Source: https://law.justia.com/cases/federal/appellate-courts/F2/483/1238/155736/
Timestamp: 2020-01-21 00:49:41
Document Index: 460793329

Matched Legal Cases: ['§ 717', '§ 717', '§ 717', '§ 717', '§ 556', '§ 553', '§ 556', '§ 553', '§ 1', '§ 553', '§ 7170', '§ 1651', '§ 717', '§ 706']

Mobil Oil Corporation, Petitioner, v. Federal Power Commission, Respondent,public Service Commission of the State of New York, Intervenor, 483 F.2d 1238 (D.C. Cir. 1973) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › D.C. Circuit › 1973 › Mobil Oil Corporation, Petitioner, v. Federal Power Commission, Respondent,public Service Commission...
Mobil Oil Corporation, Petitioner, v. Federal Power Commission, Respondent,public Service Commission of the State of New York, Intervenor, 483 F.2d 1238 (D.C. Cir. 1973)
U.S. Court of Appeals for the District of Columbia Circuit - 483 F.2d 1238 (D.C. Cir. 1973) Argued March 13, 1973. Decided July 11, 1973. As Amended July 26, 1973
The Commission's regulatory authority in this area comes solely from the Natural Gas Act, which provides in relevant part that " [t]he provisions of this Act shall apply to the transportation of natural gas in interstate commerce . . . ."14 The Act defines such natural gas as "either natural gas unmixed, or any mixture of natural and artificial gas . . . ."15 This definition has been construed to mean a "mixture of gaseous hydrocarbons found in nature."16
In considering the appropriateness of procedures we bear in mind this court's observation in American Airlines that " [i]t is part of the genius of the administrative process that its flexibility permits adoption of approaches subject to expeditious adjustment in the light of experience."47
The Commission has asserted, and the history of producer regulation has confirmed, that the ultimate achievement of the Commission's regulatory purposes may easily depend upon the contrivance of more expeditious administrative methods. The Commission believes that the elements of such methods may be found in area proceedings. " [C]onsiderations of feasibility and practicality are certainly germane" to the issues before us. Bowles v. Willingham, supra, 321 U.S. 503, at 517, 64 S. Ct. 641, 88 L. Ed. 892. We cannot, in these circumstances, conclude that Congress has given authority inadequate to achieve with reasonable effectiveness the purposes for which it has acted.61
15 U.S.C. § 717c (1970).
15 U.S.C. § 717d (1970).
Appellant's third main argument is that the rates set in this case are invalid because they are based upon evidence that under the Commission's own rules could not be considered. The Commission's rules do provide that "unaccepted proposals of settlement . . . shall be privileged and shall not be admissible in evidence against any counsel or person claiming such privilege." 18 C.F.R., Ch. 1, Subch. A, pt. 1, Sec. 1.18(e) (1970). The Commission, however, has interpreted this language to mean that such a privilege is not available to all parties to a proceeding, but may only be claimed by the person who made the offer. This court recently affirmed this interpretation of the rule, finding it neither arbitrary nor unreasonable. Mobil Oil Corp. v. FPC, 152 U.S.App.D.C. 119, 127 n. 8, 469 F.2d 130, 138 n. 8 (1972), cert. denied, 412 U.S. 931, 93 S. Ct. 2749, 37 L. Ed. 2d 159 (1973). Since appellant did not make the settlement offer from which the data was taken it cannot protest the use of this information if its use was otherwise valid
Natural Gas Act, 15 U.S.C. § 717(b) (1970)
Deep South Oil Co. v. FPC, 247 F.2d 882, 888 (5th Cir. 1957). The sections of the Act prescribing Commission power to review and determine the rates at which natural gas is transported or sold grant only the power to set rates for "the transportation or sale of natural gas subject to the jurisdiction of the Commission." 15 U.S.C. §§ 717c(a) and 717d (a) (1970). The FPC's power to regulate has been interpreted to extend to "three things and three only": (1) the transportation of natural gas in interstate commerce; (2) its sale in interstate commerce for resale; and (3) natural gas companies engaged in such transportation and sale. Panhandle Eastern Pipe Line Co. v. Public Service Comm'n of Indiana, 332 U.S. 507, 516, 68 S. Ct. 190, 92 L. Ed. 128 (1947)
390 U.S. 747, 820 n. 111, 88 S. Ct. 1344, 20 L. Ed. 2d 312 (1968)
406 U.S. 621, 92 S. Ct. 1827, 32 L. Ed. 2d 369 (1972)
City of Detroit v. FPC, 97 U.S.App. D.C. 260, 269-271, 230 F.2d 810, 819-821 (1955), cert. denied, 352 U.S. 829, 77 S. Ct. 34, 1 L. Ed. 2d 48 (1956); Cities Service Gas Co. v. FPC, 155 F.2d 694, 703 (10th Cir.), cert. denied, 329 U.S. 773, 67 S. Ct. 191, 91 L. Ed. 664 (1946); Hope Natural Gas Co. v. FPC, 134 F.2d 287, 307-308 (4th Cir.), rev'd on other grounds, 320 U.S. 591, 64 S. Ct. 281, 88 L. Ed. 333 (1943)
Mobil Oil Corp. v. FPC, 149 U.S.App. D.C. 310, 463 F.2d 256, cert. denied, 406 U.S. 976, 92 S. Ct. 2409, 32 L. Ed. 2d 676 (1972)
Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S. Ct. 794, 98 L. Ed. 1035 (1954)
5 U.S.C. §§ 556 and 557 (1970)
Administrative Procedure Act Sec. 4, 5 U.S.C. § 553 (1970)
Administrative Procedure Act Secs. 7 and 8, 5 U.S.C. §§ 556 and 557 (1970)
298 U.S. 468, 56 S. Ct. 906, 80 L. Ed. 1288 (1936) and 304 U.S. 1, 58 S. Ct. 773, 82 L. Ed. 1129 (1938); 410 U.S. 224, 93 S. Ct. 810, 35 L. Ed. 2d 223 (1973)
5 U.S.C. § 553(c) (1970)
Interstate Commerce Act Sec. 1(14) (a), 49 U.S.C. § 1(14) (a) (1970)
410 U.S. at 231, 93 S. Ct. at 814
Id. at 244-245, 93 S. Ct. 810. Distinguishing between an agency's legislative and adjudicative functions, the Court determined that this was a situation in which the agency was creating a generally applicable rule rather than adjudicating factual disputes. The Court then concluded that under the relevant cases the Constitution had never required exhaustive judicial-style hearings, when a prospective quasi-legislative rule was promulgated in a situation not involving significant factual disputes
From the record it appears probable that the FPC did not even comply with the minimal requirements of section 553. Section 553 requires in part that notice shall be given of the "terms or substance of the proposed rule or a description of the subjects and issues involved." 5 U.S.C. § 553(b) (3) (1970). In this case the parties were informed that the proceedings would be to consider the advisability of establishing a general policy of allocating costs to liquids and liquefiables. See footnote 3, supra, and accompanying text. The resulting rule established specific rates for these commodities. See footnote 10, supra, and accompanying text. Although there is certainly no requirement that the resulting rule conform precisely to that which is proposed, there is a serious question whether sufficient notice was given in this case
[I]t cannot be doubted that a statute that requires a "hearing" prior to rule-making may in some circumstances be satisfied by procedures which meet only the standards of Sec. 553. The Court's opinion in FPC v. Texaco, Inc., 377 U.S. 33, 84 S. Ct. 1105, 12 L. Ed. 2d 112 (1964), supports such a broad definition of the term "hearing."
At 241, 93 S. Ct. at 819.
147 U.S.App.D.C. 312, 458 F.2d 731 (1971), cert. denied, 405 U.S. 1074, 92 S. Ct. 1495, 31 L. Ed. 2d 808 (1972)
City of Chicago v. FPC, 147 U.S.App. D.C. 312, 324, 458 F.2d 731, 743 (1971), cert. denied, 41 U.S.L.W. 3635 (S. Ct., 5 June 1973). Cf. Justice Rehnquist in Florida East Coast, 410 U.S. at 236 n. 6, 93 S. Ct. at 817 n. 6: "Moreover, since any agency is free under the Act to accord litigants appearing before it more procedural rights than the Act requires, the fact that an agency may choose to proceed under Secs. 556 and 557 does not carry the necessary implication that the agency felt it was required to do so."
Natural Gas Act Sec. 16, 15 U.S.C. § 7170 (1970).
390 U.S. 747, 88 S. Ct. 1344, 20 L. Ed. Ed.2d 312 (1968)
Id. at 776 n. 40, 88 S. Ct. 1344
Mobil Oil Corp. v. FPC, 152 U.S.App. D.C. 119, 127, 469 F.2d 130, 138 (1972), cert. denied, 412 U.S. 931, 93 S. Ct. 2749, 37 L. Ed. 2d 159 (1973); City of Chicago v. FPC, 147 U.S.App.D.C. 312, 324, 458 F.2d 731, 743 (1971), cert. denied, 405 U.S. 1074, 92 S. Ct. 1495, 31 L. Ed. 2d 808 (1972)
390 U.S. at 776, 88 S. Ct. at 1364
Id. at 777, 88 S. Ct. at 1365
Id. at 776 n. 40, 88 S. Ct. 1344. Perhaps the final point to be made about Permian is the simple one that it was an approval of area ratemaking, and not a contraction of procedures. Permian's record was compiled on the basis of essentially adjudicatory procedures. All that the Court was doing was taking into account the adjustments that were appropriate in adjudicatory procedures when the proceeding's subject matter was broadened from the issue of rates for an individual company to the context of rates for all producers in an area
New England Power Co. v. FPC, 151 U.S.App.D.C. 371, 376, 467 F.2d 425, 430 (1972), cert. granted, 411 U.S. 981, 93 S. Ct. 2269, 36 L. Ed. 2d 957 (1973) (emphasis added)
152 U.S.App.D.C. 119, 469 F.2d 130 (1972), cert. denied, 412 U.S. 931, 93 S. Ct. 2749, 37 L. Ed. 2d 159 (1973)
The court discussed the rate ceilings with the understanding that they were intended to be in effect only until permanent rates were set by traditional methods. 152 U.S.App.D.C. at 129, 469 F.2d at 140. Cf. 28 U.S.C. § 1651
This court has specifically rejected the idea that an agency may avoid finding facts and having those findings reviewed by the courts by the simple expedient of characterizing a proceeding as "rule-making." City of Chicago v. FPC, 147 U.S.App.D.C. 312, 324-325, 458 F.2d 731, 743-744 (1971), cert. denied, 405 U.S. 1074, 92 S. Ct. 1495, 31 L. Ed. 2d 808 (1972)
The Natural Gas Act provides that "The finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive." 15 U.S.C. § 717r(b) (1970). The necessary implication is that if the findings are not supported by "substantial evidence" they will not be permitted to stand
As illustrated, rate-making by whatever method necessarily involves finding facts. There can be no dispute that Congress in passing the Natural Gas Act expected that rates would be tested by this substantial evidence standard. This court has specifically so held. City of Chicago v. FPC, 147 U.S.App.D.C. 312, 325, 458 F.2d 731, 744 (1971), cert. denied, 405 U.S. 1074, 92 S. Ct. 1495, 31 L. Ed. 2d 808 (1972). Every other case in which the factual basis of an FPC rate has been challenged has assumed that the substantial evidence test is the proper method of evaluating the factual predicate. See, e. g., Permian Basin Area Rate Cases, 390 U.S. 747, 816, 824, 827, 88 S. Ct. 1344, 20 L. Ed. 2d 312 (1968); Placid Oil Co. v. FPC (SoLa II), 483 F.2d 880, at 885 (5th Cir. 1973)
5 U.S.C. § 706(2) (E) (1970).
Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S. Ct. 206, 83 L. Ed. 126 (1938)
NLRB v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S. Ct. 501, 83 L. Ed. 660 (1939)
410 U.S. 224, 93 S. Ct. 810, 35 L. Ed. 223 (1973)
410 U.S. at 246, 93 S. Ct. at 821
410 U.S. at 235, 93 S. Ct. at 816
The parties had fair notice of exactly what the Commission proposed to do, and were given an opportunity to comment, to object, or to make some other form of written submission. The final order of the Commission indicates that it gave consideration to the statements of the two appellees here. Given the "open-ended" nature of the proceedings, and the Commission's announced willingness to consider proposals for modification after operating experience had been acquired, we think the hearing requirement of Sec. 1(14) (a) of the Act was met.
Id., at 241, 93 S. Ct., at 819 (emphasis added).
It is not surprising that Congress might be satisfied with a lesser degree of certainty in ICC factual determinations than in those of the FPC. The ICC has traditionally been permitted to base its determinations on relatively imprecise dispute resolution procedures. New England Division Cases, 261 U.S. 184, 196-197, 43 S. Ct. 270, 67 L. Ed. 605 (1923). It may well be that cost factors are sufficiently uniform in the areas of the economy under the ICC's jurisdiction so that procedures designed to produce precise factual dispute resolutions would be a waste of time. Whatever the Congress' intention with regard to the ICC, nowever, it has clearly chosen to require more of the FPC.
298 U.S. 468, 56 S. Ct. 906, 80 L. Ed. 1288 (1936). The case was again before the Supreme Court in Morgan v. United States, 304 U.S. 1, 58 S. Ct. 773, 82 L. Ed. 1129 (1938). In Florida East Coast the Supreme Court distinguished Morgan for reasons not applicable here
298 U.S. at 477, 56 S. Ct. at 910
298 U.S. at 480, 56 S. Ct. at 911
Phillips Petroleum Co. v. FPC, 475 F.2d 842 (10th Cir. 1973)
The Tenth Circuit's conclusion was based upon its reading of sections 15 and 16 of the Natural Gas Act, the Supreme Court's opinion in Permian Basin Area Rate Cases, 390 U.S. 747, 88 S. Ct. 1344, 20 L. Ed. 2d 312 (1968), and this court's opinion in City of Chicago v. FPC, 147 U.S.App.D.C. 312, 324-325, 458 F.2d 731, 743-744 (1971). We have considered all of these statutory and judicial authorities in this opinion and have concluded that the discretion granted the Commission to formulate rules is not as broad as the Tenth Circuit has interpreted it to be. Contrary to the interpretation placed by the Tenth Circuit majority on City of Chicago, we did not there rely on section 16 as a source of authority for the FPC procedures there involved. And as our later decision in New England Power v. FPC, 151 U.S.App.D.C. 371, at 377, 467 F.2d 425, at 431, No. 71-1539 (1972), states: "These sections merely augment existing powers conferred upon the agency by Congress, they do not confer individual authority to act." Similarly, we find nothing in the Supreme Court's opinion in Permian, although it recognized the problems of the FPC and permitted area rate making, which dispensed with the creation of an adequate record for judicial review, which the Court certainly had in Permian. Furthermore, while the Tenth Circuit majority in discussing the APA specifically noted, "A more reliable test [for the record required in rule-making] is the congressional intent as contained in the specific statute" (at 851), yet nowhere did the Court discuss the "substantial evidence" standard of the Natural Gas Act, there and there involved
Phillips Petroleum Co. v. FPC, 475 F.2d 842, at 855-856 (10th Cir. 1973) (Seth, J., dissenting)