Opinion ID: 436086
Heading Depth: 1
Heading Rank: 4

Heading: ferc's action contravenes the statutory directive to

Text: 47 DETERMINE WHETHER RATES ARE JUST AND REASONABLE 48 Under section 1(5) of the Interstate Commerce Act, all rates charged for oil pipeline transportation shall be just and reasonable. Similarly, under section 15(1), Congress authorized FERC to determine and prescribe what will be the just and reasonable rate for such transportation services. 49 We find that FERC in the Williams decision failed to satisfy that statutory mandate. We also find unconvincing FERC's attempts at justifying its novel interpretation of just and reasonable rates. First, FERC sought to establish maximum rate ceilings at a level far above the zone of reasonableness required by the statute. Second, FERC failed to specify in any detail how non-cost factors, such as the need to stimulate additional pipeline capacity, might justify its decision to set maximum rates at such high levels. Third, the legislative history of the Hepburn Act betrays FERC's belief that the climate of opinion in 1906 shaped a congressional purpose to impose only very lighthanded rate regulation on the oil pipelines. Finally, FERC's reliance on its findings that oil pipeline rate regulation is (1) unimportant to consumers at large, and (2) best left to regulation by market forces in most cases, constitutes an improper departure from the basic congressional mandate to ensure that oil pipeline charges are just and reasonable. 50 Congress delegated ratemaking authority to FERC in broad terms. Accordingly, the breadth and complexity of the Commission's responsibilities demand that it be given every reasonable opportunity to formulate methods of regulation appropriate for the solution of its intensely practical difficulties. Permian Basin Area Rate Cases, 390 U.S. 747, 790, 88 S.Ct. 1344, 1372, 20 L.Ed.2d 312 (1968). In arriving at a just and reasonable rate, no single method need be followed. Wisconsin v. FPC, 373 U.S. 294, 309, 83 S.Ct. 1266, 1274, 10 L.Ed.2d 357 (1963). Indeed, and more specifically, FERC is not required to adhere 'rigidly to a cost-based determination of rates, much less to one that base[s] each producer's rates on his own costs.'  FERC v. Pennzoil Producing Co., 439 U.S. 508, 517, 99 S.Ct. 765, 771, 58 L.Ed.2d 773 (1979) (quoting Mobil Oil Corp. v. FPC, 417 U.S. 283, 308, 94 S.Ct. 2328, 2346, 41 L.Ed.2d 72 (1974)). 51 On the other hand, the delegation of the power to prescribe rates is accompanied by standards to which FERC, as delegate, must conform. As Judge Leventhal observed, Congress has been willing to delegate its legislative powers broadly--and courts have upheld such delegation--because there is court review to assure that the agency exercises the delegated power within statutory limits.... Ethyl Corp. v. EPA, 541 F.2d at 68 (Leventhal, J., concurring). Surely, FERC enjoys substantial discretion in its ratemaking determinations; but, by the same token, this discretion must be bridled in accordance with the statutory mandate that the resulting rates be just and reasonable. See FPC v. Texaco, Inc., 417 U.S. 380, 394, 94 S.Ct. 2315, 2324, 41 L.Ed.2d 141 (1974); Atchison, Topeka & Sante Fe Railway Co. v. Wichita Board of Trade, 412 U.S. 800, 806, 93 S.Ct. 2367, 2374, 37 L.Ed.2d 350 (1973). 52 The just and reasonable statutory standard is, of course, not very precise, and does not unduly confine FERC's ratemaking authority. As this court once explained, [t]he necessity for an anchor to 'hold the terms just and reasonable to some recognizable meaning' is plain, for the words themselves have no intrinsic meaning applicable alike to all situations. City of Chicago v. FPC, 458 F.2d 731, 750 (D.C.Cir.1971) (quoting City of Detroit v. FPC, 230 F.2d 810, 815 (D.C.Cir.1955)), cert. denied, 405 U.S. 1074, 92 S.Ct. 1495, 31 L.Ed.2d 808 (1972). We therefore seek guidance from basic principles developed by the judiciary in furtherance of its task of assuring that ratemaking agencies conform to their duty to prescribe just and reasonable rates. 42 53 We begin from this basic principle, well established by decades of judicial review of agency determinations of just and reasonable rates: an agency may issue, and courts are without authority to invalidate, rate orders that fall within a zone of reasonableness, where rates are neither less than compensatory nor excessive. See, e.g., FERC v. Pennzoil Producing Co., 439 U.S. at 517, 99 S.Ct. at 771; Permian Basin Area Rate Cases, 390 U.S. at 797, 88 S.Ct. at 1375. 54 When the inquiry is on whether the rate is reasonable to a producer, the underlying focus of concern is on the question of whether it is high enough to both maintain the producer's credit and attract capital. To do this, it must, inter alia, yield to equity owners a return commensurate with returns on investments in other enterprises having corresponding risks, as well as cover the cost of debt and other expenses.... [W]hen the inquiry is whether a given rate is just and reasonable to the consumer, the underlying concern is whether it is low enough so that exploitation by the [regulated business] is prevented. 55 City of Chicago, 458 F.2d at 750-51 (emphasis in original). The zone of reasonableness is delineated by striking a fair balance between the financial interests of the regulated company and the relevant public interests, both existing and foreseeable. Permian Basin Area Rate Cases, 390 U.S. at 792, 88 S.Ct. at 1373; see, e.g., FERC v. Pennzoil Products Co., 439 U.S. at 519, 99 S.Ct. at 772; Trans Alaska Pipeline Rate Cases, 436 U.S. 631, 653, 98 S.Ct. 2053, 2066, 56 L.Ed.2d 591 (1978). 56 The delineation of the zone of reasonableness in a particular case may, of course, involve a complex inquiry into a myriad of factors. Because the relevant costs, including the cost of capital, often offer the principal points of reference for whether the resulting rate is less than compensatory or excessive, the most useful and reliable starting point for rate regulation is an inquiry into costs. See, e.g., Mobil Oil Corp. v. FPC, 417 U.S. at 305-06, 316, 94 S.Ct. at 2344-45, 2349; FPC v. Hope Natural Gas Co., 320 U.S. at 602-03, 64 S.Ct. at 287-88. At the same time, non-cost factors may legitimate a departure from a rigid cost-based approach. See, e.g., Pennzoil Products, 439 U.S. at 518, 99 S.Ct. at 771; Mobil Oil, 417 U.S. at 308, 94 S.Ct. at 2345. The mere invocation of a non-cost factor, however, does not alleviate a reviewing court of its duty to assure itself that the Commission has given reasoned consideration to each of the pertinent factors. On the contrary, each deviation from cost-based pricing [must be] found not to be unreasonable and to be consistent with the Commission's [statutory] responsibility. Mobil Oil, 417 U.S. at 308, 94 S.Ct. at 2346; see Pennzoil Products, 439 U.S. at 518, 99 S.Ct. at 772. Thus, when FERC chooses to refer to non-cost factors in ratesetting, it must specify the nature of the relevant non-cost factor and offer a reasoned explanation of how the factor justifies the resulting rates. 57 In Williams, FERC departed from these established ratemaking principles. At the outset, we cannot square FERC's statutory responsibilities with its own, quite novel principle that oil pipeline ratemaking should protect against only egregious exploitation and gross abuse, 21 FERC at 61,649 (emphasis added), gross overreaching and unconscionable gouging, id. at 61,597 (emphasis added). Rates that permit exploitation, abuse, overreaching or gouging are by themselves not just and reasonable. FERC itself overreaches the bounds of its statutory authority when it permits such oil pipeline rates, so long as they are not egregious, gross or unconscionable. Ratemaking principles that permit profits too huge to be reconcilable with the legislative command cannot produce just and reasonable rates. Public Service Commission v. FERC, 589 F.2d 542, 550 (D.C.Cir.1978). 58 We recognize, of course, that non-cost factors may play a legitimate role in the setting of just and reasonable rates. In Williams, FERC invoked the need to stimulate additional oil pipeline capacity as one reason for setting maximum rates at such high levels. See supra at 1494-95. As this court has observed before, [r]eliance on non-cost factors has been endorsed by the courts primarily in recognition of the need to stimulate new supplies. Consumers Union v. FPC, 510 F.2d 656, 660 (D.C.Cir.1974) (footnote omitted) (discussing Permian and Mobil Oil ). However, in this case FERC failed to forecast or otherwise estimate the dimensions of the need for additional capacity, and did not even attempt to calibrate the relationship between increased rates and the attraction of new capital. See supra note 27. 59 In the absence of such a reasoned inquiry, we cannot countenance FERC's approval of oil pipeline rates which, by FERC's own admission, ensure creamy returns to the carriers, 21 FERC at 61,650, and are far more generous than those [rates] that [FERC] or other regulators give elsewhere, id. at 61,646. In a similar context, this court explained: 60 If the Commission contemplates increasing rates for the purpose of encouraging exploration and development ... it must see to it that the increase is in fact needed, and is no more than is needed, for the purpose. Further than this we think the Commission cannot go without additional authority from Congress. 61 City of Detroit v. FPC, 230 F.2d 810, 817 (D.C.Cir.1955), cert. denied sub nom. Panhandle Eastern Pipe Line Co. v. City of Detroit, 352 U.S. 829, 77 S.Ct. 34, 1 L.Ed.2d 48 (1956); see San Antonio v. United States, 631 F.2d 831, 851-52 (D.C.Cir.1980) (ICC action, adding seven percent above costs in setting rates, is arbitrary and capricious because it lacks adequate justification for [the] choice of a particular increment above fully allocated costs), rev'd on other grounds sub nom. Burlington Northern, Inc. v. United States, --- U.S. ----, 103 S.Ct. 1238, 75 L.Ed.2d 471 (1983); Public Service Commission v. FERC, 589 F.2d at 553-54 (citing cases). In the Williams proceeding, FERC made no attempt at all to verify the accuracy of its prediction that granting pipeline [rate] incentives will spur increased investment. City of Charlottesville v. FERC, 661 F.2d 945, 955 (D.C.Cir.1981) (Wald, J., concurring). Indeed, FERC here failed to make its prediction with any specificity beyond the bald statement that [e]verybody agrees that the nation needs and will need more pipeline plant. 21 FERC at 61,614. 62 FERC also found another basis for its new and liberal interpretation of just and reasonable rates in what it labeled the climate of opinion, prevalent in the early twentieth century, in favor of dismantling the Standard Oil trust. FERC believed that Congress initiated rate regulation of the oil pipelines out of a desire to eliminate prohibitive pricing practices by the Standard Oil Company, and from this belief concluded that the just and reasonable standard requires far less stringent rate regulation than the same statutory standard requires for other regulated industries, including those industries once regulated under the very same section of the Interstate Commerce Act. See supra at 1492-93; 21 FERC at 61,578-99; FERC Brief at 29-44. Accordingly, FERC felt that the Interstate Commerce Act permitted ratesetting at levels so high that they would seldom be reached in actual practice. 21 FERC at 61,649. We cannot endorse this interpretation of FERC's statutory duties. 63 In some circumstances, the contrasting or changing characteristics of regulated industries may justify the agency's decision to take a new approach to the determination of just and reasonable rates. See, e.g., Permian Basin Area Rate Cases, supra. We find, however, that in this case FERC has not merely developed a new method for determining whether a rate is just and reasonable; rather, it has abdicated its statutory responsibilities in favor of a method that, by its own description, guards against only grossly exploitative pricing practices. See supra at 1502. FERC wrongly assumed that the statutory phrase  'just and reasonable' ... is a mere vessel into which meaning must be poured. 21 FERC at 61,594. While we agree that the statutory phrase sets down a flexible standard, an agency may not supersede well established judicial interpretation that structures administrative discretion under the statute. An agency may not pour any meaning it desires into the statute. To accept FERC's view of its own latitude would be tantamount to holding that no standards accompany the delegation of ratemaking authority to FERC, and we think such a delegation would be impermissible. From the outset, however, we noted that the statute prohibits more than grossly abusive rates. 64 Furthermore, an examination of the relevant legislative history reveals that Congress intended to subject oil pipelines to the same general ratemaking principles that applied to other common carriers. The Hepburn Act of 1906 was enacted primarily to remedy defects in the original Interstate Commerce Act of 1887. Although the Act as passed in 1887 provided that [a]ll charges made for any service rendered in the transportation of passengers or property ... shall be reasonable and just; and every unjust and unreasonable charge for such service is prohibited and declared to be unlawful, 24 Stat. 379, the Supreme Court ten years later held that the ICC lacked authority to prescribe rates, but instead could only declare whether charges set by the carriers were unreasonable or unjust in the context of granting reparations to injured shippers. ICC v. Cincinnati, New Orleans & Texas Pacific Railway Co., 167 U.S. 479, 17 S.Ct. 896, 42 L.Ed. 243 (1897) (the Maximum Rate Case ); see Trans Alaska Pipeline Rate Cases, 436 U.S. at 639, 98 S.Ct. at 2059. The Hepburn Act remedied this shortcoming by granting to the ICC express authority to set maximum rates to be observed by carriers prospectively. See 49 U.S.C. Sec. 15. In this context, the Congress, by amendment originating in the Senate, adopted the Lodge Amendment, which conferred common carrier status upon oil pipelines, thus subjecting oil pipelines to the ratemaking jurisdiction of the ICC. 65 It appears evident from the floor debates that oil pipelines were intended to be treated in the same fashion as other common carriers under the Interstate Commerce Act. It appears to me, Senator Lodge said in support of his amendment, that it is a plain injustice to the railroads of this country to put them all under the Interstate Commerce Commission, to make the most drastic regulations to control and supervise them, and leave out one of the greatest article of interstate commerce [i.e., oil transported through pipelines]. 40 Cong.Rec. 6365 (1906). This amendment, he said a few days later, makes the pipelines and the oil companies subject to all the provisions to the bill. Id. at 7009. Thus Congress chose consciously to regulate oil pipeline rates in accordance with the same principles devised contemporaneously in other provisions of the Hepburn Act, which, as we noted above, augmented the ICC's authority over all common carriers. 66 The legislative history furthermore evidences that the just and reasonable rates prescribed by the Congress in 1906 meant more than a ban on prohibitive pricing. Congress primarily wanted to authorize the ICC to set enforceable rates that would permit the carriers to earn a fair return, while protecting the shippers and the public from economic harm. As Senator Elkins put it: 67 [T]he present laws are executed and they are being enforced vigorously; but this, as I have said before, is no reason why there should not be the strictest regulation against excessive rates and abuses of every kind .... The aim of wise statesmanship should be to so adjust matters by proper legislation that the shipper and producer can make a fair profit on their products, the [carrier] a fair return for the service rendered, and the consumer get what he buys at a fair price. 68 Legislative History at 879. Discussions of what constituted a just and reasonable rate focused not upon prohibitive pricing practices, but instead on setting a fair price that would be neither excessive to the shipper nor threatening to the financial integrity of the carrier. See, e.g., id. at 854 (remarks of Senator Clay) (Under the just and reasonable standard, ICC must determine whether or not the rate so fixed is confiscatory or not compensatory for the services performed.); id. at 859 (remarks of Senator Clay) (Can the [ICC's] power be exercised either to oppress the roads or the shippers? Can this power be exercised either to wrong or injure the carrier or the shipper? .... Can the Commission fix a rate that would prevent the railroads from making operating expenses and denying to them just compensation for the services performed? I answer, 'No.' ... The object and purpose of this legislation is to make [carriers] do right and to make shippers do right.); id. at 880 (remarks of Senator Culberson) ([T]he Supreme Court has held that the words 'just and reasonable' have relation both to the rights of the public and of the companies, and that the rate must be fixed with reference to the rights of each.). 69 Additional evidence of congressional intent can be found by examining the decision to delete from the original Hepburn bill the requirement that rates be fairly remunerative in addition to just and reasonable. After quoting the definition of remunerative found in a contemporary Standard Dictionary--Affording, or tending to afford, ample remuneration; giving good or sufficient return; paying; profitable--Senator Culberson questioned whether the additional phrase served any useful purpose, and worried whether the phrase might have exclusive reference to the interests of the companies, thus liberalizing the rule [of 'just and reasonable' rates] rather than narrowing it or keeping it where it is under the common law and under the decisions of the Supreme Court. See id. at 880-81. As Senator LaFollette later elaborated: 70 The phrase just and reasonable has a clear and well defined meaning in the law. It measures what the public must pay. It measures all that the carrier is entitled to receive.... 71 The words fairly remunerative are added. What office are they to serve? For what purpose are they introduced? Are they to add something to the rate? If that is the purpose, they should be stricken from the bill. The carrier is entitled to nothing more than a just and reasonable rate. If the words and fairly remunerative are not designed to increase the rate, then they serve no purpose and should go out. 72 Id. at 906. Eventually, the phrase was deleted from the bill, in part because the fairly remunerative standard was thought to add nothing to the already established just and reasonable standard, 43 and in part out of a fear that the courts might wrongly interpret the phrase to permit higher rates. 44 73 If the Congress believed that fairly remunerative rates were at best the same as just and reasonable rates, and if there was a prevalent concern that fairly remunerative rates could exceed the proper ratemaking standard applicable to common carriers, we then find it highly unlikely that Congress aimed its ratemaking provisions solely toward preventing extraordinary exploitation or prohibitive pricing practices. After all, no fairly remunerative rate would rise to the level of egregious exploitation. How, then, could a Congress, worried that the fairly remunerative standard might permit excessive rates, at the same time be willing to permit rates at any level so long as they are not grossly abusive? We are convinced that the Congress did not intend such a result. 74 While we recognize that the legislative history of the Lodge Amendment contains a number of references to the Standard Oil Company, 45 we do not believe that those references somehow alter the meaning of the language in the ratemaking provisions of the Interstate Commerce Act as applied to oil pipelines. First, the nature of the industry to be regulated is a natural topic for discussion during debate, and at that time Standard Oil dominated the industry. Second, there is nothing else in the legislative history to suggest that the Congress intended the meaning of just and reasonable to be transfigured when applied to oil pipelines. 46 To rely too heavily on the popular climate of opinion in 1906 as evidence of the congressional intent underlying the Interstate Commerce Act would be unwise. See generally Dickerson, Statutory Interpretation: Dipping into Legislative History, 11 Hofstra L.Rev. 1125 (1983). Indeed, the motives of legislators are uniformly disregarded in the pursuit for statutory meaning; it is the purpose or intent behind the statutory provision itself that is relevant. See 2A Sutherland's Statutes and Statutory Construction Sec. 48 (C. Sands 4th ed. 1973 & 1983 Supp.). Thus, even assuming arguendo that it was the popular spirit of trust busting that aroused the 1906 Congress, it does not follow that Congress devised a response directed solely and narrowly toward prohibitive pricing. Congress provided that oil pipelines, as common carriers, could lawfully charge only just and reasonable rates; it did not enact a special antitrust or prohibitive pricing provision for oil pipelines. Whatever the historical context of the Hepburn Act, we think that FERC's statutory interpretation overlooks the broad terms of the principal source of legislative intent, the statute itself. Even if the problem Congress addressed was prohibitive pricing, the solution ultimately devised requires that oil pipeline rates be just and reasonable. 75 Finally, FERC believed that the changes since 1906 in the economics of oil pipelines also justified its novel interpretation of its statutory responsibilities under the Interstate Commerce Act. FERC determined that the cost of pipeline transportation, relative to the price of oil, had become so insignificant that close regulation was not required. See supra at 1493-95. In addition, FERC found that competition in the oil pipeline business had served to keep prices down. See supra at 1494. FERC therefore concluded that oil pipeline ratemaking can and should rely far more heavily on the market and that rate regulation should be peripheral to the pricing process. 21 FERC at 61,649. Accordingly, in FERC's opinion, oil pipeline ratemaking should merely set ceilings that ... will seldom be reached in actual practice. 76 We believe that this apologia for virtual deregulation of oil pipeline rates oversteps the proper bounds of agency discretion under the just and reasonable standard. First, the fact that oil prices have skyrocketed does not repeal the statutory requirement that oil pipeline rates must be just and reasonable. 47 Whether the purpose of oil pipeline rate regulation is consumer protection or producer protection, 48 the statute requires meaningful rate regulation. As the ICC acknowledged, the statutory command controls, despite any dilution in direct impact on the consuming public: 77 In determination of the question whether rates are lawful, we cannot attach any controlling weight to the fact that [the pipeline] or their beneficial owners [the parent companies] have seen fit to pay charges from one pocket to the other or to operate their common-carrier and industrial property in such a manner that the carrier system is virtually a plant facility of the larger producing, manufacturing, and selling industry. These facts, if they be facts, are immaterial ... whatever the relations between the pipelines and the oil companies which beneficially own them, Congress requires all rates tendered to the public by these common carriers to be just and reasonable, and no more. 78 Reduced Pipe Line Rates and Gathering Charges, 243 I.C.C. 115, 141 (1940). Despite recent legislative proposals to deregulate the oil pipeline industry, Congress has not as yet altered its command to FERC. 49 Accordingly, the fact that the price of oil to the ultimate consumer dwarfs the price of oil pipeline transportation does not excuse deviation from the just and reasonable standard, for not even 'a little unlawfulness is permitted.'  Consumers Federation of America, 515 F.2d at 358 n. 64 (quoting FPC v. Texaco Inc., 417 U.S. 380, 399, 94 S.Ct. 2315, 2327, 41 L.Ed.2d 141 (1974)). 79 Second, we find FERC's largely undocumented reliance on market forces 50 as the principal means of rate regulation to be similarly misplaced. It is of course elementary that market failure and the control of monopoly power are central rationales for the imposition of rate regulation. See S. Breyer, Regulation and Its Reform 15-16 (1982). As Representative Knapp expounded in 1906: 80 It has been stated that rate making is the most complicated and difficult work connected with transportation. Doubtless that has been correctly stated, but whether so or not, it certainly is one of the most important. The contention that competition is a regulator of freight rates is not, in the main, tenable. That, by reason of combinations, has gradually ceased to be a controlling factor, and can not now, except in limited and exceptional cases, be depended upon, as controlling in regulating rates. 81 Legislative History at 677. The courts have echoed this observation, noting that [i]n subjecting producers to regulation because of anti-competitive conditions in the industry, Congress could not have assumed that 'just and reasonable' rates could conclusively be determined by reference to market price. FPC v. Texaco, 417 U.S. at 399, 94 S.Ct. at 2327; see, e.g., Tennessee Gas Pipeline v. FERC, 606 F.2d at 1114. 82 We recognize that the market price of oil could, in an individual case, coincide with just and reasonable rates and may be a relevant consideration in the setting of area rates; it may certainly be taken into account along with other factors. FPC v. Texaco, 417 U.S. at 399, 94 S.Ct. at 2327 (citations omitted). The Williams opinion, however, goes far beyond what we regard as rational or permissible assumptions about the relationship between just and reasonable rates and the market price. 51 83 FERC's methodology, by its own admission, merely sets ceilings seldom reached in actual practice, and permits creamy returns to oil pipelines. As we have explained above, such ratemaking does not comport with FERC's statutory responsibilities. FERC's methodology, therefore, exposes a range of permissible prices that would exceed the zone of reasonableness by definition, unless competition in the oil pipeline market drives the actual prices back down into the zone. But nothing in the regulatory scheme itself acts as a monitor to see if this occurs or to check rates if it does not. That is the fundamental flaw in the Commission's scheme. See Texaco, Inc. v. FPC, 474 F.2d 416, 422 (D.C.Cir.1972), approved in relevant part and vacated on other grounds, 417 U.S. 380, 94 S.Ct. 2315, 41 L.Ed.2d 141 (1974). 84 Congress may indeed have imposed the requirement that rates be just and reasonable in order to restore the true market price--the price that would result through the mechanism of a truly competitive market--for purchasers of the regulated service or goods. See, e.g., FPC v. Texaco, 417 U.S. at 397-98, 94 S.Ct. at 2326-27; FPC v. Sunray DX Oil Co., 391 U.S. 9, 25, 88 S.Ct. 1526, 1535, 20 L.Ed.2d 388 (1968). In setting extraordinarily high price ceilings as a substitute for close regulation, FERC assumed that, with the wide exposed zone between the ceiling and the true market rate, existing competition would ensure that the actual price is just and reasonable. Without empirical proof that it would, this regulatory scheme, however, runs counter to the basic assumption of statutory regulation, that Congress rejected the identity between the 'true' and the 'actual' market price. FPC v. Texaco, 417 U.S. at 399, 94 S.Ct. at 2327. In fact, FERC's  'regulation' by such novel 'standards' is worse than an exemption simpliciter. Such an approach retains the false illusion that a government agency is keeping watch over rates, pursuant to the statute's mandate, when it is in fact doing no such thing. Texaco v. FPC, 474 F.2d at 422. 85 Moving from heavy to lighthanded regulation within the boundaries set by an unchanged statute can, of course, be justified by a showing that under current circumstances the goals and purposes of the statute will be accomplished through substantially less regulatory oversight. See Black Citizens for a Fair Media v. FCC, 719 F.2d 407, 413 (D.C.Cir.1983). We recognize that this court has sanctioned dramatic reductions in regulatory oversight under, for example, the FCC and ICC licensing provisions, both of which require that the licensee operate in accordance with the public interest. See id.; National Tours Brokers Association v. ICC, 671 F.2d 528, 531-32 (D.C.Cir.1982). In both cases, this court found that the agency adequately assured meaningful enforcement of the public interest standard. See Black Citizens, 719 F.2d at 413-14; National Tours, 671 F.2d at 533. In other cases, this court has refused to sanction administrative attempts to reduce regulation in the absence of a showing that the goals and dictates of statutes were not being honored. See International Ladies' Garment Workers' Union v. Donovan, 722 F.2d 795 (D.C.Cir.1983); Action on Smoking and Health v. CAB, 699 F.2d 1209 (D.C.Cir.), supplemented, 713 F.2d 795 (D.C.Cir.1983). 86 In this case, FERC failed to show that the rates resulting from its newly articulated ratemaking principles would necessarily satisfy the just and reasonable standard. FERC set rate ceilings which, if reached in practice, would admittedly be egregiously extortionate and then failed to demonstrate that market forces could be relied upon to keep prices at reasonable levels throughout the oil pipeline industry. As a result, we find that FERC's action contravenes its statutory responsibilities under the Interstate Commerce Act.