# Amicus Curiae Brief — FPC v. Louisiana Power & Light Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_0422%3A35 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1972 - **Citation:** 406 U.S. 621 ## Text fad Meher Nae Oe bag YF 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 . e 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 bo > 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 $3 -" * . (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 © Senin x" _ Gus Requirements, Firm Industral 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, 4 185 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 38 19 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 2 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. 3) -— 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. . . ... . . -. 47 54 eae 50,51 19 68 57 ee (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 = » é s ; = ‘ ‘. »~e . s - , Pe f : : , ts , e P * . : Fae : + : ' ; “ -@ = ° ¢ » . " _ «+ - 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 4 . 4 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. - = « e 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, Md 2d ROBART RAMEE, EE CIEL MOD ial NS NABI RE a oes! pe ae , 3 ‘ 1] - 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 a fie 1? : | . 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 - 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’ a ”~ 15 - 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 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 « 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 34 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, no ~ > cnet : aa © il As eae established. Sections 4 and 5 encompass 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. a, 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 a 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 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: 7 ~ “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 | X ‘ » 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 4 - 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? ae ) 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 ws 2 46 os s. 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 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 . ° a ‘1. Ak 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 4 Fs “> ‘ =. . 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, 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 a . © 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 3 * ao vw oth. e . 60 e 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. 61 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. II 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 —_ —~, Pd | ‘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. 64 , ‘\ 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’ , Ps 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 4 SN administrative remedies. It is a guide.to the exercise of dis-” , 2 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 party. challenging © the jurisdiction of a federal administrative | 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. : ® a ‘ 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 ° a 56 The eal and LPSC requested. this spportunity in thei Peti- ~ tion for Rehearing of Opinion No. 610. | - ee ‘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 s J} / -« “ . 69 ~ 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 61 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 | ‘ . — a" * all arr H & | | ¢ : “ | é : o 61 ee Sol: Gen. Pet! 20; United Pet. 14, ftn. 26 - X ay : 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 Texas Teares’ e Kentucky Alst.-- Atrun a a FE ) Peal R-:t07 6:55 e Chie Rew herxice ‘West Virg.snuia Miscouri Penny lvenit India Arizona Nebautka Bliancir Georgia Iown South Carodina Vireinia * Worth Careli- 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 a . -* . ‘ - * . . - es © gO LORS DELVED ID NRA EMBEDS ONL AED SNe i NDE OLDE I ie I eet " - : Sa : a . © APPENDIX C x © , . ie 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 . % a ° ' 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 . To é ‘ f X ‘ * . . R . : ”“ . . ee . ’ N ' 9 . . * as + . ' rs ’ ’ ‘ f . —s » 9° . ® * : _* P . : x . aie , ; . ’ f . . \ : . . . . . e . . e's ’ ° a a7 « - t- : ; ' —_ ’ _ ae ~” . . . . | . . \ el ‘ ; F 3 , ; x 4 . e : are S uo ’ ie Q& . 4 , © * pA : ag — ° ‘3 ‘ ™ ® ‘ : 4 / e — . ry 7. U *Example (Col, 4) = . . ‘ yy / : ; ie 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 ; | 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, s oc - (Million tubic feet) 28°, 322, 88,015,6 4 e . 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, — * 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 7 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. 29 a 160 eee PEP 1,919,145 7,861,298 twe Uniteo Stares*+ Vorume No. 4 - 1970. on, . v n . w J n A " wn * Wwe fea] wo 21,392,314 VERSi ty oF Dewvee, Denver, Corceare Peecen? Fiem Impuste a ano Genteat: on Or Torm 1'O--W8WUWNwD wwoO 37 Ocrtosee 1971, ‘ ys oe tc i — . 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" ° is Peecew’ © -~ - . 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 Froeipa © 143,847 41,374 85.°71 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. . ee 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 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 Nigh inors 443,08? 130,470 283,860 72,341 975, 7©3 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 Tees 2?69,0©5 97 gOu3 1,933 ,84€ oe 335,163 3,135,0€7 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 KENTUCK® ‘ 383, 766 33,948 39,854 . 335 157,903 AC ABAM’” 63,039 25 C2 108,86! 133 197,054 Covorapo 79,40? 51,393 17,186 5,180 *°153,161- M ssodrs 159,327 62,196 37,729 5,043% 764,295 WiSCONS NO, 106,946 40,233 38,970 3,049 39,198 S. Daxota 11,185 6,813 160 ~ - 18,156 IDaHo 8,052 6,063 11,683 - 2©,792 MINNESOTA ~ 104,881, 36,947 38,748 - 3,601 184,177 TENNESSEE - 48,602 37,636 72,972 ~ 159,210 MONTANA - 22,208 17,925 2,590 1,234 44 ;037 Iowa 94,4) 40,214 62,359 424 197,428 NEBRASKA - 54,271 25,598 28,429 - 108,298 OREGON + . 19,028 * 12,289 13,296 - 44,613 Ulan - 40,132 73,556 3,618 - 57,306 Vermont 843 348 *. 29 - 1,220 "WASH: NGTON 32,844 19,969. 22,141 - _ 74,954. WYOMING “ 12,775 8,797 13,077 - 34,649 Georcia * 89,217 33,939 44,568 - 167,724 N. CarRorina 26,435. 16,239 26,970 3 69,647 - CALIFORNEA 535,471 177,693 86,922 . ° 32,014 882,106 AR: ZONA at fee ~ 18,813 23,€54 4,876 79,106 S. Caror':na 24,580 Tater 18,916 - 51,233 Kansas ™ "95,099 34,287 36,934 7,319 193,639 New Mexico > 23,831 10,511 $717 8,322 47,381 e Un: Teo E a - States* 4,941,265 . “ - 1,958,995 . 5,942,153- 1,919,145 Poture Gas Regu remen’s or te: Un teo States = Vocume No. 4° Appewoix C - Cacenoar Year 1970 eas . Denver RESEARCH INST. TUTE, Universtiy of Denver, Denver, Cororavo * ALASKA anD Hawai! OM:TTED Sy 14,761,488 4 Octoser 1971 APPENDIX “% . Pre e* To: a . mee 44 Uses —F 10° @& . s 1,112, 769 G4 27,852 93 1,790,250 90 5,430 ? 418,346 86 54,399 86 64,020 86 84) ,?96 85 1,906 8s 51,9C7 83 . 19,463 > 8? »?'6,94% : 277,807 78 ] oS, 1 7a ° 3,003,746 78 24,'09 ef £46,422 76 762,070 76 25,504 74 77,330 74 371,36) 73 540 , S6F 72 34,0'3 71 357,652 68 62,0 64 254,315 62 317,765 €? 254,514 60 439,698 . 60 326,65? 58 31. 43t 58 45,370 57 332,197" 55 300, 787 oo: 82,468 53 378,610 52 215,369 50 93,715 48 122,358 47 2,619 ~ 47 159% 1.00 47 .- 75,417 - 46 368,446 46 157,610 +44 - 2,177,896 41 215,375 | 161,523 . oo 602,834 _ 32 — 167,263 28 21,392,314 i I4a . APPENDIX N. “41084. CONGRESSIONAL RECORD — SENATE June 19 - * JURISDICTION OF FEDERAL POWER COMMISSION | _ OVER CERTAIN INTERSTATE SALES - a ne NATURAL GAS / Mr. MAGNUSON, Mr. itties by request, I intro- duce, for appropriate reference, a bill to amend the Na- ‘ tural Gas Act to vest jurisdiction in the Federal Power _ Commission over certain interstate sales of natural gas for industrial use. I ask unanimous consent that a letter from the Chairman of the Federal Power Commission, request- ing the proposed mematon, be printed in the RECORD. 4 | The VICE PRESIDENT. The_ bill will be heendoail and appropriately referred; and, without objection, the letter: will be printed in -the RECORD. The bill (S. 1734) to amend the Natural Gas Act to vest jurisdiction ‘in the FEDERAL POWER COMMISSION ~ over certain interstate sales of natural gas for industrial use, introduced: by Mr. Magnuson, by request, was received, read twice by its title, and referred to the Committee on Com-’ merce. | . The letter presented by Mr. Magnuson ‘is as follows: FEDERAL POWER COMMISSION ; :; Washington, D.C., June 12, 1963. - HON. LYNDON B. JOHNSON, President of thesSenate, Washington, D. ay t | EAR MR. PRESIDENT: I am submitting. herewith as part of the Commission’s 1963 legislative program a 5 vas ft ‘ ‘ " proposed amendment to section | of the Natural Gas Act | to give the Federal Power Commission jurisdiction over di- rect interstate sales of natural gas by producers and by ‘ pipelines to industrial consumers. Most industrial con- sumers purchase natural -~gas from. local distribution com- panies which, in turn, purchase if from interstate pipelines for. distribution: to residential, commercial, and industrial customers. Not infrequently, however, industrial customers — buy from the pipeline directly or in some instances directly from a producer with a pipeline providing ouey a trans- portation function. 2° Under existing law the Cousinauitaat S authority is lim- ited 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 Commmis- sion’s regulatory authority. Similarly, existing law can be -construed to permit-a natural gas producer to aig the Commissfon’s rate jurisdiction by contracting directly ‘with industrial consumers and having a new or. existing pipeline transport gas for the producer’s account.! As explained more. fully below, this gap in the Commission’s jurisdiction ‘has not been closed by adequate State regulation. As a result, the pipeline companies. have set industrial gas prices . to some industrial customers at levels exceeding costs plus. reasonable profits, and are free to discriminate between in- dustrial customers. And natural gas producers seeking to escape the Commission's jurisdiction have attempted to —“- : -s vd See, e.g., FPC v. Transcontinental Gas Pipe. Line Corp., 3@5 US. 1 (1961) (dictum): Southern California Edison Co., CPS-172, applica- tion filed Dec. 23, 1960. Order Permitting Withdrawal of. Application’ -and Terminating Proceeding issued Jan. 3, 1963; Gulf Pacific Pipeline Co., CP63-223, applications filed Feb. 12, 1963. ‘ a ae | _ utilities lOa make direct industrial sales of gas which would be trans- ported over pipelines serving -only industrial customers, even though this may lead to uneconomic transportation and may divert natural gas resources from. consumer mar-_ ce kets where its use is most in the public interest.” : ea - The Natural Gas Act has been construed to_ leave the _ States free to regulate direct industrial sales, but many © simply -do not do so. In several: States, attempts by regu- ‘latory commissions to assert ‘jurisdiction over these sales have: been _thwarted by the pipelines in the State courts which have held that interstate pipelines selling to indi- vidual consumers on a contract basis- are not “public ”3 or that such salés are not “intrastate”.* . Con-— sequently, these courts have held, the transactions are be- yond the reach of the ‘State commissions. Even the States which do regulate direct pipeline industrial sales frequently > * ’ - > - Se 2 Southern California Edison Co., supra, note 1: Gulf Pacific . Pipeline Co., supra, note ee a , ee ° ; : : { 3 Mississippi River Fuel Corp.. v. Hlinois Commerce Commission, 1 Ill. 2d 509, 116 N.E. 2d\394 (1953); Public Utilities Commission y. Colorado Interstate Gas Co:, 142 Colo. 361, 351 P.2d 241 (1960). See Mississippi River._Fuel Corp. v. Hoffman, 4 ll. 2d 468, 123 N.E. 2d 503 (1955); City of St. Louis v, Mississippi River Fuel Corp., 97 ¢ _ P.2d 727 (8th Cir., 1938). Contra: .Re Panhandle Eastern Pipeline ’Co., 21 P.U.R. 2d 267 (1957) (Illinois Pub. Service Commission): Re: Cities Service Gas Co., 1931 E- P:U.R. 11. (Mo. Public Service Commission). ; ie , 4 Texas Ge Transmission Corp. v. Mississippy; E Public Serv. Comm'n., 241 Miss. 826, 133 So.2d 526 (1961); United’ Gas Pipe Line Co. ¥. Mississippi Public Service Commission, 241 Miss\ 162, 133 So.2d 521 ( sige , % 17a only require that the pipelines fi le rates negotiated between - them and industrial customers, but. at least in the absence of complaint, do not examine the ——— to see if they: are fair, reasonable, and nondiscriminatory.° The absence of effective? State regulation of these sales may reflect the difficulty a State commission would’ face in determining the: portion: of an interstate pipeline’ s total cost of service ’ applicable solely to direct industrial, sales made within the particular State. That determination would be — -compléx and time consuming. This system invites discrimination: between customers ‘on the basis of bargaining power — one: of the principal evils public utility rate regulation is designed to cure. Since State regulation of these sales, in most cases, is either non-existent or ineffective, industrial rates charged by interstate pipelines are often much higher than. could be justified by cost. considerations: The attached schedule shows just how far out.of line some pipelines’ industrial sale prices are. Based on cost of “service studies in connec- tion with relatively recent rate cases, the ‘figures show that seven out of: eight major pipelines’ revenues from indus- — trial sales exceeded costs — including a reasonable return on investment — by amounts ranging downward from 57 per- cent.” Only one company’s revenues from such sales ap- proximated costs (revenues were about 14 percent greater). and ,one come S Prices to its direct industrial customers t > Minutes of the third meeting of the Federal Power Commission. Natural Gas ‘Advisory Council, Oct. 31, 1962, p. 3.. A thorough search . | of reported State public utility commission decisions turned up only one case in-which a State commission altered ‘a rate an interstate pipeline. charged an industrial customers. 5 18a’ yielded less than an adequate rate of return. The extent to which some industrial customers.may have been re. quired to pay prices higher than might have been the case had the Commission exercised jurisdiction over the ratio ‘is suggested by. one case where the company’s rate for a sale subject to the jurisdiction of this Commission to a tocal distributor was 23.2 cents per thousand cubic feet . while its rate for an ‘unregulated direct sale to an indus- trial consumer was 45 cents and thousand cubic. feet. ® In addition, very large Senccntiaee increases are some- times forced upon industrial consumers: in one instance an oe rate was raised almost SO percent in 1 year.” These’ fatis strongly suggest that cemactiiion alorie _ is often inadequate to prevent rates for industrial gas sales . from’ rising -beyand cost-justified levels. This is not sur- ' prising, since in some regions and for some purposes; gas "is the only available or practical fuel® and a particular pipeline the only available supplier. : . Not only is Commission. jurisdiction over direct indus- trial sales necessary to protect industrial gas consumers, but it would also materially assist the Commission in better — discharging its ‘existing regulatory responsibilities. . © Panhandle Eastern Pipe Line Co., 21 P.U.R. 3d 267, 276 (1957). The rate to the distributor should be somewhat lower to reflect cer- | tain economies. However, the magnitude of the difference is probably out of praportion to that which could be justified by ‘cost consider- ations. - ; he 7 Public Utilities Commission v., Colorado Interstate Gas Co., supra, note 3. i —_ Public Utilities Commission vy, Colorailo Interstate Ge Co., supra, hote 3, at 255. | ~ ‘ 9 See authorities cited, at note f, supra. xd 10 See, e.g., Shell Oil Co., Docket No. R161 -515, Opinion No. 382 (decided Mar. 1S; 1963), where new purchases from producers in.west Texas were alleged to have triggered price increases under’ El Paso Natural Gas Co.’s contracts with other producers. The: in- crease to which these produceys were alleged to have become entitled, in-turn, allegediy triggered price escalation clauses im a contract be- tween El Paso and still ahother Producer. ‘See also Pure Oil Co., 25 ° 4. °!, me. -* additional gas to local distributors for resale in order to sell it directly to industrial consumers. 1 Since the unregu- * lated direct sale can frequently be made at higher rates, the rggson for the pipeline’s preference is obvious. But. . this practice often may not be in the public interest. In _ the first place. it means that less gas is available for resale to consumers for home heating — a use which the Com- mission, with court approval:"? has found heed frequently - be the best use for natural gas. . P Finally, direct industrial sales by pipelines Qr produ- cers May, On oOccasiog, prevent local distributors * making industrial sales within their service areas? sales beneQt home-heating customers by enabling dis tributors to make Sales during off-peak periods 4i.¢., when - warm weather reduces demand for space heating), and thus to spread the cost of their distribution facilities ahd those purchased gas costs which do not vary with the amount —_ e , : se oe _ i The problem is illustrated by the proceedings in Arkansas- Louisiana Ges Co., Opiniog No. 355, Apr. 18, 1962, 27 FPC 697, reversed sub nom, Granite City Steel Co. v. F.P.C, CAD. Nos. 17150, 17151, M# 23,1963. ° Extension of the-time in which to seek rehearing has been. réquested. There a group of Mississippi *¥ distributor customers sought. to the pipeline to sell them ad- ditional gas which it was making to direct industrial cus- tomers at rates not subject to Commission jurisdiction and exeed- ing those the Cqmmission: permitted Mississippi to chargé its dis- tributor customers. The Commission's order allocating additional gas to the distributors was set aside on review. -!2 EPC. ». Transcontinental Gas Pipe Line Corp., supra, note |. 2 2la i ae re -# taken over a greater volume of sales. © ‘The cost per unit of gas that the residential and commercial space-heating Customers ynust pay is, in turn, decreased. Thus, Commis- . . sion jurisdiction ‘e regulate direct industrial sales b y pipe- lines could put an end to the pipelines’ preference for such © sales over sales to locai distributors for resale. thereby bem efiting the natural gas consumers for whose protection the: . Natural Gas Act was passed. _ P For these reasons — protection of industrial consum. ers, prevention of widespread field price increases under existing contracts, and removal of present incentives to - withhold gas from local distributors in ordet.to make it, available for direct industrial sales — the Commission . ‘strongly recommends that it be given jurisdiction over di- : rect industrial sales by- natural gas companies. This author- ity will enable the Commission to require that interstate °~ industrial gas sales will be made at sach prices and on such. ferms as to realize the potential benefits of such sales to both industrial and domestic consumers. ’ Commissioner O'Connor has asked me to note his op- positfon to this proposal. le. : Sincerely. JOSEPH C. SWIDLER Chairman eae Pe : “ Marty pipeline rate schedules provide for both a commodity charge so much for each unit of gas taken — and a demand | charge - so much for each unit wf gas that the pipeline stands teady to deliver. The latter charge does not vary with the wtame of gas the distributor actually uses. ' X Note: Emphasis added “APPENDIX OO, . wad - ‘ 2 @ . . EXC’ RPT FROM wt rere ng SKIFF IN PANHANDLE FASTERN PIDE LIkk CO. ¥. PUBLIC SLPYICE Corissto4 aS INDIANA, 332 U.S. 507 fore imnortant, with resnoct to the -:- tion or —_————— a a er or a a s+ here, however, is the conclusion ¢f tue court below that as i peblic utibity, aopeliant willbe obligated to serve all whe apply and will not he permitted to select its customers. rf this is true in-Indiana, it is also true in each of the several x ; states in which abdpellant operates.’ It is inconceivable that requlation of this character can, fail-to bring, shout not only conflicts between the states but conflicts botween “the states * . and the Federal Power Comnission. : 2 r . . , = As shown by the recor¢ (ante, p. 14) substantially all industrial | consumers’ auptredte are on an interruptible basis and the service is curtailed when the supply would pe = ~~ . insufficient to supply the firm comnitirents of local distributin; companies for ‘corestic and comnercial customers. There-is’ untontroverted evidence that any curtailment program must be - based on the operation of the pipeline system as an entirety (RR v4, 175). Moréover-the provisions of the Natural Gas Act . e , .- * . giving the Feserai Power Connission jurisdiction over the . a . play construction of facilities for the interstate transportation - Of natural aas make it extreme ly doubtful whether appellant - ° could, if ord>rec to do se by a state commission, enlarge its ; . - 4 Te ° . _— A 7 sinGAbn x . e . . 23 7 - Be oe -«* - }; 2 ? . : ‘ inferstate transportation facilities ir order to serve new - xi = tae industrial cust@rers without authorization from the Fe eral ——— + - ® ; Power Commission, (As stated ante, np. 10, such 4 certificate was applied for-and issued with feference to the DuPont service over the objection of: the ‘appellee Comnission.) J 4 ‘The Federal Powcr Conission has alsa asserted the - — F o right to prevent a pipe Vine company fron Ness. customers, even thoutdh additional transnortation facilities are not required if that fSonmission determines that such service would: : ° inpair ability to_render Satisfactory service to existing custoners. (Emphasis Added.) - (b) steam electric power plants ‘ the operation of any of its facili-_ to supply gas for all the require- 24a APPENDIX P Comparison of Curtailment Provisions of United's FPC Gas Tariff in Effect {éntil November 14, 1971 and rape f United Direct Sale cunmant =e United Gas Pipe Line Company / Typical United Direct Sale FPC Gas Tariff ' Article 1X First Revised Volume No.1 | _ General Terms and Conditions Original Sheet Neo. 71, First Revised Sheet No. 72_ a aad _ IMpainmr NOP » DELIVERIES **TMPAIRMENT OF D©Livertes 12.1 Proration of Impaired De-, liverte: ‘Seller delivers gas to (a) gas atilitien, and pipeline , companies which deliver ga to gas utilities, for resale to domes- tie and industrial consumers, - Buyer specifically recognize the fact that Seller delivers ga to gas utilities for resale.to «de mestic consumers anfl to publi utility power plants for genera tion of electricity which is sol to domestic consumers. In. th _ event a shortage of gas render Seller unable to supply the fu gaS requirements of all its cor sumers, then it is matual! agreed that the gas requirement @f vas utilities selling-gas to mestie. consumers and - publ utility power plants-using «a for generation /of -eleetricit which is sold to,domestie cor -sumers shall first be supplied b Seller, and the remaining avai able gas shall be prorated b i, : Seller among its other contra ties. The gas requirements of . ; : : as aaa , ; * consumers, including Buyer. gas utilities, and pipe line com-.. as panies .delivering gas to ‘gas ; e. 4 , utilities, which sell gas to do- mestic consumers (but only to ton ge the extent of gas required for resale to such domestie con-~ - sumers) shall first be -supplied es Ge: by Seller. If Seller is unable ‘ for use in generating electricity wieich is sold. to domestie con- sumers, and (@) industrial eon- sumers. ‘In the event a shortage of gas renders Seller unable to supply the full gas requirements of all of its constimers, then, Seller may, without liability to Buyer, prorate its gas supply in the-mannet hereinafter set forth’ after first making allowanre for all gas required by Seller for ™ hd \ 25a. ments of such gas utilities and. pipe line companies delivering gas to gas utilities, for resale to domestic consumers, then gas for such requirements shall be sup- plied ratably. In. the event Seller is able to supply gas for alf the requirements of such gas utilities, and pipe line companies delivering gas to gas utilities, .- for resale to domestic consumers, then there shall next be supplied ” the gas requirements of steam . electric power plants using gas for the generation of electricity which is sold to domestig con- sumers, whether ‘such power plants purchase their require- ments from Seller or from gas utilities or from pipe line com- panies, purchasing their require-_ ments from Seller; and, if Seller: . does -not have sufficient gas to supply all of the requirements of said power plants, then said requirements shall be supplied ratably. After the. above re- quirements have been supplied, the remaining gas supply, if any, shall be prorated by Seller among its other customers, -to the extent of gas sold by th their other consumers. | the t of any shortage of gas as “ax: Section provided, Buyer Shall discontinue ‘service of gas e to its consumers during the period of any such shortage to ‘the extent whjc ‘h may be neces- sary consistent to the prov isions hereof. In _ instances Seller —- less’than the full re- x a - “Ses pra. Fe of certain of its cus- _ tomers, and there may be times. when Seller supplies less than the full requirements of Buyer hereunder and it is the intent of this Section that any priority gramted hereunder shall run only to that part of the require- ments of each ultimate consumer as is being currently supplied. by gas furnished by Seller, directly or indirectly.’ Pal Defendants. -.- COMPLAINT POR TEMPORARY RESTRAINING ORDER, " PRELIMINARY AND PERMANENT INJUNCTION . Now comessLouisiana Public Service Commission’ (LPSC) % an@ for its complaint against the defendants, United Gas Pipe Line Company (United)., Pennzoil United, Inc. (Pennzoil), and the Chair- man and individual Commissioners of the Federal -Power Commission (FPC), respectgully alleges: fe a rd a THE PARTIES 1. Plaintiff, LPSC, is an agency of the State of Louisiana, charged by the ‘laws of Louisiana with the authority and duty, inter alia, of regulating the rates and’ services of gas and electric utilities in that state, and with exertising general supervision over such utilities, and, in addition, with protettine the interests of gas and electric consumers in the State of Louisiana. (Article VI Section 4 of the Louisiana Constitutiaqn, as wnended in 1964, and’ Title 45 of the Louisiana evieed statytes) The LYSC is a separate entity which may sve and be sucd. 2. Defendants, Ynited and Pennzoil, are corporations, duly organizca one existing under and rs virtue of=the laws of the State of Delaware, and having their, principal places of business . ‘ @ — & wees * « > Be ea ; 27a, =. APPENDIX Q P UNITED -STATES DISTRICT CouRT . . ‘ WESTERN DISTRICT OF LOUISIANA : : MONROE DIVISION ke ’ 2 : 4 . = > —TI LOUISIANA PUBLIC SERVICE COMMISSION, ) . R e eye ‘ ) 4 Plaintiff, ) “ : ) * . UNITED GAS PIP LINF COMPANY; } CIVIL ACTION NO. PENNZOIL UNITED, INC.; ) | 7 : ~rily inje¢c- ted into the separate Green System in 1970 which éou}: .ave been us NECESSITY FOR twain CTIVE RELIEF. ~~ - ee £5, On September 28,.1971, plainti ff acopted. its - Special Order No. 7-71, (Appends x Bhi. instituting a conprehesiy: examination and Suvestiastion of United" s rates and services ag itd } . . : ‘ 2 . . * ' + \ - ; z , P i ; ‘ . */: Subsequently; LPSG issucd Special Orders 12-71 ‘and 21-71 Appendices c & D). e . \ je . .: . only on an emergeticy basis and sliegally subjects them to the cc-.- nai : . wes 7) “ ; iF “ ‘ . eee dla See ae a -5- Ce ; . ae ~~ ae ee Se ee . 9 > : : : ; ; intrastate! pipeline facilities and systems in southern Louisiana, eee curtailment “practices, and delivery volumes. , This Or de: saeco iy prohibited further ‘conning fin} by Unitec as shown by th: FPC's findings in —— No- 610 under- the heading “The 13. Opinion No. 610 unlawfully otets Plaintiss of its jurisdiction over United's Green System; cenlite the proceeding to an \FPC Examiner, for ‘eeneigt of additional evidence. to lay the fou oe n for unlawfully discriminating against’ tabraschte resc! fa @nd direct customers ‘served f£rom that systen; Ai sia them to pe. — ‘ higher ‘rates in violation of, their service. agreengnts ‘anda direct sales contracts and provides that they shall continue to be. pre s nl ditions Paci United's datrastate facilities. be Operated: as part prolonged duration. pet gm ee oe a ‘ tN ‘ . ‘ ' ¥ or sien ee @ x 5 . Bren ae f */ (Appendix F) ra =e Hes ai . : - 4 Unauthorized;Gas Flows Establish Jurisdiction" SFR op., - @-23):: " , . ? 2 voy : ike ° : 7 ° ; as 3 ’ ‘ detision in the remanded proceedings which dre certain to be of q- a ° sd *. a é fe ; -—— ” oY ©. * * - r. . * . ” . \ $2 out. *. e -~t-«- . \ i¢.. The judcnt cf the rites Circuit Court ot Appeal: - tat the Rey System is an intsfecate pipeline Subject only to state yar iscretion constitutes a full” #' judication of tas issue: /| tp a court & ponpetent jeriafietion.. it is binding ©. tasted, renazeil and hw: Fre whieh were all parties to Civil action tio. 16€}?- 4 Defore this Court. Until that ‘edgnent is vaccted, the - Fret lacks authority to aake any sebctantive ‘orders whi ere ir- fomsirient toerew: ith. Therefore, issuance of-rrc Opir.ca ws. €. on Bebrugry 9, 1972, after the | PSE Cipeuss decision tecame bir::-7 ender the principles of r rss Lud licsta ant estoppel by fetgrent “wis illegal aM an ultra vires act by.the nened defendant comments. rm Piaineite initiated itegcurrently pendins eengre*s=" sive investigation of United and made its express prohibition against further commingling and interconnections in order to pri- serve the-status’ quo during the pendency of Court Litigation con- cerned with whether the federal or state agency has jurisdictic- over United's. separate intrastate pipeline systens in southern Louisiana. Unless enjoined, Opinion Né. 610 by authorizing and |r directing United to-take such prohibited action, wilBeitiate aci* destroy the effectiveness of the LPSC order. ‘eeeeee, Opig=> mo. 616 (Slip Op. Par. 33, p- 1%) squarely holds that the Pre's jurisdiction under the uatural Gas. shit. attaches even vhen the ° - commingling of interstate and intrastate gas and any overationa:. integration between United's interstate and IRE fi sr ~al sesults from the Gelibgrate and unlawful action of the pipe Ling, euntcaxy to both the Beteral Gas.Act ant the order - the LPSCc. While plaintife isagteoe with this legal conclusion, it showlé not. be subjectcd te the-naterial ask that the court. will epee 22 the” rrc* S postion in which case United's unlevful act: ons, @ic. =| and er by - “the egeslly [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385606_0422%3A35. Public record. Not legal advice.