Louisiana Public Service Commission, Petitioner, v. Federal Power Commission, Respondent.louisiana Gas Service Company, Petitioner, v. Federal Power Commission, Respondent.hammond-baton Rouge Brick Company et al., Petitioners, v. Federal Power Commission, Respondent, 359 F.2d 525 (5th Cir. 1966)

Vernon W. Woods, Willis L. Meadows, Shreveport, La., for intervenor United Gas Pipe Line Co.

Thomas M. Knebel, Washington, D. C., Garner W. Green, Jackson, Miss., for intervenor Willmut Gas & Oil Co.

Before JONES and WISDOM, Circuit Judges, and BREWSTER, District Judge.

BREWSTER, District Judge:

The controlling question presented by these petitions to review and set aside an order¹  and the supporting opinions²  of the Federal Power Commission is whether the sales of natural gas at wholesale by a pipeline company from its integrated, interstate pipeline system are sales at wholesale in interstate commerce within the meaning of the Natural Gas Act,³  where such sales are made within the state where the gas is produced, for ultimate public consumption therein, but the gas so sold comes from an admixture of gas, some of which is destined for transportation to and consumption in other states.

Our conclusion is that such sales do come within the terms of the Act, and that they are subject to the rate and certificate regulatory jurisdiction of the Federal Power Commission, rather than that of state utility bodies. We therefore uphold the order of the Commission declaring that it, and not the Louisiana Public Service Commission, had such jurisdiction over certain sales at wholesale by United Gas Pipe Company⁴  from its interstate pipelines of natural gas produced from fields in southern Louisiana and in the adjoining offshore continental shelf beyond the regular state boundaries,⁵  for ultimate consumption in the Florida Parishes⁶  of that State.

The proceeding before the Commission originated with a petition by United for a declaratory order, brought under the provisions of the Act and of the Commission's Rules of Practice and Procedure,⁷  with respect to the existence or absence of jurisdiction in the Commission to regulate its sales of gas at wholesale for ultimate consumption in the Florida Parishes. United took no position one way or the other on the question presented. Louisiana, the Gas Company, the Brick Company and others intervened, advocating state rather than federal regulatory jurisdiction. Other interested parties intervened and urged that the Commission had jurisdiction. In due course, the Commission let loose its order and opinions now under attack here, with two of the Commissioners dissenting.

It is conceded that the facts are undisputed, and that only one possible inference may be drawn from them.

United is a natural gas company within the contemplation of the Act, engaged in the business of gathering, transporting and selling natural gas at wholesale for ultimate public consumption. It transports and sells gas both in interstate and intrastate commerce, but gas for both types of sales travels in a commingled stream in the pipelines. The main pipelines involved in this case are part of a fully integrated pipeline system by means of which United transports and sells gas from the states of Texas, Louisiana and Mississippi to industrial customers, pipelines and local distributors in those states and in Alabama and Florida. The question under consideration has no relation to United's purely intrastate pipeline facilities which are completely separate from its interstate system and over which the Commission has not asserted jurisdiction.

The particular portion of United's integrated, interstate system directly involved here consists of two main pipelines crossing the Florida Parishes on their way from Louisiana to other states, together with the network of interconnecting lines lying between them. A 30 inch line runs from the vicinity of Napoleonville, Louisiana, through the northwest area of these Parishes to Kosciusko, Mississippi. A 14-16 inch line across the southeast portion of the Parishes connects some fields in the area of Lirette, Louisiana with Mobile, Alabama. There are several connections between the two main lines in the Florida Parishes area, making it possible for gas from the two lines to become intermixed. All of the gas gathered from the producers for the Lirette-Mobile line comes from onshore fields, while that for the Napoleonville-Kosciusko line comes from both onshore and offshore fields. When it is so gathered for transportation, some of it is destined for sale at wholesale in Louisiana for ultimate consumption within that State and the balance for transportation to other states for such sale and consumption there. The gas to be sold intrastate is intermixed during transportation with that to be sold interstate, and both types of sales are taken from the commingled stream. In most instances, towns in the Florida Parishes are served from the connecting lines or from the network of smaller lines tying into them, rather than from the main lines. Some of those towns receive gas which comes to the Florida Parishes through only one of the main lines, while others receive gas which is a mixture of that from each of such lines. At the time of the hearing before the Commission, the gas sold by United for consumption in the Florida Parishes represented only a small percentage of that transported in these main lines.

These conditions brought about a conflict resulting from the assertion of jurisdiction by both the Commission and by Louisiana over the same intrastate sales in some portions of the Florida Parishes; and that conflict precipitated the action by United seeking a declaratory order settling the question as to which regulatory body actually had jurisdiction.

The question here involved has been definitely settled against the petitioners by the holding of the Supreme Court in People of State of California v. Lo-Vaca Gathering Co., 379 U.S. 366, 85 S. Ct. 486, 13 L. Ed. 2d 357 (1965), and Federal Power Commission v. Amerada Petroleum Corp., 379 U.S. 687, 85 S. Ct. 632, 13 L. Ed. 2d 605 (1965), decided since the present action reached this Court. The facts in each of those cases more strongly supported the argument for state jurisdiction over the gas produced, gathered, transported and sold in the same state than do the facts of this proceeding. In each instance, however, the Supreme Court held that the mixing of intrastate gas with a substantial portion of interstate gas for pipeline transportation in one commingled stream gave the Commission jurisdiction "at the outset over the entire transaction". Those decisions require that we uphold the order of the Commission under consideration in this case without passing on the correctness of the Commission's holding on the effect of commingling onshore and offshore gas.

Our disposition of the question above discussed makes moot the issues as to the effect of commingling onshore and offshore gas, and as to whether the Commission should be ordered to re-open the proceedings before it for the reception of further evidence as to recent developments connected with the offshore gas.

The petitions to set aside the order of the Commission are denied.