Ecee, Inc. v. Federal Power Commission

526 F.2d 1270, 53 Oil & Gas Rep. 581, 1976 U.S. App. LEXIS 12808, 1976 WL 357234
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 17, 1976
DocketNo. 75-2327
StatusPublished
Cited by22 cases

This text of 526 F.2d 1270 (Ecee, Inc. v. Federal Power Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ecee, Inc. v. Federal Power Commission, 526 F.2d 1270, 53 Oil & Gas Rep. 581, 1976 U.S. App. LEXIS 12808, 1976 WL 357234 (5th Cir. 1976).

Opinion

COLEMAN, Circuit Judge.

The petitioning natural gas producers seek review of Federal Power Commission denial of their motions to withdraw their applications for certificates of public convenience and necessity previously filed under § 2.75 of the Commission’s General Policy and Interpretations,1 and to substitute in lieu thereof new applications at the nationwide rate under § 2.56.2

The Commission order issuing the certificates under § 2.75 was, we find, final. [1272]*1272The opinion precluding employment of the national rate structure was neither arbitrary nor unjust, nor an abuse of discretion. Having chosen the higher optional rate in preference to the then existing area rate, Petitioners are bound by their choice.

The orders of the Commission are affirmed.

Facts of the Case

The events leading to the petition for review were as follows:

(1) December 26, 1972. Petitioners filed applications for certificates of public convenience and necessity permitting them to sell natural gas in interstate commerce. Section 2.75 was invoked to permit sales to Sea Robin Pipeline Company from offshore Louisiana at 35.0 cents per Mcf for a period of 20 years with price escalations of 2.5 cents per Mcf every 36 months after the date of initial delivery.

Once an application under the optional procedure was made, deliveries could commence prior to a Commission decision On the application, but for the first six months the rate could be no higher than the prevailing area rate. If the Commission had not made a decision within that time, the rate could be raised to the contract price until the Commission entered a final order, without being subject to refund. Section 2.75(n) permitted termination of deliveries so commenced

(1) if such contract for any reason shall terminate or be terminated prior to the issuance by the Commission of a final order upon review of such application, or (2) upon the issuance of a certificate containing conditions unacceptable to the party adversely affected.

(2) February 21, 1973. Pursuant to these procedures deliveries commenced at the area rate of 26 cents per Mcf.

(3) August 10, 1973. Following a hearing oh the applications, the Administrative Law Judge entered an initial decision authorizing the issuance of the certificates in the form sought. In evaluating the costs and rate of return, the ALJ relied upon the Commission’s preference for employment of the concept of national industry costs, rather than those of the individual company, as established in FPC Opinion 659, Belco Petroleum Corp., issued May 30, 1973. Based upon estimated 1971 costs for finding and producing gas and applying what it believed to be a reasonable 15 percent return, Belco found 45 cents per Mcf to be a just and reasonable rate for offshore Louisiana gas. Noting that the 35 cent figure in the instant contracts was the lowest cost supply source available to Sea Robin and was more than 25 percent below what the FPC considered reasonable for the same area, the ALJ saw no reason for objecting to the requested rate.

(4) August 21, 1973. Six months after the deliveries had commenced and no final order having been issued by the Commission, Petitioners began collecting the contract rate of 35 cents per Mcf.

(5) September 14, 1973. The FPC entered an order affirming and adopting the decision of the ALJ and issued the certificates.

(6) November 8, 1973. The Commission denied rehearing applied for by the American Public Gas Association (APGA).

(7) January 4, 1974. APGA filed a petition for review in the Court of Appeals.

(8) June 21, 1974. The Commission adopted a national rate structure aimed at replacing area proceedings. The national rate was set at 42.0 cents per Mcf. Opinion No. 699.3

(9) November 12, 1974. The producers, relying on a contractual provision authorizing cancellation of the contract prior to issuance of a final order by the Commission, terminated the 1972 agreement with Sea Robin and entered a new [1273]*1273contract at the national rate level. The termination was not to be effective and deliveries were to continue under the 1972 contract until the FPC issued a certificate covering the 1974 agreement. Petitioners maintained that this was permissible since the Commission’s 1973 order issuing the certificates was not “final” because APGA had a petition pending for review.

(10) November 27, 1974. Fifteen months after they had been collecting the higher contract rate and fourteen months after certification, Petitioners filed motions to withdraw from their certificates and submitted new applications for sales at the national rate level. The producers requested, however, that the withdrawal be contingent upon the issuance of certificates at the higher level.

(11) January 31, 1975. The Commission denied the motions to withdraw and dismissed the applications for certificates at the national rate. The FPC, noting the Natural Gas Act provision that a petition for review does not stay the effect of an order unless “specifically ordered by the court”, 15 U.S.C. § 717r(c), determined that the petition for review did not affect the finality of its order. It also observed that the sought after judicial review had not affected the deliveries or collection of the contract rate.

Further, Opinion No. 699-1, adopted January 7, 1975, was held to be dispositive in denying the national rate to Petitioners. The decision, in setting eligibility standards, provides:

Where the average price and escalations provided for in the contract filed pursuant to the optional procedure are equal to or greater than the average price determined pursuant to the national rate regulations without regard for any price increases which might result from the biennial review of the national rate pursuant to Section 2.56(n), the Commission will determine whether to allow the just and reasonable rate under the national rate structure, provided no certificate for the subject sale has been issued pursuant to Section 2.75. (Emphasis added.)

Thus, issuance of the certificates made the producers ineligible for the rate. Moreover, even if the certificates had not been issued, the fact that the average contract price and escalations were lower than the average national price disqualified Petitioners.4

(12) February 28, 1975. A rehearing was sought, raising the additional claim that denial of the opportunity to collect the nationwide rate was unfair and inequitable.

Petitioners maintained that they chose the optional procedure in preference to area rates prior to adoption of national rate procedure, and should be allowed to choose the latter. In denying the rehearing, the Commission responded that for two years Petitioners had had the advantage of selling gas at a price some 35 percent above the area ceiling. The FPC saw nothing inequitable in not permitting a switch just because the area ceiling had been effectively increased by the national rate; although Petitioners might find the higher figure attractive, there would be no corresponding benefit to the public to offset the increased prices.

(13) July 27, 1975. APGA voluntarily dismissed its petition for review.

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Bluebook (online)
526 F.2d 1270, 53 Oil & Gas Rep. 581, 1976 U.S. App. LEXIS 12808, 1976 WL 357234, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ecee-inc-v-federal-power-commission-ca5-1976.