773 F.2d 1368 (D.C. Cir. 1985), 84-1267, City of Cleveland, Ohio v. F.E.R.C.

Docket Nº:84-1267.
Citation:773 F.2d 1368
Party Name:CITY OF CLEVELAND, OHIO, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Cleveland Electric Illuminating Company, Intervenor.
Case Date:October 08, 1985
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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773 F.2d 1368 (D.C. Cir. 1985)




Cleveland Electric Illuminating Company, Intervenor.

No. 84-1267.

United States Court of Appeals, District of Columbia Circuit

October 8, 1985

Argued April 22, 1985.

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Reuben Goldberg, Washington, D.C., with whom Craig Glazer, Cleveland, Ohio, was on brief, for petitioner.

Joel Cockrell, Atty., F.E.R.C., Washington, D.C., with whom Barbara J. Weller, Deputy Sol., and Michael E. Small, Atty., F.E.R.C., Washington, D.C., were on brief, for respondent.

Robert T. Hall, III, Washington, D.C., with whom Richard M. Merriman and James K. Mitchell, were on brief, for intervenor. Stephen C. Huntoon, Washington, D.C., also entered an appearance for intervenor.

Before WRIGHT and SCALIA, Circuit Judges, and MARKEY, [*] Chief Judge of the United States Court of Appeals for the Federal Circuit.

Opinion for the Court filed by Circuit Judge SCALIA.

SCALIA, Circuit Judge:

This appeal involves a challenge to an order of the Federal Energy Regulatory Commission accepting a compliance filing by the Cleveland Electric Illuminating Company ("CEI")--i.e., a schedule of rates submitted by cei in purpoRTEd compliance with instructions contained in an earlier order of the Commission--covering short-term and limited-term power service to the City of Cleveland. The principal legal issues presented are whether supplementary evidentiary hearings were required at the compliance filing stage; whether the compliance filing diverged from the underlying order and, if so, whether such divergence renders Commission approval invalid; and whether the filed schedules set forth the practices affecting CEI's rates in the degree of detail the law and regulations require.


CEI, a public utility regulated under the Federal Power Act, ch. 285, 41 Stat. 1077 (1920) (codified as amended at 16 U.S.C. Secs. 791a-828c (1982)), may change the rates, terms and conditions under which it supplies power to Cleveland only in accordance with Sec. 205 of the Act, 16 U.S.C. Sec. 824d, requiring changes to be submitted for Commission approval before they can become effective. Section 205(c) requires the filing and approval to embrace not merely the rates, but also the "practices ... affecting such rates," which include, of course, practices affecting the electrical service for which the rates are charged.

An understanding of the current controversy requires appreciation of two underlying facts: First, that it is no more possible to set forth all of the practices affecting rates and services than it is to set forth all of the terms and conditions of a contract, leaving nothing whatever to be implied or to be governed by an unspecified standard of reasonableness. In the normal situation of ongoing purchase-sale relationships between utilities and their customers the specification of minor practices is not often

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the subject of dispute. The second underlying fact causes the present case not to be the normal situation--to wit, the hostile relationship of these two reluctant commercial partners, reflected by the following statement in the City's brief:

In the City of Cleveland, City's municipal electric system and CEI are in vigorous competition for residential, commercial and industrial customers. CEI's objective of many years standing is the destruction of the City's system and with it the competitive threat.

Brief for Petitioner at 13 n. 8. As a consequence, neither the City nor, as we shall see, the Commission, was willing to leave as many practices unspecified as is ordinarily the case.

The present dispute began on November 19, 1982, when CEI submitted a proposal that would, inter alia, change the terms and conditions under which emergency and firm power service would be made available to the city, effectively eliminating the availability of short-term and limited-term power service. 1 Cleveland Electric Illuminating Co., 22 F.E.R.C. (CCH) p 61,016, at 61,030-31 (Jan. 18, 1983). The Commission accepted CEI's submittal for filing on January 18, 1983, suspended the operation of the new rate schedule for five months, and granted Cleveland's request for intervention and for an expedited hearing on the issue of the terms and conditions of CEI's service. 2 Id. at 61,031-32.

In the hearings, CEI altered its position, offering to continue short-term and limited-term service, but subject to a number of terms and conditions. One was that the service would be provided "only when in the sole judgment of the supplying party it is available." The administrative law judge rejected this condition, though similar provisions were contained in rate schedules governing service to other CEI customers. In its place, he ruled that the schedule should provide for the services to be furnished when "reasonably available," and for a written statement of reasons to be given when services are denied or curtailed. Cleveland Electric Illuminating Co., 23 F.E.R.C. (CCH) p 63,055, at 65,197, 65,198 (May 9, 1983) ("ALJ Decision"). In Opinion No. 172, the Commission agreed with the ALJ that, in light of the "competition between and antipathy of the parties," it would not constitute discrimination to require a "reasonably available" provision instead of the "sole judgment" clause used by CEI elsewhere. Cleveland Electric Illuminating Co., 23 F.E.R.C. (CCH) p 61,380, at 61,808 (June 16, 1983) ("Opinion No. 172"). At the suggestion of its staff and with the approval of Cleveland, the Commission made the ALJ's "statement of reasons" requirement more specific, providing for "estimates of loads, capacities and other relevant data by means of which the reserving or purchasing party can assess the availability of such power or need for curtailment." Id. at 61,806. Another of CEI's proposed conditions provided that "service shall be dispatched in the same manner as is done currently." ALJ Decision at 65,198. The ALJ rejected this as "unacceptably vague," id., and prescribed instead a provision that would require Cleveland to provide CEI a schedule of the amount of power to be delivered throughout the sales period, and would permit Cleveland to make changes in that schedule at any time, including increases. He stated that this was "consistent with the manner in which CEI scheduled and dispatched power to Painesville [another of CEI's customers] during the past year." Id. In Opinion No. 172, the Commission rejected Cleveland's proposal that there be added to this requirement approximately two pages of detailed scheduling and dispatching procedures

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which the City asserted represented current practices, finding no support in the record for that contention. It accepted instead CEI's proposal "that it will include its practices and policies in its compliance filing, to which [the] City may raise any objections." Opinion No. 172 at 61,806. The Commission rejected, however, CEI's contention that there need not be included among these practices and policies any provision for Cleveland to make changes in its schedule. Though it agreed that the ALJ's provision for unlimited changes may have gone too far, since "the testimony does not state that CEI's practice is to allow frequent schedule changes," it observed that "the evidence indicates that Painesville was permitted to receive more power than originally scheduled several times in 1982." Id. at 61,808-09. The Commission resolved this issue by ordering that the practices and policies to be set forth by CEI in its compliance filing should assure that Cleveland "be accorded the same flexibility as Painesville, and no more." Id. at 61,809.

Opinion No. 172 was issued on June 16, 1983. On August 30, CEI submitted the revised schedules for filing, and in comments filed on October 3 Cleveland objected to a number of provisions as being inconsistent with Opinion No. 172. After CEI filed an Answer and Response, the Commission by letter order of March 1, 1984, rejected the City's objections (with minor exceptions) and accepted CEI's schedules for filing. Cleveland Electric Illuminating Co., 26 F.E.R.C. (CCH) p 61,320 (Mar. 1, 1984) ("Acceptance Order"). Cleveland has appealed that action under Sec. 313(b) of the Federal Power Act, 16 U.S.C. Sec. 825l (b).


Cleveland contends that CEI's compliance filing failed to comport with Opinion No. 172 in significant respects. In particular, it points to three provisions concerning scheduling and dispatch 3 and three provisions concerning availability and curtailment. 4 Cleveland argues that FERC's failure to conduct further hearings before accepting the compliance filing was contrary to law; that its acceptance of the provisions that deviated from Opinion No. 172 was arbitrary and capricious; that the "deviant" provisions are not supported by substantial evidence; and that they are in several

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instances impermissibly vague. We discuss these contentions in order.


Cleveland's principal claim is that the Commission's acceptance of the contested provisions of the compliance filing without holding further hearings "resulted in the denial ... of due process of law." Brief for Petitioner at 27. That could mean, of course, either a denial of the process "due" under applicable statutes, or a denial of the minimal procedural protections guaranteed by the Fifth Amendment to the Constitution. Perhaps the ambiguity is intentional. We decline to conduct our analysis in constitutional terms, since even if a general utility-regulation statute such as the Federal Power Act could be thought to confer upon customers individual property rights of the sort that would invoke the due process clause, but see Georgia Power Project v. Georgia Power...

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