Cities of Lakeland & Tallahassee, & Gainesville Regional Utilities v. F.E.R.C.
| Decision Date | 04 April 1983 |
| Docket Number | No. 81-5208,81-5208 |
| Citation | 702 F.2d 1302 |
| Parties | CITIES OF LAKELAND & TALLAHASSEE, & GAINESVILLE REGIONAL UTILITIES v. FEDERAL ENERGY REGULATORY COMMISSION. The LAKE WORTH UTILITIES AUTHORITY and The Utilities Commission of New Smyrna Beach, Florida, v. FEDERAL ENERGY REGULATORY COMMISSION. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
David R. Straus, Spiegel & McDiarmid, Joseph Van Eaton, Washington, D.C., for Cities of Lakeland & Tallahassee & Gainesville Regional Utilities.
Charles F. Wheatley, Jr., Don Charles Uthus, James Howard, Wheatley & Wollesen, Washington, D.C., for Lakeworth Utilities Authority and the Utilities Com'n of New Smyrna Beach, Fla.
Auburn L. Mitchell, F.E.R.C., Washington, D.C., for F.E.R.C.
Platt W. Davis, III, Washington, D.C., for Fla. Gas Transmission Co., Peoples Gas System, Inc., Lake Worth Util. and New Smyrna Beach Util. Com'n.
Ned Willis, Perry, Iowa, for Buckeye Cellulose Corp., Gardinier, Inc., Southern Gas, Gainesville Gas, Gulf Natural Gas Co.
Eugene E. Threadgill, Washington, D.C., for Central Fla. Gas Corp.
Petition for Review of an Order of the Federal Energy Regulatory Commission.
Before RONEY, TJOFLAT and HATCHETT, Circuit Judges.
This is a petition for review 1 of a Federal Energy Regulatory Commission decision to implement a curtailment plan 2 for natural gas distributed by the Florida Gas Transmission Company (Florida Gas). The petitioners are municipally owned electricity generating companies that use gas as boiler fuel. They ask us to set aside the Commission's curtailment plan, which accords them a low priority, and to remand the case to the Commission for further proceedings. We affirm the Commission.
Since this petition is the result of five years of litigation, involving one prior petition to this court, we find it necessary first to recite the history of this case in some detail.
Florida Gas has operated a pipeline extending from South Texas to South Florida since December 29, 1956. It uses this pipeline to transport natural gas that it purchases in Texas, to Florida. 3 Florida Gas sells this gas either as "firm gas" or "interruptible gas." Firm gas is gas that a seller contracts to deliver "within a given time period and which anticipates no interruptions, but which may permit unexpected interruption in case the supply to higher priority customers is threatened." Arkansas Power & Light Co. v. FPC, 517 F.2d 1223, 1230 n. 20 (D.C.Cir.1975), cert. denied, 424 U.S. 933, 96 S.Ct. 1146, 47 L.Ed.2d 341 (1976). Interruptible gas is gas that a seller is not obligated to deliver "within a given time period, and which anticipates and permits interruption on short notice, or [gas delivered] under schedules or contracts which expressly or impliedly require installation of alternate fuel capability." Id. Florida Gas sells both firm and interruptible gas directly to some large industrial users and indirectly (through gas distributing companies) to smaller industrial and non-commercial users.
When the pipeline was built, it was not large enough to transport sufficient gas to satisfy its customers' demands. To deal with this problem, Florida Gas began operations under a curtailment plan. Houston Texas Gas & Oil Corp., 16 F.P.C. 118 (1956). This curtailment plan provided that (1) firm direct and firm indirect gas receive the highest priority and be curtailed last; (2) indirect interruptible gas receive the next priority; and (3) direct interruptible gas receive the lowest priority and be curtailed first.
Florida Gas operated under this plan without challenge until the late 1960's. Then, the City of Gainesville alleged in a rate proceeding before the Federal Power Commission (FPC) 4 under sections 4 and 5 of the Natural Gas Act (NGA), 15 U.S.C. Secs. 717c and 717d (1976), that the plan was discriminatory because it curtailed Gainesville's purchases of direct interruptible gas before it curtailed purchases of indirect interruptible gas. Gainesville argued that purchases of direct and indirect interruptible gas should be treated similarly. The FPC disagreed, however, holding that the different prices paid for direct and indirect interruptible gas justified the different treatment. Florida Gas Transmission Co., 47 F.P.C. 341, 380-81 (1972).
About the time the Florida Gas Transmission Co. proceedings concluded, a severe natural gas shortage arose. To deal with this shortage, the FPC ordered each interstate pipeline that anticipated supply shortages to file a curtailment plan. Order No. 431, 45 F.P.C. 570 (1971). The pipelines responded with a variety of curtailment plans. Florida Gas did not file a plan because it already had a curtailment plan in place. It merely filed a report with the FPC stating that no changes in its plan were necessary to accommodate the supply shortage. The FPC never acted on this report.
As the gas shortage continued, the FPC decided that an end-use curtailment plan 5 was preferable to other types being filed by the pipelines, and it promulgated a sample nine-priority end-use plan. Order No. 467, 49 F.P.C. 85 (1973). Meanwhile, Florida Gas continued to adhere to its existing plan.
On March 21, 1975, Lehigh Portland Cement Company sought an FPC declaration that Florida Gas' curtailment plan was discriminatory, and therefore unlawful, under section 5(a) of the NGA. 6 Lehigh, faced with increased curtailments caused by the gas shortage, alleged that the plan was unduly discriminatory because it curtailed the direct interruptible gas purchased by Lehigh before it curtailed the indirect interruptible gas purchased by Lehigh's competitor, Maule Industries, Inc. As a remedy, Lehigh asked the FPC to replace the curtailment plan with an end-use plan that would similarly curtail direct and indirect interruptible gas used for similar purposes.
Although the FPC lacked jurisdiction to entertain Lehigh's claim of discrimination, it did not terminate the proceedings; instead, the FPC set the matter for a hearing on its own motion, which it had the authority to do. 7 In September 1975, an Administrative Law Judge (ALJ) convened the hearing. He decided to hear the case in two phases: in Phase I, he would determine whether Florida Gas' curtailment plan was discriminatory; if discriminatory, in Phase II he would consider alternative curtailment plans. The ALJ decided Phase I on August 6, 1976. He first noted that in Florida Gas Transmission Co. the FPC held Florida Gas' plan valid under a similar claim of discrimination. He also noted, however, that there was a difference in kind between the curtailment involved there--capacity induced--and the curtailment involved here--supply induced. Nonetheless, the ALJ considered this distinction unimportant and held the plan not discriminatory, thereby precluding the need for further proceedings.
Several parties took exception to this ruling. On June 24, 1977, the FPC reversed the ALJ's decision. Lehigh Portland Cement Co. v. Florida Gas Transmission Co., 20 Pub.Util.Rep. 4th 343 (1977). The Commission held that the severe, and continuing, natural gas shortage so changed the operation of Florida Gas' curtailment plan that Florida Gas Transmission Co. could be followed no longer. It therefore reexamined the curtailment plan, found it to be discriminatory, and ordered Florida Gas to file a new plan. On rehearing, the FPC modified its order that Florida Gas file a new curtailment plan. Lehigh Portland Cement Co. v. Florida Gas Transmission Co., 22 Pub.Util.Rep. 4th 384 (1977). Instead, it ordered the ALJ to draw a curtailment plan "based on end use and equality for all who make similar use of the gas," Joint Appendix at 486, and gave the pipeline "six weeks to file its views on a proper plan, with evidence in support." Id. The FPC also ordered that the old curtailment plan would remain in effect pending the implementation of the new plan. On petition for review, this court affirmed the FPC's decision. Sebring Utilities Commission v. FERC, 591 F.2d 1003 (5th Cir.), cert. denied, 444 U.S. 879, 100 S.Ct. 167, 62 L.Ed.2d 109 (1979).
While the Lehigh appeal was in process, the ALJ commenced the Phase II hearing to determine a new curtailment plan. Florida Gas proposed an end-use curtailment plan modeled after FERC Order No. 467, adjusted to account for the pipeline's particular circumstances. Other parties, all customers of the pipeline or its distributors, filed objections to this plan and sought modifications thereof. On August 4, 1978, the ALJ concluded the hearing except for the environmental impact evidence required by the National Environmental Policy Act (NEPA), 42 U.S.C. Sec. 4332(2)(C) (1976), 8 and set a briefing schedule. On November 1, 1978, the parties filed their initial briefs.
On November 9, 1978, Congress enacted the Natural Gas Policy Act of 1978 (NGPA), 15 U.S.C. Secs. 3301-3432 (Supp. V 1981). On November 17, the Commission announced that it would promulgate rules to implement the curtailment policy established by the Act; it also called for a prehearing conference and report to determine the effect the NGPA and the new regulations might have on the Florida Gas curtailment proceedings. The Commission then suspended these proceedings for 180 days. The prehearing conference convened on April 3, 1979. During the conference, Florida Gas' counsel informed the parties that the company had filed, and the Commission had accepted, a set of temporary tariff sheets to give effect to the new law. Counsel also stated that the company's gas supply had improved and that the pipeline expected to be "running full" that summer, without any curtailments.
On April 4, 1979, a new ALJ was designated to preside over the case. On April 24, he reported to the Commission what had transpired at the prehearing conference. On that date, the Commission ordered the ALJ to decide whether an interim curtailment plan should be implemented, and if so, its terms. The Commission also ordered ...
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