Opinion ID: 386006
Heading Depth: 2
Heading Rank: 2

Heading: Applicability of Antitrust Policy

Text: 47 Having determined that the Commission had jurisdiction to entertain Penn Yan's petition, we turn to the question whether the Commission's consideration of the possible anticompetitive nature of provisions of NYSEG's contract with PASNY was barred because of PASNY's status as a subdivision of New York State. We conclude that the Commission was free to consider federal antitrust policy as an aspect of the public interest. 48 The purpose of the Commission's power to identify and remedy unreasonable provisions in utility contracts is the protection of the public interest, as distinguished from the private interests of the utilities, (as) is evidenced by the recital in § 201 of the Act .... FPC v. Sierra Pacific Power Co., supra, 350 U.S. at 355, 76 S.Ct. at 372. The policies underlying federal antitrust law are one aspect of the public interest. Thus, the Commission's responsibility for protecting the public interest and its corresponding power to adjust unreasonable rates, etc., carries with it the responsibility to consider, in appropriate circumstances, the anticompetitive effects of regulated aspects of interstate utility operations. Gulf States Utilities Co. v. FPC, supra, 411 U.S. at 758-59, 93 S.Ct. at 1877-78. 49 Nevertheless, it is evident that in certain circumstances a state will be immune from liability for its imposition of anticompetitive restraints. In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), the Supreme Court held that federal antitrust laws do not prohibit a state, as sovereign, from imposing anticompetitive restraints as an act of government. Id. at 352, 63 S.Ct. at 314. Recent Supreme Court cases identify two criteria for application of Parker immunity: (1) the challenged restraint must be 'one clearly articulated and affirmatively expressed as state policy'  and (2) the policy must be 'actively supervised' by the State itself. California Retail Liquor Dealers Ass'n v. Midcal Aluminum Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980), quoting City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978) (opinion of Brennan, J.). See also New Motor Vehicle Board of California v. Orrin W. Fox Co., 439 U.S. 96, 109, 99 S.Ct. 403, 412, 58 L.Ed.2d 361 (1978). Even assuming that appropriate circumstances might justify extension of this immunity to conduct by a private party, cf. Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976); 14 Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), both of the prerequisites are lacking here. 50 To begin with, there is no articulation whatever of a state policy underlying the challenged provision of NS-11. The fact that a political subdivision of the state is a party to the contract does not transform the provisions of the contract into state policy. Moreover, even if the contract as a whole had been entered into by PASNY as agent of the sovereign in accordance with clearly articulated and affirmatively expressed state policy, there is no suggestion that the challenged restraint itself was mandated by, or even related to, state policy. The petition makes clear that the restrictive provision was desired by NYSEG, and there is no hint that it resulted from state policy. Even if the restrictive provision had been suggested by PASNY rather than NYSEG, the Commission would not be precluded from considering antitrust policy since (i) t is not enough that ... anticompetitive conduct is 'prompted' by the state action; rather, anticompetitive activities must be compelled by direction of the State acting as a sovereign. Goldfarb v. Virginia State Bar, supra, 421 U.S. at 791, 95 S.Ct. at 2015 (emphasis added). Thus we conclude that PASNY's status did not preclude the Commission from considering antitrust policy as one aspect of the public interest. 51 This conclusion, however, does not mean that summary disposition was appropriate. The Commission's determination as to the public interest under § 206 is normally required to be made after a hearing. While no hearing is required when there are no material facts in issue, Public Service Co. v. FERC, 600 F.2d 944, 955 (D.C.Cir.), cert. denied, 444 U.S. 990, 100 S.Ct. 520, 62 L.Ed.2d 419 (1979); Municipal Light Bds. v. FPC, 450 F.2d 1341, 1345 (D.C.Cir.1971), cert. denied, 405 U.S. 989, 92 S.Ct. 1251, 31 L.Ed.2d 445 (1972); Citizens for Allegan County Inc. v. FPC, 414 F.2d 1125, 1128 (D.C.Cir.1969), the limited record here reveals questions relating to the public interest which could best have been resolved after a hearing. It is true, as emphasized by the Commission, that NYSEG's petition admitted that it preferred not to provide transmission facilities to a competitor for transmission of power to one of NYSEG's present customers. But NYSEG's petition also alleged that the challenged contractual restraints were in the public interest as well, and there was no reason for the Commission to assume, as it did, that NYSEG's self-interest is inherently inconsistent with the public interest. For example, in Lafayette v. Louisiana Power & Light Co., supra, the opinion of the Court discussed the impact on a public utility of loss of customers: 15 52 The elimination of customers in an established service area would likely reduce revenues, and possibly require abandonment or loss of existing equipment the effect of which would be to reduce its rate base and possibly affect its capital structure. The surviving customers and the investor-owners would bear the brunt of these consequences. The decision to displace existing service, rather than being made on the basis of efficiency in the distribution of services, may be made by the municipality in the interest of realizing maximum benefits to itself without regard to extraterritorial impact and regional efficiency. 53 435 U.S. at 404, 98 S.Ct. at 1132 (footnote omitted). Thus, questions as to the probable impact of the proposed modification on NYSEG, the possible inefficiency in duplicating service, the extent, if any, to which NYSEG might be entitled to a settlement similar to that contained in the 1962 agreement, etc., should have been considered in assessing the public interest. Both NYSEG and PASNY requested a hearing on Penn Yan's claims. We do not believe the Commission could properly decide those claims without a hearing. 54