Court Opinion

ID: 9459327
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:17:38.292195+00
Date Added: 2024-06-11T17:36:07.509860
License: Public Domain

JOHN R. BROWN, Chief Judge
(concurring) :
I concur in the result and much of the opinion of the court. Believing that much of the court’s dictatorial commentary might be misunderstood either by the parties or the ubiquitous courts who might fall heir to these unknown damage claims, however, I think some clarification is in order.1
I.
In Opinions 606 and 606A the Commission has spoken, rather cryptically, to the issue of whether compliance with an FPC sanctioned curtailment tariff would, should, or could exculpate a pipeline from its contractual duties to pro*130vide specified quantities of gas or pay for the substitute fuel used by its customers in lieu thereof. Curiously, the court suggests that the only forum invested with the power to make such a determination would be a court of law in which a damage suit was pending.2 But this is surely not what we mean to say, for it would necessarily overrule many of our prior cases in which we have held that the administrative agencies of our government — indeed, the FPC in particular — have not only a right, but a positive duty to determine the legal and practical ramifications of their valid orders. See, e. g., J. M. Huber Corp. v. Denman, 5 Cir., 1966, 367 F.2d 104; Weymouth v. Colorado Interstate Gas Co., 5 Cir., 1966, 367 F.2d 84.
Perhaps the court creates this difficulty by failing to recall that the agency determination is subject to judicial review. We do not accord administrative agencies plenary jurisdiction, only primary.3 Thus, although the court is correct in requiring additional rulings from the FPC, it should be emphasized that the ultimate contentions of the respective parties will be subjected to judicial scrutiny. Yet, in the interim, we must require full consideration by the FPC.
That the Commission may — indeed must — determine significant, sometimes decisive, questions of law is demonstrated by the Supreme Court’s action in FPC v. Louisiana Power & Light Co., 1972, 406 U.S. 621, 92 S.Ct. 1827, 32 L. Ed.2d 369, noted by the majority in Louisiana Power & Light Co. v. FPC, (No. 71-3429) 476 F.2d 132, that it is incumbent upon the FPC to decide at the threshold whether it has jurisdiction, and if so, to what extent it will be exercised. It is a mistake then for anyone to read our opinions of this date as denying the FPC the power to pass on questions of law. And a question of law might well be whether a pipeline-seller may be held liable for damages.
II.
The Supreme Court has made it manifestly clear that the FPC must exert its controls under the Natural Gas Act over the allocation of our nation’s mineral resources — curtailing service to industrial customers if necessary in the public interest. FPC v. Louisiana Power & Light Co., supra. Having concluded that the current critical gas shortage warrants the imposition of curtailment tariffs, the Commission has issued Opinions 606 and 606A. Clearly they must *131be observed. No injunctive relief would be appropriate. See Monsanto Co. v. FPC, 1972, 149 U.S.App.D.C. 396, 463 F.2d 799.
But the various petitioner-customers involved in these cases suggest that, even given the premise that the FPC may order curtailment in fact, that they are still entitled to redress in the form of damages for breach of contract. As the court has suggested, there are two possible theories upon which this liability could be predicated — (i) that the failure to deliver the contractually stated quantity of gas, FPC curtailment order notwithstanding, constitutes a breach of the contract, and (ii) that the distributor must, under the “substitute fuel clauses” 4 of some of the contracts, reimburse the customers for the additional expense incurred because of the necessity of resorting to alternative fuels and fuel-burning systems.

The Contractual Quantity

The damage litigation of Customer versus Pipeline seeking damages for failure to deliver may arise in two entirely distinct factual patterns. First, there is the customer who complains of the curtailment, but who is unable to make any substantial allegations or proof that his service was reduced by anything other than a governmentally ordered curtailment resulting from an acute shortage of natural gas. Surely the pipeline must be exonerated completely in this instance.
But the basis of this exoneration is not, as the court suggests, the mere contractual defense of “impossibility of performance due to intervening governmental order.” It is based upon the intrinsic power of the federal government to pre-empt and abrogate private agreements in the interest of the public weal. It is a question of supremacy.
This court, by decisions binding on this panel, has previously committed itself to the view that federal administrative regulation may often obliterate or extinguish claims for relief including damages normally available to an injured party. In Carter v. American Telephone & Telegraph Co., 5 Cir., 1966, 365 F.2d 486, 496, again requiring primary jurisdiction by reference to the FCC, we declared that a utility could not both be required to comply with a validly filed tariff and, at the same time, be liable for money damages based on monopolistic, anti-trust practices growing out of compliance with the tariffs prohibiting the attachment of “foreign” equipment. In the cáse sub judice, the curtailment order, if valid, constitutes an abrogation of any contractual provision calling for current delivery of specified quantities. It would be unthinking to suggest that, having curtailed in compliance with the dictates of the FPC, that the Pipeline could thereafter be held accountable for its compliance. See Carter, supra; PepsiCo, Inc. v. FTC, 2 Cir., 1972, 472 F.2d 179 [1972], This would seriously impair the orderly administration of the regulatory scheme.
But there is a second factual pattern, best illustrated by the D.C. Circuit’s opinion in Monsanto, supra. Several established, so-called “firm” customers of the various pipelines have asserted that the need for curtailment was precipitated by the pipeline’s own failure to heed the signs of an impending crisis. These customers claim that, by taking on new obligations — knowing full well that its resources were limited — that the pipeline has created the “pickle”, 463 F.2d at 808, and counted on the FPC to bail it out with a curtailment order. I readily agree with the court that, if a customer could prove this element of “bad faith” on the part of the pipeline, that the parameters of the analysis might — and the word is might — be vastly altered, and warrant the FPC5 or the court entertaining the damage suit in concluding *132that the piper must pay the pipee. But, this too, would be subject to full considerations of the total impact6 of the decision including the source from which allowable damages are to come.

Substitute Fuel Clauses

Obviously, there is a significant difference between the quantitative contract clauses and the substitute fuel clauses, if, as the court suggests, the FPC seeks to justify the abrogation of these latter clauses under the “undue preference” section of the Act. But I agree with the Court that the record before us is not a sufficient indication that this is the basis for the Commission’s order. Accordingly, I agree that we must remand the case to the FPC for further clarification. In so doing, however, I would hasten to suggest that there is a major factor as yet unconsidered by Commission or court which must be thrown into the scales in order to determine what impact the decision to allow a damage action might have on the fulfillment of the goals of the Act — the factor of who must ultimately pay the damages.
III.
As long as we purport to comment on every issue which might be expected to emerge in connection with the curtailment order, I think that it would be appropriate for us to call attention to the factor of who must pay the judgment and, more significantly, from what funds. Assuming for the moment that the FPC and the reviewing court or damage suit court determine that it is appropriate to allow customers to recover damages in spite of the governmental sanction on the curtailment because of the Pipeline’s bad faith or the interpretation of the substitute fuel clauses, into which pocket must the customer dip? It would be an obvious frustration of the orderly control by the FPC if the damages could be paid out of current revenues contributed by ratepayers at rates necessarily increased to care for this exponential liability. Bad faith or not, the rate-payers of America are entitled to be free from this burden. Only if the damages can be assessed out of retained surpluses or assets not needed to meet customer demands, can they be collected. The test is one of impact, and the impact on the rate-paying public would be too great if it were any other way.
IV.
The FPC is not a sterile body incapable of determining legal problems of the most far-reaching kind. Its authority to regulate is plenary and exclusive. It speaks through orders both negative and positive. And the law vests it with the power to determine whether its exclusive responsibility is to be thwarted or frustrated by any action, whether in the form of disobedience to a curtailment order, or by imposing on current ratepayers the burden of paying for the past sins of the pipeline.
In short, the apparent winners of this appeal have not gotten much.

. The principles announced by the court in this principal case today are applicable to a series of connected eases. See Mississippi Power & Light Co. v. FPC, (No. 72-1003) 476 F.2d 136; Gulf States Utilities Co. v. FPC, (No. 71-3627) 476 F.2d 135; Louisiana Power & Light Co. v. FPC, (No. 71-3429) 476 F.2d 132; State of Louisiana v. FPC, (No. 72-1220) 476 F.2d 140; Mississippi Valley Gas Co. v. FPC, (No. 72-1157) 476 F.2d 137. Likewise, my comments apply to those cases.

. In the words of the court:
“We note that in the very curtailment cases relief on hy the FPC for establishing this ‘rule of law’ the governmental entity which decided the effect of the FPC order on the private contract action was not the FPC itself but rather the court in which the private action was brought. We feel that this is the proper way for deciding the effect of the FPC order .... We feel that a court which has the actual damage suit before it, and also the final FPC action, is best suited to determine the applicability of a defense recognized in contract law.”

. The best illustration of the point is offered by the subsequent history of the Huber case itself. In Huber we vacated two judgments after jury trials awarding royalties on the basis of fair market value, rather than the ceiling prices fixed by the FPC. We remanded with directions for the District Court to require the parties to seek a declaratory order from the FPC on the question of whether gas royalties were “sales of gas for resale in interstate commerce.” The FPC answered the question affirmatively, thereby holding that the royalties were subject to FPC rate ceilings. Denman v. J. M. Huber Corp., 42 F.P.C. 164. On subsequent judicial review the D.C. Circuit found this to be an erroneous statement of the law. Mobil Oil Corp. v. FPC, 1972, 149 U.S. App.D.C. 310, 463 F.2d 256. Cert. denied, 1972, 406 U.S. 976, 92 S.Ct. 2409, 32 L.Ed.2d 676. But this in no way denigrates our holding in Huber or Weymouth. For by holding that a court must stay its hand until the administrative agency has had the opportunity to act, we do not suggest that a judicial determination is inappropriate, but merely that it should be postponed.

. See note 1 of the court’s opinion.

. Apparently the administrative law judge is now hearing evidence on this matter. See the court's note 2, supra. Thus, we can expect some definitive statement from the Commission in review.

. See Part III, infra.