Court Opinion

ID: 9425284
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:14:18.095536+00
Date Added: 2024-06-11T17:22:54.518911
License: Public Domain

Mr. Justice Powell,
with whom Mr. Justice Stewart and Mr. Justice Rehnquist join,
dissenting.
This case raises the question whether the Federal Power Commission (the Commission) must consider the possible anticompetitive effect of a public utility’s application under § 204 of the Federal Power Act, 16 U. S. C. § 824c, for authority to issue a security. Section 204 provides in relevant part that the Commission shall authorize the issuance of a security
“only if it finds that such issue or assumption (a) is for some lawful object, within the corporate purposes of the applicant and compatible with the public interest, which is necessary or appropriate for or consistent with the proper performance by the applicant of service as a public utility and which will not impair its ability to perform that service, and (b) is reasonably necessary or appropriate for such purposes.” 16 U. S. C. § 824c (a) (emphasis supplied).
Rejecting the Commission’s own structuring of its responsibilities and repudiating its uniform administrative interpretation for more than a third of a century, the Court today finds implicit in § 204’s use of the phrase “the public interest” a duty on the part of the Commission, when acting upon a financing application, to consider any possible anticompetitive effect that may be *765alleged. As I am persuaded neither by the majority’s analysis of the statutory language nor by its discussion of the regulatory context, I remain of the view that the Commission’s position is consistent with the statute and I would accord it the deference to which it is entitled.1 Moreover, for the reasons stated below, I believe that the- Court’s decision is incompatible with the interest of the public in assuring that utilities are enabled to meet their necessary requirements for capital upon the most favorable terms. Accordingly, I dissent.
I
The present proceedings were initiated on October 12, 1970, when Gulf States Utilities Co. (Gulf States) filed an application under § 204 seeking authority to sell $30 million of first mortgage bonds at competitive bidding. The stated purpose for the issuance was to pay off part of its commercial paper and short-term notes, whose issuance previously had been approved by the Commission.
The cities of Lafayette and Plaquemine, Louisiana (the Cities), filed a motion to intervene on November 2, alleging a continuing conspiracy among Gulf States, Louisiana Power & Light Co., and Central Louisiana Electric Co. to block the implementation of an Interconnection and Pooling Agreement which would link the Cities, Dow Chemical Co., and Louisiana Electric
*766Cooperative, Inc. (the Cooperative). The Cooperative had applied in 1964 to the Rural Electrification Administration for a loan to build a generating facility and transmission lines. The Cities contended that Gulf States and its coconspirators had used a number of techniques, including frivolous litigation, to delay approval of the loan until 1969, with the result that the amount of the loan no longer sufficed to build transmission lines as well as a generating plant. The Cooperative was thus forced to rely for transmission services on Gulf States, which, allegedly, would agree to sell them only if the Cooperative would restrict the scope of its operations. The Cities asserted, finally, that the proceeds from the present bond issue would in some way support Gulf State’s anticompetitive actions.2
On December 3, the Commission granted the Cities’ motion to intervene, but declined to hold a hearing on their allegations. The Commission’s order explained more fully:
“The requested approval of the issuance of the Bonds allow [s] the Company only to change the form of a portion of its outstanding indebtedness, it does not call for the initiation of any construction or other program by the Company which might effect [sic] the interest of the Petitioners. The alleged violations which petitioners attempt to raise in this proceeding are irrelevant to a requested authorization of securities. There is no relief that the Commission can order in authorizing the issuance of the Bonds for refinancing purposes that would have any *767effect on the interest of the Petitioners, or solve any of the problems outlined by them.” 44 F. P. C. 1524, 1525.
In the same order, the Commission authorized the issuance and sale of the bonds. It subsequently modified the order in respects not relevant here and denied a petition for rehearing.
Reviewing the Commission’s order at the behest of the Cities, the Court of Appeals held that in a § 204 application proceeding the Commission must consider claims of anticompetitive conduct when urged by intervenors. 147 U. S. App. D. C. 98, 454 F. 2d 941 (1971). While the court’s ruling was flexible in terms, allowing the Commission to reject without a hearing claims which are “insubstantial or barren” or lack a “reasonable nexus” with the purpose of the securities issuance, it required an explanation “supported in the record,” presumably something in addition to that offered by the Commission in this case. 147 U. S. App. D. C., at 110, 454 F. 2d, at 953.3
II
It is common ground that the Commission has a responsibility to deal with anticompetitive practices in the power industry. Section 10 of the Act, 16 U. S. C. § 803, provides that the Commission may issue licenses to public utilities “on the following conditions,” one of which is that:
“(h) Combinations, agreements, arrangements, or understandings, express or implied, to limit the output of electrical energy, to restrain trade, or to fix, *768maintain, or increase prices for electrical energy or service are hereby prohibited.” 16 U. S. C. § 803 (h).
The question before the Court, then, is not whether the Commission has responsibility, but how and when it shall exercise it.
Stated abstractly, the Commission's position is that the most sensible method of regulating anticompetitive conduct is to focus on the conduct itself rather than on the means by which it may possibly be financed. The Commission acknowledges a duty to scrutinize allegedly anticompetitive behavior in proceedings: to order an interconnection, § 202 of the Act, 16 U. S. C. § 824a; to approve an acquisition or merger, § 203 of the Act, 16 U. S. C. § 824b; to review rates, §§ 205 and 206 of the Act, 16 U. S. C. §§ 824d and 824e; and to review a charge of unduly discriminatory rates or practices, § 205 of the Act, 16 U. S. C. § 824d, or of inadequate service, § 207 of the Act, 16 U. S. C. § 824f. Additionally, the Commission may investigate unlawful conduct upon a complaint by “[a]ny person, State, municipality, or State commission,” § 306 of the Act, 16 U. S. C. § 825e, or on its own motion, § 307 of the Act, 16 U. S. C. § 825f. Indeed, upon the complaint of the respondent Cities, the Commission is presently investigating the conduct at issue here. The Cities of Lafayette and Plaquemine, Louisiana v. Gulf States Utilities Co., F. P. C. Doc. No. E-7676.4
Given its broad direct authority and its undertaking to investigate allegations of anticompetitive behavior in exercising that authority, the Commission does not think it necessary or appropriate to convert § 204 into an all-*769purpose sword.5 As the Court of Appeals recognized, there may be no nexus or only a very weak one between the issuance of a security and alleged anticompetitive conduct and, in any event, the charges may be unfounded. It is no answer, in the Commission’s view, to say that nexus and merit must be determined on the facts of each case because the process of investigating the allegations will delay the financing and often frustrate the utilities’ efforts to obain a favorable price for their securities.
The Commission is properly sensitive to the complexities and subtleties of raising vast sums of money in the financial markets.6 Utility financing normally is accomplished through competitive bidding participated in by a relatively small number of national investment firms which specialize in the purchase from issuers and the wholesaling of utility securities. The market is highly competitive and is particularly sensitive to uncertainties. The maintenance of an orderly market, with dependable marketing timetables, is essential to the financing process and to favorable decisions by the investment bankers as to rates and other terms. It is settled *770practice to “bring an issue to market” pursuant to a carefully structured time schedule. When favorable market conditions are observed or anticipated, this time schedule is compressed usually within a period from 45 to 90 days. The longer the lead time is extended and uncertainties injected into the process, the greater the risk of market change or re-evaluation with a resulting adverse effect on the cost of capital and, in the end, on the cost of service to the public. Indeed, the public has a double interest in this process. Apart from the ultimate impact on rates which may be occasioned by disruption of the financing process, the utilities may simply be unable to keep pace with the burgeoning public demand for electric energy.7
Both the delicacy of financing and the availability of alternative means for regulating anticompetitive conduct, then, strongly support the Commission’s interpretation of the Act. Nor does anything in the legislative history *771of § 204 require a contrary conclusion.8 The Senate Report states straightforwardly:
“Control over the capitalization of operating utilities is plainly an essential means of safeguarding the public against the unsound financial practices which make impossible the proper and most economical performance of public-utility functions.” S. Rep. No. 621, 74th Cong., 1st Sess., 50 (1935) (emphasis supplied).
And in companion legislation entrusting to the Securities and Exchange Commission (SEC) the responsibility to regulate the issuance of securities by public utility holding companies, Congress declined to require the SEC to investigate anticompetitive conduct, at least in the ordinary case.9 Even apart from its relevance to congressional purpose, the absence of a requirement for such an investigation when a public utility holding company seeks authorization to issue a security supports the Com*772mission’s prudent judgment to accord like treatment to applications from operating utilities.
The securities of public utility holding companies compete in the financial markets with the securities of public utility operating companies. It makes little sense, especially in construing companion legislation applicable to the same industry, to construe the term “public interest” when applied to the operating companies to mean something different, and to impose a more burdensome procedure, than when applied to utilities which are within a holding company system.10 Yet, this will be the bizarre result of today’s decision by this Court.
III
The Court rests its decision in part on Denver & R. G. W. R. Co. v. United States, 387 U. S. 485 (1967), a case involving the issuance of a controlling stock interest in a carrier regulated by the Interstate Commerce Commission (ICC). In my view, that case falls far short of being a persuasive precedent. The transaction under consideration there was a proposed issuance of common stock by the Railway Express Agency (REA). Approximately 2,000,000 shares of REA stock were held exclusively by railroads, each of which was obligated to offer its shares to the others before selling them to outsiders. REA also was authorized to issue 500,000 shares to whomever it wished, and it entered into an agreement to sell such shares to Greyhound on the condition that *773Greyhound would offer to purchase an additional 1,000,-000 shares from present stockholders, the offer to remain open for 60 days.
As required by § 20a of the Interstate Commerce Act, 49 U. S. C. § 20a, REA applied to the ICC for authorization to issue the 500,000 shares. Under the terms of that section, the ICC may grant authorization “only if it finds that such issue ... is for some lawful object within [the applicant’s] corporate purposes, and compatible with the public interest . . . .” 49 U. S. C. § 20a (2). The ICC authorized the issue without granting a hearing on an intervenor’s claim that issuance to Greyhound would give it “control” over REA, or, at a minimum, would lead to a lessening of competition in the freight transportation market. On review in this Court, the. ICC argued that its responsibility under § 20a was limited to protecting against financial manipulation, but that even if it did have an obligation to consider “control” and “anticompetitive” effects of the issuance, it could properly defer such consideration until the expiration of Greyhound’s offer to purchase a large additional portion of RBA’s outstanding stock. 387 U. S., at 491-492.
Ill addressing the ICC’s first contention, the Court gave scant attention to the legislative history of § 20a. After noting that an earlier version of what was to become the Interstate Commerce Act “led to a study which condemned as a ‘public evil’ intercorporate holdings of railroad stock,” id., at 492 n. 4, the opinion shifted focus:
“Even if Congress’ primary concern was to prevent [fiscal] manipulation, the broad terms ‘public interest” and ‘lawful object’ negate the existence of a mandate to the ICC to close its eyes to facts indicating that the transaction may exceed limitations imposed by other relevant laws.” Id., at 492.
One of the ICC’s responsibilities, the Court found, was to consider possible control and anticompetitive conse*774quences, a responsibility deriving specifically from § 5 of the Interstate Commerce Act, 49 U. S. C. § 5, and from § 11 of the Clayton Act, 15 U. S. C. §21. Under §5, any conjoining of two or more carriers, either by merger or by transfer of a controlling interest of stock, must be submitted for approval to the ICC, whose approval confers antitrust immunity. Section 11 of the Clayton Act grants to the ICC authority to enforce compliance with the antitrust provisions of § 7 of the same Act, 15 U. S. C. § 18, which prohibit the acquisition by one corporation of the stock or the assets of another where “the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.” On the facts before it, the Court saw no abuse of discretion in the ICC’s decision to postpone consideration of possible control of REA by Greyhound until the expiration of Greyhound’s 60-day offer, but held it an abuse of discretion to defer consideration of a possible § 7 violation.
Section 20a of the Interstate Commerce Act, interpreted in Denver, was, as the majority points out, the model for § 204 of the Federal Power Act.11 But this tie by no means requires that the two sections be given identical constructions.12 The Denver case involved a different *775statute and regulatory framework, with a different administrative history.13 Moreover, the transaction involved in Denver, Greyhound’s purchase of stock in a regulated carrier, was arguably a per se violation of the antitrust laws: the effect of the acquisition might have been “substantially to lessen competition, or to tend to create a monopoly” in violation of § 7 of the Clayton Act. As indicated above, the legislative history of the Interstate Commerce Act showed particular concern with “intercorporate holdings of railroad stock.” The immediacy of the antitrust issue and the obligation imposed by § 5 on the ICC with respect to Clayton Act violations justified the Court in overriding the ICC’s decision not to address the issue.
In sum, Denver has little precedential weight in a case under the Federal Power Act, especially where the transaction does not involve on its face an arguable violation of the antitrust laws.
IV
I return now to the facts in this case. The relationship between Gulf States’ proposal to sell bonds for cash on the open market and the anticompetitive activities alleged by the Cities is, at best, an attenuated one. Indeed, the Cities do not claim that the issuance itself will have an *776anticompetitive effect. Nor do they claim that the simple refunding of obligations will have such an effect. Their assertion of a relationship barely goes beyond a bald insistence that the anticompetitive conduct alleged will be “financed or refinanced by the bonds here proposed.” Brief for Respondent Cities 9. Their focus consistently has been not so much on the uses to which the proceeds from the bonds will be put as on the conditions which the Commission might impose on their issuance. Indeed, the Commission believes that the lack of a substantial relationship between the Cities’ allegations and petitioner’s bond issue is characteristic of the lack of nexus between § 204 financing proposals generally and anticompetitive conduct by utilities.14
This, then, is a particularly unlikely case in which to force the Commission to investigate allegations of anti-competitive conduct. The Court apparently considers that the Cities’ claim of anticompetitive conduct is at least colorably relevant to the proposed refinancing. If so, it is unlikely that any claim can be found wholly irrelevant. On the basis of today’s precedent, the only justification reasonably open to the Commission for refusing to consider allegations of anticompetitive conduct will be that the allegations themselves are patently false.
If the field of inquiry is, as the Cities insist, all of a utility’s proposed actions and all of its past actions as *777they reflect on its proposed actions, it should be no difficult task for an intervenor to force a hearing and findings of fact. As the present case amply demonstrates, the questions of fact may be complicated ones unsuited to summary adjudication. If the Commission finds no anti-competitive conduct, the intervenor will remain free to seek judicial review of the Commission’s findings, and thereby cause further delay.
In converting a special-purpose proceeding into a general-purpose one, the Court renounces an administrative interpretation of § 204 founded on the practicalities of utility financing and regulation.15 Although other established means are available for policing anticompetitive conduct,16 the Court imposes fresh and ill-defined obstacles to the necessary raising of capital by an industry that needs an expeditious and dependable regulatory process. And, finally, in the name of the “public interest,” it ignores the critical fact that mandating a prolonged factfinding process will preclude the Commission from vindicating those aspects of the public interest peculiarly implicated by financing proposals.
I would uphold the Commission and would reverse the decision of the Court of Appeals.

 The interpretation is entitled to great deference:
“When faced with a problem of statutory construction, this Court shows great deference to the interpretation given the statute by the officers or agency charged with its administration. ‘To sustain the Commission’s application of this statutory term, we need not find that its construction is the only reasonable one, or even that it is the result we would have reached had the question arisen in the first instance in judicial proceedings.’ Unemployment Comm’n v. Aragon, 329 U. S. 143, 153.” Udall v. Tollman, 380 U. S. 1, 16 (1965).

 It was stated in petitioner’s brief, and was not challenged, that the Commission records fail to show any other like petition to intervene in a financing application under § 204 since its enactment in 1935. The remedy which intervenors are seeking to establish is a new one not heretofore deemed necessary or appropriate by anyone. Brief for Petitioner 26.

 One would have thought that by its use of the phrase “irrelevant to a requested authorization of securities,” 44 F. P. C. 1524, 1525, the Commission had already found — to use the language of the court— that the claims lacked a “reasonable nexus” with the purpose of the securities issuance.

 Nor does the Commission have exclusive jurisdiction over antitrust violations by utilities. Antitrust suits may be brought by private parties or by the Antitrust Division of the Justice Department and afford other means of relief.

 In Pacific Power & Light Co., 27 F. P. C. 623 (1962), the Commission took the same position under analogous circumstances. There, the Commission approved a proposed issuance of securities to fund construction of a politically controversial transmission line, stating:
“The plain purpose of Section 204 is to prevent the issuance of securities which might impair the company’s financial integrity or its ability to perform its public utility responsibilities.” Id., at 626.

 The Commssion has recognized the importance of expedition and adherence to time schedules in the administration of § 204 of the Act:
“It should also be observed that procedures for considering security issues must be expeditious if, in view of changing marketing conditions, utilities are to be able to raise the money needed to carry out their responsibilities. . . .” Id., at 629.

 Prof. Priest has commented on the urgency of new capital for the electric industry:
“Since World War II, the problem of new capital has been, and will continue to be, compellingly urgent for public utility managements.” A. Priest, 1 Principles of Public Utility Regulation 451 (1969).
After describing the “spectacular” growth of the electric utility industry, Prof. Priest compared the urgency of access to the capital markets of utilities with industrial enterprises:
“[T]he new capital requirements of the utility industry in the next ten years will call for extraordinary effort. The obvious reasons are (1) that regulated public utilities literally cannot produce as much cash through retained earnings as unregulated industrial enterprises and (2) that the utilities, in any event, need a much larger investment per dollar of annual revenue than the characteristic industrial.” Id., at 452.
It is stated in petitioner’s brief, and not questioned, that in 1971, 43 applications were filed with the Commission covering the issuance of nearly $1.8 billion of securities. Brief for Petitioner 24.

 Section 204 was enacted as part of Tit. II of the Public Utility Act of 1935. Title II amended the Federal Water Power Act and redesignated it the Federal Power Act.

 The Public Utility Holding Company Act was enacted as Tit. I of the Public Utility Act of 1935. See n. 8, supra. Under § 7 (d) (6) of the Public Utility Holding Company Act, the SEC is directed to disapprove an issue of securities if its terms and conditions are “detrimental to the public interest or the interest of investors or consumers.” 15 U. S. C. § 79g (d) (6). The SEC has interpreted this language as not requiring it to investigate alleged anticompetitive conduct, and applied this interpretation in an aspect of this litigation involving a substantially identical challenge by these same Cities to a proposed issuance of securities by Louisiana Power & Light Co., a public utility holding company which allegedly conspired with Gulf States. See ante, at 75r-755, n. 4. The SEC rejected the Cities’ protests as pertaining to “collateral and unrelated controversies,” 147 U. S. App. D. C., at 103, 454 F. 2d, at 946, and was upheld by the Court of Appeals. Id., at 112, 454 F. 2d, at 955.

 Further evidence of congressional intent can be gleaned from the fact that Congress exempted from scrutiny under § 204 securities of “a public utility organized and operating in a State under the laws of which its security issues are regulated by a State commission.” § 204 (f) of the Act, 16 U. S. C. § 824c (f). At the time of the Act, 32 States regulated the issuance of utility company securities. 79 Cong. Rec. 10378 (1935). Had Congress intended to subject securities issues to antitrust screening, it would not, presumably, have established this exception.

 The Senate Report indicated that § 204
“follows section 20a of the Interstate Commerce Act in defining the conditions under which such authorization is to be given, the Commission’s power to issue orders and the duty of the public utilities to comply with such orders.” S. Rep. No. 621, 74th Cong., 1st Sess., 50 (1935).

 One can hardly suppose that Congress in 1935 specifically intended to borrow the words of § 20a as they would be construed by this Court in 1967. Congress borrowed the language as it was then understood, because it had “proved its usefulness.” Id.., at 20.
Moreover, Congress departed from the Interstate Commerce Act model when it established an exception for state-regulated securities, see n. 10, supra, an exception which is not found in the Interstate Commerce Act.

 No less important are the practical differences between utility and railroad financing. Because for several decades the railroads have contracted rather than expanded facilities and services, they have for the most part been able to meet their capital needs from retained earnings and equipment trust financing without resorting to the national markets for additional capital:
“Railroads may not enlarge their trackage significantly and may continue to rely largely on internal resources and the ubiquitous equipment trust to finance additional and more efficient rolling stock. But the electric, natural gas, communications, and water industries, as well as the airlines, must go to the investment fraternity for staggering amounts.” Priest, supra, n. 7, at 451.

 It is worthy of note that a transaction between two public utilities resembling the transaction proposed in Denver & R. G. W. R. Co. would be submitted to the Commission, not under § 204, but under § 203, which provides in pertinent part that:
“(a) No public utility shall . . . purchase, acquire, or take any security of any other public utility, without first having secured an order of the Commission authorizing it to do so.” 16 U. S. C. § 824b. In passing on an application under § 203, the Commission would investigate charges of anticompetitive practices. See supra, at 768. Thus the specific problem addressed by the Court in Denver would not arise under § 204.

 I would not foreclose the possibility that the Commission should consider in the context of a § 204 application an allegation that the issuance of the security was itself an antitrust violation. But see n. 14, supra. The present case is not remotely of this type.

 See n. 4, supra.