Source: https://m.openjurist.org/406/us/621
Timestamp: 2019-09-22 01:37:47
Document Index: 149021793

Matched Legal Cases: ['§ 1', '§ 1', '§ 1', '§ 1', '§ 717', '§ 717', '§ 4', '§ 5', '§ 5', '§ 5', '§ 4', '§ 1', '§ 19', '§ 717', '§ 717', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 7', '§ 717', '§ 717']

406 U.S. 621 - Federal Power Commission v. Louisiana Power & Light Company United Gas Pipe Line Company
406 US 621 Federal Power Commission v. Louisiana Power & Light Company United Gas Pipe Line Company
LOUISIANA POWER & LIGHT COMPANY et al. UNITED GAS PIPE LINE COMPANY et al., Petitioners, v. LOUISIANA POWER & LIGHT CO. et al.
Can state authority practicably regulate in this area to prevent this inequity and hardship? Insofar as state plans purport to curtail deliveries of interstate gas, Pennsylvania v. West Virginia, 262 U.S. 553, 43 S.Ct. 658, 67 L.Ed. 1117 (1923), is authority that such plans, when they operate to withdraw a large volume of gas from an established interstate current whereby it is supplied to customers in other States, would constitute a prohibited interference with interstate commerce. But even to the extent the States may constitutionally promulgate curtailment plans, the inevitable result would be varied regulatory programs of state courts and agencies, interpreting a countless number of different contracts and applying a variety of state agency rules. The conflicting results would necessarily produce allocations determined simply by the ability of each customer to pump its desired volume from a pipeline. Moreover, in some States, Louisiana for example, the state regulatory agency is forbidden to regulate direct-sales contracts.11 Besides, a state agency empowered to regulate these contracts would be obliged to regulate in the State, not the national interest.12 Cf. Pennsylvania v. West Virginia, supra. The unavoidable conflict between producing States and consuming States will create contradictory regulations that cannot possibly be equitably resolved by the courts. With these problems in mind, the desirability of uniform federal regulation is abundantly clear. Nevertheless, as the Court of Appeals emphasized, 456 F.2d, at 335, a need for federal regulation does not establish FPC jurisdiction that Congress has not granted. We turn then to analysis of the statute to determine whether Congress withheld, as LP & L argues, authority from the FPC to apply its curtailment regulations to direct sales.
In § 1(b) of the Act, '(t)hree things and three only Congress drew within its own regulatory power, delegated by the Act to its agent, the Federal Power Commission. These were: (1) the transportation of natural gas in interstate commerce; (2) its sale in interstate commerce for resale; and (3) natural gas companies engaged in such transportation or sale.' Panhandle Eastern Pipe Line Co. v. Public Service Comm'n of Indiana, 332 U.S., at 516, 68 S.Ct., at 195. Each of these is an independent grant of jurisdiction and, though the Act's application to 'sales' is limited to sales of interstate gas for resale, the Act applies to interstate 'transportation' regardless of whether the gas transported is ultimately sold retail or wholesale. FPC v. East Ohio Gas Co., 338 U.S. 464, 468, 70 S.Ct. 266, 268, 94 L.Ed. 268 (1950).13
LP & L argues that the proviso in § 1(b) creates a complete exemption of direct sales from curtailment regulations.14 The answer is that the prohibition of the proviso of § 1(b) withheld from FPC only rate-setting authority with respect to direct sales. Curtailment regulations are not rate-setting regulations but regulations of the 'transportation' of natural gas and thus within FPC jurisdiction under the opening sentence of § 1(b) that '(t) he provisions of this Act shall apply to the transportation of natural gas in interstate commerce . . ..' The Court of Appeals rejected that construction on the ground that under it the 'transportation' jurisdiction would swallow up the proviso's exemption for direct sales. We disagree.
The major impetus for the congressional grant of sales jurisdiction to the FPC was furnished by a Federal Power Commission study of the pipeline industry in 1935—1936.15 The study showed that increasing concentration in the industry was producing vast economic power for the pipelines and a serious threat of unreasonably high prices for consumers. This threat was most acute in the case of sales for resale because wholesale distributors and their customers had little economic clout with which to obtain equitable prices from the pipelines. State power to regulate rates charged for interstate service to a customer in another State for resale was also thought, within this Court's decisions, constitutionally to be outside the regulatory power of the States. Public Utilities Comm'n of Rhode Island v. Attleboro Steam & Elec. Co., 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549 (1927); Missouri ex rel. Barrett v. Kansas Natural Gas Co., 265 U.S. 298, 44 S.Ct. 544, 68 L.Ed. 1027 (1924).
'In order to avoid misunderstanding the committee thought it necessary to omit this proviso from the present bill for the following reasons, even though there is entire agreement with the intended policy which would have prompted its inclusion: First, it would have been surplusage if interpreted as it was intended to be interpreted, and, second, it would have been, in all likelihood, a source of confusion if interpreted in any other way. For example, it was felt that in the effort to find a reason for its inclusion it might have been argued that it exempted sales to a publicly owned distributing company, and such an exemption is not, of course, intended. It is believed that the purposes of this proviso, assuming the need for any such provision, are fully covered in the present provision by the language—'but shall not apply to any other . . . sales of natural gas." (Emphasis supplied.)
'(T)he matter of interrupting service is one largely related . . . to transportation and thus within the jurisdiction of the Federal Power Commission to control, in accommodation of any conflicting interests among various states.'16
'The Commission shall have power to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regulations as it may find necessary or appropriate to carry out the provisions of this Act. . . .' 15 U.S.C. § 717o.
In applying this section, we have held that 'the width of administrative authority must be measured in part by the purposes for which it was conferred. . . . Surely the Commission's broad responsibilities therefore demand a generous construction of its statutory authority.' Permian Basin Area Rate Cases, 390 U.S. 747, 776, 88 S.Ct. 1344, 1364, 20 L.Ed.2d 312 (1968); see United Gas Pipe Line Co. v. FPC, 385 U.S. 83, 89—90, 87 S.Ct. 265, 269, 17 L.Ed.2d 181 (1966).
'No natural-gas company shall, with respect to any transportation or sale of natural gas subject to the jurisdiction of the Commission, (1) make or grant any undue preference or advantage to any person or subject any person to any undue prejudice or disadvantage, or (2) maintain any unreasonable difference in rates, charges, service, facilities, or in any other respect, either as between localities or as between classes of service.' 15 U.S.C. § 717c(b).
Two procedural mechanisms are available to enforce this antidiscriminatory provision of § 4(b). As to a tariff already on file and in effect, the FPC may proceed under § 5(a).17 The § 5(a) procedure has substantial disadvantages, however, rendering it unsuitable for the evaluation of curtailment plans. The FPC must afford interested parties a full hearing on the reasonableness of the tariff before taking any remedial action, and, as we have observed 'the delay incident to determination in § 5 proceedings through which initial certificated rates (as well as 'practices' and 'contracts') are reviewable appears nigh interminable.' Atlantic Refining Co. v. Public Service Comm'n, 360 U.S., at 389, 79 S.Ct., at 1254.18 In addition a prescribed remedial order can have only prospective application. FPC has therefore chosen to process curtailment plans under § 4(c), (d), and (e).19 Under these provisions, a pipeline's tariff amendments filed with the FPC go into effect in 30 days unless suspended by the Commission. If a filing is challenged or the FPC of its own motion deems it appropriate, it may suspend the amended tariff for up to five months, at the end of which time the amended tariff becomes effective pending the completion of hearings. In these hearings, the pipeline has the burden of proving that its plan is reasonable and fair.
In addition to holding that the proviso to § 1(b) prohibited curtailment of gas delivered to the Nine-Mile Point Station, the Court of Appeals held that those deliveries were not regulable by the FPC because 'the flow of gas from the Black system into the Green system . . . is occasional and irregular, as well as minimal,' and that '(t)he Green system, as an entire and separate unit, is physically located and functions entirely in Louisiana'; the court concluded that, for these reasons, '(t)he regulation of the Green system is substantially and essentially a localized matter committed to Louisiana's jurisdiction.' 456 F.2d, at 339 340. The Court of Appeals erred in deciding this question. The FPC had exercised its primary jurisdiction and was conducting proceedings to determine whether the Green System was subject to its jurisdiction. In that circumstance, the District Court and the Court of Appeals were obliged to defer to the FPC for the initial determination of its jurisdiction. See Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638 (1938). The need to protect the primary authority of an agency to determine its own jurisdiction 'is obviously greatest when the precise issue brought before a court is in the process of litigation through procedures originating in the (agency). While the (agency's) decision is not the last word, it must assuredly be the first.' Marine Engineers Beneficial Assn. v. Interlake S.S. Co., 370 U.S. 173, 185, 82 S.Ct. 1237, 1243, 8 L.Ed.2d 418 (1962). Review of the FPC decision may proceed in due course pursuant to § 19(b) of the Act, 15 U.S.C. § 717r(b). We see no need to make the same disposition as to the curtailment question since the Court of Appeals had Op. No. 606 before it and acted upon the opinion in reaching its decision.
FPC Staff Report No. 2, National Gas Supply and Demand 1971—1990 (1972):
'The emergence of a natural gas shortage during the past two years marks a historic turning point—the end of natural gas industry growth uninhibited by supply considerations. Not only has the Nation's proven gas reserve inventory for the lower 48 states been shrinking for the past three years, but major pipeline companies and distributors in most parts of the country have been forced to refuse requests for additional gas service from large industrial customers and from many new customers. For practical short-term purposes we are confronted with the fact that current proven reserves in the lower 48 states, as reported by the American Gas Association, have dropped from 289.3 trillion cubic feet in 1967 to 259.6 in 1970, a 10.3 percent drop within a three-year period. Furthermore, approximatey 95 percent of this proven reserve inventory is already committed to gas sales contracts and is therefore unavailable for sales to new customers or for increased volumes to old customers.' Id., at xi.
'No natural-gas company or person which will be a natural-gas company upon completion of any proposed construction or extension shall engage in the transportation or sale of natural gas, subject to the jurisdiction of the Commission, or undertake the construction or extension of any facilities therefor, or acquire or operate any such facilities or extensions thereof, unless there is in force with respect to such natural-gas company a certificate of public convenience and necessity issued by the Commission authorizing such acts or operations . . .' 15 U.S.C. § 717f(c).
'Thus, the economic welfare of the state hinges upon the continued delivery of the volumes of gas it received and used prior to United's curtailment and upon the ability to draw upon greater volumes. Otherwise, its economy will be frozen at or below its present level. This is not true of other states in which natural gas plays a subsidiary rather than a dominant role in the overall economy of the state and in which the electrical utilities have alternate power sources such as coal, imported liquefied natural gas and inexpensive hydroelectric power.' Brief of State of Louisiana Amicus Curiae 2—3. As observed in FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 81 S.Ct. 435, 5 L.Ed.2d 377 (1961), consuming States prefer federal regulation. The Chairman of the New York Public Service Commission summed up this position in In re Cabot Gas Corp., 16 P.U.R.(N.S.) 443 (1936):
in § 1(b) must be construed as applying only to companies engaged in the business of transporting gas in interstate commerce for hire or for sales to be followed by resales, whereas East Ohio does neither. The short answer is that the Act's language did not express any such limitation. Despite the unqualified language of § 1(b) making the Act apply to 'transportation of natural gas in interstate commerce,' respondents ask us to qualify that language by applying it only to business which both transport and sell natural gas for resale. They rely on a sentence in the declaration of policy § 1(a), referring to 'the business of transporting and selling natural gas.' But their contention that the word 'and' in the policy provision creates an unseverable bond is completely refuted by the clearly disjunctive phrasing of § 1(b) itself. As we pointed out in Panhandle Eastern Pipe Line Co. v. Public Service Comm., 332 U.S. 507, 516, 68 S.Ct. 190, 195, 92 L.Ed. 128, § 1(b) made the Natural Gas Act applicable to three separate things: '(1) the transportation of natural gas in interstate commerce; (2) its sale in interstate commerce for resale; and (3) natural gas companies engaged in such transportation or sale.' And throughout the Act 'transportation' and 'sale' are viewed as separate subjects of regulation. They have independent and equally important places in the Act. Thus, to adopt respondents' construction would unduly restrict the Commission's power to carry out one of the major policies of the Act. Moreover, the initial interest of Congress in regulation of transportation facilities was reemphasized in 1942 by passage of an amendment to § 7(c) of the Act broadening the Commission's powers over the construction or extension of pipe lines. 56 Stat. 83. This amendment followed a report of the Commission to Congress pointing out that without amendment the Act vested the Commission with inadequate power to make 'any serious effort to control the unplanned construction of natural-gas pipe lines with a view to conserving one of the country's valuable but exhaustible energy resources.' We hold that the word 'transportation' like the phrase 'interstate commerce' aptly describes the movements of gas in East Ohio's high-pressure pipe lines.' 338 U.S. 464, 468—469, 70 S.Ct. 266, 268, 94 L.Ed. 268 (1950) (footnotes omitted).
S.Doc. No. 92, pt. 84—A, 70th Cong., 1st Sess., submitted Dec. 31, 1935.
'Whenever the Commission, after a hearing had upon its own motion or upon complaint of any State, municipality, State commission, or gas distributing company, shall find that any rate, charge, or classification demanded, observed, charged, or collected by any natural-gas company in connection with any transportation or sale of natural gas, subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order: Provided, however, That the Commission shall have no power to order any increase in any rate contained in the currently effective schedule of such natural gas company on file with the Commission, unless such increase is in accordance with a new schedule filed by such natural gas company; but the Commission may order a decrease where existing rates are unjust, unduly discriminatory, preferential, otherwise unlawful, or are not the lowest reasonable rates.' 15 U.S.C. § 717d(a).
the decision thereon, the Commission, upon filing with such schedules and delivering to the natural-gas company affected thereby a statement in writing of its reasons for such suspension, may suspend the operation of such schedule and defer the use of such rate, charge, classification, or service, but not for a longer period than five months beyond the time when it would otherwise go into effect.' 15 U.S.C. § 717c(c), (d), and (e).