Louisiana Power & Light Co. v. FPC

• Decision Date: 05 February 1976
• Docket Number: 75-2347 and 75-3057.,No. 75-2183,75-2339,75-2183
• Citation: 526 F.2d 898
• Parties: LOUISIANA POWER & LIGHT COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent. NEW ORLEANS PUBLIC SERVICE, INC., Petitioner, v. FEDERAL POWER COMMISSION, Respondent. MISSISSIPPI POWER & LIGHT COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent. ALLIED PAPER INCORPORATED, Monsanto Company and Texasgulf, Inc., Petitioners, v. FEDERAL POWER COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

526 F.2d 898

LOUISIANA POWER & LIGHT COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.

NEW ORLEANS PUBLIC SERVICE, INC., Petitioner, v. FEDERAL POWER COMMISSION, Respondent.

MISSISSIPPI POWER & LIGHT COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.

ALLIED PAPER INCORPORATED, Monsanto Company and Texasgulf, Inc., Petitioners, v. FEDERAL POWER COMMISSION, Respondent.

Nos. 75-2183, 75-2339, 75-2347 and 75-3057.

United States Court of Appeals, Fifth Circuit.

February 5, 1976.

William T. Tete, New Orleans, La., for petitioner in 75-2183.

Drexel D. Journey, George W. McHenry, Jr., Sol., Richard A. Oliver, Gen. Counsel, Fed. Power Comm., Washington, D.C., for respondent in 75-2183.

W. DeVier Pierson, Washington, D.C., for United Gas.

Edward J. Grenier, Jr., Washington, D.C., for Gen. Mtrs.

Paul G. Borron, Jr., Plaquemine, La., for Am. Sugar Cane and United Municipal Distributors Group (75-2183).

Andrew P. Carter, Monroe & Lemann, New Orleans, La., for Louisiana Power & Light Co. No. 75-2183.

John T. Miller, Jr., Washington, D.C., for Allied Paper, Inc. No. 75-3057.

Richard M. Merriman, Reid & Priest, Washington, D.C., for Mississippi Power & Light Co. No. 75-2347.

Clayton L. Orn, Houston, Tex., for N. O. Public Service, Inc. No. 75-2339.

Allan A. Tuttle, Sol., Federal Power Commission, Washington, D. C., for respondent.

William T. Miller, Wheatley & Miller, Washington, D.C., for United Municipal Distributors Group No. 75-2183 Only.

Floyd I. Robinson, Sutherland, Asbill & Brennan, Washington, D. C., for General Motors Corp. Nos. 75-2183, 75-2339 & 75-2347.

Platt W. Davis, III, William M. Sawyer, Vinson, Elkins, Searls, Connally & Smith, Washington, D.C., for Texas Eastern Transmission Corp. Nos. 75-2183, 75-2339 & 75-2347.

Michael J. Manning, Fulbright & Jaworski, Washington, D.C., for Entex, Inc. No. 75-2183 & No. 75-3057.

Peter J. Levin, Sharon, Pierson, Semmes, Crolius & Finley, Washington, D.C., for United Gas Pipe Line Co.

Wm. W. Bedwell, Bedwell & Rudolph, Washington, D.C., for Mississippi River Transmission Corp. Nos. 75-2339 and 75-2347 Only.

W. C. Nelson, New Orleans, La., for petitioner in 75-2339.

Richard T. Witt, Peyton G. Bowman, III, Washington, D.C., Sherwood W. Wise, Richard B. Wilson, Jr., Jackson, Miss., for petitioner in 75-2347.

Albert J. Feigen, Washington, D.C., for American Sugar Cane League No. 75-3057.

Harry E. Barsh, Jr., Washington, D.C., for State of La.

Before THORNBERRY, COLEMAN and MORGAN, Circuit Judges.

THORNBERRY, Circuit Judge:

The instant petitions for review of two orders of the Federal Power Commission call for an evaluation of the success with which the Commission responded to our mandate in State of Louisiana v. FPC, 5th Cir. 1974, 503 F.2d 844. Before entering a discussion of the numerous issues presented for decision, a brief review of the facts leading up to the instant petitions will prove beneficial.

In April, 1971, the Commission issued Order No. 431,¹ which required, inter alia, all jurisdictional pipe line companies anticipating natural gas shortages to file proposed curtailment plans with the Commission. In response to Order No. 431 and to replace its existing curtailment plan, United Gas Pipe Line Company filed a proposed five-priority plan with the Commission on May 17, 1971.² Included in the proposed plan was a tariff provision absolving United of damage liability arising under substitute fuel and delivery clauses in long-term contracts between United and its customers.³ After forty-three days of hearings on the proposed plan, the Commission issued Opinion 606⁴ on October 5, 1971. In Opinion 606 the Commission took the position that United's requested tariff provision was unnecessary, since adoption of a curtailment order would itself provide an "absolute defense" to suits under substitute fuel and other contract clauses. The Commission reiterated its position in Opinion 606-A.⁵ In reviewing Opinion 606 this court, in the International Paper Co. case, characterized the Commission's statements as "mere dicta" without support in the record before the Commission. See International Paper Co. v. FPC, 5th Cir. 1973, 476 F.2d 121, 125. Opinion 606 rejected the fifth category of United's proposed curtailment plan, in which United had placed purchasers of its gas who were paying a comparatively low rate. Under Opinion 606, United's five-priority plan was reduced to a four-priority plan and immediately placed into effect pending a determination on remand to the Presiding Examiner as to the new plan's reasonableness and proper implementation. The remaining four categories of the United plan were as follows (in order of priority):

Category I. Domestic consumers of natural gas served directly or indirectly by United.

Category II. Industrial users of natural gas served directly by United, to the extent they use natural gas as a raw material in creating an end product rather than as (a) an agent for heating, cooling, dehydrating, or otherwise affecting industrial process materials, or (b) for other industrial purposes.

Category III. Electric generating stations, whether served directly or indirectly by United, to the extent that such stations serve domestic consumers of electricity.

Category IV. Users of United's natural gas, whether served directly or indirectly, to the extent not supplied under Categories I, II, and III.

The Presiding Examiner entered his decision in July, 1972. Six months later, in January, 1973, the Commission responded with Opinion 647,⁶ which was the subject of this court's decision in State of Louisiana v. FPC, supra. Opinion 647 outlined a new, five-priority plan for ultimate implementation on the United system.⁷ Opinion 647 further ordered United to immediately consolidate Categories III and IV above. This consolidation had the effect of destroying the priority previously enjoyed by electric utilities over certain industrial users of United's gas. Thus, pending implementation of a final, five-priority plan, Opinion 647 mandated an interim three-priority plan for United. The Commission's position in Opinions 606 and 606-A that a special tariff provision absolving United of contract liability was unnecessary was repeated in Opinion 647. After Opinion 647 was issued, however, we decided the International Paper Co. case. The Commission followed with Opinion 647-A,⁸ where it argued that United faced no contract liability by reason of curtailment because United had not been guilty of improvidence or willful misconduct, and in any event, United's maximum exposure under substitute fuel clauses was only seven days. Finally, Opinion 647 held favorably as to the "justness and reasonableness" of United's past curtailment plans: (1) a three-priority plan in effect from November 1, 1970, through March 31, 1971; (2) a three-priority plan in effect from April 1, 1971, through October 31, 1971; and (3) a four-priority plan in effect from November 1, 1971, through January 12, 1973 (the date of Opinion 647). In State of Louisiana this court reversed and remanded Opinions 647 and 647-A. In short summary, State of Louisiana held that the Commission was without statutory authority to require United to implement the new three-priority interim plan in the absence of a finding that the existing four-priority plan was "unjust, unreasonable, unduly discriminatory, or preferential." 503 F.2d at 861, relying on American Smelting and Refining Co., 1974, 161 U.S.App.D.C. 6, 494 F.2d 925. This court denied all petitions for rehearing of State of Louisiana, but did grant the Commission's request for continued implementation of the three-priority interim plan pending action on remand in compliance with this Court's mandate. Shortly after the decision in State of Louisiana, we vacated and remanded orders of the Commission denying a motion by Louisiana Power & Light (LP&L) that the Commission examine LP&L's claim that certain industrials receiving gas through resale by United's pipe line and city gate customers were in effect being treated as Category I users, though they should have been treated as Category III users. See Louisiana Power & Light Co. v. FPC, 5th Cir. 1975, 509 F.2d 180. This is referred to by the Commission as the "misclassification problem." In remanding to the Commission, we directed that LP&L be allowed to present the merits of its misclassification argument.

On March 7, 1975, the Commission issued an order—one of two under review by the court at this time—in purported compliance with State of Louisiana.⁹ In this order the Commission concluded that while United's four-priority plan had been just and reasonable at and during the time of its implementation, it had become "unjust, unreasonable, unduly discriminatory, and preferential" after the date of Opinion 647 (January 12, 1973). The Commission's conclusion hinged on two factual considerations: first, the present and future alternate fuel capabilities of the electric utilities, and second, the irreparable injury to the approximately 1800 industrial customers of United who would be denied any gas if the priority formerly enjoyed by the electric utilities under the four-priority plan is reinstated. These findings of the Commission, and the procedure by which they were reached, are the primary focus of petitioners' challenge to the March 7 order. In addition to its determination as to the four-priority plan, the Commission further found that the three-priority interim plan had provided for equitable and non-discriminatory curtailment during the two years that it had been in operation, and ordered United to continue to curtail gas deliveries under this plan until further order. The Commission also directed a hearing to consider whether "modifications" to the three-priority interim plan might be warranted pending adoption of a permanent curtailment plan for the United system. This portion of the remanded proceedings was denominated "Phase I" by the Commission, and was...