Lynchburg Gas Company v. Federal Power Commission, 12953.

• Decision Date: 24 February 1960
• Docket Number: No. 12953.,12953.
• Citation: 275 F.2d 847
• Parties: LYNCHBURG GAS COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, Atlantic Seaboard Corporation, Intervenor.
• Court: U.S. Court of Appeals — Third Circuit

275 F.2d 847 (1960)

LYNCHBURG GAS COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent Atlantic Seaboard Corporation, Intervenor.

No. 12953.

United States Court of Appeals Third Circuit.

Argued November 6, 1959.

Decided February 24, 1960.

Phebe Eppes Gordon, Lynchburg, Va. (Norris, Lex, Hart & Ross, Philadelphia, Pa., on the brief), for petitioner.

Robert L. Russell, Washington, D. C. (Willard W. Gatchell, General Counsel, Howard E. Wahrenbrock, Sol., David J. Bardin, Attorney, Federal Power Commission, Washington, D. C., on the brief), for respondent.

Brooks E. Smith, New York City (Daniel L. Bell, Jr., New York City, and R. K. Talbott, Charleston, W. Va., on the brief), for intervenor.

Before McLAUGHLIN, KALODNER and HASTIE, Circuit Judges.

McLAUGHLIN, Circuit Judge.

Petitioner, Lynchburg Gas Company (Lynchburg) seeks review of an order of the Federal Power Commission (Commission) which denied Lynchburg's request for a supplemental gas supply from Transcontinental Gas Pipe Line Corporation (Transco). Atlantic Seaboard Corporation (Seaboard), which presently supplies all of Lynchburg's gas, intervened to resist the application.

Lynchburg's proposal contemplated the creation of a subsidiary, Lynchburg Pipe Line Company (Pipeline), which would purchase gas from Transco and supply it to Mead Corporation (Mead) a large industrial user of coal but who, according to Lynchburg, will convert its boilers to gas upon a sufficient supply being made available. A limitation in Seaboard's tariff restricts the amount of gas available for resale as boiler fuel to 2,000 Mcf per day. Mead's requirement allegedly would be 6,500 Mcf per day. This industrial sale is expected to help make construction of a connecting line from Transco to Pipeline feasible. Lynchburg claims "the overall plan would provide an economical and necessary additional gas supply for the people of Lynchburg by making available to petitioner, during the periods of peak demand, the volumes of gas required in excess of the quantities presently available from Seaboard * * *". At the hearing, Lynchburg was unable to show any firm commitment from Mead to convert to and buy gas from the petitioner.

The Commission's refusal to issue a certificate is based upon three grounds:

(1) Lynchburg's failure to present a market for the gas to be received from Transco in that it had no evidence of a firm commitment from Mead Company, the source it relied on.

(2) The end use of the gas to be supplied is inferior in that it is to be employed in the firing of boilers for commercial production rather than in the heating of homes.

(3) It is protecting the pioneer certificated supplier in the area, Seaboard, from economic injury.

We find the refusal of the Commission can be sustained on the first ground only. Lynchburg argues that being an old-established, reputable firm the Commission should presume it would not proceed with its project unless and until it was sure it could attach customers to the proposed facility. In its reply brief the petitioner agrees that the Commission can issue a certificate with a condition, urging that in this instance it could have insisted on a firm commitment with a time limitation. Section 717f(e), 15 U.S.C.A. conveys power to impose conditions within the discretion of the Commission. Oklahoma Natural Gas Co. v. Federal Power Commission, 1958, 103 U. S.App.D.C. 256, 257 F.2d 634 certiorari dismissed, 1959, 358 U.S. 948, 79 S.Ct. 603, 3 L.Ed.2d 567. Having power to condition a certificate, it is not unreasonable that the Commission have power to withhold a certificate until the condition is met. This is particularly so where, as here, the demand is not overly burdensome. There is no insistence by the Commission of commitments from a multitude of potential customers but simply from the one industrial user relied on by the petitioner.

If and when Lynchburg obtains authorization from Mead it can immediately begin a new action before the Commission. No long delay should be thus involved since that would be a...