Court Opinion

ID: 9462768
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:49:49.642939+00
Date Added: 2024-06-11T17:37:46.467652
License: Public Domain

BAZELON, Chief Judge
(dissenting):
There is a certain attractiveness, I must admit, to the FPC’s decision in this case; after all, the Commission simply has required petitioner PGT to do what most other gas companies must do before increasing their rates: give the FPC thirty days notice of the proposed increase so that the Commission can perform its statutory mandate to assure that the rates are “just and reasonable.” But an appealing decision is not a reasoned decision, one which explains the basis for reaching the two necessary legal conclusions to support amendment of a tariff: (1) an existing condition has become “unjust, unreasonable, unduly discriminatory or preferential”; and (2) the remedy is just and reasonable.1 While the Commission may have developed a reasoned justification for modifying PGT’s essentially carte blanche import authority, I find no reasoned explanation for modifying PGT’s cost-of-service tariff.
The crucial fact here is that the Commission once found it reasonable for PGT to pass through costs incurred in acquiring Canadian gas without seeking prior FPC approval. Indeed, the Commission freely admits that the tariff has operated reasonably. The Commission argues, however, that now that Canadian prices are no longer stable or fixed on the basis of production costs, the Commission must be able “promptly to decide in advance the measures, if any, to be taken with respect to increases in the price of Canadian gas imposed or compelled by Canadian authorities.” Accordingly, the Commission found the pass through provision in PGT’s tariff no longer reasonable.
The fatal flaw in this reasoning is that it falsely assumes the tariff somehow disabled the Commission from responding to Canadian imposed price increases. In truth, the only measure the tariff precluded the FPC from taking was that the FPC could not temporarily or permanently prohibit PGT from recovering costs incurred because of the increases. The Commission has failed to explain why imposing a prohibition on cost recovery ever would be an appropriate or even plausible response to Canadian price increases. After all, PGT, not the Canadian government or Canadian producers, would bear the brunt of such a prohibition; the FPC concedes that had PGT been required to absorb even the initial 32 cent price increase for a short period of time it would have been driven out of business, and 2,000,000 consumers would have been deprived of 40% of their gas supply. Yet PGT plainly has no responsibility for or control over price increases mandated by the national Canadian government. PGT cannot even mitigate the impact of those increases by expanding production of non-Canadian gas since PGT’s sole operations are in Canada. Thus, the Commission could not possibly question the reasonableness of PGT recovering costs imposed upon it by the Canadian government. This would be true even *398if those costs were unreasonable — a question the Commission expressly declined to consider. The Commission’s actions in promptly approving all the increases PGT has requested since its tariff was modified strongly support this conclusion.
The real measure the Commission wishes to be able to consider with respect to Canadian price increases, as its opinion makes clear, is a halt in further importation of Canadian gas.2 But that measure can be taken, if at all, only in a proceeding under section 3 of the Natural Gas Act, 15 U.S.C. § 717b, which provides for issuance and amendment of authorizations to import foreign gas. If the Commission desired to assure itself an opportunity to consider halting imports in light of each price increase, it should have proceeded under section 3 to amend PGT’s import authorization to require further review and a new authorization for each future price increase before PGT could import gas at the higher price. This is precisely what the Commission did in Midwestern Gas Transmission Go., a decision on which the Commission purported to rely here.3 Instead, the Commission acted under section 5, 15 U.S.C. § 717d(a), to amend the tariff so as to require review under section 4, 15 U.S.C. § 717c, before PGT can recover costs incurred in acquiring gas PGT was authorized — indeed obligated — to acquire. Finding that the Commission has failed to justify this peculiar action,4 I respectfully dissent.

. American Smelting & Refining Co. v. FPC, 161 U.S.App.D.C. 6, 494 F.2d 925, 940-41, cert. denied, sub nom. Southern California Gas Co. v. FPC, 419 U.S. 882, 95 S.Ct. 148, 42 L.Ed.2d 122 (1974); see Public Service Comm'n v. FPC, 167 U.S.App.D.C. 100, 511 F.2d 338, 344-16 (1975).

. The Commission’s opinion also makes clear that the Commission sought to protect its ability to “send a message” to Ottawa concerning price increases. Putting aside questions as to the propriety of this objective in an adjudicative proceeding, the Commission failed to explain how penalizing PGT by requiring it to absorb Canadian imposed costs would be an effective method of communication. Indeed from this vantage point as well, it seems that an importation review proceeding would be far more effective in achieving the FPC’s objective.

. Docket No. G-18314, Order of March 29, 1974. Even this action would have been justified only if the need for Canadian gas was not such that the United States would have to import it regardless of price. The Administrative Law Judge made this same point with regard to the tariff modification he considered, but then upheld the modification without any information as to the need for Canadian gas, leaving that question for “due consideration by the Commission.” This action — and the FPC’s subsequent action in adopting the ALJ’s opinion without even commenting on this crucial issue — seems to ignore our teaching that in a section 5 proceeding, the burden of proof is on the. party advocating a modification, here the Commission staff. See American Louisiana Pipe Line Co. v. FPC, 120 U.S.App.D.C. 140, 344 F.2d 525, 529 & n.4 (1965).

. The remedy imposed by the Commission is unreasonable for an independent reason as well: it increases the risks to which PGT is exposed without increasing its rate of return. PGT is thus saddled with a “hybrid” tariff reflecting the worst of both worlds: the risks of suspension and refund associated with a normal tariff yet the low rate of return associated with a cost-of-service tariff. It is no answer to say that this situation can be corrected in a section 4 proceeding; even if that is true — even if PGT can propose more than a pass through of Canadian prices under the Commission’s decision — it does not excuse the FPC’s failure to provide a reasonable remedy in the instant proceeding. Cf. Trunkline Gas Co. v. FPC, 247 F.2d 159 (5th Cir. 1957).