Sebring Utilities Commission v. Federal Energy Regulatory Commission, s. 77-2911
| Decision Date | 20 March 1979 |
| Docket Number | 77-2972,Nos. 77-2911,s. 77-2911 |
| Citation | 591 F.2d 1003 |
| Parties | SEBRING UTILITIES COMMISSION et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Robert A. Jablon, Washington, D. C., for Sebring Utilities, Fort Pierce Utilities.
Charles F. Wheatley, Jr., Stanley W. Balis, Washington, D. C., for Lake Worth Utilities.
Phil W. Jordan, Chas. E. McGee, Washington, D. C., for Gardinier, Inc.
Robert R. Nordhaus, Philip Telleen, McNeill Watkins, II, Washington, D. C., for FERC.
Wm. P. Diener, Winter Park, Fla., for Fla. Gas Transmission.
Peyton G. Bowman, III, Richard M. Merriman, Washington, D. C., for Fla. Power & Light Co.
Wm. I. Harkaway, Washington, D. C., for City Gas Co. of Fla.
Geo. B. Mickum, III, Washington, D. C., for Abitibi Corp.
Ned Willis, Perry, Iowa, for Southern Gas Co., Gainesville Gas Co., Gulf Natural Gas Corp.
James U. Hamersley, Alexandria, Va., for Alumax, Inc.
Francis H. Caskin, Washington, D. C., James D. Olsen, Dallas, Tex., for Sun Oil Co.
Petitions for Review of Orders of the Federal Power Commission and the Federal Energy Regulatory Commission.
Before BROWN, Chief Judge, GODBOLD and RONEY, Circuit Judges.
The Federal Energy Regulatory Commission (FERC) issued several opinions and orders 1 in which it (1) found Florida Gas Transmission Company's (FGT) gas curtailment plan to be unduly discriminatory and (2) disclaimed jurisdiction to order curtailment of gas FGT merely transports. In this case, several parties 2 aligning themselves in different camps on different issues seek review of those opinions. While some argue that substantial evidence does not support the Commission's holdings, others insist that the Commission has erred in not immediately implementing its orders. Finding that it has struck a proper balance, we affirm the Commission on all points.
FGT operates a natural gas pipeline that serves several areas of Florida. It sells both to distributors (who in turn sell to residential, commercial, and industrial customers) and directly to some large industrial concerns. 3 It also transports gas for two major electric generating companies, Florida Power Corporation (FP) and Florida Power and Light (FPL), both of which buy large amounts of gas in Texas. 4
FGT has fixed various rate schedules and degrees of reliability of service in its sales contracts. Wholesale distributors may purchase gas under the G schedule, which provides firm general service, and the I schedule, 5 which offers gas for resale to preferred interruptible resale customers. Direct customers may also purchase either interruptible 6 or firm service. 7 Under FGT's tariff, 8 in case of gas shortages, it will curtail deliveries to its customers in the following order: 9 (1) primary interruptible direct customers, (2) preferred interruptible direct, (3) distributors purchasing under schedule I, (4) firm direct industrial, (5) distributors purchasing under schedule G (for resale to firm customers).
Prior to 1972, FGT contemplated and experienced only relatively short term curtailments of its interruptible customers. Because it did not foresee any gas supply shortage, it expected to deliver substantially all of its contract volumes. In 1973, however, FGT curtailed its direct interruptible customers twice as many days as it had in 1972. In 1974, that figure almost doubled again. 10
On March 21, 1975 Lehigh Portland Cement Company, 11 a direct interruptible customer of FGT, filed a complaint under Section 5(a) of the Natural Gas Act 12 (the Act), asserting that FGT's curtailment plan unlawfully discriminates against direct industrials in favor of indirect industrials purchasing from distributors. It argued that because the plan curtails gas without regard to end-use, 13 it should be found unjust, unreasonable, unduly discriminatory, and preferential. The Commission set the matter for formal hearing on its own motion, and on August 5, 1976, the Presiding Administrative Law Judge issued a decision dismissing the complaint.
The Commission, however, reversed the ALJ in its Opinion No. 807. Announcing that "those who are similarly entitled must be treated equally regardless of their ability to survive otherwise," it found FGT's plan unduly discriminatory and ordered it to file a new plan that would provide equal treatment of direct and indirect customers who make similar use of the gas. 14 The Commission further ordered that FP and FPL be joined as parties so that all gas transported by FGT could be made part of the new plan.
After several parties petitioned for rehearing, the Commission issued Opinion No. 807-A, which affirmed its previous holding that FGT's curtailment plan was no longer just and reasonable, but rescinded its order that the pipeline file a new plan. It instead determined that the existing curtailment should remain in effect until the § 5 hearing was completed or pending further Commission order. In addition, 807-A summarily reversed the Commission's prior decision to include the FP and FPL transportation gas in any new plan. 15 Numerous interested parties filed petitions for review in this Court. 16
On January 18, 1977, in an independent proceeding, the Fort Pierce Utilities Authority of the City of Fort Pierce filed a petition and complaint. It requested (1) that the Commission order curtailments of the transportation gas on FGT's system, and (2) that the Commission condition further transportation upon FGT's curtailing the transportation volumes proportionately with those to which preferred interruptible customers would be otherwise entitled. 17 The Commission issued an order dismissing the claim on August 3, 1977, and denied rehearing on September 30, 1977. In both orders it found that it lacked the authority to grant the requested relief. It reasoned that because FGT does not own the transportation gas, it cannot allocate it. Moreover, legal title passes before the gas flows interstate. Again, several parties petitioned this Court for review of the Commission orders. 18
In attacking the Commission's finding, that FGT's plan is unduly discriminatory, petitioners 20 first contend that FERC evaluated FGT's curtailment plan against an incorrect standard, and that it improperly shifted the burden of proof in its proceedings. They cite the Commission's statement in Opinion 807, that "there is a heavy burden to show that a non-end-use plan is superior," and contend that it demonstrates that the Commission elevated its statement of policy as announced in Order 467, favoring end-use considerations 21 to a legal presumption. Moreover, it compelled the supporters of the status quo to prove that the plan met the standard rather than imposing the burden of proving violation on those seeking to change the curtailment. 22 Such arbitrary action, 23 they insist, merits reversal of the Commission's decision.
We cannot agree. We think the Commission correctly applied the § 4(b) standard as it interpreted it. 24 An examination of Opinions 807 and 807-A reveals that the Commission initially found a preference unsupported by a reasonable basis for distinction, and Then determined that an end-use plan would be appropriate for remedying the discrimination. 25 In 807 it examined the similarities between two cement plants one an indirect customer of FGT, the other a direct and found no statutorily acceptable reason for the indirect customer's receiving almost twice as much FGT gas as the direct. 26 It made this finding before discussing "the necessity for an end-use plan." 27 In 807-A the Commission, apparently trying to clear up any confusion caused by Opinion 807, carefully delineated its two findings:
. . . the Commission said ((1)) that the (FGT curtailment plan) discriminates against its direct sale customers in favor of indirect customers, who receive gas on resale from distributing companies, and ((2)) that FGT must file a curtailment plan based on end-use of the gas providing equal treatment for direct and indirect customers making similar use of the gas.
Regarding the contention that the above-quoted sentence shows that the Commission shifted the burden of proving violation of the Act, we first emphasize that it made this statement while discussing the sort of plan FGT should submit in place of the present one. It had Already found a violation of the Act. Next, we point to the Commission's answer to this very claim in Opinion 807-A, in which it said that
(w)e recognize that the complainant has the burden of proof and that Order No. 467-B merely states our policy. We think, however, that the Complainants have met their burden of showing that while they operate in like manner as the indirect customers they receive a smaller share of gas.
Op. 807-A, slip op. at 7, emphasis added.
Petitioners level their second attack against Opinions 807 and 807-A by arguing that, contrary to the Commission's findings, a reasonable basis did support the admitted discrimination. 28 They point to the history of the pipeline and the unique economic difficulties involved in supplying gas to Florida, contending that these factors militate against a change in the present system.
Because Florida experiences generally mild weather conditions with occasional drastic changes in temperature, temperature sensitive loads may swing annually as much as about 800%. In order to serve these loads efficiently, therefore, FGT distributors had to sell to customers who would accept interruptible service. In other words, in order to maintain dependable deliveries to those serving residential and other high priority users, the pipeline had to develop an industrial market that would use large amounts of available gas but...
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