                  United States Court of Appeals,

                             Fifth Circuit.

                              No. 93-4089.

              TENNESSEE GAS PIPELINE CO., Petitioner,

                                     v.

        FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

                             March 25, 1994.

Petition for Review of an Order of the Federal Energy Regulatory
Commission.

Before JOHNSON, HIGGINBOTHAM, and EMILIO M. GARZA, Circuit Judges.

     JOHNSON, Circuit Judge:

     On April 8, 1991, Tennessee Gas Pipeline Company ("Tennessee")

and Flagg Energy Development Corporation ("Flagg") entered into a

firm natural gas transportation contract.           Tennessee agreed to

transport 4,140 dekatherms of natural gas each day from various

points in and offshore Louisiana to Connecticut on Flagg's behalf.

Tennessee also agreed to construct and operate the facilities

necessary to transport the natural gas.             Flagg agreed to pay

Tennessee for its services.

     Prior to entering into this contract, the Federal Energy

Regulatory   Commission    ("FERC"   or   "the   Commission")   authorized

Tennessee to charge Flagg certain rates for the transportation

services.    The Commission also ruled that Tennessee could later

seek changes to those rates, as allowed by section four of the

Natural Gas Act ("NGA").      Tennessee sought to change the rates on

February 28, 1992.        Flagg intervened and charged, among other

things, that its gas transportation contract prohibited the type of

                                     1
rate       changes   sought        by     Tennessee.                 The    Commission    agreed.

Tennessee appeals.           We reverse.

                       I. Facts and Procedural History

       Tennessee entered precedent agreements with seven different

companies in the winter of 1988-89.                        The companies proposed to pay

Tennessee      to    transport          natural       gas       to    various    points       in   the

Northeast. Flagg entered such a precedent agreement with Tennessee

on January 9, 1989.          It desired for Tennessee to transport natural

gas from various points in and offshore Louisiana to New Britain,

Connecticut, and Bloomfield, Connecticut. Tennessee agreed to seek

authorization from FERC to build the facilities necessary to

transport that natural gas.

       Consistent      with    the        precedent         agreements          with    the    seven

different companies—including its agreement with Flagg—Tennessee

sought FERC approval to construct and operate new facilities which

would expand the capacity of its existing pipeline system. The new

facilities      were    to    be    located           in    five      separate     zones,      which

Tennessee      designated      Segments           U,       1,    2,    3,    and   4.     In       its

application to FERC, Tennessee asserted that it would transport

natural gas to Flagg through Segments U, 2, and 3 and would charge

Flagg for the cost of operating those three facilities.1                                           Rate

       1
      There are two methods of charging for gas transportation:
The "incremental cost allocation" method and the "rolled in"
method. Under the incremental cost allocation method, the new
customers pay for all of the costs of the new facilities. This
method spares existing customers from having to pay for the
expansion of the transportation system, even though they may use
the expansion facilities. The rolled in method of charging for
gas transportation requires each shipper—both old and new—to pay
its share of the transportation costs based upon its

                                                  2
Schedule NET-EU set forth the rates which Tennessee proposed to

charge.   However, Tennessee requested permission to change the

rates if all of the proposed facilities were not approved by

October 1, 1989.

     FERC approved the construction of three of the five Segments

by May of 1990—Segments 1, 2, and 3.     See Tennessee Gas Pipeline

Co., 51 FERC ¶ 61,113, 61,274, 61,275-276 and n. 22 (1990).

Because FERC had not yet given Tennessee permission to construct

the proposed   facilities   for   Segments   U    or    4,   it   disapproved

Tennessee's request to charge Flagg for any use of Segment U in a

May 2, 1990, order ("May Order").      Id.       However, the Commission

decided that Tennessee could seek to amend its NET-EU rates to

"roll in"2 the costs associated with Segments U and 4 after those

projects were approved and placed in service.                The Commission

asserted that Tennessee could seek such a rate change at a later

date through a section 4 proceeding.         Id. at ¶ 61,274.           FERC

calculated a rate for Segment 4 in its September 13, 1990, order.

However, it again refused to compute a rate for Segment U because

the proposed facilities had still not been approved. Tennessee Gas

Pipeline Co., 52 FERC ¶ 61,257, 61,930 (1990).

     Based upon, and specifically referring to, the May Order,

Tennessee and Flagg entered a Firm Natural Gas Transportation

Agreement ("contract") on April 8, 1991.               Tennessee agreed to


proportionate use of the facility in question. Tennessee
proposed to charge Flagg under the incremental cost allocation
method.
     2
      See supra note 1.

                                   3
construct the facilities needed to receive and deliver gas to

Flagg.   The specific rate formula for transporting the gas was set

out in section 8.2 of the contract.      However, section 8.4 of the

contract provided that "pursuant to this Article VIII," Tennessee

has the unilateral right "to file and make effective changes in the

rates, charges, and conditions applicable to service."

     Consistent   with   its   construction   of   section   8.4   of   the

contract, Tennessee filed a limited rate case under section 4 of

the NGA to revise the rates in its NET-EU schedule.          Among other

things, Tennessee sought to charge Flagg and another company,

Capitol District Energy Center Cogeneration Associates ("Capitol

District"), for their use of Segment U.3      Apparently complying with

the Commission's May Order, Tennessee proposed to roll the Segment

U charge into these companies' gas transportation charges.         See 51

FERC at ¶ 61,274 (deciding that "Tennessee may seek to amend its

NET-EU rates to reflect the rolling in of all costs associated with

various Northeast projects by initiating a section 4 proceeding

after all the projects have been approved and placed in service"

(emphasis added)).

     Both Flagg and Capitol District filed motions to intervene.4


     3
      Flagg and Capitol District are the only NET-EU customers
which use Segment U. Tennessee uses that Segment to transport
natural gas from the Gulf Coast approximately 1400 miles north to
various points in the Northeast on Flagg's and Capitol District's
behalf. Unlike the gas transported for Flagg and Capitol
District, the natural gas transported for the other NET-EU
customers is both received and delivered in the Northeast.
     4
      Tennessee and Capitol District have settled their disputes
in this matter.

                                   4
Flagg proffered         numerous    objections   to   Tennessee's     proposals.

Important for our purposes, Flagg contended that its contract with

Tennessee prohibited Tennessee from charging Flagg for its use of

Segment U. According to Flagg, Tennessee could only charge for the

use of Segments 2 and 3.          Flagg requested FERC to review the matter

in an expedited paper hearing, and FERC granted the request,

limiting    its   review     to    deciding   whether     the   Tennessee-Flagg

contract precluded Tennessee from charging Flagg for its Segment U

use. Tennessee Gas Pipeline Co., 58 FERC ¶ 61,343 (1992).               Finding

the contract clear and unambiguous and basing its decision solely

on the plain language of the contract, the Commission concluded

that the contract did not allow Tennessee to charge Flagg for

Segment U.      Tennessee Gas Pipeline Co., 60 FERC ¶ 61,261 (1992).

The Commission denied Tennessee's motion for rehearing on January

21, 1993.    Tennessee appeals.

                                   II. Discussion

A. Background

      As late as the mid-1940s, just after World War II, contracts

between natural gas companies (e.g., suppliers and transporters)

and   natural     gas    purchasers     (e.g.,   public     service   commodity

companies) began to take one of two shapes with respect to rates.

The contracts either set forth a specific, unchangeable rate for

natural gas supply or they set no specific rate whatever.               Compare

United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332,

76 S.Ct. 373, 100 L.Ed. 373 (1956) with United Gas Pipe Line Co. v.

Memphis Light, Gas and Water Division, 358 U.S. 103, 79 S.Ct. 194,


                                         5
3 L.Ed.2d 153 (1958);   see also Federal Power Commission v. Sierra

Pacific Power Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388

(1956).   As energy prices escalated, natural gas companies sought

to unilaterally raise their prices by filing revised rate schedules

with the, then, Federal Power Commission ("FPC").5         Needless to

say, the natural gas purchasers were less than pleased.           They

intervened in the section 4 proceedings and argued that the natural

gas companies had no authority to unilaterally change their rates.

     By the mid to late 1950s these controversies made their way to

the United States Supreme Court.        The first such case was United

Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 76

S.Ct. 373, 100 L.Ed. 373 (1956).       There, United Gas Pipe Line Co.

("United") contractually agreed to furnish natural gas to Mobile

Gas Service Co. ("Mobile") for a ten-year period at twelve cents

per thousand cubic feet (MCF).         Id. at 336, 76 S.Ct. at 376-77.

Seven years into the agreement, United, without Mobile's consent,

filed a new rate schedule with the FPC, raising the rates to

fourteen and one-half cents per MCF.       Mobile opposed the increase,

arguing that it was contrary to the terms of its contract with

United. United, however, contended that the NGA authorized natural

gas companies to change their rate agreements unilaterally.

     The Supreme Court disagreed.        Id. at 337, 76 S.Ct. at 377.

The Court found that the NGA evinced no intention to abrogate the

rates set forth in private natural gas contracts.       The Court found


     5
      Section 4 of the NGA sets forth the procedures for changing
rate schedules.

                                   6
that   the   Act,     instead,   "expressly      recognizes     that    rates    to

particular customers may be set by individual contracts."                  Id. at

338, 76 S.Ct. at 378.       The primary focus, according to the Mobile

Court, is the natural gas contract, not the Natural Gas Act:

       [E]xcept as specifically limited by the Act, the rate-making
       powers of natural gas companies [are] to be no different from
       those they would possess in the absence of the Act:        to
       establish ex parte, and change at will, the rates offered to
       prospective customers; or to fix by contract, and change only
       by mutual agreement, the rate agreed upon with a particular
       customer.

Mobile Gas Service Corp., 350 U.S. at 343, 76 S.Ct. at 380.                     The

Court determined that preserving the integrity of natural gas

contracts aided the stability of supply arrangements, contributed

to the health of the natural gas industry, and therefore promoted

the purposes of the NGA.          Id. at 344, 76 S.Ct. at 380-81.                It

therefore ruled that the Natural Gas Act did not empower natural

gas companies to unilaterally change their contracts.                  Id. at 337,

76 S.Ct. at 377.

       The   Supreme    Court    again       emphasized   the   importance       of

contractual provisions in United Gas Pipe Line Co. v. Memphis

Light, Gas and Water Division, 358 U.S. 103, 105, 79 S.Ct. 194,

195-96, 3 L.Ed.2d 153 (1958). Unlike the contract in Mobile, which

set forth a specific gas rate, the contract in Memphis required

Memphis Light, Gas and Water Division ("Memphis") to pay United in

accordance     with    United's    rate       schedule    "or   any     effective

superseding rate schedules[ ] on file with the" FPC.                      Memphis

Light, Gas and Water Division, 358 U.S. at 105, 79 S.Ct. at 196.

In effect, Memphis bound itself to paying the "going" rate for the


                                         7
gas.   Id. at 110, 79 S.Ct. at 198.         In accordance with the United-

Memphis contract, United sought to raise the gas supply rates it

charged by filing revised rate schedules with the FPC.                 Memphis

protested.     Viewing Mobile as a sword—prohibiting natural gas

companies    from    ever    seeking   unilateral    rate   revisions—Memphis

contended that United's efforts ran afoul of the Supreme Court's

decision in Mobile.         Id. at 108, 79 S.Ct. at 197.

       The Supreme Court read its Mobile decision otherwise.             Again

focussing on the language in the contract, the Memphis Court ruled

that a natural gas company is precluded from seeking unilateral

changes in its rates only if its contract expressly precludes such

changes.     Id. at 113, 79 S.Ct. at 200.           According to the Memphis

Court, a gas company, "like the seller of an unregulated commodity,

has the right in the first instance to change its rates as it will,

unless it has undertaken by contract not to do so."            Id.   (Emphasis

added).     As made clear in Mobile and Memphis, courts deciding

whether a natural gas company may unilaterally change its rates

must focus on the words of the natural gas contract.

B. Standard of Review

        In light of Mobile and Memphis, we now turn to the firm

natural gas agreement at issue in the case sub judice.               Flagg asks

the Court to defer to FERC's construction of that agreement.             This,

we cannot do.       It is well-settled in the Fifth Circuit that this

Court will review the construction of natural gas contracts freely.

El Paso Natural Gas Co. v. Federal Energy Regulatory Commission,

881 F.2d 161, 164 (5th Cir.1989);           Pennzoil Co. v. Federal Energy


                                        8
Regulatory Commission, 789 F.2d 1128, 1135-36 (5th Cir.1986). This

Court will not defer to FERC's construction of such contracts

unless FERC    relied     on   its   factual   or   technical    expertise     in

reaching its conclusions.        Mid Louisiana Gas Co. v. Federal Energy

Regulatory Commission, 780 F.2d 1238, 1243 (5th Cir.1986);                    see

also El Paso Natural Gas, 881 F.2d at 164 (stating that "where the

understanding of the problem is enhanced by the agency's expert

understanding of the industry, this Court may defer to the views of

the agency although those views are not conclusive" (emphasis

added; internal quotations omitted)). In the case sub judice, the

Commission relied solely on the words of the contract.                This Court

will therefore review the construction of the gas transportation

agreement de novo.

C. Interpreting the Contract

      In interpreting a natural gas contract, courts should apply

the normal rules of contract interpretation.                Mid Louisiana Gas,

780 F.2d at 1242-43.      In section 16.4 of their contract, Flagg and

Tennessee agreed that the Texas rules of contract interpretation

would control in any contract disputes.                 A cardinal rule of

contract interpretation in Texas requires courts to review the

entire contract in order to determine its meaning;               courts should

not consider      any   single   provision     in   isolation.     Eagle      Life

Insurance   Co.    v.   G.I.C.   Insurance     Co.,   697    S.W.2d    648,   650

(Tex.App.—San Antonio 1985, writ ref'd n.r.e.).               To the contrary,

the goal of contract interpretation is to determine the parties'

intentions by harmonizing and giving effect to each provision


                                       9
within    the   contract    such   that      none   is   rendered     meaningless.

Railroad Co. v. Androscoggin Mills, 89 U.S. (22 Wall.) 594, 22

L.Ed. 724 (1874);       Woods v. Sims, 154 Tex. 59, 273 S.W.2d 617, 620-

21 (1954);      Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513,

243 S.W.2d 154, 158 (1951);          Eagle Life Insurance Co., 697 S.W.2d

at 650;      see also Duracon, Inc. v. Price, 817 S.W.2d 147, 149

(Tex.App.—El Paso 1991, writ denied) (stating that courts are to

presume that      the   parties    intended     every     clause     to   have   some

effect).     Not only must courts give meaning to each provision,

courts must also give meaning, effect, and purpose to every word in

the contract, if at all possible. TM Productions, Inc. v. Nichols,

542 S.W.2d 704, 708 (Tex.App.—Dallas 1976, writ ref'd n.r.e.).

     The starting place for construing a contract is its language.

Mid Louisiana, 780 F.2d at 1243.             The provisions in dispute here

are located in Article VIII, which is entitled "Rates For Service."

The most     important     of   those   provisions       for   our   purposes    are

sections 8.2 and 8.4.           Those sections are the second and fourth

paragraphs in Article VIII.          They provide the following:

     8.2 Transportation Rates—Beginning on the Commencement Date,
     the compensation to be paid by Shipper to Transporter for the
     transportation service provided for herein shall be payable
     monthly in accordance with Article X hereof and shall be equal
     to the sum of the following: (a) the product of (1) the sum
     of the "D-1" charges for Segments 2 and 3 under Transporter's
     NET-EU Rate Schedule and (2) the Transportation Quantity, (b)
     the product of (1) the sum of the "D-2" charges for Segments
     2 and 3 under Transporter's NET-EU Rate Schedule and (2) the
     "D-2 Billing Determinant" for the applicable billing period as
     set forth in Exhibit B hereto, (c) the product of (1) the sum
     of the "Commodity" charges for Segments 2 and 3 under
     Transporter's NET-EU Rate Schedule and any applicable
     surcharges as included in Transporter's effective FERC Gas
     Tariff and (2) the quantity of gas delivered by Transporter to
     Shipper during the applicable billing period.

                                        10
     References herein to Transporter's NET-EU Rate Schedule shall
     include any successor or substitute rate schedules....

     8.4 Rate Changes—Shipper agrees that Transporter shall have
     the unilateral right pursuant to this Article VIII to file and
     make effective changes in the rates, charges, and conditions
     applicable to service pursuant to the Rate Schedule under
     which this service is rendered and/or any provisions of the
     General Terms and Conditions of Transporter's FERC Gas Tariff
     Volume No. 1 as such Tariff may be revised or replaced from
     time to time. Without prejudice to Shipper's right to contest
     such charges, Shipper agrees to pay the effective rate for
     service rendered pursuant to this Agreement, subject to FERC
     review and adjustment. (Emphasis added).

1. FERC'S Construction

     Reviewing section 8.2, the Commission correctly determined

that that section requires Flagg to compensate Tennessee according

to a set formula which includes variables for Demand ("D-1" and "D-

2") and Commodity charges for Segments 2 and 3.     The Commission

also determined that section 8.4 "arguably does give[ ] Tennessee

the right to unilaterally file changes to two parts of its tariff:

the rates, charges, and conditions for the service ... and the

tariff's general terms and conditions."      60 FERC at ¶ 61,865.

However, the Commission determined that the emphasized portion of

section 8.4—"pursuant to this Article VIII"—limited Tennessee's

right to file revised rates.     According to the Commission, any

changes under section 8.4 must be consistent with section 8.2.

Since section 8.2 allows Demand and Commodity charges solely for

Segments 2 and 3—not for Segment U—the Commission concluded that

adding charges for Segment U is inconsistent with section 8.2.   The

Commission therefore ruled that the "pursuant to" phrase prohibited

Tennessee from unilaterally adding a Segment U charge for the NET-

EU service.   Id.   In essence, the Commission decided that section

                                 11
8.4 allows for changes in Segments 2 and 3 charges only.

         Here, on appeal, FERC adds that the definition of "pursuant

to" supports the Commission's conclusion.             FERC asserts that

"pursuant to" is a restrictive phrase which means "in conformance

to or agreement with" or "according to."           FERC quotes BLACK'S LAW

DICTIONARY as providing that "when [the words "pursuant to' are] used

in a statute ... [they constitute a] restrictive term."            FERC's

Brief at 22-23 (quoting BLACK'S LAW DICTIONARY 1236 (6th ed. 1990)).

     We disagree with both the Commission's construction of the

contract and FERC's interpretation of the "pursuant to" language.

In our view, the construction proffered by FERC effectively deletes

section 8.4     from   the   contract.   Section    8.2—even   absent    the

language in section 8.4—authorizes Tennessee to unilaterally change

the costs associated with Segments 2 and 3.        Section 8.2 sets forth

a formula for charging for the use of Segments 2 and 3.                 That

formula includes four variables—D-1 charges, D-2 charges, Commodity

charges, and a D-2 Billing Determinant.     The dollar amount for each

variable is set out, not in the contract, but in the NET-EU Rate

Schedule.    Hence, a unilateral change in the NET-EU Rate Schedule,

which is expressly permitted by section 8.2,6 changes the dollar


     6
      The second paragraph in section 8.2 states that references
to the NET-EU Rate Schedule "shall include any successor or
substitute rate schedules." That language is strikingly similar
to the provision which was at issue in Memphis. There, the
contract provided that "[a]ll gas delivered hereunder shall be
paid for by Buyer under Seller's Rate Schedule ... or any
effective superseding rate schedules." 358 U.S. at 105, 79 S.Ct.
at 196 (emphasis in the original). The Supreme Court ruled that
that language authorized the Seller to unilaterally change the
rates. Id. at 110, 79 S.Ct. at 198-99.

                                    12
amount      of   each   variable.    A   change       in   the   variable   amounts

necessarily changes the charges for Segments 2 and 3. Hence, under

the Commission's construction, section 8.4 is mere surplusage. The

Commission's construction gives section 8.4 no independent meaning

of its own.         Section 8.4 simply mimics section 8.2;                  it adds

nothing to the contract.

       FERC's     restrictive    definition      of    "pursuant    to"     likewise

eviscerates section 8.4 from the contract.7                 In FERC's view, the

first sentence in section 8.4 allows Tennessee to change the rates

and charges as long as those changes are "in agreement with"

section 8.2.       This argument, when taken to its logical conclusion

is nonsensical, for absent section 8.4, the rate formula outlined

in section 8.2 can never change.              Yet, under FERC's construction,

absent a change in section 8.2, Tennessee cannot exercise its right

to change section 8.2.          In other words, section 8.2 has to first

change before it can be changed.          If it does not change on its own,

it cannot be changed under the authority of section 8.4.                       This

construction not only make no sense, but it also negates section

8.4:       It, in effect, requires the rate formula to remain constant,

since section 8.2 clearly cannot change on its own.                       Thus, the

section 8.4 language which provides Tennessee with the right to

make unilateral changes in the transportation rates is, again,

rendered meaningless and ineffective.             Such a construction clearly

       7
      We also note that the restrictive definition proffered by
FERC is inapplicable in this case. BLACK'S LAW DICTIONARY makes
clear that the "pursuant to" phrase is restrictive "when used in
a statute." BLACK'S LAW DICTIONARY 1237 (6th ed. 1990) (emphasis
added). A contract—not a statute—is at issue here.

                                         13
violates the elementary rules of contract interpretation which

require courts to give meaning to each term, phrase, and provision

of a contract.    See Androscoggin Mills, 89 U.S. (22 Wall.) 594, 22

L.Ed. 724 (1874) (requiring courts to give effect to all of a

contract's provisions);      TM Productions, Inc., 542 S.W.2d at 708

(stating that courts must give effect and purpose to each word in

a contract).

      Our construction of the contract does not violate these

contract interpretation rules. This Court's review of the contract

reveals a more coherent interpretation, one which gives meaning and

effect to both section 8.2 and section 8.4. Another interpretation

of the "pursuant to" phrase aids in our task.        WEBSTER'S NEW COLLEGIATE

DICTIONARY and BLACK'S LAW DICTIONARY first define "pursuant to" as

meaning "in carrying out" or "in the course of carrying out."

WEBSTER'S NEW COLLEGIATE DICTIONARY 930 (1979);   BLACK'S LAW DICTIONARY 1237

(6th ed. 1990).    Using this definition, the pertinent sentence in

section 8.4 provides Tennessee with the unilateral right, in

carrying out Article VIII, to file and make effective changes in

the   transportation    rates.     Because   Article     VIII   establishes

Tennessee's authority to charge Flagg for the gas transportation,

Tennessee "carries out" the terms of Article VIII by charging

Flagg. Hence, section 8.4 simply provides Tennessee with the right

to change transportation rates when carrying out its charging

authority.

      Our construction of section 8.4 is consistent with other

provisions in the contract—section 16.1, in particular.             Section


                                    14
16.1 prohibits the modification of any of the terms of the contract

absent written consent by both parties.    By using the "pursuant to

this Article VIII" language in section 8.4, the parties completely

removed Article VIII from the ambit of section 16.1.     The parties

provided that contrary to the modification prohibition in section

16.1, unilateral changes in Article VIII are permissible.

2. Flagg's View

     Flagg offers a second interpretation of the contract.        It

contends that the terms "rates" and "charges" are used synonymously

in section 8.4 and are distinct from the terms "cost allocation"8

and "compensation," terms which refer to the amount Flagg owes to

Tennessee for the gas transportation.     Using this reading of the

contract, Flagg reaches FERC's conclusion:      while Tennessee may

revise the "charges" for Segments 2 and 3, Tennessee may not change

the overall gas transportation rates by, for example, including

charges for Segment U.

     Besides completely negating the effect of section 8.4, as

discussed in part II(C)(1) of this opinion, Flagg's construction

improperly renders the word "rates" superfluous. Fort Worth Lloyds

Insurance    Co.     v.    Willham,       406   S.W.2d    76,    79

(Tex.Ct.Civ.App.—Amarillo 1966) (stating that "courts are without

authority to needlessly reject any words or terms used in contracts

by the parties or delete any clause therein as surplusage, unless

such action is judicially mandatory").     A careful reading of the

contract reveals that the words "rates" and "charges" are used

     8
      The term "cost allocation" is not used in the contract.

                                15
distinctly.           Section    8.2       associates         the    word     "charges"       with

specific costs connected with three of the four NET-EU variables.

That       section    provides       for    "D-1      charges,"       "D-2        charges,"    and

"Commodity charges."            (Emphasis added;                  internal quotation marks

omitted).

       The word "rates" is used more globally.                          That word is used

just four times in the contract.                       Section 8.4 is entitled "Rate

Changes," and it provides Tennessee with the "unilateral right ...

to file and make effective changes in the rates."                             Article VIII is

entitled        "Rates   For     Service,"            and    section        8.2    is     entitled

"Transportation Rates."              The word "rates," as used in these latter

two    locations,        alludes,          not    to        the    Demand     and       Commodity

variables—as does the word "charges."                        Using the ordinary meaning

of the word and construing "rates" in the context of the entire

contract, we find that that word means the overall price for the

gas    transportation.9              The   word       "rates"       found    in     section    8.4

necessarily has the same definition as does the word "rates" found

in the title to Article VIII and in section 8.2.                              See Gonzalez v.

Mission American Insurance Co., 795 S.W.2d 734, 736 (Tex.1990)

(deciding that in general, a word which is used in one sense in one

part       of   a   contract    is    presumed         to    retain    that        same    meaning

throughout the contract, absent indications to the contrary);

       9
       Indeed, WEBSTER'S NEW COLLEGIATE DICTIONARY defines "rate" as "a
charge, payment, or price fixed according to a ratio." WEBSTER'S
NEW COLLEGIATE DICTIONARY 950 (1979). Flagg is therefore correct in
arguing that the term "rates" is not synonymous with the term
"compensation." Although the amount of compensation equals the
transportation rates, "compensation" refers to the amount Flagg
owes Tennessee, not the price of the transportation services.

                                                 16
Johnson v. Dick, 281 S.W.2d 171, 175 (Tex.Ct.Civ.App.—San Antonio

1955) (same);      Green Avenue Apartments, Inc. v. Chambers, 239

S.W.2d 675, 685 (Tex.Civ.App.—Beaumont 1951) (same).        Thus, in

authorizing Tennessee to change the "rates," section 8.4 gave

Tennessee the authority to completely revise the prices for its gas

transportation services.   Tennessee's right to make such revisions

is limited only by procedural and other requirements in the Natural

Gas Act.   Memphis, 358 U.S. at 110, 79 S.Ct. at 198-99.

     Flagg contends that such an interpretation fails to consider

the technical manner in which the term "rates" is used and renders

section 8.2 nugatory.   Neither argument is persuasive.    First, the

contract does not indicate that the word "rates" is used in any

technical sense.    In fact, FERC, itself, used the term "rates" as

meaning the total costs for the gas transportation throughout the

course of this controversy.      See, e.g., 60 FERC at ¶ 61,863

(stating that "Tennessee filed a general rate case ... seeking to

increase the rates for most of its services");       Tennessee Gas

Pipeline Co., 59 FERC ¶ 61,175 (1992) (stating that "the Commission

rejected Tennessee Gas Pipeline Company's ... proposal to increase

its rates for transportation services under Rate Schedule NET-EU

"); Tennessee Gas Pipeline Co., 58 FERC ¶ 61,343 (1992) (asserting

that Tennessee "filed a limited rate case proposing to increase

Rate Schedule NET-EU rates");   Tennessee Gas Pipeline Co., 58 FERC

¶ 61,160 (1992) (stating that Tennessee "filed a tariff sheet

reflecting increased rates for transportation service rendered

under its Rate Schedule NET-EU") (emphasis added).


                                 17
     Second, this Court's construction of section 8.4 does not make

section 8.2 meaningless. This Court's construction of the contract

simply makes the authority of section 8.2 temporary.           The clear

intent of the parties, as revealed in the contract, was that the

specific rate guidelines set forth in section 8.2 would be viable

only until Tennessee chose to revise the transportation rates in a

manner consistent with the NGA.

     In this case, Tennessee has filed revisions to its NET-EU Rate

Schedule to include charges for Segment U.          This Court does not

determine whether those revisions are consistent with the NGA, nor

has it been asked to do so.       However, a clear reading of the gas

transportation contract at issue here reveals that the Flagg-

Tennessee agreement unambiguously authorizes Tennessee to file such

unilateral changes.    Any other reading would impermissibly negate

portions of the contract.10

                           III. Conclusion

     For   the   aforementioned   reasons,   this   Court   REVERSES   the

decision of the Federal Energy Regulatory Commission.




     10
      Tennessee has presented numerous other arguments and
counter-arguments in support of its position. In light of our
construction of the contract here, we need not address those
arguments.

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