Ohio Power Co. v. F.E.R.C., 83-1074
| Decision Date | 14 September 1984 |
| Docket Number | No. 83-1074,83-1074 |
| Citation | 744 F.2d 162 |
| Parties | OHIO POWER COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Ohio Edison Company, Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petition for Review of Orders of the Federal Energy Regulatory commission.
Albert X. Bader, New York City, with whom Edward J. Brady, New York City, was on the brief, for petitioner.
Lynn N. Hargis, Asst. Gen. Counsel, Federal Energy Regulatory Com'n, Washington, D.C., with whom Stephen R. Melton, Acting Gen. Counsel, and Jerome M. Feit, Sol., Federal Energy Regulatory Com'n, Washington, D.C., were on the brief, for respondent.
George F. Bruder, Washington, D.C., was on the brief for intervenor.
James E. Hickey, Jr., Washington, D.C., also entered an appearance for intervenor.
Before TAMM and MIKVA, Circuit Judges, and BAZELON, Senior Circuit Judge.
Opinion for the court filed by Circuit Judge TAMM.
Petitioner, Ohio Power Company (Ohio Power), seeks review of two orders of the Federal Energy Regulatory Commission (Commission). 1 In these orders, the Commission accepted the filing of a unilateral rate increase by intervenor, Ohio Edison Company (Edison), and denied Ohio Power's requests for a suspension of the rate increase and a hearing. We affirm the Commission's orders.
Edison and Ohio Power are electric utilities that provide electricity to an Ohio corporation called Buckeye Power, Incorporated (Buckeye Power). Buckeye Power consists of rural electric cooperatives that, inter alia, provide long-term arrangements among members for the transmission and distribution of electricity. In 1968, Ohio Power drafted an Agreement with Edison, after extensive arm's-length bargaining, that stipulated the terms under which the two utilities would buy and sell power for transmission to Buckeye Power. See Joint Appendix (J.A.) at 1-19, 55, 57, 101. The Agreement, which had a duration of thirty-five years, was executed by both parties and approved by the Commission in June 1968. J.A. at 1, 11.
On March 30, 1982, Edison filed a proposed rate increase with the Commission under section 205 of the Federal Power Act, 16 U.S.C. Sec. 824d (1982). The filing sought to raise the transmission service rates Edison charged Ohio Power under the 1968 Agreement. J.A. at 32-34. Ohio Power protested the proposed rate increase, arguing that the Agreement permitted Edison to file rate increases only at five-year intervals and then only if Ohio Power agreed that the filing was appropriate. J.A. at 36, 38-39. Alternatively, Ohio Power contended that if the Commission accepted Edison's filing, the Commission should conduct a hearing and suspend the rate increase for five months. J.A. at 40. 2
By order issued May 28, 1982, the Commission rejected Ohio Power's arguments and accepted Edison's filing. Ohio Power Co., 19 FERC p 61,196 (May 28, 1982) (Order Accepting Rates for Filing, Granting Intervention, and Terminating Docket), J.A. at 74-76. The Commission found that the Agreement authorized unilateral rate changes and further found that Edison's proposed rates were not excessive. Id. at 61,381, J.A. at 75, 76. After noting that Ohio Power had raised no factual ratemaking issues, the Commission ordered that the rates become effective June 2, 1982 without suspension and without a hearing. Id. at 61,381, J.A. at 76.
On June 28, 1982, Ohio Power applied for a rehearing claiming that the Commission had misinterpreted the 1968 Agreement and had erred in denying both a suspension and a hearing. J.A. at 77. On November 22, 1982, the Commission issued an order denying rehearing. Ohio Power Co., 21 FERC p 61,095 (Nov. 22, 1982) (Order Denying Rehearing) [hereinafter cited as Order Denying Rehearing ], J.A. at 124-32. After examining the Agreement and the extrinsic evidence submitted by both parties, the Commission again concluded that the Agreement permitted unilateral rate increases at times other than five-year intervals after the effective date of the agreement. Id. at 61,291, J.A. at 131-32. The Commission also determined that a hearing was not necessary because it would provide no information other than that already submitted by both parties. Id. at 61,291, J.A. at 131. Finally, the Commission again denied Ohio Power's request to suspend the rate increase. Id. at 61,291, J.A. at 132.
On appeal, we are asked to resolve two issues: (1) whether the Commission correctly construed the 1968 Agreement, and (2) whether the Commission erred in refusing to grant Ohio Power a hearing on the meaning of the Agreement. 3
The Supreme Court has held, in what has become known as the Sierra-Mobile doctrine, that only those rate filings consistent with a public utility's contract are lawful. See United Gas Pipe Line Co. v. Memphis Light, Gas and Water Division, 358 U.S. 103, 111-13, 79 S.Ct. 194, 199-200, 3 L.Ed.2d 153 (1958); FPC v. Sierra Pacific Power Co., 350 U.S. 348, 353, 76 S.Ct. 368, 371, 100 L.Ed. 388 (1956); United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 343-44, 76 S.Ct. 373, 380, 100 L.Ed. 373 (1956). Ohio Power, Edison, and the Commission properly acknowledge that under the Sierra-Mobile doctrine the terms of the Agreement between Ohio Power and Edison must control the lawfulness of Edison's disputed rate filing. More specifically, the central question presented is whether the Agreement permits Edison to seek unilaterally a rate change at times other than five-year intervals following the effective date of the Agreement.
This court has deferred to the Commission's contractual interpretations in applying the Sierra-Mobile doctrine so long as that interpretation is "amply supported both factually and legally." Kansas Cities v. FERC, 723 F.2d 82, 87 (D.C.Cir.1983) (quoting Memphis Light, Gas and Water Division, 358 U.S. at 114, 79 S.Ct. at 200). Indeed, we have recently noted that it "would be foolish not to accord great weight to the judgment of the expert agency that deals with agreements of this sort on a daily basis." Kansas Cities, 723 F.2d at 87. Of course, we do not accord conclusive validity to the Commission's contractual interpretation. Papago Tribal Utility Authority v. FERC, 723 F.2d 950, 953 (D.C.Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 3511, 82 L.Ed.2d 820 (1984). After a thorough review of the Agreement and the parties' extrinsic evidence, we find the Commission's judgment sufficiently reasonable to warrant affirmance.
Sections 20 and 23 of the Agreement address Edison's and Ohio Power's authority to seek rate changes. Section 20 appears to contemplate rate changes by mutual agreement at five-year intervals.
20. Review of Charges. The charges specified herein shall be subject to review five years after the effective date hereof at the request of either party and at intervals of five years thereafter during the term of this Agreement, and shall be adjusted as deemed appropriate by the parties ....
J.A. at 11. Section 23 appears to permit a unilateral application to the Commission at any time to change any provision, including those pertaining to rates.
23. Action before Regulatory Authorities. Either party hereto may, upon delivery of prior written notice to the other, take such action before or make such filings with any regulatory authority having jurisdiction in respect of any term or provision of this Agreement as it shall deem appropriate and, in the event of any such action by either party hereto which effects or is intended to effect any change in any term or condition hereof, the terms and conditions of service hereunder shall be, except as provided in Section 14 hereof, the terms and conditions as so changed or as shall result from any ensuing action by or before any regulatory authority having jurisdiction.
The Commission interpreted each clause to define an independent and meaningful aspect of the parties' contractual relation. By declining to find that either clause trumped the other, the Commission complied with the cardinal principle that apparently contradictory clauses are to be reconciled by affording each the fullest meaning possible. Papago Tribal Utility Authority v. FERC, 610 F.2d 914, 929 (D.C.Cir.1979).
The Commission began its analysis by noting the clarity with which section 23 authorized both parties unilaterally to petition regulatory agencies at any time for a change in "any term or provision of this Agreement." Order Denying Rehearing, 21 FERC p 61,095 at 61,289-90 (Nov. 22, 1982), J.A. at 127. Section 23 excepted neither those provisions pertaining to charges generally nor section 20 specifically, as it excepted section 14 of the Agreement, from those "terms" subject to unilateral amendment. The Commission concluded that only an express limitation, in section 20 or elsewhere in the Agreement, could qualify the parties' authority under section 23 to seek unilaterally at any time to alter the Agreement, including its rate provisions. 4
The Commission next examined the text of section 20. Although section 20 requires bilateral review of charges at five-year intervals, it does not expressly preclude unilateral petitions for rate changes at times other than five-year intervals. That is, section 20 did not specify that charges would be subject to review only at five-year intervals and to adjustment only upon mutual agreement. Given the ease with which Ohio Power, the drafter of this Agreement, could have clarified the relation between sections 20 and 23, the Commission was justified in attributing significance to Ohio Power's omission of "only" in section 20. 5 Barco Urban Renewal Corp. v. Housing Authority of Atlantic City, 674 F.2d 1001, 1010 (3d Cir.1982); Papago Tribal Utility Authority, 610 F.2d at 928-29; Restatement (Second) of Contracts Sec. 206 (1981). The Commission accordingly concluded that section 20 requires...
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