Department of Conservation v. FEDERAL POWER COM'N., 11241.

• Decision Date: 18 April 1945
• Docket Number: No. 11241.,11241.
• Citation: 148 F.2d 746
• Parties: DEPARTMENT OF CONSERVATION OF STATE OF LOUISIANA et al. v. FEDERAL POWER COMMISSION.
• Court: U.S. Court of Appeals — Fifth Circuit

148 F.2d 746 (1945)

DEPARTMENT OF CONSERVATION OF STATE OF LOUISIANA et al. v. FEDERAL POWER COMMISSION.

No. 11241.

Circuit Court of Appeals, Fifth Circuit.

March 31, 1945.

Rehearing Denied April 18, 1945.

E. Leland Richardson, Sp. Asst. Atty. Gen., and Sam H. Jones, of Lake Charles, La., for petitioners.

Tom J. McGrath, of Washington, D. C., for interveners-petitioners National Coal Association and others.

Charles V. Shannon, Gen. Counsel, Louis W. McKernan, Principal Atty. and William L. Brunner, Senior Atty., all of Washington, D. C., for Federal Power Commission.

Hamilton E. Little and Charles C. Crabtree, both of Memphis, Tenn., for City of Memphis, Tenn.

William F. Barry, Sol. Gen., of Nashville, Tenn., for State of Tennessee.

Alden T. Shotwell, of Monroe, La., and T. A. McEachern, Jr., of New York City, for Memphis Natural Gas Co.

David W. Heath, Asst. Atty. Gen., for Railroad Commission of Texas.

Louis E. Clevenger, of Topeka, Kan., for Kansas Corporation Commission.

Carl I. Wheat and Robert E. May, both of Washington, D. C., for Independent Natural Gas Ass'n of America.

Before HUTCHESON, HOLMES, and McCORD, Circuit Judges.

HUTCHESON, Circuit Judge.

In culmination of a loop line construction program of long standing,¹ Memphis Natural Gas Company, on January 31, 1944, and on May 20, 1944, applied for certificates of convenience and necessity, and on November 21, 1944, obtained an order granting them.² This petition filed under Section 19(b)³ of the Natural Gas Act,⁴ seeks to vacate and set these orders aside.

In their motion for rehearing before the Commission, petitioners did formally make the point that the applicant had not shown itself possessed of sufficient reserves to adequately perform the service to the public for which the certificates were sought. But the real point made against the order in the rehearing was, and the real point made against it here is, that the certificates of public convenience and necessity may not stand because they were issued to permit the withdrawal of gas, and irreplaceable natural resource, for burning under boilers, an industrial use, that is regarded as inferior and wasteful, and, therefore, the granting of the certificates was not in, but against, the public interest.

The subordinate claim that the proof is insufficient to support the finding that the company has adequate supplies to enable it to properly serve the public interest may be disposed of in short order by saying that the record amply supports the commission's finding both that there was a public need to be served and that the applicant for the certificates showed itself adequately equipped to perform it.

The main contention, that the order is invalid and the certificates may not stand because issued for a wasteful use of gas, is, we think, no better taken, but a demonstration of this will require some further reference to the Act, to the proceedings before the commission, and to the authorities governing the review of its orders.

The Natural Gas Act was enacted to vest, and it did vest, the commission with jurisdiction to regulate the transportation and sale of natural gas for re-sale in interstate commerce.⁵ Section 7(c) of the Act, as amended, 15 U.S.C.A. § 717f, requires those desiring to engage in such transportation or sale, or to construct, extend, acquire or operate any facility thereunder, to apply to the commission for a certificate of public convenience and necessity. Section 7(e) of the Act governs the issuance of certificates. It provides: "a certificate shall be issued to any qualified applicant therefor, * * * if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of the Act and the requirements, rules, and regulations of the Commission thereunder, and that the proposed service, sale, operation, construction, extension, or acquisition, * * * is or will be required by the present or future public convenience and necessity; * * *"

Petitioners do not claim that the Memphis Natural Gas Co. is not a qualified applicant or that it has not the financial ability to constitute, finance and operate the proposed facilities. The commission has found on evidence amply supporting it that the applicant has assured itself adequate gas reserves for the operation of the line. The commission has also found that the proposed extension is, or will be, required by the present or future public convenience and necessity, and viewing the matter entirely from the standpoint of consumer demand for the gas, the evidence is of such conclusive character that it demands the finding that was made. Petitioners' reliance, however, is not on the ordinary considerations which control where the dispute is between rival companies, as it was in Arkansas Louisiana Gas Co. v. Federal Power Commission, 5 Cir., 113 F.2d 281, or over rates or the limits of federal and state power, as it was in cases cited in Note 5, above. They base their whole case on reading the words "public conveyance and necessity" as including considerations of conservation of natural gas with a consequent prohibition against the issuing of certificates where, as here, there is protest and proof by a state that the gas to be withdrawn under the authority of the certificates will be put to an economically wasteful use, that is to the inferior one of being burned under boilers. Pointing to the evidence of the already highly developed industrial use of the gas, and the evident purpose to extend and increase that use, petitioners insist that this sustains its burden of showing that the finding of fact by the commission, that the issuance of the certificates will be required by the present or future public convenience and necessity, is not supported by substantial evidence. The applicant and those aligned with it on the side of the commission insist that in granting or refusing certificates under the act, the kind of uses, viewed from the standpoint of inferior and superior, to which the gas to be carried in the line is to be put, is of no, or at least of very little, significance. The commission, they say, is concerned only with whether there is a public need or demand for the gas the line will supply and whether the applicant is in a position to adequately and properly serve that need if the certificate is granted. The commission, while of the opinion that the Act leaves questions of conservation to the state authorities and does not make the granting or refusal of certificates turn upon such questions, points out that it did, as shown by its two opinions in the case,⁶ give sympathetic consideration to the fact of inferior use along with all the other facts in the case. So pointing it insists that the record as a whole furnishes no basis for petitioners' claim that its finding, that the certificates are required by the present or future public convenience and necessity, is without support in the evidence.

We agree with the commission. Assuming, without deciding, that the commission could properly consider as one of the facts entering into the granting or denial of the certificates the uses to which the gas was to be put, that is, that considerations of conservation had a place in such granting or refusal, we think it quite plain that the statute does not make such matters determinative. If, therefore, we assume, as the petitioners insist we should, that it was part of the commission's duty to consider, as one of the underlying facts to be determined, whether the gas being taken is for inferior, and therefore wasteful, uses, we should still, upon this record, have to decline to hold that, in exercising, the commission has abused, its powers under the Act. Normally it is for the commission to draw the conclusion that the present or future public convenience and necessity either requires or does not require the granting of a certificate. Normally an order granting a certificate may be set aside only when the evidence admits of but one conclusion, that its granting will not serve...