Columbia LNG Corp. v. Federal Power Commission
Columbia LNG Corp. v. Federal Power Commission
Opinion of the Court
On June 28, 1972, the Federal Power Commission promulgated its Order No. 622, whereby Columbia LNG Corporation, Consolidated System LNG Company, and Southern Energy Company were granted Certificates of Convenience and Necessity under Sections 3 and 7 of the Natural Gas Act, 15 U.S.C. §§ 717b and 717f. By these certificates, the petitioners were allowed to import approximately 1,000,000 Mcf
Early in 1970, anticipating a short fall in domestic supplies of natural gas to meet current demand, the petitioners and their parent companies, Columbia Gas System, Inc., Consolidated Natural Gas Company, and Southern Natural Gas Company, all registered public utilities, began searching for alternative sources of fuel. After considering a variety of supplements,
Upon reaching the United States this liquefied natural gas would be re-gasified and injected into the petitioners’ transportation facilities. According to the evidence of record, this gas would be used only to service existing customers for the purpose of preventing curtailments of service.
In this time of the energy shortage and the quest for relief supplies, this case marks two rather important reference points in the effort to ease the domestic fuel problem. First, by granting the requested certificates the Commission has approved the largest importation scheme of liquefied natural gas, at the highest price, heretofore of-record, $.80 per MMBtu.
The controversy here arises over the Commission’s requirement that the imported liquefied natural gas be sold on an incremental basis. Although something of a misnomer, the incremental marketing system ordered by the Commission provides for the sale of the imported gas by separate contracts and rate schedules. Originally, by Order No. 622, the petitioners were required to institute the following three-step program: (1) the filing of an incremental rate schedule for the separate sale of the liquefied natural gas, reflecting the commodity and transportation costs; (2) during curtailments the gas must be made available to customers who had not contracted for it; and (3) the gas could be sold only to wholesale customers who had established their own incremental schedules for separate sales to retail customers.
Immediately upon rendition of the Order, the Commission was inundated with petitions for rehearing, all alleging hardship and impossibility of performance and requesting an evidentiary hearing on these factors. The Commission responded only to the extent of hearing oral arguments.
The oral arguments consisted of two major points: (1) the administrative
impossibility of implementing the incremental pricing system and (2) the advantages of the rolled-in pricing system. After argument, the Commission modified its original order
The record supports the petitioners’ position that virtually all of the evidence presented below went to show how much
The only real evidence supporting incremental pricing comes from testimony involving a special agreement between Southern and its largest subscriber, Atlanta Gas Light Company, in which Southern would offer its customers the option of either having the price of the liquefied natural gas rolled in with the domestic or contracting separately for the service under a different rate schedule. In substance, this testimony was only an afterthought and dealt with the theoretical economic feasibility of such a program. No testimony was taken as to the administrative problems which might arise, what the cost of implementation might be, or how the public interest could best be served.
The result is that we must determine whether the Commission has met the “substantial evidence” requirement of Section 19(b), 15 U.S.C. § 717r(b); for if it has not, this Court may not affirm its action, S. E. C. v. Chenery Corporation, 1947, 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 1995.
Substantial evidence, as defined by the Supreme Court, means more than a mere scintilla and must do more than create a suspicion of the existence of the fact to be established, N. L. R. B. v. Columbian Enameling and Stamping Company, 1939, 306 U.S. 292, 59 S.Ct. 501, 83 L.Ed. 660. “It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion”, Consolidated Edison Company v. N. L. R. B., 1938, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126. “It must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury”, N. L. R. B. v. Columbian Enameling and Stamping Company, 306 U.S. at 300.
It seems clear to us that the record, as compiled, fails to sustain the proposition that incremental pricing is more desirable. Certainly, ten pages of testimony out of a total record of 14,500 pages of testimony, affidavits, briefs, opinions, etc. cannot suffice to justify departing from the longstanding Commission practice of approving rolled-in pricing.
The Commission argues that the petitioners had ample opportunity to present their case, pointing specifically to the granting of oral arguments on the petitions for rehearing. In the context of this case, oral argument, lacking an adequate presentation and sifting of the evidence, with appropriate findings, is, we believe, not enough. The evidentiary
Vacated and remanded.
. 1,000 cubic feet.
. According to the findings of fact of the Administrative Law Judge, Algerian liquefied natural gas was a more desirable supplement than natural gas from Canada, Alaska, Mexico, Nigeria, Trinidad, Venezuela, or other Domestic Sources, gasified coal, re
. 1,000,000 British thermal units.
. See, Federal Power Commission Order No. 622-A.
. See Trunkline Gas Supply Company, 1949, 8 F.P.C. 250; Panhandle Eastern Pipe Line Company, 1951, 10 F.P.C. 185; American La. Pipeline Company, 1954, 13 F.P.C. 380; Trunkline Gas Company, 1959, 21 F.P.C. 704; El Paso Natural Gas Company, 1959, 22 F.P.C. 260; Kansas-Nebraska Natural Gas Company, Inc., 1961, 25 F.P.C. 448; Nueces Industrial Gas Company, 1971, 45 F.P.C. 1224.
. The Commission in Opinion No. 622 stated:
“We may note that under our Order No. 431, issued April 15, 1971, jurisdictional pipelines are required to file curtailment plans where curtailment is necessary; and Columbia Gas Transmission, Consolidated Gas Supply & Southern Natural have all done so.”
Reference
- Full Case Name
- COLUMBIA LNG CORPORATION and Consolidated System LNG Company v. FEDERAL POWER COMMISSION, Respondent SOUTHERN NATURAL GAS COMPANY and Southern Energy Company v. FEDERAL POWER COMMISSION
- Cited By
- 1 case
- Status
- Published