United Gas Pipe Line Co. v. Federal Energy Regulatory Commission

824 F.2d 417, 1987 U.S. App. LEXIS 11177
CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 18, 1987
Docket86-4424
StatusPublished
Cited by36 cases

This text of 824 F.2d 417 (United Gas Pipe Line Co. v. Federal Energy Regulatory 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
United Gas Pipe Line Co. v. Federal Energy Regulatory Commission, 824 F.2d 417, 1987 U.S. App. LEXIS 11177 (5th Cir. 1987).

Opinion

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Once again we review a facet of the administrative proceedings, begun sixteen years ago before the Federal Power Commission, involving United Gas Pipe Line Company’s curtailment of natural gas to its customers during the nation-wide natural gas shortages of the 1970’s. We review Opinions Nos. 237 and 237-A, in which the Federal Energy Regulatory Commission approved tariffs stating that United is not liable for contract damages arising from deliveries of natural gas curtailed in compliance with a filed curtailment plan unless United, through negligence, bad faith, fault, or willful misconduct, caused the need for curtailments. United seeks greater protection from liability by a standard greater than negligence and would also have us require the Commission to determine whether United in fact was culpable. Several intervenors challenge the Commission's jurisdiction to approve the tariffs for direct sales customers and challenge whether the tariffs are in the public interest. We vacate the portion of the Commission’s orders determining that force maj-eure did not apply on the facts, then conclude that the remainder of the decisions are reasonable exercises of Commission power and are supported by substantial evidence, and affirm.

I. HISTORY

The petitioner, United Gas Pipe Line Co., is among the largest of the nation’s interstate natural gas pipeline companies that sell natural gas in direct sales and in sales for resale. United owns and operates a pipeline system that extends throughout Texas, Louisiana, Mississippi, Alabama and Florida. Its major pipeline customers distribute natural gas throughout the eastern half of the United States. United also sells gas to industries, power plants, and local distribution systems.

Six intervenors, New Orleans Public Services, Inc., Mississippi Power & Light Co., City of New Orleans, Louisiana Power & Light Co., Brooklyn Union Gas Co., and Elizabethtown Gas Co., are direct sales customers of United. The seventh intervenor, the Louisiana Public Service Commission, is a state public regulatory body with statutory authority to regulate public utilities in Louisiana and to assert the interests of Louisiana's consumers of electricity.

In 1952, during temporary natural gas shortages caused by the Korean War, the Federal Power Commission approved United’s tariff section 12.1, which stated, “In the event a shortage of gas renders Seller unable to supply the full gas requirements of all of its consumers, then, Seller, may, without liability to Buyer prorate its gas supply in the manner hereinafter set forth....”

Around 1970, the nation experienced severe shortages of natural gas. United lacked sufficient supplies to meet its customers' needs for the winter of 1970-71 and proposed to curtail deliveries according to the priorities in its 1952 tariff. On October 26, 1970, United sought an order from the FPC declaring that United’s curtailment plan complied with its tariffs and that, given section 12.1, United incurred no liability for curtailments to any customer, including direct sales customers. See United Gas Pipe Line Co., FPC Docket No. RP71-29. After two days of hearings on the order, United reached an agreement with its customers, except Monsanto Co., permitting curtailments through March 31, 1971. 1

In February 1971, United made a supplemental filing for a curtailment plan *421 through October 31,1971. In March, Louisiana Power & Light Co. sued United, alleging that the curtailment breached its contract with United and challenging FPC jurisdiction to curtail gas to direct sales customers. The district court dismissed the suit, holding that the FPC had jurisdiction of both curtailment and certification proceedings for direct sales and that Louisiana Power & Light Co. had to exhaust its administrative remedies in both. Louisiana Power & Light Co. v. United Gas Pipe Line Co., 332 F.Supp. 692, 698 (W.D.La.1971). We reversed, holding that the FPC lacked authority to curtail gas to direct sales customers. Louisiana Power & Light Co. v. United Gas Pipe Line Co., 456 F.2d 326, 333-38 (5th Cir.1972). The Supreme Court in turn reversed, holding that the FPC under its power to regulate transportation can order curtailment plans involving both direct sales and sales for resale. FPC v. Louisiana Power & Light Co., 406 U.S. 621, 647, 92 S.Ct. 1827, 1842, 32 L.Ed.2d 369 (1972).

With the winter of 1970-71, other pipelines experienced shortages. Responding to a growing fuel crisis, the FPC on April 15, 1971, by Order No. 431, required all interstate pipelines either to file new tariffs containing end-use curtailment 2 plans or to establish that existing curtailment tariffs conformed to FPC policy. The FPC asserted that the tariffs would control over inconsistent provisions in all sales contracts, jurisdictional and nonjurisdictional. Order No. 431, 18 C.F.R. § 270 (1971).

Opinions Nos. 606 & 606-A

On May 17, 1971, in response to Order No. 431, United proposed a five-category, end-use curtailment plan to replace the plan it already had. Second, United proposed to modify tariff section 12.1 to make clear that it could curtail both direct sales and sales for resale without liability. United also proposed a new tariff section 12.3 intended to eliminate United’s potential liability under a substitute fuels provision 3 in some of its direct sales contracts. 4 Finally, United requested the FPC to construe narrowly the substitute fuel clauses.

In Opinion No. 606, 46 FPC 786 (1971), the FPC granted interim approval to proposed section 12.1 with one change in its curtailment priorities, effective November 14, 1971. A Hearing Examiner was ordered to assess the justness and reasonableness of the curtailment scheme before final approval. The FPC rejected proposed tariff 12.3 and declined to interpret the substitute fuel clauses, reasoning those actions were unnecessary because “[implementation of the curtailment plan itself, pursuant to our procedures, would be an absolute defense for United against all claims for specific performance, damages, or other requests for relief ... that may be initiated in the courts.” 46 FPC at 805. United’s customers objected to this language and sought rehearing.

*422 The FPC denied rehearing in Opinion No. 606-A, 46 FPC 1290 (1971), explaining, “[T]he pipeline companies cannot be faced with the dilemma of providing nondiscriminatory service as ordered by the Commission and at the same time incur liability for breach of contracts which grant discriminatory preferences, directly or indirectly.” Id. at 1293.

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824 F.2d 417, 1987 U.S. App. LEXIS 11177, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-gas-pipe-line-co-v-federal-energy-regulatory-commission-ca5-1987.