Tennessee Gas Pipeline Company v. Federal Power Commission

606 F.2d 1373
CourtCourt of Appeals for the D.C. Circuit
DecidedSeptember 21, 1979
Docket77-1566
StatusPublished

This text of 606 F.2d 1373 (Tennessee Gas Pipeline Company v. Federal Power Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tennessee Gas Pipeline Company v. Federal Power Commission, 606 F.2d 1373 (D.C. Cir. 1979).

Opinion

606 F.2d 1373

197 U.S.App.D.C. 1

TENNESSEE GAS PIPELINE COMPANY, a division of Tenneco, Inc.,
Petitioner,
v.
FEDERAL POWER COMMISSION, Respondent,
Consolidated Edison Company, Inc. of New York, Public
Service Commission of the State of New York, Columbia Gas
Transmission Co., Public Service Electric & Gas Co., New
England Customer Group, Tennessee Natural Gas Lines, Inc.,
General Motors Corporation, Intervenors.

No. 77-1566.

United States Court of Appeals,
District of Columbia Circuit.

Argued Feb. 23, 1979.
Decided Sept. 21, 1979.

Melvin Richter, Washington, D. C., with whom Dale A. Wright, Washington, D. C., was on the brief, for petitioner.

McNeill Watkins, II, Atty., Federal Energy Regulatory Commission, Washington, D. C., with whom Howard E. Shapiro, Sol., Federal Energy Regulatory Commission, Washington, D. C., was on the brief, for respondent.

Dennis Lane, Washington, D. C., with whom Peter H. Schiff, Gen. Counsel, Public Service Commission of the State of New York, Albany, N. Y., and Richard A. Solomon, Washington, D. C., were on the brief, for intervenor Public Service Commission of the State of New York.

John D. Daly and Stephen J. Small, Charleston, W. Va., were on the brief, for intervenor Columbia Gas Transmission Corp.

William I. Harkaway, Washington, D. C., was on the brief, for intervenor Consolidated Edison Co. of New York, Inc.

Also Carl W. Ulrich, Washington, D. C., entered an appearance for intervenor Public Service Elec. and Gas Co.

Also John W. Glendening, Jr. and Paul W. Fox, Washington, D. C., entered appearances for intervenor New England Customer Group.

Also William W. Bedwell, Washington, D. C., entered an appearance for intervenor Tennessee Natural Gas Lines, Inc.

Also Edward J. Grenier, Jr., Richard P. Noland, Floyd I. Robinson and Robert W. Clark, III, Washington, D. C., entered appearances for intervenor General Motors Corp.

Also Steven A. Taube, Atty., Interstate Commerce Commission, Washington, D. C., entered an appearance for respondent.

Also Sheila S. Hollis, Washington, D. C., entered an appearance for intervenor Public Service Commission of the State of New York.

Before ROBB and WILKEY, Circuit Judges, and RICHEY,* United States District Judge, United States District Court for the District of Columbia.

Opinion for the Court filed by Circuit Judge WILKEY.

Dissenting opinion filed by Circuit Judge ROBB.

WILKEY, Circuit Judge:

Tennessee Gas Pipeline Company (Tennessee) petitions this court to vacate two orders1 of the Federal Power Commission2 arising from a proceeding which Tennessee maintains has become moot. The Commission found, after a hearing, that Tennessee's curtailment of natural gas deliveries occasioned by deficient pipeline capacity was unjust and unduly preferential under section 4 of the Natural Gas Act.3 Because we are of the opinion that there no longer exists a live controversy suitable for judicial review, we vacate the subject order and remand for proceedings consistent with this opinion.

I. BACKGROUND

A. Tennessee's Capacity Shortage

Tennessee is an interstate natural gas pipeline company. Its sales of natural gas are governed by three sorts of rate schedules: Contracted Demand (CD), General Service (G), and Small General Service (GS). CD customers are those possessing alternative natural gas sources as, for example, another pipeline, local production, or underground storage. G and GS customers are without alternative sources and are commonly termed requirements customers. Although all customers were contractually entitled to purchase the maximum quantities specified in their contracts, historically only the CD customers did so; the G and GS customers purchased gas in amounts well below their entitlements. Over time, however, the actual demand of G and GS customers has grown to accommodate their increased gas resales to other purchasers. Thus, average daily G and GS demand expressed as a fraction of contractual entitlements (the so-called "load factor") increased from roughly sixty percent in 1973 to seven-three percent in 1974.4 In order to supply the increased demand it has been Tennessee's practice each year to seek Commission authorization to construct and operate expanded pipeline capacity. Its annual applications were based on estimates of future gas requirements furnished Tennessee by its G and GS customers.

4. Under the curtailment settlement approved by the Commission in Docket No. RP75-50 by order of February 28, 1977, Tennessee would be barred from any such reinstitution of capacity curtailment until November 1, 1980.

Following its usual practice, Tennessee on 31 October 1972 applied for a certificate permitting an expansion of capacity to accommodate 1974 demand, as estimated by the G and GS customers earlier in 1972. The Commission granted the certificate in an order of 1 May 1973 in Docket No. CP73-115.5 However, apparently concerned about Tennessee's expanding sales in a period of national shortage, the Commission had inserted a proviso that its action was "without prejudice to a final determination on the issues of the sales volumes sold through such facilities."6 On rehearing the Commission vacated the proviso and instead instituted a new proceeding directing Tennessee to show cause why volumetric limitations should not be placed on sales to each of its customers.7 Hearings in that proceeding commenced on 16 October 1973 and continued intermittently through January 1974.

B. Tennessee's Curtailment Plan

The expansion authorized in the Commission's order of 1 May was completed and placed in service by the end of 1973. Meanwhile, however, Tennessee had received revised estimates of its G and GS customers' expected 1974 demand-estimates, some 48,000 Mcf per day over their prior estimates. In light of the revisions, Tennessee sought permission in November 1973 for further capacity expansion, without which anticipated demand could not be met.8

In order to handle the capacity shortfall in the event the proposed additions were not constructed, Tennessee filed tariff revisions on 28 September 1973 under which it would curtail sales of gas "(i)f for any reason whatever" it were unable to deliver its customers' requirements. Tennessee's plan was to curtail sales to various customers in accordance with a schedule of priorities ranking various end uses of the gas. The principal effect of the scheme, and the one eventually found to run afoul of section 4 of the Act,9

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606 F.2d 1373, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tennessee-gas-pipeline-company-v-federal-power-commission-cadc-1979.