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

Supreme Court brief1972

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e TABLE OF CONTENTS

LOUISIANA’S INTEREST 2 2°... 2)’.

SUMMARY OF ARGUMENT

ARGUMENT

I. THE FPC HAS NO STATUTORY AUTHORITY +

TO REALLOCATE GAS SUPPLIES OF DIRECT

SALE CUSTOMERS. TO RESALE CUSTOMERS ;

A.. The FPC Boss Not Have Any Emergency

Statutory Power To Ration Gas Deliveries -

Among The Customers Of An Interstate

_ Pipeline Because Of A Systemwide Or

Nationwide. Gas Supply Shortage. .

_B. The FPC Has No Statutory Power To

Change The Terms Of Direct Sale 6 =” -

_ Contracts Governing Deliveries Of Gas

During Shortages ee ie MPR,

C. The Rate And Tariff Sections Of The Act

_ Grant The FPC Limited, Not Plenary,

Power Over. Service And ey a To

Resale ‘Comemess ; ;

D: The FPC Has No Statutory Power —- .

. - Discrimination In Service Between Direct

. And Resale. Customers me er ae

E. The FPC Lacks Statutory ‘Power To ~—

Reallocate Gas Supplies From Direct, ~~

_ Sale Customers, To: Resale Customers . . . , :

*

18

18.

25

(ii)

F. Section 1(b) Does Not Grant Any

Substantive Power And Cannot Be _

Combined With Sections 4, 5 And 16 To

Create Implied Power To’ Reallocate. Gas -

Supplies . ee 41

_G. The FPC Does Not Have Coextensive And

-Concurrent Power Over Transportation And

_ Sale Under The Certificate And Rate

seen Se Te Ae. ous ee ee ee e SO

a H. The FPC Has No Statutory Power To Change

_ The Impairment Of Delivery Terms.Of Direct -

Sale Or Resale Contracts By Tariff Revision

Procedwes. 2... 2. We

I. FPC Jurisdiction To Reallocate Direct Sale

--Gas Supplies To Resale. Customers Is Not |

Necessary To Avoid A Regulatory Gap . . . 56

Il. THE COURT OF APPEALS JUDGMENT THAT

UNITED’S GREEN SYSTEM IS AN INTRA-

‘STATE PIPELINE WAS NOT AN ABUSE OF |

a JUDICIAL DISCRETION:. . . . . .-. . 62

ra)

" CONCLUSION ia er oa . 70

(iii) -

APPENDICES:

APPENDIX “A” — Gas Exporting States Ranked

in Order of Production a es

APPENDIX “B” — Five Largest Gas Producing States

Ranked in Order of 1969 Gross Production .

APPENDIX “C” — Five Laggest Gas Producing States .

- Ranked in Order of 1969 Net Production .

APPENDIX *- Five. Largest Gas Production States

Ranked in Order of 1969 Marketed Production

APPENDIX “E” — Analysis of Interstate Gas

APPENDIX “F” — Analysis of Natural Gas Supply

APPENDIX “G” — Trend of Exports of Natural Gas

Produced in Louisiana on a ae

APPENDIX “H” — i Siadias Recoverable Reserves,

New Field and Reservoir Discoveries asa -

_ Percentage of the Nation

jppenow i ee . Analysis of Natural Gas Supply

. for United Gas Pipe Line Company .

= APPENDIX “7” - Cemperioon of Parcentign ¢ of.

Estimates Proved Recoverable Reserves of Natural |

Gas in 1969 for Louisiana and the Nation .

~

APPENDIX “K” — Gas Requirements, Firm Industrial

and. Firm Generation, ‘Percent Firm of aad’

APPENDIX “L” — Gas Requirements, Electric .

Generation, Percent Firm. of Total Electric -

Generation. . .-. . 2. we.

la

2a

3a

‘12a.

(w)

4

" APPENDIX: “M” — Gas Requirements, Percent Firm.

of Total See ae 2 « 2

APPENDIX “N” — ‘Congressional Record — -

Senate pp. 11084-11085 .

APPENDIX “O” — Excerpt from Appellant’s Brief In

Panhandle Eastern Pipe Line Co. v. Public |

_ Service Commission of Indiana, 332 US. 507 :

APPENDIX “P” — Conan of Curtailment

‘Provisions of United’s FPC Gas Tariff in Effect ©

Until November 14, 1971 and oa United

- Direct Sale Contract - S 6m

APPENDIX “Q” Louisiana Public Service Commission

Complaint for Temporary Restraining Order,

Preliniinary and Permanent Injunction ,

APPENDIX “R” — iain Public Service Commission

Special Order No. hain os

- APPENDIX “S" — Louisidna Public Service Commission,

“Special Order No. 17-71 (Order Affirming

Jurisdiction And To Show Cause). .- .

APPENDIX “T” — Louisiana Public Service Commission,

Special Order No. 27-71 (Order Denying Request

For Relief From _—— Restrictions). .

& 24a

47a

W)

LIST OF AUTHORITIES - .

American Tricking ‘Associations v. Frisco Transportation

Co, 238 UA, 193, 166 2 ec ce ee te ep we OO

Arkansas-Louisiana Gas Co, | eg , . - 3

27 FPC 697,703. EO

_ Qty of Chicngo ». Atchison T & SF. Rastway Co, .

' oo) ards ae | .. . 666

City of Detroit v. FP - og 2

- 230 F.2d 810, 816-817 (CADC). . . ... . ... . 35

; City of Detroit v. Panhandle Eastern Pipe Line Co., :

6: FRC: 196, 197, S204 6 e oh tur oes 32

City of Hastings, Nebraska v. FPC,

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

SUS OW oS aye es eS a OP

Centrat West Utility Co. v.-FPC. . se

247 F.2d 306, 310-313 (C.A.3). . 2... 0. 21, 41

Coastal Transmission Corp, ae - - :

26 FPC 318, 324-325. . . 2. 2... ws. sc . 37,38

Civil’ A eronautics Board v: Delta Airlines

367 US. 316, 321. ‘. *

Commonwealth of Pennsylvania v. State of West .

Virginia, 262 US. 584,598 . . . . 1... . . 61

" Colorado Interstate Gas Co. v. FPC, - |

185 F.2d 357) 359, 360 (C.A. 3) a oe ew we” 26

Deering Milliken, ine v. Jolnson, Z

295 F.2d 856 (CA. 4)... . 2... ote nw of es 66:

Dixie Pipe Line Co,

_ 14 FPC 106, 114. 2. 2... oe 8 crs |

(vi)

Florida Parishes, Louisiana Public Service

Commission v. FPC, 359 F.2d 525 (CA. 5)

_FPC v. East Ohia Gas,

338 US. 464, 470, 472-473

_ FPC v. Hope Natural Gas Co.,

320 US. 591, 608-614

FPC.v. Hunt, . |

376 US. 515, ‘519-524 :

FRC ». Panhandle Eastern Pipe Line Co.,

“337 US. 499, 503, 504, 507-508

FPC v. Panhandle Eastern Pipe Line Co.,

: 172 F.2d 57, 59-60, affd 337 US. 499, 514-515

FPC. v. Sierra Pacific Power Co.,

350 US. 348, 353, 355.

FPC v. Transcontinental saat Line Corp.,

365: US. 1- en ee ee

° Federal Trade Commission v. Bunte Bros, -Inc.,

312 US. 349, 350-355

Fuels Research Council, Ine. v. FPC,

374 F.2d 842, 852-853, 853-854 (CA. wy) :

: Granite City Steel Co. .v. FPC,

320 F.2d 711, 713 (CADC)

Houston, E& WIR Co. v. United States,

234 US: 342, 355-360 ,

Leedom v. Kyne,

358 US. 184.

| Michigan Consolidated Gas Co. v. Panhandle Eastern

Pipe Line Co., (C.A. 6) 173 F.2d 784-789 .

= oo, oF

« 23, 62

. 31, 57

Michigan Consolidated Gas Co. v. FPC, a

- 203 F.2d,895, 905 (CA.3) 2... 2 es SI

Pan American Petroleum Corp. v. Superior :

Court of the State of Delaware in and for a Me

New Castle County, 366 US.. 656, 665666. . . ... 62

Panhandle Eastern Pipe Line Co.; —— ee

22 FPC 679, 681, 683684. ... .....2... «19

Panhandle Eastern Pipe Line Co.,. e

14 FPC :264, affirmed, 236 F.2d 289 (CA. 3). . . 19_

Panhandle Eastern Pipe ‘Line v. Michigan

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

945 (CA.6). 0 0 eee te ee ee 9

Panhandle Eastern Pipe Line. Co. v. ged |

204 F.2d 675, 679, 680 (CA. 3)... . . . 20,31, 42

_ Panhandle ‘Edstern Pipe Line Co. v. Michigan

_+ Public Service Commission, oe :

341 US. 329, 334-336, cr. °

Panhandle Eastern Pipe Line Co. y. FPC, fs _—

324 US, 635,647... 0 8S

Panhandle Eastern Pipe Line Co. v. FPC,

232 F.2d 467 (C.A.. 3), cert. denied, “ ;

352 US. 891... . LS é eee 2 Oe

Panhandle’ Eastern Pipe Line Co. v. FPC,,. oe 4

247 F.2d 306; 310-313 (CA. 3). aa a *

Panhandle Eastern Pipeline Co. v. FPC,

359, F.2d 675, 682 (CA.8) -. 2... ee 38

Panhandle Eastern Pipeline Co. v. "Public Service .

- Commission of Indiana, = —_: 39,

332 US. 507, 512, 513-514, 516-519, S23: s . 42, 51,57

Skinner & Eddy Corp. v. United States, —

_ 249 US. 557, 562. a 66 |

.

Turnbull & Zoch Drilling Co,, —- o 3

* 26 FPC 678, 680 . - = ‘ 53

Ee siei Gwe

388 F.2d 385, 388 (C.A. 5) . 48

United Gas Improvement Co. v. Continental Oil Co.,

| 381 US. 392, 404 : $2

United Gas Pipe Line Co. v. FPC,

385 US. 83,91. 6 : —47-

United Gas Pipe Line Co. v. Nicls Light, Gas,

', Water Division, 358 US. 103; 112, H13-114 ° ; 540

| ' United Ges Pipe Line Co. v. Mobile Gas as

Service Co., 350 US. 341, 342,

343, 344, 348, it ae 540

"United States-v. Seatrain Lines, * 4 ,

329 US. 424, 428-432... ww 50, 51

_ Watson Bros. Transportation Corp. yv. United States,

132 F. Supp. .905 @C. Neb.) Affd.

350 U.S. 927 ; ig viet. 51

Willmut Gas & Oil Co. v. United Gas Pipeline Co,

12 FPC 132, 138-139 ioe = 4 19

* ~

a fe

Fifth Amendment . ts 68

Tenth Amendment . - $7

a Sipe EN: os sia , oar te: OIE TN i SOI Te ert

(ix)

Statutes

Bituminous ( Coal Act of 1937, 50 Stat. 720 Dries Bepeiaey * 58

Federal Power Act, 49 Stat. 487, amended

(67 Stat. 461, Part I |

Section.202 . . 4 Se aie shel, ee aie ee:

Section: 2076) +0. acu er aiglak ig ek

Sections 2021) es Si oe OS ae

Fair Labor Standards Act of 1938, 52 Stat. 1060... . . 58

_ Louisiana Constitation, Article VI, Section 4.

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

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

AS USC. 717-Ti7w eae

“Section 10) s+ jv +s + + 26,32,33,39,41,42

Section4 . 2... 2... 2. 32,33,34,35,37,47

EB i a SMe aY sn" a 4.

Section 4(b) 2 2. ee 42,4

‘Section 40M), ee ee

‘Section 4(c) . Se 8 Se Pee

Section 4d). 2 2 2 2. wwe ee 42,43

Section 4(e<) . 2 2. ee 26,43, 53, 54

Seti Se a ae:

Section S(a) 2. 2s . . . . . . . 33, 34,35, 42,55

Section7 . . 2 2°... 1 1 es. -24,36,37, 38, 46

Section 7(a) 0 Pe ope DD

Section 7(b) . . ees a age es, Sih co es ee | 4

| Section 7(c) . . ; : R

Section 7(e) . 2

_ Section 16.

| FPC Annual Report, 1951

FPC Annual Report, 1952 .

FPC Annual Report, 1953.

FPC Annual Report, 1954

FPC Annual Report, 1955 \

FRC A Annual nadie 1956 \L

FPC Annual Report, 1957 Ve +

. FPC Annual-Report, 1958 .

-FPC Annual Report, 1963

Fre Annual Report, 1970...

. FPC Gas Tariff, United Gas Pipe Line Co.,

Me Sec. 2. 1 Proration of. Impaired Deliveries ,

Seer of the hvary. Atlantic Seaboard,

Fre Dkt. No. CP 66-179

. FPC Regulations, Under Natural Gas Act, .

Section oT (1G eo a ws 8

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

_ FPC Order Suspending Proposed Tariff Sheets,

El Paso Natural Gas Co., Dkt:; RP 724. .

.. 55

26

; | Burger we 1a BM NPAs ee & atte 39.

“3 Lentsians Constitution, - y

| Article VI, Sec. 4°. .

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; INTHE + serge

Supreme Court of the Ynited tates <

October Term 1971.

Nos. 71- 1016 = 7H-1008

FEDERAL POWER COMMISSION, Abner,

-LOUISIANA POWER & LIGHT COMPANY, ET AL. , Respondents. 3

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

- o

. v.

| LOUISIANA POWER & 4 ucitreo, ET AL., Respondent |

On Writs of Certiorari to the United States Court of Appeals

. foe the Fitth Clrenke *.

BRIEF OF STATE OF LOUISIANA

AMICUSCURIAE © |.

&

_LOUISIANA’S INTEREST

| Louisiane is- the largest gas exporting state and the sec-

ond largest gas producing state in the nation.’ It delivers to

other states 47.9% of all-natural ; gas exported by producing

statés.to meet the needs of other states which cannot supply’.

their own requirements.” ‘Louisiana marketed production of :

- 1,227,826 trillion cubic feet of natural gas was 34.9% of °

United States ——— in 1969.3

l Appendices A, B. and C, la-3a.

Appendix A, la. > > ice =

3 Appendix D; 4a. We

a

Over 73% of its total production is exported to other- |

‘states; on a net delivery basis‘ During the last decade, gas

exports have increased’ dramatically. Using 1960 ‘as a base

year, exports increased by 31.8% in 1965 and by 100.4% in

1970. % : “te 3 re.

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

within the state. By 1965, this percentage declined to. 27.2%

and in 1970 to only 20.6%° | | —

Plainly, Louisiana contributed more than its fair share

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

its own gas production for interstate use. |

Historically, gas producing states have certain advan-

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

- Their very proximity to the source of production attracts

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

their plants could not operate. The lower transportation costs

of délivering gas to other industrial -and commercial users

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

applications... It ‘is not surprising, therefore, that producing _

' states have a higher proportion of industrial-commercial con-

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

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

gas sold in the state for industrial and power plant generation

purposes, in cémparsion to a national ‘average average of only

37% . a

- Louisiana’s economy is heavily dependent upon the |

availability of a firm, reliable and uninterrupted supply of

natural. gas, Statewide investment by industrial category ©

. ronen E, Sa.

"> ‘Appendix F, 6a.

a. p CY , 6a.

if Appendix K, la.

3

clearly reflects the predominance of selina refineries and. .

- chemicals which represented $465, 297,370 or 76% of a total

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

these industries which use natural gas a process gas. without =

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

ties are completely dependent upon natural gas as r fuet for

electric generators.

Thus, the economic welfare « of the state hinges upon the

continued delivery of the volumes.of gas it received and used 7

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

upon greater volumes. Otherwise, its economy will be frozen

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

which natural gas plays.a subsidiary rather than a dominant

role in the overall economy of the state and in which the

. electrical utilities have alternate power sources such as coal,

imported liquified natural gas and inexpensive hydroelectric

- power. oa

The state currently has an unemployinent rate of 8.3%

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

June since 1962. While-the state rate was increasing, the

national rate dropped to 5.6%9 *

Other, more fortunately situated states, have as their

principal economic assets resources which are neither. deplet- -

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

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

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

produced generates only one-time non-recurring income rai

.

* :

“@-.

“8 ee Horizons, Publication of. the Louisiana sesh acs

of Commerce and Industry, Winter; 1971 * >?

= Louisiana Labor Market, Department _ of Bia sailed

. saad June 1971.

< 4 +

°

the State of Louisiana. Furthermore, the cost- of locating,

drilling and producing natural gas in Louisiana is higher than .

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

deeper but cost twiee the national average. Even dry holes i ir

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

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

ent predominance as a supplier of energy to the nation is

exposed to a genuine and substantial threat that unlimited

supplies of atomic energy used to generate electricity will,

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

Louisiana is deprived of the opportunity to use an equitable

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

-porarily valuable natural gas resources, it will be inequitably —

and irreparably injured. | :

United. Gas Pipe Line Company (United) operated. an

integrated interstate natural gas system extending across

_ several states!! before the enactment of the Natural Gas Act —

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

sity covering the operation of such interstate facilities was

issued on November 10, 1942.12. United has. also operated,

ona completely separate basis, intrastate pipeline systems in

Southern Louisiana which -have always been regulated ex-

clusively by the Louisiana. Public Service Commission

'(LPSC). Such regulation has never hampered or impaired the

effectiveness of regulation of United’s iriterstate activities by °

the Federal roe Commission (FPC) and no such claim has

boey made,

eo?

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

Arkansas Division, Mid-Continent Oil and Gas Association.

ANY United Gas Pipe Line Company, 3. FPC 562. | oa

| 1244, at 863.

- United is the principal supplier of gas used within Louis- |

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

plied by that pipeline has been consistently declining because

it is using ever increasing quantities of state —— gas to

" meet the needs of its interstate customers. 7

In 1960, United supplied 61.4% of all ual coemmaed

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

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

‘United had increased its exports of Louisiana gas by 6.5%

- from 1960. By 1970, however, this percentage had increased

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

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

gas volumes delivered to United’s intrastate customers ‘in.

Louisiana will be constantly and progressively diminished.

The FPC’ s assertion of power to reallocate firm | direct :

sale gas to resale. customers will have an abnormally ‘severe

impact on: Louisiana. As Commission Carver noted in his‘dis- =

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

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

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

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

; of firm gas used within Louisiana i is applied to residential:and ©

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

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

natural gas by ultimate consumers will have an equally dis-

’ proportionate. impact on Louisiana as compared to its impact —

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

gas purchased is used for industrial and power plant. gencen-

"13 Appendix F, 6a.

148 4 pendix F, 6a.

14D United Pet., ftné 1, 128a.

14c Appendix M, 13a. .

tion purposes while the corresponding figure for Louisiana is -

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

_ gas used for such purposes in Louisiana, as compared to 49%

in the nation as a whole.!4% The FPC’s end-use’ test dis-

regards the long established and universally recognized service

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

ofall gas used in Louisiana is firm, as compared’ with a

national average of 69% l4e it will bear the economic burden

- and dislocation of United’s curtailments to a far greater ex-

~ tent than other states served by this pipeline.

Apart from these considerations: the FPC’ S arbitrary

and capricious refusal to even consider the State’s suggestion —

of a nationwide allocation proceeding to fairly distribute

interstate gas supplies between -states, leaving to ‘such state

the responsibility for. controlling the end-use of gas by its

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

work which ignores such oppressive and severe discrimination °

and excludes any consideration of the equities of a producing

state. 4f Finally, United’s Louisiana customers obtain all of

_ their requirements. from this. pipeline; have no peak shaving -

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

sale pipeline customers and their distributor customers obtain

only part of their requirements from United and have both -

14d Appendix L, 12a.

_14€ appendix M, 13a. °

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

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

encompass consideration of such matters on the basis of a single sen-

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

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

- 606.” Commissioner Carver dissented from the denial of rehearing

principally because he felt that the FPC had missed an opportunity to”

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

— Pet., oo. ar °

* . . . a“ 5

i a SOR RR Oe EeTEINS GBM SOIR EO AMEN S LIE E, VIGIL IEEE! PILL OF ALIEN LE LL AN F LEIS KBE EOE OL CARN RS LE IE POE PEED AE

. -

sea

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

curtailments, stating: °

“The curtailment of United’s ‘delves to

city gate® | 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 environment in .

any way attributable to United’s curtailment pro-

gram, since United’s pipeline customers have been

'. able to offset the effect of ited s curtailment by ;

utilizing alternate sources of gas. ! The geographical .

distribution area served’ by. these pipeline cus-.

_ 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 program is in thé area.

-. served directly by. United. was

1 Natural Gas Pipeline Sole of America is an ex-

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

_ requirements from United.” (Emphasis added).

the

-Furthermore, the gas volumes reallocated from Louisi- -

ana direct sale customers to resale customers are used to meet

needs of industrial—not domestic and. com- ~

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

the FPC blandly admits that:.

“The pipelines have significant interru ruptble loads ;

which are served both directly and indirectly .

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

_ ruptible loads have continued in very substantial

quantities despite United’s curtailment (Item si

’ Reference Z).” (Emphasis added).

In other words, the purpose of United’s curtailment plans is

to divert firm direct sale gas to interruptible industrial con-

sumers served by its pipeline distributor resale customers.

SUMMARY OF ARGUMENT

, , I

THE FPC HAS NO STATUTORY POWER TO RE-

ALLOCATE ‘THE GAS SUPPLIES OF DIRECT

‘SALE CUSTOMERS TO RESALE CUSTOMERS

s

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- |

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 1(b), because a new and unforeseen situation has”

created an emergency. 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 findings of de-

/ pletion of the gas supply or that the public interest permits -

such action. Certificates of pubic convenience and necessity _~

" *are granted only upon a. showing of. maar iory gas reserve

lives ene deliverability volumes. |

RMR Ares a OH Bho? idl es . ar, LENE REY PESO MISE inte x 3 4.” fe

tract committments to: deliver firm -gas. The thrust of the °

oo

|

All ‘direct and - resale contracts contain impairment of

deliveries terms establishing definite service priorities between

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

intérstate pipelines to have an absolute and uncenditional

- obligation to meet such firm delivery commitments. This ex-

plains why it did not equip the FPC with express statutory

powers.to deal with’ the abnormal and extraordinary-sitaation

of either an individual pipeline systemwide, or a nationwide, :

gas shortage. Congress delegated express: emergency authority

to deal with shortages of electrical energy ¢o. the FPC in

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

Omission was deliberate and reflected qn awareness of the

vital differences between the natural ‘gas and electric utility

industries. ae Se ik.

The FPC —_ repeatedly, and unsuccessfully, eae! an

amendment of the Natural Gas authorizing it to safeguard the

available gas. supply i in emergency situations.

B. Petitioners admit that the . FPC lacks rategnd tariff

jurisdiction over direct sale contracts. Nevertheless gghe FPC’s

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

. curtailment plans’ ap licable to such contracts as tariffs.

Thus, despite its disclaimer of jurissdiction, the FPC is chang- -

ing the .terms of such contracts by 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 — that it has-no

such statutory authority.

e c. The FPC is socking ¢ to improve upon the provisions s 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: .

- authorize ‘the regulation of service as well as of rates. The

10

/,

a

prohibitions against undue preferenct or advantage between

customers and against unreasonable differences in services

betw localities or classes of s@vice apply to the allocation -

of ind@equate mainline transmission capacity of an interstate _

‘pipeline, among its resale customers (Michigan Consolidated

Gas Co. v. Panhandle Eastern Pipe Line Co., 173 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. EPC, —

204, F.2d 675, 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

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

eet sale or resale impairment of delivery. contract terms.

+_*

Both the plain language. and structure of Sections. 4and -—

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

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-

ferential rate designs under Section 5(a), are limited in scope ©

- to resale rates affecting gas distributors and the ultimate con-

sumers purchasing from them. (Fuels Research Council, Inc..

v. v. FPC, 374 F.2d 842, 852-853). : 3

-~

D. Petitioners in that if direct sale customers obtain’

_ gas for industrial purposes while resale customers are unable _

to meet all.of their needs for domestic and commercial use,

there will bean undue preference to the former class of

"service. On this. premise, they argue that the Court of

Appeals holding that the FPC lacks curtailmentdurisidction

over direct Sales. is inconsistent with, and undermines, the

agency’s jurisdiction. under Sections 4 and 5. However, *

FPC lacks statutory authority to consider the end-use of ga

or conservation factors in proceedings under Sections 4 and 5.

--(FPC v. Hope Natural Gas Co.,'320 U.S. 591, 608-614; Fuels

Research Council, Inc. v. FPC, 374.F’2d 842, 853-854 (CA

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

3 ll

a .

aon

%

Plainly then, the FPC cannot establish priorities, segitating

different classes of end-use by ultimate consumers, in

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

price discrimination between resale and direct sale customers

to equalize rates and charges between these classes of service.

: . (Panhandle Eastern Pipe Line Co. v. FPC 324 U.S. 635, 647). °

. By the same token, it-cannot remedy service discrimination |

_ arising from more favorable impairment of delivery terms | in

direct sale contracts. er

E. The FPC has no statutory authority to reallocate gas

Supplies between direct sale and resale customers or to con-

trol the end-use of natural gas by ultimate consumers. In FPC _

v. Transcontinental Gas Pipé Line Corp., 365 U.S. 1, 17, this .

Court held “... the Commission’ S$ powers under Section 7

are, by definition, limited. , ’: it “. . cannot order a natural —

gas company to sell gas bo users that’ it favors; it can only

_ exercise a veto power over proposed transportation and it can .

only do this when a balance of all the circumstances weight

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

portion of the mainline transmission capacity of an interstate

_ pipeline in excess of its delivery commitments to firm cus-

tomers from direct sale industrial users to resale customers "

was held unlawful under. Section 7(a) of the Act because it ‘

would impair the pipeline’s ability go render adequate service

to its.existing customers. In that ci , the FPC was exercising

its Section’ 5(a) authority to eli te unduly discriminatory

or preferential practices or contr.

thority’ upon.a finding that it was in the public interést for -

the pipeline to supply additional capacity to its resale cus-

tomers. (Granite City Steel Co., v. FPC, 320 F.2d 711, 713.

(CADE):

F. There is no merit to. the FPC’ s sivel: and unprece-

dented theory that it has concurrent and coextensive juris-

‘diction over interstate transportation: and_sales for resale.

under Section 1(b). This: reading of the Act is sects to

and its Section 7(a) au- 7

r. . | t we = or foe | 7 * |

: ; nage Se be . rae

“ > : : e : ei . _ ad 4

< evade the Ppa eae the very same section against regula- >

™ tion of any aspect 6 riggs and terms.of direct sales. This

is an argument that the chieve indirectly what Con-

gress has prohibjted it to- do directly; ~*~".

In, any Byént, Section 1(b) is not a Patt of ariy- ‘self--

excouting 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 _

‘Feserved :to state regulation. Each of the substantive: sections

of the Act empowers the FPC:to regulate a differerit subject,

and the individual powers thereby conferred must be exer:

cised in: accordance with the specific procedures: prescribed

by Congress. Furthermore, ir? implementing: its powers under

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

which was expressly withheld in another section of the Act.’

(Panhandle Edstern Pipe Line Co. v. FPC,. 204 F.td 675, -

_ 679-680 (CA 3); Panhandle Eastern Pipe Line Co. v. FPC,

ae Fae 306, 310-313 (CA 3). |

; In a completely parallet 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 Pee Line Co., 337.USS.

499, 504, 507-508). : eae

G. Petitioners’ attempts to ‘imply ;coéxtensive 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 forthe:

interstate transportation | or sale of such gas supplies. The —

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

operative after such initial certification of natural gas in inter-

fy

a . :

¢

mee. 7 As: if:

< Se é

° ° “

7 , . . * .

» ?

. . ‘ ‘se

Y

. would only be exercised if sud

‘diction’. . Sc alg ame

-F pe > vate S

state. commerce by means of a permanent certificate. This.

‘S'very contention. was specifically rejected inweiited Gas Pipe --

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

justified i®ylassification“of wholly unregulated direct sales as.

regulated business activities, for the purpose of applying its

consolidated tax return savings formula, on the ground that

such , sales were subject to its certificate jurisdiction with

respect to transportation. The Court of Appeals held that the

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

: e

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

, . tinuing jurisidiction undertthe certificate and rate sections of

the Act, its claimed power to reallocate gas supply volumes ~

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

istrative agency’ cannot alter. or amend a previously issued

) permanent certificate in-order to implement a changed regu- re

latory policy unless its. énabling act specifically provides for

modification or revocation of such certificates (Unitéd States

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

san ir v. Frisco Co., 358 U.S. 133, 146; Watson Bros. ,.. .— -

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

Neb.) aff& 350 U.S. 927). The FPC’s reallocation of gas :

Supplies is such a change in policy and the acts does not

confer such authority.

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

cable ‘for the first time to its direct sale customers and to its:

resale customers~served by the separate’ intrastate pipeline

Re a ig Southern Louisiana regulated by the LPSC and in

derogatién of their contract fights, which the agency made,

effective without any statutory findings that the existing con- |

tract terms.were unduly preferential or discriminatory or that

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

. utilize the tariff revision procedures of Section 4 to chang&

either the ratés or terms of service tendered to even interstate

&

-

transportation authority isof — ~

_

7 . Tiss i* 3 “ie ee es 14

c oe : > can 2 +

° ,

resale eatin Subject, to its jurisdittion, unless they ave

consented to such unilateral chahges by, pipeline suppliers.in oe

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

rvice Corp., 350 U.S. 333, 342-344; United Gas Pipeline

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

172-1 13). The FPC seeks to evade the rule of Mobile on the

straihed 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

: ord such’ companigs 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’ express reqfirement ‘of |.

- Section 5(4} 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.

e Petitioners claim that unless that the FPC has power Pe

F lait the terms of direct sale contracts dealing with i impair-

. ment of —— there’ will ‘be an: “attractive ear”, in the

regulator sch C- p ick

ae > huesee isla committed to the exclusive regulatory

sins of the states the rate, licensing and service aspects of

- dictional pipeline (Panharidle Eastern Pipe Line Co. v. Public

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

516-519; Panhandle Eastern Pipe Line Co: » Michigan Public

- -$brvice Commissian, 341 U.S..329, 333-337). The Act with-

“held from the FPC power to remedy undue discrimination or

of such.power would have invaded the constitutional prerog-

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

a been limited by the Act. Thus, the FPC’s:regulation of direct

sales violates the Act and invades powers reserved to the States

e

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

preference between such state regulated direct industrial con- -

sumers and federally regulated resale distributors and pipelines,

and the ifdustrial consumers ‘they serve, because the granting ©

fs

| are the Tenth Amendment to the United Staies ae

fa “tion,

- Apart from these considerations: the- FPC’s lidividuat

pipeline company systemwide’ basis for - rationing and re-

allocating gas deliveries creates, rather than ‘corrects, undue ee

a unlawful discrimination. /and ‘preference between end-

sers of the same class-in each state-and in different States. It ..

can insure, at most, only equal treatment to all customers -—

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

users of the same. 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 tp 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 ae its statutory-powers arid

invading prerogatives Congress deliberately lefi/to the states

when it seeks to conteal 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 natural gas by ultimate consumers, ‘the —

FPC j is unlawfully exercising such jurisdiction. }

f

ministrative interpretation of the Act by the FPC that it lacks —

~ The State submits that the explicit language of the. Act,

which feaves. no latitude for inference concerning -Conpres-

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

power to change the price or terms of direct sale contracts

-and that agency’s repeated and unsuccessful attempts to have

the Act amended to grant such authority compel the con-

clusion that uniform federal regulation i is neithey appropriate

nor a, insofar as direct sales are concerned.

. ° _

7

«

@

"Power Commission. The supremacy clause_of_the-Constr~ ——

ee = ST ceecelie a Se ee ee ar 42

| . Even if this case 1s regarded as a conventional injunction

g .

_. this intrastate system has been converted to an ‘interstate —

- . system to oust the LPSC of its lawful jurisdiction. This isnot .

_haustion of administrative remedies applies. Rather, this is a

until the courts have rendered a final judgment in’ favor of

the FPC.: The FPC has no authority at all over intrastate

~ commerce and Section 1(c) of the Act reserves regulation of

intrastate pipelines and of local distribution systems entirely - ©

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

- matters of such primarily local concern. | rr

“by 4 private party challenging the jurisdiction of a federal

declaratory judgments, administrative proceedings concerned ...

- with the determination of so-called ‘‘jurisidictional . facts” **

| which will determine whether that party is subject to regula-

a | are

@ 7 . - : e : yt

‘THE"COURT OF ‘APPEALS JUDGMENT THAT .~ a

" UNITED’S GREEN SYSTEM IS AN INTRA; ©.

STATE PIPELINE WAS NOT AN ABUSEOF ITS ©

JUDICIAL DISCREHON 520 ae

The ssue-decided on fhe merits by the Court of Appeals *

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

the. normal situatioh of a dispute between‘a private. party and

a federal administrative agency ¢oncerning a matter within its |“

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

controversy concerning conflicting and mutually exclusive

claims of jurisidction between Louisiana and the Federal

tution is inapplicable. to resolution of this issue unless and

ae |

proceeding, the Court of Appeals did not abuse its judicial

discretion. The cases.cited by petitioners involve attempts

administrative agency to-enjoin or to otherwise terminate, by

tion. No such effort was made here and the-admiristrative _

and judicial review process continue completely unimpeded —

and uninterrupted. © on : a.

“

& »

ae

. ©

ci

This Coiatt has rejected the primary argument here here :

_ that the FPC is the sole competent judge of the scope of its —

~ own jurisdiction and that courts must defer to the pendency :

- - of its administrative proceedings | until it can determine. its

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

handle Eastern Pipe Line Co., 172 F.2d 57, 59-60, aff'd, 3

_ 337.U.S. 499, 514-515). Where an agency is clearly acting a

‘excess of its statutory authority exhaustion of administrative

remedies i is pines (Leedomv. x ert 358 U.S. 184):

; Unlike the cases cited by petitioners, where the only

exposure to injury of the parties seeking. court relief'was the

burden and expense of participating in an agency hearing %

which this .Court does not view as- irreparable injury -

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

* LPL alleged clear irreparable injury. The question of -ceftifi-

cate jurisdiction was decided by ‘fhe Fifth, Circuit upon the .

____—_—_basis Of undisputed. facts and purely as a matter, of statutory ©

. interpretation and the applicability of judicial precedents.

Such issues are within the specialized competence of the

courts, not thet: ‘of the FPC. If petitioners’ exhaustion view

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

of reharing moet the very procedural 1 issue € they seek 6 have \

reviewed by this Court. jul

—_————

ay

ie Ga ae ARGUMENT

ok

_.. THE FPC HAS NO STATUTORY POWER 16.

’REALLOCATE,. THE GAS. .SUPPLIES™ “OF.

; ee SALE do rensnesis RESALE CUS-

ee ” THE FPC DOES NOT. HAVE: \ANY EMERGENCY

ST ATUTORY POWER TO RATION. GAS" DE- :

. LIVERIES AMONG THE CUST OMERS OF AN IN-

~ TERSTATE. PIPELINE : BECAUSE OF A SYSTEM-

Me OR NATIONWIDE — SUPPLY SHORT-

. ——

-

NS

; The FPC asseits. that sheet is a “need for Codnuniasion

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

in times of emerge ich as: when a pipeline cannot meet ~

‘its contractual ce nt because of inadequate gas sup-

plies: 15 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 4emporary

shortages. of gas during a period -of emergency,’ ® although

it pointedly ignores the possibility of a conditional aban-

-.donment wifich would permi 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 Act in disregard of the deliberate,and

meticulous exclusion of direct sales from the sgope. ofthe | |

agency’s ‘regulatory powers by Séction -1(b). because a new

-‘and unforeseen situation ‘has - created an meergency. The

State will demonstrate that Congress was aes aware of the

_ ot .

Le: oat Fass Pog

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

ee

ae. "possi of ‘sersaly shortages when it sania Nat-

ural ¢ ct and has repeatedly refused the FPPC’ s‘Tequests ie

OF ‘express authority - to ce with such. Ceraemey short-

— es : cf ae a ; re Silas

The natural gas pipeline industry is icles de...

pendent upon:a depleting asset in finite supply... Congres--

sional awareness of this circumstance ‘jis ,éflected:in pivotal

provisions of the Natural ‘Gas Act designed. to insure a

dependable. and “uninterrupted supply of gas to the ul imate.

“consumers served directly or indirectly by interstate [Pipe

lines. Ue si a pan ella a

Sectio 7{b) prohibits a partial or total soaintictlinend

of any facilities or service subject to FPC jurisdiction unless

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

pipeline company, full evidentiary hearings and upon the:

'. basis of a specific finding that “.... the available supply of .

. natural gas is depleted to the extent that the: continuance -

of ‘service is unwarranted’’ er that the public interest. per-

‘ mits such abandonment. Both the” FPC and ‘the courts have.

held that. this Statutory protection encompasses a redugtion

in the valumetrie quantities. of gas delivered as well as a

complete cessation of.service (Dixie Pipeline. Co., 14°FPC -.

106, 114; Panhandle EasterfiPipe Line Co., 22 FPC 679,

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

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

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

Panhandle Eastern Pipe. Line Co., v. Michigan. Consolidated

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

‘Sectton Ha) authorizes’ the FPC to require extensions

of pipeline transmission facilities to serve the needs of gas

distributors in communities adjacent to such main lines but

expressly prohibits. any compulsory physical connection or

- sale. or natural gas which would impair the pipeline’s

. ability to render adequate service to its customers”.

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

| adequate gas reserves firmly committed: under contracts to”

support the construction .and operation of any facilities or -

extentions sought. to be certificated under ‘Section H(c)'7

and Sectign 157. 14(a)(10). of the Regulations under the

Natural Gas Act “requires a comprehensive showing by the _

-

applicant to. establish satisfactory ‘gas. reserve ieaean and de-- ©

liverab ility voltimes. Ee ee as Pane én

Both direct sale customers and resale customers of

interstate pipelinés have shown equal awareness of the need

ta protect themselves against the danger of a gas shortage

in the event that their pipeline supplier improvidently as-

sumes. obligations to deliver firm gas in. quantities exceeding «

either its gas supply or transmission capacity., Thus, direct.

sales contracts. and resale tariffs invariably contain impair- .

ment of deliveries. provisions establishing service priorities

_+ between ‘different classes of customers and defi ining the -

“respective rights and liabilities of the seller and buyer in the

event of a jane to meet contractual delivery obligations..

Interstate ‘pipelines , differ from conventional public

»

utilities because ‘they are not legally obligated to meet-

_' service demands. by potential new custoniers or to. furnish

additional service to existing customers. The Natural Gas .

_ Act leaves such companies free to choose ‘their. custémers

and to make. voluntary business judgments concerning the

expansion of. their transmission capacity and the assump-

. tion of conttact obligations. to deliver additional volumes of

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

ascind to compel the solegecnent, of transportation facil- ae |

‘ . . ™ 4

17 tyunkline’ Gas Co.; 21 FPC 706: Texas Ilinois Natural Gas

* Pipeline Co.,:24 FPC 980; gee Gas Transmission @., 30 vi

164. pe

18 Panhandle Sain recto Co., 204 F:2d 675, 680-(C.A,

3). ee ‘ ‘ sf ~ 5 ses i -

od

oT ee

-

gr

\

and extraordinary situation or ei

‘with a ‘systemwide gas shortage re)

——

ities? 9 Pipeline transmission Capacity and gas‘ ‘Teserves ee

| always been geared to -the present and future’ needs of

- “resale and-direot sale customers. ° bee

_ &

a . 1: es : oe ‘ A f A P

These background considerations conclusively demon-~*

strate. that Congress intended interstate pipelines to have an

absolute and unconditional obligation to’ meet their con-_

tract commitments to. direct<éale and ‘resale customers and '

explain why it did not find it’ necessary to equip: the FPC

Be

ran individual pipeline

“with express statutory powers ihe with ‘thé abnormal *

é “a

“eA

‘ zs

is 4

Congress. was faced. with a different sitiation in’ n fram-

| ing the: statutory scheme ‘of the: Féderal Power Act for the

regulation of interstate electric ‘utilities. Electricity is an. -

intangible commodity” whereas -natural+ gas is ,a ‘tangible.

commodity. Electrical energy cannot be Stored. whereas:

nS natural gas occurs in producing wells which are inherently pat

‘. storage facilities permitting, withdrawal at known maximum

deliverabilty rates. For these teasons, Congress specifically

authorized the FPC to déal. with - emergency . shortages of

electrical energy ‘in Part Il of. that Act. Section 202(c)?®

proyides that during - ‘a war, éf whenever the agency ‘deter-

|

- a

19 Central: West Utility Co. v. FPC, 247 F.2d 306, 310-313

(CA 3):

20. Section 202(e): During the illic of any. war in”

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

determines that an ‘emergency exists by reason of:a sudden increase

_in the, demand _f br electric enérgy,. or a shortage of electric energy or

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

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

shall have authority, either upon its own motion or upon

complaint, with or. without notice, hearing, ‘or repost, to require by |

Strict! next page)

2

«

] . >

P ao VS

with a nationwide gas ©

b>

‘mines that an emergency exists by reason xt a sudden

increase in demands for electric energy or that there is a

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

ation or transmission, .the FPC shall require temporary

connections of facilities and such other generation, delivery,

interchange and transmission. arrangements _as_ well best.

.meet the emergency needs and serve the public interest.

Section 202(4)?! vienealy exenipts from. FPC juris-

diction any temporary connections or facilities made or:

. ‘constructed to. deal. th such an emergency by. an inter

°

- (20 Cont.)

order such temporary connections of facilities and ‘such generation,

_ delivery, ‘interchange, or transmission of electric energy as. in its

judgment will best meet the “emergency and serve the: public interest.

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

any arrangement between them in carrying .out such order, the

Commission, after hearing held either before.or after such order takes”

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

. be just and reasonable, including the compensation or reimbursement

_ which should. be paid fo or by any such party. (49, Stat. 849; 16 |

U.S.C. 824a (c)). | oe ee

t

-21. Section 202(4): During*the éontinuance of any emergency

requiring immediate action, any person engaged in the transmission or

sale of electric energy arid not otherwise subject to the jurisdiction of

thé Commission may make such temporary connections with any

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

construct such temporary facilities for the transmission’ of electric

energy in interstate commerce.as may be necessary or appropriate to

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

diction of the Commission by.reason of such temporary connection —

or temporary congtruction; provided, that such temporary connection.,

‘shall be discontinued or such temporary. construction removed Or

otherwise disposed of upon’ the. termination of such émer-. -

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

permanent. connections for emergency use only may be made _— ae

under. (49 Stat. 849; 16 USC. 824a(4)).”

-

State electric utility. It also limits ethe duration of such .

temporary connections ard construction ‘to the. period of

emergency, and permits permanent. connections for emer- — .

gency use to be continued thereafter only upon specific.

; approval by the FPO. ~~

Congress delegated such express emergency authority

-_ to the FRC with ‘respeét to electric utilities on Augu . ee

1935. But, it failed to make any corresponding delegation”

of emergency authority in the Natural Gas Act enacted on

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

oversight but a deliberate omission and attributable to Con-

~ gressional awareness of the vital differences between the gas

pipeline and electric utility ‘industries. :

_» . The FPC has long been aware that it lacked authority

to deal with emergency situations arising from a shortage of

natural gas. It repeatedly requested that the Natural Gas

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

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

national defense or to safeguard the available supply” (31

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

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

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

specifically for, control by the Commission of the allocation -

of natural gas when required for national defense or to |

safeguard the available ‘supply in emergenay ‘Situations”’

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

“Ann. Rep..182 (1955); 36 FPC Ann. ‘Rep. 18 (1956); 37

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

January, 1970 the FPC again formally. asked Congress to

enact legislation granting ‘it such emergency powers and this

- time it modeled ‘the proposed legislation upon the pattern

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

_ emergency contained’ in Section 202 of the Federal Power

* Act. The FPC’s Annual Report for 1970 summarizes this -

‘request: — : “ * 75> «= a

24. |

¢ . me

"t-te jut gas ‘which became

apparent during iscal year andwhich are

expected to'to increase: in the foreseeable. future

suggest urgent need for Congressional action to

_ aalleviate.. these problems and that the ‘Commis- ©

, sion ’s jurisdiction to do so should not be subject.

to challenge. This proposal. which would add a

_iew ‘subsection to Section as ‘of the Natural Gas

Act would. enable the. Commission to determine

when an emergency exists so as to require the —

construction of temporary connections of facil--

itiés and extensions of facilities and the delivery,

interchange, transportation, load curtailment and

: allocation of gas by any gas company, whether or

‘not it°is otherwise. subject | to the Commission’s

| jurisdiction. Undisputed ‘authority to. meet such -

_ crises .as they arise is necessary for effective regu-

lation of the natura] gas — (p. 8).” (Em-

phasis added).

wv

- These repeated and unsuccessful attempts to obtain =

- éxplicit emergency powers caset grave. doubt -upon the ~

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

its enabling Act to deal with the alleged nationwide gas

supply emergency or with United’s = gas short-

age. ; ,

The only provision of the Natural Gas Act granting

emergency powers iS the portion . of 1(c)?? which applies

:'» . :

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

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

tenance of adequate service or to serve particular customers, without

notice or hearing, pending the determination of jan application for a

certificate, and may by regulation exempt from the requirements of

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

certificate will not be required ig the public interest. § . « %&

5 . . e ° : .

. \ ° 7

. ‘ ° e

+ ° 25

ould to, the limited situation ene issuance of a temporary

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

sary “to assure maintenance of adequate service to to serve

' particular customers” during the pendency of hearings.

Such eniergency authority cannot be utilized to impair .

. adequate service or terminate service to particular custom-

ers under curtailment plans. This specific. and limited au-

- thorization negates the. FPC’s effort to imply much broader

and wholly different emergency powers. which were request:

ed from, but denied by, Congress. i |

/ .

In ‘any event, the FPC’s efforts to chatettertic met :

curtailment plans of United and other pipelines as attempts.

to deal with an emergency situation are inaccurate and.

misleading.- Neither United nor such other pipelines have

‘ proposed that the reduction in contract delivery volumes be

effective for only a specified hnd ‘limited. period of time.

‘ Rather, these pipelines have requested both thier direct sale

and resale customers to execute new long term contracts.

permanently, rechane their Spiga cclivery entitlements. a

-B. THE FPC HAS NO STATUTORY POWER TO

CHANGE THE TERMS OF DIRECT SALE CONTRACTS

GOVERNING DELIVERIES OF GAS DURING SHORT.

AGES

- The impairment of deliveries Provisions in dneci Ste |

contracts are “‘terms” governing the service provided in the

event of: a.gas shortage. The FPC cannot abrogate and

5 nullify ‘these contract terms concerning. the liabilitiés and

rights of. the pipeline and _ its direct - - customers merely ‘be- -_

. cause the contingency to-which they are. drawn has mater-—

idized. ‘Any effort by ‘this agency to regulate such matters

‘is a direct: and prohibited assertion’ of Powe over ‘direct

sales. | oe

age a

"Both the FPC?3 and United?‘ admit that the agency

- lacks rate jurisdiction over direct industrial sales. Neverthe-

- less, the FPC’s*Order No. 43175, required United to. file a

plan providing for ,the curtailment of direct sales. in the

form. of. new and amended tariff sheets’ ‘which become .

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

during: the ‘pendency: of an investigation of the reason-

ableness and lawfulness of such plans. Thus, despite its

disclaimer of rate and tariff jurisdiction over direct sales,

the FPC is changing the terms of direct sale contracts. This ~

clearly violates the express prohibition of Section 1(b)

‘which excludes from the regulatory sii of the FPC any.

regulation of sales for consumptive use.

. - Fhe FPC plainly lacks the authority. to require a pipe-

link to. file a tariff covering the price and terms of d direct -

sale because this would give it the contirfuing/ rate and

setvice jurisdiction it exercises over sales for resale as op-

posed. to the initial certification jurisdiction it has over

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

pipeline to file-a tariff applicable _to direct sales contracts in, —-

order to obtain such continuing sales jurisdiction | was found

unlawful in Colorado Interstate Gas Co. v. FPC, 185 F.2d

baud 359, 360 (CA 3),.% where the court stated:

> "ihe power of the Commistion to: awe

) the sale: of natural gas by’ Colorado Interstate

extends only. to sales to buyers. for resale and not

to sales to buyers for their own consumption.

That being the “extent of the authority which’

Congress has conferred upon the Commission that |

wad is without authority to. as tae Colorado

23 1B. 22.

" 2A TB.9. os

” 25136 Fed. Reg. 7505, FPC L.B., pp. 50-54.

- Intétstate to make its gas tariff sails to any °

sales other than those- for resale. Itis. beyond the.

power of the Comniission to require a natural gas :

company within its jurisdiction to ‘make its tariff

applicable to sales which -are not within the regu- —

latory: power of the Commission for this would

be in effect to regulate such sales. Indeed, the

Commission itself recognized this in 1945 when

, in accepting Colorado interstate’s earlier tariff

_? changes for filing it specified : that they were to

'. . be effective only. for sales ‘for resale for ultimate -

public consumption’. 7 a Added):

The FPC also cannot amend. ; an interstate pipeline’s

filed rate tarifé to’ compel continued deliveries of gas under .

a resale rate schedule for the purpose of permitting the

purchaser’ to divert such volumes from resale channels to

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

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

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

beyond the scope of the -FPC’s statutory Powers" as a

| prohibited regulation of a direct sale, stating:

“In, effect, the Commission says when the

- City cancelled its contract for power plant gas, it

put itself into the position of having no no con-

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

the Commission is unable to write a new contract

for the parties. The Commission says it may not, .

_ because it cannot, although it has recommended =

to Congress. that it be given authority to, regulate :

sales not now governed by the statute. It there-

__ fore concludes that. the’ complaint, must ‘be. dismis-

sed.”: (Emphasis Added). Me ee,

if As the District of Columbia Court. of appeals observed

in City if Hastings, cited supra, P: 12, the FPC had re-

8 2 we

. cucited suthotity to ‘regulate direct. sales before 1954.

. Again, in 1963, the FPC recognized its lack of statutory

i “authérity to regulate. either the rates or terms of direct.

industrial sales and asked eae ear for such legisiigiive au-

thority:

“At the time the Natural Gas Act was adopted in

1938, itgwas not believed that Commission regu-

lation “of the rates ‘and terms of such sales was

necessary to protect the purchasers from discrim- ~

ination or unduly high rates, or that such sales

could have any adverse effect upon, jurisdictional

sales for resale. Both of these. views have provedn

- to be incorrect in a ‘significant number of situa-

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

ing that this type of sale if inherently. improper

or should be generally prohibited — on the con- © -

trary, in many situations: theye have been*shown..

‘to be mutually beneficial to all interested\parties

— it is believed that’ bringing.such salés within the

range -of Commission regulations would materially.

enhance the .effectiveness of ‘Commission regu--

: lation, of natural gas ini the public interest. (1963

: FPC Annual wa pp. 405). ‘(Emphasis Added).

The FPC justified the proposed legislation by reference :

to the freedom of interstate pipelines under the Natural”

Gas Act. to engage in discriminatory practices, respecting

- gervice, by preferring induggrial consumers they served

‘ directly‘ to. industrial consum served by their resale cus-

- tomers and by diverting natural gas from superior domestic

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

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

- to. President: of the Senate Lynd P. Johnson; the FPC

‘ stated: .

“Under etiiting law the Commiséion’s au-

4.

29°

thority is limited to sales for resale. i in interstate

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

direct sale by'a pipeline-to an industrial consumer

aré outside the sphere Of this. Commission’ S regu- |

latory authority.

. the Coramission conn :

that it be given jurisdictio ion over direct industrial

che by cane os ames This authority .

+e e the Commission to. require that inter- -

> State’ industrial gas ‘Sales. will be made at sych -

prices. and on such terms as -to realize the poten-

tial benefits of such sales to both industrial and

' domestic ‘consumers.” . (Cong, Rec. 11084;

11085). (Emphasis Added). | —

The FPC cannot cite a single agency _ decision, whether. -

or not litigated in the cour rts, in which it has changed either

the price or any term in“a direct: sale contract authorizing

the inferstate transportation of natural gas under a perma- |.

\nent certificate of public convenience and necessity.

C. THE RATE AND TARIFF SECTIONS OF THE _

ACT GRANT THE FPC LIMITED, NOT -

PLENARY, POWER OVER SERVICE AND

APPLY ONLY TO RESALE CUSTOMERS ;

| The “FPC claims’ ‘plenary authority. to approve or pre-.

scribe “curtailment plans” which allocate reduced gas deliv-

ery’ volumes to. both the direct sale and resale customers of __

an interstate. pipe ine. in derogation of its contract and

certificate - -obligations. Its exercise of such authority, which

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

and far-reaching consequences.

The FPC proposes to obliterate judicially sanctioned

differences in treatment between existing-and new custom-

_ ers ard the’ universally recognized service priorities of firm

“a ae

30

over interruptible customers. It his accepted for filing, at

permitted to. become effective pending a determination on -

the merits, the ‘curtailment plans.of United and of other

pipelines which reduce gas deliveries’ to direct sales custom-

ers and reallocate such gas volumes to resale customers.

Such curtailment plans are effective as to both present and .

potential gas shortages. While asserting an urgent need for

* such plenary authority to. deal with a nationwide. gas supply

shortage, the FPC has _ permitted curtailments by pipelines

who are not ‘experiencing such a shortage but have elected .

_ to fail to proivde- additional transmission capgcit y needed

‘to meet firm contract : obligations. to existing ° ustomers

because of the additional risk of investing # new or en-

larged facilities’ ‘when there is a possibility that potential

future shortages will diminish profit margins.” -

-

¢ Furthermore, the: FPC has made manifest ifs iritention -

to inure: that pipeline rates and charges for direct sale and ©

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

vide financial incentive to encourage exploration. for and —

. development of new gas reserves. 27 The State. submits that.

gas Allocation, proceedings are not the ‘proper vehicle Tor

_ dealing with this, /problem and that the alleged eméf. Tgency is

being used asa pretext to circumvent the limited powers of

‘the FPC to relieve United of financial obligations to direct

~ sale customers?® which were profitable but no .longer pro-

- 26 Order Suspending Proposed Tariff Sheets, etc., p. 4, issued |

"August 5, 1971 in El Paso Natural Gas Company, Docket RP 72-6.

Sec. 14.3 Curtailment Procedures, El Paso Natural Gas Co., FPC Gas .

Tariff, issued July 2, 1971. as

7 27 Opinion 606, FPC Pet. 70a; Louisiana Power and Light Co.

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

Id. at Ta.

28 See Discussion, infra at :p. 56.

“ ° a

a

4

1 ee

s

/

vide as great a profit as- that pipeline can earn by diverting a

.the gas volumes from those customers.who purchased under.

low price, long term contracts to reslae’ customers’ who

: must pay. substantially higher ‘and continuously escalating =

prices under rates’ fixed by the FPC.

No provision of the Act grants the FPC any authority.

to override and. supersede all existing contracts between a

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

__the certificate obligations of such pipelines. The term “‘cur

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

: jurisdiction” over the gas delivery obligations of pipelines. .-

The FPC is ‘seeking. to improve ‘the Aet, from its stand-

point, by. inducing” this Court to accept a strained and -

tenuous interpretation of statutory ‘provisions which delib-

erately denied it any authority over the prices and terms of.

direct sale service and only limited authority of the type

sought to be exercised over resale service.

Sijons 4. 4 and. 5 of the Act suthotize the Sgulation :

of servic and well as of rates. The prohibitions of: ‘Section

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

ing any undue preference or advaiitage to one resale cus-

tomer over another or in maintaining any unreasonable

differerice as between localities or classes of service has

been held applicable to the allocation-of i equate main-

line transmission capacity, of. an interstate: pipeline, among ©

its resale customers (Michigan Ce lidated Gas Co. v. Pan-

handle Eastern. Pipe Line Co., iF. 22d 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.2d

6 5, 679 (CA: 3)). ‘But, the FPC can- only’ invoke its

authority under these sections upon. a finding: that the -

_ pipeline’s service priorities are unduly preferential or dis-

criminatory since its authority to regulate service is based

upon the implementation of the ‘Statutory objective of,

\ a ‘ .

. °° : \ : . : ¢

° Fd se

-

remedying’ such unlawful practices (Michigan Consolidated®

- Gas Co. v. Panhandle Eastern Pipe Line Co., cited supra, at

-

its powers-to control and limit gas deli volumes in the

only case in which it has ever exercised such authority>

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

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

ing the same parties and a single interstate pipeline. These. -

"cases afe distinguishable in several vital respects. They rela-

‘ted; to a shortage of ‘pipeline transmission capacity. rather —

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

‘allocations were made effective by FPC orders only with

_ respect to Panhandle’s resale. customers, ‘gas distributors and —

other‘ interstate pipelines. Panhandle’s contracts with these

jurisdictional: resale customers were filed with the FPC as.

rate schedules under Section 4(c) of the Act but did-not ° .

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

ice when demands on the pipeline system exceed _ its

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

court ‘the validity of the Emergency Service Rules ahd”

_ Regulations/ prescribed by the’ FPC which were of. limited:

_. duration. The "rights of firm direct’ sale customers were -

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

circumstances are present here. - « ak a ae *

The FPC itself has recognized nh ne upon

Pere os

. An analysis of the structure of Sections -4 and 5°

clearly reveals that the FPC’s ,féte.and service powers can

be exercised only with respect to gas “delivered ‘by an.

‘interstate pipeline to a resale customer. Each. of the opera:

tive paragraphs of Section 4 and of Section 5 repeats the.

‘express limitation of the powers thereby granted to the

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

diction .of the Comthission” for the purpose of excludingy .

therefrom. the matters expressly exempted from the cover-

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

es

“¢

— ensee @

le

i | ¢

‘

resale, i.€., any direct sale of gas ‘to a consumed bythe -

"_ purchaser: To read ‘the word “transportation” in this limit- : |

_ ing clause as conferring upon the FPC under Sections 4 and:

- thereafter effective. ne ay Fire ...2

5, the very powers over the prices. and: terms of direct sales

excluded by Section 1(b) and again excluded: by the in-

corporation of such ited clauses in each of such sections

‘would. nullify and subvert the -clear intention of. Congtess .

- (FPC v. Panhandle Eastern Pipe Line Co,., 337 U. S; 499,

503, 508). Yet thé:FPC and United: — such a con-

. struction by this Court.

,

Section 4(4) requires all lenis: rates ad charges, and

rules segulations affecting them, to be just and Teason-

-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 ‘unreasoable™ difference in .rates, service,

facilities or in any -other- regpect between localities or

classes of such: service. Section 4(c) requires the filing, in ©:

the form of tariffs, of schedules embodying all resale rates,

classifications, practices and regulations affecting such rates,

dogether with all contracts affecting such matters. Section

7s 4(d) requires the Tiling, on thirty days notice, of tariffs -

' proposing changes in such resale rates.and. serviées. Section

Ae) provides for hearings, ‘upon ‘complaint ' or on the FPC’s

own. initiative, concerning the . _ lawfulness of such resale

< rates, classifications Or service. Section 5(a) authorizes the

‘FPC when it finds that any-resale rate of classification, or es

any regulation, practice or contract affecting such*rate or

classffication is unjust, unreasonable, unduly discriminatory | |

or preferential to prescribe the lawfuf rate or service to be

ea

_ These considerations 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 only be exercised’ with respect to,gas sold

1° , scat vhs ° ee |

/

/

/

/

ee a 34 ne ie

Js - 2 ae el

,

for resale. The Court of Appeals for the Seventh Circuit

‘reached the same conclusion in Fuels- Research 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 ghange unduly (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.”

D. THE FPC HAS NO STATUTORY POWER OVER

ss DISCRIMINATION IN SERVICE BETWEEN

a DIRECT AND RESALE CUSTOMERS)

The FPC’s only authority to prevent undue and, unlaw- -

ful discrimination or preference derives from Sections 4 and

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

direct sale customers obtain gas for industrial purposes,

while resale customers requiring gas for ultiniate 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 aiid resale. customers. It further erroneously assumes

that the FPC has been invested by Congress with authority

_ to control and regulate, in rate proceedings, the end-use of

gas by different classes of ultimate. consumers.

7 a

29 Pet. 18-19. oie

30 1B. at 15. |

a

%.

: > = 32

As already ecard, Sections” 4 and 5 encompass

only the protection and regulation by the. FPC of Tesale _

customers. Furthermore, ‘the FPC.lacks statutory authority —

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

proceedings under Sections 4 and 5 (FPC v. Hope Natural

Gas Co., 320 U.S. 591, 608-614;, Fuels Research Council,

Inc. v. FPC, 374 F.2d 842, 853-854 (CA 7); Gity of

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

aim of discrimination against 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 tariff jurisdiction. Thus, the alleged discrimina-

tion is wholly beyond-the statutory powers of this agency.

The FPC3! and United rely upon a dictum in Pan-- =

handle Eastern Pipe Liné Co. v. FPC, 324U.S. 635, 647, to

support the thesis that direct sales contra@ets are within the -

scope’ of its Section 5(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

terms of such contracts. It decided only that the FPC did

‘* not abuse its administrative discretion by allocating excess

earnings or the combined jurisdictional and nonjurisdic-

tional business of an interstate pipeline to its regulated

resale business. This Court noted that Panhandle earned

more than a 200 percent profit on its industrial sales and.

held: em ae

“It is a fairly obvious indication that the.

regulated 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. Commission ‘to take into ac-

.

-

.

31 1B, ftn. 19a at. 22.

aw’

36 sie a

count when jk determines what costs are fairly

attributable to each business and what the re-

sultant rate for the- wholesale business should be.

Section 5(a) does not of course give the Commis-.

sion authority to disregard the jurisdictional lines

which Congress, has drawn between. interstate

wholesale sales and direct industrial,sales so as to

level the profits between the two classes of busi-

ness.”’ (At 647). (Emphasis Added).

Clearly, the ‘decision recognized that the FPC could not

eliminate price discrimination between resale and direct sale

customers. A fortiori, it cannot’ ‘remedy service discrimina-

tion- between these two ‘lasses of customers because Sec-

— tion. 5(a) cannot possibly be’construed as granting gréater

powers over practices or contracts which do not, than over

’ those which do, affect a jurisdictional resale “rate, charge, .

or classification”.2? Allocation or assignment of the regula-

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

rectly affects jurisdictional resale rates. Reduction of gas

_ delivery obligations by allocations under curtadment plaffs

have no such impact.

. ‘The FPC itself has recognized that it lacks necessary

- statutory authority ° to remedy undue preference and dis- °

_crimination ° between ‘different direct sale customers oF

between localities, caused by’ either unequal rate levels or

2

3 2 This Court’s statement that direct sales contracts are within

‘Section S(a). Specifically referred to the statutory language that.

. whenever the. ‘Commission: ‘shall find that any rate, charge, or

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

ral gas company in connection with any transportation or sale of*

natural gas, subject to the jurisdiction of the: Commission, or that any

rule, regulation, practice, or contract affecting such. rate, charge, or

__ classification is unjust, unreasonable, unduly discriminatory, or prefer:

- ential, the Commission shall determine the just and reasonable rate.’”’

(p- 647) (Emphasis original).

-

/

je

/

ot Bie

by soetailiient practices concerning internuptible direct cus-

tomers (Coastal Transmission Corp., 26 FPC 318,

324-325). ; -.

E. THE FPC LACKS, STATUTORY POWER TO RE-

ALLOCATE GAS SUPPLIES FROM DIRECT SALE

CUSTOMERS TO RESALE CUSTOMERS

The FPC claims plenary jurisdtetion, by virtue of its.

‘authority over the interstate transportation of natural gas,. -

.to reallocate gas supplies between direct sale and resale

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

ultimate. consumers. As already demonstrated, such. powers

cannot ‘be derived from Sections 4 and 5. .They are.‘not

‘expressly conferred by ‘any section of*the Act and could

only bg implied under the certificate’ provisions of the Act,

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

ficate of public conveniencé and necessity, the regulation of

any, transportation or natural gas in interstate commerce ©.

utilizing fhe facilities of -a pipeline. It provides the statutory

vehicle for authorizing the dedication of a natural gas —

supply to interstate movement andthe installation of any

‘new or improved facilities used to t€ansport such gas, either

on a transportation service for hire basis or on a sale for

resale basis.

'

In determining whether the public convenience and

necessity requires the issuance of a certificate, the FPC

_«.° must consider all aspects of the proposed use of interstate °

transportation facilities in order to decide whether the

granting of the requested authorization will impair the

pipeline’s ability to continue adequate service to its existing

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

to be. rendered thereby, involve a direct sale to industrial

consumers the FPC may initially certificate facilities used

for the “‘transportation’’ of gas althoygh the “‘sale” of such

2

customers, including those purchasing under direct sale con- ‘

s

4

ae 38

gas is beyond its regulatory powers (FPC v. Transcontinen-

tat’ Gas Pipe Line Corp., 365 U.S. 1; Panhandle Eastern -

Pipe. Line Co. y. FPC, 359 F.2d 675, 682 (CA 8)s, Pan-

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

cert. denied, 352 US. 891; Coastal Transmission Corp., 26

FPC 318, 324). F . @

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 under

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

~ Court held, in. Transcontinental, cited supra at 4, a direct

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

except insofar as’ Section 7 requires the Commission to

certificate the transportation of gas pursuant to” the sale.”

(Emphasis Added). | .

In any event, the FPCts powers under 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

tndustrial use to resale domestic and. commercial prep ran-

continental, cited supra at 17, decided that “. . . the Com-

mission’s powers unger Section 7 are, by definition, limit-

ed...) it “..J cannot order a natural gas company to sell

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

cover proposed transportation and it can only do this when

a balance of al] the circumstances weighs against certifi-

cation”. That sase further held’ that the FPC was not

empowered to allocate gas to specific end-uses stating:

“it is clear that the Commission fully realized the dis-

-tinction between the [limited] power it enjoys under. Sec-

tion 7 moll a al allocation power” (at 18-19).

AN :

}

s FA .

~~: = 39:

> i

In arriving at this congyision, careful consideration was

siven to an abortive attempt to amend the Act by declaring

‘a national policy that the. public interest required the pro-

motion of national defense and conservation of gas reserves |

for those uses affording the highest social benefits to the

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

because much of the. gas sold for industrial uses: was con-

sumed within producing states and could not be subjected -

. to its regulatory control. This Court also recognized that—

_the. Act deliberately and meticulously invested~the FPC

with only. limited authority short of the reach of féderal

- constitutional power over interstate commerce, and left the °

residue including regulation of direct sales to the states,

citing Panhandle Eastern Pipe’ Line Co. v. Public: Service

Commission of Indiana, 332 U.S. 507 (Transcontinental, ’

cited supra, at 8). . - : . 2,

In the light of these considerations, this Court con-

cluded that 4) FPC lacked power to prohibit by a uniform.

‘\al

rule direct. '\ales for use as boiler fuel (365 U.S. 16-17).

However, although, the FPC cannot directly controt and

regulate end-use in a. Section 7 proceeding, it en fosier

proposed uses of gas sold under direct sale contrac

relevant factor, among all other such factors, in deteYmining

whether to certificate a proposed sale.

ih: . Applying the same rationale’ it also: conclud d that

Section 1{b) prohibits any effort “. .. to bar diréct sales.

absolutely, thus forcing all gas transactions into regulated

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

ed consideration and weight to the impact of a proposed

‘direct sale price on- prices payable by resale customers (365

U.S. 23-24). is

To ‘summarize, Congress left the regulatory’ authority

of the states intact and undiminished with .respect to all

aspects of direct sales made by interstate pipelines except

- for the initial certification. Of such sales by the FPC; de-

as. one |

— FZ

“40 2 _

clined to incorporate in the Act a national policy preferring

certain end-uses of this limited natural resource; denied the

‘FPC power to allocate either the national supply or, the

___interstate- supply of natural gas- to-different-classes of.end- | _

use by ultimate consumers and prohibited any effort by. the

FPC. to channel. gas supplies to resale customers of ‘inter--

_ State pipelines by barring sales to direct industrial consum-

oe “ |

” In Granite. City Steel-Co., v. FPC, 320 F.2d°711, 713

(C.A:D.C ‘an attempt by the FPC to reallocate mainline

transmissi in capacity of an interstate pipeline in excess of

its delivery commitments to-firm customers from direct sale.

industrial users to resale customers was held unlawful urider

Section .7(a) because it- would impair the pipeline’s ability

to render adequate service ot its existing customers. The-

rationale of the decision rejected the FPC’s claim that it

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

domestic and commercial users? > on the basis that:

“The theary and purpose of the statutory

restriction of 7a) appear to be that’ persons

~~ - desiring gas for_the-first time, or desiring more —

- gas, Should not get it by taking it away from —

existing lawful customers. We think Mississippi's

service to ‘its industrial customers will not be

“gdequate” within the meaning of Section Ha).

unless it meets their present and reasonably fore-

seeable requirements approximately as well as the

_- service Mississippi has been furnishing them. This ~

is no less true because Mississippi has contracted

be]

33 tn -Arkansas-Louisiana’ Ges Co. et al., 27 FPC 697, 703, the |

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

‘for the pipeline to supply additional capacity: to its resale customers

and also. found under Sectional. 5(a). that its “practice or contract”

respecting allocation of capacity to direct ‘industrial customers was

“unduly discriminatory or preferential” against resale customers. ~ .

ene Si

to supply the full requirements 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). - .*

a ee

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 shortage, it is acting outside

the scope of its statutory authority in taking such action to

relieve United of its delivery obligations for an alleged

temporary period. — . ;

F. SECT iON 1(b) DOES NOT GRANT ANY SUB-

- STANTIVE POWER. AND. CANNOT BE COM- -

BINED WITH SECTIONS 4, 5 AND 16 TO

CREATE IMPLIED POWER TO REALLOCATE .

GAS SUPPLIES ; Pp’

Th 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 transportation and sales for

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

ed to evade the prohibition in 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, service and tariff powers °

_ which are: admittedly limited to sales for resale. This is an

argument that the FPC can achieve indirectly what Congress =

_ has prohibited it to do diréctly.>*. - ‘

34 The agency recognized this limitation on its jurisdiction in

the context 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. v.

. FPC, 247 = 306, 312 (CA 3).

8 42

Section 1(b) is not aegrant of any substantive power. *

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

tory 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 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 Co. v. Pubjic Service Commission of

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

Co. v. Michigan Public Service Commission, 341 U.S. 329,

334-336). Section ‘Yeb) is nat self-executing. Each of the

substantive “seetions of the Act empowers the FPC to regu-

late a different subject and the individual powers, thereby

conferred must be-exercised in accordance with the specific ,

procedures, prescribed by Congress. :

Furthermore, in implementing its powers ‘iaider any

section 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. FP@¥204 F.2d -

675, 679-680 (CA 3), an attempt, under Sections 4(b) and

5(a), to eliminate unduly disrciminatory and preferentiaf

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

line delivery capacity to different resale customers by

ordering a compulsory enlargement of such facilities in

disregard of the prohibition against such action, in Séction

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

+» 1(b) grants powers which can be implemented under the ©

c.

tariff revision hs aaa prescribed in A(d) and 4c) for .

35 Birtermnoke: 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 Co. v. FPC, 247. F.2d

* 306, 310-313 (CA 3).

changing resale rates, practices and contracts although. the

latter sections may hot be applied to direct sales clearly

runs 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. .

In a completely parallet ‘situation presented in FPC v.

Panhandle Eastern Pipe Line Co., 337 U.S. 499, 504,

507-508, the agency ‘claimed jurisdi ion over a transfer of

undeveloped gas reserves owned by . iriterstate pipeline to

its production affiliate which sold thé 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

" confronted with a specific exemption in Section 1 {b), con-

cerning production or \ gathering. It sought a ‘narrow inter-

pretation of that. exemption. and combined several separate

sections of the Act to 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 16. to counterbalance that prohibition. Fi-

nally, it justified the 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 presented to this Court were the same as those

pressed here. This Court completely and squarely rejected

each of these arguments, for reasgns which are equally

compelling, and controlling in this case:

“The Commission seeks to- caligtinguish - ‘be-

tween the activities of ptoduction and gathering,

such as drilling, spacing wells, or collecting’ gas,

~ and the facilities, such as reserves and gas ‘leases, |

used therefor and argues that only: the former

were excluded from the coverage of the Act. In

mee of this position at is poutes out that the

~-

J °

“44

3

‘section spefifically exempts both the socal dis-:

tribution and: the facilities used therefor while it

makes ‘no. mention of ,the facilities used for pro-

duction ofr, gathering. In ‘the face of the

unambiguous language of the Act and. its legisla- -

-tive background, we cannot ‘ascribe such a narrow

meaning to the words, ‘the production or. gather-

'- ing of natural gas.’ .

‘

.

The Commission /urges it has jurisdiction

over’. the . transaction | between Panhandle and —

Hugoton. from the powers granted t0.it by Sec-

tion 7(c) of the Act,:15 USCA Section 77 f (c),

4 FCA ‘title | 15, Section TIT F (c), which au-

thorizes it to issue certificates of convénience and —

necessity for the interstate trnasportation and sale |

- of natural gas and those granted to it by. Sections —

4 and 5, 15 USCA Sections 717c, and. 71145 °4

- FCA title 15, Sections 717c 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 and

necessity to construct additional. pipe-line facil-

ities had included the acreage here jnvolved as .

part .of its gas reserves, and certificates were

issued upon the finding by. the Commission that

Panhandle - had adequate reserves tg warrant. its

‘expansion. “Moreoyer Panhandle 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 at

reasonable. and nondiscriminatory. rates. From

these. circumstances, the Commission concludes

+ ‘ . ; ’

te

_or gathering of na

a

he

that these leases ‘cannot be relinquished by ‘Pan-

handle without the consent of the Coinmission,

which has the implie power to. protect its rate-

making function and Q insure the maintenance

of adequate servic@by a natural-gas company.

Sections” 4, 5 and

gas; rather they have re-

ference to the interstate sale and transportation

of gas.and are so limited. by their. express terms.

Thus Sections -4(a), (b), (c), 5(a) and 7¢c) speak

/ of ‘transportation or sale of natural gas subject to

the jurisdiction. of the Cominission’ while Section

7(a) afd: (b) refer respectively to ‘transportation

facilities’ and ‘facilities subject to the jurisdiction

of the Commission. ’ Nothing in the sections in-

dicate that the power given to the Commission

over natural gas companies by Section 1(b) could

_ have been intended to swallow all the exceptions

of the same section and: thus extend the power

the Commission to ‘the constitutional limit of

not concern the producing

¢

congressional authority over commerce, The re-"

o petition of the’ words subject ot the jurisdiction’

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

sion’s hands out of the excepted local matters.

| The same answer applies to petitioner’s argument.

that Section 16,:15 USCA Section 7170, 4 FCA,

title 15, Section 7170, 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 ‘rescind a prohibition against

". certain actions. . o's

To accept these arguments springing from

power to allow interstate Service, fix rates, and

control by the Federal Power Commission over

‘the production and gathering of gas. It would’ “4

‘invite expansion of power into other phases of

.

s

=

Ee ab

the forbidden area.’4 ‘It would be an-assumption

of powers specifically denied the Commission by

the words of the Act as explained”in the Seer

and on the floor of both Houses of epee

~ 14 Would it : soon be. contended that statutory, power

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

power to require exploration or acquisition of leases or

| allocation of production to interstate pee lines in order to

serve the public interest? a

Note:

Other footnotes omitted and: Emphasis Added.

~

| There is no merit to the FPC’s claim that Section 16

‘authorizes it to utilize the procedures prescribed in the rate.

- sections to implemient transportation authority granted; if

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

enlarge ‘authority, withheld "by the Act since its sole fun-.

,. ction. is to implement ma. ‘specifically granted (Murphy ~

. Obl Corp. v. FPC, 43KF. 2d 805 (CA 8); Willmut Gas & Oil

_ Co. v. FPC,’ 294 F 24 “245, 249-250 (CADC); Niagra Mo-.

awk Power Corp. v.. FPC\379 F.2d -153, 158 (CADC)).

~ Finally, as this Court held im.Panhandle, Section 16 can

- never be utilized to circumvent evade an express pro-

hibition against the exercise of jurisdiction, in. this case,

_ regulation va ed terms of direct sale contracts |

- i

ot

= as FPC DOES NOT HAVE COEXTENSIVE AND. =

CONCURRENT POWER OVER’ TRANSPORTA- 7

TION AND SALE UNDER THE CERTIFICATE

a ey AND RATE SECTIONS OF THE ACT en

” Section 7 is the only provision in the: the Act which

authorizes the regulation. of the transportation —— of a

. ' “

cm

~

Line Co. v. PC, 385 US. 83, 91).

&

ar’. 2

°

natural gas company or of the service ‘thereby eadered 36

It is both complete and comprehensive and expressly grants

authority to control and supervise extensions or. improve-

ments of such’ facilities: the abandonment; the issuance

and terms and conditions of certificates and ‘the acquisition

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

The FPC’s claim that Congress intended the mere defini-

tions. in Section 1(b) to override and supersede these spe-. ts

cific. provisions granting its only express powers. to regulate .

the interstate transportation of. natural Bas defies credibil-

ay ct

"The FPC?’ construe. the incorporation, in Sections 4°

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

forth in Section 1(b) as evidence of an intention to author-

ize the exercise of “transportation” authority under these

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

ation” in this limiting clause as conferring upon the FPC

under those sections the very power to regulate the prices

and terms of direct sales. deliberately excluded: by Section

1(b) and again éxcluded by the express recital that the

powers of the FPC under Section 4 and 5 are limited to-

. the transportation or sale of natural gas subject to the

jurisdiction of the Commission. . > would nullify and sub-

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

the context of rate and tariff regulation, ‘the FPC’s powers

are restricted to the regulation of rates.and the elimination

; of preferences and discrimination in Sh ag with the

36 Neither the FPC nor - United can. invoke such certificate

authority in the absence of an ‘application under Section 7(b) or Hc),

the statutory . hearings ‘required as a. prerequisite to the exercise of

such authority and express findings that the granting of a certificate

will serve the public convenience and necessity: (United Gas =

37 1.B. at 34. esl

)

48

interstate transportation ae gas owned by others and the

interstate sale of gas Jor resale.

Furthermore, the FPC’s assertion of coextensive and

concurrent jurisdiction oyer the transportation and sale of

natural gas under the: certificate and rate sections of the

Act ignores both the interplay. between thdse sections and -

the structure 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 Sections. 4 and

5 only become. operative after such initial certification of

natural’ gas in interstate commerce by means of a perma-

- nent certificate. Before the issuance of such a cettificate,

the FPC can :regulate rates by attaching appropriate con-

ditions under Section 7(e). Thereafter, it can correct. an

excessive OF discriminatory rate only by proceedings under

Section 4, initiated by company rate filings, or under Sec-. <

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

gation. (376 U.S. 515, 519-524). Consequently, the FPC

can exercise its statutory. authority over the transportation

of natural gas in interstate commerce only under the certifi-

cate section of the Act and cannot claim such authority

under the. rate and tariff sections of the Act. These legal

considerations fully and plainly negate its claim that it may .

reallocate gas supply volumes from ‘direct sale to resale

. customers by virtue of its “transportation” authority under

Sections 4. and 5.

. ‘The FPC’ s contention that it has coextensive and con-

current jurisdiction over transportation and sales ‘for resale _

under. the certificate and rate séctions of the Act was”

specifically rejected in United Gas Pipe Line Co. v. FPC,

Zz 388 F.2d 385, 388 (CA 5). In that case, the issue was the

proper application of the agency’s formula for allocating

consolidated tax return savings between affiliated regulated

‘

.

es

ee ey

“gg

4

and. unregulated companies joining in a single return. Its

formula involved. three distinct Steps: separation of ‘the

companies into regulated and unregulated groups;

determination of the net aggregate taxable income of each .

group. and dpportionment of the total consolidated tax

_ between the two groups, and among companiés in the

regulated group, on the basis of their respective - taxable

incomes. The FPC classified the pipeline as a completely

_ Tegulated company. although 45% of its income was derived

- from jurisdictional sales for resale,. 10% from nonjurisdic-

tional sales for resale regulated by State commissions and

45% from nonjurisdictional direct sales not regulated by

any agency. The FPC justified its classification of such’

direct sales as regulated business activities-on the ground

that ‘they were “... subject to the Commission’s certificate

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

ed). The Court of Appeals’ flatly repudiated this theory |

because: . | 7 : .

| The Commission’s certificate jurisdiction is

not the same as its rate jurisdiction and ‘the

-' Commission’s judgment in this respect is invalid

since this is a rate case which we are considering

and regulation here is rate regulation. (Emphasis -

Original). |

The State submits-that these considerations conclusively ~

establish that the FPC does not have coextensive and con-

tinuing jurisdiction over the interstate transportation and

sale of gas under the. certificate and rate sections of the ©

Act. —

-” Assuming, for. the sale of argument, that it had such

jurisdiction .the Claimed power to reallocate gas supply

volumes could - only be exercised if such transportation

authority is of a continuing nature. ‘Stated otherwise, if

Such transportation authority is exhausted, and terminated

50

by. the issuance of a permanent certificate authorizing. the

use of interstate pipeline facilities to transport gas to direct

~ gale customers, the FPC clearly lacks any statutory author-

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

direct sale.”3 This was the rationale of Opinion No. 606

‘and the heart of its claim that curtailments do not relate to

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

‘ Court of Appeals in this case were based principally on this

- continuing transportation jurisdiction theory. In its argu- 7

ments to this Court, the FPC has completely abandoned its

reliance on Section 7 of the Act and seeks to conceal “and

deemphasize the total dependence of its alleged plenary

_jurisdiction over pipeline curtailment plans on such continu-

‘ing transportation jurisdiction. The State submits that this

reversal of position is caused by thie FPC’s belated reali-

zation that its certificate powers end upon the issuance of a -

permanent certificate which, as alréady established, do not

permit reallocation of gas supplies.

The Natural Gas Act doesnot 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 the Civil - Aeronautics

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

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

ence and necessity so require. . .°39 It is hornbook law that

_an administrative agency cannot alter or amend a previously

issued permanent certificate in order to implement a chang-

ed regulatory policy unless its enabling act specifically pro- _

vides for modification or revocation of such certificates -

United States v. Seatrain Lines, 329 U.S. 424, 428-432; _

American Prucking . Association v. Frisco Co., ‘358 U. S. 133,

38 sol. Cnt: Pet. at 57a. —

39 49 U.S.C.A., Sec. 1371. .

eee ot HAPS

“a

146; Watson Bios, Transportation Co. v. United States, [32 =

~F. Supp. 905 (D.C. Neb.) aff'd 350 U.S. 927): The. FPC’s.

reallocation of gas supplies is such a change in policy.

. Nor may an agency condition a certificate by reserving

the power to-attach such terms, conditions and limitations

as it may later deem appropriate in order to. deprive the

licensee of previously granted substantive tights“(United

~ States v. Seatrain Lines, Inc.; 329 U.S. 424; Civil. Aeronau-

_ tics Board v. Delta Airlines, 367 U.S. 316, 321). Section 16

_which grants the FPC power to “rescind such orders, rules,

and‘ regulations as it may find necessary or appropriate to

carry out the provisions of this Act: does not include

“certificates” (United States 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 permanent and

unconditioned’ certificate which has become effective. On

‘the contrary, it has conceded the applicability. of the Sea-

train Lines doctrine where. the natural gas company has

‘relied upon the. issuance of.a permanent certificate (Turn-

bull: & Zoch Drilling Co., Operator, 26 FPC 678; 680).

The FPC49 and United! rely upon a -there: dictum,

‘taken out of context and incorrectly 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 reallocation

of direct sale gas supply volumes to resale customers. Fun- —

damental questions of jurisdiction must be based on an.

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 United: Gas

4078 at 24.

41 1B. at 9-10.

52

"Improvement Co. v. Continental Oil Co., 381 US. 392,

404: oc : -~ *

“Concepts of stare decisis in statutory. interpre- _

tation apply to the holdings with which the case-

by-case_ method of decision surrounds a statute. _

To recognize no differences between the Pan-

handle transfers and those in ‘issue here; and in

the name of stare decisis to hold that Commis-

sion jurisdiction depends on the form rather than

the. substance of the transaction, would turn the

case-by-case process ‘against itself.” (Emphasis.

Original). .

4 Panhandle did not involve any reallocation of gas, Or

any interruption of service, to either direct or resale cus-

tomers, rather: it presented for decision only the issue of

whether a state commission had power to require an inter-

state pipeline’ to make direct sales, in competition with

local gas distributors. This Court sustained such state power

holding that Congress had not preempted the entire’ field of

regulation of direct sales made. in interstate commerce; had _

reserved to the statés ‘their preexisting powers to regulate

both the rate and service aspects of- such sales and that’

“uniform national regulation was not. required either by the

Act or by the Constitution. — 7

The dictum quoted by petitioners was a response to

_ the. contention of Panhandle, in its brief,4? 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. utility obligation, there would be conflicts

between. the several states and between the states and the

FPC resulting from diverse administrative. orders imposing

— service obligations beyond the physical capacity of the

»

42 appellant’s Brief at 49-50, Appendix O, 22a-23a.

Preiser vistertieicae oie

pipeline to meet. Panha@pdle relied upon the provisions of |

the Act giving the FPC jurisdiction over the construction of

new facilities for the interstate transportation of natural gas

| and its policy of refusing certification of sales to new

customers without regard to any need for additional facili-

ties when such authorization would impair the pipeline’s

ability to render satisfactory service to existing customers. |

It was in the context of this purely hypothetical situation,

‘which had not then and still. has not materialized, that this

Court stated that: “... if such conflict should develop, the

matter of interrupting service is one largely related, as

appellees say, to transportation’ and thus within the saa

diction of the Federal Power Commission to control, in

accommodation of any conflicting interests among various

states.”’ (Footnote 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

4 United filed with the FPC tariff provisions, applicable

for the first time to its direct sale customers and to its

resale customers served by the separate intrastate pipeline

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

in derogation of their contract rights, which the agency —

made effective without any statutory findings that the .

existing 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

- gas supply shortage it is essential that it utilize the tariff .

revision _procedures of Section 4(e) of ‘the Act. As already

established, the FPC has no: special emergency authority to

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 oe to file: ‘tariffs

a same to direct sale. contracts.

of service rendered to even interstate resale customers sub-

ject to its jurisdiction, unless they have consented to such

unilateral ‘changes by ‘pipeline suppliers in their contract

rights. The basic powers of tha FPC over resale rates and

- service ate defined by, and can 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

aside and modify any new or existing resale rate, practice

or contract which it finds to be “unjust, unreasonable,

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. ;

_ v. Mobile Gas Service Corp., 350 U.S. 333, 341-343; FPE v..

Sierra Pacific Power Co., 350 U.S, 348, 353). Section 4(e)

Furthermore, the FPC cannot utilize the tariff revision *

procedures of Section 4 to change either the rates or terms:

adds to this basic power, in the case of a newly filed rate. .

or.a change in a previously filed rate proposed by a natural -

‘gas company, the further powers to preserve the status quo ©

pending review of the. new or changed rate by suspension

for a limited period and, after final determination of its —

_ lawfulness, to make its. order. retroactive. to the date when

the suspended rate becamé effective by means. of refunds

(United: Gas Pipe ‘Line Co. v. Mobile Gas Service Corp.,

cited supra, at 341-342; United Gas Pipe Line Co. v.

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

-113- 114).

~ However; Section 4 does not supersede either the’ rates

or any other terms of a contract between an interstate

- pipeline supplier and its distributor or pipeline resale cus- _

- tomers. Unlike 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; or. to, fix’

by contract, and cHange only by mutual agreement, the

a

rate agreed upon with a particular customer” (United Gas -

Pipe Line Co. v. Mobile Gas Service Corp., cited supra at .

343). Thus, the. Act does’ not empower an interstate pipe-

line to unilaterally change its contracts and the tariff re-

vision procedures of Sections 4(d) and 4(e) can be utilized ©

only where the customers have consented to such changes

(United Gas. Pipe Line Co.: v: Mobile Gas Service Corp.,

cited supra at 342-344: United Gas Pipeline Co. v. Memphis

Light, Gas, and Water. Division, cited supra at 112-113).

United’ s Louisiana direct sale and _ resale customers

have withheld such consent, except for’a few who have

recently signed so-called “tariff and service agreements”

under duress. The FPC seeks to evade thé rule of Mobile on»

the. strained and tenuous theory that a although a pipeline

... cannot unilaterally change the terms of its contracts govern- |

ing service priorities in the event of a gas shortage, -the

agency may order such companies to formulate curtailment

‘plans’ reallocating their gas supplies .from. direct sale to.

tesale customers and to file such plans as tariffs.43 This is a

brazen and transparent attempt to circumvent _ the express

requirement. of Section 5(a)** that as a condition pre-

cedent to the exercise of its power to prescribe any rate,

_practice or contract the agency must find the existing tariff

provision unlawful. The FPC has not found that. the impair- -

‘ment of ‘deliveries provisions in effect , before -United’s

tariff revisions discriminatory or preferential. Such a finding

would appear to be precluded by the fact that United’s

direct sales contracts and Section 12.1 of its preexisting FPC

i

8 LB, at 31-32.

-* Applicable also to Section 4 poacebiling under the Section

~ 4(e) proviso that the. FPC may make such’ orders in ‘proceedings —

initiated by company tariff filings as would be proper in an investi-

gation of an existing rate. |

Gas Tariff are substantially identical.45 Finally, the FRC does |

not have plenary or unlimited powers to substitute its

judgment of» what constitutes a lawful rate, practice or

contract for that of the parties to such contracts. Thus,

* “even when it is properly proceeding under Section 5(a) to” ,

modify an existing contract it cannot relieve a pipeline of

an obligation to provide service at a rate which is less than

the just and reasonable rate unless “the rate is so low as to ©

adversely affect the public 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 because the \powers of

the agency to regulate rates are for the protect n of the

public interest, as opposed " the private interests of the |

utilities.

: i FPO. JURISDICTION TO REALLOCATE DIRECT .

SALE\GAS SUPPLIES TO RESALE. CUSTOMERS

__IS_NOT\ NECESSARY TO AVOID A REGULA-

TORY GAP oy

Petitioners ‘claim 47 that, unless’ the FPC has. power to»

overtide the terms of direct sale contracts dealing with im-

pairment of deliveries during periods. of gas shortage, it will

‘be impossible to establish a.uniform and rational system of ;

aa eae: and that there will be an “attractive gap’ “in :

4S See Appendix P, 24a-26a.

46 Sierra held the rate and tariff provisions of the Natural Gas

’ Act ard of the Federal Power Act equivalent. and identical-”

47 EPC, 1.B. at 17-21,24-26; United, I.B. 10-13.

een $7.

the regulatory scheme. The FPC has adopted an individual

"pipeline company systemwide approach -as the appropriate’

unit for gas reallocatién purposes. United’s direct Sale con-

tracts and resale tariffs have impairment of delivery terms _

which are substantially identical and uniform,’ and also

wholly free of any undue or unlawful prejudice or preference

between direct sale and resale customers. Even if this were ‘

not the case, the FPC has no statutory authority to equalize |

the terms of. we rengered to direct and resale customers.

Congress committed to the exclusive regulatory control’

of the states the rate, licensing and-service aspects of direct

sales made by use of the interstate facilities of a jurisdictignal

_ pipeline (Panhandle Eastern Pipe Line Co. ». 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 résale distributors and pipe-

’ lines, and the industrial consumers.they serve, because the

e: granting of such power would have invaded the constitutional -

prerogatives of the states to regulate such commerce which |

-have not been limited: by the Act. Thus, the FPC’s regulation

of direct sales violates the Act and invades powers reserved to -

_ the States: under the: Tenth Amendment to the’ ‘Unitéd States :

Constitution. beeen .

The, Act docs wo occupy the entire field within the

' “peach. of federal constitutional power and limited federal reg-,

ulation only to the “gap area” where the Supreme Court had

held the States constitutionally unable to act by fixing the

import ‘prices of out-of-state’ gas ‘sold for resale, in many

cases, by an interstate pipeline to an affiliated distributor

company (interstate United Gas Co. v. FPC, 331 U. S. 681;

682; 689; FPC y. Hope National Gas, 320 U.S. 591, 609; FPC

v. East Ohio Gas, 338 U.S. 464, 470, 472-473). :

. pel

Le cas ro uit gg

: “The: Natu l Gas Act i is an “in . interstate commerce” act,

a3 not one:* “‘affecti g” interstate commerce. Congress, was well

“et “aware of the difference. and had used broader: language mm

- statutes passed fore or-contemporaneously with the Na- »

> © tural Gas Act such as. the Fair. Labor Standards Act of 1938,

_\ $2 Stat. 1060, the Bituminous Coal Act of 1937, 50 Stat. 72

and the National Labor: Relations Act, 49 Stat. 449. This

. .. nestrietion .on FRC jurisdiction was designed to avoida repeti-

tion’ of the unanticipated and, unintended. invasion’ of state |

e) jurisdiction in the transportation field under the Shreveport |

.. doctrine. (Hous on, E.&W.T.R. Co. v: United States, 234

342; 355-360). A tatutory prohibition against discrimination

; nsportation by railroad. unaccompanied by

eed any express limitation’ upon its scope was there properly in-

'. terpreted as: empowering. ‘the Interstate. Commerce. Commis-

‘sion to regulate’ intrastate rates Which affected interstate

traffic ‘by virtue of ‘discriminatory. or preferential features.

_’ The'states were determined to avoid any repetition of such

a. federal, i invasion of their regulatory prerogatives and the plain

Fe * Fanguage_ of,-the: Act, :enacted at the requést of the states

_\” “acting in concert through the National Association of Rail-’

poad and: Utility” Commissions, witnesses this. compact be-

tween: the states and the federal government: aS a

“The ‘State submits thit the explicit language of the Act,

; which: leaves no latitude for inference .concerning Congres-

“sional intent;. its clear: legislative history; the consistent

ne administrative interpretation of the Act by. the FPC that it

lacks .power to change. the-price or terms of. direct sale con- - 1.2

. tracts and that agency ’’s repeated and unsuccessful attempts

‘to have the Act amended to grarit such authority compel the. . 4

~.°". conclusion that: uniform federal. regulation is:neither appro-

., priate. nor lawful: insofar as. direct sales are concerned. This -

urt, in a case presenting parallel elements. construed identi-

cal statutory language to preclude an exercise of jurisdiction

over the use of urifair methods of competition in intrastate *

~ Sales despite the: fact that the. ——— of such business

\ . ‘ \

. ‘ :

“te

59

a

practices by. persons engaged in interstate | commerce handi- -

capped: such competitors (Federal Trade’ Commission. v.

_ Bunte, Brothers, ‘Inc., 312 US. 349, 350-355).48

nN

Apart from these considerations, the FPC’s individual

pipeline: company systemwide. basis for rationing and real- ©

- locating 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 states. It can |

insure, at most, only equal treatment to all customers of the :

. same pipeline. It cannot afford equal treatment to end-users :

_ of the same class whether. they are located in the game state’

or in different states. However, the 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 citizens, would treat all states and localities fairly.

me Many discriminatory and inequitable consequénces flow |

‘from ° failure to allocate the total interstate supply of gas to

the individual states of the federal union. A pipeline which ;

has’ kept faith with its customers and not oversold its frans- ~~

"’. mission capacity or gas reserves to maximize its profits will |

continue delivering full contract volumes, and or gccasion

increased volumes, to-its direct industrial and power «plant

* customers while other pipelines which have disregarded their

contract and statutory obligations are substantially reducing

deliveries to the same class of customers located in either the _

same state or in different states. The individual company

: approach has. ‘a disproportionate ‘and oppressive adverse

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: purposes. United is:

48 The decision took cognizance of the fact that ‘the Shreve- a

port docrtine was in effect during the life of the Federal T rade Com-

* mission’ but that it never asserted sieniier authority.

60

-totally unlike: other. pipelines. It not only supplies 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, the world’s largest transporter

of natural gas and its system purchased, collectéd, and trans-

‘ported more than 1.8 triljon cubic feet in 1970. (Tr. 71-79,

120). Thus, consumers in producing states unfairly. bear the

brunt of a gas ening reflecting increased demand in other

states. ‘

_ Moreover, the FPC is exceeding 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 pravince 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. 49 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 by; a direct industrial con-

- sumer is at least as much a matter of purely local concern as

the disposition of resale gas by: a distributor.

49 Sol. Gen. Pet. at “7i-0-72a:Emphasis added.

6]

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. -

onty 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,>? any attempt to rechan-

nel interstate gas .to industrial consumption within its bord-

ers. Rather, that investigatiqn 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 ‘contentoon™? that the .

LPSC is constitutionally prohibited from Tegulating curtail-

ment practices of intrastate gas pipelines. Article VI, Section .

Ay. of the Louisiana | Constitution provides that the

. power, authority, and duties of the Commission shall

affect and include all matters and things connected with,

concerning, and growing out of the service to be given or

rendered’. . .” by such-companies. This is an unusually broad

- delegation of power not found in the conventional 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 “thas been

vested with the authority and responsibility to regulate and

-

901.B. at 11.

9! Brief, Amicus Curide at 11.0 ce

S21. B at 11.

531 Bat 11-12.

MORRO tee eos anon

™~

62

control utilities with respect ... to the services rendered by

public utilities” and exercised such 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 degree of state regulation.” (The Secretary of the Army,.

Atlantic Seaboard Corporation, Order Denying Rehearing,

Dkt. No. CP66:179, issued October 22, 1971). ' |

. Petitioners’ suggestion that courts are not competent 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 Court and it has expressly 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). he ts |

.

’

_ Finally, ‘the concept of an “attractive gap” applies only

in the absence of an express statutory prohibition against .

regulation of a specific subject as this Court held in rejecting

the FPC’s claim of implied authority in FPC ». Panhandle

Eastern Pipe Line Co., 337 US. 499, discussed infra at 38.

. RR ee.

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 exclusive and sole juris-

diction over the separate intrastate pipeline systems of

Deen 2 Se one emer Oa ee

eae

« Sant

Ni ait sect: Phat ali ich oes

.

63

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 intrastate 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 party and a federal administrative

agency concerning a matter within its established statutory

powers to which the doctrine of exhaustion of administrative

remedies applies. Rather, although arising in the context of a

private lawsuit, this is a controversy concerning conflicting

and mutually exclusive claims of jurisdiction between Louis-

iana and the Federal Power Commission.

. On September 28, 1971, the LPSC instituted a compre-

hensive investigation of United’s separate Southern Louisiana

intrastate systems (the Green and Purple Systems).> 4 United .-_

denied the jurisdiction of the state agency claiming that its

- unilateral action in applying to. the FPC for certification of

such systems invoked ‘the supremacy -clause of the United

States Constitution to terminate the‘ sole. and exclusive juris-

diction the LPSC has continuously and lawfully exercised. It

was, and still is, unable to cite any authority supporting this:

view. In Special Order No. 17-71, Order Affirming . Juris-

diction and to Show Cause, (Appendix S, 44a-46a), the

LPSC rejected this contention on the: Je eae grounds,

which United. has never answered or appealed:

“The docttins of pre-emption is applicablé

“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 constitatiorial- powers

over interstate. commerce. On the contrary, it -

authorized that agency to regulate only certain

limited aspects of the transportation and sale for.

54 Appendix R, 40a-43a.

64

9

resale in interstate commerce of natural gas.

Congress gave the FPC no authority at all over

intrastate commerce (FPC v. Transcontinental Gas

Corporation, 365 US. 1}, 17). Furthermore,

Congress enacted Section 1 (c) of the Natural Gas

Act in ofder to reserve regulation of intrastate

pipelines ‘and of local distribution systems entirely

to state regulation. Plainly then, the FPC ‘must |

defer to the states on matters which are primarily 3

of local concern.

The supremacy clause is. inapplicable. unless |

and until a binding and final ‘determination has

been made that United’s separate pipéline system

in southern. Louisiana is both in interstate com-

merce and outside , the scope of the cearramie

Amendment.

Such a determination cannot be nile 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. a2

This Commission believes - that ‘during the

pendency of such litigation it has both the author- ~

ity. and the duty to continue its regulation of

United’s rates and services. ha |

Aside from these unique aspects involving a 5 coufiict of

jurisdiction, the Court” of Appeals did not abuse its judicial

, discretion even if the case is regarded: as a conventional in-

“junction. proceeding. The FPC and United maintain that ‘the

- Court of Appeals committed reversible error .in rendering

judgment . on, an issue. admittedly within ‘its jurisdiction

ae

65. -

| because of the mere pendency before the FPC of ai an adminis- :

trative proceeding presenting the same legal question. Petit-_

ioners mistake the nature of the doctrine of exhaustion of

ministrative remedies. It is a guide to the exercise of dis- .

_ cretionary judicial power to hear and determine contro-

versies, not an absolute and inflexible barrier to court review.

The cases cited by petitioners involve attempts by a private -

party challenging the jurisdiction of @ federal’ administrative

" agency to enjoin or to otherwise terminate, by declaratory

judgments, administrative . proceedings concerned with the

determination of so-called “jurisdictional facts’ which will

determine whether that.party is subject to regulation. Here,

neither LPL nor LPSC has souight to invoke the authority 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 conclusion ‘concerning the jurisdictional status of

United’s Green System. In fact, the FPC has remanded the ee

case to an examiner for further hearings and the adminis-

/

trative process continues completely unimpeded and uninter- .

rupted. Opinion No. 610-A issued on April 7,;:1972 denied

all petitions for rehearing and is now final. A timely petition

for review has been filed by LPL in the Fifth Circuit. Court

- review of these jurisdictional: issues -will. also proceed under

thé provisions of Section 19(b) of the Act aand, contrary to

Unitéd’s claim,>> Congress has not’ prohibited ‘resort by a

private party to the general equity powers of the federal

courts for interim. relief pending a ia resolution of i issues of .

jurisdiction.

The vital distinction pare cases where courts inter-

vene in a controversy between a private litigant and the

_ agency, by-blocking or refusing to assist the administrative ©

oe 3 in its task of investigating jurisdictional facts, and cases -

55 LB. 22-23.

reas

66

where the agency’ S investigatory powers are unopposed was

recognized and relied upon in FPC v. Panhandle Eastern Pipe

Line Co., 172 F.2d 57, 59-60; aff'd. 337 U.S. 499, 514-515.

That case also rejected the primary argument made here that ae

the FPC is the sole competent judge of the scope of its own

jurisdiction and that courts must defer to the pendency of its

administrative proceedings until it can determine its own —

_ power and the necessity of its exertise. While this ruling was

made in the context of an FPC effort to obtain ‘a court

injunction during the pendency of its administrative proceed-

_ ing, and this case presents the same issue in the context of ©

_ the FPC’s effort to prevent. ‘such. an injunction, the rationale

* of the decision is equally applicable to both situations. Pan-

. handle applied the long standing rule that where an agency is

clearly acting.in excess of its statutory authority, exhaustion

of administrative remedies is unnecessary:(Leedom v. Kyne, . __

358 U.S. 184; City of Chicago v. Atchison, T & S.F. Railway

Co., ‘357 U:S: 77; Skinner & Eddy Corp. v. U.S., 249 US.

557, 562; Deering Milliken, ‘Inc. v. Johnson, 295 F.2d. 856

(C. A. 4)).

The FPC, which was neither a defendant nor obliged to

intervene in this private litigation between United and LPL,-

having participated as a party cannot complain that it was

s . 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 unlawfully oust the LPSC of its jurisdiction, convert an

intrastate pipeline to an interstate pipeline and reallocate

direct sale gas volumes from Louisiana ‘customers to —

' industrial consumers in othér states served by this pipeline’ S

resale customers who’will be compelled to pay higher rates. .

Yet, the FPC and United have neither petitioned the’Court of,

Appeals for —s en bane nor song review on | the.

merits by this Cart

s,s)

.

+ ion a tine eh ~“s~

rh 6 OO NON NR eel ot eT rl

ipl Aes ae aa Maid wahoo Ae

| A reading of Opinion 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

' Tesorting 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 it filed:

its October I, 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 _ fe

and irrelevant. The FPC has officially noticed extra-record

_ facts and unlawfully denied any opportunity to the parties to

_.- the procetding? ® to controvert such facts by rebuttal evi-

- dence and cross-examination under Section 7(c) of the’

Administrative Procedure Act. .

_ Petitioners seek to invoke the aid of this Court in their _

- unlawful effort, unsupported by any precedent, to exercise

certificate, curtailment and rate jurisdiction over United’s

_ intrastate Green System during the prolonged 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, thie 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 emergency basis and that they shall pane

. ”

' 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, contrary to

fa’

The State and LPSC requested this opportunity in their Peti-

tion for Rehearing of Opinion No. 610. °

: : 2

‘

68

law, beyond the statutoty authority of the FPC anda depri-,

yation of due process of law in violation of the Fifth hieied-

ment to the United States Constitution. ‘The FPC willglso ©

then be ‘unable to enforce itggdirection that. all of Unit€d’s |

intrastate ‘pipeline facilities and systems be operated as part

of its integrated interstate pipeline system which is equally

- unlawful and unconstitutional and designed to aid United’ Ss

"efforts to evade state regulation. This is the relief sought in

a

the LPSC injunction suit?’ which United. characterizes as “an

injunction sega exercise of FPC mpulatony’ Jurisdiction. pda

Unlike iat ieee cited by potiiionees, where the only =

injury incurred by the parties seéking court 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 blackout or brownout of electrical service in a

wide-geographical area resulting in 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 question -

of certificate: jurisdiction was decided by. the Fifth Circuit ~

upon the basis of undisputed facts and purely asa matter of

= statutory interpretation and the applicability of its own

Florida Frtines decision.©® Issues of this figure are within’

os Appendix Q,

SSiptti.

: Pa "pe

59 Petroleum Exploration, Inc. >, Public, eas Commission,

hid USS..209, 220-221. —

- 60: United Gas Pipeline Co., Docket No. CP 62-161, 30 FPC..

560 (1963), aff'd, Louisiana Public Service Commiation ». FPC, 339 =

F.2d 525(C.A.5).

69°

: Pea a : tos es be ot 4 :

the speciflized competence of the courts, ‘not that of the

FPC; - : . 7 |

The petitioners have exposed the completely untenable

nature of their views concerning the procedural issue of ex-

haustion of remedies by the inconsistency of the position

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 and decide, on ‘the

merits, either the direct sale issue or the certificate issue in .

‘this case. Here, they seek review of the merits of the Court of —

Appeals decision on the former issue but have avoided such

review on the latter issue.. .They seek to differentiate these

‘two substantive issues®! on the ground that the exhaustion

__of remedies problem has been mooted ‘by the FPC’s issuance

of Opinion Nos. 606 and 606-A. prior to the Court of Appeals

decision. But, the FPC has now issued both its Opinion Nos.

610 and 610-A in ‘the certificate case: thereby, under their

view, also. mooting the very procedural issue they seek to

have reviewed by. this Court.: Petitioners’ effort to differ-

entiate between the direct sale issue and the certificate issue

on the. ground that the Fifth Circuit squarely rejected the -

legal rationale of Opinion No. 606 is equally futile and un-.

‘ sound because that court’s opinion also squarely rejected the

legal- rationale of Opinion No.. 610.

©! Sol. Gen. Pet. 20; United Pet. 14, ftn. 26.

i

a tie 70 : 7

ks = ‘ . : Se: a . . ae -

4 f _ CONCLUSION ene oe Es

~ ;

is e -™s . . ?* ;

me i ' The State. maintains that ‘certiorari was -improvidently

granted in this case ‘because thefe’ is no support, either in

~ agency findi BE. fact or in. the pleadings. of petitioners, for

- the ‘challenged clai |

- Jocate United's direct Sale

volumes essential deliveries for

*icmestic: use will be jeopardized. In any.event, the pebgeent:

of the bumedal of Appeals ween be affirmed ‘inits entirety. -

7 ¢ ae Oe

. Respectfully submitted G

at Brae THE HON. J )HN J. McKEITHEN

Ae ele * Governor of ‘thie State of Louisiana |

State Capitol Building

' Baton Rouge, Louisiana —

° oe HON. JACK P. F. GREMILLION

"Attorney General of the State of

ak Ae eee Louisiana.

Se ee ae State Capitol Building

rue ei - Baton Rouge, Louisiana . -

% ee aes FRED G. BENTON, SR.

; ; Benton & Moseley. e

- eS. PM St. Louis Street

fe. - =" Baton Rouge, ~ Louisiana 70801

ARNOLD D. BERKELEY :

Suite 1200, 1819 H Street, NW. :

Washington, D.C. 20006 a

‘ A e ‘ ‘e -

. ae. ‘< . .

< i : 8

** o

oe

ia B

val

\ ge

ee ra

eens

States .

, Mis

“Nebraska

Mississippi

=

GAS ¥ XPORTZ 3 STATE

Louisiana i

xas 7 eS

nresfer ‘

Kentucky

Alabe ra

Avbhancnas

Ok Jahon

-Keanse's

, Ohio

New toxic

“West Virginia

souri.

Pennsylvania

Indiana

Arizona

Tilinoise

Georg ta

Towa

‘South Caro)i na,

Vireinia. -

North Carolina

. Maryland ..

New Yersey

Idaho

Washington

Orsgon

© Wyoming :

New. York

- Minncssta ‘

Utah

Colorado

Connecticut

Rhode IsJand

Michigan

Massachusetts

Montana

- Wisconsin

“*Norlh Dakota

. Alaska

* Delaware

New Hampshire

South Diakota;

Nationa) rotal

af,

oF PRON

(Mil) Lens

ee

‘ ;

, APPETDIX A.

SANE, it “ORDER

LOmL 27 yS

- :

Deliveries

6,527, 705-

5,860,437

3,993,763

3,657,8)2

3,488,971

2,863,601

2,519,758

2,263,047 -

2,25) ,627)

1,840,035)

>, S64, 460.

1,462, 566

1,308,335:

1.29) 854

315254,134.

pore hg =

1,073,

1,073,450

32,016,515

923,565

&48.423

623,396

216,066

. 360,616

. 341,012

260, 306

. 256,667

234,703

156,936

24), 310

89,723

89,137

71,226

_ 29,770

"(22,537

- 20,789

17,888

6,383

. 2,082

1,922

1,687

* 7 Source:

Tables

— Ineustry in 1969,

ee sy ExcesS dcliverié::

Gas Facts,

A

over rece pts. °

Statistical)

cuhie feet

Receipts

3,278, 99% -

G,0? 845 —

403,293

3,92) 252

3,68, 372

3,367 ,4%

2,01),,753

~ 1,370,359

) 9G, 734

7 20,2702

wes, 24;

1,356,800 .

° 21,706,524 -

2,027,425

3,802,014

1,422,256

1,276,838

. 3,230,926

),333,70)

1,296, 07?

994, 40a

957,370

4,423

830,054

» B0).,478

' 802,737

-487,6)0

350,678

74,071.

. 937, 680

482,966

220,174

252,398

146,575

94,248

ie 7%,

159,903

21,177

346,929

- 22,823

‘a

27,559

_ 22,877

. 36,27 5.3

¥Ol -

8

a

*

Pigott 7°

5,243,710.

3,609,670

i re ae a)

2 6,47

“Bis 223-7

“or,706f ¢

eee

mm ¢

50,918,658 :

SPREE OE Te | A ETS SLIT IER ATER EL NE PE EEE

“ .

Record of the Gas

16,993,418

‘ok Gse

. Louisiana exports as a percentage of Totnl Nilional Deliveries - 47.6%"

r

FIVE LARGEST GAS KRODUCING STAT

» RANKED

IN ORDF: R a 19 “.GRCS aS. aes ico oe

e

?

a bug

g

. States. :

United Stat's

Texas

Louisiana

Oklahoma

. ene , @

“New Mexico %

_ Kansas:

®

aoe

eg oe Roe. 26, Gas Facts, A Statistical. Record ef. the. Gas Utility —

Industry in 1969,

Na

&

= Volume e

(Millions, «cubic feet)

?

5

22, 679, 15

& >

8,914,794 .

2, 561, 027

1, 741, 677

1, 142, 594

887,03

°

2

-

?

e

.

F

aS v

Preve niFze uf

Nationz.) i?roduction |

é

100%».

39.3%.

3 3. 35.

4

‘~~ APPENDIX’R

ed

K dated

Lai

a. Peek a a APPENDIX E

ate — | . ex

; ,- @ 7

° x os F i) e

> : ml 0 / ye

FIVE LARGEST GAS PRODUCING STATES RANKED :

* IN OKDER OF 14969 NET PRQODUGTION*

° (Millions cubic fect). eter A, Fos

f , i Percentage of -« N\ m

States . i Volume: « Nationa! Production” or

cf : . ve we . a

‘United States. | J. os .* 2.1, 223,990 _ ; 190% - °

> : ° e

. . ° - . . . . : * ae e

Texas . 2 4°" sO _ 7,964,698 oF 37.5%: - .

Louisiana a 7,386,678 © > 34, 8% ’

Oklahoma. ~ "4,654,481 TET ,

New Mexico ; - * hy 242,191 °° 5, 387,

_ Kansas" 2 _ 885, &22 we BT - Ps

Fe tal : ; hd

. . ‘ >

ee ' y

ad e

sii an

ba

*Source: Table 27; Gas Facts, A Statistical Rdcord ofthe Gas Utility 9.

. Tee ~~ , ae i

‘ o° :

pe et

| o “

<3 be ~

¥ ry ‘

a ° :

\ ; . *

ae late Oe, ; . ‘ ( cree

7 : ab - ay ~ ae ee

< 4a |

: . APPENDIX 3 *

e

2. a , ;

= : oe is

. me: / “

eat “Be . ° e #7 |

FIVE LARGEST GAS PRODUCTION STATES RANKED “ . 3

IN ORDER OF 1969 MARKETED. PRODUCTION* ° a

(Millions cubic fuut} . . E

ty ; ; he . Percentage of 4

States Volume * National Production ot

United States \ 2 20, 698, 240. 100%...” ——S

’ . " a e - . . : ie . :

Texas + 7,853,199 37.9%

Louisiana Pa. 7 227, 826 34.9% :

Oklahoma 1, 523, 715 7.36%

New Mexico 1, 1384333, | 5.04%

Kansas v ; 883,156 4.26%

. . - ae y

ae eer ee

— | — - mt. - - .

> ¥ .

° . —— )

° ¢ ice ° *

tBbaree: Table 28, ‘Gas Facts, * Statietical Record of the Coe Utility

“iadustey in 1969, Se

o se . | °

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oasis oe

ade danonT iON

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nn oo eae

°

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as

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ad \ e* : . . : P . 3 | . ry

\

CALENDAR’ YEAR"

. ? ’ . Se ne

rR CM Dae RangpeifARnESSIStToN RNIN” ate ataRS ERIE sTisemencg My tac nentt ey 9 enatmenp e ta RE Te Gg SR TENT ERPS GE ORTETY SANTINO NA SINR FAIRE POTEET NCR MN are

Sere ran greet RINE TY wai : ' A : a :

\ > A

aa. vie

NRE A LTT BOR WORT OR

X

te

;

3

&

s

&

« >

i

%

,

=.

: : “Louisiana

Year United States Louisiana Percentage of &:,5,

19638 287,349, 852 88,015, 624. 30.63%.

> * 1967 292,.907, 70: ‘ 86,290,009 - 29,467.

1966 B 28°, 332, 805 - 83, 664, 092 28.92%

_ 4965 266,466, 923 62, 811, 157 28.91%

1964 281,251,454 © 79, C76, 209°. 28.12%

1963. 276, 151,233 "75, 364, 992 2729 |

ed : New Field Discoveries :

* "1969" 1,769, 557 262, 140 14.81%

1968 _ 1, 376,429 7] 376,919 27. 38°

1967 3, 170, 520 750, 644°" 23068"

1966 2, 947, 329 433, 345 14,706

ot a ae Pe .

- . +

_ New Reservoir Discoveries

~ + 1969 2,043, 219 "}, 002,308 | 49.06%

1966 1,545,612 - 687, 902 44.51%

1967 2, 5249652. 1,026, 915 40, 68%

(1966 3,110, 396 1, 284,014 41.28%

a te >? ~

. ; J .

‘Sources ‘Table 2, ‘Gas Facts, A Statistical: Record of the Gas Utility » ihe

—_— for 1963-199. 8 4

’ ;

~ s

«

° u .

(Million ‘alii feet)

¢

LOUISIANA RECOVERABLE ‘RESERVES, NEW Fiz LD, , :

AND RESERVOIR | Dls COVERIES AS A. PERCENTAGE pi THE NATION *.

Receverable Rererves of Natural Gas.

APPENDIX H

5

CO

e° 3 4

gee

-

'@ ” ANALYSIS Or QATURAL GAS SUPPLY FOR

i UNITED GAS PIPE LINE COMPANY = °

. ‘ .

STATE OF LOUISIANA’€ DEPARTMENT OF CONSERVATION -

- - oP . \ : 4 . : : -

APPENDIX I

- >

-

‘ “IN MOF: - 15,025 pounds Abs, 60 Degrees* ‘+ ...¥

Das — : ‘ 2 noe ; r

ei “Total Available” é e

- Year ee in State. _ * , Exports ts

1970 - + - 1,475,062, 580. 485, 701, 523 144, 792, 981

1969 ' 1,442,660,890° 476, 552, 185 : 143, 408, 910

1968 -1,256, 852,564. . 423, 357, 903 125, 145,762 |

. 1967 1,122, 302,791 ° 379,492,001 ‘121, 487,781.

1966 1,057,033, 316 * 353,995, 578 174, 125,884 |

1965 1, 036, 401, 716 319, 821, 477 "450, 438, 303.

‘1964. _ 1,029, 034, 128 - 323, 067, 954, —:124, 390,436.

4 1963 ‘(no records) © . 293, 386, 955 " 134, 626, 288)

1962 ‘ 860,752,808 MW 264, 444,967 ‘Psz, 373,933 :

1961: “ > 871,779, 864 * 301, 316, 763 223,866,184

1960 881, 584, 353 299, 637, 510 - 224, 089, 524

1959 _, 839,182,532 276, 013, 704 206, 142, 854

"1958 806,976,272 + --264, 351, 336 "198, 226, 154 |

1957 796,702,907’ | . 264,580,704 | *% 210,646,432

1956 - , 803, 881, 299 259,042, 333 220, 963, 719

+ 1955 758,973,817. |. 254,816,631 - 205, 306, 598

1954 ji " 164, 600, 945° '244, 535, 502 197, 895, 391 ,

1953 700, 753, 308 225,835,779 . 185,387,221 ©

1952 * 514, 698, 050 121,540,119 6 gt

~ a

5 i :

e Pita

rm

a Ae

f +4 . :

vs ‘Source: Table 2, Gas Facts, A Statistical Record of the Gas Utility cpa |

. \ °

} °

| ;

: oo,

Ai, aaah i pus Hares 2, 4hhe 2 ts ane De mw nts qaymaee se yen. — arn _—ee pen eee

~ @«

<s

10a°

. e :, 6 7

. ee APPEN OR

_ COMPARISON OF PERCENTAGE OF: ESTIMATES _

PROVED RECOVERA BLE RESERVES-OF NATURAL .-

GAS IN 1969 FOR —- AND ‘TaE NATION :

(Millions cubic feet) : = . 7

_ © a — : :

. . , .

r Jt a. . . Percertace

United States . ‘Louisiana - Utilization Us ages

Production*® . 22,679, 195 7 “¢, 561, 027°

m 7 . : >

"Total Proved Qo. . ;

Recoverable Referves** 275, 108, ahs - , $5,956,935 OL 4

7. yf - N. 4, 287, 202 55 ba

te -e S.89, 789, 437 * 2a. *

Non-Associated Proved 4 . Se ora. oe m a

Rec he'aties oe Reserves** 211, 873, naz + 69,429,161 de | 2.7%. *:

v: "ON, 2, 826, 606 1. 33% a

s S.66, 602, 555 7 "31.4%

' Associated Dissolved** — . 59, 633,644 15, 514, 268 26.0%. ;

oe ae 7.'-. "Ne 1, 347,386 - oy 25R

. S.14, 166, 882°— 234.7%.

@ . 6 : on

t a d

: e ‘ « -f

4 . > . . .

“* Source: .Table 26, Gas Facts, A Statistical ‘Record of the Gas Utility

_Industry in 1969. - .

** Source: Table 2, Gas Facts,

Industiy in cata

é

A Statistical Recerd of the Gas Utility: ~- .

.® , 7 = a j

ag

Lou:rs:ana

Texas

ARKANSAS

~NEvaoa

MississipP:

Frorioa

Oxc aroma ;

“y. ViRGi tA

* . TNotana

Ono hg

PENNSYLVANIA

ALABAMA

-Decaware

tLernors |

Toano

TENNESSEE

Mi cHiGan.

Marys end

Maine @

ViRGINIA

Cownwecticur

lowa

N. CarRoOutina

Wr omit NG

Kentucky

- Ruooe Isiano

WASHINGTON

Orecow .

WISCONS Ig mo

AriZOna

Minnesota |

NEBRASKA.

Geor

“New Yorn:

S. Carorina

Kansas.

New Jersey

Missouge = «+

Cororaco

| MasSacnuseris

. Mee Mexico

; TANA

Car Peornia

Utan

- New Hamesasne.

Verwowr .

SA. “Darosk

N. Dakota *

Dist. of Cor.

Uniteo

States®-

lla |

GAS REQUIREMENTS

‘" Fiem twoustes car ato Fram Gewewation

Future ,Gas Reguireninrs Or TH

APPeNo: x C - Cacewoar Year 19

’

. 4 “\Pracen

. * Fie

-Anpys tral GENERATION

1,181,538. _ 315,274

1,933,846 ‘35,163

189,877 94,333.

-~12,65 21,287. .

129,647 \ 83 , 595.

_ 55,681 143,843

* .” 56,703 224,331

80, 750 45

191,067 3,299

| 371,78 12,960

292,585 - . 683

_ 108,861 133

- 8,162 * . 88

283,860 72 341

11,683 ° ‘ -

*- »« 72,972 “ a7

170,611 ¢ 27,854

23,362 11,513

ot 394 -

28,346 . -

12,682 c -

62,359 424

26,970 3

13,037 -

39,854 . 335

¢ 3,286 ~

22,141 : _

13,296 :

38,970 3,049

»654 4,876

38,748 3,601

28,429 a

44,568 -

87,639 335

- 18,916 =

56,934 7,319

39,669 178

32,729 5,043

175186 ~ §;180

13,413 ° 486

4,717 8,322

2,590 1,234

86,9 32,014

3,618 =

185 — -

e293 =

180 -

30 5

“. , .

5,942,153 .1,919,145

F on %r Tomar

> (Mfuctow Cust Feet)

x °

‘

@.

Totac Firm

’ Pwoustarar

Torat —

+ > Ano e

n ia A .

1,496,812 1,790,250

2,769,009 * °4,008,246

284,210 418,346

33,943 54,399

213,242. 371,361

. ® 199,528 362,028

» . 281,034 540,566

80,795 215,504

"194,366 546,422

384,741 1,112,768

293 5268 ' 841,296

108,994 .317,765

8,250 27,320

» 356,201 1,216,261

ER agocFas

72,972 ?

pt amt

34,875 ’

3 1,906

28,346. 444,013

12,682@ , 64,020 +

62,783 378,610

26,973" . 157,610

13,077 75,417

405189 254,315

3,286 - aoe

22,141 st9Q_

13,296 93-715. N\

42,019 * 328,652

28,530 215,375

42,349 . 332,197

28,429 215,369

44,568 368, 446

87,974 -~* 762,010

18,916 161,523

64,253 602 , 834

39,847 357,652

42,772 439,698

: 22,366 - 254,814!

13,899 15.1 07

13,0399 167,263

3,824 82,468

118,936 2,177,896

3,618 122,

185 5, :

. 29 2,619

\ 160 31,435

30 19,463

<4 7 -

- 7,861,298 21,392,314

Ornver Rescarce Instirure, University or Denver, Denver, Coconnoa

° ALASKA AND Hawaii omrtteo

- Percent :

Fiam Imouste® ac.

-and Generation

rOo- -WWUUD Oo

37

i States + Vorume No. . + Octo@cr 1971,

°

A ow. Virginia

MarRYLAND

ARKANSAS

Oxi anoma

aaa Lousiana

: , sMissessiPPr

Texas

NEVADA

Onto °

Frorioa

~e Sa

. Tecinors

Mi: cCHIGAN

. MONTANA

Néw Mexico”

Detaware

Cororaoco

INDIANA

Wiscorsin

+» , Missouri

MASSACHYSETTS

ARIZONA .

. PENNSYLVANIA

‘. Mi NNESOTA

CALIFORNIA.

Kentucky

Kansas

lowa

ALABAMA

New Yorn

Georcia

a

. New JERsey

_ NEBRASKA @

S. Carourna

TENNESSEE

; N, CaroOuina

. Utan

> $§. Daxota

ViRGInta

Rwooe Iscako -

N. Danota

_ Commecticur

WrominG

Wasninéton

VERMONT

Orecon

New Hamesni re

Maine

_ Toano

- - Dist. oF Cou.

Uni teo

State

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