Henry v. Federal Power Com'n

• Citation: 513 F.2d 395
• Decision Date: 28 July 1975
• Docket Number: Nos. 73-2090,73-2166,73-2236,74-1045,s. 73-2090
• Parties: , 168 U.S.App.D.C. 137, 6 Envtl. L. Rep. 20,508 Alice HENRY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, Continental Oil Company et al., Intervenors. ENVIRONMENTAL DEFENSE FUND, INC., Petitioners, v. FEDERAL POWER COMMISSION, Respondent, Public Service Commission of the State of New York et al., Intervenors. PEOPLE OF the STATE OF CALIFORNIA and the Public Utilities Commission of theState of California, Petitioners, v. FEDERAL POWER COMMISSION, Respondent, Columbia Coal Gasification Corporation et al., Intervenors. TRANSWESTERN COAL GASIFICATION COMPANY et al., Petitioner, v. FEDERAL POWER COMMISSION, Respondent, Continental Oil Company et al., Intervenors.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 395

513 F.2d 395

10 ERC 1732, 168 U.S.App.D.C. 137, 6

Envtl. L. Rep. 20,508

Alice HENRY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, Continental Oil Company et al., Intervenors.

ENVIRONMENTAL DEFENSE FUND, INC., Petitioners, v. FEDERAL POWER COMMISSION, Respondent, Public Service Commission of the State of New York et al., Intervenors.

PEOPLE OF the STATE OF CALIFORNIA and the Public Utilities

Commission of theState of California, Petitioners, v. FEDERAL POWER COMMISSION, Respondent, Columbia Coal Gasification Corporation et al., Intervenors.

TRANSWESTERN COAL GASIFICATION COMPANY et al., Petitioner, v. FEDERAL POWER COMMISSION, Respondent, Continental Oil Company et al., Intervenors.

Nos. 73-2090, 73-2166, 73-2236, 74-1045.

United States Court of Appeals, District of Columbia Circuit.

Argued Nov. 25, 1974.

Decided July 28, 1975.

James W. McCartney, Houston, Tex., with whom C. Michael Harrington, Houston, Tex., and K. R. Edsall, Los Angeles, Cal., were on the brief for petitioner in No. 74-1045 and intervenor Transwestern Coal Gas Co. in Nos. 73-2096, 73-2166 & 73-2236.

William H. Booth, Berkeley, Cal., with whom John P. Mathis and J. Calvin Simpson, San Francisco, Cal., were on the brief for petitioner in No. 73-2336. Also Lawrence Q. Garcia, San Francisco, Cal., entered an appearance in No. 73-2236.

Clifton E. Curtis, Washington, D. C., with whom Edward Berlin, Washington, D. C., was on the brief for petitioner in No. 73-2166.

Richard A. Oliver, Atty., Federal Power Commission, with whom Leo E. Forquer, Gen. Counsel and George W. McHenry, Jr., Sol., Washington, D. C., were on the brief for respondent.

William A. Wood, Jr., Houston, Tex., with whom Thomas G. Johnson and William G. Riddock, Houston, Tex., were on the brief for intervenor, Shell Oil Co.

Kirk W. Weinert and C. Fielding Early, Jr., Houston, Tex., were on the brief for intervenor, Texaco Inc., also John N. Young, Houston, Tex., entered an appearance for Texaco.

William J. Bonner, Dallas, Tex., was on the brief for intervenor, Atlantic Richfield Co.

John L. Williford and Charles Larry Pain, Bartlesville, Okl., were on the brief for intervenor, Phillips Petroleum Co., Kenneth Heady, Bartlesville, Okl., also entered an appearance for intervenor Phillips Petroleum.

Martin N. Erck and John H. Cooper, Jr., Houston, Tex., were on the brief for intervenor Exxon Corp. Also John R. Rebman and Paul W. Wright, Houston, Tex., entered appearances for intervenor, Exxon Corp.

Penn J. Williamson, Birmingham, Ala., was on the brief for intervenor, Southern Natural Gas Co.

Richard A. Rosan and John F. Sisson, Wilmington, Del, were on the brief for intervenor, Columbia Coal Gasification Corp.

Richard W. Hughes and Robert M. Strumor, Shiprock, N. M., were on the brief for petitioner in No. 73-2090.

Clifton E. Curtis and Edward Berlin, Washington, D. C., were on the brief for petitioner in No. 73-2166.

Tom Burton, Houston, Tex., also entered an appearance as intervenor, Continental Oil Co.

Richard A. Solomon, Peter H. Schiff and Michael H. Rosenbloom, Washington, D. C., entered appearances for intervenor, Public Service Commission for the State of New York.

Daniel L. Bell, Jr., Charleston, West Va., was on the brief for intervenor Columbia Gas Transmission Corp.

Graydon D. Luthey, Tulsa, Okl., was on the brief for Cities Service Gas Co.

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

Opinion for the Court filed by Circuit Judge LEVENTHAL.

LEVENTHAL, Circuit Judge:

This case raises the question of whether the jurisdiction of the Federal Power Commission (FPC) under the Natural Gas Act (Act), 15 U.S.C. § 717 et seq. (1970), extends to the production, transportation, and sale of unmixed synthetic gas produced from coal. The Commission has ruled that it has no jurisdiction over this kind of gas, on the ground that it is "artificial" within the meaning of § 2(5) of the Act, 15 U.S.C. § 717a(5) (1970). This determination is challenged by the State of California and the Public Utilities Commission of California; the Environmental Defense Fund (EDF); the Transwestern Group, ¹ which plans to produce and sell gas from coal feedstock; Transwestern Pipeline Co.; and certain individuals. We affirm the Commission's ruling.

I. THE FACTUAL BACKGROUND

The current shortage of natural gas has, one might say, energized the search for alternative natural and synthetic sources. The manufacture of gas from coal and other feedstocks is not a recent innovation. ² However, large-scale production of high-Btu gas from coal feedstocks has only recently become a viable possibility. The basic coal gasification method (the Lurgi Process), which involves the reaction of coal with steam and oxygen to form gas with a heat content of approximately 415 Btu per cubic foot, has been used for years. The low-Btu gas that it produces can now be converted through methanation, in which the carbon monoxide and hydrogen components of the gas are reacted in the presence of a catalyst, into gas that has a heat content of approximately 972 Btu per cubic foot.

This proceeding involves two projects that are to be the first facilities to produce high-Btu gas from coal for interstate transportation. The plants are to be built in New Mexico on a Navajo Indian reservation, and the feedstock will be taken from adjacent strip mines.

The case came before the Commission on three applications, filed pursuant to § 7(c), of the Act, 15 U.S.C. § 717f(c) (1970), for certificates of public convenience and necessity. El Paso Natural Gas Company filed for authorization to construct and operate tap and valve facilities for the introduction of gas from coal into its New Mexico mainline, where it is to be commingled with gas from wells. The Transwestern Group applied for a certificate authorizing the construction and operation of facilities to convert coal to gas, and the sale for resale of the product to Transwestern Pipeline Co.; Transwestern Pipeline applied for authorization for the construction and operation of a pipeline to transport the purchased gas from the plant to the pipeline's main system, and the transportation and sale of the commingled stream. ³

El Paso asserted that the Commission has jurisdiction over the coal gas only after it is commingled in the mainline system, and Transwestern asserted that the Commission's jurisdiction extends as well to the production, sale, and transportation of the unmixed coal gas. The proceedings were consolidated for purposes of deciding the jurisdictional questions.

Prior to consolidation, Petitioner EDF had asked for leave to intervene in the El Paso proceeding. In the consolidated proceeding, EDF contended that the FPC has full jurisdiction over the unmixed coal gas, and that the Commission is required in any case to consider the environmental consequences of El Paso's upstream facilities in passing on its application for certification of the tap and valve facilities.

The Commission, in Opinion No. 663, ⁴ held that gas produced from coal feedstock is not "natural gas" within the meaning of § 2(5), and that, consequently, it has no jurisdiction over the production, sale, or transportation of such gas prior to its mixture with gas from wells. The Transwestern Group's application and those portions of Transwestern Pipeline's application pertaining to unmingled coal gas were dismissed. ⁵ The Commission further said, in response to EDF's contention, that it is required to consider only those environmental consequences ascribable to jurisdictional activities, and that the need for an environmental impact statement thus turns on the question of whether the tap and valve facility is a major federal action having a significant effect on the human environment, an issue which was deferred pending a staff investigation. ⁶

II. THE JURISDICTION OF THE FPC OVER GAS MANUFACTURED FROM COAL

A. The Language of § 2(5)

The reach of the Natural Gas Act is defined in § 1(b), 15 U.S.C. § 717(b) (1970):

The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation and sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.

"Natural gas" is defined in § 2(5) as "either natural gas unmixed, or any mixture of natural and artificial gas."

This is clear and unambiguous language. We have said, in a similar context, that "as a point of departure we may properly begin with the presumption that Congress, like other legislatures, has in mind the ordinary, usual and natural sense of a word. . . ." ⁷ An ordinary reading of the statute which draws a distinction between "natural" and "artificial" gas requires us to look to the origin of the gas, not to its physical characteristics. The FPC took this approach, looking to whether the gas in question is manufactured, ⁸ rather than to its heat value or methane content. ⁹

B. The Legislative History

Petitioners contend that, in enacting the Natural Gas Act, Congress was concerned with the interstate character of the market, rather than with the origin of the regulated product. The desire to fill the regulatory gap left by judicial decisions prohibiting the state regulation of interstate commerce aspects of the natural gas market has been described by the Supreme Court in Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 682, 74 S.Ct. 794, 98 L.Ed. 1035 (1954), as "the overriding congressional purpose" in enacting the Act. But Congress chose to impose the new Federal regulatory structure on the interstate Natural gas market. If it had wished to...