Court Opinion

ID: 9466263
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:09:58.149275+00
Date Added: 2024-06-11T17:39:37.897901
License: Public Domain

WILKEY, Circuit Judge, concurring:
I concur in Judge Gordon’s careful and analytical opinion primarily because the Vint Hill cases1 before the Federal Power Commission and their ultimate affirmance in this court were binding upon the agency on the decisive issue of whether the gas going from the Army to the Defense Family Housing Agency is a “resale for ultimate public consumption” within the meaning of the Natural Gas Act. A subsidiary supporting rationale is that the various Government entities involved have so structured and documented their transactions in a manner which makes it difficult to construe the transfer from the Army to the DFH as a “resale.” I add this concurring opinion to point out that the Defense Department and its components are discriminated against in comparison with other large purchasers of gas; to no one’s surprise, the ultimate non-beneficiary or ultimate entity losing by these arrangements and construction of the regulations and statute is the long-suffering American taxpayer.
The primary purpose of Natural Gas Act regulation is to protect the consumer. In relation to that objective, it has been recognized that where the purchaser (the Army here) from the pipeline (Cities Service) is one who performs the function of redistribution to other ultimate users, the purchaser from the pipeline is entitled to buy at a lower regulated rate because it is reselling the gas. The Army buys the gas on the basis of negotiation, but negotiation is a partial misnomer, because the Army really has no alternative source of supply to Cities Service. The Army has invested capital in the distribution facilities at Fort Leavenworth just as a municipality, privately owned public utility, or other wholesale pur*552chaser would have done for ultimate redistribution.
The difficulty in calling the Army’s sale to Defense Family Housing a “resale” for the purposes of the Natural Gas Act comes from the fact that the Army does not either sell directly to individual homeowners nor does it in fact sell to a truly arm’s length third party or a group of third parties. The Army “sells” to another Government agency, DFH. The DFH is not controlled by the Army; it, like the Department of the Army, is a part of the Defense Department, and functions for many more people and entities other than the Army. Like all inter-Govemmental transactions, the “sale” by the Army to the DFH is accomplished by an entry on the books of the Government Accounting Office.
It is of some significance that the obligation to furnish the gas to the household units at Fort Leavenworth is the obligation of “the United States,” not the Army, because it follows from this, as counsel at oral argument for both the FERC and Cities Service were free to admit, that if the DFH were located in another Government department, HUD for example, and were not part of the Defense Department, the position of the parties would be exactly the same. The FERC would contend that “payment” was accomplished by an accounting entry on the books of the Government, and was not a sale or resale within the meaning of the statute.
The statute, § 717, clearly says “resale for ultimate public consumption.” The DFH itself does not sell at all; the DFH supplies the individual families in satisfaction of the obligation of the United States to provide heat and fuel for the Government employees’ housing. If the DFH and the Government employees it services are considered together, then arguably the DFH could be considered an ultimate public consumer; yet, the DFH itself does not consume a cubic foot of gas, it has the responsibility of supplying it to the households which do.
So here we have an original sale, Cities Service to the Army, a transfer by the Army to the DFH, and use of the gas by the ultimate consumer, the Government employee households. It is this transfer by the Army to DFH which must be classified as a “resale” within the meaning of the statute for the Army to be able to buy at a wholesale rate from Cities Service. The difficulty with the Army’s position is that the householder does not pay the DFH for the gas, because this is part of what he is entitled to be furnished by “the United States”; nor does the DFH “pay” the Army for the gas, because the “payment” is accomplished by a transfer of accounts on the Government’s books.
What this court is holding, by sustaining the position of the FERC here, is that no Government department such as the Army can be a wholesale purchaser at regulated prices, even though it expends capital and installs a distribution system for those whom it services, if another Government agency appears in the chain of distribution as the “purchaser” from the Army (because no Government agency can be a true purchaser nor can there be a true “resale” within the meaning of the statute), and if those who ultimately consume the gas receive it in satisfaction of an obligation owing them from the United States rather than paying outright for the gas. Our holding, at the FERC’s behest, thus knocks out economies of wholesale purchase by all federal Government agencies, while municipalities or privately owned public utilities are enabled to buy at wholesale regulated rates, because they are reselling to individual householders, and thus unquestionably come within the language of the statute “resale for ultimate public consumption.” The FERC’s interpretation of the statute thus protects all consumers except the biggest one, the United States Government, whose bill is, of course, financed by the taxpayer.
I suggest that where a Government agency performs the distribution function of a municipality or large private utility buying gas for resale, the Government agency should enjoy the same economies of purchase. This desired result could be reached simply by treating the sale by the Army to another Government agency (DFH here) as a resale within the meaning of the statute, but this seems to be precluded by the Vint Hill cases and the manner in which the *553Government has arranged and documents its internal transactions.
I concur because the law is now rigged this way, as Judge Gordon’s analysis convincingly shows, but we ought clearly to recognize how the law is rigged against the federal Government entities and their employees in comparison with the advantage of wholesale purchase conferred on municipalities, privately owned utilities, and their ultimate consumer-distributees. The FERC should reconsider its interpretation of the statute, and if the Agency does not, then Congress should consider an amendment to the statute to put government purchases on an equal basis with private.

. Secretary of the Army v. Atlantic Seaboard Corp., 39 F.P.C. 346 (1968), remanded .on other grounds sub nom. Secretary of the Army v. FPC, 138 U.S.App.D.C. 65, 425 F.2d 496 (1969) (Vint Hill I); Secretary of the Army v. Atlantic Seaboard Corp., 46 F.P.C. 565 (1970), aff'd mem., No. 71-2036 (D.C. Cir. 15 Jan. 1973) (Vint Hill II).