Louisiana Power and Light Company, hereinafter referred to as Power and Light, is appealing from the dismissal of two petitions brought by it in the district court seeking to have an order of Louisiana Public Service Commission declared invalid, and to have the Commission enjoined from enforcing the order, which commands Power and Light to cease and desist the rendition of electric service to a facility operated by Shell Oil Company, known as "North Terrebonne Gas Processing Plant." The facts and circumstances from which this litigation emanates are not in dispute and may be briefly stated as follows:
The subject matter of the litigation is a customer service dispute between Power and Light and South Louisiana Electric Cooperative Association, hereinafter referred to as South Cooperative. Both of these companies have non-exclusive franchises from the Police Jury of Terrebonne Parish to do business in the area involved, known as the "Humphrey area", situated in the vicinity of Highway 90 between Houma, Louisiana and Amelia, Louisiana. Power and Light is a regulated electric public utility company authorized to furnish electric service in 45 parishes of this State. South Cooperative is an electric cooperative association, incorporated originally in 1938 as a non-trading non-profit corporation and later converted, in 1941, into a cooperative non-profit membership corporation pursuant to the Electric Cooperative Law, Act No. 266 of 1940 (now R.S. 12:301-12:330). This cooperative has been furnishing electric power to its members for over 20 years and has been serving the Gibson Terminal of Shell Oil Company (a storage facility) during all that time.
The Gibson Terminal which, as aforesaid, is an oil storage facility of Shell Oil Company, is located on land leased from Southdown, Inc. and its predecessors and Shell, as a member of South Cooperative, has been, and still is, furnished its electric power for this Terminal by the Cooperative.
In 1963, Shell Oil Company and 28 other companies engaged in the oil and gas business entered into an agreement or compact for the construction and operation of a gas processing plant in which the gas secured by the members of the syndicate from wells situated in certain described areas was to be processed by separating the liquid hydrocarbons therefrom. Shell was designated as operating agent for the group; it was to purchase the land, furnish the employees and manage the plant, which was to be known as North Terrebonne Gas Processing Plant. In this agreement of co-proprietorship, which was for a duration of twenty years, Shell acquired a 23½% ownership and the other parties owned the remaining interest in specified percentages as set forth therein. All proprietors contributed to the costs of construction and operation according to their proportionate interests and all shared in the profits and losses in like manner. Thus, albeit the agreement recites that it is not a partnership or joint venture (apparently for tax purposes), the enterprise, in legal contemplation, may well be regarded as either an ordinary partnership, under Article 2801 of the Civil Code, or at least a joint venture. Shell, conformably with the authority vested in it as plant operator for the entity, North Terrebonne Gas Processing Plant, acquired by purchase in its own name a tract of land adjacent to its Gibson Storage Terminal, which tract overlapped a portion of the land leased from Southdown on which it operates the Gibson Terminal. After acquisition of the land on which the processing plant was erected, Shell entered into negotiations for supplying the facility with electric service. Both South Cooperative and Power and Light sought to furnish this electrical energy. In May of 1963 Shell entered into an electric service agreement with Power and Light and, pursuant thereto, the latter constructed facilities (a double circuit, 138,000 volt line was built from the existing line to the substation site, "a transformer 138 to 34,000 volts was installed" and a distribution line was built from this point into the plant site), at a cost of $375,000 to $400,000.
On the contrary, while the suit was pending in the Court of Appeal on writs, South Cooperative abandoned, for all intents and purposes, its rights under the contract with Power and Light, for it petitioned the Public Service Commission to order Power and Light to cease and desist from furnishing electric energy to Transcontinental Gas Pipe Line Corporation, Avondale Shipyards, Inc. and Shell Oil Company on the ground that Power and Light was supplying electricity to these parties in violation of the policy, rules and regulations of the Commission and in an area exclusively served by it. Power and Light filed a plea of lis pendens (which, of course, became moot when the Court of Appeal dismissed the suit and South Cooperative failed to apply for a rehearing) and also an exception of no right or cause of action challenging the authority of the Commission to act upon a customer service dispute in a case brought by an electric cooperative, an unregulated public utility not subject to the Commission's jurisdiction.
After a hearing on this exception, the Commission found that the complaint did not disclose a violation of any of the Commission's rules and regulations and that the only law governing the case was R.S. 45:123 (which we shall discuss in detail later in this opinion). Applying this statute, the Commission maintained the exception and dismissed the petition with respect to Power and Light's service to Transcontinental Gas Pipe Line Corporation and Avondale Shipyards,
Thereafter Power and Light filed its answer denying that the Cooperative was entitled to a cease and desist order. In substance, it contended that R.S. 45:123 was manifestly inapplicable since South Cooperative is not a regulated public utility and, further, because Shell is not the Cooperative's customer insofar as Shell's operation of the North Terrebonne Gas Processing Plant facility is concerned. The case was then heard on its merits with respect to these issues and, after considering the evidence, the Commission (with one dissent) entered its Order No. 9498 commanding Power and Light to cease and desist the rendition of electric service to the facility known as North Terrebonne Gas Processing Plant, operated by Shell. The Commission stated:
Following the rendition of this order, Power and Light filed a petition in the district court against the Commission seeking to have the order declared invalid and to have the Commission enjoined from enforcing the same. A second petition, identical with the first, was filed by Power and Light except that no injunctive relief was sought. These petitions were consolidated for trial by agreement.
South Cooperative intervened in the case and joined the Commission in filing an exception of no cause of action leveled at the request for injunctive relief. This exception was sustained. An intervention was also filed on behalf of 28 companies, including Shell Oil Company, the co-owners of the facility known as North Terrebonne Gas Processing Plant. Following a trial and submission of the case in the district court the judgment was affirmed. No written reasons were given.
Although Power and Light specify six errors allegedly committed by the Commission and the district court, we think there is only one basic question upon which the correctness of the Commission's action may be said to depend—that is, whether or not R.S. 45:123 is applicable to the case. This question is divisible into two, or perhaps more, sub-parts—viz.: Is R.S. 45:123 applicable to a customer dispute between an unregulated cooperative electric company and a regulated electric public utility under the jurisdiction of the Public Service Commission? If it is, may Shell, while acting in its capacity as operator of North Terrebonne Gas Processing Plant, be regarded as the customer of South Cooperative by reason of the fact that it is the customer and member of the Cooperative for the furnishing of electricity to its Gibson Terminal oil storage facility?
R.S. 45:122 declares, in substance, that the Public Service Commission has authority to require electric public utilities to make extensions of their services and facilities "* * * whenever the revenues to be derived from the proposed extensions will be sufficient to provide a fair return upon the fair value of the facilities used and useful in rendering additional service". This provision was formerly Section 1 of Act 254 of 1936.
The pertinent part of the statute upon which the Commission rested its cease and desist order, R.S. 45:123, which was formerly Section 2 of Act 254 of 1936, reads as follows:
It is seen from the foregoing that, in order for the provision to be applicable, it is essential that the electric services or facilities extended by an electric public utility be given to customers already receiving electric service from another electric public utility. But it is suggested that, albeit electric cooperatives are exempt from the jurisdiction of the Public Service Commission, they are, nonetheless, public utilities and, being unregulated as to their rates and services, constitute monopolies contrary to the prohibitions of our Constitution (Section 5 of Art. XIII and Section 14 of Art. XIX).
Statutes similar to R.S. 45:123 have been considered by the courts of last resort in other jurisdictions and those tribunals have held that such statutes do not apply to electric cooperatives and, hence, cannot be enforced against regulated public utilities. See Black River Electric Coop. Inc. v. Public Service Com'n (1961) 238 S.C. 282, 120 S.E.2d 6; Clearwater Power Company v. Washington Water Power Co., 78 Idaho 150, 299 P.2d 484; Socorro Electric Cooperative Inc. v. Public Service Commission,
However, we do not deem it important to determine here whether electric cooperatives are public utilities or not. For counsel of South Cooperative, while arguing that electric cooperatives are entitled to protection by the Commission of established customer relationship, declare in their brief that, if R.S. 45:123 is inapplicable, it is only on the basis that electric cooperatives are not public utilities, and they cite in support thereof Garkane Power Company v. Public Service Commission of Utah, 98 Utah. 466, 100 P.2d 571. See also cases discussed in annotation 132 A.L.R. 1495. In other words, counsel are saying that inapplicability of the statute cannot be grounded on Power and Light's (and the intervening gas companies) contention that such non-profit electric organizations are unregulated public utilities and, therefore, monopolies without right of protection, either administratively or at law. But, as we read the statute, it is clear that it extends only to customer disputes between regulated public utilities and, this being so, it matters not whether or not the statute is inapplicable to electric cooperatives because they are not public utilities or because they are unregulated public utilities. In the absence of an applicable statute or violation by Power and Light of a Commission rule or regulation, the Commission was without authority to issue the cease and desist order.
Nor can the Commission's order be sustained on the theory that, since Section 4 of Article 6 of the Constitution vests plenary power over all public utilities in the Commission, its action in this case is well within its regulatory jurisdiction. The Commission has the right to order a public utility to cease and desist from a certain course of conduct when, and only when, its act transgresses a law of the State or a reasonable rule or regulation of the Commission. It has no power to deny to such utility the right of serving a customer on the basis of its right to regulate when the regulation applies only to one side. Indeed, the Commission did not ground its decision on its constitutional authority to control Power and Light's customer dispute with South Cooperative. Its order is based solely on an assumption that R.S. 45:123 is applicable to the case. For our part, we are not disposed to conclude that the Commission is entitled to exercise the constitutional power vested in it over electric public utilities by settling customer disputes with unregulated electric cooperatives when it may not regulate the rates the latter may charge for similar service and when, were the situation reversed, it would be powerless to order the cooperative to comply.
Furthermore, we think the holding of the Commission that Shell Oil Company is still the customer of South Cooperative insofar as the operations of North Terrebonne Gas Processing Plant are concerned because "* * * Shell continues to be the party with whom the utility deals and the party who is responsible for obtaining the utility's service" is manifestly incorrect and without sanction. The uncontested evidence is that North Terrebonne Gas Processing Plant is a separate facility and that Shell Oil Company, although operating the same, is performing this function as an agent for either a partnership of oil and gas companies or as a joint venture. In this capacity, Shell was not acting for itself. While it is true that Shell was and is a member of South Cooperative and was and is its customer for the operation of the storage facility known as Gibson Terminal, this does not mean that it is to be regarded as the Cooperative's customer for separate and distinct pursuits conducted by it under a mandate from others and on other property, albeit adjacent in location to the oil storage terminal. And the mere fact that it purchased the site for the new operations in its own name, under its appointment as agent by the owners of the gas processing enterprise, furnishes no legal or factual basis for holding either that this was an expansion of Shell's operation or that, since Shell dealt with Power and Light directly, it was doing so under its status as the Cooperative's original customer. No one has suggested that the facts herein outlined are unreal or that the agreement between the oil and gas companies was designed to deprive the Cooperative of a preference it would otherwise have had as the supplier of electric energy to Shell at its Gibson storage facility. In these circumstances, the Commission's ruling is at odds with the admitted facts and, therefore, clearly arbitrary.
For the reasons assigned, the judgment of the district court, affirming the order of the Commission, is reversed and set aside and Order No. 9498 of the Commission is declared invalid and, accordingly, annulled.
On Application for Rehearing.
HAMITER and SANDERS, JJ., dissent, being of the opinion that a rehearing should be granted limited to the question of jurisdiction of the La. Public Service Commission.
SUMMERS, Justice (dissenting).
A rehearing should be granted. Certain erroneous and unnecessary statements in the majority opinion becloud the question of the Louisiana Public Service Commission's jurisdiction over South Louisiana Electric Cooperative Association.
The opinion makes numerous references to the Louisiana Public Service Commission's apparent lack of jurisdiction over South Louisiana Electric Cooperative Association and cooperatives generally, reasoning that the Cooperative is not a public utility; it then proceeds to hold, specifically, that North Terrebonne Gas Processing Plant was not a customer of South Louisiana Electric Cooperative Association when Louisiana Power and Light Company began to service the Gas Processing Plant.
The only language of the opinion which can be sustained under the law and by the record is that which finds that North Terrebonne Gas Processing Plant was not a customer of South Louisiana Electric Cooperative Association when Louisiana Power and Light Company began to service the Gas Processing Plant. Such a holding presupposes that the record upon which the decision is founded was properly made in a proper tribunal with proper jurisdiction. Otherwise, the majority opinion must be
It is entirely inconsistent with this Court's practice, or with good judicial process anywhere, to adjudicate issues other than jurisdiction in a case tried before a tribunal which is found to be without jurisdiction. On the other hand, it is wholly consistent with a finding that there was no jurisdiction in the tribunal before which a case was tried to dismiss the suit and thereby permit a trial and adjudication of the issues, other than jurisdiction, before a proper tribunal which does have jurisdiction. For jurisdiction is the very cornerstone of any tribunal's right to issue valid decrees and judgments; and venue, of course, is the handmaiden of jurisdiction.
From these observations it must necessarily follow that if the Public Service Commission had no jurisdiction in this matter, the 19th Judicial District Court in East Baton Rouge Parish—to which the Commission's order was appealed—likewise had no jurisdiction, its jurisdiction in such cases being predicated upon the Commission's jurisdiction. And, having no venue over the domicile of the parties or the situs of the controversy in Terrebonne Parish, the 19th Judicial District Court had no independent original jurisdiction.
If we accept the opinion's declarations that the Public Service Commission had no jurisdiction, there was, then, no tribunal with original jurisdiction participating in the making of this record. (Needless to say, the Supreme Court quite clearly has no original jurisdiction.) Thus, if the Commission had no jurisdiction, no valid adjudication could take place on the customer issue, which this Court's majority opinion unequivocally does decide. To adjudicate the customer issue based upon facts found by the Commission, which, in turn, the Court found to be without jurisdiction, is contrary to fundamental concepts of Constitutional Due Process. Due Process requires that all valid adjudications be rendered by legally constituted tribunals acting only over litigants and within boundaries prescribed by law.
For these reasons a decision that the Public Service Commission has no jurisdiction and a decision of the customer issue, based upon facts found in a hearing before the Commission, cannot stand side by side in the same opinion. Such an anomaly logically requires a conclusion that only that portion of the decision based upon the real issues truly litigated by the parties is the ratio decidendi of the opinion—the other expressions being merely dicta.
Only a cursory review of the record is required to learn that the real issue was whether or not the Gas Processing Plant was a "customer" of the Cooperative Association within the purview of La.R.S. 45:123, when the Power and Light Company began to service the Gas Processing Plant. This is made manifest when we note that the Cooperative Association chose the Commission as the forum in this matter, and the essence of its complaint was that Louisiana Power and Light Company "had violated R.S. 45:123 by `taking' the Gas Processing Plant." Furthermore, the Chairman of the Commission defined the issues at the outset of the hearing when he declared, "* * * (W)e should limit our hearing this morning in these cases as to whether or not a customer has actually been taken * * * as to whether or not under R.S. 45:123 a customer is actually taken." (Emphasis added.) And a joint stipulation of the parties set forth that "the Commission has not asserted and does not now assert regulating jurisdiction over rural electric cooperatives * * * as to their rates, service regulations, rules and procedures, but only with respect to customer disputes." This being a customer dispute, it could be said that the jurisdiction was stipulated. Upon this factual background,
Even the Cooperative expressly relied in its pleadings upon the theory that the issue of jurisdiction was foreclosed by previous decisions of the Courts of Appeal which this Court would not review, citing these cases as authority for its position: South Louisiana Electric Cooperative Association v. Louisiana Power and Light Company, 161 So.2d 413 (La.App.1964); South Louisiana Electric Cooperative Association v. Central Louisiana Electric Company, 140 So.2d 687 (La.App.1962); and Pointe Coupee Electric Membership Corporation v. Central Louisiana Electric Company, 140 So.2d 683 (La.App.1962).
The Commission's jurisdiction, and the related question of whether the Cooperative was or was not a public utility, was conceivably put at issue by Louisiana Power and Light Company's pleadings. But this was a plea in the alternative and only in the event it was found that the Gas Plant was a "customer" of the Cooperative. Because a finding was never made that the Gas Plant was a customer of the Cooperative, the finding instead being that the Gas Plant was an uncommitted new entity, the contingency upon which the alternative issue was pleaded never occurred. The alternative plea was, consequently, of no effect—just as though it had not been pleaded.
In keeping with this posture of the pleadings, the record is barren of any facts which would tend to prove the Cooperative was not a public utility as contemplated by La. R.S. 45:123, the statutory provision under consideration. By way of illustration, this Court had no evidence before it concerning the actions and activities of cooperatives or utilities, the extent of the business each conducts, the use by cooperatives of powers normally possessed by public utilities and other information indispensable to a fair and proper determination of whether the cooperative at bar was not a public utility. I say again, determining such an issue without facts to support it would be a deprivation of Constitutional Due Process. This makes it clear to me that the majority opinion does not and could not decide that the Public Service Commission had no jurisdiction of the South Louisiana Electric Cooperative or cooperatives generally. Nor did this Court intend to adjudicate a question of such farreaching import without a record to support its judgment. Especially is this true in light of the substantial authority to the contrary. Application of Trico Electric Cooperative, Inc., 92 Ariz. 373, 377 P.2d 309 (1962); Dairyland Power Cooperative v. Brennan, 248 Minn. 556, 82 N.W.2d 56 (1957); Natural Gas Service Co. v. Serv-Yu Cooperative, 70 Ariz. 235, 219 P.2d 324 (1950); Kosciusko County Rural Electric Membership Corporation v. Public Service Commission, 225 Ind. 666, 77 N.E.2d 572 (1948); Rural Electric Co. v. State Board of Equalization, 57 Wyo. 451, 120 P.2d 741, 122 P.2d 189 (1942); Taylor County Rural Electric Cooperative Corporation v. Kentucky Utilities Company, 94 PUR (NS) 14 (1952); Re:Plumas-Sierra Rural Electric Cooperative, Inc., 88 PUR (NS) 506 (1950); Re: Farr, et al., 65 PUR (NS) 7 (1946); Re: Indiana Service Corporation, 48 PUR (NS) 185 (1943); Jersey Central Power & Light Co. v. Tri-County Rural Electric Co., 38 PUR (NS) 48 (1941); Re: Adams Electric Cooperative, Inc., 38 PUR (NS) 193 (1941).
Justice and the orderly processes of law demand that this issue be given the consideration it deserves. I would not expect this decision to stand in the way of such a determination when a proper case is presented.
The holding of this case, then, must be that North Terrebone Gas Processing Plant was not a customer of the Cooperative at the time when Louisiana Power and Light Company began to service the Gas Processing Plant, and, as a necessary concomitant, the record made before the Commission was made before a tribunal which at least had jurisdiction over this customer dispute.