Court Opinion

ID: 9444535
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:04:30.149161+00
Date Added: 2024-06-11T17:29:54.624320
License: Public Domain

FAHY, Circuit Judge (dissenting).
The question is one of the Commission’s jurisdiction, not of how the case should be disposed of on the merits. I agree with Commissioner Buchanan, then Chairman, in his dissent from the Commission’s denial of jurisdiction.
The only contractual arrangement under which Kansas-Nebraska has supplied natural gas to the City since July 1, 1950, is the Contract Demand type, initiated at rates set forth in Rate Schedule G-l. This arrangement was instituted at the insistence of Kansas-Nebraska and superseded a block or commodity type rate. Kansas-Nebraska delivers all gas to the City at its town border stations and it is then distributed by the City through its own distribution system. Kansas-Nebraska is required daily to supply all or any portion needed of a quantity of gas “nominated” by the City on the basis of peak-day require*40ments of the City’s firm resale customers, but no more.1 The City is required to pay an amount equal to the sum of (1) a demand charge computed on the quantity of daily demand, which in no case may be less than 80% of the Contract Demand, and (2) a specified commodity charge for gas actually delivered. This contract and rate schedule were entered into April 12, 1948, effective retroactively to October 1, 1947. Prior thereto the City paid for gas sold to it for resale on the basis only of the quantity delivered. The change, insisted upon by Kansas-Nebraska, led to the controversy which has now reached this court.
Until July 1, 1950, a separate contract covered the gas used by the City for fuel at an electric generating plant which it owns and operates. This separate contract was validly terminated •effective that date, as a result of the •controversy referred to regarding the change to the Contract Demand arrangement, effective October 1, 1947. Since July 1, 1950, all gas supplied by Kansas-Nebraska to the City has been within the amount the City was required to nominate as possibly needed for its firm resale customers. But all of it has not in fact been resold by the City to such customers. When not needed by them some has been used by the City as fuel for its electric generating plant.
Schedule G-l contains a provision which reads,
“This rate schedule * * * shall not apply to gas used or consumed by Utility [the City] (or any of its Departments) for industrial purposes.”
A provision of similar character had originated some years earlier. It seems first to have appeared in a contract which was assigned to the City in 1942 by the Hastings Gas Company which owned and operated the distribution system before it was acquired at about that time by the City. The City, however, already owned and operated the electric generating plant, which was fueled with coal and oil before the City acquired the distribution system from the Hastings Gas Company.
The complaint of the City filed with the Commission in September 1950 requests the Commission, inter alia, to remove from Rate Schedule G-l the provision that its rates shall not apply to gas used by the City for industrial purposes, that is as fuel for its electric generating plant, and also to find that the gas used since termination of the separate contract has been sold to the City by Kansas-Nebraska for resale and should be paid for at the rate prescribed in Rate Schedule G-l. It is this complaint which the Commission dismissed for lack of jurisdiction. Hastings v. Kansas-Nebraska Nat. Gas Co.,-F.P. C.-, 98 P.U.R. (N.S.) 1.
Howsoever the Commission might decide the merits of the questions raised by the complaint and whatsoever relief it might or might not give the City, it seems to me the Commission has jurisdiction to take up the questions and decide them; for the gas used by the City as fuel in the generating plant, at least since July 1, 1950, I think has not been directly sold to the City for that use but is part of a larger quantity nominated by the City for resale. Though not always needed for resale, because at particular times the City’s firm customers do not require all of it for their own purposes, its resale character is acquired when it is delivered to the City at the town border stations under the Contract Demand agreement. All is available to the City for resale and must be paid for, at least in part, on the basis set forth in Rate Schedule G — 1. There is thus not merely a commingling of the gas itself but also a commingling of the price as it were. The rate was formulated on the theory that Kansas-Nebraska must have available for resale by the City a larger *41quantity than might actually be resold. It is paid accordingly. It seems to me, therefore, that the terms governing this gas are within the jurisdiction of the Commission over the “sale in interstate commerce of natural gas for resale”, Section 1(b) of the Natural Gas Act, 52 Stat. 821 et seq., as amended, 15 U.S.C.A. § 717 et seq., and that use of some of it on an interruptible basis, that is, when not needed by the City’s firm customers, for fueling the generating plant, does not retroactively oust the jurisdiction which attaches to the larger volume of which that so used is a part. California Electric Power Co. v. Federal Power Commission, 9 Cir., 199 F.2d 206, certiorari denied, 345 U.S. 934, 73 S.Ct. 794, 97 L.Ed. 1362; United States v. Public Utilities Commission, 345 U.S. 295, 317-318, 73 S.Ct. 706, 97 L.Ed. 1020. See, also, decision of the Commission In the Matter of Colorado Interstate Gas Co., 8 F.P.C. 313, 82 P.U.R.(N.S.) 350.2 Such use might be a factor to be considered by the Commission on the merits, for example, as to the validity or reasonableness of the so-called exclusionary clause or of the rates for different uses, but this should not be confused with the jurisdictional question itself.
Doubt as to this view is rested in part upon the statement of the Supreme Court in United States v. Public Utilities Commission, supra, 345 U.S. at pages 317-318, 73 S.Ct. at pages 718-719, regarding the materiality on the jurisdictional question of evidence of separate rates, negotiations, contracts, or rate regulations in the history of a particular case. It is true that in the present case, prior to July 1, 1950, there was the history, above referred to, of a separate contract covering gas used by the City as fuel in its generating plant, under which contract, considered alone, no doubt there was a direct sale of gas to the City not for resale, and one therefore beyond the Commission’s jurisdiction. But at least since July 1, 1950, there has been no identifiable “separate transaction covering the power directly consumed' by the purchaser,” notwithstanding as an engineering proposition “accurate measurement of the volume resold and the volume directly consumed * * * is possible for each billing period.” 345 U.S. at page 318, 73 S.Ct. at page 719. Moreover, this separate contract had been the subject of controversy, along with the Contract Demand arrangement and its controverted provision, since this new arrangement was pressed upon the City and reluctantly accepted upon receipt of advice from the Commission that acceptance would not preclude “modification of any provision which could be proved to be unreasonable and over which the Commission has jurisdiction.”
I do not think anything said in United States v. Public Utilities Commission is intended to cause a history such as this to bar Commission jurisdiction of the merits of this case, especially when a change in the relations between the parties, brought about by Kansas-Nebraska, has broken the very history upon which it relies and has led to current conditions which in and of themselves are within the Commission’s jurisdiction. Where the gas involved in the jurisdictional issue is within the volume purchased by the City at wholesale in interstate commerce, at a rate related to that volume, with a right to resell any or all of it, that is, when the portion used in the generating plant and not resold does not bring the total quantity received by the City above that which is thus available for resale, I think the Commission has jurisdiction of the terms and rates which should apply.2
3 A provision in the rate schedule that *42the rates therein set forth shall not apply to gas used by the City for industrial purposes does not preclude the Commission from taking jurisdiction to consider what rate should apply, when the gas used for industrial purposes is within that for which the City is required to pay on a resale basis.

. Included in the quantity nominated is also gas to be consumed by the City for municipal purposes other than as fuel for the electric generating plant.

. The order of tlie Commission in this proceeding was set aside in part in Colorado Interstate Gas Co. v. Federal Power Commission, 3 Cir., 185 F.2d 357, but tlie court did not pass upon the Question now before this court.

. The Commission terminated the proceedings before it by an order dismissing the *42complaint “for want of jurisdiction” and the decision is treated by all as a jurisdictional one. Nevertheless, a sort of partial jurisdiction seems to have been exercised by the Commission in ruling the exclusionary clause to be non-diserimina-tory under the Act.