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Northeastern Gas Transmission Co. v. Federal Power Commission. Blackstone Valley Gas & Electric Co.

filed as amended april 22 1952.: April 4, 1952.


Author: Mclaughlin

Before MARIS, GOODRICH and McLAUGHLIN, Circuit Judges.

McLAUGHLIN, Circuit Judge.

These interrelated petitions bring before us for review, under Section 19(b) of the Natural Gas Act,*fn1 four orders of the Federal Power Commission concerning the supply of natural gas to certain communities in New England.

Northeastern Gas Transmission Company is a wholly owned subsidiary of Tennessee Gas Transmission Company. On August 24, 1949 it filed an application, under Section 7 of the Natural Gas Act, with the Federal Power Commission, for a certificate of public convenience and necessity to construct and operate a gas pipeline system with its main line running east from the New York-Massachusetts state border near Pittsfield, Massachusetts to near Boston, Massachusetts and a second line north from the New York-Connecticut border near Greenwith, Connecticut to connect with its west-east line near Springfield, Massachusetts. The application, as amended March 2, 1950, specifically proposed serving fifty-three named distributors in Connecticut, Massachusetts, New Hampshire and Rhode Island. It omitted eight distributing companies in Massachusetts (one of which, Worcester Gas Light Company, covered two communities, Worcester and Framingham) and two in Rhode Island. Those ten distributors had made no arrangements with Northeastern for gas service. Tennessee had its own application, filed with the Commission August 2, 1949, to increase the capacity of its pipeline system so that it could take care of the anticipated demands upon it to supply the west-east Northeastern line. Transcontinental Gas Pipe Line Corporation for the purpose of supplying Northeastern's south-north line with gas filed its application with the Commission on September 9, 1949 for a certificate for the construction and operation of a pipeline from near Doctor's Creek, New Jersey to the New York-Connecticut point near Greenwich, Connecticut to there connect up with Northeastern. The Commission consolidated these applications (that of Transcontinental as far as it affected Northeastern).

On January 24, 1950, Algonquin Gas Transmission Company filed an application with the Commission which, as amended May 1, 1950, requested a certificate for the construction and operation of a pipeline system from near Lambertville, New Jersey which it would connect with the line of its sole gas supplier, Texas Eastern Transmission Corporation, to a point near Boston, Massachusetts.This was to serve Algonquin's contract distributors in New Jersey, Connecticut, Rhode Island and Massachusetts, others who had expressed their intention of being served by Algonquin and "certain other customers who can be served economically by [Algonquin's] pipeline system alone." In its later amended petition Algonquin named all its proposed customers. Texas Eastern on March 10, 1948 filed an application with the Commission for a certificate to take care of, among other things, its commitments to Algonquin. This was amended November 14, 1949 and May 5, 1950. On July 24, 1950 United Gas Pipe Line Company filed an application for the construction and operation of new pipeline facilities part of which were to furnish gas to Texas Eastern for delivery by the latter to Algonquin. The latter and Texas Eastern were permitted to intervene in Northeastern's proceedings. Northeastern, Tennessee and Transcontinental were allowed to participate in the Algonquin matter. Later the Commission consolidated the Northeastern and Algonquin proceedings.

Testimony was taken on the Northeastern and Algonquin applications and was concluded with the exception of Algonquin presenting evidence of its gas supply. On August 7, 1950, on motion of the Commission's Staff Counsel, the intermediate decision procedure*fn2 was dispensed with as to all matters in the consolidated hearings involving the applications of Northeastern, Tennessee and Transcontinental and those issues and matters in the Algonquin application "to the extent only that Algonquin Gas Transmission Company presently proposes to supply natural gas to the communities and to the distributing companies presently proposed to be served by Northeastern Gas Transmission Company."

Thereafter, on October 4, 1950, the Commission issued its first opinion in the case bearing Number 201. It stated in that opinion that "Northeastern proposes in its application to construct and operate a pipe line system for the transportation and sale to certain designated manufactured gas distributing companies in specified areas in the New England states of the natural gas to be purchased by it from Tennessee and Transcontinental." It said that Algonquin "proposes the construction and operation of a pipe line system * * * into Connecticut, Massachusetts and Rhode Island for the purpose of transportation and sale of natural gas to certain designated distributing companies in that part of New England, * * *."

The Commission found that the evidence was convincing "that the public convenience and necessity requires adequate natural gas service in the New England area." It concluded "that this public need should soon be fulfilled," but found "that the issuance of a certificate either to Northeastern or to Algonquin as applied for in the pending applications will not provide adequate and satisfactory natural gas service to New England at a reasonable cost." It found that neither Northeastern nor Algonquin "has requested a certificate authorizing service to the entire area." If found that if Northeastern's project was approved the ten above referred to New England distributors would be without natural gas. Said the Commission:

"We are concerned here with a public need and demand for natural gas service in New England generally - not in a portion of that area and not by a few selected distributing companies in that area. It is inconceivable that anyone desirous of promoting the public good should urge that we now authorize one engaged in a business affected with the public interest to pick and choose whom it wishes to serve without proper regard for the public good. Nor should we authorize any applicant to render partial service when it is clear at the outset, as shown by this record, that its plans do not provide the full service to which the people of New England are entitled."

The Commission went on to hold that public convenience and necessity requires adequate and satisfactory natural gas service at a reasonable cost in the New England area; that neither the application of Northeastern or Algonquin met that test. It then stated that the purpose of "making these findings now" was so that the applicants might present a proposal without delay that would "meet the public demand and need for natural gas in New England in the early future." It clearly indicated that it thought such a proposal could be and should be submitted "forthwith". On October 9, 1950, Northeastern submitted its proposal. It asked that the certificate it was requesting under its current application be allowed; that the one sought by Algonquin be denied because of the absence of gas supply proof; and said that it would undertake to present in a separate proceeding plans to service the entire New England area at a minimum cost by expanding its system. Also on October 9, 1950, Algonquin filed a supplement to its amended application asserting that it had endeavored unsuccessfully to have Northeastern formulate a joint proposal with it and suggesting that the New England area be divided between Northeastern and Algonquin or that it be authorized to serve all of the companies and communities in New England originally proposed to be served by it and Northeastern.

On November 8, 1950 the Commission issued its second opinion in the matter, No. 202, with accompanying order. This allowed certificates to Tennessee and Transcontinental to supply Northeastern with gas. It granted part of Northeastern's application and denied the balance. It referred to its request in opinion No. 201 for a plan to service all New England and said that "It is still our opinion * * * that the public interest would best be served through fully coordinated facilities free to secure gas from whatever sources of supply are best able to meet the large ultimate demands of New England for natural gas upon the most favorable terms and conditions." Later in the opinion it again referred to having indicated that one system for New England was possible and desirable. The Commission then stated that since the one system had not been presented, Northeastern would be allowed a portion of its application and that certain other named markets "should be served by Algonquin upon a showing by Algonquin that it has an adequate supply of natural gas to serve such markets." The Commission proposed to secure to New England the benefits in part, at least, of an integrated natural gas system, by conditioning the certificate to Northeastern and "any certificate which may issue hereafter authorizing additional service in New England, to require the establishment of interconnections with, and agreements for emergency interchange of gas with, any natural gas system or systems serving the area at wholesale." Northeastern accepted its certificate. No certificate was issued Algonquin.

On December 11, 1950 Algonquin moved to dismiss as intervenors in its application Northeastern, Tennessee and Transcontinental. On December 18, 1950 hearings on the Algonquin matter were resumed with Algonquin broadening the scope of its proposition and asking to be allowed 20% more gas than previously. These moves were over the objections of Northeastern and Tennessee. On December 21, 1950 Northeastern filed its new application referred to in its proposal of October 9th.This covered the whole New England area. It asserted that as compared to the Algonquin project for the same service it would save $20,000,000 in construction costs and $3,000,000 annually. It represented that 92% service would be furnished more than one year before Algonquin could commence service. It alleged that under its contemplated system 97% of the gas customers in the entire New England territory could be properly taken care of. On December 29, 1950 Northeastern filed a supplement to its petition to intervene in the Algonquin-Texas Eastern application seeking to be allowed an allotment of gas from Texas Eastern in order to help fulfil the additional commitments it would have as a result of its new application. On January 9, 1951 Northeastern and its supplier, Tennessee, filed a joint motion for consolidation of their applications with that of Algonquin. It was stressed in that motion that the Northeastern, Tennessee and Algonquin applications were mutually exclusive and therefore should be heard together in order to dispose of them properly as the granting of one necessarily would result in the denial of the others.

On January 10, 1951 the Commission made three of the four orders of which complaint is made. The first of these dismissed Northeastern's application of December 21, 1950 as far as it covered the markets requested by Algonquin "without prejudice to its refiling should the pending application of Algonquin be denied." The second dismissed Tennessee and Northeastern as intervenors in Algonquin's proceedings for the reason that they "* * * no longer are in competition with Algonquin for natural gas markets * * *." The third order dismissed Northeastern's supplement to its petition to intervene of December 29, 1950 in the application of Texas Eastern. Timely applications for rehearing on these orders were made in accordance with the Natural Gas Act procedure and were denied. Two of these were affirmatively denied. No action was taken on the third which was equivalent to denial.Northeastern, Tennessee, Algonquin and Texas Eastern being corporations organized and existing under the laws of the State of Delaware which is within this circuit, the orders were then brought here for review.

In the Algonquin application and those of its suppliers, Texas Eastern and United Gas, the Commission on January 10, 1951, dispensed with the intermediate decision procedure. On February 27, 1951 the Commission issued its opinion No. 206, with accompanying order dated February 26, 1951. This, among other things, granted a certificate of convenience and necessity to Algonquin. It authorized Texas Eastern to sell and deliver natural gas to Algonquin. It authorized Algonquin to deliver and sell natural gas in specified amounts to Fall River Gas Works Company and Blackstone Valley Gas and Electric Company. Applications for rehearing ...

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