National Association For Advancement of Colored People v. Federal Power Commission Federal Power Commission v. National Association For Advancement of Colored People

• Decision Date: 19 May 1976
• Docket Number: Nos. 74-1608,74-1619,s. 74-1608
• Citation: 48 L.Ed.2d 284,96 S.Ct. 1806,425 U.S. 662
• Parties: NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE et al., Petitioners, v. FEDERAL POWER COMMISSION. FEDERAL POWER COMMISSION, Petitioner, v. NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE et al
• Court: U.S. Supreme Court

425 U.S. 662

96 S.Ct. 1806

48 L.Ed.2d 284

NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE et al., Petitioners,

v FEDERAL POWER COMMISSION.

FEDERAL POWER COMMISSION, Petitioner,

v. NATIONAL ASSOCIATION FOR the ADVANCEMENT OF

COLORED PEOPLE et al.

Nos. 74-1608, 74-1619.

Argued Feb. 25, 1976.

Decided May 19, 1976.

Syllabus

The National Association for the Advancement of Colored People and various other organizations petitioned the Federal Power Commission (FPC) to issue a rule "requiring equal employment opportunity and nondiscrimination in the employment practices of its regulatees." The FPC refused, holding that it had no jurisdiction to issue such a rule. On petition for review, the Court of Appeals, while agreeing that the FPC lacked power to prescribe personnel practices in detail and act upon personnel complaints, held that the FPC does have "power to take into account, in the performance of its regulatory functions, including licensing and rate review, evidence that the regulatee is a demonstrated discriminator in its employment relations." Held:

1. The FPC is authorized to consider the consequences of discriminatory employment practices on the part of its regulatees only insofar as such consequences are directly related to the FPC's establishment of just and reasonable rates in the public interest. To the extent that illegal, duplicative, or unnecessary labor costs are demonstrably the product of a regulatee's discriminatory employment practices and can be or have been demonstrably quantified by judicial decree or the final action of an administrative agency the FPC should disallow them. Pp. 666-669.

2. The FPC's asserted duty to advance the public interest, however, does not afford any basis for its prohibiting regulatees from engaging in discriminatory employment practices, as references to the "public interest" in the Federal Power Act and Natural Gas Act require the FPC to promote the orderly production of plentiful supplies of electric energy and natural gas at just and reasonable rates, and do not constitute a directive to the FPC to seek to eradicate discrimination. Pp. 669-671.

172 U.S.App.D.C. 32, 520 F.2d 432, affirmed.

Drexel D. Journey, Washington, D. C., for the F.P.C.

Howard A. Glickstein, Washington, D. C., for Nat. Ass'n for the Advancement of Colored People et al.

Mr. Justice STEWART delivered the opinion of the Court.

The issue in this case is to what extent, if any, the Federal Power Commission, in the performance of its functions under the Federal Power Act, 41 Stat. 1063, as amended, 16 U.S.C. § 791a Et seq. (Power Act), and the Natural Gas Act, 52 Stat. 821, as amended, 15 U.S.C. § 717 Et seq. (Gas Act), has authority to prohibit discriminatory employment practices on the part of its regulatees.

I

In 1972 the National Association for the Advancement of Colored People (NAACP) and several other organizations petitioned the Commission to issue a rule "requiring equal employment opportunity and nondiscrimination in the employment practices of its regulatees." The proposed rule would have required the regulated companies to adopt affirmative action programs to combat discrimination in employment and would have given any person who believed himself to have been subjected to employment discrimination by any such company the right to file a complaint with the Commission.¹

The Commission refused to adopt the proposed rule, holding that it had no jurisdiction to do so because "the purposes of the Natural Gas and Federal Power Acts are economic regulation of entrepreneurs engaged in resource developments. So considered, we do not find the necessary nexus between those aspects of our economic regulatory activities and the employment procedures of the utility systems which we regulate, as would justify (adopting petitioners' proposed rule)." 48 F.P.C. 40, 44.

On petition for review, the Court of Appeals for the District of Columbia Circuit agreed that the Commission was without "power . . . to prescribe personnel practices in detail and to receive complaints, adjudicate them, and punish directly infractions of those practices." 172 U.S.App.D.C. 32, 35, 520 F.2d 432, 435. The court held, however, that the Commission does have "power to take into account, in the performance of its regulatory functions, including licensing and rate review, evidence that the regulatee is a demonstrated discriminator in its employment relations." Ibid.

Because of doubt as to the Commission's recognition of any power on its part to take into account the employment practices of its regulatees even in the narrower sense described above, the Court of Appeals vacated the Commission's order and remanded the case. Id., at 47, 520 F.2d, at 447. The Commission and the NAACP each petitioned for certiorari, and we granted both petitions in order to consider the scope of the Commission's authority to deal with discriminatory employment practices on the part of the companies that it regulates. 423 U.S. 890, 96 S.Ct. 186, 46 L.Ed.2d 122.

II

The question presented is not whether the elimination of discrimination from our society is an important national goal. It clearly is. The question is not whether Congress could authorize the Federal Power Commission to combat such discrimination. It clearly could. The question is simply whether or to what extent Congress did grant the Commission such authority. Two possible statutory bases have been advanced to justify the conclusion that the Commission can or must concern itself with discriminatory employment practices on the part of the companies it regulates.²

The first of these statutory bases is the legislative command to the Commission under the Power and Gas Acts to establish "just and reasonable" rates for the transmission and sale of electric energy, 16 U.S.C. § 824d(a), and for the transportation and sale of natural gas, 15 U.S.C. § 717c(a), and, consequently, to allow only such rates as will prevent consumers from being charged any unnecessary or illegal costs.³ The second and broader statutory basis advanced for Commission regulation of employment discrimination is the Commission's asserted duty to advance the public interest. The NAACP notes that Congress found that "the business of transmitting and selling electric energy for ultimate distribution to the public is affected with a public interest," 16 U.S.C. § 824(a), and that "the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest," 15 U.S.C. § 717(a). From these and other references to the "public interest" in the Gas and Power Acts,⁴ it is argued that the Commission is charged with advancing the public interest in general, and that the Commission is thus authorized if not required to promulgate rules prohibiting its regulatees from engaging in discriminatory employment practices, since ending discrimination in employment is in the public interest.

The Court of Appeals basically accepted the first of these statutory arguments:

"The Commission's task in protecting the con- sumer against exploitation can be alternativelyescribed as the task of seeing that no unnecessary or illegitimate costs are passed along to that consumer. Costs incurred by reason of a regulatee's choosing to practice racial discrimination are within the reach of that responsibility. Without attempting an exhaustive enumeration of such costs, we identify at least the following as indicative of those arguably within the Commission's range of concern: (1) duplicative labor costs incurred in the form of back pay recoveries by employees who have proven that they were discriminatorily denied employment or advancement, (2) the costs of losing valuable government contracts terminated because of employment discrimination, (3) the costs of legal proceedings in either of these two categories, (4) the costs of strikes, demonstrations, and boycotts aimed against regulatees because of employment discrimination, (5) excessive labor costs incurred because of the elimination from the prospective labor force of those who are discriminated against, and (6) the costs of inefficiency among minority employees demoralized by discriminatory barriers to their fair treatment or promotion.

"Obviously such costs of employment discrimination range from the very definite and easily ascertainable to the very questionable and virtually unquantifiable. The problem of how to see that they are not borne by the consumer could arise in any number of different regulatory contexts, including both rate and certificate proceedings. We therefore do not attempt to detail all the various ways the Commission may thus 'regulate' employment discrimination, leaving this in the first instance to the Commission itself." 172 U.S.App.D.C., at 44, 520 F.2d, at 444 (footnote omitted).

Without necessarily endorsing the specific identification of the costs "arguably within" the Commission's "range of concern," we agree with the basic conclusion of the Court of Appeals on this branch of the case. The Commission clearly has the duty to prevent its regulatees from charging rates based upon illegal, duplicative, or unnecessary labor costs. To the extent that such costs are demonstrably the product of a regulatee's discriminatory employment practices, the Commission should disallow them. For example, when a company complies with a backpay award resulting from a finding of employment discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., it pays twice for work that was performed only once. The amount of the backpay award, therefore, can and should be disallowed as an unnecessary cost in a ratemaking proceeding.

To the extent that these and other similar costs, such as attorneys' fees, can be or have been demonstrably quantified by judicial decree or the final action of an administrative agency charged with consideration of such matters, the Commission clearly should...