Federal Power Commission v. Tiq Transcontinental Gas Pipe Line Corporation

• Decision Date: 19 January 1976
• Docket Number: No. 75-584,75-584
• Citation: 423 U.S. 326,46 L.Ed.2d 533,96 S.Ct. 579
• Parties: FEDERAL POWER COMMISSION v. 7[[TIQ!]] TRANSCONTINENTAL GAS PIPE LINE CORPORATION
• Court: U.S. Supreme Court

423 U.S. 326

96 S.Ct. 579

46 L.Ed.2d 533

FEDERAL POWER COMMISSION

v 7[[TIQ!]] TRANSCONTINENTAL GAS PIPE LINE CORPORATION.

No. 75-584.

Jan. 19, 1976.

[Syllabus from this page intentionally omitted]

PER CURIAM.

The Federal Power Commission seeks certiorari from an interlocutory order of the Court of Appeals for the District of Columbia Circuit, which defers that court's review of the Commission order at issue pending completion of a certain evidentiary investigation by the Commission directed by the court. The Commission challenges the authority of the Court of Appeals to order the investigation under the statutory review provision involved, § 19(b) of the Natural Gas Act, 52 Stat. 831, as amended, 15 U.S.C. § 717r(b), and, in any event, contends that the Court of Appeals abused its discretion in the circumstances of this case.

The underlying case involves plans for coping with a natural gas shortage being experienced by respondent Transcontinental Gas Pipe Line Corp. (Transco). The shortage is said to require curtailment of contracted natural gas deliveries by Transco to its customers during periods of high demand. The curtailment plans concern methods of allocating the shortfall among the various customers. The curtailment plan immediately at issue was submitted by Transco to cover the period of November 1974 to November 1975. This interim plan was filed in September 1974, and was the result of a settlement agreement negotiated between Transco and its various customers. The agreement provided for a plan of allocation of natural gas supplies among Transco's customers during periods of shortage, and a monetary compensation scheme under which customers receiving more gas than the systemwide average would compensate customers who received less natural gas than the average. The Commission rejected the proposed plan, determining that the compensation scheme would be violative of the Natural Gas Act. The Commission held that the compensation scheme would violate (1) § 4(a) of the Act, 15 U.S.C. § 717c(a), which requires a pipeline's jurisdictional rate to be based on the pipeline's cost of service plus a reasonable rate of return; (2) § 4(b) of the Act, 15 U.S.C. § 717c(b), which prohibits undue discrimination in rates among similarly situated customers; and (3) § 7(c) of the Act, 15 U.S.C. § 717f(c), which requires persons engaging in resales of natural gas in interstate commerce first to obtain a certificate of public convenience and necessity.

Thereafter, Transco and several of the parties to the settlement agreement sought review of the Commission's determination.¹ Following oral argument on the peti- tion for review, the Court of Appeals, "desiring to be more fully informed about the 'crisis' on the Transco system before reviewing questions pertaining to its solution," entered an order sua sponte directing the parties to submit certain information concerning Transco's natural gas reserves. After receiving responses to this order, and noting the refusal of the Commission to certify the accuracy of the data supplied by Transco regarding its reserves of natural gas, the court directed the parties to show cause why it should not order the Commission to conduct an immediate investigation of Transco's claim of reduced reserves. Thereafter, the Court of Appeals, observing that evidence of "actual shortage both underlies the concept of curtailment and justifies its application," issued the proposed order. That order directed the Commission to complete and report to the court an investigation "of Transco's claims of reduced reserves by immediate subpoena of Transco's books and records pertaining to all gas supplies in which it has any legal interest . . . and by field investigation (which) has determined the extent of the reduced reserves and the bona fides of Transco and its suppliers in meeting their past and future contract commitments. . . ." The court further directed that its decision reviewing the Commission's order would be deferred pending the investigation and report, and that the investigation and report should be made by the Commission within 30 days.

It is this interlocutory order for which the Commission petitions for review by this Court. The Commission first argues that the Court of Appeals has overstepped the bounds of its reviewing authority in ordering this investigation by the Commission, and that in doing so the court has unwarrantedly interfered with the internal functional autonomy of an independent administrative agency. Additionally, the Commission argues, the Court of Appeals has abused its discretion in ordering the factual inquiry by the Commission in the circumstances presented by this case. The Commission maintains that the extent of Transco's natural gas shortage is not material to the legal issues concerning the lawfulness of the proposed compensation scheme which presently confront the Court of Appeals. This is said to be particularly true where, as here, the Commission has disapproved the proposed interim plan for dealing with the alleged shortage of gas.² Finally, the Commission argues that it is impossible to comply with the order, as such a complex investigation would require much longer than the 30 days allowed.

First. We agree with the Commission that the challenged order, although interlocutory in nature, is prop- erly reviewable by this Court pursuant to 28 U.S.C. § 1254(1). Clearly the effect of the order is immediate and irreparable, and any review by this Court of the propriety of the order must be immediate to be meaningful.

Second. We agree with the Court of Appeals that the existence of an actual shortage of gas supplies forms the factual predicate necessary to the Commission's assertion of authority under its transportation jurisdiction, § 1(b) of the Act, 15 U.S.C. § 717(b), to approve the curtailment of gas already contracted for. FPC v. Louisiana Power & Light Co., 406 U.S. 621, 92 S.Ct. 1827, 32 L.Ed.2d 369 (1972). Certainly that court could properly conclude that the Commission would have abused its discretion had it approved curtailment plans in the absence of evidence whereby it "could have reasonably believed" the shortage to exist, Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971), and that "substantial evidence" in the record is necessary to support any such finding by the Commission.

Third. We are of the view, however, that the Court of Appeals overstepped the bounds of its reviewing authority in issuing the order presently before us. First, we have consistently expressed the view that ordinarily review of administrative decisions is to be confined to 'consideration of the decision of the agency . . and of the evidence on which it was based.' United States v. Carlo Bianchi & Co., 373 U.S. 709, 714-715, 83 S.Ct. 1409, 1413, 10 L.Ed.2d 652 (1963). '[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.' Camp v. Pitts, 411 U.S. 138, 142. 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973). If the decision of the agency 'is not sustainable on the administrative record made, then the . . . decision must be vacated and the matter remanded . . . for further consideration.' Id., at 143, 93 S.Ct. at 1244. Clearly it is this mode of review that is contem- plated by the statute providing for judicial review of Commission decisions, § 19(b) of the Act, 15 U.S.C. § 717r(b).³ Secondly, although we have recognized that a court reviewing decisions of the Federal Power Commission sits as a court vested with equity powers and "may authorize the Commission in proper cases to take new evidence," Mobil Oil Corp. v. FPC, 417 U.S. 283, 311-312, 94 S.Ct. 2328, 2347, 41 L.Ed.2d 72 (1974), it is nevertheless true that ordinarily this will require a remand to the agency in order that it can exercise its...