Opinion ID: 304693
Heading Depth: 1
Heading Rank: 1

Heading: The Procedural Due Process Issue

Text: 3 In contending that it has been deprived of procedural due process by the Commission's approval of a settlement without a hearing and over its objections, Penn Gas points to the following sources in support: the Natural Gas Act, 4 which it believes entitles it to a full formal hearing; the Administrative Procedure Act; 5 the Commission's Rules 6 and practice; and judicial precedent, which it believes requires unanimous consent of the parties to settle a rate proceeding. 4 It is essential to recognize at the outset the appropriate scope for our review. The Federal Power Commission under its mandate, the Natural Gas Act, is empowered to regulate the transportation and sale of natural gas in interstate commerce for resale for ultimate public consumption. Its findings and orders, absent evidence of arbitrariness or lack of support by substantial evidence, are entitled to our respect. As we recognized in a related context: 5 We are not called upon to decide directly if the [Civil Aeronautics] Board made a sound decision; judicial review calls on us to determine only if the Board followed established principles and procedures which provide the required procedural due process for the adversary parties and which should lead to a sound decision. 7
6 Under the Natural Gas Act a proceeding to review a filed rate increase may be initiated by the FPC either upon complaint or upon its own motion. Section 4(e) of the Act provides in relevant part: 7 Whenever any such new schedule is filed the Commission shall have authority, either upon complaint of any State, municipality, State commission or gas distributing company, or upon its own initiative without complaint, at once, . . . to enter upon a hearing concerning the lawfulness of such rate, charge, classification, or service; . . . 8 8 Section 4(e) further states that the FPC, provided it orders a hearing, may suspend the rates in question in its review for a period of no longer than five months beyond the time when they would otherwise become effective. It may thereafter, by means of a refund procedure, make any order finding increased rates unjustified retroactive to the date the change became effective. 9 As the plain language of Section 4(e) and the Supreme Court's review of the Natural Gas Act in United Gas Pipe Line Co. v. Mobile Gas Service Corp. reveal, the suspension of a rate is discretionary with the Commission. Section 4(e) merely defines the power of the Commission; it does not require the FPC either to suspend a rate or to hold a hearing without suspension at the behest of a customer such as Penn Gas. 9 As the Court remarked with respect to the Act as a whole, In short, the Act provides no 'procedure' either for making or changing rates; it provides only for notice to the Commission of the rates established by natural gas companies and for review by the Commission of those rates. 10 10 In the case at bar the FPC decided, after reviewing the evidence before it, 11 that the rates successfully negotiated by Manufacturers with all of its customers except Penn Gas, and approved by the Commission staff, did not warrant further hearing. If it were not within the power of the Commission to do so, any customer of a natural gas company could tie up its supplier and the Commission for an indefinite period in the trial of a limitless variety of issues, where there is no genuine issue of material fact, despite the ease with which their inherent worth or worthlessness might otherwise be quickly determined.
11 Penn Gas asserts that it was denied procedural due process by the Commission's acceptance of the Stipulation and Agreement submitted by all other parties, and by the termination of the proceedings without further hearings. The applicable legislation, agency rules, and judicial precedents, however, favor the resolution of issues such as presented by the case at bar by settlement proposed by some or all of the litigants, subject to Commission approval. 12 It is well to note at the outset that settlement carries a different connotation in administrative law and practice from the meaning usually ascribed to settlement of civil actions in a court. As we shall see later, 12 in agency proceedings settlements are frequently suggested by some, but not necessarily all, of the parties; if on examination they are found equitable by the regulatory agency, then the terms of the settlement form the substance of an order binding on all the parties, even though not all are in accord as to the result. This is in effect a summary judgment granted on motion by the litigants where there is no issue of fact. 13 This difference in procedure between the courts and regulatory agencies stems from the different roles each is empowered to play: the court must passively await the appearance of a litigant before it; once the court's process has been invoked, the litigant is entitled to play out the contest, unless he and the other litigant reach a mutually agreed settlement or one of several summary disposition procedures is successfully invoked by his adversary. On the other hand, the regulatory agency is charged with a duty to move on its own initiative where and when it deems appropriate; it need await the appearance of no litigant nor the filing of any complaint; once the administrative process is begun it may responsibly exercise its initiative by terminating the proceedings at virtually any stage on such terms as its judgment on the evidence before it deems fair, just, and equitable, 13 provided of course the procedural requirements of the statute are observed. Only by exercising such summary judgment or administrative settlement procedures when called for can the usual interminable length of regulatory agency proceedings be brought within the bounds of reason and the agencies' competence to deal with them. 14 Whether the summary action of any agency in a particular case is fair, just, equitable, and in accord with the procedure required by law is a matter for judicial review, as in the case at bar. But we cannot discourage the regulatory agencies by invoking blanket prohibition against such summary administrative settlement procedures in all cases, particularly in view of the administrative and judicial precedents supporting such action, see infra. 14
15 Section 554(c) of the Administrative Procedure Act provides in relevant part: 16 (c) The agency shall afford all interested parties opportunity for- 17 (1) the submission and consideration of facts, arguments, offers of settlement, or proposals of adjustment when time, the nature of the proceeding, and the public interest permit; and 18 (2) to the extent that the parties are unable so to determine a controversy by consent, hearing and decision on notice and in accordance with sections 556 and 557 of this title. 15 19 The legislative history accompanying this provision recognizes it as being of the greatest importance to the functioning of the administrative process. 16 The whole purpose of the informal settlement provision is to eliminate the need for often costly and lengthy formal hearings in those cases where the parties are able to reach a result of their own which the appropriate agency finds compatible with the public interest. 20 Section 554(c) of the Administrative Procedure Act in itself is not decisive support for the Commission action here, as the Act merely provides for the submission and consideration of facts, arguments, offers of settlement . . . when . . . the public interest permit[s]. Except as provided in Sec. 554 (c) (2), it does not spell out in what manner or by what procedure the Commission is to consider and act on the matter submitted, nor does it expressly require-or dispense with-the unanimous consent of all the participating parties in a multiparty proceeding. As we have seen above, the Commission's power to utilize summary procedures, acting on its own or the litigants' initiative to terminate the proceedings over the objection of a party, stems from the nature of its mandate as a regulatory agency, particularly under the Natural Gas Act, Section 4(e), and is amply sustained by the Commission's rules, lengthy administrative practice, and judicial precedent. 17
21 Section 1.18 of the Commission's Rules of Practice and Procedure, implementing Section 554(c) of the Administrative Procedure Act, supra, provides: 22 Section 1.18-Conferences: offers of settlement 23 (a) To adjust or settle proceedings. In order to provide opportunity for the submission and consideration of facts, arguments, offers of settlement, or proposals of adjustment, for settlement of a proceeding, . . . conferences between the parties to the proceeding and [FPC] staff for such purposes may be held at any time prior to or during such hearings before the Commission or the officer designated to preside thereat as time, the nature of the proceeding, and the public interest may permit. 24