General Motors Corp. v. Federal Energy Regulatory Commission
| Decision Date | 24 October 1979 |
| Docket Number | No. 77-1859,77-1859 |
| Citation | 613 F.2d 939 |
| Parties | GENERAL MOTORS CORPORATION, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Northern Illinois Gas Co., Natural Gas Pipeline Co. of America, Northern Indiana Public Service Co., Mississippi River Transmission Corp., Iowa-Illinois Gas & Electric Co., Peoples Gas, Light and Coke Co., Central Illinois Light Co., Associated Natural Gas Company, the Cities of Lenox, Bedford, Clearfield and Prescott, Iowa, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Edward J. Grenier, Jr., with whom Richard P. Noland, Richard A. Oliver, Washington, D.C., and Julius Jay Hollis, Detroit, Mich., were on brief, for petitioner.
J. Paul Douglas, Atty., Federal Energy Regulatory Commission, Washington, D.C., with whom Howard E. Shapiro, Sol., Federal Energy Regulatory Commission, Washington, D.C., were on brief, for respondent.
J. Stanley Stroud, Chicago, Ill., with whom Wendell H. Adair, Chicago, Ill., was on brief, for intervenor Northern Illinois Gas Company, et al.
Joseph T. Morrow, Hammond, Ind., was on brief, for intervenor Northern Indiana Public Service Company.
Paul E. Goldstein, Paul W. Mallory, Chicago, Ill., and Harry L. Albrecht, Washington, D.C., were on brief, for intervenor The Peoples Gas, Light & Coke Company, and Natural Gas Pipeline Company of America.
Charles A. Crampton, Davenport, Iowa, was on brief, for intervenor Iowa Illinois Gas & Electric Company.
J. Richard Tiano and Richard T. Witt, Washington, D.C., were on brief, for intervenor Central Illinois Light Company and Associated Natural Gas Company.
Also Wm. W. Bedwell, Washington, D.C., entered an appearance for intervenor Mississippi River Transmission Corporation.
Also William T. Miller and Stanley W. Balis, Washington, D.C., entered appearances for intervenor Cities of Lenox, Bedford, Clearfield and Prescott, Iowa.
Also Steven A. Taube, Atty., Federal Energy Regulatory Commission, Washington, D.C., entered an appearance for respondent.
Before BAZELON, Senior Circuit Judge, and MacKINNON and ROBB, Circuit Judges.
Opinion per curiam.
Petitioner General Motors Corporation (GM) seeks to set aside an order of the Federal Energy Regulatory Commission (Commission) which dismissed without a hearing GM's complaint against a natural gas curtailment plan filed with the Commission by the Natural Gas Pipeline Company of America (Pipeline). GM contends that the Commission abused its discretion in dismissing its complaint. We hold that it did not, and we accordingly deny the petition to set aside the Commission's order. 1
Pipeline operates a natural gas pipeline system extending from the southwestern United States to the Chicago metropolitan area. It makes interstate sales of natural gas to municipalities, utility companies, and several industrial users. Among its customers are two Illinois natural gas distributors doing business as the Northern Illinois Gas Company (NI-Gas) and the Peoples Gas, Light & Coke Company (Peoples). NI-Gas and Peoples' intrastate distribution activities are subject to the regulatory authority of the Illinois Commerce Commission. GM, which operates three industrial plants in Illinois, purchases natural gas from NI-Gas and Peoples.
Pipeline began curtailing deliveries of natural gas to its customers in 1970. In 1971 it filed with the Commission 2 a settlement agreement providing for the permanent allocation to be effective in 1972 and thereafter. 3 The curtailment plan makes a distinction between Pipeline's smaller customers and its nine major customers, the latter accounting for approximately 97% Of Pipeline's sales. 4 Under the plan, the volume of gas estimated to be required by the smaller customers is subtracted from Pipeline's total gas supply available for sales. The amount of gas which a small customer receives from Pipeline during curtailment periods varies within the customer's 1971 contractual limits as the customer's needs change over time. Although the plan allows these smaller customers to increase their entitlements to serve newly attached firm load, in no event can the gas purchased by these customers from Pipeline exceed their daily or monthly contract quantities fixed by their tariffs effective in 1971.
Each of Pipeline's nine major customers is assigned a "Basic Annual Quantity" of natural gas which represents that customer's negotiated share of Pipeline's remaining projected gas supply. The Basic Annual Quantity is a fixed volume; it does not increase as the customer attaches new firm load or provides more gas to its customers. If shortages occur in Pipeline's gas supply, each of the major customers will be curtailed Pro rata from the negotiated Basic Annual Quantity until each major customer has been reduced to a 75% Annual load factor. 5 Additional curtailments beyond this point are allocated among all Pipeline's customers.
The Commission approved Pipeline's curtailment plan in 1971. Natural Gas Pipeline Company of America, 46 F.P.C. 1262 (1971). The Commission has twice revised the plan by order since that time, but has not altered its essential characteristics. 6 None of Pipeline's customers have complained about the plan since its inception.
In January 1973 the Commission adopted Order No. 467 in which it described its policies on the priorities of deliveries to be observed by interstate pipelines during periods of curtailment. 7 Under this policy statement, the highest priority (that is, the last to be curtailed) is residential and small commercial users. The second highest priority is large commercial users and firm industrial uses for plant protection, feed-stock, and process needs. The Commission's statement declared that curtailment plans based on the "end-use" to which the natural gas would be put is the most effective way of ensuring protection for high priority users. The Commission said, however, that the decision to apply or not to apply an end-use-based system would require further proceedings into individual curtailment plans. 8
As a result of such further proceedings the Commission has stated its policy of favoring two limitations on curtailment plans which are designed to avoid incentives to pipeline customers to compete for available pipeline supplies by expanding their high-priority markets. One of these limitations bases allocations on actual deliveries for each end-use category during a fixed historical base period. The other imposes volumetric limitations on deliveries to each pipeline customer.
In April 1976 GM filed a complaint with the Commission pursuant to Rule 1.6 of the Commission's Rules of Practice. 9 Citing the Commission's Order No. 467 Series, GM alleged that Pipeline's curtailment plan is unjust, unreasonable, and discriminatory in violation of section 5(a) of the Natural Gas Act, 15 U.S.C. § 717d(a) (1976), 10 because the curtailment plan (1) is not based on end-use, (2) lacks effective volumetric limitations, (3) is not implemented through use of a fixed historical base period, and (4) contains incentives for expansion of high-priority markets by Pipeline's customers. GM contended that these features of the plan were creating "increasingly severe problems" in Pipeline's service area which were exacerbated by Pipeline's "declining gas supply." As evidence of the curtailment plan's ostensibly generous view of expansion policies, GM pointed to the attachment policies being pursued by NI-Gas and Peoples and to the fact that Pipeline's smaller customers were allowed to increase their entitlements. GM demanded a hearing on the Pipeline curtailment plan, asking that Pipeline show cause why the plan was not unlawful.
In accordance with its rules, 11 the Commission forwarded the complaint to Pipeline, which filed a detailed answer to GM's charges in May 1976. A number of Pipeline's customers also filed pleadings opposing GM's complaint. After giving public notice of the complaint and soliciting additional comments, the Commission took the matter under advisement. In May 1977, it issued an order dismissing the complaint, holding that GM had failed to state sufficient facts to warrant a lengthy investigation into the lawfulness of Pipeline's curtailment plan. The Commission reasoned, Inter alia, that the fact that a curtailment plan was not based on end-use did not render the plan a Per se violation of section 5(a); that the expansion policies of NI-Gas and Peoples were within the regulatory jurisdiction of the Illinois Commerce Commission; and that GM's allegations had failed to disclose the existence of a direct and immediate injury to GM from the continuance of Pipeline's curtailment plan.
GM then applied for rehearing, charging that the Commission had failed adequately to explain why a formal hearing was not necessary to investigate Pipeline's alleged gas shortages and why an end-use plan should not be imposed on Pipeline. The Commission granted rehearing for the purpose of additional consideration, and asked interested parties to respond to GM's complaint. In July 1977, after considering these additional pleadings, the Commission again dismissed GM's complaint. The Commission reiterated its view that GM had failed to show injury from the implementation of Pipeline's plan. It also again declined wholesale application of its Order No. 467 to every pipeline system, adding that it found effective market deterrents to expansion in Pipeline's curtailment plan.
On this petition GM argues that the Commission's orders represent an abuse of discretion, are arbitrary and capricious, and lack substantial evidence. It insists that in light of its allegations of increasing curtailments the Commission was obliged to conduct a formal hearing into the lawfulness of Pipeline's curtailment plan. It complains that the Commission's refusal to impose an end-use plan with...
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