Opinion ID: 405902
Heading Depth: 2
Heading Rank: 3

Heading: Proceedings before the ERA

Text: 22 Joint application for agency approval of the amended contract was made by the three importing companies on 18 May 1979. Acting against rigid deadlines set by the Amendment Agreement, 10 the ERA issued, on 22 August 1979, an opinion and order 11 approving the interim price provisions of the renegotiated contract. At the same time, it announced that no decision concerning other aspects of the Amendment Agreement would be made without a further examination of the many issues involved. 23 A prehearing conference was held on 13 September 1979 to explore and delineate procedures which may be appropriate to identify and resolve the range of issues ... which the parties believe may be appropriate for hearing and decision. 12 The ERA concluded that procedural due process required an evidentiary hearing-which also had been demanded by the intervenors in the case-but at the same time made it clear that it would not permit such a hearing to interfere with meeting the 31 December deadline for decision. 13 The prehearing order established a schedule for the development and submission of testimony and exhibits and set forth four principal issues, as well as examples of encompassed subissues, as to which evidence could be submitted: 24 (1) the reasonableness of the price term contained in the Amendment Agreement: 25 (a) the availability of reasonably priced alternate supplies in sufficient quantity to replace the gas supply; 26 (b) the availability of such alternate supplies in the appropriate time period; 27 (c) the effects of disapproval of the contract amendment on the applicants, their supplier and customers, and the end-users of this gas supply. 28 (2) The reasonableness of the proposed escalator: 29 (a) the reasonableness of the Platt's OILGRAM price indices; 30 (b) the accuracy of the price of No. 2 and No. 6 low sulphur fuel oil in New York Harbor as a reflection of the cost of alternative energy sources in the areas served by the applicants. 31 (3) The reasonableness of the bases for amending the 1969 Initial Agreement including: 32 (a) the suppliers' increased costs; 33 (b) other factors which warrant an increased price; and 34 (c) the public benefits from approval of the Amendment Agreement. 35 (4) The impact on the U. S. balance of payments. 14 36 The prehearing order placed upon the applicants the burden of demonstrating, upon these issues, that approval of the application would be consistent with the public interest. The order also permitted any party advocating incremental pricing of the LNG to submit evidence in support of that position, and placed upon them the burden of demonstrating that any such pricing was practicable and in the public interest, to include addressing at least two issues: 37
38
39 Evidentiary hearings commenced on 30 October 1979 and continued for nine days. Two additional weeks were permitted for party briefs, and opportunity for oral argument was denied. 40 On 29 December 1979 the agency issued DOE/ERA Opinion No. 11, 16 announcing the ERA's determination that, on balance, the price terms of the Amended Agreement were reasonable and that the LNG importation as revised was not inconsistent with the public interest. 17 The agency thereby approved the amendment to the prior import authorization, conditioned only upon a requirement that the imported LNG would be subject to incremental pricing under rules issued by the Federal Energy Regulatory Commission pursuant to Title II of the Natural Gas Policy Act of 1978. 18 Imports beginning 1 January 1980 were base priced, per the contract, at $1.94/MMBtu. 41 As it turned out, the effects of the ERA's approval were short-lived. Deliveries under the contract were unilaterally suspended by the Algerian government around 1 April 1980, when El Paso refused to agree to yet further price increases demanded by Sonatrach. Government-level negotiations are currently underway.