weighs against - certifi-

cation”. That case further held -that. the FPC was not

gee to allocate gas to spevific end-uses stating: -

.it is clear that the Commission , fully realized, the dis-

tinction between the “limited ] power: it enjoys under Sec-

‘tion 7 and complete allocation power” (at 18-19). -

ee : ,

In arriving at this conclusion, careful consideration was ~

siven to an abortive attempt to amend the Act by declaring

‘ee a national policy that the public interest required the ‘prse

motion of national defense and conservatron of gas reseren|

b for those uses affogding the highest social benefits to the

re public (H.R. 982, 1949). The FPC-had opposed this bill,

‘because muck of the -gas sold for indusiriat uses was con-

- sumed within producing states and could not be stebjected

o its regulatory control. This Court also recognized that

the Act deliberately and meticulously invested —_—

. m with. only, limited -authority short of the weep ol federal

constitutional power Over interstate commercg, and left the

residue including regulagion of direst sale¥ to the states,

citing Panhandle fastern Pipe Line Co. vy. Public Service

Commission of Indiana,’ 332 U.S. 307 (Transc ontinental,

cited supra, at 8).

In the light of these considerations, this Court don-

cluded that the FPC lacked power to prohibit by a uniform:

rule direct sales for use’ as boiler fuel (365 U.S... 16-17).

However, although the FPC cannot directly control -and

regulate end-tise in a Section 7 proceeding, it can consider

* proposed uses of gas sold under direct sale contracts as one

PF stot factor, among all other such factors, in dete rmining -

whether to certificate a proposed sale.

: Applying the same rationale it also concluded that

~~ Section’ 1(b) prohibits any! effort“... to bar direct: sales

absolutely, thus forcing all gas transactions into regulated -

[resale] channels” although the FPC could give such ‘limit-

ed consideration ‘and weight te the impict of a proposed

direct ee price on prices payable by resale custome rs (365

U.S. 23-24),

To sugmarize. Congress left the regulatory: autharity

of the states intact and undiminished with respect to all’

aspects of direct sales made by interstate pipelines except

for the initial certification of such Sales ‘by the FPC: de-

;

clined to incorporate in the Act a ealinnel policy preferring

certain end-uses of this limiged natural resource; denied the |

FPC power to allocate either. the national supply or .the *

interstate supply of natural gas to different classes of end-

use by ultimate consumers and prohibfted any effort by the.

FPC to channel gas supplies to resale customers Of inter-

‘| . State pipelines by. barring, sales to direct industrial consum-

ers. *e

. > a zy

In Granite City Steel’ Co., v. PPC, 320 F.2d 711, 713

(c ‘A.D.C.) an attempt by. the FPC to reallocate mainiine

transmission capacity of an interstate. pipeline in excess of

. delivery commitments to firm customers from direct sale

industrial users to resale customers was held unlawful under.

= Section 7(a) because it would #mpair the pipeline’s ability

to render adequate service of its existing customers. The-

= _ rationale -of the decision rejected fhe FPC’s claim -that it

could control the end use Of gas. and give priority - to

- domestic #nd commercial users rs? on the basis-that:

“The Sheory and purpose of the statutory

restriction of Ha) appear to bey that persons

desiring gas for the pirst time, or y* siring more

gus, Should not get it by taking it away from

| existing lawful customers. We think Mississippi s

, service’ to ifs industrial customers will not-be_

“adequate” within the meaning of Section 7a)

unless it meets their present and reasonably fore-

. f steable requirements ype as well as the

service Mississippi has. been furiftshing them. This

is no less true because Mississippi? has contracted

33 tn pRraeekiy per eee Gas Cv. et al., 27 FPC 697. i ‘

agency found,.under Section 7(a), that it was in the public infterest

for the’ pipeline to supply additional capacity to its resale customers

and also found under Sectional S(a) that its “pfictice or contract”

respecting allocation of capacity to direct indastrial customers was

* “unduly discriminatory or preferential” against resale gustomers.

™

ee a ee

”

to supply -the full coo of .many utility

customers while its contracts with industrial cus-. ’

tomers contain no full-requirements clause and

are subject to cancellation on six months notice.”

(at 713) (Emphasis added). :

Clearly, the FPC cannot permanently reallocate gas

volumes from direct sale to resale customers by prohibiting |

industrial end-use ‘of such gas: Since it lacks special emer-

gency power to deal with a gas shaftage, it is acting Outside

the scope of its statutory authority in taking such action to

relieve United of its delivery obligations for an alleged

femporary period, “ay,

_. F. SECT.ON I(b) DOES NOK GRANT ANY SUB-

L ‘ STANYWIVE POWER AND CANNOT. BE COM-

BINED WITH SECTIONS 4, 5 AND 16 TO

CREATE IMPLIED POWER “TO REALLOCATE

GAS SUPPLIES

* The FPC claims_ power to reallocate gas supply vol-

umes from direct sale to resale customers-on the novel and

unprecedented theory that it has concurrent and coextensive

jurisdiction over interstate fransportation and sales for

resale under Section 1(b). This reading of the Act is design-

ed to evade the prohibition im the very same section against

regulation of any aspect of the prices and terms of direct

sales. It is the Keystone of the FPC’s attempt to nullify and

supersede the impairment of delivery terms of direct sale

contracts without invoking its rate. ec and tarifl) peers

-which are admittedly limited to Ailes for resale. Phis is an .

argument that ‘the FPC can — indirectly what Congress |

has prohibited it to do directly.

‘

: if Be agen recognized this limitation on its jurisdiction in. ™

the cohtext of construction’ of its powers under the unusually broad

standard of “public convenience and necessity” in Panhandle Eastern-

Pipe Line. Co., 15 FPC 46, 57-59, aff'd. Central West Utility Co. 1

FPC, 247 F.2d 306, 312 4CA 3). as |

‘ » 42 « Tih

‘ Section A(b) is not a erant ot any Sear action

Rather, it is a mere definition of the scope of the regula-

tory .powers conferred by the Act which is cast in te rms of

the types of transportation and sale transactions Congress

‘committed, to federal regulation and reserved to state regu-

lation. Direct sales for. consumptive use were deliberately

and unmistakably exempted from the authority granted the

FPC in each and every section: of the Act (Panhandle

Eastern: Pipe Line C 0. V. Public Service Commission of

Indiana, 332 U.S. 507, 516; Panhandle Eastern Pipe Line

Co. v. Michigan Public Service Commission, 341 U6. 329,

334-336). Section I(b) is not self-executing. EachA of the

substantive tions of the Act enipowers the FPC to Tegu-

‘late a diffetgnt subject and the individual powers, thereby

conferred must be exercised in accordance with the specific

“procedures prescribed by C ongress.

Furthermore, in implemenfifig its -_powers “under any

séction of the Act, the FPC cannot claim implied power

which was expressly withheld in another section of the Act.

Thus, in Panhandle Eastern Pipe Line Co. v. EPC, 204 F.2d

075, 679-680 (CA 3), an attempt, under Section’ 4(b) and

SMai).* to eliminate unduly disrciminatory and preferential

practices in a pipeline’s allocation of its transmission main-

line delivery capacity .to different Tesale customers by

ordering a compulsory enlargement of such facilities in

disregard of-the prohibition against such action, in Section

7(a), was held unlawful.35 The FPC’s.claim that Section

-1(b): grants powers which can be implemented. under the

tariff revision procedures prescribed in 4(d) ang 4(¢) for

- Furthermore, the FPC may- not rely on Section 4(b) to

override this prohibition of Section 7(a) even when exercising its

* certificate powers (Panhandle Eastern Pipe Line Go. . FPC: 247 Edd

306, 310-313 (CA 3.

: .

‘ as . os

changing resale rates, practices and contracts although the

‘+ Jatter sections may not be applied to direct sales clearly

_Suns afoul of ‘this legal doctrine. This Court has specifically

condemned an attempt by the FPC to combine different

sections of the Act™ by the purpose of circumventing

explicit limitations imposed by Congress. oe

‘Ina completély parailel situation presented in FPC v.

Panhandle Easgern~ Pipe Line’ Cg, 337 U.S. 499, 504;

507-508, the agency claimed jurisd\gtion over a transfer of

undeveloped gas reserves owned by-# interstate. pipeline to

its production. affiliate which sold the gas in intrastate.

commerce. The FPC was unable to base its claim of statu--

tory authority on any express provision of the Act and was

contronted with a ‘specific exemption in Section I(b), con-

cerning production or gathefing. It sought a narrow inter?

pretation of that exemption and ‘combined several separate

sections of ‘the Act4to | lay the foundation for. implied:

authority: necessary to protect granted statutory functions -

and , objectives. It- claimed authority under Section 1(b)

broad enough to neutralize the specific exemption and also

invoked Section \6 to counterbalance that prohibition. Fi-

nally, it justified he requested broad construction on the’

need to avoid a gap impairing the comprehensive regulatory

‘ scheme established by the Act. In all of these respects, the

arguments prese nted- to this Court were the same as those

pressed here. This- Court completely and squ: Irely rejected

each of these arguments, for reasons which. are equally |

compelling and controlling in this Case:

“The Commission seeks to distinguish be-

tween the activities of production and gathering:

such as drilling, spacing wells, or collectitg, gas.

“and the facilities, such as reserves and® gas leases,

used theretor and argues that only the former

were excluded. from thé coverage -of the Act: lie /

support of this’ position it is pointed out that The.

44 -.

-* «

section spefifically exempts both the local dis-

tribution arm the facilities used therefor while it

makes no mention of the facilities used for pro-

duction or gathering. /n the face of the

unambiguous language of the Act and its legisla-

. tive background, we cannot ascribe such & narrow

meaning to the words, “the production | opaetier-

ing'of natural gas.’ . dens

: / "ae

_ The Commission urges it has jurisdiction

-over the transaction between “Panhandle and

Hugoten from the powers granted to it by Sec-

tion 7(c) of the Act, 15 USCA Section 717 f (c),

4 FCA title 15, Section 717 F (e), which -au-

thorizes it to issde certificates of convenience and

necessity. for the interstate trnasportation and. sale

of natural gas and those granted to it by Sections

4 and 5, 15, USCA ‘Sections 717¢, and 71744

FCA fitle 15, Sections 717¢ and 717d, to deter-

mine reasonable rates for. such transportation and

‘sale. -It is pointed out that Panhandle in three?

applications, for certificates of convenience amd *

necessity to construct additional pipe-line facil

it#es-had included thie acreage -her¢ involved as

-part of its gas reserves, and. certificates were

issued upon the finding.by the Commission that’

Panhandle had adequate’ reserves tO warrant ‘its >

expansion. Moreover Panwandle had been permit-

ted to include these reserves in its rate base as

‘used and useful property... The Commission,

/ Therefore, argues that these gas leaves which Pan-

handle proposes to grant to Hugoton-have been.

dedicated to the discharge of Panhandle’s public-

utility ‘obligation ‘to render adequate’ service al

reasonable -and noneliscriminatory rates. From .

these CIFCUMISLANCES, ‘the Commission concludes?

)

Aga eRRarLling 96

that these leases cannot be’ relinquished by .Pan-

handle without the consent. of the ¢ ‘ommission\

which has the implied power to protect its rate-

making function and to insure the maintenance

of om service by a natural-gas compaily.

‘Sections 4, 5 and 7-do not concern the producing

“or gathering of natural gas: tather ‘they have re- -

ference te the interstate sale and transportation

of gas and are so limited by their express terms.

Thus Sections 4(a), (b), (c), Sqa) and 7(c) speak

of “transportation of sale of natura} gas subject to

the jurisdiction of the Commission’ while Section

7(a) and (b) refer, respectively to ‘transportation

~kacilities’ and “facilities subject to the jurisdiction.

of -the Commissien.’. Nothing in the sections in-

dicate that the power given to the Commission’

over natural gas COMpantes bi. Section I(b) could

have been: intended to swallow all the exceptions

of the same section and thus exte nd the power

the Commission . to. the constitutional limit, of

congressional. authority ever conmerce. The -re-

petition of the words ‘subject ot the jurisdiction's.

makes clear.to us the intent to keep the. Commis-

‘sions shards out of the excepted local matters. ..

The same answer appfies to petitioner's argument

that Section 16, 15 USCA Section 71704 FCA

title ame Seétion 71 70: gives it authority to stop

sales of leases. The power to do the things appro-

priate to carry. out the provisions of the Act can

hardly be taken to resc ind. a. prohibition against

certain ac — :

To’ accept these arguments sp ringing “from

poWer to allow interstate -seryice, fix rates, and

control by the Federal Power Commission - over.

the production and gathering of gas. It would

‘invite expansion of power into other phases of

2 46 os <i | a

the-forbidden area.!4 Ht would be an assumption

of powers specifically denied the Commission by

the w®rds of the Act as explained in the report

-and on the floor of both Houses of Congress....

i “Would it soon be contended that statutory power

to require extension of service, Section 7(a), ‘included

power to require exploration or acquisition of leases OF

allocation vf production to interstate pipe lines in order to

‘serve the sete interest? ;

Note: rs

Other footnotes omitted and Emphasis: ‘Added.

There is no. merit:to the FPC’s claim that Section lo.

authorizes it to utilize the procedures prescribed in the rate ;

_ sections to implement transportation authority. granted, ‘if SS

al all, only by Section 7.@Nor can that section be used to:

enlarge authority withheld by ‘the Act since its sole fun-—

ction is to itnplement powers specifically granted: (Murphy.

Oil Corp. v. FPC, 431-F.2d 805 (CA 8); Willmut Gas & Oil

Co Vv. FPC, 294 F.2d 245, 249-250 (CADC); Niagra Mo-

hawk Power Corp. v. FPC, 379 F.2d «153, 158 (CADC)).

Finally; as this Court held in Panhandle, Section ‘16 can. .

néver. be utilized to circumvent and evade ‘an express: Pro-

hibition against the exercise of ‘jurisdiction, in. ttts case, s

regulation of the terms of direct s sale saree

G. ‘ THE FPC DOES NOT HAVE COEXTENSIVE AND

CONCURRENT POWER OVER TRANSPORTA-

TION AND ‘SALE UNDER THE CERTIFICATE

AND RATE SECTIONS OF THE ACT

Section: 7 is the only provision in 1 the. the Act svhich

‘authorizes the: regulation of he transportation facilities of a

eeu ee * a ee v] o Pita § Soe d SR cae

47°

natural gas cOmpany or of the service thereby rendered: 36

[tis both complete. and conrprehensive and expressly grants

authority to control and supervise extensions Or improve- ~

mehts o . Such facilities; their abandonment: the issuance

and terms and conditions of certificates and: the acquisition

_of pipeline right-of-ways -by eminent domain proceedings.

The FPC’s claim that Congress intended .the meré defini-

tions in, Section 1(b) to override and’ supersede these spe-

cific provisions granting its only express powers to regulate

the interstate Panepenene of natural gas defies: credibil-

. ity. a ee ‘

—_—-—.

4 cy

The FPc?7 construe the incorporation, in Sections 4

ize the exercise of “transportation? duthority under these

rate and tariff. provisions. To read the word “transport-.

ation” in this, limiting Clause ‘as’ conferring ey FPC.

under those sections the very | power to regulate Ahe ‘prices:

and terms of direct sales deliberately exchided by Section |

peat and _ excluded by the express recital that the

sien Sp e FPC-under Section 4 and 5 are limited to

tra ast or sale of natural gas subject to the

juriSdictfon of the Commission...” would nullify ,and -sub-

‘vert the clear and plainly expressed intent of Congress. In

the context of rate and tariff regulation, the FPC’$ powers —

“are- restric ted to the regulation of rates and the elimination”

of preferences and dise rimination in -connec tion’ with the

< : . ae 2 f °

36, - Neither the’ FPC nor United *can “invoke such certificate _

authority ‘in the absence of an application under Sectfon 7(b) or 7(c), «:

' the statutory hearings requi ired as a prerequisite to .the exercise of

such authority and. express findings that’ the granting of a certificate

and 5 of the Act, of the limitations. upon its jurisdiction set

forth i Section’ _ as evidence of an intention to author-

will serve the public convenience and necessity. (United Gas Pipe ;

Line Co. v. FPC, 385 U.S; 83, 91). aie yu nei

STB. at 34.

2 : es

—

———

interstate taansportation of gas owiind oy athers a he

interstate sale-pf gas Jor resale.

' Guitinimobs. the FPC"s assertion of coextensive and”

concurrent jurisdiction over the transportation and sale of .

" natural gas under“ certificate and rate ections of the

Act ignores both the Sage ope 1 between those sections and

the structure of the Section 7 is the statutory vebicle

for initially dedicating natural gas supplics to interstate

movemtnt and for initially authorizing the use of pipeline

facilities for the’ interstate transportation or sale of such gas.

supplies. The powers grarited to the FP@.in Sections 4 and

- § onfy become operative ‘after such initial certification of

Natural gas ip interstate commerce by means of 2 perma-

nent certificate. Before the issuance’ of such a certificate. .

the FRC can regulate rates by attaching appropriate con-

ditidns under Section Wek Thereafter, it can correct an .

| excessive of discriminatory raie ‘only by proceedings under

- Section 4, Tnitiated by company rate filings. gor under Sec-

‘tion 5, initiated. by its action in instituting a rate investi

gation. (376 .U:S. SIS, 519-524). Conseqnentlv, the® FPC

cam exercise its statutory authority ‘over the transportation

of natural gas in interstate commerce only under the certifi-

*. cate*section of the Act and canyot claim such authority

under: the raw and tariff sections of the Act. These legal

considerations fully and plainly negate its claim that it may

gas supply volumes from direct sale ‘to resalcS

pareer df =

virtue of its ee authority under

Be cece : | “

* The FPC’s contention that it has coextensive wit con-

current jurisdiction over transportation, antl sales for resale

ander the certificate dnd rate sections of the Act, was

specifically rejected in United Gas Pipe Line Co,” EPC. ~

- 388 F.20-385, 388 {CA 5). If that ce «. the femmes was the

proper application of. the agency’S formula for allocating

qnaeianed tax return savings between affiliated haat:

- 49

. ‘ | . s ‘

- and unregylated companics joming in a Gegie retutn Its

. . formula > involved three dastinct steps: separation ‘of the . ‘

companies Into regutated anid unregulated = groups:

* dgermination Of the fet aggregate’ taxable income wf cach

group aed appé@riionment of the total consolidated tax

: » betWeep the two groups. and- among companigs in the

regulated group, on the bayis of Mier respectiye taxable

incomes. The FPC classified the pipeling as a completely

regulated company although 45° of its income .was derived.

from jurisdictional sules for resale, 10% .from ‘nonjuzisdic-

tional sales for resgle regutated by -state commissions’ and

45° from nonjurisdictional direct sales not regilated by»

ang agency. > FPC justified its classification of such © -

ey -irect sales as regulated business activittes on the gfdund =

that they ‘were “2. . subject to the ¢ ommsion’ S$ certificate .

jurisdiction with respect to transportation.” (Emphasis Add- :

\. . «dd. The Court of Appeais flatly repudiated this theory

because. =

“a

“The Commission's wertificate Jurisdiction 1s

not the same as its rate jurisdiction and the

Commission's judgment in this’ respett-is invalid’.

° since this is a rate case which- we are considering -

and regulation’ here is rule regulation. (Emphasis :

Original). odie “ ,

_The State submits ‘that thes? considerations conclusively .

“establish that the FPC does not have coextensive and con-

tinuing jurisdiction over tbe intersta@ t/insportation and.

salg of la under the certificate ae rate sections of tee - OE

: Act. ; a

Assuming, for, the -sale_ of argument: that it had such ©

jurisdiction ‘the claimed power to reallocate gas supply

volumes could only be_ exerciged if- such transportation

- _authority iS of. a continuing nature: Stated otherwise. it. + |

° sich tftansportation’ authority is exhausted and terminated

Nee 50--

as . °.

by the’ issuance- of a permanent certificate authorizing the

use of interstate pipeline tacilijies to transport gas to direct

sale customers, the FPC clearly lacks any statutory author--

ity “...to regulate the volumes of gas transported for

direct sale. "38° This was the rationale of Opinion No. 606

and the heart of its clainy that curtailments_do not relate to

rates but to transportation. The FPC’s‘arguments to the

€ourt of Appeals in this.case were based principally on this

continuing transportation jurisdiction theory. -In-its argu-

' ments, to this Cou¢t, the FPC has completely abandoned its

— telidnce on Section 7 of the Act and seeks to conceal and

deentphasize the total dependence of if alleged plenary

jurisdiction over pipeline curtailment plans on such continu-

ing transportation jurisdictjon. The State submits that this

reversal ‘of position is caused by "the FPC’s: belated reali-

zation that its certificate: powers-end upon the issuante of a

permanent certificate which, as already established, do not

permit. reallocation of gas supplies. .*

The Natural Ges Act does not expressly confer upon

the FPC the authority to change an issued and. effective.

. certificate of public convenience and necessity. The absence

_of such an express provision gains significance from the

explicit delegation by, Congress to thé Civil “Aéronantits

- Board of power to “alter, amend, modify or suspend any

such certificate, in whole or in part, if the public conveni-.

ence and necessity se require. . 9 It is hornbook law that

an administrative agency cannot alter or.amend. a previously

. issuedpermanent certificate in order to implement a chang-

ed regulatory policy unless its enabling act specifically pro-

vides: for modification or.revocation of such certificates

P {United States i. Seatrain Lines, 329 U.S. 424, 428-432:

American Trucking A Association vy. Frisco Co.. 358 U.S. 133,

‘~~

38 Sol. Gen. Pet. at -S7a.

_ . 39.49 US.CA., Sec. 1371. 7

_as it may lateg deem appropriate in order te’ deprive t

2 z ‘ $1 > -

i 146. Watson Bros. Tr. caportation Co. v. United States, 132

F. ging 905 (D.C. Neb.) aff'd, 350 US. 927). ThE $PC s

‘reallocation of gas supplies is such a | Sn in aie Sy:

Nor may an agency condition ; a certificate byf reXgrving

the powey to attach such terms, conditions and limitatyn:

licensee “of, previously ‘granted substantive rights (United

States -v. Seatrain Lines, Inc., 329 U.S. $2$-Civil . de ‘rondu--

tics Board'y. Delta Airlines, 367 U.S. 316. 321). Section 16

which grants’ the FPC power to “rescind such orders, ruiles,,

_and: regulations as it thay. find necessary Or appropriate to

carry out the provisions of this Act:: does wot include

“certificates” (United Stétes v. Seatrain Lines. Inc., cited

supra, at 432). The FPC is unable to. cite.a single instance

in which it has either Vacated or modified a permygent and

unconditioned certificate ‘Which has become effective. On

the contrary, it has conceded the applicability of ‘the Sea-

train Lines doctrine where the natural gis, sompany has

relied upon the issuance of a permanent: certificate (7urn-

bull & Zoch Drilling Co., Operator, 26 FPC 678,480).

The .FPC*® and United*! . rely upon a mere dictun,

taken out of context and° Er tes construed, in Pan-

handle Eastern Pipe Line Co. v. Public Service Commission:

of Indiana, cited supra ‘at 523. This is the sole support for

their. clearly erroneous view that the statutory. grant of

_authority over “transportation” authorizes. the near et

_of direct salé gas supply volumes to resale customers: Fun

damental questions - cor jurisdiction. must “be ° based. onan’

informed and sound interpretation of the agency's enabling -

Act ‘rather than. on isolated fragments ‘of superfluous ‘lan-

guage in? an opinion. As this Court stated in Usired Gas

huni .

a” ee. Saree

@hee wndta ~~" . Pe:

Improvement Co:.¥. Continental Oil Co., 381 U.S. 392,

404: . | |

“Concepts of stare deyisis ine statutory interpre-

- tation apply to. the holdings with-which the case-

by ‘case method of decision ‘surrounds a statute.

-cognize no. ditferences between the Pan-

handle transfers und those in issue here, and in

the name of stare decisis to hold that Commis-

’ sion jurisdiction depends on the for#fi rather than .

the substance of the transaction, w Sa - *

- €ase-by-case process against ~ itself.”

- Original). |

_ Panhandle did not involve any fre: scares of or

any interruption. of service, to ej

_ tomers, rather it prese Or ——— ot the issue of

whether a state comnys:

State pipeline to mak@ direc SNes, in aa with

local gas.-distributors. ThiyC ae such state power

- hokding ‘that C ess had preempted ‘the entire field of

regulation of direct sales made in interstate commer&® had -

reserved to the states their preexisting powers to regulate

both ihe. rate and service aspects of such sales and that

uniform national regulation was not required either by the

Act or by the Constitution: © 2. :

» -. The dictum quoted by petitioners was a response to

the contention of Panhandle, in its brief4? that since -the

Supreme Court of Indiana had held the pipeline obligated

‘to serve all applicants, and other states ‘would also impose

such a public ufMity obligation, there would be conflicts_~

between the several states and ‘between the states and the .

FPC resulting from diverse administrative orders impesing

service — beyond the physical capacity. of the

ae 42 > Appellant? s Brief-at $- SO,. Appendix’0, 22a-23a.

—_

and’ ts

‘ c

pipeline to meet. PnMandle relied. upon the provisions ot

the Act giving: the FPC jurisdiction: ever the construction of

new facilities tor the interstate transportation of natura

olicy of refusing certifation of , sales '

; without: regard to any need tor additional tieili-

1 such authorization would impair the pipeline’ s

render Satiptactory service to existing custome rs.

the context of this purély hypothetical situation,

not then and still has not materialized, that this

custome

tics wh

ability t

It Way UI

which he

_ Court stated that: “... if such contlict should develop, the

matter Qt interrupting’ service is one largety Givens as*

appellees say, to transportation and thus within thé —

diction of, the Federal Power Commission to control,-

accommodation of any conflicting interests among various’

States.” "(Rootnote Omitted).

H. THE FPC HAS NO STATUTORY POWER -TO

CHANGE THE IMPAIRMENT OF DELIVERY

TERMS -OF DIRECT SALE OR RESALE CON.

TRACTS BY TARIFF REVISION PROCEDURES

United fited with thy FPC tariff provisions, applicable

tor the first time to its dyect sale cuSomers. and to its.

resale customers served by the separate intrastate pipeline

Systems in Southern Louisiana -gulated by the LPSC and

in@derogation of their contra, rights, which the agency

made" effective without any statutory tindings that the

ekisting contract terms were unduly’ preferential or discrim-

inatory or that the revised terms were fair and lawful. The

-FPC urges that because there is an emergency caused by a

fas supply shortage it is essential that it wtifize the tariff

» Tevision procedures of Section 4(e) of the Act. As already

established, the FPC hat no special emergency, authority io-

_deal with such istuations; has not made any findings sup-

ported by evidence. substantial or otherwise; that there is’

_ an emergency. and cannot order a pipeline to. file tariffs

applicable to direct sale contracts. camer “

" )- Poe ae

‘1.

Fusrthernfore, the FPC . — 5t_utilizesthe tariff revision

procedures of Section 4 to change either the rates or terms

of service rendered to even interstate resslkecustomers sub-

‘ject to Us jurisdiction, ‘unless. they: have consented to. such

unilatefal Changes by pipeline suppliers in their contrayt

rights. The basic powers of the FPC over resale-rates and .

Service. are detined by, and tan only be exercised in accord-

-ance with, the specific procedures. prescribed. in Section

5(a) of the ‘Act. That Section: authorizes the agency to set

a ide and modify. any new or existing resale. rate, practice

or contract which it finds to bé- “unjust, unre; ‘fSonable.

unduly discriminatory or preferential’ on the” basis of

record evidence, after full hearings, and such powers may

only be exercised prospectively (United Gas Pipe Line Co.

ve Mobilé Gas Service Corp., 350°U.S. 333, 341-343: FPC

Sierra Pacific Power. Co., 350 U.S. 348, 353). Section ys

adds to this basic. power, in the case of a newly filed rate

-Or a change in a previously filed rate propased by a natural

gas company, the further powers to preserve the status quo’

pending review of the news or.changed rete by oS

‘for a limited. period and, after final determination of

lawfulness, to make its Order retroactive to ‘the date pre

the suspended rate. became effective by means of refunds

“(United Gas Pipe. Line Co. y. Mobile Gas Serv ice Corp.,

cited supra, at 341-342; United Gas Pipe “Line- Co. v. =

+ Memphis Light, Gas and Water Division, 358 US. 103,

113-114).

However, Section 4 does not supersede either*the rates

or any Other terms of.a contract between ah interstate

- pipeline supplier and its. distributor or pipeline resale cus-

tomers. Uniike the interstate Commerce Act which requires

uniform rates and practices, the Natural Gas’ Act preserves

and sanctions invididual private contracts. Natural gas com- — ..

“panies retain. the right “to establish ex parte, and change at

‘will, the -rates offered to prospective customers; OF fo fix

- by contract, afid. change -_ by annie ‘agreement, the

“>

‘ =.

rate -agreed upon with a -pasaagular customer’ (United Gas

* Pipe Line Co. v. Mobile Gas Service -Corp., cited supra at

343). Thus, the Act does not empower «in interstate. pipe-

line fo unilaterally change its contracts afd the tayiff re-

vision, procedures of Sectigns 4(d) arid 4(e} can be utilized

only where the’ customers have consented to such changes

(United: Gas. Pipe Line Co. v.° Mabile Gas Service _Corp.,

cited supra at 342- 344: United Gas Pipeline Co. v. ». Memphis

: Ligey, Gas, and Water Division, cited supra. at 12-113).

United’s. Louisiana direct sale and resale customers

have withheld such onarecsae except for.a few who have

recently signed so-called “tant and service agreements”

under dugggs. The FPC seeks fo evade the rule of Mabile on

the straMed. and tenuous theory that although a pipeline

cannot unilaterally change the termis of-its contracts govern-

ing: service. oriorities jn’ the’ ‘event of a gas shortage, the

agency may order such companies to formulate:curtailment

plans reallocating their gas supplies from direct sale to

resale customers and to file such plans as tariffs.43 This is: i

brazen and transparent attempt to circumvent the express

-. requirement. of Section Saft that as a condition -pre-

cedent to the exergise of ifs power to prescribe «any rate,

practice or contract the agency must find the existing tariff

provision unlawful. The FPC ehas not found that the. costed

ment of deliveries provisions: in effect before United’

tariff revisiOns ‘disctiminatory or preferential. Such a finding

would appear to be preguded by the fact that United’s

direct sales contracts artd Section 12.1 of its préexisting FPC\

oo oe af31-32.

44 Applicable also to Section 4 sorceodiags wales the Sectfon .

A(e) proviso that the FPC may make such orders in proceedings

initiated by company tariff filings as would be snee in an. invésti-

gation of ‘an existing rate. — . es

’

: siecle the terms of direct salé contracts dealing with im-

Gis Tariff are substantially eaten #5 Pinally,, the FPC does

not -have_ plenary of unlimited powers to substitute its

judgment of what constitutes a- lawful rate, practice or

‘ contract for that of ¢he: parties to such contracts. Thus,

even when it is: properly proceeding under Section S(a)_ to”

modify an existigg contract it cannot relieve a pipeline of

an obligation to provide service at d rate which is less than

the just and “reasona le rate unless “the’ rate is so low ‘as to

adversely affect the| publi interest as where it might

impair the financial ability of the public utility to continue |

-its service, cast upon other consumers as excessive burden.

or be unduly discriminatory” (FPC v. Sierra Pacific ‘Power

‘Co., cited supra, at 355).4© This is ae the powers of,

the agency to tegulate ratgs are for the protection of the ©

| public interest, as ‘opposel to the private interests of the

, utilities.

L FPC JURISDICTION TO REALLOCATE DIRECT

\ SALE GAS SUPPLIES TO RESALE CUSTOMERS

_ IS NOT ‘NECESSARY .TO AVOFD- A ‘ane i

- TORY GAP axe :

"emai claim? - that, ene the FPC has power to

pairment of deliveries during periods of gas shortage, it will

-be impossible to establish a uniforni and rational system-of

_ Strvice priorities ang that there will be an “attractive gap” in

45’ sae Appendix = 24a-26a.

4© Sierra held the rate and taiift provisions of the Natu ral Gas’

Act and of the Federal Power Act equivalent and identical.

~ Sree: LB. at 17-21, 4.3 26: United, 1.B. 10-13,

* ,of the states the rate, licensing and service aspects of direct

the ‘regulatory scheme. Fhe FPC has adopted an individual ,

pipeline company systemwide: approach as the appropriate

“unit for gas reallocation purposes. United’s direct sale con-

tracts and resale tariffs have impairment of delivery terms

which are substantially ‘identical .and uniform, - and alsa

wholly free of any undue or unlawtul prejudice or preference:

~~ between direct sale and resale customers. Even if this were

not the case, the FPC has ‘no statutory authority to equalize

the terms ot service rendered to direct ‘and resale customers.

Congress. committed fo the exclusive regulatory’ control

by use of the interstate facilities of a jurisdictional

“pipeline (Panhandié Eastern Pipe Line Co. v. Public Sérvice

CEG RESET

Commission af Indiana, »332- U.S. 507, -512,° 5135514, 77

"516-519; Panhandle Eastern Pipe Line a Y. Michigan Pablic

* Service Commission, 341 US. 329, 33 337). The Act with-

held from the F PC power to. remedy poe disgrimination OF -

preference between such state” regulated direct industrial con~ ;

sumers and federally regulated resale distributors and pipe-

- lines, and the industrial consumers they serve, because the

granting of such power would\have invaded the colstnatinasl

prerogatives of the states to’ regulate such Commerce which

have not been limited by the Act. Thus, the FPC’s regulation

of direct sales violates the Act and invades powe rs reserved to

the States under: the: Te nth Ame ndment, to the ‘United: States.

3 onstitution,

Thee Act does not. occupy the entire field within ihe

reach of federal constitutional power and limited federal reg-

ulation only to the “gap area’” where the Supreme Court had

held the states constitutionally unable to act by fixing the

import prices of out-of-state gas sold for resale, in many’

cases, by’ an interstate pipeline to an affiliated’ ‘distributor ;

- company (Interstate United Gds Co. v. BPC, 331 U.S. 681,

682, 689; FPC vy. Hope National Gas, 320 U.S: 991, 609; FPC

v, East Ohio Gas, 338 U.S. 464, 470, 472-473)...

& ASE

The Natural Gas Act is an “in interstate commerce” act,

not, one “affecting” interstate commerce. Congress Was well

aware of the difference and had used broadey language in

‘statutes _passed. before or contemporaneously witlf the Na-

tural Gas Act such as the Faiy_ Labor Standards. Act of 1938,

52 Stat. 1060, ‘the Bituminous Coal Act of 1937, 50 Stat. 72

and the National ‘Labor Relations: Act. 49 Stat. 449. This —

‘restriction on FPC jurisdiction was desfgned to’av oid are petl-

‘tion ‘of the unanticipated and unintended invasion’ of state

jurisdiction in the pte under the Shreveport

: doctrine (H@uston, E.&W.T.RsCo..v. Unite d States, 234 USS.

342, 355-360). A statutory srohibition agdinst discrimination

_in interstate transportation by railroad unaccompanied bye

any express limititien upon its scope was there properly in-

terpreted as empowering the Imte rstate C ommerce Commis-

-sion to © gulate intrastate ‘rates which affected interstate

traffic by, virtue of discriminatory or preferential. features,

The statgs were determined to avoid any répetition of such

federal iffvasion of their regulatory prerogatives and.the. plain.

| language of the - Act, enacted at the request of the states”

* acting in concert through the National Association of Rail--

road and Utility. Commissions, witnesses’ this compact be-

tween the Stites atid the federal goyernment: . 5.

The State submits ‘that ‘ne explicit language of the Act,

which’ leaves nO latitude for inference concerning. Congres-

sional intent; its clear’ legiskative . history; the consistent

administrative interpretation of the Act by the FPC that it |

lacks. power: to change the price ar terms of direct sale con-

trac ts and that agency's repeated and unsuccessful attempts

to have the Act amended to grant.such authority compe, the

‘conclusion that uniform federal regulation is neither appro-

priate nor lawful insofar as direct sales gre concerned. This .

Court, in a-case presenting parallel elements construed ide nti--

cal statutory language to preclude%n c >xercise of jurisdiction

over the use. of unfair-niethods of competition in intrastate

sales despite the fact that the prohibition of such’ business

“

, Pemtraimanermercen © 5 gy —

ee "

practices by. persons. engaged in ifterstate: ‘commerce handi-

capped. such » competitors (Federal Trdde’ Commission ¥.

Bunte Brothers, Inc., 312 U.S. 349, 3sh3s5y8 i

} = =a |

? :

e ‘

Apart from the se considerations; the FPC's ial sibial

pipeline company s¥ stemwide- basis for rationing and real- ©

locating gas deliv eries creates, rather than correc ty; undue and

unlawful discrimination and prefe rence betwee n e nd-users. of

the same class in eac he state and in different . states. It can

insure, at nfost, only equal treatment;to all. customers. of the

. ae pipeline. lt cannot afford equal treatment-to end- “users”

the same class whether they are located in the same state

or ‘in different states. However, tlie State” s suggested nation-

| _ wide approach of allocating gas supplies to states, leaving to

each state the responsibility for controlling the end-use of gas

by its Own witizens, would treat all states and localities fairly.

~ Many Gschminstory and inéquitable consequences flow

from failure to allocate the total. interstate supply éof gas to,-

the individual states of the federal. union. A pipeline which

‘has kept faith: with its customers and not oversold its *trans-

Mission capacity’ or “gas. reserves to maximize its. profits wilt

“continue delivering full contract volumes, and on occasion °

increastc& ‘volumes s,.to-its direct industrial and. power: plant

: customers while other pipelines which have disregarded their

contract and statutory obligations are substantially redusing

‘deliveries to the same class of customers located in either the

same. state or in different.states. The individual company.

approach has, disproportionate and © “oppressive adwerse

impact upon industrial and power plant consumers in the

Gulf States where United has always been the dominant sup-

plier of direct sales. -gas used for such piitpases. United is

: . a .e

. ©

48° The decision beak cognizince of the fact: that the Shre ve---

port docrtine was in effect during the life of the Federal bag Com-

mission but _— it never asserted similar authority.

. .

v" 3 x . ‘ : . 4

oth.

e . 60

totally ‘unlike other pipelines. It not only supplied gas for -

‘resale by: distributors and industrial gas in seVeral states but

acts as a gigantic gas gatherer collecting gas from the pro-

ducing areas of the Southwest which it sells to, and trans-

ports for, five major interstate pipelines. This is its _principal-

role. It is, in terms of volume, thé world’s largest transporter

. _of natural gas and its system purchased, collected, and trans- .

ported more than 1.8 trillion cubic feet in 1970. (Tr. 71-79,

120). Thus, consumers in producing States unfairly bear the |

‘brunt of a gas shortage reflecting increased demand in other

states. '

Moreover, the FPC is exc eeding its statutory powers and

invading prerogatives Congress deliberately left to the states.

when it seeks to control’ the end-use of gas by ultimate

‘consumers, Each state is entitled to its own choice of service

priorities and is not obliged to make them identical with

those. of other states. For, as: the FPC itself recognized in

Opinion No. 606: “Our jurisdiction: over the disposition of

natural gas ends when it reaches the hands of a nonjurisdic-

tional person such as a distributor purchasing for resale. This

language would in effect attempt to extend our jurisdiction

over the disposition of gas by a local distributor, .a matter

within the province of the local regulatory body: We will of

course’ consider the past and planned disposition of volumes

_by the customers when ruling upon allocations for the vari- |

ous customers, but after allocating among United’s custom-

- ers,.we leave for the states or other local bodies the job to

oversee the distribution of that gas by the customers at ‘the

‘local level.”"*9 Thus, while admitting that it lacks jurisdiction

to control end-use of natural gas by ultimate consumers, the

FPC is unlawfully exercising such jurisdiction. It is self- -

evident that the use made of gas bya direct industiial con-

sumer .is at least as‘much a matter of purely local concern as"

the disposition of resale gas by a distributor. ;

- 49 S01. Gen. Pet. at 71-a-72a. Emphasis added.

Contrary to the claims of United>® and Brooklyn Union

. Gas Company,>! Louisiana is not asserting that the citizens

‘of a producing state are entitled to a priority in- the use of

' their natural gas reserves during a period of shortage and °

. taking action which prohibits exports of gas to other states of

. the type deemed. to constitute a direct burden on interstate

~ commerce .in Commonwealth of Pennsylvania v. State of

West Virginia, 262°U.S. 584, 598. Rather, the State asserts

only a right to a fair share of its natural gas reserves. Further-

more, the investigation instituted by the LPSC does not‘have

as its purpose, as United’ suggests,» 2 any attempt to revhan-.

nel interstate gas to industrial. consumption within ifs bord-

ers. Rather,-that investigation concerns only .United’s deliber-

ate. and persistent refusal to meet its obligations as an

intrastate pipeline (Appendices R, S and T, at 40a, 44a, 47a).

Nor is there any merit to- United’s contention®? that the

LPSC is constitutionally-prohibited from regulating curtail-

ment practices of intrastate gas pipelines. Article VI, Section

4, of the Louisiana Constitution: provides that’ the.

‘.:.sower, authority, and duties of the Commissign: shall -

affect and include all matters. and things connected with,

concerning, and ggowing out of the service to be given or

_ rendered...” by such companies. This is an unusually broad

delegation of power not found -in the converftional state or

federal public utility statute. Further, in a Special Order is-

sued September 28, 1971 and in a General Order issued Sep-.

tember 30, 1971, the Commission declared that it “has keen

vested with the authority and responsibility to regulate and

907 Bat 11. »

31 Brief, Amicus Curiae at 11.

9? 1B. at 11.

53 1B. at 11-12:

7 a

control ‘utilities with respect ... to the services rendered by

public utilities” dnd exercised pre powers with respect to °

both United and other intrastate pipelines by instituting a

comprehensive investigation. In any event, FPC * jurisdiction

was not intended to vary from state to state depending upon

the degrée of state regulation.” (The Secretary of the Army,

. Atlantic Seaboard Corporation, Order Denying Rehearing,

Dkt. No. ca 179, issued October 22, aise

. Petitioners’ ' suggestion that courts are-not competent t to -

deal with any disputes which may arise from the failure to an

% interstate pipeline to honor its clearly-defined delivery obli-

gations to direct sale customers is clearly without merit. This

is an ‘area in which the judiciary branch, not the FPC, has

specialized expertise. Furthermore, the judicial process is sub-

*“ ject to supervision by this Ceurt and it has expr€ssly rejected -

the argument that uniformity of regulation under the Act

will be destroyed or impaired by permitting courts to enforce

traditional common law contract rights (Pan American Petro- -

‘leum Corp. v. Superior Court of Delaware for New Castle

County, 366 U.S. 656, 665-666).

Finally, the concept of an “attractive gap” applies only

“in the absence*of ane express statutory prohibition against

regulation of a specific subject as this.Court held in rejecting

the FPC’s claim of implied authority in FPC v. Panhandle

Eastern Pipe Line Co., 337 U.S, 499, discussed infra at 38.

THE COURT OF APPEALS JUDGEMENT.

THAT UNITED’S GREEN SYSTEM IS AN

INTRASTATE PIPELINE WAS NOT AN

ABUSE OF ITS JUDICIAL DISCRETION |

The LPSC has always exercised” éxclusive and sole juris-

‘diction over the separate intrastate pipeline systems of

—_

—~,

‘such systems invoked the supremacy clause of the United~

. 7 =

‘ ; &

United in Southern Louisiana. Thus, the issue decided on the -

merits by the Court of Appeals was whether, by the self-

_ serving and unlawful acts of United, this intrastaté system has

been converted to an interstate system to oust the LPSC of

its lawful jurisdiction. This is not the normal situation of a

dispute between a private pgrty and a federal administrative

agency concerning a-matter within its established statutory

powers to which the doctrine of ex austion of -iypaipinsonnugars

and mutually exclusive claims of ala ai between Louis-

iana and the Federal Power Commission.

On September. 28 1971, the. LPSC instituted a eueanne

hensive investigation of United’s separate Southern Louisiana

intrastate systems (the Green and Purple Systems). 54 United

denied the jurisdiction of the state agency claiming that its -

unilateral action in applying-te the FPC for certification of

~ ‘States Constitution to terminate the sole and exclusive j juris-

diction the EPSC has continuously- and nt exercised. It

view, In Social ‘Order No. 17-71’, Order Affi irming Juris-

diction and to’ Show Cause, (Appendix S, 44a-46a), the |

LPSC Tejectéd this contention on the following grounds

which United has never answered or appealed:

“The hocteies of pre-emption is applicable

only where Congress has enacted legislation design-

ed to encompass all aspects of a particular field —

of regulation. But, Congress has not delegated to

the FPC the. full reach of its constitutional powers

over interstate commerce. On the contrary, it

authorized that agency to regulate. only certain

‘limited aspects of the transportation and sale for:

« _- 94 appendix R, 40a-43a.

, ‘\

resale in interstate commerce of natural gas.

Congress gave the FPC no authority at all ‘over

‘intrastate commerce’ (FPC v. Transcontinental Gas:

- Corporation,. 365 U.S. 1, 17).’. Furthermore,

Congress enacted Section | (c).of the Naturaf Gas »

Act in order ‘to reserve regulation of intrastate

Pipelines and’ of local distribution systems entirely

to state regulation. Plainly then, the FPC- must f

defer to the states on matters which are primarily’.

of local concern. i

The supremacy clause is inapplicable ‘unless

‘ and until a -binding and final determination has:

been made that United’s separate pipeline system

in southern Louisian’ is both in interstate com-.

* merce and outside the scope of the Hinshaw —

Amendment. , iat’ ,

Suit a dethieination cannot be made by the”

FPC. Only the courts can exercise the judicial func-.

_tion of determining the lawfulness of an assertion _

‘ of jurisdiction by that -agency in.a particular pro- °

-ceeding. State regulation by this Commission will

end therefor, if at all, only after the Federal Courts

have made an adverse decision which is no longer

subject to judicial review. = == ;

' This Commission, believes that during the’

pendency of such litigation it has both the author

_ ity ‘and the duty to mes its regulation of

United? 's rates and services... .””

Aside from these unique oie ivsiibehias a conflict of

jurisdiction, the Court of Appeals did not abuse its judicial

discretion even if the case is regarded as a conventional i

junction proceeding. -The FPC and United maintain that t

Court of Appeals. committed reyersible error in farrell

.. judgment on an issue admittedly within . jurisdiction

65 | : . 7 ji “g °

5 ee eee

because of the mere’ pendency before the FPC of an 1 adminis-

trative proceeding presenting - the same ‘legal question. Petit-

ioners mistake the nature of the doctrine of exhaustion of | Pd

? f

SN administrative remedies. It is a guide.to the exercise of dis-” ,

iF PPS Re :

cretionary judicial power to hear and determine contro-

versies, not an-absolute and inflexible barrier to court reyiew.

The. cases. ses cited. by petitioners involve attempts by a private

agency to. enjoin or to qtherwise terminate, by @éclaratory

~ judgments, administrative proceedings concermed with the

determination of so-called. “jurisdictional facts” which will

determine whether. that party,/ ‘is subject ty Fegulation. Here,

neither LPL nor LPSC has sought to invoke teauthority of

‘the courts to stay or end’ the FPC’s pending certificate pro-.

* ceedings. The judgment of the court, below has not precluded

the ‘later issuance of -FPC Opinion No. 610: which reached a

_ contrary concllsion. concerning’ the jurisdictional status of.

United’s Green System. In fact, the FPC has remanded the

case to an examiner. for -fGrther hearings and the adminis-

os i aegis 2 . A .

’ trative procéss Continucsy;completely unimpeded and uninter--.

rupted, Opinion No. 6¥0-A issued on April 7, 1972 ea

all petitions for rehearing and is now final. A timely petiti

for review has been filed by LPL in the Fifth Circuit. pa

review of these jurisdictional issues will also proceed under

the provisions of Section 1% b) of the Act aand, contrary to

Uniteds claim,>> Congress has not prohibited resort by a

private party to the general equity powers of the federal

-courts forinterim rmey pending a fing a resOlution of issues of

jurisdiction. :

<. :

The vital distinction between cases where courts inter-

vene in a controversy between a private ‘litigant and the

agency, by blocking or refusing to assist the adininistrative.

body in its task of investigating jurisdictional facts, and cases

SSR 99.93. .

2" " fi ‘ ¢ ; @

where the agéeney’s investigatory powers are . unopposed was

‘recognized and relied- upon in FPC ». Panhandle Eastern Pipe

Line Co., 172 F.2d 57,.59- 00, aff’ 337 U.S. 499, 514-515.

That case also rejected the primary argument made here that

the FPC is the sole competent judge of the scope of its own |

. jurisdiction and_that caurts must defer to the pendency of its -

administrative - proceedings until it can determine its own

power and the necessity of its exercise. While this ruling was

made in the context of an FPC effort to obtain 4 court

injunction during the pendency of its administrative proceed-

ing,. and this’ case - presents .the same issue.in the context of

the FPC’s effort to prevent such an injunction, the-rationale : °

of the decision is equally applicable to both situations. Pan-

’ handle applied: the long, standing rule that where an agency is

clearly. acting in excess of its'statutory authority, exhaustion

.* . of administrative remedies is unnecessary (Leedom v, Kyne,

358 U.S. 184; City of Chicago v. Atchison, T & S.F, Railway

-Co., 357 U.S. 77; Skinner & Eddy Corp. v. U.S., 249 U.S. |

‘557, 562; Deering Milliken, ‘Inc. ¥ Johnson, 295 F.2d 856

(C.A. 4))..

- %

>‘ The FPC, which was neither a defendant nor obliged to |

intervene in this private litigation between United and LPL, -

having participated as a party cannot complain that it was’

obliged to defend its jurisdiction and that the Court rendered

a judgment on the merits adverse to its position. Petitioners’

real complaint is not the judgment of the Court, which is not

‘yet final, but rather its opinion which impedes their efforts

‘to urlawfully oust the LPSC of its jurisdiction, convert.an

intrastate pipeline to an interstate pipeline “and reallocate

Uirect ‘sale. gas volumes from Louisiana customers to -

“industrial consumers in other stites served, by: this pipeline’s

resale customers who. will be compelled to pay higher rates.

Yet, the FPC.and.United have neither petitioned e Court of

' Appeals: for rehearing gn banc ‘nor Sought review. on the

merits by this Court. ;

“Se

er;

67/

L-

A reading of Ghision No. 610 discloses the reason for -

this reluctance. The evidentiary records before the FPC and

before the District. Court both. related to the same facts and

year of actual gas flows and operations. In the light of the

Fifth Circuit opinion, petitioners doubt their ability to pre-

vail on the merits and wish to improve | their prospects by

resorting to facts not of record which result from United’s

deliberate. rearrangement of its gas flows and. operations,

admittedly in violation of Section 7 of the’ Act, after if filed

its October 1, 1970 application for a certificate. Opinion No.

610 unlawfully finds that United’s motives in seeking to serve

its own interests and evade state jurisdiction are immaterial

and irrelevant. The FPC has officially noticed extra-record

facts ar unlawfully denied any opportunity to the ‘parties to °

. the proceeding? ® | to’ controvert such facts’ by rebuttal evi-

dence» ‘and cross-examination under’ Section 7(c) of the

Administrative Procedure Act..

Petitioners seek to invoke thi aid of this Count in their |

unlawful effort, unsupported by any precedent, to exercise

certificate, curtailment ‘and: rate jurisdiction ‘over -United’s

intrastate Green System during the protonged period rere-

quired to obtain a final resolution of this conflict. of juris-

diction issue. If this Court does not vacate the judgment of

the Fifth Circuit as to the Green System, the: issue of whether |

the FPC is bound by that judgment will be litigated..If the

‘ LPSC prevails: on. this and related issues, the FPC will be -

! unable ‘to enforce the conditions‘ of Opinion No. 610 that’

service to all-of United’s intrastate customers shall. be con-

‘tinued only on an emergeney~ Basis and that they shall be

subject to interim. curtailment and rate increases and compel-

‘led to execute service agreements waiving their contract

rights’ against unilateral changes by. United. The State submits

‘that: these conditions are. arbitrary, capricious, conttary to

56 The eal and LPSC requested. this spportunity in thei Peti- ~

tion for Rehearing of Opinion No. 610. |

‘eo

> S87 Bat 21.

. F.2d $25 (C.A.5). | | WA

- 68.

Js,

law, heniad the: salina’ authority of the FPC ‘ai de pri-

vation of dtie process of law in violation of the Fifth Amend-

~ ment to’ the United : States Constitution. The FPC will also

then be: unable to enforce its direction that all,of United’s

‘intrastate pipeline oar. and systems be operated as part

of its: integrated interstate pipeline system which is equally

- unlawful and unconstitutional and designed to aid United’s

efforts to evade. state regulation. This. is the relief sought m |

the LPSC injunction suit®’ which United characterizes as “an

injunction against’exercise of FPC regulatory jurisdiction.’’>8

aaa

Unlike the cases cited by petitioners, whete the only, ee

injury “incurred by the parties seeking . cougt relief was the

, burden and ‘expense of participating in an- agency ‘hearing .

which this Court does not view as: irreparable injury?? LPL

alleged in its sworn complaint i in the District Court a material -

danger of a blagkout or brownout of electrical service ina .

wide geographical area resulting i int incalculable damages; that.

it has no. adequate alternate means of generating electricity.

and would permanently lose ‘sales. Thus, the test of the ex-

tent of the injury which will be caused by exhaustion of

administrative. remedies is: clearly satisfied here. The Juestion

_ of certificate jurisdiction was decided by the Fifth Circuit

‘upon the basis of undisputed facts and purely as a matter of

— interpretation. ‘and the applicability .of. its own

-., Florida Parishes ‘decision.®° Issues of this nature are within

57. Appendix Q, 27a. a a

59 Petroleum Exploration, Inc.. v. Public Service Commission,

304 U.S, 409, 220-221. |

60 United Gas Pipeline Co., Docket. No. CP 62-161/ 30 F.P.C. 7

560 (1963), aff'd. Louisiana Public Service Commission | lv. FPC, 359

-«

“ .

the specialized competence of | the courts, not ‘that of the

PC. a ae ea ae

yan

‘2

The petitioners have exposed the completely untenable >

nature of their views concerning the procedural .issu¢ of ex-

. haustiof of remedies, by’ thes inconsistency of the position 3

they maintained before the two lower courts and the position

they urge upon this Court. ‘Below, they denied the. juris-

diction of: the District ‘Court to hear a decide, on the

merits, either the direct sale issue or the’ certificate issue if

'. this casé. Here, they seek review of the merits of the Court of

Appeals decision on the’ former issue but ‘have avoiddd siich

reviéw. on the latter issue. They seek: to differentiate these

two substantive issues®! on the ground that the exhaustion

of remedies problem has been mooted by the FPG’s.issuance a

of Opinion Nos. 606 and 606-A’ prior to the Court of'Appeals*

decision. But, the FPC has now igsued both. its Opinion. Nos.

610 and 610- A in the certifitate. case thereby, under their

‘view, also’ mooting. the.-very procedural issue they” ‘seek to

have réviewed by. this Court: Peyationers” effort to, differ-

entiate between the direct sale igsue and the certificatesissue

on the ground that the ritth Cropuit Squarely rejected the

legal rationale of Opinion. No. 606 is equally futile and. un*

sound because that court’s opinion also —— the

. rationale of Cpinina No. 610..

aaa :

ere os

| ‘ . —

* all arr H &

| | ¢ : “

| é : o

61 ee

Sol: Gen. Pet! 20; United Pet. 14, ftn. 26 - X

: ey BOS a

"= CONCLUSION |

t : . 7 : .

The State maintains that certiorari was improvidently ~

granted in this case because there, is no support. either in

agency findings of fact or in the pleadings of petitioners, for

the challenged claim that unless the FPC has power to real-

locate United’ s direct sale gas volumes essential deliveries for

domestic use will be jeopardized. In any event, the judgment °

of the Court of Appeals should be affirmed in its entirety.

Respectfully submitted

©.

: THE HON. JOHN J. McKEITHEN

Governor of the State of Louisiana @

State Capitol Building \

Baton Rouge, Louisiana

° HON. JACK P. F. GREMILLION

Attorney General of the State of

Louisiana

State Capitol Building

Baton Rouge, Louisiana

* FRED G. BENTON, SR.

Benton & Moseley PD

114 St. Louis Street

Baton Rouge, Louisiana 70801

~ ARNOLD D. BERKELEY.

Suite 1200, 1819 H Street, N.W. :

Washington, D.C. 20006 °

States

Louisiana

Mitsaccifg

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GAS Y¥PORTLNG STATLS PARMAR Im ORDER

APPE!DIX «4

~«

paport 7

5,243,790

3,83, 600

~——

rr .

10,993,438 ee

Lowitians exports as 2 pereentwae of Tgted Welicaed Meliveties - 47.674

o J sou ee:

ee mee wee eee

Utility Yarmstry in G9.

ee7

Ecce: %

dc vers”

Over Foewiptr.

Telsle Yt, Gas Puet:,°A Stat isti.a) wecord ef the

Gas

s =

APPENDIX BR

Ze FIVE LARGEST*GAS PRODUCING STA TES RANKED

' IN ORDER OL 14" GRONS PROVE TION

. . ad :

(Millions cubic feet)

‘ Z ‘

Pree nivge of

; . ; . > ad

United Stat. s ; 22,674, 145 00".

Teas : 8, 914,794 , ‘39.3%

Louisiana 7,61, 027 *. 1m

Oklahoma = 1, 741, 677 + 7.67%

New Mexico s 1, 142, 54 5%.

-Kansas 681, 663 ie 3.9

*Source: Table 26, Gas Facts, A Statistical Record cf the Gas Utility.

Industry in 19€9, > ‘

Par

. ‘ -

- : Sa : a

FIVE LARGLUST GAS Via DUCING STATES RANKED,

JIN OULE CF 1969 Nev PRODUCTION: : -

° Pes vA

(Milhhors cubie feet) “

; : ¥ ‘ Percentage of ‘-

State we. . Volume Nationa! Frodu:tion _

‘ c aes s P _—_ . iene mea ee it

“Uvitod Statey : 21,223, 990 199",

wee A x 7, 944, 698 37, 3: ‘

Louisiana . 7,386,678 34, 87. .

e > P . .

OF lahoma 1,654, 481 :. gio eee 7

‘ ; ~

New Mexico . te 132, 191 : ~~ « ee

: . « = ‘ . .

Kansas ; * 885, b22 4,174 -

é .

' e . . +

*Source: Tabde 277, Gre Pacts, A Statistical Record of the Gace Utility

Industry in 196), é

: 4a a

s : APPEDIDIX :

: pee .

- -FIVE LARGEST GAS PRODCTION STATES RANKED

IN ORDER OF 1969 MARKETED PRODUCTION - °

f os ,

" Coalions cubi-efeet)

ee a . Percentage of

| ee Volume. Nationa! Produc tion

-3 *

United States - sel 20,698,240 -. + 100%

Louigiana 7,227, 826 34,97,

Oklahoma 1, 523, 715 . 7. 36%

F - ‘ - 7 ‘

New Mexico 1, 138, 133 5.04%

- ° ° a

Kaneas 883, 156 ‘ 4.26%

. * .

j 9 ’

: } ~

*Source: Table 28, Gas Facts, A Siatistical Record of the Gas Utility

“Industry in 1969, ‘ ; : :

“ }

‘ ’

’ er a. eo | 8

; ? x i :

i ~ : . ve . —

NESE Ras ln ART Sh! Cae ai ao alba 9.2 HMR PN ES CA em a Fee ODE NI teenie le RS

‘ f X ‘

* . .

R .

: ”“ .

ee .

’

N ' 9

. .

* as

+ .

' rs ’

’ ‘ f

. —s

» 9° .

® *

: _* P

. : x

. aie , ;

’

f .

. \ : .

. .

e .

e's

’

° a

« -

t- :

; ' —_ ’

_ ae ~” .

. . | .

\ el ‘ ; F

3 , ;

<a ¥

: .

: . ;

N . 2

& . ‘

@ rn + a

‘ ;

| .

: .

; ' .

°* @

. *

Se ae oe oe

’

. .

“

‘

\ o

sd \ °

‘

‘ r

° .

. ® .

Wad eer tae

Se eee eee f

“

at ®t: svt ce : ten oh st On iit atthe Sas -

STATE OF LOUISIANA -

re Spa ASL aa G tea aA Rea Teas GE PS GREY

“

DEPARTMENT OF CONSERVATION

Net

Interstate

Deliveries

606,336,379

667,744,026

736,143,077

948,260,444

.1,119,723,592

1,351,651, 208

1,499,049, 304

2,0°8,505,5C0

2,188, 220,087

2,569,371,128

2,791,617, 745

2,592,631, 580

3,269, 213,610

3, 741,739,376

4, 206, 284,433

4, 731,628,560

5,297,481,079

—— ° ‘

uv 3 4 NALYSIS. OF DNIERSTATE GAS. °

‘ IN MCF - 15.025 pounds Abs. 60 Degrees

8 _ 2 Deliveries To Less - Receipts

, Other States Fron Other States

" as

, : . Y

TOTAL - ALL TRANSPORTERS: a

: ah Year 1952 1,319,064,548 712,728,159 —

. . 1953 1,510,395,368 842,651,342

Ne 1954 1,714,902,151 978,759,074

1955 1,961,456, 609 1,013,196,165

1956 2,279,911,313 1,160,187,721

“1957 2,518,570,014—. 1,166,918,206"

1958 2,725,379,461 « 1,226,329,657

1952. 3,039, 259,485 1,290,898 ,582

1°60 °3,366,493,305 1,317,927,€05

1961 3,467,045 ,796 1,278,825,709

1962 3,672,600,177 1,163,229 ,049

1963 3,953 ,598,984 1,161,981, 239

1964 4,149,546,354 1,156,°908,774

’ 165 - &,437,222,742 1,168,079,132”

i566 4,259;988,525 1,109,229,151

1957 $,259,218,940- . 1,032,934 ,507

1968 5,765,336, 709 1,033,758,149

“sip 1969 6,254,299,51 _ -- $96,818,433

. ; 1970 1,029,836,978

6,748,070,324

porting gas into Loufsianra.

SOURCE OF CTCRMATICN: < Yorn R-S-T Gas Trensporter’s Report - using reports

. 5,718, 233,346

NOTE: Gas production is net production after deducting gas returned to earth

of only those transporters

Total

Louisiana

Production

- { Het Met),

1, 284,339,790

1,399, 740,719

1,454,952, 4468

2,732,301,435

1,$37,565,711

2,151,233,222

25353 ,683,539

2,727,469, 636

(2,54, 361, 745

3,170,616,114

3,£13,123,651

3,652,445,999. .

4,181,052, 266

4 491,752,520

$,143,157,18%

5,793,015,416 -

6,492,728,904

7,267,900,195

7,796, 747,096

Percentage.

- Interstate

Deliveries

exporting or {m-

wy?

™N

—)

7 o ,

24 Pe re pe re et ee ee et re 8 ad

a XIGNadd Vv’

ax}

e tae t}

° : & my

o) :

rm~ e :

> x

. e :

are S

uo ’ ie

Q& .

, ©

<5 e a

o STATE OF LOUISIANA --DEPARTMENT OF CONSERVATION - vA Bs

é ou) 08 * S.

ANALYSIS CF NATURAL GAS SUPPLY we

¥ IN MCF - 115.025 pounds Abs. 50 Degrees - a: 4

‘ : p ° ie bes

» ALL GAS COMPANIES UNITED GAS PIPE LINE CO. - :

“us " 196 9 + 9 7 1979 be

19466 | 26S i 1970 1260 1965 ? 1979 .

e “ . a ea ‘ : ; AEN

1. Produced in State 2,994,061, 748 4,491, 752,580 7,795, 747,096 657, 494, 824 885,083,413 1,370,265, $99 .

a e . - “6 cs fs ‘ - , Y : .

3. Total Gas Available(142) 4, 312,849,550 5, 659,831,712 8, 826, 584,074 881, 584, 353°1,036,401,716 1,475,062, 580

4. Exports from State 3, 344, 493, 305 4,427,2292,742 6,748,070, 324. 299,637,510 319,821, 477 485, 791,523 }

5. Percentaze of Gas : “°: 4 :

Produced in State Used : ’ . \

in Stxte (5+1) ig 31.5 27.2 20.6 errs 88.5 80.8 74.4. e :

% Percertaze of GasUsed - ; oe ae . : f : d |

, in State Supplied by United - i f rs x

Gas Pipeline Company \ - - 61.4 58.6 47.5 / 5

. - ; ‘f .

8. Increase ir. Exvorts* F “eaters { o / es an

° : Related to 1960 Base - 31.8 100.4 . ae 62.3% « . pow , 7 cy

; oa , ‘ a 7 - y . : : ‘ -. ‘

. e a ‘ , . ad

. eS ‘ : > pA : ag

— ° ‘3 ‘ ™ ® ‘ : 4 / e — . ry 7.

U *Example (Col, 4) = . . ‘ yy / : ; ie

< ; = ‘ ‘e ig] .

; . Zz

1079 - 1959 5 100.4% . 0 ;

1960 : a ; : : o a . §

. : . 2 2 e . ; . 9} « : Ros

. “Source of information: Form R=5-T Gas Transporter's Report - using reports of only those a

. transporters exvorting or importing gas into Louisiana. ” z , : xX

. . ? ; i

- ° as

; > aa

Ss e ’ : }

, \ “ kia see ie 1? Ses : 5 “2

\ - .

° 7

: . . . ; . » ‘ ,

: : . . 2

; 2 : as ‘ i

é S

. - ’

he 7 ‘ a 4 ae ee. rea

é ’ yy ~ , \4 ° . - . " . ‘ ot fy \ ag Raiden

s oo . . e ° >» »&* ay . ‘ a8, 2 ‘ ge ror rN me : Le ; Mis ok ‘ ps OPES

civ ¢ 4 z re, NS ° $ « “" ° 4 . :

== . . 2 aa . ° , ° . ‘ *% ae: ia

f- ‘' : : ° m ' ‘

: . a . — at ca * 6 ‘ P ’ ; . j

' . ‘ ° .

oe \ teak - m

; Lo — ree ’

st: a. en : Ovet :

3 5 ° . .

3 : = hae i ° 696T ‘

A é > t

: « 896

; < ; ;

~ : . L901

3 fe) . :

? = ee a

7 de < : . 9961

& - ta 7 pan ms

Q - $96T \

‘ o 2 we . - \

| i as 796T

be 5 2 ;

isti: a ae : /

, ee 25 , ’ eet i Rie

: : tee : : . a ° roe

: : SS. * zor |. \

| Bog: 3 :

o ’ 4 . ¢

BB oo & “ ae

ee a ,_ & Ww ‘ ‘ ‘ =.

P ' W 2 O96T: 3

< m.O° * ° rit a

6 oa ,

bss ee a. Bs a .

‘ =: 2 4 ‘ |

5 Zo. 8S6T

; 8 & ‘ .

2 te. eed ‘ : > | cs6r.

: 2 4 ' .

" & B> 9S6T ; :

Es ’ : :

“ . SS6T :

. s 7 ¥ pS6L ; .

pe go = ! ES6I

a (Se ° ° '

e “GINISHSLNI GaVZAITaG NOTLSAGOWd WAYISINOT JO ZOWLNADUaa ‘am

i wa Nis ‘f os

7. 2? . i

: . ‘ > = 4 .

1969

1956

*Source: Table 2, Gas Facts; AS

Industry for 1943-1965,

- (Million tubic feet)

28°, 322, <05

2éé, 466, 523°

281, 221,454

276, 151,233

e«cveradle Reserves of Naturo! Gas

; —

> 88,015,6 4

86, 290, Go?

83, 654, 062

62,811,157

“79, C70, 209

75, 364, 992

New Piela Discoveries

1, 769, $57-

-1, 376, 429

3, 170, 520

2, 947, 329

262; 14c + ~

376, 91¢

750, <4

433, 345

New: Reservoir Discoveries

2,043,219

1, 545, 622

2, 524, 651

3, 110, 396 |

“<

"4,002,208" = -

687, 402

1,026, 915

1, 284,014.

LOUISIANA RECOVERABLE KESERVES, NEW FicLy,

AND RESERVOIR MSCOVERIES AS A PERCENTAGE OF IHE NATION *

Lon: <ia:

pore: “DIX H-

Percesntace of U.S,

W.65"

* 29, 46

28. 92°;

‘26.°R%

2&.32°

27,.2¢°

tatistical Record cf the Gas Utility

" —_— RET “=

‘ 7/

” APPENDIX I

STATE OF LOUISIANA - DEPARTMENT OF CON SERVATION

ANALYSIS O7 NATURAL.GAS SUPPLY FOR

UNITED CAS PIPE LINE COMPANY

IN MCF - 15.625 pounds Abs, 60 Degrees

Total Available

in State

* 41, 475, 062, 580

- 1,442, 660, 890

1,256, 852, 564

1, 122, 302,791

1,057, 033, 316

" 1,036, 401, 716

1,029, 034,128

(rio records)

660, 752, 506

871, 779, 864

B81, SR4, 353

839, 182, 532

806, 976, 232

_796, 702, 907°

803, 881, 299

758, 973, 817

764, 600, 945

700, 753, 308

514, 698~650

Exporte

485, 701, S23

476, 552, 185

423, 357, 903

379, 492, 001

353, 995, 578

319, 821, 477

323, 067, 954

293, 386, 955

264, 444, 967

301, 316, 763-

299, 637, 510

276, 013, 704

264, 351; 336

264, 580, 704

259, 042, 333

254, 816, 631

244, 535, 502

225, 835, 779

4121, 540, 119

144, 792, 981

141, 408, 910

125,145, 762

111, 487,781.

“1146, 125, 984

150, 418, 303

124, 390, 436

134, 626, 268

-152, 373, 933

223, 866, 184

224, 089, S24

206, 142, 854

198, 226, 154

210, 846, 432

220, 963,719

205, 306, 598

197, 895, 391

185, 387,221 .

Source: Table 2, Gag Facts, A Statistical Pecord of the Gas Utility Industry.

fon

sensscnesemniiesell extant

ee a

”

. | 10a

S.14, 166, 882

- APIs

< . ;

COMPARISON OF PPRCENTAGE OF ESTIMATES

PROVED RECOVERAB RE RESERVI'S Or NATURAL

GAS IN 1969. FOR LOUISIANA @ND Lik NALION

“ ~ (Millaons cubic feet)

Percerts: ‘

. aay United States mistana | Wttlivar iin 2,

Prsduttion* ?2,.67%, 145 7, 99, O27

Total Proved :

Recoverable Reserves** 275, lus, & 55 9, 0°65 5 4d y

Ne 4,267, 202 ,5-

S.69, 769, 437 an s%

: ¢

Non-Associated Proved { . ; ‘

Recoverable Reserves" * 211,673, 282 69,429, 161 , a ipo

: .” i N, 2, 626, 606 . 7%

i S.66, 602, 555 1.4%

| Associated Dissélved** . 59,633,644 .— 15, 514, 268 26.9

, se N. 1, 347, 386 2.25

> —

* Source: Table 26, Gas Facts,-A Statistical Record of the Gas Utility

Industry in 1969,

industry in 1969,

' ** Source: Table 2, Gas Facts, A sumetces Record of the

Gas Utility

i TR a

* Lou's ana - -1,18%3,538

Texas 1,933,846

Sem ansas 189,877

Nevada - 12,656

Mississi pe; 29,647

Froe:oa 55,681

Ont anOma : 56,703

W. ViReG nia 80,750

Incl ana a 191,067

Ono : 371,7A)

PENNS TL VANGa 292,585

SU aBama 108,86)

Det aware 8,162

feirnors 263,860

loano 11,683

TENNESSEE 72,972

Michi Gan 70,6

Maercano 23,362

“Maine ‘ci 334

VieGinia ‘ 28,346

Connecticut 12,682

Towa 62,359

N. Camo.iwa 2£ 970

WrOMING . 13,077

Kentuca,r 39,854

Ruooe Iscawo 3,286

WASH NGTON 22,14

OrtGconw 13,296

WISCONSIN 38,970

Arizona 23,654

Mo onwesota 38,748

. Neeeasna 28,429

Georcia 44,568

New Yor« 87,639

S. Carorrna 18,916

Kansas 56,934

New Jeeser - 39,669 .

Mi ssour: * 37,729

. Cororavo 17,186

MaSSacwHusetrTs 13,413

New Mexico 4,717

MONTANA 2,590

CaciFornia 86,922

Uta 3,618

New Hampsniee , 185

VeRmonr -23

S. Daxora 460

N. Dawora 30

Dist. of Cor. -

Uniteo

Stares® °* . 5,942,153

o Foemw ‘Incust® a

lla

GAS REQUIREMENTS

Future Gas Requ: rements of

Apprnwo:ix C - Cactwoar Year

Denver Researcn Institute, Un:

> ALASKA anD Hawas: Omwitrteo

ano Fiem vwivt eae

Preecen’ F ,™ or Tova,

(M4 ctrom Cuprce Fees)

Torac Fi ew

Pwouste) ay

ano

Gtnteatiow mina’ on

; 318,274 »796,8

435;°63 2,769,009

94,333 284,2:0

21,287 33,943

83,595 ?'3,242

43,847 99,528

224,33 28° ,034

45 -" €0,795

3,299 » 94,366

12,960 384,74

. 683 293,268,

133 "08,994

58 8,250

7,343 356,20:

- 11,683

- - 72,972

27,854 "98,465

17,513 34,875

- 394

- 28,34€

Z > 6a>

424 62,733

3 2€,973

. $3,077

33* 40,°89

- 3,236

- 22,141

23 13,296

3,049 42,019

3,607 $7,349

. 28,429

- 44,568

335 * 87,9%

‘ . 3 18,916

64,253

5 39,847

-5,043 42,772

5,180 22,366

“486 13,899

8,322 13,039

1,234 3,824

32,014 118,936

3,618

z 185.

a 160

eee PEP

1,919,145 7,861,298

twe Uniteo Stares*+ Vorume No. 4 -

1970.

on,

Wwe

fea]

21,392,314

VERSi ty oF Dewvee, Denver, Corceare

Peecen?

Fiem Impuste a

ano Genteat: on

Or Torm

1'O--W8WUWNwD wwoO

Ocrtosee 1971,

‘

—

. a)

ee a ; :

ee , —_ ‘

. * . e

‘ al

ns I2a APPENDIX L

. ra GAS REQUIREMENTS - -

ms Ecgcrte ¢ Genewation

Peecent Fiem or Tora Evecrarc Gengaation

e 6 (Miccronw Cus:c Feer) a"

- . Tora . oO

Fiam TERRLP': Rat ON Tora, Gas

W. Vi aGinta : 45 . ; - - . ae 1CO

Masrviano: ~ 5 131,533 130 a tte 11,643 39

Ame ansas 94,332 7,727 101,460 3s *

Ontawoma 224,331 18,354 242,685 ?

Lours: ama 318,274 40,084 355,328 a3

M ssiss: PP, 63,595 2 "13,674 = - 97,269 - * ae

Texas ’ 635,'63 16+,723 996,586 34

Newaoae 21,287 5,336 : 2€,622 . - 80

O-~ 0 ~ 12,960 . oe ‘ *6,3€7 oo. -73

Hkuvwors : 72,341 - 60,454 | 32,795 , “ 84

Min Gan : 27,354 34,988° 62,736 “44

Montana : 1,234 2,166 3,400 3€

New Mexico "§,32? 4) ,4f8 49,790 ;

Dec awace 338 ‘ 593 —- % > 686 : 13

Covoraco| .- 5,180 40,5 35,740 6° 1}

IND ana 3,299 26,06" 73,3

Wi SCONS) 3,049 y 27,67" 30,720 * 0

Misscue, 5,043 59,91" 64,954 3

, Massaceusetrs 486 5,772 6,258 3

Ae:zone - 4,876 56,648 €1,524 3

PENNS* Lean a 663 8,795 9,468 / ‘

M wwESOTA 3,00) > 6) ,365 64,966 € :

Cari Froen a 32,074. 639,049 671,063 S

Kenruce: . “ 335 8,446 8,78: -

Kansas 7,319 761,528 168,847 4

lows. _* “2 78,585 79,009 ’

AL aBama : 133 16,088 6,2? : ’

New Yor«” 335 113,956 194,291 ~- . , o

Groecia ; - ~ - 60,688 60,688 : -

New Jeeses : . “178 48,607 48,785 ve

Neeeasna - 46,668 46,668 oe

S. Carmoyinwa * - 43,174 43,114 —

TENNESSEE - "18,562 18,562 : -%

_N. Camouina — 18,299 18,302 . -

Urax ; , - ee 13,921 13,927 a

S. Danora °# - 4,212 : 4,232 . -

Vi aGomra - "3,980 3,980 | : -

Rwooe Iscano- . = 2,394 2,394 -

N. Daaora - '35? 35>? n “

Cownect: cur, - 1 Pr. | "150 -

“me ‘of .

Wass) NGTON - o : “ e ~ a

Veemonr - - o _

+ Ortcow - - P - -

New Hamese: cc - ~ . ae

Maine - ~ - -

Toano | - * - : - P i

» Ost. ofr Cor. = = = -

Uni teo . ” . : e

States*® 1,919,145 . 1,996,062 3,915,207 4s

Furure Gas Requ:etments of tHe Un: treo States - Vorume No. 4 - Ocrosce 1977 :

Appewo x C - Cacenoar Year 1970 -

Denver Research Insti ture, University of Denver, Denver, Corcoeaco

’

DAcasaa awd Haws Omi treo.

4 if COS PTS a. on ad Wok, ihe UC NE a 4S 2 at —

i. .

a -

r -

I3a

* GAS FEQUIPEMENTS

e ‘

Peecen: Fine ov Torac

(M-curon Cuesc Fee?)

. ee. TO at

. "Reside is et Commes: ac Iwpes's at Genes at os Foes

On1o 471,663 184,871 ari ei 12,9F0 ,04: ,.?7=

Dist. or Cor. 14,743 13,123 : * a a 25,876

tou ‘S1ana < 83,556 27,24) 3,181,538 315,274 »607,€0%9

New Hamesys 8E 3,192 1,365 TAS = 4,748

> ARKANSAS 43,055 27,743 189,877 » SO 5. 360,008

Nevaoa 6,721 = ,849 12,656 . | 2°,787 46,£°3

CONNECTICUT , 33,97 10,537 12,682 * 55,14

Freurawemeag . -* 315,802. 102,859 292,585 683 Je 1 529

Maine 718? + 439° 394 - 615

MaSSaCHUSETIS 84,055 28,459 13,413 436 126,413

“Ne Sa — 36316 7,851 30. - 15,897

M .4:GaNn 350,044 136,041 170,61" 27,354 €36,550

_Mag+ i and 3 73 ,24* “i Bi ger 23,362 11,513 199,537

GeQoe. Pot ano 11,606 3,614 3,786 = 2,506

“ tes ave * 155,329 672,333. - 191 ,O67 3,299 417,022

New YOr«. : 3£°,049 . 127,099 87,639 335 573,!2?

W. Vecwia * 56,585 >? ,9?? 80, 75 45 €0,302

°° Del aware . 6,706 35739 f 8,162 883 20,19"

Miss: SS: PP) 37,999 *9, 622 *29,637 83,595 270,893

Onc anoma 7€,471 37,501 56,703 224,33 395 ,O0F

VIRGINIA 49,968 24,511 23,346" - 102,825

New JeRser 147,279 4,377. 39,669 178 242,003

FLORIDA > ~ gaat 1€,083 SS,68: . 143,847 231,443

KEN

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