Court Opinion

ID: 9461494
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:15:57.995073+00
Date Added: 2024-06-11T17:37:05.712634
License: Public Domain

FAHY, Senior Circuit Judge
(dissenting) :
In considering the several orders of the Commission culminating with its order now on review, I am unable to agree that the Commission has complied with the obligation of explaining its decision in a manner to which the parties are entitled and which affords an adequate basis for favorable court review.
I
In the original Order, No. 453, issued June 7, 1972, the Commission amended section 141.61 of its regulations so as to require certain steam-electric generating utilities to file a monthly report on FPC Form No. 423 listing data on cost, quality and source of supply of fuels the utilities receive.1 In promulgating this ma*394jor change in its administration of the Federal Power Act the Commission considered two alternative versions of the form to be used. Alternative A was adopted. It requires full disclosure of the cost and source of supply of purchases by individual plants. The Commission believed this alternative would best serve the public interest since it would supply the fuel cost and quality statistics in the most useful form and thus would prove to be “significantly greater in' analytical value.” Alternative B would have permitted the plants to supply the information without fully disclosing the costs and source of supply of each fuel purchase. One reason stated by the Commission for rejecting this alternative was that it,
would force the smaller utilities to make a proportionately greater disclosure of cost information than their larger competitors from which contract terms can be deduced and thus place them at a competitive disadvantage in the fuel market.
While the adverse competitive effect upon small utilities of Alternative B compared with Alternative A was recognized, the Commission made no reference to the anti-competitive effect among competing fuel suppliers of disclosure of their respective contractual terms with the utilities, as required by Alternative A, asserted by the utilities to be inconsistent with the policies of the antitrust laws.
The National Coal Association filed a petition for rehearing respecting Order No. 453, with its Form 423, alleging it required disclosure of data of a proprietary and commercial nature which could have a seriously disruptive effect on the competitive structure of the energy market. In denying the petition by order of August 3, 1972, the Commission was silent upon the subject of antitrust policy, simply stating:
The NCA petition for rehearing raises no issues which were not considered by the Commission prior to the adoption of Order No. 453. Moreover, having reconsidered the issues raised in the NCA petitions, the Commission is of the opinion that its Order No. 453 is correct.
However, Order No. 453, as we have seen, neither explicitly states nor otherwise reflects any prior consideration of the allegedly seriously disruptive effect on the competitive structure of the energy market, except the special problem noted with respect to the smaller utilities, which influenced the adoption of Alternative A rather than Alternative B.
Sixteen electric utilities, including our present petitioners, then filed a “Petition of Certain Electric Utilities for Amendment of Commission’s Regulations with Respect to Form No. 423.” This petition clarified the issue of conflict between the disclosure required and the policy of the antitrust laws. To avoid this conflict an amendment was sought to require only “the average cost of fossil fuels delivered to a plant . instead of the actual price of each delivery” and, also, the elimination of “the reporting of information with respect to the identity of the fuel supplier and the date of contract expiration.” In the alternative the utilities requested that unless otherwise ordered by the Commission the forms containing the required data be made available only to the staff and members of the Commission and to other federal agencies upon written request of the agency head and not made available to any other person. The petition included an offer of proof “that electric utilities and their customers stand to be injured in fuel contract negotiations by the require*395ments of section 141.61 [which embodies Order No. 453]. . . .” The petition also stated that “In the event the Commission orders an evidentiary hearing on this petition, they offer to prove that the forms are in fact being used in contract negotiations by fuel suppliers. ft
In its Order of March 2, 1973, denying the petition the Commission held that due to petitioners’ failure to seek rehearing of Order No. 453 petitioners were precluded from seeking court review,2 and for the Commission to amend an order then under judicial review 3 would be tantamount to usurping appellate court jurisdiction. For this reason the petition to amend was denied for lack of jurisdiction. Nevertheless, assuming jurisdiction pertained, the Commission adverted to what it considered to be petitioners’ suggestion that the order violated United States v. Container Corp. of America, 393 U.S. 333, 89 S.Ct. 510, 21 L.Ed.2d 526 (1969), and also considered other reasons advanced to support the suggested amendments. The Commission mistakenly characterized petitioners’ position as urging “strict application of antitrust laws to electric utilities and would preclude the Commission from considering whether or not disclosure of such data serves the overriding public interest.” It stated that in regulated industries increased competition may sacrifice efficiency and retard investment; moreover, “The application of antitrust policy to public utilities requires a balancing of the public interest in energy supply at a reasonable price so as to achieve the most efficient allocation of our limited resources against the potential anticompetitive effects of the proposed action.” Pointing out there was no agreement to exchange price information as in Container, the Commission said it refuses, “to apply a per se antitrust rationale to electric utilities, without further inquiry into the competitive effects of disclosure” of the data, and if the fuel suppliers agreed among themselves to fix or interfere with the prices paid by utilities, resort could be had to the Department of Justice. The Commission then characterized its position as follows:
Our determination is not in the context of immunizing any alleged antitrust violations, but is a determination that disclosure of such data, absent a showing to the contrary, serves the public interest. (Footnote omitted.)
Assuming arguendo that the Container rationale were applicable to Form 423 and that certain anti-competitive restraints would develop, the Commission stated that petitioners ignore that it is “government action” which requires the disclosure for the benefit of the public and petitioners cannot allege, “as is implied in their” petition, that the Commission had violated the antitrust laws.4
The Commission added, however, in this Order of March 2, 1973, that it would grant petitioners an opportunity, in aid of their request for a public hearing, to submit a written offer of proof that Form 423 had injured electric utilities and their customers in fuel contract negotiations, adding further that, if injury has o&urred, “petitioners must show that such injury outweighs the public benefit from full disclosure.”
Thus, disclosure of the pricing details was given a preferred position, as pre*396viously the Commission had accorded it in its decision that “disclosure, absent a showing to the contrary, serves the public interest.”
Petitioners applied for rehearing, and included an offer of proof. They offered to prove, inter alia, that the fuel suppliers have informed petitioners that by reason of Form 423 the fuel suppliers know their competitors’ prices to petitioners, and that at least one fuel supplier has informed a petitioner directly that because of the public dissemination of its prices on Form 423 it will be obliged to raise its price to the petitioner to conform with prices it charges others, that no longer was it possible for petitioners to negotiate favorable prices with the understanding they would be confidential; that in one fuel supply market an existing control structure is strengthened when the resale price to petitioners is available on Form 423; and that “given the foregoing facts, dissemination of Form 423 information to their fuel suppliers will result in a completely new basis for negotiating fuel supply contracts and prices to Petitioners and other electric utilities for fuel in each market higher than if such information is not available to their fuel suppliers, to the injury of Petitioners and their customers. . . . ”5
The Commission by Order of April 16, 1973, denied rehearing. It reasserted lack of jurisdiction due to failure of petitioners to have sought judicial review of Order No. 453, but added: “We need not restate our reasons for denial as found in our March 2 Order, pp. 2-5.” Referring then to that part of the March 2 Order which afforded petitioners an opportunity to submit a written offer of proof, the Commission characterized their allegations as general and unspecific. Once again the Commission placed disclosure of the pricing information in a preferred position, stating, “[tjhere are no facts set forth nor have Petitioners shown that even if they have been injured, . . . ‘such injury outweighs the public benefit from full disclosure.’ ”
II
Once the jurisdictional issue is solved, as the opinion of Judge Leventhal accomplishes, one attempts, unsuccessfully, to find in the above analysis, believed to be a fair exposition of the several orders, why there is an overriding public interest to be served by disclosure of the data, or its disclosure in the detail required by Form 423, in face of the policy of the antitrust laws. The Commission simply concludes that full disclosure is in the public interest and requires that petitioners prove the contrary.6
In view of the policies of the antitrust laws, and their importance, I think this *397conclusion is not so obvious as to supply its own support. There is no self-evident reason why the public interest in energy supply at a reasonable price, so as to achieve the most efficient allocation of our limited resources, is served by disclosure of the Form 423 data, and the uses to which the data could or would be put to obtain the purposes stated are not explained. In the absence of explanation I do not think we should accept the conclusion stated, especially when its absence deprives the court of a basis for comparative consideration of the conclusion in light of the policy of the antitrust laws.
In the second place, it seems to me that the Commission reached its decision, at least in good part, upon a mistaken theory by attributing to the utilities a position that the required disclosure led to violation of the antitrust laws by them or by the Commission, or both. This was not the position of the utilities. To the undetermined extent that the Commission’s decision rests upon this misapprehension the decision lacks foundation. There had been no suggestion that Order No. 453 rendered either the utilities or the Commission in violation of the antitrust laws. What the utilities have contended is that making available to the competing fuel suppliers the detailed pricing information of each with respect to fuel sold the utilities leads to anti-competitive consequences inconsistent with the policy of the antitrust laws, in turn thereby injuring the utilities in negotiating for fuel, with ultimate injury to the consumers of electric energy. When the Commission refers to “[t]he application of antitrust policy to public utilities” as requiring a balancing of the public interest in energy supply at a reasonable price, “against the potential anticompetitive effects of the proposed action”, the context indicates the Commission had in mind a balancing of the anti-competitive effects between the utilities. I do not understand this to be the problem presented. The balancing required is to compare the asserted public interest in the energy supply said to be served by the disclosure, on the one hand, and, on the other hand, the public harm of the anti-competitive consequences in the fuel supply industry, incident to each competing supplier having made available to it the details of its competitors’ contractual arrangements with the utilities. This is said to result in more disadvantageous arrangements forced upon the utilities than might otherwise be the case, to the ultimate injury of consumers of electricity.
Furthermore, the Commission does not explain why its view that the public interest served by the details required to be furnished on Form 423 could not be adequately served by requiring only the average costs of fossil fuels delivered to a plant instead of the actual prices, and by the elimination in the reporting of the identity of the fuel suppliers and dates of contract expirations, all as suggested by petitioners.
Even were we to assume that in the exercise of its expertise the Commission was entitled without explanation to find that the public interest in energy supply at a reasonable price would be served were the data specified on Form 423 considered without regard to the policy of the antitrust laws, the Commission was not in my opinion entitled to give overriding weight to this public interest factor when confronted with the claim of petitioners that the making of this information available to competing fuel suppliers was inconsistent with the policy of the antitrust laws. I think it then became incumbent upon the Commission to consider the potential adverse effect upon the public interest arising from this claim and to weigh or compare it with the public interest in disclosure. The Commission seems to have recognized this only to the extent of placing the burden upon petitioners to establish anti-competitive injury to themselves or their customers to a degree to overcome the Commission’s determination previously made of an overriding public interest in full disclosure as specified in Form 423.
*398III
Faced with (1) the offers of proof of anti-competitive effects of the required disclosure of contractual data, including pricing terms, and (2) additional predictable effects of like character, the Commission in my view was obligated to have explored more closely this phase of the problem as it bore upon the public interest in “the fundamental national economic policy expressed in the antitrust laws.” Gulf States Utilities Co. v. FPC, 411 U.S. 747, 759, 93 S.Ct. 1870, 1878, 36 L.Ed.2d 635 (1973). The exploration should include analysis of the question whether, in view of the policy of the antitrust laws, disclosure only of regional averages of prices, as suggested by petitioners, rather than the details required by Form 423, would better serve the public interest. Such exploration need not depend upon actual violation of the antitrust laws.
Consideration of antitrust and anti-competitive issues by the Commission, moreover, serves the important function of establishing a first line of defense against those competitive practices that might later be the subject of antitrust proceedings.
Id. at 760, 93 S.Ct. at 1878, Moreover,
The exchange of price data tends toward price uniformity. . . . Stabilizing prices as well as raising them is within the ban of § 1 of the Sherman Act.
United States v. Container Corp. of America, supra, 393 U.S. at 337, 89 S.Ct. at 512.
Although here the price data is not “exchanged” directly by the fuel suppliers, and there is no suggestion the latter violate the antitrust laws simply by coming into possession of the data, the acquisition of the information by reason of Order No. 453 places in their hands the same anti-competitive weapon as though received directly from their competitors.
The Commission must maintain a regard for consumer interest in price. New emphasis on energy shortage may indeed modify this regard, but it cannot eliminate it. See Atlantic Rfg. Co. v. Pub. Serv. Comm’n, 360 U.S. 378, 388, 79 S.Ct: 1246, 3 L.Ed.2d 1312 (1959).
The Commission I think was not warranted by the record in adhering to the position that disclosure occupied a preferred position in the public interest— even if appropriately granted initially— unless overcome by evidence to the contrary, when confronted by the anti-competitive effects inconsistent with the policy of the antitrust laws. The Commission should at least have reconsidered the matter on an open basis rather than to have continued to accord disclosure an overriding public interest value. Only the public interest maintains a preferred position throughout Commission deliberations.
IV
I must conclude that the Commission “has not genuinely engaged in reasoned decision-making.” Greater Boston Television Corp. v. F.C.C., 143 U.S.App.D.C. 383, 29 L.Ed.2d 701, 444 F.2d 841 (1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2229, 2233 (1971). If findings of fact, supported by substantial evidence were requisite, none appears. Greater Boston, however, was . adjudicatory, whereas our case is of a rule-making character; so it may be said as to anti-competitive issues that there is,
. no objection in law to a disposition without hearing that is accompanied by an explanation, supported in the record, that the contentions are too insubstantial or barren to indicate the existence of substantial anticompetitive. issues.
City of Lafayette, Louisiana v. Securities & Exch. Com’n, 147 U.S.App.D.C. 98, 454 F.2d 941, 953 (1971). And see, Judge Robb’s recent opinion for the court in Moss v. F.P.C., 502 F.2d 461 (1974). The disposition of the present proceeding “without hearing,” however, was not accompanied by such an explanation supported in the record.
*399If the denial of a hearing sought by petitioners is to stand, then I think we must find in the Orders a reasoned basis for the required disclosure without the need of a hearing. I do not find this, nor do I find that the conflicting factors bearing on the public . interest are weighed on the record in a manner which supports the conclusion reached.
Petitioners’ offer of proof was rejected as an inadequate basis for a hearing (1) without accepting the facts offered to be proved as true and deciding, if true, whether they adequately countered the Commission’s predetermined public interest conclusion, and (2) without permitting a further development of the truth of the anti-competitive effect of disclosure inconsistent with the policy of the antitrust laws.
It seems to me that the Commission, without adequate supportive articulation, has made an overriding determination in favor of the detailed disclosure, and has done this also without analytical appraisal of the public interest in disclosure, modified disclosure or nondisclosure. It has cast upon petitioners the burden of dislodging the determination made independently of considerations asserted to be adverse to such disclosure. In determining the relative public interest in detailed disclosure, modified disclosure or non-disclosure, it has not developed or analyzed on the record, or permitted to be developed or analyzed, the effects of full disclosure asserted to give rise to consequences inconsistent with the policy of the antitrust laws. Values and non-values have not been adequately identified and then weighed on the scale of the public interest.
The following statement of our court, though made in a different factual context, seems to me to have particular relevance, even if not literally to be applied in all respects to this case:
. because competitive considerations are an important element of the “public interest,” we believe that in a case such as this the Commission was obliged to make findings related to the pertinent antitrust policies, draw conclusions from the findings, and weigh these conclusions along with other important public interest considerations.
Northern Natural Gas Co. v. Federal Power Com’n, 130 U.S.App.D.C. 220, 399 F.2d 953, 961 (1968).
I would remand the case to the Commission for reconsideration of Order No. 453 and Form 423 upon the basis of a fuller record or with a more detailed analysis of the basis for the conclusion reached, aided by the experience which has intervened. Cf., American Importers Association v. C.A.B., 154 U.S.App. D.C. 38, 473 F.2d 168, 175 (1972).

. In the Commission’s Notice of Proposed Rulemaking of November 26, 1971, the reasons given for “promulgation of the proposed Form No. 423” were stated as follows :
(a) to provide monthly information on the availability and cost of fossil fuels to electric utility companies for use in current analyses of the energy and fuel supply situation and the effects on the cost of electric power; (b) to provide timely data on a comparable basis for each type of fuel by quality determinants, thus facilitating the evaluation of developments in fuel supply which may affect the reliability of electric service, emergency preparedness, and the environmental improvement programs for the different air quality control regions in the United States; and (c) to assist the Commission generally in *394the proper administration of the Federal Power Act.
These reasons for the proposed Form are merely reiterated in the Order of June 7, 1972, as having been listed in the Notice, without more.

. Section. 19(a) of the Natural Gas Act, 15 TJ.S.C. § 717r(a).

. The National Coal Association had filed a petition for review in this court. However, on May 14, 1973, a motion for voluntary dismissal was granted.

. The Commission also rejected petitioners’ claim of exemption from disclosure under the Freedom of Information Act, 5 U.S.C. § 552(b)(4), which applies to trade secrets and commercial or financial information. This contention was rejected because, the Commission states, “Disclosure will not undermine the competitive positions of utilities.” I assume the correction of the Commission’s rejection of the applicability of 552(b) (4) to prevent disclosure, a matter quite aside from the main thrust of the position of the utilities based on the policy of the antitrust laws.

. The application for rehearing contains the statement, following the detailed offer of proof:
[It should be noted that the foregoing offer does not comply with that part of Ordering Paragraph (B) of the Commission’s Order of March 2, 1973 which in effect requires the Petitioners to put a dollar value on their injury from dissemination of Form 423 since last September. Petitioners do not believe that proof of the size of the injury in that time frame (which is impossible to establish with any accuracy) is required to sustain their position under the foregoing offer of proof. See United States v-. Container Corp. of America, supra.~\

. Moreover, the court does not accept this conclusion as the basis for its affirmance. The court decides that the utilities were not in an acceptable procedural position to maintain their petition to amend, having waited some seven months after issuance of Order No. 453 to petition for its amendment. The court also considers petitioners’ offer of proof not sufficiently specific, but the court fails to approve the basis given by the Commission for its decision, indeed intimating that perhaps it was inadequate. The petition to amend, though filed seven months after the order was issued, I think was not too late; for the first time it clearly posed the conflicting public interest values. To wait longer, as the majority suggests in pointing out that a similar petition to amend could still be filed, would I think serve no purpose not ready to be served now.