# Petition for Writ of Certiorari — Federal Power Commission v. Consumer Federation of America > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_1379%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1975 - **Citation:** 423 U.S. 906 ## Text RE TIN rccsccercskveheuci-chicementvnstioatone Uae SECIS Cas Bae Pere RR ee I I sc cnentitnSonsectehceedesotenantenies Statutes involved - ET aee i sconce eRe RR eam Reasons for granting the writ Conclusion caliph aeicak lla theca ehiaianaden 14 IIE TR See Order 431, 45 FPC 570, 571 (1971). ° 43 FPC 707 (1970) (Adding new section 2.68 to the FPC’s Statement of General Policy and Interpretations under the Natural Gas Act). *44 FPC 1574 (1970) (amending 18 C.F.R. §§ 157.22 and 157.29). LAPT L IE IT LIE OER NE MC EIS ISLA Rf BP gh SF Hed ery ee a te ett et i ee ae) 9 tN amtIEN PIA. De AIP IW by 4a “these emergency measures” a number of pipelines were unable to meet their firm demands.‘ In order to forestall emergencies during the next winter the Commission in Order 431 extended the 60 day ex- emption and decided to “consider limited-term cer- tificates with pre-grant abandonment, if the pipeline demonstrates emergency need.”’* None of these early measures were challenged in the courts.” Another staff study of gas supplies, released July 16, 1978, projected “net curtailments of firm re- quirement customers of the major interstate pipe- lines” of 1.2 trillion cubic feet (tef) during the April, 1978, to March, 1974, period with a .5 tef shortfall during the 1973-74 winter." The study found “reliable and adequate gas service even more jeopardized than at the juncture when [the Com- mission] initiated emergency measures” in 1970.” Concluding that further steps were necessary to prevent “severe economic and environmental conse- quences,” the Commission, without notice or oppor- tunity for comment, issued Order 491 on September 14, 1973."" The order exempted from § 7’s certifica- tion requirement emergency sales, if deliveries com- menced before March 15, 1974, even though they ran * See Order 431, 45 FPC 570, 571 (1971). * Id. at 572. 1° See Order 491-A, 50 FPC 848, 853 (1973). 1 See Order 491, 50 FPC 742, 743 (1973). 2 Td. 18 See id. at 742-743. ah SEES OT Te aI FP UY LINE LEE FAR ETN AMO BUA RR MB SAC TMM RE 5a for a period as long as 180 days. Order 491 also suspended the limited-term certificate procedure of Order 431 “pending further study and order of the Commission.” * On September 20, petitioners—Consumer Federa- tion of America, American Public Gas Association and National League of Cities-United States Con- ference of Mayors *—sought leave to intervene and moved for rehearing and a stay of Order 491. Next day they filed a motion for stay in this court, claim- ing that the Commission’s order had been adopted in violation of the Administrative Procedure Act and the Natural Gas Act." The FPC denied pe- titioners’ stay application in Order 491-A, Septem- * See id, at 744-45. ‘* Briefs in this case have also been filed by Intervenors Texas Gas Transmission Corp, and Transcontinental Gas Pipe Line Corp. (Pipeline Intervenors), Intervenor Associated Gas Distributors, and a group of Senators and Representatives acting as amicus curiae. Amicus curiae, like petitioners, urges us to set aside Order 491. The intervenors address only portions of the order under review. The Pipeline Intervenors support the 180 exemption but claim that the Commission lacks the authority to prevent pipelines from passing on to consumers “purchased gas ex- penses resulting from contracts entered into as “arm’s length’ and in good faith.” Brief for Pipeline Intervenors at 3. Intervenor Associated Gas Distributors defends only the 180 day exemption of emergency sales, exchanges and deliveries between distribution companies exempt from FPC regulation and interstate pipelines or distribution companies in other states. See note 86 infra. 2 See Motion for Stay at 1, Sept. 21, 1973; Brief for Peti- tioner at 11. BAL ALINE OANA ARNE RA IR NY WER. OO ad TS BEIT HHI RF a 6a ber 25, 1973." This order presented a more detailed picture of the projected curtailments and explained that the 180 day period was necessary “to obtain sufficient commitments for this winter heating sea- son.” ** In addition, the Commission announced that it would allow interested parties to file comments. This court heard oral argument on petitioners’ mo- tion and, on October 3, 1973, stayed Order 491 pend- ing Commission reconsideration after receipt of com- ments.” The FPC’s Order on Reconsideration, Order 491- B, November 2, 1973, reaffirmed its decision to ex- pand the emergency sales exemption to 180 days and reinstituted the limited-term certificate proce- dure. Petitioners applied to the FPC for a rehearing and stay of Order 491-B and moved in this court for an extension of the October 3 stay pending resolu- tion of their petition for review. The Commission denied the rehearing and stay requests in Order 491- C, November 21, 1973. We then granted a stay of Order 491-B pending judicial review. Ten days later, on December 20, 1978, the Supreme Court granted the Solicitor General’s application to vacate our stay. Live Controversy Although all sales under Order 491 have been com- pleted, the present controversy remains alive. Fol- 750 FPC 848 (1973). 18 See id. at 852. 1° Brief for Petitioners at 12. SRT LMT SORA rte LLG BRINE OE UNREST he PPT Te | Sos a Ta lowing the Supreme Court’s action, the Order 491 procedures were available for sales to pipelines fac- ing curtailment until terminated by Order 491-D on March 15, 1974. Between September 1973 and September 1974 over 500 sales, involving more than 172 billion cubic feet (172,000,000 mcf) of natural gas were exempted under the challenged orders.” Petitioners not only request that we set aside the ex- pired orders but also seek refunds of rates paid producers in excess of the just and reasonable rate.” The limited duration of the orders combined with the continuing gas shortage make this controversy one “capable of repetition, yet evading review.” ” Indeed, while this case was pending the Commission advised that it was considering reinstating the 180 day exemption for the 1974-75 season.” II. SCOPE OF THE SECTION 7(c) PROVISO Section 7 of the Natural Gas Act “ requires that a natural gas company obtain a certificate of public *” See Order Directing Solicitor to seek an Expedited De- cision in the Appeal of Orders No. 491, et seq., at 6, Jan. 16, 1975. * Brief for Petitioners at 13. 22 See Roe v. Wade, 410 U.S. 118, 125 (1973), quoting Southern Pacific Terminal Co. v. ICC, 219 U.S. 498, 515 (1911). 28 See Motion for Expedited Decision at 3-4, Jan. 17, 1975. 24 Section 7 of the Natural Gas Act, 15 U.S.C. § 717f (1970), provides in pertinent part: (c) No natural-gas company or person which will be a natural-gas company upon completion of any proposed SEL APEIEE LEE DIOR MEL EO SPRITE TOES INTERES IE ATOLL I WS PION Gea Sg ET ol AIR NE RA TEMS Se weg BASES tee PE FPC News Release No. 19640. ®° FPC News Release No. 19441. * April through July volumes were actual, whereas, August through October volumes were estimated. i SRA 4 46a encing increasing difficulty in obtaining sufficient gas to maintain reliable service. The following table rep- resents the extent of curtailed service each of the major pipeline companies projects for the 1973-74 season (April 1973 through March 1974): Firm Volumes Requirement Curtailed Percent Mcf Mcf Curtailment *Algonquin 177,935,800 17,431,500 10.0 Arkansas-Louisiana 495,548,000 119,887,965 24.0 Cities 571,164,000 29,856,000 5.0 Columbia 1,532,573,000 12,574,000 1.0 El Paso 1,906,747,000 147,474,427 8.0 *Louisiana-Nevada 147,271,334 56,700* Negligible Mississippi River 209,296,000 7,996,118 4.0 Natural 1,207,139,000 228,868,178* 19.0 Northern 896,000,000 11,800,000 1.0 Panhandle 825,708,000 36,079,308 4.0 Texas Eastern 1,081,814,000 164,503,788 15.0 Transco 1,097,152,000 141,018,748 13.0 Transwestern 360,532,000 20,759,957 6.0 Trunkline 597,986,000 165,601,429 28.0 United Gas 1,602,798,000 541,937,052 34.0 * Summer curtailment only. Furthermore, all of the above pipelines, with the ex- ception of Algonquin and Louisiana-Nevada, have been obtaining some gas under the Commission’s present emergency purchase provisions. The project- ed curtailments would thus be even greater without the increments provided by such temporary pur- chases. The effects that such curtailments are having on the distributor and industrial customers of these pipelines are evidenced by the increasing number of petitions for extraordinary relief from curtailment presently being received by the Commission. A list- 47a ing of the more recent petitions for relief, and a brief summary of each, follows: Arkansas Louisiana Gas Company—Docket No. RP 71-122 Arkansas Lightweight Aggregate Corporation t Relief required to operate kilns. No alter- nate fuel capability installed. Without re- lief, production would be reduced by 50 per- cent and several employees would be laid off. El Paso Natural Gas Company—Docket No. RP72-6 City of Wilcox, Arizona and Arizona Electric Power Cooperative, Inc. Relief required for safety and reliability of its electric generating plant. No alternate fuel supplies. City of Mesa, Arizona Relief required to avoid possible endanger- ment of residential and commercial service. Department of Water of the City of Los Angeles and Southern California Edison Company Relief required to prevent curtailment of firm electric loads. No alternate fuel sup- plies. Florida Gas Transmission Company—Docket No. RP 71 128 Edgar Plastic Kaolin Company Relief to continue operations. Alternate fuels (propane and butane) are not avail- 48a able. Without relief production would be re- duced 30 to 40 percent and a 3 to 4 month shut-down or possibly the closing of its plant. Panhandle Eastern Pipe Line Company—Docket No. RP71-119 DeKalb Agresearch, Inc. Relief required to dry seed corn for next year’s planting. No alternate fuel facilities and propane is not available. This plant’s production represents a corn crop of nearly 40,000,000 bushels. Michigan Seamless Tube Company Relief required to avoid shut down until al- ternate fuel capability is installed (560 em- ployees). Eugene W. Stallings (an independent oil pro- ducer) Relief required to operate compressor en- gines and treat oil produced in an in-situ (fire flood) oil recovery operation. Program would be uneconomical if equipment has to utilize other fuels. As the winter season arrives, additional requests for relief will undoubtedly be received. Furthermore, some, if not most, of these requests will require de- termination after formal hearings. This Commission will thus become increasingly burdened in resolving these requests and some petitioners will sustain seri- ous operational and economical injury during the interval. 49a Although the projected deficiencies in gas supply are endemic to the nation as a whole, our studies show that certain areas of the country will be particu- larly hard hit. These regions * include: the Gulf Coast, Pacific Southwest, Appalachian, Great Lakes, and Southwest. (See attached Appendix A). The problem is compounded by the fact that these same regions are also faced with severe shortages of suitable alterna- tive fuels, such as propane and distillate fuel oil. In- deed, it is this high degree of interdependence be- tween the available natural gas and the supply of suitable alternative fuel, such as propane and num- ber 2 heating oil, that further exacerbates our overall energy problem. This is indicated by data presented to the Commission, by various state regulatory bodies in response to our request for specific fuel supply in- formation, in which each state outlines the extent and effect of immediate and projected shortages of pri- mary fuels. These responses’ concluded that addi- tional curtailments of natural gas this winter will force many industrial plants to operate part-time or shut down completely. Many of these plants could have relied on propane as a satisfactory alternative fuel. However, the equally severe shortage of propane fuel would eliminate this safeguard. In testimony *The names of these regions refer to the designations by the Future Requirements Committee. * See telegraphic request of August 15, 1973, from Chair- man Nassikas to state regulatory utility agencies. Responses to this request were received between August 20—September 21, pertinent excerpts of which are attached as Appendix B. oe OUT ITE FRE AT KY REAR) PULTE ERNE S 50a given at a public hearing instituted by the White House Energy Policy Office on September 7, 1973, many of the Nation’s largest propane suppliers testi- fied that supplies for the 1973-74 heating season would be 15-25 percent less than the amount avail- able for the 1972-73 season. The situation regarding fuel oil supplies does not appear quite as bleak as that of natural gas and pro- pane. However, strong evidence exists indicating a shortage of even these petroleum products, especially home heating oils. In a Notice issued August 27, 1973, the White House Energy Policy Office estab- lished a public hearing to be held on September 6, 1973. At the hearing comments and testimony were received on all phases of the “Proposed Program to Establish Priorities and Allocate Supply for Certain Low Sulfur Petroleum Products”. These comments and testimony document the existence of a generally tight fuel oil supply, with severe shortage evident in certain areas of the country in home heating qual- ity oils. In order to make available supplies of this product for human needs and other essential require- ments, the supply of heating oils for industrial con- sumption must necessarily be decreased. Since many larger industrial natural gas customers have con- verted gas burning equipment to dual-fuel capbility in anticipation of continued gas shortage, the unavail- ability of oil as an alternative fuel will result in plant shut-downs. In some. areas the reliability of electric generation may be threatened. 5la It was in response to this increasingly deteriorat- ing energy situation that we initiated our present action. The 60-day emergency purchases and limited- term certificated previously authorized in Order Nos. 402,” 418," and 431,” have not enabled the pipelines ‘to avoid curtailing the firm, higher priority service along with lower priority, interruptible service. Clearly, further measures must be taken to increase the gas supply available to the vital interstate mar- ket during this coming winter. In this regard, we are mindful of our authority under Section 7(c) of the Natural Gas Act, 15 U.S.C. § 717f(c), to “ex- empt from the requirements of this section temporary acts or operations for which the issuance of a cer- tificate will not be required in the public interest.” The courts have accorded wide discretion to the Com- mission’s efforts to protect the adequacy of service to the consuming public.” We believe that the provisions of Order No. 491 will increase the supply of emergency gas available to the interstate market during the coming winter. An extension of the period during which emergency sales can be made from 60 days to 180 days, will 10 43 FPC 707 (1970), 43 FPC 822 (1970). 1 44 FPC 1574 (1970). 12 45 FPC 570 (1971). 13 F.P.C. v. Louisiana Power & Light Co., 406 U.S. 621, 642 (1972); Permian Basin Area Rate Cases, 390 U.S. 747, 776 (1968); Public Service Commission for the State of New York v. F.P.C., 467 F.2d 361, 367-69 (D.C. Cir. 1972). ERR ON TT ae eet Be Tt os oe Bit 52a assure the seller of the gas a more definite market for a given quantity of gas. The seller would thus be more likely to enter into a contract for emer- gency sales to the pipeline. The fact of an assured supply over a longer defi- nite time period also benefits the pipeline buyers, and in turn, their customers. As illustrated by Ap- pendix C, a large number of pipeline companies util- ize large volumes in underground storage to meet their requirements during the winter heating season. This more definite flowing supply will improve the flexibility afforded by this underground storage, thus permitting the pipelines to respond more effectively to the extreme circumstances affecting their own and their customers operations during the winter period. Similarly, assured 180 day emergency supplies en- tering the interstate market in the latter part of the winter season will enhance the pipelines’ ability to manage their usual supply sources more effectively during next summer’s storage injection season. As we indicated in Order No. 491, we will review the rates and volumes of natural gas under these re- vised procedures, to determine the efficacy of our pol- icy to cope with the existing emergency for the 1973- 1974 winter heating season, and take whatever ac- tion is warranted to serve the overall public interest. The rate at which these emergency volumes are com- mitted to interstate pipelines will be examined in our pipeline regulatory review under Sections 4 and 5 of the Act, in the same manner as purchases are reviewed under the prior emergency procedures. 53a New York questions whether or not the extension from 60 to 180 days is required to meet the pro- jected needs for the 1973-1974 winter heating sea- son. From 1970 through May 1973, 442 60-day emer- gency purchases were initiated at prices ranging from 35-54 cents per Mcf with volumes aggregating 385 Bef. From 1971 through May 19738, 226 limited- term certificates were initiated at prices ranging from 30-45 cents per Mcf and for volumes of 792 Bcf. Under Order No. 491, the limited-term certificate procedures were stayed, pending further Commission review and order. The 60-day period is too short to obtain sufficient commitments for this winter heat- ing season and we fully anticipate that commitments will increase by the extension of the term to 180 days, thus alleviating the short-term emergency con- ditions for this winter. In staying that portion of 2.70(b) (3), providing for limited-term certificates under paragraph 12 of R-389-A, 35 Fed. Reg. 11638, we anticipate long-term dedications (in addition to the 180-day short term emergency purchases) under the optional certificate procedure, the area rate pro- cedure, or petitions for special relief from area rates. However, as we review the volumes and rates of gas which is committed pursuant to these amended procedures, we will consider whether the public in- terest requires reinstatement of limited-term certifi- cates with pregranted abandonment.’* Because of 138 Order No. 491 (mimeo. at 5-6). 54a our mandatory review prior to March 15, 1974, and through the advance reporting procedures prescribed in Order No. 491, we will closely monitor and re- view the results of these emergency procedures in fulfilling our Congressionally delegated mandate to assure adequate and safe service to the Nation’s gas consumers during this emergency period and will determine whether any modification is necessary to serve the public interest. As can be seen from the foregoing,’ there is un- controverted and substantial evidence that an emer- gency will be present for significant segments of gas consumers for the 1973-1974 winter heating sea- son. The evidence before us requires prompt Com- mission action, the result being Order No. 491. How- ever, we will provide for procedures so that an in- terested person may file written comments, as well as written responses to comments in Docket No. RM74-3, concerning alternative emergency measures for the short-term situation. After receipt of those comments and responses, the Commission will issue an order on reconsideration in Docket No. RM74-3, on or before November 13, 1973." New York and Consumer Federation, et al. also request a stay of the effectiveness of Order No. 491 1* Neither New York nor Consumer Federation, et al. con- test that an “emergency” exists. 15 New York avers that we were “tardy” in issuing Order No. 491. However, FPC Press Release No. 19640, issued September 17, 1973, containing the most recent curtailment projections, was only recently available to us. FERS 55a pending consideration of their applications for re- hearing, contending “irreparable injury to the in- terests of N v York gas consumers” (New York at 2) and that a stay would “prejudice no one for the effect of a stay would be to reinstate the 60-day and limited-term procedure of Orders No. 418 and 431” (Consumer Federation, et al. at 13). In determining whether or not to stay the effectiveness of its order pending further review, this Commission applies the standards enunciated by the D.C. Circuit in Virginia Petroleum Jobbers v. F.P.C.** Under these guidelines, to prevail in staying our order, the petitioners must show: (1) likelihood of prevailing on the merits of their requested review ; (2) that they will suffer irreparable injury if the stay is not granted; (3) that other parties will not be substantially harmed by granting the stay; and (4) that the public interest will be served by grant- ing the stay. In the instant case, neither petitioner has met these standards. The only possible references to a claim of prevail- ing on the merits occurs in New York’s contentions that the Commission has overstepped its Section 7(c) authority (New York at 5-7). However, even here New York admits that “[I]t is arguable that the 16 259 F.2d 921 (D.C. Cir. 1958). 2 AYA RY A 56a sixty day period previously prescribed by the Com- mission’s Rules in which producers can operate with- out a certificate * * * is an appropriate exercise of the Commission’s authority under Section 7(c) * * *”| This in no way indicates the probability of success that must be shown under the Virginia Petroleum doctrine. Even less substantial are the Petitioners’ claims of irreparable injury unless we stay the effectiveness of our order. The only harm alluded to on this point involves possible increases in prices to some con- sumers while the emergency provisions are in effect. However, as we have stated above (p. 8), the rates at which any emergency purchases are made pur- suant to this order will be subject to our full regula- tory review subject to Sections 4 and 5 of the Natural Gas Act. Moreover, the emergency procedures es- tablished by Order Nos. 402, 418 and 431 (See Or- der No. 491 at 2-3) are legal regulations of this Commission, and no longer subject to court review. The effect of Order No. 491 was limited to merely extending the term of the measures prescribed there- in from 60 days to 180 days. As Consumer Federa- tion indicates (Consumer Federation at 13), the ef- fectiveness of Order No. 491, from its date of is- suance until November 13, 1973, i.e. 60 days, is the same as would be the case under existing lawful regulations. There is thus no change in the status + quo until after November 13, 1973, and to contend vi 57a otherwise, represents a collateral attack upon exist- ing regulations.” When we consider the final factors that must be shown, i.e., whether other parties or the public in- terest in general will be served, it is clear that we must deny the stay of our present order. As has been previously shown, it is the critical magnitude of the gas supply deficiency with its threatened immediate harm to the entire consuming public that mandates our emergency action. To grant the Petitioners’ re- quest would be an acceptance of the paradoxical rea- soning that, having determined the appropriate ac- tion with which to respond to an emergency situa- tion, we will now wait until a more appropriate time to implement that action. Such an argument is untenable. Our present action represents a clear case where the fulfillment of our statutory duties re- quires “the interest of private iitigants to give way to the realization of public purposes.” (Virginia Petroleum Jobbers, supra, 925). Inasmuch as pe- titioners have failed to meet the standards required for grant of a stay as set forth in Virginia Jobbers and have failed to show how the continued effective- ness of order No. 491 (at least for a period of 60 days from its issuance) in any way undermines their interests, the motions for stay are denied. New York and Consumer Federation, et al. have petitioned to intervene in Docket No. RM74-3. Be- 7 Cf. F.P.C. v. Colorado Interstate Gas Co., 348 U.S. 492, 497 (1955) 58a cause of the modified procedures set forth infra, we will deny their petitions to intervene, because they, along with all other interested persons, are afforded the opportunity to comment on the procedures pre- scribed in Order No. 491. Those additional argu- ments raised by New York and Consumer Federa- tion, et al., to the extent not addressed in either Order No. 491 or in this order, are deferred for further consideration in the order to be issued after receipt of comments. For purposes of clarification, the only modification to Sections 157.22 and 157.29 of our Regulations under the Natural Gas Act was the extension of time of an emergency transaction from 60 days to 180 days. The exemption from Section 7(c) certifica- tion authorization is restricted to pipelines to: assure maintenance of adequate natural gas serv- ice where interruption or serious curtailment of service exists or is threatened because of failure of facilities or failure or curtailment of supply or unusual and unexpected demand on such fa- cilities or supply. § 157.22(a) and § 157.29. Additionally, such pipeline purchasers should also have on file with the Commission a curtailment plan pur- suant to Section 2.70(b) (2) (i) to be eligible for such emergency purchases. The Commission orders that: (A) New York and Consumer Federation, et al., motions for stay of Order No. 491 are denied. PALES TOLLE EIA CIAL CLL LORE LEONI IME ENCED 59a (B) New York and Consumer Federation, et al., petitions to intervene in Docket No. RM74-3 are denied, without prejudice to the submission of comments, as provided in (C) and (D) herein. (C) Any interested person may file written com- ; ments concerning the modification of emer- gency measures prescribed by Order No. 491 with the Secretary at the Federal Power Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426, by October 8, : 1973. The submittal shall state the name, q title, qualifications, mailing address, and telephone number of the person or persons to whom communications concerning this matter should be addressed. An original and fourteen conformed copies of such re- sponse shall be filed with the Commission. (D) Responses to the submittals shall be filed no later than October 17, 1973, in the same form and number as the original submittals. (E) All submittals and responses shall be under oath and acknowledged by a notary public or comparable official, and that the person making such filing is authorized to verify and file the document and that all state- ments contained therein are true and cor- rect to the best of his knowledge. (F) New York and Consumer Federation, et al., applications for rehearing of Order No. 491 are treated as motions for reconsidera- tion and will be deferred and taken under advisement pending further Commission or- et Neh hah) DE SEIN, SLOW LEE LEIS LOLS PEDIC SA. CLIGIE LE LBL LIEDER ILI LEE LOL LLCS DIOL LEED IPE ES ELEN = 60a der, on or before November 138, 1973, after receipt of the comments provided in (C) and (D) above. By the Commission. {SEAL] Mary B. 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AW Be a DPA Ca I RP at i att 63a APPENDIX B EXCERPTED QUOTES FROM STATE FUEL REPORTS State California Comments Acquisition of sufficient gas and fuel oi! to satisfy foreseeable generating requirements during the forthcoming winter heating season and subsequently through 1976, is the specific energy supply problem most urgently facing California electric utilities. It will be noted from Table 1 page 2 that the estimated decline in gas fuel supply from 65.8 million barrels in 1973 to 25.5 million barrels in 1974 results in as yet uncovered requirement for residual! fuel oil of 57.7 million barrels in 1974. Similarly uncovered fuel oil requirements for 1975 are 76.2 million barrels and 56.1 million barrels for 1976. At present it appears that unless additional gas is made avail- able or gas service priorities are revised, it is likely that electric curtailment will occur during 1974. There are 10 liquefied petroleum gas utili- ties in California that will have an esti- mated requirement of almost 140,000 bar- rels of propane for the year 1973. These utilities’ customers are limited to the resi- dential and commercial type. Their 1973- 1974 winter requirement will be slightly in excess of 55,000 barrels for the months of December, January and February. The precise disparity in supply and utilities re- quirements is now under evaluation. The first indications are that those utilities not owned by large propane companies may have supply problems this winter. It ap- pears these supply problems may be in- tensified if the proposed mandatory alloca- SLRS LOLOL LITLE DESO LOG EIEIO DLLME LEP LOALL RL IIE LENE ID ELEN SI i se bel A Perm egiee: 3 . Cia in oe al ls State California (continued) Colorado Florida New Hampshire 64a Comments tion procedures of the Energy Policy Office are put into effect, with public utilities ranking next to last in the eighth priority classification. In summary, Colorado will experience a greatly intensified demand for all alternate fuels with utilities, gas and electric, shar- ing the best position. A need for all energy users to at least hold to the 1972/73 levels is to us obvious, unless producers come up with reliable assurances that they can and will provide the indicated total quantities of fuels. The anticipated requirements for LP gas for the winter season is 350-400 million gallons with an anticipated shortage of 5-7%. We have been informed by the Flor- ida LP Gas Association that the various distributor companies have filled the tanks of residential and commercial customers unless there is a severely cold winter sea- son. The problem facing the companies rests with propane availability—they have been served notice by the suppliers that winter contracts may not be met, at least on the terms normally expected in the past. Tra- ditionally, gas companies have purchased LPG on a winter-summer relationship of at least two to one, with shipments arriv- ing by rail car or truck transport on a schedule which minimizes the amount of on-site storage; therefore, whereby five carloads per week might suffice during the summer season when only the company’s bottled gas business required product, ten cars per week would be delivered during the winter when peak-shaving was neces- sary. State 65a Comments New Hampshire The companies have been told that these (continued) ‘New York delivery schedules will no longer be hon- ored. LPG will be brought in primarily on a constant one-to-one schedule, and the only way they can be assured of enough product to carry them through the winter will be to install sufficient on-site storage to build up a tremendous supply during the summer. It will be noted that Gas Service, Inc., Manchester Gas Co. and Con- cord Natural Gas Corp. are doing exactly that, and the investment costs are stagger- ing. To compound the problem, the companies are now receiving feed-back from the LPG suppliers that this one-to-one schedule may not even be assured. They are continuously revising their estimates of projected sup- ply availability, and it appears they will continue to do so right into the peak-shav- ing season. The State of New York is dependent upon every fuel you have mentioned, and all of our investigations indicate a shortage for each fuel, some potentially more serious than others. Natural Gas Curtailments by the major interstate pipe- lines serving New York during the 1973- 74 heating season are anticipated to be over 30 billion cubic feet or approximately 15 billion cubic feet more than occurred during the last heating season. The cur- tailments will be partially offset by almost 6 billion cubic feet of alternative gas sources. The main impact of the deficiency this winter will be on the combination util- OV VatiSeRteO tAy S) State New York (continued) 66a Comments ities where there will be a reduction in the amount of natural gas available for boiler fuel for electric generation of about 15 billion cubic feet, 10.5 billion cubic feet worse than last year. The impact upon retail interruptible cus- tomers will only be slightly greater this coming heating season than they experi- enced last season. We estimate curtail- ments of interruptible customers amount- ing to 8.5 billion cubic feet, 1.5 billion cubic feet more this heating season than last heating season. Almost all interruptible customers were completely curtailed dur- ing the last heating season. During sustained cold spells, firm indus- trial sales and large commercial uses may also be affected in the course of a “normal winter.” With respect to special problem areas con- cerning natural gas, it should be noted that substantial volumes of gas are used within the State in the agricultural indus- try. Agricultural customers are served un- der industrial rate classifications and are not separately identifiable. It is important to note, however, that assuming normal weather conditions, the volumes of gas re- quired by agriculture will be substantially greater than the volumes consumed by this industry in New York last year. Last year the severe floods associated with Hurricane Agnes destroyed crops and resulted in a reduced natural gas requirement. Since this Commission’s restrictions include vol- umetric limitations based on the highest annual use during the three years preced- ing our restrictions, the utilities serving State New York (continued ) 67a Comments agricultural customers have planned to meet the historic limitations, not the below- normal agricultural consumption of gas last year. They would not, however, take into account increased crop sizes. Propane and Other Liquid Petroleum Gases The information we have indicates approx- imately a 1% deficiency of supply against estimated total requirements of 150 million gallons, assuming a normal winter. There is concern, however, that railroad and pipe- line transport difficulties may cause tempo- rary shortages, especially during the peak of winter. In addition, concern was voiced that suppliers might not fully deliver on contracts. Some distributors indicated that transport and weather conditions could cause short- ages of 10-20%, but that such an imbal- ance would be “solved” by curtailing in- dustrial users and encouraging residential conservation by limiting deliveries to par- tial fills or emergency service only. Distillate Fuel Oil Although supplies for this season are ex- pected to remain at last year’s levels, indi- cations are that requirements have in- creased by as much as 5% under normal weather conditions. Most major petroleum companies in the State indicated their ability to supply oil at volumes equal to 1972 levels. Some could not do as well. Obviously, this leaves no room to accommodate growth in demand or to care for increased needs in a severe winter. More important, the big independ- State New York (continued) North Carolina Shy LEDGE LP RIL E Cid OL OEM 68a Comments ent dealers in the market indicated that their stocks were low. It is apparent that they are concerned about their ability to meet even past demand. Residual Fuel Oil As is the case with distillate oil, the major oil suppliers to the State have indicated that supplies of residual oil are expected to remain at last year’s levels while re- quirements are expected to increase at a rate of 7% annually. A major portion of the increase is required by electric utilities, because of growth in power demand and because of the shortage of natural gas. It appears at this time that our most criti- cal areas relating to availability of fuel during the winter heating season will be propane, kerosene and number 2 heating oil for agriculture, commercial and home heating. Number 2 heating oil availability for industrial purposes could create a most serious problem if there are additional curtailments of natural gas over and above that resulting from the interim curtailment plan. This matter was discussed in the letter of August 21, 1973, from the North Carolina Utilities Commission and will be elaborated on in detail at the Federal Pow- er Commission hearings scheduled for Sep- tember 18, 1973. However, we desire to point out that we are by no means certain that sufficient number 2 heating oil will be available to fill the needs of aditional product required by industry even under the interim curtailment plan. One of the primary reasons for our shortage of num- ber 2 heating oil, kerosene and LPG in the State of North Carolina is that two of the State North Carolina (continued) Virginia 69a Comments major suppliers, British Petroleum (BP) and Atlantic Richfield (ARCO), have re- cently withdrawn completely from the State. A specific problem area which exists in the State of Ohio is that of the grain harvest. The outlook indicates a late, wet harvest which will require more propane and natu- ra] gas than has been estimated for a nor- mal harvest (per FPC’s request). The Commission provides that industrial customers generally are curtailed first, so residential and commercial customers should have an adequate natural gas and propane supply. This will alleviate the situation to an extent, but it will by no means solve the shortage problem. To date Ohio’s small propane distributors have been unable to secure more than 20% of their estimated need for the late harvest season. Of five distribution companies that utilize propane for peak shaving, two report ade- quate stock in storage for normal winter requirements. Both hope to make replen- ishment purchases. The remaining three companies are short 12% (11% million gal- lons), 50% (496,000 gallons) and 67% (102,000 gallons). None of these have been able to contract for the requirements as of this writing. Motor Fuels and Heating Oils From November, 1972 through March, 1973, Virginia used 1,155,879,859 gallons of motor fuel. Most projections are on the increase for 1973 of about 7% if the win- ter is normal. This means the State will need about 1,236,927,000 gallons of motor meerare State Virginia (continued) BIEN EComments of Exxon Corporation, p. 3; Comments of Tenneco, p. 2; Comments of Shell Oil Company, p. 3. 2 Limited term certificates were held lawful in Sunray Mid- Continent Oil Co. v. F.P.C., 239 F.2d 97 (10th Cir. 1956), reversed on other grounds, 353 U.S. 944 (1957). 97a herent, in the review of limited term certificate ap- plications, this procedure is insufficient to cope with the present emergency. Conclusion We would be remiss if, in closing, we did not re- spond to the rhetorical indictment by Senators Humphrey, et al.,”° that this Commission is guilty of “administrative abandonment of the consumer pro- tection provided by Congress.” We have not aban- doned any of our responsibilities under the Natural Gas Act, nor do we intend to do so in the future. True, we have exempted certain temporary sales from direct regulation, in order to meet an emergency, but we have done so only in accordance with Congres- sionally delegated power explicitly defined in Section 7(¢). There are those who regard the Commission as impotent, in the absence of further Congressional action, to deal with the gas supply crisis now plagu- ing the American consumer. To these, we are a sterile body with no more responsibility than to in- sure that rates are held to a minimum. We view our duties more broadly, as did Congress, in our judg- ment. The consumer is entitled to our assurance of adequate service as well as low rates; indeed, the question of price is academic if supply is not forth- coming. If Order No. 491 is permitted to remain *° Comments, p. 7. iy 4 ELE REE PRONE aR ary te mage 98a viable, it will contribute greatly to complete con- sumer protection for the present winter. The Commission finds: Upon review and analysis of the comments, and considering data and information described herein which is matter of public record, it is in the public interest that we take all action hereafter ordered. The Commission orders: (A) Part 2, Subchapter A, General Rules, Chapter I of Title 18 of the Code of Federal Regulations, is amended by revising the following: § 2.68(a) and (b)—The 60-day periods found therein are changed to 180 days. § 2.70(b) (3)—The 60-day periods found therein are changed to 180 days. (B) Section 157.22, Subchapter E, Chapter I, Title 18 of the Code of Federal Regulations, is amended by revising the following: § 157.22(a)—The 60-day period is changed to 180 days. (d)—The 60-day period is changed to 180 days. (C) Section 159.29, Subchapter E, Chapter I, Title 18 of the Code of Federal Regulations, is amended by revising the following: § 157.29(a)—The 60-day period is changed to 180 days. 99a (b)—The 60-day period is changed to 180 days. (D) Order No. 491 is modified to eliminate that portion of ordering paragraph (A) which stayed the limited term certificate procedure. (E) All applications for rehearing are treated as motions for reconsideration and as such are denied. (F) The revisions and amendments in (A), (B), and (C) are effective upon issuance and until March 15, 1974. By the Commission. [SEAL] Kenneth F. Plumb, Secretary. mid ee Re eee Pee ee SRL NEL SOLAS RN AR ONLY F LILES LIE HO MNO MEV ‘A[YJUOU penss ‘xepuy 901g a[BsejoyM ‘SOI4SIZeIG AOqeT jo nvsing ‘10qe] jo yusWyIVded ‘S'f Wor a[quiivae eyep uodN paseg , i sjong 10} Sexepuy yueuodw0D puke xapu] ad1I1g sTesejouM G12% TVS 8 I6. 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SCS SCCGETETSC*CEGS:COCE'T.C‘éd'T a1ouliyeg -- rd os Wt — ior — or — Z8°0 Bueyy HOP Mm s*eD TORN sey TORPMG sey POPMY sey [IO PNA sey S¥ALY [BI14SI}BIS uez0do.30]q paepuryg SL6I eunre SLOT YBN =SLET 4oquis20g)§= [LET dequiadag = G1 Jequiz00q (Mq GOTT 49g $) t SL-OL6I ‘S®ID aarnjejuasaidey Ul SurjweH [BUepisey 405 [IO [ONY Z “ON pue sey jo sad1g FERTIL TYAN NE SELON NT Ce NIN FN Ten CUES 9 XIGNUddV PAGES BOUND VERTICALLY 108a (S9198178IS Joquy] Jo nvaing) “9 -d*y aquy “Ez6I ung ‘