Court Opinion

ID: 7838503
Source: CourtListenerOpinion
Date Created: 2022-09-08 16:49:13.077684+00
Date Added: 2024-06-11T15:56:14.518963
License: Public Domain

MacKINNON, Circuit Judge
(dissenting):
The foregoing opinion finds it necessary to again remand this case (rather the record) to the Federal Power Commission. The stated objective of such a remand is
to determine how Transco is marshaling its resources and proved and provable *151reserves to produce maximum deliverability in the future. Only when the anticipated duration and shape of the shortage is in better perspective will this court be able to assess the legality of the compensation scheme at issue here.
Majority op. p. 150 of 183 U.S.App.D.C., p. 669 of 562 F.2d (emphasis added).
In my view the foregoing misconceives the issues here and this court’s ability to deal with them.
This court has before it a curtailment plan involving a compensation scheme. If the compensation scheme is invalid the entire curtailment plan falls and it would be unnecessary to consider any of the facts and issues that the remand directs the Commission to determine and consider. However, the majority, apparently obsessed with the idea that there is no actual gas or oil shortage,1 have taken the bit in their teeth and sua sponte determined to compel the Commission to make an extensive and complex investigation, study and report on that issue. This same effort is being substantially duplicated for other gas producing areas by Congress, Ashland Oil, Inc. v. FTC, 179 U.S.App.D.C. 22, 548 F.2d 977 (1976), and other agencies, FTC v. Texaco, Inc., 170 U.S.App.D.C. 323, 517 F.2d 137 (1975), vacated pending rehearing en banc (Feb. 6, 1976).
In determining that it has the right to do this, the majority hangs on the strict language of the sentence in the Supreme Court remand order which, inter alia, states:
[I]t is at least conceivable . . . that the lawfulness of the proposed compensation scheme is partially a function of the actual severity of the shortage.
FPC v. Transcontinental Gas Pipe Line Corp., 423 U.S. 326, 334, 96 S.Ct. 579, 46 L.Ed.2d 533 (1976) (emphasis added).
However, to my mind, the reliance of the majority does not fully consider the import of the Supreme Court order. First, to the extent that the Supreme Court supported the theory of the majority it did so by saying it was only “conceivable.” That is not much support. Second, the Supreme Court recognized that the validity of the compensation scheme was, at best, depend*152ent only “partially [on] . . . the actual severity of the shortage.” Id. This recognizes that this court could pass on that part of the plan that involved the validity of any computation scheme inter sese without the necessity of determining the existence or non-existence or exact extent of a gas shortage on the line. In fact, the two alternatives which the Supreme Court gave this court on remand2 are another recognition that it was not necessary to pass on the validity or extent of the gas shortage in order to rule that the plan was invalid because the Natural Gas Act does not permit the incorporation of any compensation scheme. Third, when the Supreme Court referred to the “lawfulness of the proposed compensation scheme” (emphasis added) as being only “partially a function of the actual severity of the shortage” (emphasis added), it indicated to me that it recognized that (1) the Commission might find the scheme to be lawful under the Natural Gas Act, but that (2) in its application to curtailed users, the same plan might at some later date be determined to involve an unlawful breach of their contracts because of Transco’s “negligence, bad faith, or other wrongful conduct.” This conduct might then also be found to violate the Natural Gas Act even though the Commission had previously approved the plan.
In my view of the present proceedings, none of the parties has raised any issue as to the lawfulness of the application of the plan to particular parties or in particular circumstances. Transco started back over 5 years ago on May 17, 1971, responding to the Commission’s Order No. 431 to file proposed permanent curtailment plans for use in such future shortages as might arise. The presently proposed curtailment plan is a continuation of that original start as modified by subsequent alterations and such orders of the Commission and of this court as have compelled it to alter its plans. Also, the parties eventually negotiated a settlement among themselves involving the presently questioned compensation scheme.
The principal concern of the parties and the Commission with the plan is the validity of any compensation scheme in a curtailment plan in which priorities are based wholly or in part on end use criteria. And the inherent validity of such a compensation scheme is not dependent upon the existence of any particular degree of shortage, real or spurious. The plan is to be applied over a wide range of possible degrees of shortages. If Transco has curtailed its customers in the past, or does so in the future, because of any shortage which is fictitious or self-induced, or in any way wrongful, it can be sued for damages. Alternatively, parties aggrieved could conceivably petition the Commission for relief. But that is not this case and such issues have not been raised and cannot be decided on this record. We are restricted to acting on the basis of the record before us. However material the bona fides of a particular gas shortage might be to litigation involving the application of a curtailment plan to particular parties in particular circumstances, it is not “absolutely essential to a decision by [this court] on the issues presently before [this] court for review,” FPC v. Transcontinental Gas Pipe Line Corp., 423 U.S. 326, 334, 96 S.Ct. 579, 584, 46 L.Ed.2d 533 (1976), i. e., to the validity of a monetary compensation scheme in a curtailment plan based on end use criteria. The question as to the bona fides of the shortage, and possibly the bona fide character of various degrees of shortages, that the majority now seek to interject into the proceeding for a Commission determination should be left to a more appropriate time and proceeding. So far as the parties are concerned, they have not raised any of these issues in this proceeding, and the determination of proved and provable reserves which the majority order by the present *153remand is premature and might never be required if this court passed on the issue involving the facial validity of the compensation scheme.
As previously indicated, the compensation scheme which was negotiated with Transco’s customers would be invalid if Transco fraudulently misrepresented the existence or extent of a gas shortage, and the customers relied thereon in agreeing to the scheme and thereby suffered damage. But the more immediate question, and the one raised in this proceeding by those priority customers of Transco who would be required to pay compensation to lower priority customers, is whether the compensation scheme, per se, creates an “unreasonable difference in rates, charges, service . or in any other respect ... as between classes of service.” 15 U.S.C. § 717c(b) (1970). The Commission determined that the scheme was a facial violation of the Act. That issue can easily be ruled on by this court, right now, without any further delay and inconvenience to the parties and to the Commission and without the necessity of determining the amount of proved reserves, provable reserves, reserves economically achievable by acts lying wholly within the control of a pipeline or producer, etc. In my opinion we should rule on the merits of the facial validity of the compensation scheme before the Commission is forced to make the exceptionally complex findings and prophecies 3 that the majority orders, because if we find the scheme to be facially invalid there is no necessity for the additional investigation. Certainly such procedure would work an economy of the time of this court and all parties concerned. A finding that the compensation scheme of the plan violated the Act would doom the entire plan for unlawfulness and no second reason for reaching the same conclusion would be necessary.
The majority assert that answering some of the questions “would be difficult” and that the meaning of the phrase “classes of service” is unclear.4 Apparently the majority has some initial difficulty with whether the compensation called for by the compensation scheme is subject to regulation by the Commission. On the latter point the majority cites a Fifth Circuit case as holding that compensation payments do not constitute “rates,” i. e., “[Cjompensation payments are not ‘rates’ but in the nature of surcharges . . . .”5 (Emphasis added.) Well, the statute says “rates” and “charges” and certainly the majority would not have any great difficulty in holding that a “surcharge” is a “charge.” And as to whether “classes of service” are involved, the cases on permissible classification run into the thousands.
It is thus clear that the majority are overcomplicating the case, unreasonably burdening the parties without any assurance that it is necessary to do so, and unreasonably delaying a decision on the facial validity of the compensation scheme. Nothing would be lost by this panel immediately coming to grips with that issue and deciding it. If we decided the scheme was invalid the further inquiry would be unnecessary. If we decided the scheme was fa-*154dally valid then the majority could remand for such additional information as they desired. That is the sensible way to approach the situation.6 In addition to the foregoing I do not find that the majority has fairly considered the record furnished by the Commission in response to the remand and I also object to the indefinite and imprecise nature of the second remand that the majority now orders.
I respectfully dissent.

. Originally the majority were concerned with “proved reserves” (Majority op. p. 149 of 183 U.S.App.D.C., p. 668 of 562 F.2d), which term has a precise meaning in the accepted geological and engineering concepts and methods used throughout the oil and gas industry, i. e.:
[Pjroved reserves [are] the current estimated quantity of natural gas and natural gas liquids which analysis of geologic and engineering data demonstrate with reasonable certainty to be recoverable in the future from known oil and gas reservoirs under existing economic and operating conditions. Reservoirs are considered proved that have dem*151onstrated the ability to produce by either actual production or conclusive formation test.
The area of reservoir considered proved is that portion delineated by drilling and defined by gas-oil, gas-water contacts or limited by the structural deformation or lenticularity of the reservoir. In the absence of fluid contacts, the lowest known structural occurrency of hydrocarbons controls the proved limits of the reservoir. The proved area of a reservoir may also include the adjoining portions not delineated by drilling but which can be evaluated as economically productive on the basis of geological and engineering data available at the time the estimate is made. Therefore, the reserves reported . . should include total proved reserves which may be in either the drilled or undrilled portions of the field or reservoir.
28 American Gas Ass’n, Reserves of Crude Oil, Natural Gas Liquids, and Natural Gas 102 (1974).
[Pjroved reserves . include gas and natural gas reserves of all types regardless of size, availability of market, ultimate disposition or use.
Id. at 96-97. The majority now expand their prior remand to include so-called “provable reserves” — not just proved reserves. The industry reports (id.) do not refer to any such classification. So unless some industry support can be cited for the term “provable reserves,” it must be concluded that the majority have coined an ad hoc definition and gratuitously endowed it with their own non-scientific trappings. They define it to mean sizeable reservoirs of gas which might be moved from the “possible” or “probable” categories (both undefined) into the category of “proved reserves” by “physically and economically achievable acts lying wholly within the control of a pipeline or producer.” Majority op. p. 149 & n.3 of 183 U.S.App.D.C., p. 668 & n.3 of 562 F.2d. The term “proved reserves” already includes considerable quantities of natural gas that are not absolutely proved and which may be said to involve some degree of “possibility” or “probability” — such as reserves in the “undrilled portions of the field or reservoir.” American Gas Assn., supra at 102.
How much more “possible” or “probable” the majority want the Commission to go in their now expanded effort to find some additional basis for supporting the remand, they do not say. Whether this attempt by the majority to now expand the inquiry into this nebulous area is practical remains to be seen. At the present time no industry or scientific support has been cited to justify it. If the Commission or the parties considered this request to be impractical, they can move for its modification.

. [T]he court below is free on remand either to proceed to the merits on the issues presented by the compensation scheme and only thereafter deal with the adequacy of the record in regard to the evidence of shortage, or immediately to remand the case to the Commission for the required inquiry.
423 U.S. at 334, 96 S.Ct. at 584, quoted in majority op. p. 147 of 183 U.S.App.D.C., p. 666 of 562 F.2d.

.The majority assert:
We believe that the legality of compensation may well turn, at least in part, on answers to the following sorts of questions: Are sufficient volumes of gas available as proved or provable reserves so that greater total deliverability can be foreseen in the short-term future? Are present levels of curtailment likely to continue for the indefinite future, or to deepen? And more specifically: will compensation be a short-term financial adjustment between customers of the pipeline to keep some of those customers financially afloat until the supply situation stabilizes, or will it be a permanent cross-subsidization? We believe that without such information, neither the Commission nor the court can hope to give meaning to statutory terms such as “rates,” “charges,” and “classes of service” in a regulatory landscape vastly altered by end-use curtailment.
Majority op. p. 50 of 183 U.S.App.D.C., p. 669 of 562 F.2d (emphasis added).

. Majority op. pp. 149-150 n.5 of 183 U.S.App.D.C., pp. 668-669 n.5 of 562 F.2d.

. Mississippi Public Service Commission v. FPC, 522 F.2d 1345, 1350 (5th Cir. 1975), cert. denied, 429 U.S. 870, 97 S.Ct. 181, 50 L.Ed.2d 149 (1976), quoted in majority op. p. 149 n.5 of 183 U.S.App.D.C., p. 668 n.5 of 562 F.2d.

. It is argued that the FPC should not consider the compensation agreement without first determining that there is a legitimate shortage. To my mind that question should be explored and determined when it is raised by the parties — and certainly not when the Commission has found the scheme to be invalid for other reasons which made it unnecessary to determine the existence of a legitimate shortage.
I would pass on the case that was presented to us by the parties. In that respect I would apply the Supreme Court’s finding that the majority “overstepped the bounds of its reviewing authority . . [by not confining its review] to ‘consideration of the decision of the agency . . . and of the evidence on which it was based.’ U.S. v. Carlo Bianchi & Co., 373 U.S. 709, 714-715, 83 S.Ct. 1409, 1413, 10 L.Ed.2d 652 (1963).” FPC v. Transcontinental Gas Pipe Line Corp., 423 U.S. 326, 331, 96 S.Ct. at 582 (1976).