Citizens for Allegan County, Inc. v. Federal Power Com'n

• Decision Date: 29 April 1969
• Docket Number: No. 21842.,21842.
• Citation: 414 F.2d 1125
• Parties: CITIZENS FOR ALLEGAN COUNTY, INC., Petitioner, v. FEDERAL POWER COMMISSION, Respondent, City of Allegan, Michigan, Consumers Power Company, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

414 F.2d 1125 (1969)

CITIZENS FOR ALLEGAN COUNTY, INC., Petitioner, v. FEDERAL POWER COMMISSION, Respondent, City of Allegan, Michigan, Consumers Power Company, Intervenors.

No. 21842.

United States Court of Appeals District of Columbia Circuit.

Argued October 16, 1968.

April 29, 1969.

COPYRIGHT MATERIAL OMITTED

Mr. William I. Harkaway, Washington, D. C., for petitioner.

Mr. David F. Stover, Atty., Federal Power Commission, with whom Messrs. Richard A. Solomon, General Counsel, Peter H. Schiff, Solicitor, and Drexel D. Journey, Asst. General Counsel, Federal Power Commission, were on the brief, for respondent.

Mr. Howard E. Wahrenbrock, Washington, D. C., for intervenor, City of Allegan, Michigan.

Mr. George F. Bruder, with whom Messrs. Thomas M. Debevoise and Ernst Liebman, Washington, D. C., were on the brief, for intervenor, Consumers Power Company.

Before DANAHER,^* WRIGHT and LEVENTHAL, Circuit Judges.

LEVENTHAL, Circuit Judge:

The central question on this appeal is whether petitioner was denied the hearing to which it is legally entitled by the procedure followed by the Federal Power Commission (FPC) in issuance of orders authorizing acquisition of the electric system of Allegan City Light Department and authorizing transfer of a license of the Calkins Bridge Project, a dam and power house on the Kalamazoo River. Petitioner is a citizens group, the Citizens for Allegan County, Inc. (Citizens). Intervenors are the acquiring company, Consumers Power Company (Consumers) and the former owner of the facility and license, the City of Allegan, Michigan (City). Although we conclude that the orders should be affirmed, the questions are not free from difficulty, and our ruling is narrowly confined to the facts and circumstances before us, to which we now turn.

Prior to 1968 the City owned and operated its electric system — consisting of generating facilities, a 2,550 kw hydroelectric plant at the Calkins Bridge Project and a 4,576 kw diesel plant, and the transmission and distribution facilities necessary to service 1,822 customers in the Allegan, Michigan, area. The City's electric system was not interconnected with any other system, and generated its own energy requirements. Early in 1966, the City began seeking an interconnection with some other electric system from which it could purchase power. After receiving proposals from Consumers and from Wolverine Electric Cooperative, the City Council decided to consider an offer by Consumers to purchase the entire system from the City. The resulting agreement, dated December 5, 1966, for the sale of the City's system to Consumers for $1,785,000, was submitted to a referendum election held January 18, 1967, which resulted in a vote — 798 in favor of the sale, and 438 against — that satisfied the 60% vote requirement of the City Charter.

Applications were made to the FPC on June 9, 1967, a joint application by the City and Consumers for approval of the license transfer for the Calkins Bridge Project as required by § 8 of the Federal Power Act,¹ and an application by Consumers for approval of the merger under § 203(a) of the Act.²

On July 12, Citizens filed a petition in opposition to the sale,³ seeking leave to intervene as a party, with the right to produce evidence, cross-examine witnesses and be heard on brief and oral argument. This petition to intervene was answered by Consumers and the City; it was amended; and the amendment was answered by the applicants. On January 29, 1968, the FPC issued an order granting Citizens intervention, and simultaneously issued orders approving the license transfer and the merger of facilities. Citizens filed a petition for rehearing which was denied, and then petitioned this court to review the orders of the FPC.

I

The Citizens group was entitled to intervene and to have a meaningful opportunity for hearing in order to oppose the applications of Consumers and the City.⁴ It gives us pause, then, to see that when the Commission granted intervention it simultaneously closed out the proceeding without any further presentation from the intervenor. This is indeed "disturbing" — the word used by Commissioner Ross in dissenting from this abbreviated procedure. The use of such a procedure puts a heavy burden on the agency to demonstrate that its procedure comported with fairness and requirements of law.

However, the right of opportunity for hearing does not require a procedure that will be empty sound and show, signifying nothing. The precedents establish, for example, that no evidentiary hearing is required where there is no dispute on the facts and the agency proceeding involves only a question of law.⁵

An analogy is sometimes drawn from the court rules which provide summary judgment procedure for the cases that involve only legal issues and no bona fide disputed questions of fact, where it is quite clear what the truth is and there is really no issue to try.⁶

This analogy calls to mind, however, that even in court litigation there are limitations on use of summary procedure, limitations that may usefully delineate, and restrict, the appropriate use of abbreviated procedures by administrative agencies required to act after opportunity for hearing.

For example summary procedures are held to have only limited scope in anti-trust litigation. When that approach was first put forward, reference was made to the inappropriateness of summary procedures for an area of law "where motive and intent play leading roles."⁷ The same principle was also applied, however, to an area not turning on intent when the Court, faced with a novel legal issue, decided it was inappropriate "to reach a conclusion on the bare bones of the documentary evidence," and determined to consider its disposition in the light of a trial developing more information as to the actual impact on competition of the arrangements under attack. White Motor Co. v. United States, 372 U.S. 253, 259, 263-264, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963). Similar considerations may be pertinent when an agency is considering approval of a merger or other issues of consolidation of control.⁸ These and other questions of public interest confronting an administrative agency will often be illuminated by an exploration in greater depth than can be provided simply by pleadings and documents.

The burden of justification resting on the Commission is even heavier in a case like this where the agency not only failed to notice an evidentiary hearing, but disposed of the matter without even brief or argument from the petitioner.

Yet in the particular case we affirm, not without some hesitancy, because the unique setting includes a political decision made by the City coupled with the weakness of the Citizens' allegations. We conclude that the information presented to the FPC in the applications, exhibits, affidavits, intervention petition and other pleadings, developed the salient facts of the dispute to a sufficient depth and detail that the Commission was enabled to perceive, define, and resolve the various strands of public interest. It is important that the Commission's opinion addressed itself to each of the problems raised by petitioner and set forth its reasons for concluding that the public interest lay in approval of the merger. Reviewing the Citizens' assertions as well as the setting of the case, we cannot say the Commission abused its discretion either in its conclusions or its procedure, though we in no way endorse the latter. We also feel that the matter was clearly enough presented and apprehended, and that absent some additional allegations or showing no further procedure was required.

II

The applications of Consumers and Allegan stated, inter alia, that the acquisition would make possible removal of duplicate distribution facilities; that it would end the hazardous isolated status of Allegan; and that Consumers would establish a service headquarters in Allegan with 20 employees and a payroll of about $200,000 a year, the number of these employees to increase to about 40 in the future.

The issues raised by Citizens were: (1) there were irregularities in the election approving the sale; (2) the acquisition would result in increased electric rates for Allegan residents; (3) the effect of Consumers' accounting would result in increased costs; (4) the City of Allegan was overborne by Consumers Power on the deal; (5) Consumers Power earned a rate of return higher than authorized by the Michigan Public Service Commission; (6) the transfer of the hydroelectric project would harm the recreational use and water level of Lake Allegan; and (7) in both its petition to intervene and its petition for rehearing, Citizens asserted that alternative courses could be followed — there was no need to sell since ample power existed and an interconnection could be had through a purchase agreement as offered by Wolverine Electric; and if the system were sold, there should be a repurchase agreement covering the hyroelectric plant.

A. SIGNIFICANCE OF CITY'S ELECTION AND POLITICAL DECISION

A unique feature of this case, significantly supporting the Commission's course both on the merits and procedure, is the fact that the City, through its council and its citizens on referendum, has made a political determination to increase the extent and reliability of its electric system, to entrust that responsibility to Consumers, and to get the municipality out of the electric business.

The FPC was aware that its role was not a mere "ministerial one" even though the City had made its choice. As it stated in denying rehearing:

it is clear that we would be concerned if the proposed acquisition by a public utility would impair reliability of service or would inherently diminish the potentiality for increased service at the lowest reasonable rates, or was at so low a price as to indicate coercion by the buyer or at so high a price as to impair the financial status of the purchaser. * * * We would also be

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