673 F.2d 425 (D.C. Cir. 1982), 80-2184, Consumer Energy Council of America v. Federal Energy Regulatory Commission

Docket Nº:80-2184, 80-2312.
Citation:673 F.2d 425
Opinion Judge:WILKEY, Circuit Judge:
Party Name:CONSUMER ENERGY COUNCIL OF AMERICA, CONSUMER FEDERATION OF AMERICA, AND PUBLIC CITIZEN, PETITIONERS, v. FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT, PROCESS GAS CONSUMERS GROUP, ET AL., UNITED DISTRIBUTION COMPANIES, INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA, AMERICAN GAS ASSOCIATION, PETROCHEMICAL ENERGY GROUP, INTERVENORS. CONSUMER ENERG
Attorney:Alan B. Morrison, Washington, D. C., with whom John Cary Sims, Washington, D. C., was on the brief for petitioners. Larry L. Simms, Acting Asst. Atty. Gen., Dept. of Justice, of the bar of the Supreme Court of Vermont pro hac vice by special leave of Court, Washington, D. C., with whom Harold H. ...
Judge Panel:Before BAZELON, Senior Circuit Judge, and WILKEY and EDWARDS, Circuit Judges.
Case Date:January 29, 1982
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
FREE EXCERPT

Page 425

673 F.2d 425 (D.C. Cir. 1982)

CONSUMER ENERGY COUNCIL OF AMERICA, CONSUMER FEDERATION OF AMERICA, AND PUBLIC CITIZEN, PETITIONERS,

v.

FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT,

PROCESS GAS CONSUMERS GROUP, ET AL., UNITED DISTRIBUTION COMPANIES, INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA, AMERICAN GAS ASSOCIATION, PETROCHEMICAL ENERGY GROUP, INTERVENORS.

CONSUMER ENERGY COUNCIL OF AMERICA, CONSUMER FEDERATION OF AMERICA, AND PUBLIC CITIZEN, PETITIONERS,

v.

FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT, UNITED DISTRIBUTION COMPANIES, INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA, PROCESS GAS CONSUMERS GROUP, ET AL., AMERICAN GAS ASSOCIATION, PETROCHEMICAL ENERGY GROUP, INTERVENORS.

Nos. 80-2184, 80-2312.

United States Court of Appeals, District of Columbia Circuit.

January 29, 1982

Argued September 10, 1981.

Page 426

[Copyrighted Material Omitted]

Page 427

[Copyrighted Material Omitted]

Page 428

[Copyrighted Material Omitted]

Page 429

[Copyrighted Material Omitted]

Page 430

[Copyrighted Material Omitted]

Page 431

[Copyrighted Material Omitted]

Page 432

Alan B. Morrison, Washington, D. C., with whom John Cary Sims, Washington, D. C., was on the brief for petitioners.

Larry L. Simms, Acting Asst. Atty. Gen., Dept. of Justice, of the bar of the Supreme Court of Vermont pro hac vice by special leave of Court, Washington, D. C., with whom Harold H. Bruff and Anthony J. Steinmeyer, Attys., Dept. of Justice, Washington, D. C., were on the brief for amicus curiae, U. S.

Jerome M. Feit, Deputy Sol., Federal Energy Regulatory Com'n, Washington, D. C., with whom Jerome Nelson, Acting Gen. Counsel, and Stephen R. Melton, Atty., Federal Energy Regulatory Com'n, Washington, D. C., were on the brief for respondent.

Edward J. Grenier, Jr., Washington, D. C., with whom Michael J. Shea, Glen S. Howard, Marilyn L. Muench and David A. Gross, Washington, D. C., were on the brief for intervenors, The Process Gas Consumers Group, et al.

C. William Cooper, Falmouth, Mass., with whom Richard M. Merriman, David G. Hanes, L. Peter Farkas, John D. McGrane, Peyton G. Bowman, III, and John R. Schaefgen, Jr., Washington, D. C., were on the brief for intervenors, United Distribution Companies.

Michael Davidson, Senate Legal Counsel, Washington, D. C., with whom M. Elizabeth Culbreth, Deputy Senate Legal Counsel, and Charles Tiefer, Asst. Senate Legal Counsel, Washington, D. C., were on the brief for amicus curiae, U. S. Senate, urging dismissal.

Eugene Gressman, Washington, D. C., for amicus curiae, Speaker of the U. S. House of Representatives, urging dismissal.

John A. Myler, Washington, D. C., was on the brief for intervenor, American Gas Ass'n.

Lawrence V. Robertson, Jr., Washington, D. C., was on the brief for intervenor, Interstate Natural Gas Ass'n of America.

R. Gordon Gooch, B. Donovan Picard, Thomas J. Eastment and John W. Leslie, Washington, D. C., were on the brief for intervenor, Petrochemical Energy Group.

Petitions for Review of an Order of the Federal Energy Regulatory commission.

Before BAZELON, Senior Circuit Judge, and WILKEY and EDWARDS, Circuit Judges.

OPINION

Page 433

WILKEY, Circuit Judge:

Petitioners Consumer Energy Council of America, Consumer Federation of America, and Public Citizen ("CECA") challenge the constitutionality of a legislative veto provision in the Natural Gas Policy Act of 1978 ("NGPA").1 Title II of the NGPA directs the Federal Energy Regulatory Commission ("FERC") to implement an "incremental pricing" program, which shifts part of the price increase resulting from the deregulation of new natural gas from residential users to industrial users. Phase I of the program directs the Commission to promulgate within one year a rule applying only to "boiler fuel use of natural gas by any industrial boiler fuel facility."2 Phase II requires the Commission to issue within eighteen months a rule expanding the program to "any industrial facility which is within a category defined by the Commission" and not otherwise exempt.3 The statute provides, however, for the Phase II rule to take effect only if neither house of Congress adopts within thirty days a resolution disapproving the rule.4

FERC issued its Phase II rule on 6 May 1980, three days before the deadline. Two weeks later the House of Representatives voted its disapproval. CECA then filed a petition for rehearing asking the Commission to make the rule effective in spite of the House's action, on the ground that the

Page 434

one-house veto provision was unconstitutional. Refusing to pass on the constitutional question, the Commission denied the petition and revoked the Phase II rule. CECA sought review in this court, and also petitioned FERC for rehearing on the revocation order. This second petition was denied, and CECA filed another petition in this court. The two petitions for review were consolidated and are now before us.

FERC has not taken a position on petitioners' constitutional claims, asserting that this court may dispose of the case on other grounds.5 It argues that the legislative veto provision is not severable from the provision authorizing the Commission to promulgate a Phase II rule, leaving petitioners with no claim for effective relief even if section 202(c) is declared unconstitutional. It also contends that the case is moot because the rule was properly revoked. The United States Senate and the Speaker of the House of Representatives have entered the case as amici curiae. In addition to supporting FERC's position, they contend that this court lacks jurisdiction to hear the case, a contention both FERC and CECA dispute, and that the legislative veto provision is constitutional. The United States has also appeared as amicus curiae, taking the opposing view that the veto provision is unconstitutional. Finally, several industry groups have filed briefs as intervenors, arguing generally in favor of the positions of both FERC and Congressional amici.6

Having determined that we have jurisdiction and that the constitutional issue is properly presented, we hold that the one-house legislative veto provision in section 202(c) of the NGPA is unconstitutional. Accordingly, we reverse and remand the Commission's orders and instruct it to reinstate the Phase II rule. The Commission is free, however, on its own motion and pursuant to the notice and comment requirements of the Administrative Procedure Act ("APA"),7 to consider amending the Phase II rule or changing its effective date.

I. BACKGROUND

A. Structure of the NGPA

Title I of the NGPA provides for the phased deregulation of natural gas prices. It sets allowable wellhead prices of gas considerably higher than under the cost-based system of rate regulation, and provides that "new" natural gas prices will be decontrolled on 1 January 1985.8 Title II of the Act provides for incremental pricing as a means of easing the transition to deregulation. Incremental pricing is a "mechanism for passing through to end users some of the increased prices for natural gas,"9 so

Page 435

that large industrial gas users will pay a disproportionate share of the increases in gas prices. The program's goals are "to restrain the prices paid by pipelines for natural gas supplies, particularly after deregulation, and to protect residential consumers from higher prices resulting from deregulation."10

Title II provides for implementation of incremental pricing in two phases. Section 201 requires FERC within one year to issue an incremental pricing rule covering boiler fuel users.11 Section 202(a) provides that within eighteen months "the Commission shall, by rule, prescribe an amendment to the (Phase I) rule ..."12 to extend incremental pricing to other industrial users. However, the Phase II rule "shall take effect only as provided under subsection (c) of this section,"13 which states that the rule shall take effect after thirty legislative days "unless, during such 30 day period of continuous session of Congress, either House of the Congress adopts a resolution of disapproval."14 Thus, either house of Congress may veto FERC's Phase II rule by majority vote.

B. Legislative History of Title II

In April 1977 President Carter proposed to Congress a comprehensive energy program. In the congressional debate that followed a principal issue was whether to remove wellhead price controls on natural gas. There was widespread agreement that price controls should at least be loosened and that the dual gas market—in which the price of federally regulated interstate gas was lower than the price of intrastate gas, which was not subject to federal regulation—should be eliminated. But questions of specific tactics and timing were hotly disputed, with the primary debate centering on proposals for price deregulation. Two major concerns were the effect of deregulation on consumers and the problem of moving from a regulated to a deregulated market. Incremental pricing was proposed as a solution to both problems. President Carter's natural gas proposal and both the original bills passed in the House and the Senate

Page 436

contained provisions for incremental pricing.

In the House a special ad hoc energy committee reported out an energy bill rejecting natural gas deregulation and extending price regulation to intrastate gas, but raising the allowable price of gas by a substantial margin. The bill included a broad provision applying incremental pricing to interstate and intrastate pipelines and to local distribution companies. This meant that FERC would set both the price charged by pipelines to distribution companies and the price charged by distribution companies to local gas users.15 On 3 August 1977...

To continue reading

FREE SIGN UP