Consumers Power Co. v. Federal Energy Administration
| Decision Date | 23 April 1976 |
| Docket Number | 5-72093,5-72171 and 6-70499.,5-72104,5-72030,Civ. A. No. 5-72000 |
| Citation | 413 F. Supp. 1024 |
| Parties | CONSUMERS POWER COMPANY, a Michigan Corporation, Plaintiff, v. FEDERAL ENERGY ADMINISTRATION and Frank G. Zarb, Defendants, and General Motors Corporation, Intervenor-Defendant. LOWELL LIGHT AND POWER BOARD, a Municipal Utility, Plaintiff, v. FEDERAL ENERGY ADMINISTRATION and Frank G. Zarb, Defendants. The DOW CHEMICAL COMPANY, a Delaware Corporation, Plaintiff, v. FEDERAL ENERGY ADMINISTRATION and Frank G. Zarb, Defendants. OWENS-ILLIONIS, INC., Plaintiff, v. FEDERAL ENERGY ADMINISTRATION and Frank G. Zarb, Defendants. MICHIGAN PUBLIC SERVICE COMMISSION, Plaintiff, v. FEDERAL ENERGY ADMINISTRATION and Frank G. Zarb, Defendants. CELANESE CORPORATION et al., Plaintiffs, v. FEDERAL ENERGY ADMINISTRATION et al., Defendants. |
| Court | U.S. District Court — Western District of Michigan |
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James D. Tracy, Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, Mich., Terrance Murphy, Wald, Harkrader & Ross, William Bode, Batzell, Nunn & Bode, Washington, D. C., O. K. Petersen, Jackson, Mich., for Consumers Power Co.
Peter W. Steketee, Freihofer, Cook, Hecht, Oosterhouse & DeBoer, Grand Rapids, Mich., for Lowell Light and Power Bd P. D. Conner, Ann Arbor, Mich., Leslie F. Nute, Midland, Mich., for The Dow Chemical Co.
Philip McWeeny, Toledo, Ohio, Keith R. McCrea, Grove, Jaskiewicz, Gilliam & Cobert, Washington, D. C., Daniel G. Wyllie, Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, Mich., for Owens-Illinois, Inc.
James E. Riley, Asst. Atty. Gen., Lansing, Mich., for Michigan Public Service Commission.
Tucker Peterson, R. Gordon Gooch, Baker & Botts, Washington, D. C., for Celanese Corp.
Patricia N. Blair, U. S. Dept. of Justice, Washington, D. C., Thomas M. Woods, Asst. U. S. Atty., Detroit, Mich., Scott Lang, Federal Energy Administration, Washington, D. C., for Federal Energy Administration.
Edward J. Grenier, Jr., Ronald L. Winkler, Sutherland, Asbill & Brennan, Washington, D. C., Douglas West, Hill, Lewis, Adams, Goodrich & Tait, Detroit, Mich., for General Motors Corp.
Consumers Power Company seeks declaratory and injunctive relief against an order by the Federal Energy Administration (FEA) granting Consumers' request for an allocation of natural gas liquids (NGL's) as a feedstock for the production of synthetic natural gas, subject to certain conditions. The only issues now before the court are (1) whether the FEA acted in excess of its authority in allocating NGL's to Consumers as a feedstock for the production of synthetic natural gas; and (2) assuming the FEA's authority to allocate NGL's, whether it exceeded that authority by conditioning such allocations on Consumers' compliance with certain notice and data gathering requirements.
In an opinion and order dated March 5, 1976, 413 F.Supp. 1007, this court denied Consumers' motion for a preliminary injunction, but stayed the FEA's requirement that Consumers notify certain customers that their gas service might be terminated. The background for this controversy was fully set forth in that opinion, and will not be repeated here. Subsequently, a final hearing on these jurisdictional issues was held, and the parties were allowed to file additional depositions and affidavits bearing on these issues and on a question posed by the court in its March 5 opinion. Having carefully considered this additional material, the court now adopts its March 5 opinion and order as a final order on these issues, except as modified herein.
At the time that the March 5 opinion was issued, it was not clear how Consumers introduced the synthetic natural gas from Marysville into its pipelines and distributed it. The court indicated to the parties its uncertainty about whether the FEA's authority would be affected if only a portion of Consumers' customers receive synthetic natural gas produced from the NGL feedstocks involved in this action. The record is now clear that:
The court accordingly concludes that the reach and effect of this order is not affected by the fact that some customers of Consumers do not actually receive any molecules of synthetic natural gas. These findings and this conclusion are intended to remove from any further consideration the issues on this subject that were introduced by the court in its March 5 opinion.
The court adopts without modification this portion of its March 5 opinion and order, but comments on the additional evidence presented which indicates that at this time there is no shortage of propane. The absence of a shortage of propane at the present time does not affect the analysis of the FEA's authority to allocate propane among competing users. It is for Congress, and also for the FEA under the Energy Policy and Conservation Act, to determine when, if ever, the propane supply is so secure that it may be "decontrolled." Whether the FEA exceeded its authority in making the allocation to Consumers Power Company in this particular case is a question not now before the court.
The original FEA order in this case conditioned the allocation of NGL's to Consumers on a requirement that its natural gas service was to be terminated to customers having or servicing firms with "alternate fuel capabilities on a continuing basis." The FEA's Office of Exceptions and Appeals affirmed the FEA's authority to attach such a condition to an allocation, as well as FEA's authority to condition allocations on the incremental pricing of synthetic natural gas. In a related proceeding, the FEA went a step further, asserting its authority "to supersede conflicting state regulations whenever such action is necessary for the effective formulation of a national energy policy."1 FEA justifies the assertion of such powers by pointing to the need to allocate equitably and intelligently a limited resource (NGL's) among competing users.
The court concluded, in its March 5 opinion and order, that the FEA must have the freedom to consider such factors as the end use of the synthetic natural gas produced from the NGL feedstocks, the nature and extent of state regulation of the natural gas with which the synthetic natural gas is commingled, the adequacy of Consumers' requests to the state agency for the incremental pricing of synthetic natural gas, and Consumers' sensitivity to energy management problems in making commitments for new and additional natural gas service. The court now reaffirms these conclusions.
Paragraphs 5(a) and (b) of the FEA's December 12, 1975 order,2 however, reflect a present determination by the FEA (1) that FEA has the authority to require termination in the future of natural gas service to customers of Consumers, and (2) that FEA has the authority to determine which customers may be terminated in the future. The latter conclusion flows inevitably from the FEA's assumption of authority to determine which customers were to receive notice of possible termination. These provisions of the December 12 order reflect the FEA's assumption that it has the authority not only to consider such factors as were set forth above, but to condition its allocations on Consumers' implementation of certain policies bearing on the distribution and pricing of natural gas within the state of Michigan. This asserted authority collides with authority heretofore exercised exclusively by the Michigan Public Service Commission, pursuant to the congressional mandate in the Natural Gas Act.3
Reviewing the FEA's assertion of jurisdiction in this case is more complicated than simply determining which of two competing agencies has jurisdiction over the end use, pricing, and distribution of synthetic natural gas commingled in Michigan with natural gas. It is conceded by the FEA that the Michigan Public Service Commission has that jurisdiction. Although it is not quite as clear, this case also does not involve simply a determination of how far the FEA's jurisdiction follows the NGL's. It is clear, in this latter regard, that FEA has the authority to deny allocations of NGL's on the basis of end use of the NGL's —in this case, the production of synthetic natural gas. Rather, this case raises the question whether the FEA has the power to indirectly preempt the state's authority to regulate internal state use and processing of natural gas when such preemption furthers a particular energy policy of the FEA. The court holds that the FEA does not have such broad powers.
In an area that traditionally has been within the regulatory province of the states, the assumption is that the historic powers of the states are not superseded by the federal statutory scheme. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447, 1459 (1947); cf. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Ware, 414 U.S. 117, 94 S.Ct. 383, 38 L.Ed.2d 348 (1973). And preemptive intent certainly will not be presumed when the matter on which the state asserts the right to act is not in any way regulated by the federal act. Rice, supra, 331 U.S. at 236-37, 67 S.Ct. at 1155, 91 L.Ed.2d at 1462. Each case "turns on the peculiarities and special features of the federal regulatory scheme in question." Burbank v....
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General Motors Corp. v. Public Service Com'n No. 2
...hydrocarbon liquids). See Consumers Power Co. v. Federal Energy Administration, 413 F.Supp. 1007, 1015 (E.D.Mich.1976), modified 413 F.Supp. 1024 (E.D.Mich.1976). Consumers built the plant in the early 1970s when natural gas was scarce and deliveries of it were unpredictable. The plant was ......
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General Motors Corp. v. Public Service Com'n No. 1, Docket Nos. 97858
...hydrocarbon liquids). See Consumers Power Co. v. Federal Energy Administration, 413 F.Supp. 1007, 1015 (E.D.Mich.1976), modified 413 F.Supp. 1024 (E.D.Mich.1976). Consumers obtained the feedstocks through allocations granted by the United States Department of Energy. Consumers built the pla......