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03/25/74 Michigan Power Company, v. Federal Power Commission

March 25, 1974

MICHIGAN POWER COMPANY, PETITIONER

v.

FEDERAL POWER COMMISSION, RESPONDENT, MUNICIPAL DEFENSE GROUP, NORTHERN NATURAL GAS COMPANY, INTERVENORS 1974.CDC.62



UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petition for Review of an Order of the Federal Power Commission.

APPELLATE PANEL:

Leventhal, Robinson and Robb, Circuit Judges. Circuit Judge Leventhal did not participate in the disposition of this case.

PER CURIAM DECISION

Petitioner, Michigan Power Company, operates a natural gas distribution system in the Upper Peninsula of Michigan and purchases all its natural gas from Intervenor, Northern Natural Gas Company (Northern). Although this appeal challenges orders entered in Docket No. RP71-107 which allowed Northern to file revisions of its gas tariff (tariff), the genesis of the dispute was in Docket No. RP71-89.

In January 1971 Northern, pursuant to section 4 of the Natural Gas Act (Act), 15 U.S.C. § 717c (1970), filed in Docket No. RP71-89 a proposal to amend the curtailment provisions of its tariff. Under this tariff Michigan Power had the right to purchase a contract demand of 25,188 Mcf of natural gas per day subject to only two curtailment provisions. The first curtailment provision gave Northern the right to reduce deliveries of gas below Michigan Power's contract demand during the months of April through October, but only to the extent necessary to perform specified maintenance and construction work and only after Northern had first discontinued deliveries of gas to its direct interruptible customers. Northern Natural Gas Company, FPC Gas Tariff, Third Revised Volume No. 1, Original Sheet No. 59, General Terms and Conditions, Section 9.1. The second curtailment provision gave Northern the right to require Michigan Power to reduce or discontinue its purchases of gas for resale to large volume commercial and industrial customers whenever, because of conditions beyond the control of Northern, the volume of gas available for delivery by Northern, after discontinuance of deliveries to Northern's direct interruptible customers, was not adequate to supply all contract demand requirements of all wholesale purchasers. Northern Natural Gas Company, FPC Gas Tariff, Third Revised Volume No. 1, Original Sheet No. 59, General Terms and Conditions, Section 9.2. Northern's proposed revisions affected both section 9.1 and section 9.2 of the tariff.

The proposed revisions removed the contract provision limiting Northern's right to reduce gas deliveries to situations where the gas supply was inadequate to fulfill all wholesale customer contract demand requirements. In place of this limitation Northern sought the right to reduce gas deliveries up to fifteen percent of the customer's contract demand on any day during the months of April and October, and up to thirty percent on any day during the months of May through September. The effect of this new curtailment right would have been to allow Northern to replenish its underground storage tanks without having first to discontinue deliveries to its own direct interruptible customers. The proposed revisions also restricted the use and resale rights of Northern's wholesale customers by prohibiting the use of purchased gas in the customer's own electric generating plants and the resale of the gas to consumers whose requirements were in excess of 25,000 Mcf per day.

Michigan Power filed a motion to reject Northern's filing on the grounds that (1) the proposed curtailment revisions were an illegal unilateral change in Northern's contract with Michigan Power and (2) the proposed revisions constituted an abandonment of service which required a proceeding under section 7 of the Act, 15 U.S.C. § 717f (1970), rather than section 4, 15 U.S.C. § 717c (1970).

On February 26, 1971 the Commission issued an order in Docket No. RP71-89 denying Michigan Power's motion to reject on the ground that the Supreme Court in United Gas Pipe Line Co. v. Memphis Light, Gas & Water Div., 358 U.S. 103, 3 L. Ed. 2d 153, 79 S. Ct. 194 (1958), rehearing denied, 358 U.S. 942, 3 L. Ed. 2d 350, 79 S. Ct. 344 (1959), had sustained unilateral changes in contracts where the right to make such changes had not been bargained away by the natural gas pipeline company. The Commission deferred consideration of the applicability of section 7 abandonment proceedings and suspended the effectiveness of the filed tariff revisions until April 27, 1971.

Michigan Power filed a motion for reconsideration of the February 26 order in Docket No. RP71-89. On March 19, 1971 the Commission issued an order granting partial reconsideration of its February 26 order. The Commission (1) extended the suspension period, and (2) held that formal abandonment proceedings under section 7 of the Act were not required. With respect to the abandonment issue the Commission found "that the proposal of Northern [was] a change in service which [was] a permissible filing under Section 4 of the Act." Order Granting Partial Reconsideration, Amending Suspension Period, Denying Stay, and Determining Abandonment Issue (March 19, 1971).

In light of the Commission's decision to extend the suspension period, on March 22, 1971, Northern filed a notice of withdrawal of its filing in Docket No. RP71-89. On April 19, 1971 the Commission allowed Northern's withdrawal.

The proceedings which are the basis for this appeal began when Northern, on April 26, 1971, filed for a general rate increase, under section 4 of the Act, in Docket No. RP71-107. As part of its filing Northern proposed the same revisions of its curtailment rights as it had proposed in Docket No. RP71-89. Michigan Power intervened in Docket No. RP71-107 and objected to the curtailment plans on the same grounds it had argued in Docket No. RP71-89. On May 26, 1971 the Commission denied Michigan Power's motion to reject. The denial was based upon the rationale stated in the Commission's February 26, 1971 and March 19, 1971 orders in Docket No. RP71-89. Michigan Power filed an application for rehearing of the May 26 order, which the Commission denied on July 23, 1971. Michigan Power seeks review of the Commission's May 26 and July 23 orders in Docket No. RP71-107. For reasons stated below we affirm. I.

At the outset the Commission says the challenged orders are interlocutory and not subject to our scrutiny until after the Commission's hearing on the reasonableness of Northern's proposals.

Although procedural orders of the Commission are not normally reviewable, FPC v. Metropolitan Edison Co., 304 U.S. 375, 383-84, 82 L. Ed. 1408, 58 S. Ct. 963 (1938); Texas Gas Corp. v. FPC, 102 U.S. App. D.C. 59, 250 F.2d 27 (1957), it is our duty to review orders which have an immediate impact on petitioner's rights and are of such a nature as to result in irreparable harm. Amerada Petroleum Corp. v. FPC, 285 F.2d 737, 739 (10th Cir. 1960); Isbrandtsen v. United States, 93 U.S. App. D.C. 293, 211 F.2d 51, cert. denied, 347 U.S. 990, 74 S. Ct. 852, 98 L. Ed. 1124 (1954); Abbott Laboratories v. Gardner, 387 U.S. 136, 18 L. Ed. 2d 681, 87 S. Ct. 1507 (1967). We think the Commission's determination that Northern could properly file its unilateral curtailment revisions under section 4(e) of the Act, *fn1 rather than under section 7(b) *fn2 was a final determination of substantive character which could result in irreparable injury. Atlanta Gas Light Co. v. FPC, 476 F.2d 142, 147-48 (5th Cir. 1973). After the suspension period provided in section 4, the order permitted Northern to withhold volumes of gas which otherwise it would have been obliged to deliver. The impact on ...


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