West Virginia Public Services Com'n v. U.S. Dept. of Energy
| Decision Date | 21 June 1938 |
| Docket Number | Nos. 80-1402,16,No. 2 and N,No. 80-1402,No. 11,No. 80-1437,80-1410 and 80-1437,No. 80-1410,Nos. 80-1402 and 80-1437,s. 80-1402,80-1402,80-1437,80-1410,s. 80-1402 and 80-1437,2 and N,11 |
| Citation | 681 F.2d 847 |
| Parties | , Energy Mgt. P 26,377 WEST VIRGINIA PUBLIC SERVICES COMMISSION, Petitioner, v. UNITED STATES DEPARTMENT OF ENERGY, Economic Regulatory Administration, Respondent, Southern Natural Gas Co., etc., Columbia LNG Corp., etc., UGI Corporation, Pennsylvania Gas and Water Co., El Paso Algeria Co., Consolidated System LNGCompany, Dayton Power and Light Company, Columbia Gas Distribution Companies,etc., et al.,Georgia Industrial Gas Group and General Motors Corporation, Public ServiceCommission of the State of New York, Atlanta Gas Light Company, Intervenors. GEORGIA INDUSTRIAL GROUP and General Motors Corporation, Petitioners, v. DEPARTMENT OF ENERGY, Charles Duncan, Secretary of Energy, and EconomicRegulatory Administration, Hazel Rollins, Administrator, Respondents, Southern Natural Gas Co., etc., UGI Corporation, etc., Columbia LNGCorporation, etc., Pennsylvania Gas and Water Co., El Paso Algeria Corporation,Washington Gas Light Co., People's Counsel of Maryland, Consolidated System LNGCo., Dayton Powerand Light Co., Columbia Gas Distribution Companies, et al., Alabama GasCorporation, Cincinnati Gas & Electric Co., et al., Intervenors. CONSUMER FEDERATION OF AMERICA and Consumer Energy Council of America, Petitioners, v. ECONOMIC REGULATORY ADMINISTRATION and Department of Energy, Respondents, Southern Natural Gas Co., etc., UGI Corporation, Columbia LNG Corporation,etc., Pennsylvania Gas and Water Company, Dayton Power and Light Co., El PasoAlgeria Corporation, Consolidated System LNG Co., Washington Gas Light Co.,People's Counselof Maryland, Chattanooga Gas Company, Columbia Gas Distribution Companies,etc., et al., Alabama Gas Corporation, Cincinnati Gas & Electric Co., et al.,Georgia Industrial Gas Group and General Motors Corporation, Public ServiceCommission of theState of New York, Atlanta Gas Light Company, Gas Light Company of Columbus,Intervenors. . Argued 22 Oct. 1981. Decided 18 June 1982. Petition for Review of an Order of the Economic Regulatory Administrati |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petition for Review of an Order of the Economic Regulatory Administration of the Department of Energy.
Richard E. Hitt, Jackson, Mich., with whom Robert R. Rodecker, Charleston, W. Va., was on the brief, for petitioner West Virginia Public Service Commission in No. 80-1402.
Morton L. Simons, with whom Charles E. Hill, Washington, D. C., was on the brief, for petitioners Consumer Federation of America, et al., in No. 80-1437.
Robert W. Clark, III, with whom Edward J. Grenier, Jr., Richard P. Noland, David A. Gross, Glen S. Howard, Robert P. Varian, Washington, D. C., and Julius Jay Hollis, Detroit, Mich., were on the brief, for Georgia Industrial Group and General Motors Corp., petitioners in No. 80-1410 and intervenors in Nos. 80-1402 and 80-1437.
Arthur S. Weissbradt, Atty., Dept. of Energy, for respondents.
James J. Flood, Jr., Washington, D. C., with whom William A. Major, Jr., Birmingham, Ala., was on the brief, for intervenors Southern Natural Gas Co. and Southern Energy Co.
John M. Hill, Giles D. H. Snyder, Stephen J. Small, Charleston, W. Va., and John F. Sisson, Wilmington, Del., were on the brief for intervenors Columbia LNG Corp. and Columbia Gas Transmission Corp.
Michael B. Sheppard, Lowell D. Turnbull and Carmen D. Legato, Washington, D. C., were on the brief for intervenor People's Counsel of Maryland.
Thomas E. Morgan, Wallace R. Barnes and Allan E. Roth, Columbus, Ohio, were on the brief for intervenors Columbia Gas Distribution Companies.
Peter H. Schiff, Albany, N. Y., Richard A. Solomon and Dennis Lane, Washington, D. C., entered appearances for intervenor Public Service Commission of the State of New York.
J. David Mann, Washington, D. C., entered an appearance for intervenor UGI Corp.
Arnold Fieldman, Washington, D. C., entered an appearance for intervenors Pennsylvania Gas and Water Co. and Chattanooga Gas Co.
Patrick Zailckas-Kremers, Houston, Tex., entered an appearance for intervenor El Paso Algeria Corp.
Lewis Carroll, Birmingham, Ala., Gordon M. Grant and Monte R. Edwards, Washington, D. C., entered appearances for intervenor Washington Gas Light Co.
George L. Weber, Washington, D. C., entered an appearance for intervenor Consolidated System LNG Co.
Richard M. Merriman and Robert S. Waters, Washington, D. C., entered appearances for intervenor Dayton Power and Light Co.
Harold L. Talisman, Washington, D. C., and A. S. Lacy, Birmingham, Ala., entered appearances for intervenor Alabama Gas Corp. James J. Mayer, Cincinnati, Ohio, entered an appearance for intervenor Cincinnati Gas and Electric Co.
John E. Holtzinger, Jr., Washington, D. C., entered an appearance for intervenor Atlanta Gas Light Co.
Before MacKINNON, WILKEY and WALD, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKEY.
Petitioners in these consolidated cases challenge an order issued by the Economic Regulatory Administration (ERA) of the Department of Energy (DOE) amending a prior authorization to import liquified natural gas (LNG) from Algeria. In granting the authorization the ERA approved renegotiated price terms which amended an existing long-term supply contract by greatly increasing the base price for the LNG and by tying price escalation to the price of imported oil. Because we find that vital elements of the agency's decision are not supported by substantial evidence, we vacate the ERA's order and remand for further consideration.
In 1969 Sonatrach, 1 the Algerian national oil and gas company, contracted to supply LNG over a twenty-five year period to El Paso Algeria Corporation (El Paso), an American enterprise, at a rate of 1,000,000 Mcf 2 per day, delivered at Arzew, Algeria. El Paso, in turn, would transport the LNG by cryogenic tanker to the east coast of the United States for resale at Elba Island, Georgia, to Southern Energy Company and at Cove Point, Maryland, to Columbia LNG Corporation and Consolidated LNG Corporation. 3 The LNG would be regasified at these points, ultimately finding its way to consumers throughout the regions serviced by these companies.
The 1969 import contract ("Initial Agreement"), as approved in 1972 by the Federal Power Commission (FPC), 4 called for an initial base price of $.0305/MMBTu, 5 f. o. b. Arzew. Twenty percent of this base price was subject to periodic escalation according to an inflation-based formula utilizing two Bureau of Labor Statistics indices. 6 The project required the applicants to construct terminal storage and vaporization facilities at Cove Point and Elba Island (at a combined cost of over $600 million) and the purchase by El Paso of LNG tankers and associated facilities (costing.$1.6 billion). 7 For its part, the Algerian government was to construct a liquefaction plant and storage facilities at Arzew.
At the time the Initial Agreement was negotiated, the parties anticipated that the construction of Sonatrach's LNG facilities would cost about $540 million and that deliveries would begin in 1973 or 1974. As it turned out, the Arzew facilities cost over $2.2 billion and initial deliveries, which were still below the contracted volumes, were not made until March 1978. 8 This same time period witnessed dramatic changes in the entire character of world energy supply and demand, driving affected prices skyward at a rate all too familiar to American consumers. The price of LNG followed this spiral, and by early 1979 El Paso was paying Sonatrach only one-fifth as much as other U. S. concerns were paying for natural gas from every other import project.
In January 1979, ten months after deliveries had commenced under the Initial Agreement, Sonatrach made it clear to El Paso and the importing companies that Algeria would continue to provide LNG for the project only if the contract price were renegotiated to reflect the sudden and greatly increased prices of energy on the world market. Negotiations between Sonatrach and El Paso ensued, yielding an 11 May 1979 "Amendment Agreement" which provided for an interim increase in the LNG base price from 1 July to 31 December 1979 and established new pricing formulae and provisions to take effect on 1 January 1980. The "Interim Price" was set at $1.75/MMBtu, reduced by a "discount" of $0.60/MMBtu, to an f. o. b. price of $1.15. The base price was to be adjusted on 1 January 1980, and on each July and January thereafter, to reflect changes in the base price of "competing fuel oils." 9
Joint application for agency approval of the amended contract was made by the three importing companies on 18 May 1979. Acting against rigid deadlines set by the Amendment Agreement, 10 the ERA issued, on 22 August 1979, an opinion and order 11 approving the interim price provisions of the renegotiated contract. At the same time, it announced that no decision concerning other aspects of the Amendment Agreement would be made without a further examination of the many issues involved.
A prehearing conference was held on 13 September 1979 "to explore and delineate procedures which may be appropriate to identify and resolve the range of issues ... which the parties believe may be appropriate for hearing and decision." 12 The ERA concluded that procedural due process required an evidentiary hearing-which also had been demanded by the intervenors in the case-but at the same time made it clear that it would not permit such a hearing to interfere with meeting the 31 December deadline for decision. 13 The prehearing order established a schedule for the development and submission of testimony and exhibits and set forth four principal issues, as well as examples of encompassed subissues, as to which evidence could be submitted:
(1) the reasonableness of the price term contained in the Amendment Agreement:
(a) the availability of reasonably priced alternate...
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