Conway Corp. v. Federal Power Com'n

• Decision Date: 04 April 1975
• Docket Number: No. 73--2207,73--2207
• Citation: 167 U.S.App.D.C. 43,510 F.2d 1264
• Parties: , 1975-1 Trade Cases 60,272 CONWAY CORPORATION et al., Petitioners, v. FEDERAL POWER COMMISSION, Respondent, Arkansas Power & Light Company, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1264

510 F.2d 1264

167 U.S.App.D.C. 43, 1975-1 Trade Cases 60,272

CONWAY CORPORATION et al., Petitioners, v. FEDERAL POWER COMMISSION, Respondent, Arkansas Power & Light Company, Intervenor.

No. 73--2207.

United States Court of Appeals,

District of Columbia Circuit.

Argued Oct. 23, 1974.

Decided April 4, 1975.

Robert C. McDiarmid, Washington, D.C., with whom Sandra J. Strebel, Washington, D.C., was on the brief for petitioners.

John H. Burnes, Jr., Atty., F.P.C. with whom Leo E. Forquer, Gen. Counsel, and George W. McHenry, Jr., Sol., F.P.C., were on the brief for respondent.

Harry A. Poth, Jr., Washington, D.C., with whom Robert T. Hall, III, Washington, D.C., was on the brief for intervenor.

Before TAMM, LEVENTHAL and MacKINNON, Circuit Judges.

Opinion for the Court filed by Circuit Judge LEVENTHAL.

LEVENTHAL, Circuit Judge:

In this case, we hold that the Federal Power Commission's jurisdiction to review a petition to set aside or reduce a utility's wholesale electric rate increase permits consideration of the utility's alleged purpose, and effect, to forestall its customers from competing with it at retail.

On May 31, 1973, Arkansas Power & Light (AP ) filed with the FPC a wholesale rate proposal that would increase electricity rates to municipally owned systems by 22.6 percent, and to cooperatives by 34.9 percent. Petitioners are municipally owned and cooperative electrical systems that (a) purchase from AP all or a major portion of the electricity they resell to retail customers; and (b) compete with AP at retail for large industrial customers, and have historically been able to match AP tariffs for such loads. AP's filing would, in some cases, elevate its wholesale rates to petitioners above its retail rates, thus making it impossible for petitioners to maintain parity with AP in competing for retail customers.

Petitioners filed a timely Protest, Motion to Reject, and Petition to Intervene, with the Commission. They alleged, inter alia, that AP's increase in wholesale prices represented 'an attempt to squeeze petitioners or some of them out of competition, and to make them more susceptible to the persistent attempts of the company to take over the publicly owned systems in the State,' ¹ and asked that the proposed rate increase be rejected.

The FPC, by Order of July 31, 1973, accepted, and suspended until January 1, 1974, the proposed rate schedule. Intervention by Petitioners was limited to matters other than the alleged discrimination. In its Order denying intervention on this question the Commission referred to its earlier order in Indiana & Michigan Electric Co., 49 FPC 1232 (1973), which set minimum standards that must be met before protestants can obtain intervention and hearing on anti-competitive issues and avoid disposition made summarily: The petition must clearly specify '1) the facts relied upon, 2) the anti-competitive practices challenged, and 3) the requested relief which is within this Commission's authority to direct.' Petitioners, the FPC held, had failed to meet the third criterion.

Petitioners' Amended Petition to Intervene asked that the proposed wholesale rates be reduced to eliminate the price squeeze. It was denied by a Commission order of October 29, 1973, on the same ground. The FPC clarified its former order by characterizing petitioners' suggested relief as 'a rate related not to wholesale costs but rather related to (AP's) industrial rates,' which are not within the Commission's jurisdiction. ² A subsequent petition for rehearing was denied, and a petition for review was filed in this court.

We hold that the FPC has jurisdiction to consider anti-competitive allegations of the sort raised by petitioners and indeed must consider them in determining whether the rate proposed by AP is a 'just and reasonable' rate.

I. FINALITY OF ORDER BELOW

The Commission contends that the order denying intervention on this issue was not of the 'definitive character' required by section 313(b) of the Federal Power Act, 16 U.S.C. § 825l(b) (1970), as construed in FPC v. Metropolitan Edison Co., 304 U.S. 375, 384, 58 S.Ct. 963, 82 L.Ed. 1408 (1938). Although petitioners have been allowed to intervene in the Commission hearing to raise other, unrelated challenges to the proposed schedules, we find this an appropriate order for review at this time.

We may profitably follow the lead of the Supreme Court in defining finality in 'pragmatic' terms. See Cox Broadcasting Corp. v. Cohn, --- U.S. ---, 95 S.Ct. 1029, 43 L.Ed.2d 328 (1975). We are to make 'a realistic appraisal of the consequences' of the challenged action. ³ An order is reviewable when it 'impose(s) an obligation, den(ies) a right of fix(es) some legal relationship.' ⁴ We look to whether there has been 'an effective deprivation of (petitioners') rights.' ⁵ We find the order denying intervention here so definitive in character and of such a significant and immediate impact on petitioners as to meet this criterion.

Petitioners raise a question of law, which will not be better defined by further development of the record. The FPC has taken a firm position that petitioners have no legal right to FPC consideration of their antitrust allegations. Because it sees the bar to be jurisdictional, the FPC considers the issue closed. It is not deferring consideration of the question ⁶ or considering the matter in other proceedings. ⁷ On the contrary, the Commission has repeatedly refused in other proceedings ⁸ to consider similar allegations. Thus, we are presented with a definitive administrative conclusion on a recurring question of law that will shape numerous unrelated proceedings if judicial review is deferred. Disruption of the orderly process of adjudication is a factor to be considered. ⁹ But our review now on this point does not interfere with the FPC's conduct of the proceeding it has already put under way.

There is a need here for swift resolution of the anti-competitive jurisdictional issue, not only because it is recurring, but because the FPC's determination has a substantial and immediate impact on the parties that cannot be remedied by subsequent agency action. ¹⁰ The competitive context in which petitioners operate sets the stage for our analysis. In competing with supplying companies, municipal and cooperative systems seek to maintain customer satisfaction with the quality and price of their service in order to attract new industries and to retain existing customers; continued satisfaction is also necessary to ensure voter support for the municipal systems. At its most basic level, this competition represents a struggle on the part of the municipal and cooperative systems to preserve their independence from their supplier insofar as they compete at retail. The context has been described by Professor Meeks in Concentration in the Electric Power Industry: The Impact of Antitrust Policy, 72 Colum.L.Rev. 64, 78 (1972):

To illustrate, assume that a municipal system is buying all or most of its power from a neighboring private system. There exists between the two an indirect, but very real competition to serve both areas. Unless the municipality has access to alternative sources might well decide to allow the system that furnished the cheapest power to serve both areas. Unless the municipality has access to alternative sources of economical power . . . the neighboring system can virtually control the performance of the municipal system through its control over the wholesale price of power. . . . Such control by selling systems is probably very common and very effective, primarily because of the almost universal control over transmission by the dominant selling system in an area. This kind of 'unfair' competition is usually directed at municipals and cooperatives but also occasionally at small private systems, particularly when the seller is seeking to absorb the smaller system by merger. ¹¹

Through its position as supplier, AP will be able, if there is no FPC jurisdiction to consider the public interest in AP's discriminatory levels, to affect the quality and price of petitioners' retail service in such a way as to tilt the scales of competition in its favor.

The refusal of the FPC to consider discriminatory treatment between jurisdictional and nonjurisdictional rates will inevitably and immediately affect the context in which long-term contracts will be bargained for, and relatively irrevocable location decisions will be made by potential industrial customers. Judge Friendly has found--we need not go so far--these considerations determinative of the question of finality even where the agency has held that it has jurisdiction and is continuing to investigate an issue on its merits. ¹²

The immediate effect of the FPC's order on the shape of decision-making in the industry is not gainsaid by the possibility that the FPC may set aside the wholesale rate increase in the rate proceeding, and order a refund of overcharges made after the suspension terminated. First, such relief would in a sense be adventitious, and totally divorced from any consideration of the discrimination problem that is claimed to be part of the public interest. Second, the discriminatory charges may last for years before the wholesale rate is reduced, if it is reduced, on other grounds. The initial rate filing in this case, for example, was made on May 31, 1973, and hearings are still being held. Third, the potential discriminatory impact is not limited to the parties in this proceeding, but affects the competitive relationship of suppliers and customer-competitors throughout the country. ¹³

The FPC contends that petitioners are not injured because they can still raise 'valid' anticompetitive issues--those regarding discriminatory treatment between wholesale customers--in the Commission proceeding. This begs the question: It is clear that the Commission will not consider the claims that are raised by petitioners and will not give them the...