Court Opinion

ID: 8881254
Source: CourtListenerOpinion
Date Created: 2022-11-26 20:38:52.032322+00
Date Added: 2024-06-11T17:06:39.955589
License: Public Domain

J. SKELLY WRIGHT,
Circuit Judge, (concurring in part and dissenting in part);
I concur in Judge Robinson’s excellent opinion except for the following reservations with respect to Part IV relating to the handling by the Commission of the investment tax credit.
*978I agree with the majority’s statement that the Commission “was in error if it felt that it was inexorably bound” by Section 203(e) of the 1964 Internal Revenue Act to give the carrier, as distinguished from bus riders, the benefit of the investment tax credit since that section “applies only to an ‘agency or instrumentality of the United States,’ which the Commission clearly is not.” However, the majority then states that “the issue does not vanish here, for the Commission’s authority to administratively adopt the canon expressed in Section 203(e) is something else again.” The majority quotes language from City of Chicago v. F.P.C., 128 U.S.App.D.C. 107, 113, 385 F.2d 629, 635 (1967), to the effect that “[a] regulatory agency may, should, and in some instances must, give consideration to objectives expressed by Congress in other legislation * * and the remainder of Part IV implies that the giving of such consideration is appropriate here and that the Commission is to be faulted only because it blindly adopted the policy of Section 203(e) instead of exercising in a meaningful way the “discretion” it possessed to do so or not.
My disagreement with this part of the opinion stems from my belief that, since Section 203(e) is not applicable, the Commission cannot give any consideration to the policy embodied therein. In other words, the Commission has no “discretion” to deny the farepayers the benefits of the investment tax credit savings. I rely specifically on the language quoted by the majority from F.P.C. v. United Gas Pipe Line Co., 386 U.S. 237, 244, 87 S.Ct. 1003, 1008, 18 L.Ed.2d 18 (1967): “[W]hen the out-of-pocket tax cost of the regulated [taxpayer] is reduced, there is an immediate confrontation with the ratemaking principle that limits cost of service to expenses actually incurred.” As this statement recognizes, basic to all ratemaking is fixing rates in terms of actual costs and that, of course, includes the actual cost of federal income taxes as well. To hold that the Commission has the discretion to fix the rates on the basis of total federal income tax liability without subtracting the amount of the tax credit which Transit is entitled to, and in fact takes, flies in the face of this principle.
I do not think that anything in our en banc decision in Panhandle Eastern Pipe Line Co. v. F.P.C., 115 U.S.App. D.C. 8, 316 F.2d 659 (1963), precludes our holding in this case that the Commission does not have the discretion to set a rate which is not based on a total flow-through. Certainly the spirit of Panhandle is that tax benefits should flow through and, although we there affirmed the Commission’s discretion not to give the consumers the total benefit of the revenues generated by Panhandle’s use of Section 167’s authorization of accelerated depreciation, I think that part of the decision turned on the fact that accelerated depreciation is merely a tax deferral and not a tax saving like investment tax credit. We stated in Panhandle:
“* * -x- The liberalized method provides higher depreciation deductions and therefore lower taxes during the early part of the life of a given property, and lower deductions and higher taxes in the later years of the life of the property. The total depreciation deduction's available to a company over the entire life of a facility are the same using either method. ' * *”
115 U.S.App.D.C. at 10, 316 F.2d at 660. In this case giving Transit the benefit of Section 203(e) would result in a rate predicated in part on hypothetical costs not expended — on taxes never to be paid. This, in my judgment, would be contrary to the fundamental principle of ratemaking.