506 F.2d 33 (D.C. Cir. 1974), 73-1358, Pacific Gas & Elec. Co. v. Federal Power Commission

Docket Nº:73-1358, 73-1485.
Citation:506 F.2d 33
Party Name:PACIFIC GAS AND ELECTRIC COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, General Motors Corporation et al., Intervenors. MISSISSIPPI POWER AND LIGHT COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, General Motors Corporation et al., Intervenors.
Case Date:June 26, 1974
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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506 F.2d 33 (D.C. Cir. 1974)

PACIFIC GAS AND ELECTRIC COMPANY, Petitioner,

v.

FEDERAL POWER COMMISSION, Respondent, General Motors

Corporation et al., Intervenors.

MISSISSIPPI POWER AND LIGHT COMPANY, Petitioner,

v.

FEDERAL POWER COMMISSION, Respondent, General Motors

Corporation et al., Intervenors.

Nos. 73-1358, 73-1485.

United States Court of Appeals, District of Columbia Circuit

June 26, 1974

Argued Feb. 21, 1974.

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Daniel E. Gibson, Oakland, Cal., with whom Malcolm H. Furbush and Howard V. Golub, San Francisco, Cal., were on the brief, for petitioner in No. 73-1358.

Peyton G. Bowman, III, Washington, D.C., with whom Richard M. Merriman and J. Richard Tiano, Washington, D.C., were on the brief, for petitioner in No. 73-1485.

John Staffier, Atty., Federal Power Commission, for respondent. Leo E. Forquer, Gen. Counsel, Federal Power Commission, and George W. McHenry, Jr., Sol., Federal Power Commission, were on the brief, for respondent. Platt W. Davis, III, Atty., Federal Power Commission, also entered an appearance for respondent.

Edward J. Grenier, Jr., Washington, D.C., with whom Richard P. Noland, Richard J. Pierce, Jr., and David C. Evans, Washington, D.C., were on the brief, for intervenors in No. 73-1358 and intervenors, Gen. Motors Corp., Johns-Manville Corp., Brick Institute of America and Georgia Industrial Group in No. 73-1485.

Arnold D. Berkeley, Washington, D.C., and David R. Straus, Chicago, Ill., were on the brief, for intervenors, State of Louisiana, Louisiana Municipal Association, Louisiana Public Service Commission and St. James Parish Utilities in No. 73-1485.

Raymond P. Buschmann, Chicago, Ill., entered an appearance for intervenor, Illinois Power Co. in No. 73-1485.

Before BAZELON, Chief Judge, and MacKINNON, Circuit Judge, and A. SHERMAN CHRISTENSEN, [*] United States Senior District Judge for the District of Utah.

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MacKINNON, Circuit Judge:

Petitioners assert that we have jurisdiction under section 19(b) of the Natural Gas Act 1 to review Order No. 467, 49 F.P.C. 85, 2 which the Federal Power Commission issued on January 8, 1973. Order No. 467 is a 'Statement of Policy' on 'priorities-of-deliveries by jurisdictional pipelines during periods of curtailment' which the Commission indicated it proposes to implement in all matters arising under the Act. The petitioning customers of pipeline companies, whose deliveries are subject to curtailment during natural gas shortages, contend that Order No. 467 is procedurally defective for failure to comply with the Administrative Procedure Act, 3 substantively defective for failure to compile an adequate record, and environmentally defective for failure to comply with the National Environmental Policy Act. 4

We hold that as a general statement of policy, Order No. 467 is exempt from the rulemaking requirements of the Administrative Procedure Act. We further hold that Order No. 467 is not reviewable under section 19(b) of the Natural Gas Act because this general statement of policy does not have a sufficiently immediate and significant impact upon petitioners and because the record in this case is inadequate to permit meaningful judicial review.

I. BACKGROUND

This country appears to be experiencing a natural gas shortage 5 which necessitates the curtailment of supplies to certain customers during peak demand periods. The problem confronting many pipeline companies is whether to curtail on the basis of existing contractual commitments or on the basis of the most efficient end use of the gas. In some instances the pipeline companies are concerned that withholding gas due under existing contracts may subject them to civil liability.

Recognizing these uncertainties and mindful of the desirability of providing uniform curtailment regulation, 6 the FPC in 1971 issued a Statement of General Policy in the form of Order No. 431 directing jurisdictional pipeline companies which expected periods of shortages to file tariff sheets containing a curtailment plan. 7 Order No. 431 hinted that curtailment priorities should be based on the end use of the gas and stated that curtailment plans approved by the Commission 'will control in all respects notwithstanding inconsistent provisions in (prior) sales contracts . . ..' 8 In response to Order No.

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431, numerous pipeline companies which had not already done so submitted a variety of curtailment plans for the Commission's approval. As could be expected, the curtailment plans reflected a wide range of views as to the proper priorities for delivery. Some plans were based on end use; others, on contract entitlements. The industry was forced to speculate as to which priorities would later be found to be just and reasonable by the Commission, and the absence of any stated Commission policy hindered effective long range planning by pipelines, distributors and consumers.

Sensing a need for guidance and uniformity in the curtailment area, on January 8, 1973 the Commission promulgated Order No. 467, the order presently under review, which is reprinted in the Appendix to this opinion. Entitled 'Statement of Policy,' Order No. 467 was issued without prior notice or opportunity for comment. The statement sets forth the Commission's view of a proper priority schedule and expresses the Commission's policy that the national interest would be best served by assigning curtailment priorities on the basis of end use rather than on the basis of prior contractual commitments. Order No. 467 further states the Commission's intent to follow this priority schedule unless a particular pipeline company demonstrates that a different curtailment plan is more in the public interest. On January 15, 1973 the Commission issued Order No. 467-A, 49 F.P.C. 217, which corrected an inadvertent omission in Order No. 467 of procedures to provide for emergency situations that may occur during curtailment periods.

The Commission immediately received numerous petitions for rehearing, reconsideration, modification or clarification of Orders Nos. 467 and 467-A, and several parties requested permission to intervene. Most of the petitioners were customers of pipeline companies subject to curtailment, particularly electric generating companies to whom Order No. 467 had assigned a low priority. Few pipeline companies objected to Order No. 467, apparently because the pipelines sell all the gas they can during periods of shortage and consequently are not overly concerned with which customers receive it. On March 2, 1973 the Commission issued Order No. 467-B, 49 F.P.C. 583, which affirmed the policy expressed in Order No. 467, amended that order in some minor instances and otherwise denied the petitions for rehearing and intervention.

Petitioners seek review of Order No. 467 9 in this court under section 19(b) of the Natural Gas Act 10 and advance the following three arguments: (1) that Order No. 467 is in effect a substantive rure which the Commission should have promulgated after a rulemaking proceeding under the Administrative Procedure Act (APA); 11 (2) that there is an insufficient factual basis for the priorities announced in Order No. 467; and (3) that the Commission failed to comply with the National Environmental Policy Act.

II. STATEMENTS OF POLICY

The principal issue is whether this court has jurisdiction to review Order No. 467 under section 19(b) of the Natural Gas Act. In resolving this issue it is necessary first to determine whether

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Order No. 467 is a substantive rule or merely a general statement of policy. We recognize that a decision on the latter question effectively disposes of petitioner's procedural challenge under the APA. However, since many of the same considerations are relevant to both issues, disposition of the APA issue is an unavoidable incident to disposition of the jurisdictional issue.

A. General Principles

The APA requires that before an agency adopts a substantive rule, it must publish a notice of the proposed rule and provide interested persons an opportunity t0 comment. 5 U.S.C. 553. The FPC did not utilize this rulemaking procedure in adopting Order No. 467. However, section 553(b)(A) of the APA provides an exception to the general rulemaking requirements:

Except when notice or hearing is required by statute, this subsection does not apply--

(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; . . ..

Id. 553(b)(A). 12 The Commission maintains that Order No. 467 was exempt from the rulemaking requirements because it is a 'general statement of policy' within the meaning of section 553(b)(A).

The APA never defines 'general statements of policy' but it does define 'rule' to

(mean) the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency . . ..

Id. 551(4). This broad definition obviously could be read literally to encompass virtually any utterance by an agency, including statements of general policy. 13 But the statutory provision of an exception to the rulemaking requirements for 'general statements of policy' indicates that Congress did not intend the definition of 'rule' to be construed so broadly. Congress recognized that certain administrative pronouncements did not require public participation in their formulation. These types of pronouncements are listed in section 553(b)(A) and include 'general statements of policy.' 14

Professor Davis has described the distinction between substantive rules and general statements of policy as a 'fuzzy product.' 15...

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