Opinion ID: 305863
Heading Depth: 1
Heading Rank: 2

Heading: the alternate i proposal

Text: 7 Though the parties have disagreed at various stages of these proceedings about the precise scope of the Alternate I proposal, it now seems reasonably clear that MDG intended at least two distinct requests to be encompassed therein. The first of these was a request for the Commission to exercise its power under Section 7(e) of the Act 5 to impose as a condition to any certificate issued to Cities pursuant to their Section 7(c) application the requirements that the project follow the route proposed by MDG and provide natural gas service to the communities included in the MDG proposal. It is conceded by the parties here that Section 7(e) does grant the Commission power to so condition a certificate where necessary to more adequately meet the requirements of public convenience and necessity. 6 However it is also conceded that this power extends only to certificates issued to Section 7(c) applicants willing . . . to perform the service proposed. 7 The Commission noted in its July 27 order that Cities' enthusiasm, and indeed its willingness to proceed, have now wholly evaporated. II JA at 624. MDG does not contest the Commission's conclusion that upon this decision by Cities, the Commission's 7(e) powers similarly evaporated. 8 The second request included within MDG's Alternate I proposal was for the Commission to order Cities to construct the project pursuant to Section 7(a). MDG's reliance on Section 7(a) results from Cities' unwillingness to proceed with the project. As the Examiner observed, The very purpose of [Sec. 7(a)] must be to compel pipelines to build when they do not want to. Otherwise it would have no effect. 8 Here again, however, two separate theories of entitlement to a Sec. 7(a) order were argued, resulting in the confusion and disagreement noted at the beginning of this portion of our opinion. The confusion is due to the fact that though the theories are analytically distinct, MDG's presentation of them was substantially less than lucid, and the factual findings upon which the Commission appears to have based its rejection of both theories are approximately the same. 9 The Examiner dealt primarily with the contention that construction of MDG's Alternate I proposal could be compelled pursuant to the lateral-line provision in Cities' tariff. 9 Under that provision Cities had declared: 10 As a general policy, Company will construct a sales lateral pipeline to any utility purchasing gas from Company for resale to a community or location adjacent to Company's transmission system provided: [enumerating certain rate, capacity, and financing conditions]. 11 II JA at 601-602. MDG contended that the absence of any distance, size, or dollar limitation among these conditions made Cities' policy one based on an economic feasibility criterion; and that since the MDG communities had alleged their willingness to contribute sufficient funds to make the project feasible within Cities' financial criteria, the Commission should order construction under these provisions. The Examiner denied this contention, 12 First, because of the expressed limitation of the policy to lines extending to locations adjacent to Cities' transmission system and, as a second and independent ground, because a lateral-line policy, regardless of expressed limitations, is applicable only to laterals and this is not a lateral, but a main line extension. 10 13 He relied on several facts to support these conclusions: (1) If the project were presumed to be a lateral line, the main line must be presumed to end at Springfield, which is, in any normal meaning of the word, adjacent to only a small portion of the project. Though he eschewed any attempt to define how long a lateral might be, or how far away an adjacent customer might be, he considered it plain that no stretch of the meaning of the word 'lateral' would embrace a project of this magnitude. (2) the line referred to by MDG as the main sales lateral from which branch laterals were to serve the customer communities just simply did not deliver natural gas to any customer other than Fort Leonard Wood, thus strongly suggesting it should be considered a main line extension instead of a lateral. (3) The 16-inch segment from Saginaw to Springfield served no customers, duplicated an existing Cities line, and was apparently necessary solely to increase the capacity of Cities' pipeline at Springfield. This could not conceivably fall within the definition of a lateral, and may well have constituted an enlargement of Cities' facilities that would take the project wholly outside the Commission's power to compel construction under Section 7(a). (4) The scope of the project would necessitate a major financing by Cities, a result wholly inconsistent with the common understanding of a lateral-line policy. 14 The second theory urged by MDG was that the Commission need not rely on Cities' lateral-line policy since Section 7(a) provides the Commission with authority to 15 direct a natural-gas company to extend or improve its transportation facilities, to establish physical connection of its transportation facilities with the facilities of, and sell natural gas to, any person or municipality engaged or legally authorized to engage in the local distribution of natural or artificial gas to the public. . . . 16 15 U.S.C. Sec. 717f(a) (1970). In the proviso to Section 7(a), however, the Commission is deprived of authority to compel the enlargement of transportation facilities for such purposes. Id. The relationship between these two segments of the statute has apparently never been satisfactorily resolved. The question, in each case, is whether the requested project 17 constitutes on the one hand a mere extension or improvement, concededly within the power of the Commission to direct, or an enlargement which the Commission may not order. The Act nowhere defines these terms and it is somewhat baffling to determine when and under what circumstances an extension or improvement of facilities ceases to be such and becomes enlargement. 18 Michigan Consolidated Gas Co. v. Panhandle Eastern Pipe Line Co., 173 F.2d 784, 788 (6th Cir. 1949). The Examiner went no further than stating this question, finding it 19 unnecessary to reach the statutory question because the lateral-line policy has no application to such a project and cannot properly be invoked in support of it. In his [the Examiner's] view, therefore, the Commission need not make a statutory interpretation that might tend to limit its jurisdiction. 20 II JA at 563-64. Neither of the Commission's orders appealed from here makes any explicit reference to the question, having apparently adopted the Examiner's view that such a determination was unnecessary. 21 It has long since been accepted as a commonplace in administrative practice that the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained. SEC v. Chenery Corp., 318 U.S. 80, 94, 63 S.Ct. 454, 462, 87 L.Ed. 626 (1943). But while recognizing that an agency or commission must articulate with clarity and precision its findings and the reasons for its decisions, we also have acknowledged that the presumption of regularity and principles of judicial restraint induce an indulgence toward administrative action to the extent of affirming an order where the agency's path can be 'discerned' even if the opinion 'leaves much to be desired.' WAIT Radio v. FCC, 135 U.S.App.D.C. 317, 320, 418 F.2d 1153, 1156 (1969), quoting from Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 595, 65 S.Ct. 829, 89 L.Ed. 1206 (1945). Summarizing the court's supervisory function in the total administrative process, we recently stated: 22 If satisfied that the agency has taken a hard look at the issues with the use of reasons and standards, the court will uphold its findings, though of less than ideal clarity, if the agency's path may reasonably be discerned, though of course the court must not be left to guess as to the agency's findings or reasons. 23 Greater Boston Television Corp. v. FCC, 143 U.S.App.D.C. 383, 393, 444 F.2d 841, 851 (1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2233, 29 L.Ed.2d 701 (1971). The problem confronting us here, then, is to determine whether the Commission's failure to clearly and precisely articulate its findings and reasons for rejecting MDG's Section 7(a) request requires us to impermissibly guess at their rationale, or whether their path toward that decision may be reasonably discerned from the record before us. 24 The Commission contends, at the outset, that MDG has raised this issue for the first time on this appeal, and, having not presented it before the Commission in the proceedings below, MDG cannot here complain of the Commission's failure to resolve it. MDG responds with citations to and quotations from its application, its initial brief before the Examiner, Cities' brief before the Examiner, its exceptions to the Examiner's decision, and its petition for rehearing. Coupled with the Examiner's acknowledgement of the issue (quoted above) by deciding he need not deal with it, we cannot accept the Commission's position. However, from our examination of the overall context of the passages cited to us by MDG, it becomes obvious that MDG never presented a sharply focused Sec. 7(a) argument independently of its lateral-line argument. For example, MDG refers us to that portion of its petition for rehearing in which they argued: 25 5. Neither the Commission nor the Examiner determined, on the merits, consistent with statutory obligation and authority under Section 7 of the Natural Gas Act, whether Cities route best met the public interest or whether an alternative would best serve the public interest. . . . The Examiner's failure to consider the merits of the comprehensive First Alternative presented by MDG apparently stemmed from his opinion that the Commission lacks legal authority to certificate any location other than Cities proposal as an enlargement contrary to the proviso of Section 7(a). . . . The proviso in Section 7(a) does not preclude the Commission from finding that new proposed facilities are inadequate, or improperly located, or that they should serve more communities. The extension or modification of proposed facilities by the Commission to meet the public interest is perfectly proper. 26 Reply brief for petitioner, at 6 n. 13, quoting from II JA at 632-33. This passage is not without ambiguity; it might be read either to urge a Sec. 7(a) order, as MDG argues here, or to request imposition of conditions pursuant to Sec. 7(e) on any certificate granted to Cities. However, this portion of the MDG petition for rehearing concludes with a passage that would seem to preclude the first of these interpretations: 27 Except to the extent that it is required by the lateral line provisions of Cities' tariff, none of the parties argue for an order compelling Cities to accept a certificate conditioned by the Commission to meet the requirement of the public interest for serving the Central Missouri area. If Cities can and does refuse to accept such a certificate, the Commission should authorize MDG's Second Alternate. 28 II JA at 633. MDG refers us to no portion of the record where their Sec. 7(a) argument is clearly and precisely articulated without encountering similarly ambiguous or contradictory contextual material. Under these circumstances we find it exceedingly difficult to fault the Commission for failing to articulate their denial of this argument. 29 Yet we need not rest there. Without improperly guessing, and without building a post-hoc rationalization 11 for the Commission's action, we believe that we can reasonably discern the Commission's path through this record, and we find that path to have led to a legally permissible conclusion supported by substantial evidence in the record. 30 In making its request for a Section 7(a) order, MDG had clearly argued entitlement under the lateral-line tariff provision and, as we have described above, hinted at entitlement under the statute alone. Although the Commission, to our knowledge, has never considered the question, and without pretending to pre-determine such a question whenever properly brought before the Commission, we would consider it reasonable as a matter of law for the Commission to apply different standards to requests such as were made here. A lateral-line tariff provision represents an affirmative undertaking by the pipeline company to construct facilities to accommodate potential customers under specified conditions. A Section 7(a) order compelling adherence to such a provision is thus not much more than Commission enforcement of the pipeline's prior agreement to build. A Section 7(a) order under the statute alone represents a pure exercise of governmental power on behalf of the potential customer to coerce construction by an unwilling pipeline. We do not believe it would be at all unreasonable for the Commission to demand a far more rigid standard of necessity and convenience from a Sec. 7(a) applicant relying solely on the statute than on an applicant seeking enforcement of a tariff provision. Viewed in this context, the Examiner's finding that it was unnecessary to reach the statutory question because the lateral-line policy has no application to such a project and cannot properly be invoked in support of it, is reasonable on either of two grounds: (1) The lateral-line question was the sole issue squarely presented, and its resolution obviates the necessity to go any further; or (2) since an even stronger showing would be necessary to establish the statutory claim than the tariff claim, resolution of the lateral-line question against MDG obviates the necessity to consider the other. 31 The Commission's resolution of the Alternate I proposal carries the Examiner's reasoning one step further. At the time of the Examiner's decision MDG's Alternate I project, and the other Sec. 7(a) applications, remained viable if Cities were willing to proceed with the project under the conditions proposed by the Examiner. Even if some route other than MDG's proposed route were followed, the Section 7(a) requests might have been construed and approved by the Commission as requesting such modifications to the Cities proposal as would result in service to all the communities included within the MDG Alternate I proposal. But then Cities declared its intention not to proceed with the project, and the Commission's July 27 order stated we have no alternative but to deny Cities' project application, as well as the several 7(a) applications which are predicated upon it. Thus we also deny, because they have become moot, the applications of . . . the [MDG] in its Alternate I. . . . II JA at 624. It seems reasonably clear that the Commission had accepted the Examiner's findings in regard to the lateral-line policy and that therefore the only remaining Sec. 7(a) argument was that predicated upon some modified project Cities might be willing to construct. This rationale was reiterated in the September 21 order denying rehearing: 32 (2) The [MDG's] Alternate I, being predicated upon the construction of facilities by Cities in central Missouri, became moot when Cities indicated that it was unwilling to construct any facilities in that area. Alternate I does not stand on its own feet. . . . 33 II JA at 639 (emphasis added). While this conclusion, that Alternate I cannot survive independently from the Cities project, leaves much to be desired in the way of a reasoned articulation of the Commission's findings, we can reasonably discern their path (1) through the Examiner's adverse findings on the 7(a) and lateral-line questions, (2) to the dependence of the project on Cities' willingness to proceed, (3) to the final decision of mootness. The Commission's decision with regard to Alternate I may thus be affirmed.