Summary
holding that the Commission has authority under the NGA to adopt a curtailment compensation plan
Summary of this case from United Distr. Companies v. Fed. E. Reg. CommOpinion
No. 76-1465.
Argued June 17, 1977.
Decided January 26, 1978. Rehearing Denied March 24, 1978.
John T. Miller, Jr., Washington, D.C., for petitioner.
Thomas M. Walsh, Atty., Federal Energy Regulatory Commission, for respondent. Drexel D. Journey, Gen. Counsel, Federal Energy Regulatory Commission, Robert W. Perdue, Deputy Gen. Counsel, Allan Abbot Tuttle, Sol., and John H. Burnes, Jr., Atty., Federal Energy Regulatory Commission, Washington, D.C., were on the brief, for respondent. John J. Lahey, Atty., Federal Energy Regulatory Commission, Washington, D.C., also entered an appearance for respondent.
Stephen J. Small, Washington, D.C., with whom Tilford A. Jones, Washington, D.C., was on the brief for intervenor, Columbia Gas Distribution Companies.
Edward J. Grenier, Jr., Richard P. Noland, Robert R. Morrow, Washington, D.C., Frazer F. Hilder and Julius Jay Hollis, Detroit, Mich., were on the brief, for intervenor, General Motors Corp.
John D. Daly, Giles D. H. Snyder, Leonard Sargeant, III, and William P. Saviers, Jr., Charleston, W. Va., were on the brief, for intervenor, Columbia Gas Transmission Corp.
Lewis Carroll, Monte R. Edwards and Susan A. Low, Washington, D.C., were on the brief, for intervenor, Washington Gas Light Co.
James O. Watts, Jr., Richmond, Va., entered an appearance for intervener, Commonwealth Natural Gas Corp.
Petition for Review of an Order of the Federal Energy Regulatory Commission.
In this case, we rule that the Federal Power Commission has the power to require compensation as part of a curtailment plan. We remand to the Federal Energy Regulatory Commission, as the successor to the FPC, for consideration of whether such compensation should be provided.
See 42 U.S.C. § 7101 et seq., § 7295(c) (Supp. 1977).
The issue arises out of orders of the FPC relating to two successive interim curtailment plans for the interstate natural gas pipeline transmission system of Columbia Gas Transmission Corporation (Columbia). The appeal is by Elizabethtown Gas Co. (Elizabethtown), one of the public utilities that buys natural gas from Columbia for resale to consumers.
Elizabethtown opposed each of the plans on the ground that it unfairly failed to compensate the customers of Columbia which received less than their pro rata share of gas. The Commission approved the plans, rejecting Elizabethtown's claim on the ground that it lacked jurisdiction under the Natural Gas Act to order or approve any curtailment plan that included a compensation feature. The appeals have been consolidated.
As indicated at the outset, in our view, the Commission does have the power to require compensation as part of a curtailment plan. We remand for a determination in appropriate proceedings whether or how this power should be exercised.
I. PROCEDURAL BACKGROUND
The procedural background of these pending appeals is of considerable complexity. To aid reader understanding, we have presented that background in some detail in Appendix A to this opinion, and confine ourselves at this point to a brief statement that Elizabethtown contends that the interim curtailment plans approved by the FPC are unlawful (as constituting undue preference and for other reasons) because the plans do not provide a compensation feature, whereby purchasers who receive more than their pro rata share of gas pay a surcharge, and purchasers who receive less than their pro rata share of gas receive compensation out of the proceeds of the surcharges.
II. COMMISSION'S AUTHORITY TO EMPLOY A COMPENSATION PROVISION
On the merits, these appeals pose the question whether the FPC was correct in its construction of the Natural Gas Act, when it determined that a compensation scheme is impermissible under the Act as a matter of law.
As set forth in Appendix A, the Commission's position emerged in these proceedings in the course of procedural rulings in the handling of a Columbia plan that contained a compensation feature. Columbia then dropped the compensation feature ("under duress") in the next interim plan(s) proposed to the FPC, and those interim plans were in due course approved. The FPC has rejected Elizabethtown's petitions for rehearing, which sought a compensation feature, and in doing so has relied on its opinion in the Transco case. Another opinion and order of the Commission to similar effect has been reversed by the Fifth Circuit and certiorari has been denied. Mississippi Public Service Commission v. F P C, 522 F.2d 1345 (5th Cir. 1975), cert. denied, 429 U.S. 870, 97 S.Ct. 181, 50 L.Ed.2d 149 (1976).
Transcontinental Gas Pipeline Corporation, FPC Docket No. RP72-99, orders of Nov. 12, 1974 and Jan. 10, 1975. On appeal, as noted in Appendix A, this court did not reach the compensation issue, and Transcontinental has sought certiorari on the ground that this court erred in its remands, and requirements for further consideration, without ruling on the compensation issue.
Although the procedural situation is complicated almost beyond belief, we find the issue on the merits to be relatively simple. In brief, we agree with the reasoning of Judge Bell in Mississippi Public Service Commission, and with his reliance upon the language of the Supreme Court in F P C v. Louisiana Power and Light Company, 406 U.S. 621, 92 S.Ct. 1827, 32 L.Ed.2d 1723 (1972).
In the latter case, the Court dealt with a somewhat different issue — that of the Commission's authority to regulate curtailment of direct interstate sales of natural gas — but its construction of the Act is relevant to the case at bar. In finding authority for such curtailment in the Commission's transportation jurisdiction, the Court noted that the Commission has broad powers to meet its responsibilities under that aspect of its jurisdiction. The Commission
must be free, "within the ambit of [its] statutory authority, to make the pragmatic adjustments which may be called for by particular circumstances." F P C v. Natural Gas Pipeline Co., 315 U.S. 575, 586, 62 S.Ct. 736, 86 L.Ed. 1037 (1942). Section 16 of the Act assures the FPC the necessary degree of flexibility in providing that: "The Commission shall have the power to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regulations as it may find necessary or appropriate to carry out the provisions of this act . .." 15 U.S.C. § 717 o. In applying this section, we have held that "the width of administrative authority must be measured in part by the purposes for which it was conferred . . .. Surely the Commission's broad responsibilities therefore demand a generous construction of its statutory authority." Permian Basin Area Rate Cases, 390 U.S. 747, 776, 88 S.Ct. 2050, 20 L.Ed.2d 1379 (1968) . . .
406 U.S. at 642, 92 S.Ct. at 1839.
No compensation feature was involved in the curtailment plan at issue in Louisiana Power and Light. That case did, however, turn on an expansive view of the Commission's latitude to make "pragmatic adjustments which may be called for by particular circumstances," and the statutory grant of "necessary degree of flexibility" as necessary or appropriate to further the Congressional objective. In our view, this embraces the authority to employ a compensation feature as part of a curtailment plan where necessary or appropriate to promote the policies of the Natural Gas Act.
Cf. Cities Service Company v. F E A, 529 F.2d 1016 (Em.App. 1975), cert. denied, 426 U.S. 947, 96 S.Ct. 3166. 49 L.Ed.2d 1184 (1975), where the court was confronted with a problem of statutory interpretation similar to that of the case at bar, arising within the same general context of the national energy crisis. In finding that the F E A had authority under § 4(a) of the Emergency Petroleum Allocation Act of 1973, 87 Stat. 628, as amended, 15 U.S.C. § 753(a) (1976), to promulgate the Old Oil Entitlements Program, 10 C.F.R. § 211.67, the court held that "[a] proper interpretation of the Allocation Act and its provisions requires recognition of the fact that the authority under Section 4(a) must be read together with the objectives [set forth in Section 4(b)] which the exercise of that authority is to obtain." 529 F.2d at 1022.
In Niagara Mohawk Power Corporation v. F P C, 126 U.S.App.D.C. 376, 381-83, 379 F.2d 153, 158-60 (1967), this court held, more generally, that an act that entrusts a broad subject-matter to administration by an agency should be read to provide the agency with sufficient authority to implement the purposes and policies of Congress. "[T]he breadth of agency discretion is, if anything, at zenith when the action assailed relates primarily not to the issue of ascertaining whether conduct violates the statute, or regulations, but rather to the fashioning of policies, remedies and sanctions, including enforcement and voluntary compliance programs in order to arrive at maximum effectuation of Congressional objectives." Id. at 382, 379 F.2d at 159. [Citations omitted.] We further observed that "[t]he principles of equity are not to be isolated as a special province of the courts. They are rather to be welcomed as reflecting fundamental principles of justice that properly enlighten administrative agencies under law. The courts may not rightly treat administrative agencies as alien intruders poaching on the court's private preserves of justice. Courts and agencies properly take cognizance of one another as sharing responsibility for achieving the necessities of control in an increasingly complex society without sacrifice of fundamental principles of fairness and justice." Id. at 383, 379 F.2d at 160. [Citations omitted.]
Implicit in the Commission's handling of the case at bar is its view that it was inconsistent to require a purchaser to provide for compensation in order to obtain rights to deliveries of natural gas when those deliveries were properly allocated to him. The Commission argues, for example, that a compensation scheme, by rewarding low priority users and penalizing high priority users, is "inconsistent with the theory and purpose of end use curtailment." (Br. at 20).
In human affairs generally our society owns a deep-seated conviction that, to use Emerson's words in the influential essay on Self-Reliance, a man should not be required to "pay for a privilege where [he has] intrinsic right." That principle does not answer the question, however; it rather bids us to focus on defining the "right" that is involved.
The decision that a system of priorities is mandated by fundamental policy considerations does not, in our view, necessarily imply that priority status should be entirely unburdened. The question of whether, and how, to provide compensation may well turn on the fairness of balancing the benefit accorded a high-priority purchaser with a charge that offsets, at least in part, the added expense imposed by a curtailment plan upon a lower-priority purchaser. We do not attempt to resolve this question on the present facts. We hold, merely, that it is open to the Commission to consider employing a compensation feature.
The issue of fairness is an issue of policy for the Commission. Our function is only to consider the issue of law whether the Commission has the legal authority to implement that policy of fairness.
Our opinion in State of Louisiana v. F P C, 175 U.S.App.D.C. 104, 533 F.2d 1239 (1976), is not to the contrary. We there assumed, without deciding, that the Commission had authority to impose a compensation feature as a condition upon the granting of a certificate of public convenience and necessity, but held that no showing had been made, under the peculiar facts of that case, that the public interest required compensation. 175 U.S.App.D.C. at 110, 533 F.2d at 1245.
In order that the Commission may proceed, on the premise of legal authority, to consider whether and how a compensation feature should be or should have been included, we remand for further consideration by the Commission, in appropriate proceedings, of an interim curtailment plan.
We do not vacate the orders of the Commission. The Commission may conclude that those orders should be retained. Portland Cement Ass'n v. Ruckelshaus, 158 U.S.App.D.C. 308, 486 F.2d 375 (1973); Portland Cement Ass'n v. Train, 168 U.S.App.D.C. 248, 513 F.2d 506 (1975).
Washington Gas Light Company filed a suggestion of mootness in No. 75-1767, based on the fact that no Columbia customer requested or took more than its pro rata share of gas during the period May 1, 1975 to October 31, 1975. (As explained in Appendix A, that is the period governed by the 1974 interim curtailment plan, as extended in time and modified to omit the compensation feature originally in Columbia's 1974 plan.)
Elizabethtown's response develops a contention that the 1974 plan, as modified, presents a live issue because its disposition affects the proper handling by the Commission of the 1975 plan.
In American Smelting and Refining Co. v. F P C, 161 U.S.App.D.C. 6, 494 F.2d 925 (1974), we held that the Commission, in remedying unjust or discriminatory rates, is required by § 5(a) of the Act to proceed in two steps, by finding, first, that an existing condition is unjust or discriminatory, and then prescribing the remedy for that condition. Id. at 21-22, 494 F.2d at 940-41. Under the approach there enunciated, the proponent of an existing plan would, indeed, enjoy some advantage deriving from considerations of burden of proof. But we dealt there with an existing plan; here, by contrast, the curtailment plan challenged in No. 75-1767 expired of its own force. Elizabethtown cannot, consequently, derive any procedural advantage from American Smelting on remand. Naturally, the Commission's findings of fact will be required to meet the substantial evidence test, and its action in settling upon a new interim curtailment plan must not be arbitrary or capricious. We believe these standards provide ample procedural protection for Elizabethtown.
The appeal in No. 75-1767 stands dismissed for mootness.