Document: 411 U.S. 747 93 S.Ct. 1870 36 L.Ed.2d 635 GULF STATES UTILITIES COMPANY, Petitioner,v.FEDERAL POWER COMMISSION et al. No. 71—1178. Argued Dec. 5, 1972. Decided May 14, 1973. Syllabus Following petitioner's application under § 204 of the Federal Power Act to respondent Commission (FPC) for authorization a bond issue, two intervening cities opposed on ground that proceeds issue would be used finance or refinance certain anticompetitive activities in violation antitrust laws, Act, and Public Utility Holding Company 1935. Section 204(a) empowers FPC authorize security only if is found some lawful purpose compatible with public interest. The granted cities' petition intervene, denied their request hearing, authorized holding allegations were irrelevant requested securities 204. Court Appeals remanded case consideration claim, that, line reasoning Denver R.G.W.R. Co. v. United States, 387 485, 87 1754, 18 905, should have considered alleged competitive consequences proceeding. Held: 1. FPC, as general rule, must consider Pp. 756—7621879. (a) did not render policy FPC's regulation electric power industry. 757—759. (b) fact has broad authority other provisions determine whether utility's conduct interest does mean same standard equally germane P. 759. (c) Consideration policies context provides first defense against practices might later become subject an 760. (d) like Interstate Commerce Commission, regulatory authority, which includes responsibility considering discharging its statutory obligations. Cf. & supra. 760—762. 2. Though necessarily required hold hearing make full investigation all cases, summary disposition proffered objections requires strict scrutiny by reviewing court light Commission's obligations protect enforce laws. 763—764. 3. Unexplained administrative action incompatible requirements precludes appropriate judicial review. 147 U.S.App.D.C. 98, 454 F.2d 941, affirmed. Benny Harry Hughes, Beaumont, Tex., petitioner. Leo E. Forquer, Washington, D.C., Gen. Counsel F.P.C. support Robert C. McDiarmid, cities. Howard Shapiro, amicus curiae, supporting Mr. Justice BLACKMUN delivered opinion Court. 1 This presents question whether, when utility applies security, do 49 Stat. 850, 16 U.S.C. 824c,1 passing upon application, issue's effect determining it 'compatible interest,' phrase employed 204(a). 2 * In October 1970, Gulf States Utilities applied cash, bidding, $30,000,000 mortgage 30-year bonds refunding part Gulf's then-outstanding commercial paper short-term notes.2 3 Gulf, Texas corporation qualified business Louisiana, within meaning 201(e) 824(e). It engaged principally generating, distributing, selling energy southeastern south central Louisiana area approximately 28,000 square miles population about 1,225,000. sells at retail numerous communities market and, time was providing resale nine municipal systems, 11 rural cooperatives (one serving four systems), one utility. 4 filed notice application. 35 Fed.Reg. 16649 (1970). Thereupon Lafayette Plaquemine, (Cities) protest intervene proceedings before formal Cities concert investor-owned utilities, Light (LP ) Central Electric (CLECO), had 'apparently violative anti-trust laws,' well 10(h) 803(h),3 1935, 838, 15 79 seq.—that these activities, effect, 'financed refinanced here proposed'; utilities' 'unless until purges itself past violations, unless conditions authorization.' 5 Cities' claim centered stressed 1968 interconnection pooling agreement between Cities, Dow Chemical Company, Cooperative, Inc. (LEC). plant near Cities; generating capacity could members pool emergency stabilizing capacity. LEC generation transmission cooperative financed Rural Electrification Administration (REA): super-cooperative composed 12 distribution cooperatives, located served three utilities. 6 1964, REA loans construction station lines through able serve eight member organizations. These then purchasing from claimed utilities attempted destroy LEC, pointed history 'extraordinary litigation' instituted 1964 1970 prevent lines, delaying five years. arrangement proposed assure parties' surplus coordinate, substantial savings, new generators parties. correspondingly, lose carried out. Accordingly, alleged, frivolous repetitive litigation launched relations lobbying drive order block loan fulfillment agreement. California Transport Motor Trucking Unlimited, 404 508, 92 609, 30 642 (1972). 7 effected, however, 1969. But sufficient facilities exclusive lines. Dow, forced negotiate use transmit power. contended continued, course negotiations, limit agreeing provide services members; refusing supply canceled; demanding wattage already planned, thus giving right further needs LEC's precluding expansion LEC. 8 intervention, bring They such anti-competitive properly proceeding 204(b), 824c(b), may condition approval accordingly place restrictions proceeds. 9 By answer, any 'to unsound financing impair financial integrity utilities,' even accepted true those matters 'irrelevant this application.' 10 issued December 3, 44 1524, permission intervene. issuance sale bonds. recited: 'The Bonds allow (sic) change form portion outstanding indebtedness, call initiation program Petitioners. violations petitioners attempt raise are securities. There no relief can authorizing refinancing purposes Petitioners, solve problems outlined them.' Id., 1525. specifically found: asserted issuing refund shortterm indebtedness heretofore Commission.' 1526. 13 rehearing 313(a) 825l(a), see Department Fish Game 359 165, 168—169 (CA9), cert. denied, 385 932, 293, 17 214 (1966), denied. 14 Review sought pursuant 313(b) 825l(b), District Columbia Circuit. A unanimous panel disagreed claims raised sub nom. City Lafayette, La. SEC, 941 (1971). recognized contention operations 'could meaningful relation replace notes long term bonds' 'not without appeal, also problems.' 109, F.2d, 952. concluded, 'cryptic statement permit us conclude reasonable confidence position taken FPC.' Ibid. observed respected out hand earlier decision Pacific Co., 27 623 (1962), viewed untenable Court's subsequent 905 (1967).4 Inasmuch issues potential recurring importance respect we certiorari. 406 956, 2058, 32 343 took error, but nevertheless grant. II mandate 824c, imposes impressive one. 'if finds . object, corporate applicant interest.' inquire into satisfied lawfulness. And 'object' lawful, necessary inquiry ended, for, addition, object making determination 204(a), given powers enforcement. 204(b) hearings grant 'in whole part,' modify it, impose terms 'as find appropriate.' After opportunity good cause shown, supplement, modify, previous 204(c) grants specify amount allowed purpose. While, observes, §§ 204(e) (f) exempt transactions concern 'organized operating State laws regulated commission,' exemptions5 significantly detract sweeping responsibilities generally. We asked extend possible flowing security. both argue narrowly confined prevention ability perform service responsibilities. Exactly interpretation placed 1962 F.P.C., 626.6 contend considerations kind fall limited scope defined, broad-ranging need relatively fast passes issue. said fully related interconnections 202 824a, dispositions mergers 203, 824b, rates rate-making 205 206, 824d 824e, adequacy 207, 824f. 19 Although similar may, indeed, made regard determinative Instead, touching 'public interest' sections emphasizes breadth generally embodied statute enacted Tit. 803, 850. primary purposes: curb abusive companies bringing them effective control, federal expanding transmitting interstate commerce. 803—804, 847—848; S.Rep. 621, 74th Cong., 1st Sess., 1—4, 17—20; H.R.Rep. 1318, 7—8; Jersey 319 61, 67—68, 63 953, 956—957, L.Ed. 1258 (1943); North American 327 686, 66 785, 90 945 (1946). passed of, response to, great concentrations economic political vested trusts, absence enforcement restrain growth companies. See supra, 11—12; Corporations—Summary Report, 70th S. Doc. 92, Part 73—A, pp. 47—54; Cong.Rec. 8392 (1935). 20 achieve perceived operational level business, enacted. 17; 7. denominated 863. Title certainly preclude operation important areas described above. Otter Tail 410 366, 1022, (1973); Meeks, Concentration Industry: Impact Antitrust Policy, 72 Col.L.Rev. 64 clearly carries consider, circumstances, effects aspects directives contained 205, 207. Indeed, confines basic natural monopoly structure, competition sort protected seems been anticipated. 373—374, S.Ct., 1027—1028; 369 482, 82 901, 54 (1962); S.Rep.No.621, 12; Hearings House Committee Foreign H.R. 5423, 157—159 (1935); Summary 52; 21 Nothing suggests contains less directive than similarly worded adjacent sections. Under express language governing factor. nothing indicates restricted considerations, every aspect ignored. Further, there section's requirement lawful. directed evaluate will put. Without more definite indication contrary legislative purpose, shall read relating fundamental national expressed FMC Svenska Amerika Linien, 390 238, 244, 88 1005, 1009, 1071 (1968); U.S., 484—485, 903—904; FCC RCA Communications, Inc., 346 86, 94, 73 998, 1004, 97 1470 (1953); McLean 321 67, 80, 370, 377, 544 (1944). Report National Policy Public-Utility Companies, 55, 59 (App.). moreover, serves function establishing proceedings. particularly significant 204, pre-issue stage avoid unravel complex granting Act. 22 Our conclusion reinforced (1967). concluded performing duty 20a(2) 20a(2), particular 'for required, modeled 20a initial draft reference identified specific (property acquisition; improvement service; discharge obligations; reimbursement expenditures purposes). 108 109; 1725, 109—110.7 provision intentionally replaced broader now attain greater flexibility workability original section. defining substantially section proved usefulness.' 20. was, thus, departure specific, selection general. perceive reason view differently ICC's Each agency possesses authority. charged statute. virtually identical language.8 ICC obligation 11(a) Clayton 21(a), advance Transportation control case, 492—493, 1759 1760, parallel deemed controlling. (1962). III 23 end inquiry, subordinate questions remain: abused objections, facts improperly rejected they approval. 24 asserts investigate refusal so summarily dispose extended investigation. case. Neither allegation investigated regardless facial merit, not, deferred, major forthwith remainder withheld study.9 So rule unduly discretion mold procedures exigencies unrealistic nature flexibility, planning, rapid coordinated acute market. where disposes exercises approve consequences, 'the closely scrutinize Whether abuse present ultimately depend transaction approved, justifications deferral' treatment. Denver, 498, 1762. noted, concerned ICC, foregoing quotation forceful context. 25 strenuously urges allegations, although summarily, merits having future engage. noted above observed, U.S.App.D.C., 952, argument appeal. On basis record us, cannot say justified rejecting summarily. go unexplained face far inadequate explanation reasons disposing merits, what occurred. provided why warranted, meritless. more, unable 'closely (to) scrutinize' action. Nor me alternative, unstated agency's alone make.' SEC Chenery Corp., 318 88, 454, 459, 626 (1943). 26 remanding Affirmed. 28 POWELL, whom STEWART REHNQUIST join, dissenting. 29 raises (the Commission) relevant 'only assumption interest, consistent proper performance service, reasonably purposes.' 824c(a) (emphasis supplied). 31 Rejecting own structuring repudiating uniform third century, today implicit 204's acting alleged. As I am persuaded neither majority's analysis nor discussion context, remain accord deference entitled.1 Moreover, stated below, believe assuring enabled meet capital most favorable terms. dissent. initiated 12, (Gulf States) seeking sell $30 million bidding. pay off notes, whose previously approved Commission. 33 Cities), motion November 2, alleging continuing conspiracy among implementation Interconnection Pooling Agreement link Cooperative). Cooperative build facility coconspirators number techniques, including litigation, delay 1969, result longer sufficed plant. rely which, allegedly, agree restrict operations. asserted, finally, way State's actions.2 34 declined allegations. explained fully: allow(s) order, subsequently modified respects rehearing. 37 Reviewing behest held urged intervenors. While court's ruling flexible terms, allowing reject 'insubstantial barren' lack 'reasonable nexus' issuance, 'supported record,' presumably something addition offered 110, 953.3 38 common deal licenses 'on following conditions,' that: 39 '(h) Combinations, agreements, arrangements, understandings, implied, output electrical energy, trade, fix, maintain, increase prices hereby prohibited.' 803(h). 40 Court, then, responsibility, how exercise it. 41 Stated abstractly, sensible method regulating focus rather means possibly financed. acknowledges allegedly behavior proceedings: interconnection, 824a; acquisition merger, 203 824b; review rates, 206 824e; charge discriminatory practices, 824d, 207 Additionally, unlawful complaint '(a)ny person, State, municipality, 306 825e, motion, 307 825f. presently investigating here. F.P.C.Doc. E—7676.4 42 Given direct undertaking exercising think convert allpurpose sword.5 recognized, nexus very weak event, charges unfounded. view, merit determined each because process often frustrate efforts obtain price 43 sensitive complexities subtleties raising vast sums money markets.6 normally accomplished bidding participated small investment firms specialize purchase issuers wholesaling highly uncertainties. maintainance orderly market, dependable marketing timetables, essential decisions bankers settled practice 'bring market' carefully structured schedule. When anticipated, schedule compressed usually period 45 days. lead uncertainties injected process, risk re-evaluation resulting adverse cost end, public. double process. Apart ultimate impact occasioned disruption simply keep pace burgeoning demand energy.7 Both delicacy availability alternative conduct, strongly anything require conclusion.8 Senate states straightforwardly: 'Control over capitalization plainly safeguarding impossible economical public-utility functions.' S.Rep.No. 50 (1935) 46 companion legislation entrusting Securities Exchange (SEC) regulate companies, Congress least ordinary case.9 Even apart relevance congressional company seeks supports prudent judgment treatment applications 47 compete markets makes little sense, especially construing applicable industry, construe different, burdensome procedure, system.10 Yet, bizarre today's 48 rests (1967), involving controlling stock carrier (ICC). my falls short being persuasive precedent. Railway Express Agency (REA). Approximately 2,000,000 shares exclusively railroads, obligated offer others outsiders. 500,000 whomever wished, entered Greyhound additional 1,000,000 stockholders, open 60 20a, shares. section, applicant's) purposes, ..' 20a(2). intervenor's give 'control' REA, or, minimum, lessening freight transportation argued protecting manipulation, 'anticompetitive' defer expiration Greyhound's large REA's stock. 491—492, 1758—1759. addressing contention, gave scant attention 20a. noting version 'led study condemned evil' intercorporate holdings railroad stock,' id., 492 n. 4, 1759, shifted focus: 51 'Even Congress' (fiscal) 'lawful object' negate existence close eyes indicating exceed limitations imposed laws.' 492, 1759. 52 One responsibilities, found, deriving 21. conjoining carriers, either merger transfer stock, submitted confers immunity. compliance 18, prohibit assets another lessen competition, tend create monopoly.' saw postpone 60-day offer, violation. 53 interpreted majority points out, model Act.11 tie constructions.12 involved different framework, history.13 carrier, arguably per se laws: 'substantially monopoly' indicated above, showed 'intercorporate stock.' immediacy overriding address sum, precedential weight involve arguable IV 55 return relationship States' proposal cash is, best, attenuated effect. simple Their assertion barely goes beyond bald insistence proposed.' Brief Respondent 9. consistently much uses put issuance. believes characteristic proposals utilities.14 56 This, unlikely force conduct. apparently considers colorably refinancing. If so, wholly irrelevant. precedent, justification themselves patently false. 57 field insist, actions reflect actions, difficult task intervenor findings fact. amply demonstrates, complicated ones unsuited adjudication. free seek findings, thereby delay. 58 converting special-purpose general-purpose one, renounces founded practicalities regulation.15 established available policing conduct,16 fresh ill-defined obstacles industry expeditious And, name ignores critical mandating prolonged factfinding vindicating peculiarly implicated proposals. uphold reverse Appeals. '§ 824c. Issuance securities; liabilities; filing duplicate reports '(a) No until, extent utility, authorizes .. purposes. '(b) after part, modifications appropriate, time, supplemental orders premises uses, theretofore thereof applied, always subsection '(c) shall, consent apply specified excess otherwise contravention order.' registration bonds, received connection Company's App. 162. uncontested Docket E 7509. total $80,000,000 debt. Only $55,000,000 Thus, borrowed $25,000,000 credit authorization. 'Combinations, LP issues, repay objectives , CLEC, conditioned cessation illegal establishment remedy damage done. jurisdiction instance based 79f 79g, 814—817. Sections contain met 7(d), 'shall declaration that—. (6) detrimental investors consumers.' refused entertain protest, concluding 7(d)(6) solely issued, collateral unrelated controversies engaged. petitioned Circuit orders, matter consolidated affirmed FPC. diverse follows: 'Where operations, surveillance attack grounds. doctrine requiring take account problem arises (past projected) agency, company. stands posture inter alia, interconnect discriminating customers' 112—113, 955—956 original). exemption challenged Cf., Black Hills 1121 1605 (1964). 'Sec. 206(a). assume liability guarantor, indorser, surety, liability. others, purposes; property; construction, completion, extension utility; moneys actually expended sources aforesaid cases kept accounts vouchers manner enable ascertain expenditure made.' version. Except spelling punctuational differences, identical. recognized. 623, 627 meticulously various options 110—111, 953—954. entitled deference: 'When faced shows officers administration. 'To sustain term, reached arisen proceedings.' Unemployment Compensation Comm. Aragon, 329 143, 153, 67 245, 91 136.' Udall Tallman, 380 1, 16, 85 792, 801, 616 (1965). brief challenged, records fail show since enactment intervenors establish anyone. Petitioner 26. thought securities,' 1525, found—to court—that lacked suits brought private parties Division afford relief. analogous circumstances. There, fund politically controversial line, stating: plain company's responsibilities.' 626. expedition adherence schedules administration Act: 'It if, changing conditions, needed carry .' 629. Prof. Priest commented urgency industry: 'Since World War II, been, continue be, compellingly urgent managements.' A. Priest, Principles Regulation 451 (1969). describing 'spectacular' compared access industrial enterprises: '(T)he next ten years extraordinary effort. obvious (1) literally produce retained earnings unregulated enterprises (2) larger dollar annual revenue industrial.' 452. brief, questioned, 1971, covering nearly.$1.8 billion 24. amended Water redesignated 8, disapprove 'detrimental 79g(d)(6). challenge conspired States. ante, 754—755 4. protests pertaining 'collateral controversies,' 103, 946, upheld 112, 955. Further evidence intent gleaned exempted 'a organized commission.' 204(f) 824c(f). At 10378 Had intended screening, presumably, exception. 'follows given, comply orders.' hardly suppose 1935 borrow words construed 1967. understood, 'proved departed exception state-regulated securities, 10, practical differences financing. Because several decades railroads contracted expanded services, equipment trust resorting capital: 'Railroads enlarge trackage largely internal resources ubiquitous efficient rolling electric, gas, communications, water industries, airlines, fraternity staggering amounts.' 7, 451. worthy note resembling pertinent purchase, acquire, secured so.' 824b. practices. 768. Thus addressed arise foreclose possibility remotely type.

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