## Facts

- New Orleans Public Service, Inc. (NOPSI), a utility providing gas and electricity in New Orleans, purchased natural gas from United Gas Pipe Line Co. under long-term agreements governing “power plant gas” used to generate electricity.
- United invoked a contract “redetermined rate” mechanism to increase the price of power plant gas; NOPSI disputed the increase and filed a diversity breach-of-contract action against United.
- The mayor of New Orleans and other city officials, along with a group of electricity consumers, sought to intervene, asserting that the contract dispute would affect electricity rates and that they should participate to protect the public interest.
- The district court denied intervention of right and permissive intervention to all applicants.
- A prior appellate panel had ordered permissive intervention for the city officials, but the Fifth Circuit granted rehearing en banc limited to the intervention questions.

## Issues

1. Whether city officials or electricity consumers had a “direct, substantial, legally protectable interest” in the contract litigation sufficient for intervention of right under Federal Rule of Civil Procedure 24(a)(2).
2. Whether the district court abused its discretion in denying permissive intervention under Federal Rule of Civil Procedure 24(b).

## Decision

- The en banc court affirmed the district court’s denial of intervention to both the city officials and the consumers.
- The court held neither group satisfied Rule 24(a)(2) because their asserted interests were indirect and generalized rather than legally protectable interests in the contract transaction.
- The court held the district court did not abuse its discretion in denying Rule 24(b) permissive intervention based on likely complication, delay, and diversion from the core contract dispute.
- The en banc court rejected the earlier panel’s conclusion that permissive intervention for city officials was required.

## Legal Principles

- Intervention of right under Rule 24(a)(2) requires a “direct, substantial, legally protectable interest” related to the transaction at issue; indirect economic effects or interests shared with the public generally are insufficient.
- An interest is inadequate for Rule 24(a)(2) when its effect depends on intermediate decisions or proceedings (such as regulatory rate-setting) rather than the direct legal operation of the judgment.
- Adequate representation defeats intervention of right; when an existing party’s objectives substantially match the applicant’s (e.g., obtaining favorable contract relief), different litigation tactics or settlement preferences do not establish inadequate representation without more.
- Permissive intervention under Rule 24(b) is committed to the district court’s discretion; even with common questions of law or fact, intervention may be denied to avoid undue delay, prejudice, or expansion of a private dispute into broader public policy controversies.

## Conclusion

The Fifth Circuit en banc held that city officials and ratepayers could not intervene in a utility’s contract dispute with its fuel supplier because their asserted rate-related concerns were indirect and not legally protectable under Rule 24(a)(2), and the district court acted within its discretion in denying permissive intervention to prevent delay and complication of the contract litigation.


New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452 (5th Cir. 1984) (en banc)