Petition — National Ass'n for the Advancement of Colored People v. Federal Power Commission

IN THE ares

SUPREME COURT OF THE UNITED STATES hae

October Term, 1974

wo.. €4-! 6U8

National Association for the

Advancement of Colored People, et al.

Cross Petit<.oners

V.

Federal Power Commission

Petitioner

CROSS-PETITION FOR A WRIT OF CERTIORARI

To The United States Court

of Appeals for the District

of Columbia Circuit

Howard A. Glickstein

Notre Dame Center for

Civil Rights

Notre Dame, Indiana 46556

William L. Taylor

Catholic University Law

School

Washington, D.C. 20064

Counsel for Cross Petitioners

TABLE OF CONTENTS

OPINION BELOW 7 . 7 ° . . . . 7 . . . . . . . om 2

JURISDICTION 7 . . . ° . 7 . . . . . . 7 + . . . 2

QUESTIONS PRESENTED . . . . . . . . . . . . . . 2

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED . 7 . « . . . . . . > ; . . 3

See Gr We Gn aw cg tc pte ele kel kl kl tlt 4.

THE IMPORTANCE OF THE

QUBRSTIONS PRESENTED ...s-ccecceccecce3ceee 8

I. THE COURT OF APPEALS' NARROW READING

OF THE FPC'S STATUTORY DUTY TO REGU-

LAT™ IN THE PUBLIC INTEREST IMPROPER-

LY LIMITS THE AGENCY'S RESPONSIBILITY

TO PREVENT EMPLOYMENT DISCRIMINATION

BY ITS REGULATEES .....+. 222 eee 9

Polic y * . 7 ° . . . . . . 7 . . . 12

II. HAVING FOUND THAT THE FPC HAD JURIS-

DICTION OVER EMPLOYMENT DISCRIMINATION

FOR THE LIMITED PURPOSE OF PROTECTING

CONSUMERS FROM ILLEGITIMATE COSTS, THE

COURT BELOW ERRED IN REFUSING TO FE-

QUIRE THE AGENCY TO ADOPT RULES TO EF-

FECTUATE I'fS JURISDICTION. ...... 414

BEST Gus AVAILABLE

ii TABLE OF AUTHORITIES

ITI. ‘THE LOWER COURT FAIIED TO RECOG- "Cases:

NIZE THE FPC'S CONSTITUTIONAL

DUTY TO PREVENT EMPLOYMENT DIS- Bolling v. Sharpe, 47 U.S. 497...... 17,19

CRIMINATION BY ITS REGULATEES .... 16

City of Lafayette, Louisiana v. Securities

Commission, F.

a 9% Breer ee ae a ae ee 10

om sera

CONCLUSION . . . . . 7 . 7 . . . . . . . 7 . 2 1

CERTIFICATE OF SERVICE. . 2. ee ec eee cece 22

Cooper v. Aaron, 358 U.S. 1.....2..-. 17

APPENDIX A: Relevant Sections of the Federal Comelius v. Benevolent Protective Order

Power Act and Natural Gas Act. of Elks, 362 F. Supp. 11682

Te «seh e eb hoe tease e

APPENDIX B: Opinion of the Federal Power Com-

mission (No. 623, July 11, 1972). Ethri v. Rhodes, 268 F. Supp. 83

-D. 2 6 «= oe 6 & 6 6 @ @ 6 6 6 18

APPENDIX C: Order of the Federal Power Com

mission Denying Petition for Rehearing een 309 F. Supp. 1127

(August 21, 1972). eWeCe) » sub nom.

Mit Vv. Green, 404 U.S. 797 . . . . . . . 18

APPENDIX D: Opinion of the United States

Court of Appeals for the District of Jackson v. itan Edison

Columbia Circuit. Company , U.S. feeseessetbo5ue ew

APPENDIX E: Judgment of the United States Jackson v. Statler Foundation,

Court of Appeals for the District of 496 F. 2a 623 (C.A. 2) 7 . . . . . . . + . 17, 18

Columbia Circuit.

Johnson v. Railway Express Agency,

~~ 43 USuN 4623 |

. . . . . . . . * . . . . . . 13

Lombard v. State of Louisiana,

U. . . >. >. . . 7 . . . . . 7 . >. 18

McCabe v. A.T. & S.F. Ry. Co., 235

~ U.S. LOL

. . . . . . . . . . . . . . . . . . . 18

McGlotten v. Connally, 388 F. Supp.

148 (D.D.C.) . . ae ee ee ae oe 7 * . . 7 * . 18

iv

Ni Mohawk Power Corp. v. FPC, ;

395 7.48 2ee Gees ¢ ¢ se cee 6 eo ee Executive and Regulatory Materials:

FPC

Oregon v. Mitchell, 400 U.S. 1122...... 19 eee 6

Palisades Citizens Association v. CAB,

( Be - Be 8 rere |

Peterson v. Greenville, 373 U.S. 244.... 18

Southem Seap Company v. National

Labor Relations Board, U.S. ceosos &

Turner v. City of Memphis, 369

“Se We ee ree kes ae ee

United Packinghouse, Food & Allied Workers

~ International Union v. N.L.R.B., 416 F.od

1126 (C.A.D.C.), cert. denied, 396

OS. GO. «vs 6 6 6s 2 eee 6 ee

’ Constitutions and statutes:

U.S. Constitution:

Fifth Amendment . > > . . > . * 3. 16, 17, 19, 20

Fourteenth Amendment . ....++e+-+-+-e 3,19

Civil Rights Act of 1964

42 oe mA 2000e + . . . . >. >. . . _ > > o 12

Equal Employment Opportunity Act

42 U.S.C.A. 2000e-14 (Supp. July 1972) . . 12

Federal Power Act, 16 U.S.C. 791 et seg. .. 3,5

el eee are re

Natural Gas Act, 15 U.S.C. 717 et seg. ... 3, 5

Section 19 (b) . 7 . . . . . . . . . - . . - 6

National Association for the

Advancement of Colored People, et al.

Cc Petiti

Vv.

Federal Power Commission

CROSS-PETITION FOR A WRIT OF CERTIORARI

To The United States Court

Of Appeals for the District

of Columbia Circuit

The cross-petitioners, the National Associa-

tion for the Advancement of Colored People, et al.,

pray that in the event the Court should grant the

petition for a writ of certiorari to review the

judgment and opinion of the United States Court

Of Appeals for the District of Columbia Circuit

entered in this proceeding on February 5, 1975,

this cross-petition for a writ of certiorari

should likewise be granted.

=~“

OPINION BELOW |

The opinion by the Court of Appeals, not yet

reported, and the opinion of the Federal Power

Commission (No. 623, July 11, 1972), are included

herein as Appendices D and B respectively.

JURISDICTION

The judgment of the United States Court of

Appeals for the District of Columbia Circuit was

entered on February 5, 1975. After having granted

the Solicitor General an extension of time to al-

low the Federal Power Commission to file a petition

for certiorari (see infra, p.g), this Court granted

cross-petitioners an extension of time to and in-

cluding June 20, 1975, for the purpose of filing

a cross-petition for writ of certiorari. This or-

der was signed May 8, 1975. This Court's juris-

diction is invoked under 28 U.S.C. § 1254 (1).

QUESTIONS PRESENTED

1. Whether the Federal Power Commission, pur-

suant to its mandate to regulate in the "public

interest," has both statutory authority and respon-

sibility broadly to proscribe employment discrimina-

tion in the industries it regulates.

2. Whether, having found that the Federal

Power Commission had jurisdiction over employment

discrimination for the limited purpose of protect-

ing consumers from illegitimate costs, the court

below erred in refusing to require the agency to

adopt rules to effectuate its jurisdiction.

-3-

3. Whether the Federal Power Commission, by

reason of its extensive involvement in the regula-

tion of the gas and electric utility industries,

has a Constitutional duty to proscribe employment

discrimination by the companies it regulates.

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

U.S. CONST. AMEND. V

No person shall . . . be deprived

of life, liberty, or property, without

due process of law; ....

U. S. CONST. AMEND. XIV, SEC. 1

+ « « «7 nor shall any State de-

prive any person of life, liberty, or

property, without due process of law;

nor deny to any person within its

jurisdiction the equal protection of

the laws.

FEDERAL POWER ACT

16 U.S.C. 791 et seq.

Sections 4(e), 20l(a), 205, 206

and 309 are set out in Appendix A.

NATURAL GAS ACT

15 U.S.C. 717 et seq.

Sections l(a), 4(a) - 4(e), 5(a)

and 5(b), and 7(a), 7(c) and 7(e) are

set out in Appendix A.

ag=

STATEMENT OF THE CASE

Cross-petitioners, a group of civil rights,

public interest and employee organizations, on

June 22, 1972, filed with the Federal Power Cam

mission a petition for issuance of a rule requir-

ing nondiscrimination in employment pursuant to

subsection 1.7 (b) of the Commission's Rules of

Practice and Procedures 18 CFR 1.7 (b) (J.A.

1-53) .*

The petition filed with the FPC alleged that

there is substantial evidence of severe and wide—

spread discrimination in the gas and electric

utility industries (J.A. 2, 7-19). Among major

industries, the utility industry in 1972 had the

lowest number of minority and women employees and

the largest proportion of these were in lower

paying menial positons (J.A. 11-16). Cross-peti-

tioners argued that existing statistical and other

evidence required the Commission to take correc-

tive action under its authorizing statutes, which

charge the Commission with safeguarding the public

interest through the exercise of regulatory power

over the electric energy and natural gas industries.

Cross-petitioners urged that the Commission

must consider matters of fundamental national

policy, such as nondiscrimination in employment,

in its determination of the public interest (J.A.

23-24). Cross-petitioners additionally claimed ©

that the Constitution requires such consideration,

lest the Federal government become a partner to

private discriminatory actions (J.A. 31-35)).

* "J.A." refers to the Joint Appendix filed with

court below.

-5-

The Commission has prohibited discrimination

in the use of same licensed facilities on the same

rationale (J.A. 35-36), and other similar Federal

regulatory agencies have exercised jurisdiction

over employment discrimination (J.A. 37-39).

Cross-petitioners, therefore, urged the FPC to ex-

ercise its rule-making power with regard to employ-

ment practices of regulatees for the purpose of

prohibiting employment discrimination based on

race, sex or national origin.

The Federal Power Commission rejected cross-

petitioners' rule-making request and concluded

that it lacked delegated statutory authority to

regulate discriminatory employment practices by

its regulatees. It held that executive authority

and constitutional considerations do not provide

a basis for such jurisdiction. The Commission

also could not find the necessary nexus between

employment discrimination and the economic activi-

ties it was charged with regulating to justify ex-

ercising the jurisdiction requested by cross-peti-

tioners. The FPC's decision distinguished employ-

ment discrimination from other subjects, such as

national defense, antitrust, environmental con-

siderations, navigation, flood control or recrea-

tion which it has considered in exercising its

jurisdiction. The Commission found concern for

these subjects to be "reflected" in the National

Gas and Federal Power Acts (J.A. 61).

Finally, the Cammission denied that its fail-

ure to regulate employment - a failure based on a

Claimed lack of statutory authority - constituted

federal support for discrimination (J.A. 70). The

Cammission emphasized its support for the prin-

ciple of nondiscrimination and pledged to recog-

nize such a responsibility if it should be assign-

ed to it.

-6-

Fram this ruling the cross-petitioners, NAACP

et al., sought review before the United States

Court of Appeals for the District of Columbia Cir-

cuit. This appeal was brought pursuant to and in

conformity with Section 19 (b) of the Natural Gas

Act, 15 USC § 717 (r) and Section 313 (b) of the

Federal Power Act, 16 USC § 8251 (b). These sec-

tions provide for review of an order of the Federal

Power Commission by any party to a proceeding ag-

grieved by the order issued.

The Court of Appeals gave a narrow interpre-

tation to the "public interest" mandate of the

FPC. It concluded "that Congress has not charged

the Cammission with advancing all public interests,

but only the public's interest in having the parti-

cular mandates of the Commission carried out, its

interest, in other words, in the conservation of

natural resources and the enjoyment of cheap and

plentiful electric and natural gas" (App. D,

infra, p. 19). Accordingly, the court ruled that

Congress did not intend "for the Cammission to

entertain and to adjudicate individual complaints

of employment discrimination by its regulatees,

and to impose sanctions unrelated to the perfor-

mance of its central regulatory purposes” (App. D,

infra, pp. 24-25). At the same time, the court re-

cognized that there were circumstances in which the

discriminatory practices of a requlatee were re-

lated to the FPC's proper objectives. The court

explained its reasoning in these words (App. D,

infra, pp. 25-26):

The Commission's task in protecting the

consumer against exploitation can be al-

ternatively described as the task of

seeing that no unnecessary or illegiti-

mate costs are passed along to that con-

sumer. 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 proved that they were discrim

inatorily denied employment or ad-

vancement, (2) the costs of losing

valuable government contracts ter-

minated because of employment dis-

crimination, (3) the costs of legal

proceedings in either of these two

categories, (4) the costs of st-ikes,

demonstrations, and boycotts aimed

against regulatees because of em

ployment discrimination, (5) exces-

sive labor costs incurred because of

the elimination fram the prospective

labor force of those who are discrim-

inated against, and (6) the costs of

inefficiency among minority employees

demoralized by discriminatory barriers

to their fair treatment or promotion.

The court, however, did not require the Caom-

mission to adopt rules related to employment dis-

crimination but left to the discretion of the Com

mission the question of whether such rules should

be adopted.* Nor did the court resolve cross-

* The Court of Appeals expressed confusion over

the cross-petitioners' purpose in attaching to

their petition to the FPC a proposed rule. The

petition submitted to the FPC, on page l, re-

quests “the issuance of a rule requiring equal

employment opportunity and nondiscrimination in

the employment practices of its regulatees."

Continued on next page

af»

petit.oners' claim that the Constitution required

the FPC to preclude employment discrimination by

its regulatees.

The Court of Appeals, in short, found the ar-

guments of neither side wholly convincing and as

a result vacated the Federal Power Commission's

order of dismissal and remanded this case for fur-

ther consideration in light of its opinion.

THE IMPORTANCE OF THE QUESTIONS PRESENTED

Although the Solicitor General of the United

States has determined not to file a petition for

certiorari in this case, he petitioned this Court

on April 29, 1975, for an extension of time to

allow the Federal Power Commission to prepare a

petition on its behalf. In the event that the

Federal Power Commission's petition should be

granted, we believe there are a number of substan-

tial questions in this case which should be re-

viewed.

Continued from preceding page

This same intention is repeated in the prayer

on page 3. The proposed rule was attached

merely as suggestion of a possible form that

would accomplish the general purpose of the

petition. It was not the intention of those

petitioning the FPC to limit their request for

relief to the adoption of that particular pro-

posed rule.

-9-

I. THE COURT OF APPEALS' NARROW READING OF THE

FPC'S STATUTORY DUTY TO REGULATE IN THE PUBLIC

INTEREST IMPROPERLY LIMITS THE AGENCY'S RESPONSI-

BILITY TO PREVENT EMPLOYMENT DISCRIMINATION BY ITS

REGULATEES.

A. The Federal Power Cammission Has

Broad Power To Regulate In The

Public Interest.

The statutory authority granted to the

Federal Power Commission is broad-based. The

Commission is charged with regulating the elec-

trical energy and natural gas industries in light

of the "public interest." This authority should

be broadly construed to include significant

national concerns such as a discrimination-free

employment policy.

First, the pervasive regulatory scheme creat-

ed by the Acts was designed to further and pro-

tect the public interest. The Federal Power Act,

for example, declares the transmission and sale

of electrical energy for distribution to the pub-

lic to be a business strongly affected with the

public interest. The Commission's duty in a

licensing case is to explore all issues relevant

to the public interest and determine whether the

grant of a license is in that interest. Com

pliance with public policies of high priority and

with legal requirements is relevant in determin-

ing what action is in the public interest.

The Natural Gas Act suggests a similarly

tificate of public convenience and necessity under

the Act, the Commission is invested with discre-

tion and must evaluate all factors bearing on the

public interest. Such factors have been found to

include matters of fundamental national policy,

such as antitrust policy, national defense con-

-10-

cerns, and environmental impact. Since the elimi-

nation of discrimination in employment is a na-

tional policy of highest priority, an applicant's

employment policies should be a matter relevant to

the Commission's determination of the public in-

terest.

Secondly, the FPC's authority to effectuate

the “public interest" and "public convenience and

necessity" has been broadly construed through

judicial decision. In City of Lafayette, Louis-

iana v. Securities Exchange Commission, 454 F.2d

941, 951 (C.A. D.C. 1971), the Court of Appeals

for the District of Columbia Circuit admonished

the FPC to avoid employing "a tunnel vision of the

public interest." On an earlier occasion, refer-

ring to the Federal Power Act and reminding the

Commission that it was not restricted to dealing

with “procedural minutiae," the same Court said:

The Act is not to be given a tight

reading wherein every action of the

Commission is justified only if re-

ferable to express statutory autho-

rization. On the contrary, the Act

is one that entrusts a broad subject

matter to administration by the Can

mission, subject to Congressional

oversight, in the light of new and

evolving problems and doctrines.

Niagara Mohawk Power - Vv. FR,

Thirdly, other administrative agencies, in

carrying out their regulatory responsibilities,

have been required to consider and promote national

objectives beyond those expressly set forth in

their statutes. Such a duty was found by this

Court in Southern Steamshi v. National

Labor Relations Board, U.S. In

condaming a narrow approach to the exercise of

regulatory power by the NLRB this Court found that:

ale

The [National Labor Relations] Board

has not been commissioned to effec-

tuate the policies of the Labor Rela-

tions Act so single-mindedly that it

may wholly ignore other and equally

important Congressional objectives.

This principle also encompasses a duty on the part

of administrative bodies to seek an accommodation

between their immediate tasks and other statutory

schemes.

A similarly broad interpretation of an admini-

strative agency's responsibility was found by the

Court of Appeals for the District of Columbia Cir-

cuit in Palisades Citizens Association Inc. v.

CAB, 420 F.2d 168, 191 (C.A.D.C. 1969).

No agency entrusted with determina-

tion of public convenience and neces-

sity is an island. It fits within a

national system of regulatory control

of industry. Its decisions affect

not only its primary interest groups

but also the general public at large.

There are, therefore, numerous situations in

which the courts have recognized that the mandate

of administrative agencies to regulate in the

public interest is sufficiently broad to encom

pass policies of overriding national concern. The

elimination of employment discrimination in the

United States is such a national policy. To per-

mit the Federal Power Commission deliberately to

exclude this policy from its regulatory considera-

tions involves an improperly narrow interpretation

of the public interest mandate.

12»

B. The FPC And Other Federal Agencies

Must te In The Implementation

OF The fag Oe eS

Na

crimination Policy.

There is, in this country, a clearly articu-

lated national policy against discrimination in

employment on the basis of race, sex or national

origin. The urgency and importance of this po-

licy was made clear by the Congress in

Title VII of the Civil Rights Act of 1964, and

the Equal Employment Opportunity Act of 1972, and

— affirmed by court decision and Executive

The decision of the Court of Appeals in this

case raises a significant federal question as to

the obligation of federal administrative agencies,

particularly the FPC, to recognize and support

this overriding national policy in the exercise of

their regulatory responsibility. The cross-peti-

tioners urge a finding that the FPC, as an agen-

cy of the federal government engaged in the regu-

lation of large industries, is required to assist

in the enforcement of this national nondiscrimi

The mere fact that Congress has established

the Equal Employment Opportunity Commission and

charged it with authority to effectuate the na-

tional nondiscrimination policy does not preempt

other federal agencies from regulating discrimina-

tory practices. On the contrary, it envisions a

coordinated effort by all agencies of the Federal

govermment. The EEOC has recognized that its role

is not exclusive - for example, by its participa-

tion as amicus curiae in the court below where it

agreed with cross-petitioners that the FPC had the

broad jurisdiction for which we argue - and that

other agencies mist play a complementary role in

so have recognized Uiat combating loyment

discrimination is not a task restricted t» one

-13-

Federal agency. In United Packinghouse, Food &

Allied Workers International Union v. NLRB, 416

F.2d 1126 (c.A.D.c. 1969), cert. denied, 396 U.S.

903 (1969), for example, the Court of Appeals for

the District of Columbia reviewed the legislative

history of Title VII of the Civil Rights Act of

1964 and con~luded that "(t]he [National Labor

Relations] Board has concurrent jurisdiction with

EEOC." And recently this Court observed that

Title VII does not preclude other federal remedies

Railway Express Agency, 43 U.S.L.W. 4623, 4625

We contend that the statutory charge of the

FPC to regulate in the public interest is a broad

authorization that includes a duty to proscribe

discriminatory employment practices through the

exercise of its rule-making capacity. As a feder-

al agency, the FPC cannot ignore such important

national policies and still satisfy its “public

interest" mandate.

This question raised by cross-petitioners is

one of profound significance in determining the

scope of public interest regulation required of

the FPC and similar administrative agencies.

The decision of the court below not only

limits the “public interest" mandate of the FPC,

but broadly implies that other agencies that are

considering similar rules (the ICC, CAB, SEC) or

that have adopted such rules (the FHLBB) may be

similarly limited (App. D, infra, pp. 24-25).

Moreover, without evidence of support of any kind,

the court below casually concluded that the like-

-14-

lihood that discrimination in employment might

affect equity in service "seems to us a slight

one" (App. D, infra, p. 23).*

This unwarranted narrow reading of the statu-

tory responsibilities of the Federal Power Commis-

sion and the implication that other regulatory

agencies are similarly limited is likely to have

a chilling effect on the Federal government's

effort to secure equal job opportunity.

II. HAVING FOUND THAT THE FPC HAD JURISDICTION

OVER EMPLOYMENT DISCRIMINATION FOR THE LIMITED

PURPOSE OF PROTECTING CONSUMERS FROM ILLEGITIMATE

COSTS, THE COURT BELOW ERRED IN REFUSING TO RE-

QUIRE THE AGENCY TO ADOPT RULES TO EFFECTUATE ITS

JURISDICTION.

The lower court rejected cross-petitioners'

broad interpretation of the FPC's authority to

regulate in the public interest. The court

found, however, that in certain situations "con-

sideration by the Commission of a regulatee's

discriminatory employment practices, including

rules governing the invocation of that considera-

tion, could be reasonably related to the pursuit

of the Commission's proper objective." (App. D,

infra, p. 25). Thus the Commission was found to

have a narrow jurisdictional basis for the regula-

tion of employment discrimination, an authoriza-

tion that reached only to discrimination relating

directly to the FPC's central regulatory purposes.

* The court sought to distinguish the situation

of the Federal Commmications Commission where

discrimination in service "might be so subtle

and unsusceptible of direct remedy as to re-

quire the eradication of its root cause”

—— discrimination] (App. D, infra,

P

-15-

While recognizing that some regulation of er

ployment discrimination was within the Commission's

jurisdiction, the court stopped short of finding

an obligation on its part to adopt specific rules

governing such discrimination. The court declared

that the Commission had considerable discretion

"not to promulgate rules even when it has authori-

ty to do so” (App. D, infra, p. 33, n. 53). Cross-

petitioners argue that once jurisdiction over dis-

crimination is determined to exist, even though

the scope is limited, there must be found a duty

to act affirmatively to prevent such discrimina-

tion. In finding only a discretionary authority

as to rule-making the court below was in error.

Discrimination in employment has a fundamen-

tal impact on the efficient and proper function-

ing of the industries over which the FPC is

that no illegitimate costs are passed on to con-

sumers. As the lower court recognized, it is the

Commission's purpose "to insure the efficient per-

formance of an industry in which the normal forces

of competition are for ome reason or another not

equal to the task" (App. D, infra, pp. 16-17).

When widespread employment discrimination is

allowed to exist, as it does in the gas and elec-

tric utility industries, the Commission cannot

ignore its impact on the public's interest in ef-

ficiency and proper functioning. The court below

recognized at least one aspect of the problem, the

unnecessary and illegitimate costs of such dis-

crimination, but it stopped short of providing an

effective remedy. This treatment is inadequate

to satisfy the Commission's statutory mandate.

-16-

_ The lower court was incorrect in its charac-

terization of the Commission's rulemaking authori-

ty as discretionary. The Commission may indeed

have discretion in determining what kind of rule

to fashion. But cross-petitioners contend the es-

tablishment of rules governing discriminatory en-

ployment practices must be declared an obligation

of the Federal Power Commission.

Lacking a rule of general licabili -

grieved parties aia be Gane 6 ah Oe eee

determination whenev.r appropriate rule-making or

renewal proceedings arise - a process that may take

many years. This would be feeble and inadequate

_— for a serious wrong, especially in light of

Commission's persistent refusal to recognize

the important national policy of nondiscrimina-

pe aux tele an its resistance to impic-

ating po even to the limited extent

quired by the court below. aa

III. THE LOWER COURT FAILED TO RECOGNIZE THE FPC'S

CONSTITUTIONAL DUTY TO PREVENT EMPLOYMENT =

on a DISCRIMI

There is an additional ground for finding a

duty on the part of the FPC to regulate racially

discriminatory practices, an obligation that is

based on the Fifth Amendment to the Constitution.

In an industry where the government works closely

to support, regulate and protect the private sec-

tor, any effort short of affirmative regulation re-

sults in the government condoning the illegal dis-

crimination of the regulatee.

_ The Federal Power Commission rejected cross-

petitioners’ argument that. such regulation is con-

stitutionally required. The Commission denied that

the government was involved with the regulated com

panies to a degree that constituted state action

and gave rise to constitutional obligations.

a general anti-discrimination rule. The

did not express a finding, simply a doubt that the

Commission has a Constitutional obligation to im

pose nondiscrimination requirements on its regula-

tees.

The opinion below is a narrow reading of the

Fourteenth Amendment which not only forbids racial

discrimination by a state, but also forbids state

support of or participation in ostensibly private

racial discrimination through “any agreement,

management, funds or property." Cooper v. P

358 U.S. 1, 19 (1958). The Fifth Amendment due

process clause imposes an equivalent prohibition

on the Federal government. a Vv. ee 347

U.S. 497 (1954). Asa a-

tive agencies are prohibited both fran discrimina-

ting on the basis of race and fram sanctioning

or supporting such discrimination.

The precise Constitutional question in this

case is whether the Federal Power Commission, as a

govermment agency, has violated its responsibili-

ties under the Fifth Amendment by not requiring

the industry over which it exercises farreaching

regulatory control to follow nondiscriminatory

employment practices. The issue is not whether

the government involvement in the activities of

the private companies is sufficient to constitute

state action and thus place Constitutional re-

sponsibilities on otherwise private entities. Cf.

Jackson v. Metropolitan Edison Sopa 419 U.S.

1974); Jackson v. Statler tion, 496

F.2d 623 (C.A. 2, 1974). These two issues are

distinct and the requirement of each considerably

different. "A holding that an otherwise private

institution has become an arm of the state is much

-18-

broader and can have far more serious consequences

than a determination that the state has impermiss-

ibly fostered private discrimination,” (Friendly,

J., dissenting in Jackson v. Statler Foundation,

supra at 637).

In Green v. Kennedy, 309 F. Supp. -D.

C. 1970), affirmed sub nom., Coit v. mag 404

U.S. 797 (1971), for example, the court prohibited

the Treasury Department from affording tax benefits

to private segregated schools. See also McGlotten

¥-_ Gonna "y 388 F. Supp. 448, 457 (D.D.c. 1972).

that they desegregate. Similarly, in ee Vv.

Rhodes, 268 F. Supp. 83 (S.D. Ghio l > tate

obligation of the goverrment itself to avoid con-

stitutional violations is much stricter than that

imposed on “private” entities. Sec, e.g., Lombard

v. State of Louisiana, 373 U.S. 267 (1963); Peter-

son_v. Greenville, 373-U.S. 244 (1963); Turner v.

City of Memphis, 369 U.S. 350 (1962); McCabe v.

A.T. & S.F. Ry. Co., 235 U.S. 151 (1914); Cornel-

lus v. Benevo Protective Order of Elks, 382 F.

pny Rey (D.C. Conn. 1974). In short, whether

or a particular gas or electric company i

volved in “state action" Bye ap ae BP

as whether governmental agencies are impermissibly

and unconstitutionally fostering private discrimi-

nation. To show the former cone must satify the

camplex requirements of the "state action" test.

The latter requires a lesser showing of government

action sufficient to encourage or support the

private acts of racial discrimination.

-19-

And it cannot be too strongly emphasized that

this case involves racial and sexual discrimina-

tion in violation of the equal protection guaran-

tees of the Constitution - not an alleged denial

of due process of law. Cf. Jackson v. Metropoli-

tan Edison Co., supra. This Court has noted the

distinction between these two constitutional pro-

tections. "The ‘equal protection of the law’ is a

more explicit safeguard of prohibited unfairness

than 'due process of law' and, therefore, we do

not imply that the two are always interchangeable

phases." Bolling v. Sharpe, 347 U.S. 497, 499

(1954). In cases involving racial] discrimination

this Court has been even more strict in applying

the Constitution's equal protection measure. The

Fourteenth Amendment (and for the Federal govern-

ment the Fifth Amendment) was "unquestionably de-

signed to condemn and forbid every distinction,

however trifling, on account of race." Oregon v.

Mitchell, 400 U.S. 112, 127 (1970).

The FPC is not casually concerned with the

activities of the gas and electric utility indus-

try; it is deeply involved in every aspect of its

operations. It must approve many of the most im

portant business decisions these campanies make.

The setting of rates, transport and sale of energy,

construction of facilities, mergers and the issu-

ance of securities all must be agreed to by the

Commission. The issuance of licenses requires the

FPC's approval.

The granting of monopoly status to the utility

campanies is further evidence of the involvement of

the government in the gas and electric utility in-

dustry. This exclusivity of operation is designed

to protect utilities fran destructive campetition

and is accomplished with government support. Be-

cause this industry is so vital, the government,

through the FPC, guarantees its successful opera-

tion.

-20-

The Federal Power Commission, in numerous

ways, sanctions and supports the conduct of the

utility industry. As a result the Commission

cannot ignore the racially discriminatory employ-

ment practices in that industry and still satisfy

its constitutional obligations. Cross-petition-

ers argue that the Fifth Amendment requires the

FPC to exercise its rule-making power. It may

do so in any appropriate manner, as long as the

result prohibits racially discriminatory employ-

ment practices.

The Cammission's record of indifference to

these illegal practices, when viewed in the con-

text of its massive regulation and support of the

industry, is a clear constitutional violation.

The Federal Power Commission is constitutionally

required to act affirmatively to terminate its

support of racial discrimination. The court below

was incorrect in failing to recognize such a con-

stitutional obligation on the part of the FPC.

afin

CONCLUSION

For the foregoing reasons, it is respect-

fully submitted that in the event the Court should

grant the petition for a writ of certiorari, this

cross-petition for a writ of certiorari should

likewise be granted.

Respectfully submitted,

Howard A. Glickstein

Notre Dame Center for

Civil Rights

Notre Dame, Indiana 46556

William L. Taylor

Catholic University Law

Schéol

Washington, D.C. 20064

~~.

CERTIFICATE OF SERVICE

It is hereby certified that

in compliance with Rules 33(1) and

33(2) (a) of this Court, three copies

each of this Cross-Petition for a

Writ of Certiorari have been forward-

ed by depositing same in a United

States mail box, first class postage

prepaid, to the following:

Solicitor General of the

United States

Department of Justice

Washington, D.C. 20530

Drexel D. Journey

General Counsel

Federal Power Commission

825 No. Capitol Street

Washington, D.C. 20426

/s/ Howard A. Glickstein

Howard A. Glickstein

Counsel for Cross-

Petitioners

APPENDIX A

RELEVANT SECTIONS OF THE

FEDERAL POWER ACT AND

NATURAL GAS ACT

FEDERAL POWER ACT

Sec. 4. [As amended August 26, 1935.] The Com-

mission is hereby authorized and empowered—

(e) To issue licenses to citizens of the United States,

or to any association of such citizens, or to any corpora-

tion organized under the laws of the United States

or any State thereof, or to any State or municipality

for the purpose of constructing, operating, and main-

taining dams, water conduits, reservoirs, power houses,

transmission lines, or other project works necessary or

convenient for the development and improvement of

navigation and for the development, transmission, and

utilization of power across, along, from or in any of

the streams or other bodies of water over which Con-

gress has jurisdiction under its authority to regulate

commerce with foreign nations and among the several

States, or upon any part of the public lands and

reservations of the United States (including the Terri-

tories), or for the purpose of utilizing the surplus water

or water power from any Government dam, except as

herein provided : Provided, That licenses shall be issued

within any reservation only after a finding by the

Commission that the license will not interfere or be

inconsistent with the purpose for which such reservation

was created or acquired, and shall be subject to and

contain such conditions as the Secretary of the depart-

ment under whose supervision such reservation falls

shall deem necessary for the adequate protection and

utilization of such reservation. Provided further, That

no license affecting the navigable capacity of any

navigable waters of the United States shall be issued

until the plans of the dam or other structures affect-

FEDERAL POWER ACT

ing navigation have been approved by the Chief of

Engineers and the Secretary of the Army.? Whenever

the contemplated improvement is, in the judgment of

the Commission, desirable and justified in the public

interest for the purpose of improving or developing a

waterway or waterways for the use or benefit of inter-

state or foreign commerce, a finding to that effect shall

be made by the Commission and shall become a part

of the records of the Commission: Provided further,

That in case the Commission shall find that any Govern-

ment dam may be advantageously used by the United

States for public purposes in addition to navigation,

no license therefor shall be issued until two years after

it shall have reported to Congress the facts and con-

ditions relating thereto, except that this provision shall

not apply to any Government dam constructed prior

to June 10, 1920: And provided further, That upon

the filing of any application for a license which has

not been preceded by a preliminary permit under sub-

section (f) of this section, notice shall be given and

published as required by the proviso of said subsection.

[41 Stat. 1065-1066; 49 Stat. 840-841; 61 Stat. 501;

16 U.S.C. 797(e)]

Section 201. (a) It is hereby declared that the

business of transmitting and selling electric energy for

ultimate distribution to the public is affected with a

public interest, and that Federal regulation of matters

relating to generation to the extent provided in this

Part and the Part next following and of that part of

such business which consists of the transmission of

electric energy in interstate commerce and the sale of

such energy at wholesale in interstate commerce is

necessary in the public interest, such Federal regulation,

however, to extend only to those matters which are

not subject to regulation by the States. [49 Stat. 847;

16 U.S.C. 824(a)]

FEDERAL POWER ACT

Sec. 205. (a) All rates and charges made, demanded,

or received by any public utility for or in connection

with the transmission or sale of electric energy subject

to the jurisdiction of the Commission, and all rules and

regulations affecting or pertaining to such rates or

charges shall be just and reasonable, and any such

rate or charge that is not just and reasonable is hereby

declared to be unlawful. [49 Stat. 851; 16 U.S.C.

824d (a) ]

(b) No public utility shall, with respect to any

transmission or sale subject to the jurisdiction of the

Commission, (1) make or grant any undue preference

or advantage to any person or subject any person to

any undue prejudice or disadvantage, or (2) main-

tain any unreasonable difference in rates, charges,

service, facilities, or in any other respect, either as

between localities or as between classes of service.

[49 Stat. 851; 16 U.S.C. 824d(b) ]

(c) Under such rules and regulations as the Com-

mission may prescribe, every public utility shall file

with the Commission, within such time and in such

form as the Commission may designate, and shall keep

open in convenient form and place for public inspection

schedules showing all rates and charges for any trans-

mission or sale subject to the jurisdiction of the Com-

mission, and the classification, practices, and regula-

tions affecting such rates and charges, together with

all contracts which in any manner affect or relate to

such rates, charges, classifications, and services. [49 Stat.

851; 16 U.S.C. 824d(c)]

(d) Unless the Commission otherwise orders, no

change shall be made by any public utility in any

such rates, charges, classification, or service, or in any

rule, regulation, or contract relating thereto, except

after thirty days notice to the Commission and to

the public. Such notice shall be given by filing with

the Commission and keeping open for public inspection

new schedules stating plainly the change or changes to

FEDERAL POWER ACT

i!

t

3

i

service,

;

ti

it

ff

BRE

hue

|

3

f

1

or charges as by its decision shall be found not justified.

At any hearing involving a rate or charge sought to be

FEDERAL POWER ACT

increased, the burden of proof to show that the increased

rate or charge is just and reasonable shall be upon the

public utility, and the Commission shall give to

the hearing and decision of such questions preference

over other questions pending before it and decide the

same as speedily as possible. [49 Stat. 852; 16 U.S.C.

824d (e) ]

Sec. 206. (a) Whenever the Commission, after a

hearing had upon its own motion or upon complaint,

shall find that any rate, charges, or classification, de-

manded, observed, charged, or collected by any public

utility for any transmission or sale subject to the

jurisdiction of the Commission, or that any rule, regula-

tion, practice, or contract affecting such rate, charge,

or classification is unjust, unreasonable, unduly dis-

criminatory or preferential, the Commission shall deter-

mine the just and reasonable rate, charge, classification,

rule, regulation, practice, or contract to be thereafter

observed and in force, and shall fix the same by order.

[49 Stat. 852; 16 U.S.C. 824e(a) J

(b) The Commission upon its own motion, or upon

the request of any State commission whenever it can

do so without prejudice to the efficient and proper

conduct of its affairs, may investigate and determine

the cost of the production or transmission of electric

energy by means of facilities under the jurisdiction

of the Commission in cases where the Commission has

no authority to establish a rate governing the sale of

such energy. [49 Stat. 852: 16 U.S.C. 824e(b) ]

Sec. 309. The Commission shall have power to per-

form any and all acts, and to prescribe, issue, make,

amend, and rescind such orders, rules, and regulations

as it may find necessary or appropriate to carry out

the provisions of this Act. Among other things, such

rules and regulations may define accounting, technical,

and trade terms used in this Act; and may pre-

FEDERAL POWER ACT

scribe the form or forms of all statements, declarations,

applications, and reports to be filed with the Com-

mission, the information which they shall contain,

and the time within which they shall be filed. Unless

a different date is specified therein, rules and regulations

of the Commission shall be effective thirty days after

publication in the manner which the Commission shall

prescribe. Orders of the Commission shall be effective

on the date and in the manner which the Commission

shall prescribe. For the purposes of its rules and regula-

tions, the Commission may classify persons and matters

within its jurisdiction and prescribe different require-

ments for different-classes of persons or matters. All

rules and regulations of the Commission shall be filed

with its secretary and shall be kept open in convenient

form for public inspection and examination during

reasonable business hours. [49 Stat. 858-859; 16 U.S.C.

825h1

NATURAL GAS ACT

Section 1. (a) As disclosed in reports of the Federal

Trade Commission made pursuant to Senate Resolu-

tion 83 (Seventieth Congress, first session) and other

reports made pursuant to the authority of Congress, it

is hereby declared that the business of transporting and

selling natural gas for ultimate distribution to the pub-

lic is affected with a public interest, and that Federal

regulation in matters relating to the transportation of

natural gas and the sale thereof in interstate and for-

eign commerce is necessary in the public interest. [52

Stat. 821 (1938); 15 U.S. C. $717 (a)]

Sec. 4. (a) All rates and charges made, demanded, or

received by any natural-gas company for or in connec-

tion with the transportation or sale of natural gas sub-

ject to the jurisdiction: of the Commission, and all rules

and regulations affecting or pertaining to such rates or

charges, shall be just and reasonable, and any such rate

or charge that is not just and reasonable is hereby

declared to be unlawful.

(b) No natural-gas company shall, with respect to

any transportation or sale of natural gas subject to the

jurisdiction of the Commission, (1) make or grant any

undue preference or advantage to any person or sub-

ject any person to any undue prejudice or disadvantage,

or (2) maintain any unreasonable difference in rates,

charges, service, facilities, or in any other respect, either

as between localities or as between classes of service.

(c) Under such rules and regulations as the Commis-

sion may prescribe, every natural-gas company shall

file with the Commission, within such time (not less

than sixty days from the date this act takes effect) and

in such form as the Commission may designate, and

shall keep open in convenient form and place for pub-

lic inspection, schedules showing all rates and charges

for any transportation or sale subject to the jurisdiction

of the Commission, and the classifications, practices, and

NATURAL GAS ACT

regulations affecting such rates and charges, together

with all contracts which in any manner affect or relate

to such rates, charges, classifications, and services.

(d) Unless the Commission otherwise orders, no

change shall be made by any natural-gas company in

any such rate, charge, classification, or service, or in

any rule, regulations, or contract relating thereto, except

after thirty days’ notice to the Commission and to the

public. Such notice shall be given by filing with the

Commission and keeping open for public inspection new

schedules stating plainly the change or changes to be

made in the schedule or schedules then in force and the

time when the change or changes will go into effect.

The Commission, for good cause shown, may allow

changes to take effect without requiring the thirty days’

notice herein provided for by an order specifying the

changes so to be made and the time when they shail

take effect and the manner in which they shall be filed

and published.

(e) Whr never any such new schedule is filed the Com-

mission shal] have authority, either upon complaint of

any State, municipality, State commission, or gas dis-

tributing company or upon its own initiative without

complaint, at once, and if it so orders, without answer

or formal pleading by the natural-gas company, but

upon reasonable notice, to enter upon a hearing con-

cerning the lawfulness of such rate, charge, classifi-

cation, or service; and, pending such hearing and

the decision thereon, the Commission, upon filing with

such schedules and delivering to the natural-gas com-

pany affected thereby a statement in writing of its

reasons for such suspension, may suspend the operation

of such schedule and defer the use of such rate, charge,

classification, or service, but not for a longer period

than five months beyond the time when it would other-

wise go into effect;** and after full hearings, either

completed before or after the rate, charge, classification,

or service goes into effect, the Commission may make

such orders with reference thereto as would be proper

in @ proceeding initiated after it had become effective.

If the proceeding has not been concluded and an order

made at the expiration of the suspension period, on

motion of the natural-gas company making the filing,

the proposed change of rate, charge, classification, or

NATURAL GAS ACT

service shall go into effect. Where increased rates or

charges are thus made effective, the Commission may,

by order, require the natural-gas company to furnish a

bond, to be approved by the Commission, to refund any

umounts ordered by the Commission, to keep accurate

accounts in detail of all amounts received by reason of

such increase, specifying by whom and in whose behalf

such amounts were paid, and, upon completion of the

hearing and decision, to order such natural-gas company

to refund, with interest, the portion of such increased

rates or charges by its decision found not justified. At

any hearing involving a rate or charge sought to be in-

creased, the burden of proof to show that the increased

_ rate or charge is just and reasonable shall be upon the

natural-gas company, and the Commission shall give to

the hearing and decision of such questions preference

over other questions pending before it and decide the

same as speedily as possible. [52 Stat. 822 (1938); 76

Stat. 72 (1962) :15 U.S.C. $717]

Sec. 5. (a) Whenever the Commission, after a hearing

had upon its own motion or upon complaint of any State,

municipality, State commission, or gas distributing com-

pany, shall find that any rate, charge, or classification

demanded, observed, charged, or collected by any natu-

ral-gas company in connection with any transportation

or sale of natural gas, subject to the jurisdiction of the

Commission, or that any rule, regulation, practice, or

contract affecting such rate, charge, or classification is

unjust, unreasonable, unduly discriminatory, or prefer-

ential, the Commission shall determine the just and rea-

sonable rate, charge, classification, rule, regulation, prac-

tice, or contract to be thereafter observed and in force,

and shall fix the same by order: Provided, however, That

the Commission shall have no power to order any in-

crease in any rate contained in the currently effective

schedule of such natural-gas company on file with the

Commission, unless such increase is in accordance with

a new schedule filed by such natural-gas company; but

the Commission may order a decrease where existing

rates are unjust, unduly discriminatory, preferential,

otherwise unlawful, or are not the lowest reasonable

rates.

NATURAL GAS ACT

(b) The Commission upon its own motion, or upon the

request of any State commission, whenever it can do so

without prejudice to the efficient and proper conduct of

its affairs, may investigate and determine the cost of the

producticn or transportation of natural gas by a natural-

gas company in cases where the Commission has no

authority to establish a rate governing the transporta-

tion or sale of such natural gas. [52 Stat. 823 (1938) ;

15 U.S. C. § 717d]

Sec. 7. (a) Whenever the Commission, after notice and

opportunity for hearing, finds such action necessary or

desirable in the public interest, it may by order direct a

natural-gas company to extend or improve its transpor-

tation facilities, to establisn physical connection of its

transportation facilities with the facilities of, and sell

natural gas to, any person or municipality engaged or

legally authorized to engage in the local distribution of

natural or artificial gas to the public, and for such pur-

pose to extend its transportation facilities to communi-

ties immediately adjacent to such facilities or to territory

served by such natural-gas company, if the Commission

finds that no undue burden will be placed upon such

natural-gas company thereby: Provided, That the Com-

mission shall have no authority to compel the enlarge-

ment of transportation facilities for such purposes, or to

compel such natural-gas company to establish physical

connection or sell natural gas when to do so would impair

its ability to render adequate service to its customers.

[52 Stat. 824 (1938) ; 15 U.S. C. §717f (a))

NATURAL GAS ACT

(c) No natural-gas company or person which will be

a natural-gas company upon completion of any proposed

construction or extension shall engage in the transporta-

tion or sale of natural gas, subject to the jurisdiction of

the Commission, or undertake the construction or exten-

sion of any facilities therefor, or acquire or operate any

such facilities or extensions thereof, unless there is in

force with respect to such natural-gas company a certifi-

cate of public convenience and necessity issued by the

Commission authorizing such acts or operations: Pro-

vided, however, That if any such natural-gas company or

predecessor in interest was bona fide engaged in trans-

portation or sale of natural gas, subject to the jurisdic-

tion of the Commission, on the effective date of this

amendatory Act, over the route or routes or within the

area for which application is made and has so operated

since that time, the Commission shall issue such certifi-

cate without requiring further proof that public con-

venience and necessity will be served by such operation,

and without further proceedings, if application for such

certificate is made to the Commission within ninety days

after the effective date of this amendatory Act. Pending

the determination of any such application, the continu-

ance of such operation shall be lawful.

In all other cases the Commission shall set the matter

for hearing and shall give such reasonable notice of the

hearing thereon to all interested persons as in its judg-

ment may be necessary under rules and regulations to be

prescribed by the Commission; and the application shall

be decided in accordance with the procedure provided in

subsection (e) of this section and such certificate shall

be issued or denied accordingly : Provided, however, That

the Commission may issue a temporary certificate in cases

of emergency, to assure maintenance of adequate service

or to serve particular customers, without notice or hear-

ing, pending the determination of an application for a

certificate, and may by regulation exempt from the re-

quirements of this section temporary acts or operations

for which the issuance of a certificate will not be required

in the public interest. [52 Stat. 825 (1938), as amended,

56 Stat. 83 (1942); 15 U.S.C. § 717f (c)]*

NATURAL GAS ACT

(e) Except in the cases governed by the provisos

contained in subsection (c) of this section, a certificate APPENDIX B

shall be issued to any qualified applicant therefor, au-

thorizing the whole or any part of the operation, sale,

service, construction, extension, or acquisition covered

by the application, if it is found that the applicant is OPINION OF THE

able and willing properly to do the acts and to perform

the service proposed and to conform to the provisions of FEDERAL POWER COMMISSION

the Act and the requirements, rules, and regulations of

the Commission thereunder, and that the proposed serv- (No. 623, July 11, 1972)

ice, sale, operation, construction, extension, or acquisi-

tion, to the extent authorized by the certificate, is or will

be required by the present or future public convenience

and necessity ; otherwise such application shall be denied.

The Commission shall have the power to attach to the

issuance of the certificate and to the exercise of the

rights granted thereunder such reasonable terms and

conditions as the public convenience and necessity may

require. [56 Stat. 84 (1942); 15 U. S. C. §717f (e)]

UNITED STATES OF AMERICA

FEDERAL POWER COMMISSION

EMPLOYMENT PRACTICES

Before Commissioners: John N. Nassikas, Chairman;

Albert B. Brooke, Jr.,

Pinkney Walker,

and Rush Moody, Jr.

)

The National Association for the ) Docket No.

Advancement of Colored People et al.)

)

OPINION NO. 623

DECLARATORY OPINION AND ORDER ON PETITION FOR

ISSUANCE OF A RULE REIATIVE TO

EMPLOYMENT PRACTICES

(Issued July 11, 1972)

The petition to which this Opinion is addressed

was filed June 22, 1972, and is treated herein as a

petition for a declaratory order. See 1.7(c) Feder-

al Commission Rules of Practice and Procedure,

18 CFR 1.7(c).

=)

Petitioners raise important issues of poli

Gah in ion of regulatory statutes and

laws and regulations governing employment practi-

Three docketed cases 1/ have arisen under the

Federal Power Act, 16 U.S.C. 791(a) et seg., in

which a mumber of underlying legal issues raised

in the subject petition were considered. They were

requisite delegation of Congressional authority to

act in that area. Executive authority and consti-

tutional considerations do not provide the basis

for Commission jurisdiction. Simply stated, the

1/ Pacific Gas and Electric , 44 FPC 1365,

1373 (1970), appeals” , unreported or-

ders of the Court of for the Ninth Cir-

cuit filed April 26, 1971, and June 22, 1971,

->

Commision is not the designated agency for the

administration of equal employment laws or any

other type of labor regulation. As pointed out

infra, regulation of this type is the province of

a specific number of departments and agencies of

the Federal Government, and state agencies.

Where the Commission does have specific re-

ties in the area of equal rights, they

are being enforced. These are: (1) as an ar

ployer and agency of the Federal Goverrment sub-

ject to the requirements of Executive Order No.

11478, August 8, 1969, 34 F.R. 12985; amd (2) as

the Congressionally delegated agency charged by

the Congress with the duty to administer the com

prehensive use of resources standard governing hy-

droelectric licensing under the Federal Power Act,

16 U.S.C. 803(a), i.e., in a manner to insure that

multi-purpose hydroelectric facilities (e.g., pow

er production, navigation, recreation and other

uses), are open to use by all persons upon non-

discriminatory bases. Implementing regulations of

ployment Opportunity, issued January 26, 1970,

Administrative Manual; and Federal Power Commis-

at Recreational Facilities at Licensed Hydroelec-

tric Projects, issued April 19, 1967, 37 FPC 775 2/.

national origin. The Commission welcomes judi-

cial review and final resolution of the findings

and conclusions set forth in this Opinion.

2/ Codified Part 8 Commission Regulations under the

Federal Power Act, 18 CFR Part 8.

BEST Coy i siuaaue

-4-

a Relief — Petitioners seek a gener-

al emaking action of the Commission directed to

the promulgation of "* * * regulations prohibiting

discrimination on account of race, color, religion,

tunity in the employment practices of its regula-

tees * * *," Petition, p. 3. Procedurally, peti-

— aoe hearings before the Commission,

argumen a general public

through notice of a rule 3 oo poatremegeee. Sl

As the Commission stated in Pacific Gas and Elec-

tric, supra, 44 FPC 1368:

The legal issues, which must be

of concern to us in this proceed-

ing, are those over which we have

jurisdiction. We do not find the

issues raised * * * sufficiently

related to a legitimate regulatory

Purpose as expressed in the Feder-

al Power Act that we can proceed

as requested * * * we do not find

it appropriate in the exercise of

Our general administrative power

to order a hearing on ultimate is-

sues which we could not lawfully

resolve.

The bases of the Commission's jurisdiction to

act in respect to natural gas companies, public

utilities and licensees, are statutory: namely,

the Federal Power Act, 16 U.S.C. 791(a) et seg.,

passed in 1920 as the Federal Water Power Act,

41 Stat. 1063, and substantially amended in 1935,

49 Stat. 838; and the Natural Gas Act, 15 U.S.C.

717 et seg., passed in 1938. Other statutes cited

7 A proposed rule annexed to the petition is re-

produced in Appendix A hereto.

-5-

by petitioners in support of their claims do not

grant jurisdictional authority to this Commission.

In our judgment, the Congress has not granted au-

thority under any of these statutes for this agency

to act as a remedial forum for the redress of unlaw-

ful employment practices.

Discussion of Authorities -- Petitioners legal

arguments are directed to various sections of the

Natural Gas Act, the Federal Power Act, the Civil

Rights Act of 1964, as amended, 78 Stat. 241, 42

U.S. 1971 et ., the Civil Rights Act of 1866,

14 Stat. 27, the Equal Pay Act of 1963, 77 Stat.

56, 29 U.S.C. 206(d), Executive Order Nos. 11246

and 11375, the Fifth Amendment to the United States

Constitution and the Fair Employment Practices Act

of various states. We consider these seriatim.

Referring to the Natural Gas Act and natural

gas companies, petitioners cite sections dealing

with the Congressional grant of jurisdiction to the

Commission to regulate interstate transportation and

sale of natural gas for resale in interstate com

merce in the public interest, 15 U.S.C. 717(a); the

therefor of natural gas companies and abandorment

thereof as required by the public convenience and

necessity, 15 U.S.C. 717£(b) (c); the control of

the types of wholesale gas services of natural gas

companies and rates therefor as required umder a stan-

dard of just, reasonable, without undue discrimina-

tion or preference, 15 U.S.C. 717c(b), d; and gener-

al administrative procedural authority of the Can

mission, 15 U.S.C. 717o.

Referring to the Federal Power Act and public

utilities and licensees, petitioners cite sections

dealing with the Congressional grant of jurisdic

tion to regulate interstate transmission and sale

of electric energy for resale in interstate com

merce in the public interest, 16 U.S.C. 824(a); the

control of the merger, sale or disposition of juris-

dictional properties of public utilities or acquisi-

-6-

tion of the capital securities thereof as requir-

ed in the public interest, 16 U.S.C. 824b/(a) (b);

the control of the types of wholesale or bulk pow

er services of pubic utilities and rates therefor

as required under a standard of just, reasonable,

without undue discrimination or preference, 16

U.S.C. 824d(b), e; the licensing of hydroelectric

project works of licensees upon streams over which

the Congress has jurisdiction, upon public lands

and reservations of the United States and at feder-

ally owned dams, 16 U.S.C. 797(e); and the general

administrative procedural authority of the Commis-

sion, 16 U.S.C. 825h.

Essentially, petitioners argue that public in-

terest considerations enfold the national policies

against discrimination in employment and therefore

make their implementation and execution a part of

this Commission's regulatory jurisdiction and au-

thority. We can not accept this generalized argu-

ment. Application of the public interest concept

in the context of any given regulatory statute pre-

supposes inguiry into, and observance of, the le-

gislative purposes of that Act. As pointed out

infra, 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 as-

pects of our economic regulatory activities and the

employment procedures of the utility systems which

we regulate, as would justify the ultimate con-

clusion petitioners draw. We distinguish employ-

ment procedures from other subjects such as nation-

al defense considerations, antitrust, environmental

requirements, navigation, flood control or recrea-

tion, all of which are reflected in the Natural

Gas and Federal Power Acts. See for example, 15

U.S.C. 7173, 717s(a); and 16 U.S.C. 803(a) (h), 804,

805, 809, 824a(a) and 8253.

afe

Nothing in either of the basic statutes which

we administer — the Federal Power Act and the Na-

tural Gas Act -- and particularly the sections re-

ferenced by petitioners, addresses the matter of

employment procedures of natural gas companies,

public utilities or licensees, nor does the legis-

lative history of either Act give any basis for be-

lieving that Congress intended to confer jurisdic-

tion upon the Commission to regulate those activi-

ties. Both statutes are economic regulatory devi-

ces born out of economic development and financial

conditions which prevailed nationally earlier in

this century. The Federal Water Power Act (Part

I of the Federal Power Act), is, as its preamble

states, "* * * An Act to create a Federal Power

Commission; to provide for the improvement of navi-

gation; the of water power; the use of

public lands in relation thereto * * * and for

other purposes.", 41 Stat. 1063. The Federal Pow

er Act is Title II of the Public Utility Act of

1935, 49 Stat. 838, "An Act To provide for control

and regulation of public utility holding companies,

and for other purposes.", 49 Stat. 803. The Natur-

al Gas Act, as its preamble states, is "An Act To

regulate the transportation and sale of natural

gas in interstate commerce, and for other purposes.”

52 Stat. 821.

Constitutional considerations and the inability

of individual states to regulate and control multi-

state utility operations, i.e., interstate trans-

missions and wholesale transactions involving elec-

tric energy ami natural gas were principal factors

in the enactment of the Federal Power and Natural

Gas Acts. Public Utilities Commission v. aAttle-

boro Steam & Electric Co., U.S.

Federal Power Commission Peet A~ 4

Pipeline Co., et al., U.S. 575, 581-63 (1942);

Connecticut Li t & Power Co. v. Federal Power Com-

mission, U.S.

Fower Comission v._ Southern California Bison Com

pany, et al. U.S. 4). In short,

-8-

Congress, through the enactment of these statutes,

provided Federal regulation of electric and natural

gas services and transactions which are beyond the

reach of state public service commission control.

See for example, House Report No. 61, on H.R. 3184

(which became the Federal Water Power Act), 66th

Cong., lst Sess., p. 5; Senate Report No. 621, on

S. 2796 (which became the Federal Power Act), 74th

Cong., lst Sess., pp. 3, 17-18, 22; and House Re-

port No. 709 on H.R. 6586 (which became the Na-

tural Gas Act), 75th Cong., lst Sess., pp. 1-3.

The consumer and services and prices for elec-

tric and gas utility services were focal points of

Congressional concern in the enactment of both sta-

tutes. See Pennsylvania Water & Power Co. et al.

v. Federal Power Commission et al., 343 U.S. 414,

418 (1952) "A A major purpose of the whole Act is to

protect power consumers against excessive prices

* * *,."; Atlantic Refining Co., et al., v. Public

Service of New York, et al., 360 U.S. 378,

388 ae "the 7Natural Gas/ Act was so framed

as to afford consumers a complete, permanent and

effective bond of protection from excessive rates

and charges."; and Federal Power Commission v.

Transcontinental Gas Pipe Line Corp., et al., 365

U.S. I, 19 (1961) “When Congress enacted the Natur-

al Gas Act, it was motivated by a desire 'to pro-

tect consumers against exploitation at the hands of

natural gas companies'."

It is in the context of these considerations

that we reject petitioners’ broad public interest

arguments. The public interest concept does not

provide the basis for this Commission to regulate

employment procedures of natural gas companies,

public utilities or licensees, any more than the

public interest would have us regulate the securi-

ties, the taxes, the patents, the safety, the

wages and hours, the advertising or any other of a

number of areas which Congress has created specia-

lized agencies to regulate, including equal employ-

->

ment opportunities. The Natural Gas and Federal

Power Acts do not admit of such interpretation.

Congress has acted in the area of labor law

and equal employment opportunity protection. See,

for example, 29 U.S.C. Chapters 1-15, and in parti-

cular, Chapter 2. Women's Bureau, Chapter 4B.

Federal Employment Service, Chapter 5. Labor Dis-

putes, Mediation and Injunctive Relief, Chapter 6.

Jurisdiction of Courts in Matters Affecting Er

ployer and Employee, Chapter 7. Labor-Management

Relations, Chapter 8. Fair Labor Standards, Chap-

ter 9. Portal to Portal Pay, Chapter 11. Labor-

Discrimination in Employment, and Chapter 15, Occu-

pational Safety and Health; the Civil Rights Act of

1964, 78 Stat. 241; the Equal Pay Act of 1963, 77

Stat. 56; and the Equal Employment Opportunity Act

of 1972, 86 Stat. 103 4/. In no instance did the

Congress specify tive duties for this

4/ Cf. the Civil Rights Act of 1866, 14 Stat. 27,

and 1870, 16 Stat. 140, 42 U.S.C. 1981-1982,

Equal rights under the law, Property rights of

citizens.

§1981. All persons within the jurisdiction of

the United States shall have the same right in

every State and Territory to make and enforce

contracts, to sue, be parties, give evidence,

and to the full and equal benefit of all laws

and proceedings for the security of persons

and property as is enjoyed by white citizens,

§1982. All citizens of the United States shall

have the same right, in every State and Territory,

as is enjoyed by white citizens thereof to in-

herit, purchase, lease, sell, hold, and convey

real and personal property.

BiST Gur @ al ALAS BLE

-10-

The basic statute of concern in light of pe-

titioners' arguments, is the Civil Rights Act of

1964, as amended, including the Equal Employment

Opportunity Act of 1972. As pointed out in the

Opinion of the Supreme Court, Griggs, et al. v.

Duke Power , 401 U.S. 424, 429-31 (1971),

"The objective of Congress in the enactment of Ti-

tle VII /Civil Rights Act of 1964/ * * * was to

achieve equality of employment opportunities and

remove barriers that have operated in the past to

favor an identifiable group of white employees

over other employees * * * what is required by Con-

gress is the removal of artificial, arbitrary, and

unnecessary barriers to employment when the bar-

riers operate insidiously to discriminate on the

basis of racial or other impermissible classifica-

tion." Title VII of that Act, 78 Stat. 253, 42

U.S.C. 2000e, establishes the Equal Employment Oppor-

tunity Commission to administer those provisions.

That Act specifies the actions which constitute un-

lawful employment practices, 42 U.S.C. 2000e-2, -3

5/. Investigatory authority is conferred upon the

EEOC, including examination of witnesses and pro-

duction of evidence with provision for judicial en-

5/ Among the proscribed conduct are "* * * to fail

or refuse to hire or to discharge any indivi-

dual, or otherwise to discriminate against any

individual with respect to his compensation,

terms, conditions, or privileges of employment,

because of such individual's race, color, re-

ligion, sex, or national origin * * * or * * *

to limit, segregate, or classify * * * to de-

prive any individual of employment opportuni-

ties or otherwise adversely affect * * * sta-

tus as an employee, because of such individual's

race, color, religion, sex, or national origin",

42 U.S.C. 2000e-2 (a) (1) (2).

a) ie

forcement of investigatory determinations, 42

U.S.C. 2000e-5, -8, -9. The EEOC may prescribe

procedural regulations pursuant to the requirement

of the Administrative Procedure Act, 42 U.S.C.

2000e-12. It may direct the keeping of records

relevant to employment practices and enforcement of

the Civil Rights Act, subject to he statutory pro-

vision that information so obtained by the EEOC

shall not be made public by it prior to the ini-

tiation of any proceeding involving such inform-

tion, 42 U.S.C. 2000e-8. Its investigation of

claimed violations of Title VII, by statute, are

not public without the written consent of the par-

ties and may not be used as evidence in any subse-

quent proceeding, 42 U.S.C. 2000e-5(a). The Act

provides for mediation and conciliation measures

leading to voluntary compliance measures by the

EEOC, 42 U.S.C. 2000e-5(a). Private persons ag-

grieved have recourse to the courts with injunctive

and equitable remedies, together with court ap-

pointed counsel, 42 U. S. C. 2000e-5(e). The Act

also provides for civil enforcement actions by the

Attorney General, 42 U.S.C. 2000e-6, -5(e).

Pursuant to the 1972 amendments, the coverage

of Title VII provisions are extended to certain

state and local government authorities and private

employers with 15 or more persons and private and

public educational institutions, 86 Stat. 103, 42

U.S.C. 2000e.

The power of the EEOC is extended "* * * to

86 Stat. 104, 42 U.S.C. 2000e-5. The EEOC is re—-

quired to serve notice of charges, which, by sta-

tute, are not to be made public by the Commission;

to investigate the same, according "* * * substan-

tial weight to final findings and orders made by

state or local authorities in proceedings commenced

under state or local law * * *"; and to endeavor

to mediate or conciliate controversies which have

reasonable cause, or otherwise to dismiss the charge.

-12-

The EEOC is to defer, initially, to state or lo-

cal agencies having jurisdiction in the premises

under an exhaustion of remedies principle. Where

the EEOC is unable to mediate or conciliate, it

may bring a civil action in the Federal courts in

pursuit of equitable remedies or affirmative re—

lief. Where the respondent party is a governmen-

tal authority, the Act provides for initiation of |

such court actions by the Attorney General. The

EEOC and the Attorney General are. also authorized

to seek temporary judicial relief. The party ag-

grieved may also initiate court action under cer-

tain conditions, may seek court appointed counsel

and may intervene in actions instituted by the

EEOC or the Attorney General. The Equal Employment

Opportunity Act of 1972 provides for transfer of

these functions of the Attorney General to the EEOC

effective in 1974.

The 1972 amendments confer upon the EEOC, in

connection with its hearings and investigations,

the powers of National Labor Relations Act, 29

U.S.C. 161, 86 Stat. 109, 42 U.S.C. 2000e-9. The

type of investigatory rulemaking which petitioners

seek before this Cammission is within the authority

of the EEOC to effectuate. (Indeed, that agency's

established reporting requirements appear to cam-

prehend essentially the type of infomation which

petitioners seek to assemble through this agency.

The amendments provide for a Presidentially ap-

pointed general counsel of the EEOC with the "* * *

responsibility for the conduct of litigation as

provided in Sections 706 and 707 /42 U.S.C. 2000e-5,

-6/ of this title.", 86 Stat. 110, 42 U.S.C.

2000e-4. In the enactment of the 1972 revisions to

the Civil Rights Act of 1964, the Congress consider-

ed and rejected a provision whereby recognized reme-

dies for enforcement of equal rights and labor

practices would be pre-empted. See, United States

Code Congressional and Administrative News, 92nd

Cong., 2nd Sess., No. 3, pp. 1049-50, 1022, 1043-

44. Congress clearly evidenced its intention re-

-l>-

garding the enforcement of equal rights, including

its intention in respect to administrative actions

dealing with equal employment opportunities. The

Civil Rights Act, as amended, does not specify that

Congress wishes to accomplish that result, it so

states. See, National Environmental Policy Act of

1969, 42 U.S.C. 4321, 4332, 4333.

The 1972 amendments establish an Equal Employ-

pin | cee rare Bees aw te and policies r

ity legislation , and po .

* * *", 86 Stat. lll. The Council is comprised of

the Attorney General, Secretary of Labor, and the

Chairmen of the EEOC, the United States Civil Ser-

vice Commission and the United States Civil Rights

The Equal Pay Act of 1963, 77 Stat. 56, 29

U.S.C. 206(d), cited by petitioners, is a part of

the Fair Labor Standards Act of 1938, enforced by

the

Wage and Hour and Public Contracts Division

of the Labor Department, not the Federal Power Cam

wage differentials based upon sex. As such, the

based upon sex, the latter extending to areas other

than wage discrimination. Criminal and civil ac-

Standards Act.

-14-

Executive Order No. 11246, September 24, 1965,

30 F.R. 12319, as amended by Executive Order No.

11375, October 13, 1967, 32 F.R. 14303, implements

the "* * * program of equal employment opportunity

in Goverrment employment, employment by Federal con-

tractors and sub-contractors and employment under

federally assisted construction contracts * * *",

regardless of sex, race, creed, color, or naticnal

origin, 3CFR 685. As recognized in these orders,

Title VII of the Civil Rights Act of 1964, 78 Stat.

253, enunciates the national policy of equal oppor-

tunity in private employment, and Title VI, 78

Stat. 252, is specifically directed to non-discrim

ination in federally financially assisted programs.

The Secretary of Labor is the designated administer-

ing official of Parts II and III of Executive Order

No. 11246, which relate to Govermment contractors,

sub-contractors, and federally assisted programs.

Executive Order No. 11247, September 24, 1965, 30

F.R. 12327, assigns coordinating function responsi-

bilities to the Attorney General in respect to

Title VI matters. The Secretary of Labor, by Order

No. 15-68, August 8, 1968, 33 F.R. 12600, assigned

the responsibility under Executive Order No. 11246,

to the Office of Federal Contract Campliance 6/.

6/ Order No. 15-68 states in part (33 F.R. 12600-1):

Under the general direction of the Secretary

* * * the Office of Federal Contract Compliance

(EBO) is hereby delegated authority and assigned

responsibility for: * * * Carrying out * * *

Parts II, III, IV of Executive Order No. 11246

as amended by Executive Order No. 11375 * * *

Developing and recommending to the Secretary

rules and regulations necessary or appropriate

to achieve the purposes of * * * 11246 * * *

11375 * * * Coordinating with the Equal Emloy-

ment Opportunity Commission and the Department

of Justice on matters relating to Title VII * * *

and maintaining liasion with other agencies hav-

ingcivil rights and equal employment opportunity

activities * * *,

-15-

Order No. 1, issued October 24, 1969, by the

Office of Federal Contract Compliance re-delegates

certain of its responsibilities to 16 departments

or agencies, each with designated compliance re-

sponsibility relative to equal employment oppor-

tunity 7/. Order No. 1 states in part:

"2. Action. - a. The agencies listed herein below

are designated as compliance agencies. Other agen-

cies, not so listed, are hereby relieved of any com

pliance responsibilities under the Executive Order

7 11246/." , Labor Law Reports, Employment Practices,

CCH, Vol. I, paragraph 4380. The Office of Feder-

al Contract Compliance and the Equal Employment Op-

portunity Commission, on May 20, 1970, 35 F.R. 8461,

entered into a Memorandum of Understanding "* * *

to reduce duplication of compliance activities and

to facilitate information exchange * * *.”

7/ The departments and agencies are: Agency For

International Development, Department of Agri-

culture, United States Atomic Energy Commission,

Department of Commerce, Department of Defense,

General Services Administration (whose indus-

tries include electric, gas and sanitary ser-

vices, holding and investment companies), De-

partment of Health, Education and Welfare, De-

partment of Housing and Urban Development, De-

partment of the Interior (whose industries

include mining and oil, petroleum, refining

and related industries and pipeline transpor-

tation), National Aeronautical and Space Ad-

ministration, Post Office Department, Depart-

ment of Transportation, Tennessee Valley Au-

thority, Department of the Treasury, Veterans

Administration and the Environmental Protec-

tion Agency.

-16-

The Office of Federal Contract Compliance Im

plementing Rules and Regulations Under Executive

Order 11246, are set forth in Title 41, Code of

Federal Regulations, Chapter 60, Part 60-1, Obli-

gations of contractors and sub-contractors, Part

60-2, Affirmative action programs, Part 60-3,

Employee testing and other selection procedures,

Part 60-5, Washington plan, Part 60-6, San Fran-

cisco Plan, Part 60-7, St. Louis plan, Part 60-8,

Atlanta plan, and Part 60-20, Sex discrimination

guidelines 8/. The Implementing Rules and Regula-

tions of the Equal Employment Opportunity Commis-

sion are set forth in Title 29, Code of Federal

Regulations, Chapter XIV, Part 1600, Employee re-

sponsibilities and conduct, Part 1601, Procedural

regulations, Part 1602, Records and Reports, Part

1604, Guidelines on Discrimination because of sex,

Part 1605, Guidelines on Discrimination because of

religion, Part 1606, Guidelines on Discrimination

because of national origin, Part 1607, Guidelines

on Employee selection procedures, and Part 1610,

Availability of Records 9/.

8/ Office of Federal Contract Campliance Order No.

14, issued January 14, 1972, sets forth pro-

9/ See also, Regulations of the Department of the

Interior and of the General Services Administra-

tion, pursuant to their assigned responsibili-

ties under Title VI of the Civil Rights Act of

1964 (Interior), 43 CFR Parts 17 and 17a, and

(GSA), 41 CFR Subpart 101-6.2. Accommodations

between Federal Labor and Civil Rights laws are

discussed in Labor Law Reports, Employment Prac-

tices, CCH, Vol. I, paragraph 5063.

a>"

Cc?

ojF=

The foregoing matters we believe, effectively

demonstrate why this Commission does not have the

ibilities pursuant to Executive Order Nos.

11246 and 11375, as alleged by petitioners.

Petitioners also cite the Fifth Amendment to

the Constitution in support of their claims. We

find nothing in the Constitution or the judicial

interpretations thereof, as would support Commis-

tection of the laws. See Moose No. 107 v

Irvis, et al., U.S. June 12, 1972,

Slip Op. PP. 8-9, which discusses constitutional

ment:

In 1883, this Court in The Civil

Ri Cases, 109 U.S. 3, set

ee ae te tas Gunte, ede

is prohibited by the Equal Protection

Clause, and private conduct, "however

discriminatory or wrongful," against

which that clause “erects no shield,"

Shelley v. Kraemer, 334 U.S. 1, 13

1 That has been sub-

sequently reaffirmed in Shelley v.

Kraemer, , and in Burton v. Wil-

3 Authority, 365, U. Ss.

While the principle is easily _

stated, the question of whether parti-

cular discriminatory conduct is private,

on the one hand, or amounts to "State ac-

tion,” on the other hand, frequently ad-

mits of no easy answer. “Only by sifting

facts and weighing circumstances can the

non-obvious involvement of the State in

private conduct be attributed its true

This Cammission, as pointed in Pacific Gas and

Electric, , 44 FPC 1367-8, does not counte-

nance discr treatment in respect to the

rendition of utility services which it regulates,

based upon race, sex, color, creed or national

origin; does not permit its hydroelectric licen-

sees owning or operating multiple purpose reser-

voirs to discriminate in the use thereof, based

upon race, sex, color, creed or national origin;

and has affirmatively spoken out in respect to the

need for all utility suppliers to fully implement

the Nation's policy respecting elimination of

discrimination in employment. Thus, where this

agency takes “State action” within the meaning of

Constitutional considerations, its processes do not

deny equal protection of the laws either by reason

of any Commission rule, regulation or order or by

reason of enforcement of a private discriminatory

action.

Petitioners’ references to actions of the

Federal Communications Cammission and the Public

Service Commission of the District of Columbia,

are not persuasive in the interpretation of the

provisions of Federal Power and Natural Gas Acts.

Both are legally distinguishable. The Federal Com

munications Commission, the one Federal administra-

tive utility regulatory body which has promulgated

regulations in the area of equal employment prac-

tices of its regulatees of the general type peti-

tioners seek, did so following judicial interpre-

tation of one of the basic statutes which it ad-

ministers, the Commmications Act of 1934, 47 U.S.C.

-19-

om -, Office of Commumication of the United

Christ, et al. ees ale SF

au 354, 1003, 1006 (CADC, 1966) 107. The Court

suneneaens Gp tale aan an t Act with a

nexus to employment practices, the "fairness

10/ As petitioners note, the Interstate Commerce

Commission initiated a rulemaking inquiry on

May 6, 1971, to consider whether there is dis-

crimination in carriers' employment practices,

whether laws are being violated, whether that

Commission has jurisdiction to deal with the

matter, and what action the Commission should

take if it has jurisdiction, Notice of Pro-

posed Rulemaking, Ex-Parte No. 278, 36 F.R.

10741. The Securities and Exchange Commission,

by Release Nos. 5170 and 9252, July 19, 1971,

called attention to disclosure requirements in

SEC forms as to civil rights legal actions af-

fecting the security registrant's business ac-

tivities, such as loss of government contracts

or civil rights enforcement activities. The

Federal Home Loan Bank Board Regulation refer-

red to by petitioners, April 21, 1972, 37 F.R.

8436, in an exercise of responsibility which

that agency has by reason of inter alia, Title

VIII, Fair Housing, Public Law 90-284, 82 Stat.

73, 81.

randum Opinion and Order and Notice of Proposed

Rulemaking of the Federal Commmications Can-

mission released July 5, 1968, the initial or-

der of that Commission in a series of actions,

33 F.R. 9960, 9961-2, which states in part:

9. * * * there is the consideration

that broadcasting is an important mass

media form which, becafise it makes use

of the airwaves belonging to the pub-

lic, must obtain a Federal license un-

der a public interest standard and mist

operate in the public interest in order

to obtain periodic renewals of that Lli-

cense. When these two considerations

are taken together — the national po-

licy against discrimination and the

nature of broadcasting — we simply do

not see how the Commission could make

the public interest finding as to a

broadcast applicant who is deliberately

pursuing or preparing to pursue a policy

of discrimination — of violating the

national policy. In this respect —a

mass media service to the public which

is based entirely on a Federal license

under a public interest standard — the

situation clearly parallels the Federal

policy in contract awards.

Footnote continued on next page

afin

Natural Gas or Federal Power Acts. The Commmica-

tions Commission, by orders released March 29, 1972,

37 F.R. 6586, February 12, 1971, 36 F.R. 3119,

August 11, 1970, 35 F.R. 12892, and June 3, 1970,

35 F.R. 8825, adopted reporting regulations requir-

ing cable television operators, commmications com

mon carriers and broadcast licensees or permittees

to affirmatively show non-discrimination plans in

employment practices and to complete annual report-

ing thereon. Through Notice of Proposed Rulemaking

released June 28, 1971, that Commission initiated

inquiry into proposed regulations relative to dis-

crimination based upon sex as a part of that Com

mission's administrative law, 36 F.R. 12542. A

rule was adopted and released on December 21, 1971,

36 F.R. 25012.

1l1/ Footnote continued from preceding page

ll. The same question is raised

when a substantial charge is made

that a licensee is deliberately dis-

criminatory in his employment poli-

cies. A refusal to hire Negroes or

persons of any race or religion clear-

ly raises a question of whether the

licensee is making a good faith effort

to serve his entire public. Thus, it

immediately raises the question of

whether he is consulting in good faith

with Negro community leaders concern-

ing programming to serve the area's

needs and interests. Indeed, the very

fact of discriminatory hiring policies

may effectively cut the licensee off

from success in such efforts.

x

The action of the District of Columbia Pub-

lic Service Commission in respect to equal oppor-

tunity employment practices of its regulatees,

SE or oe ek 83 PUR 3d 113,

-8, - ’ PUR 6, 246 (1970),

rests upon specific:authority in that Commission.

This includes statutory provisions governing that

agency, 43 DC Code 303, general federal law, Civil

Rights Act of 1964, Executive Order No. 11246 and

general police regulation, District of Columbia

Commissioners Order No. 65-768 12/. That Conmmis-

sion is currently considering subject in re-

lation to the Potomac Electric Power Company. See,

PSC-DC, Formal Case No. 576, In the Matter of In-

vestigation of Employment Practices of the Potomac

Electric Power Company.

Recent cases before the California Public

Utilities Commission have established that the PUC

does not have jurisdiction over such employment

practices of regulated entities, NAACP et al. v. All

Regulated Public Utilities et al., Cal. P.U.C.

Decision No. 77781, dated October 6, 1970, petition

for writ of review denied the state Supreme Court

12/ 43 DC Code 303 states: "The Commission shall

~~ have power * * * to and compel every

public utility to comply with * * * all other

laws of the United States applicable, and any

municipal ordinance or regulation relating to

said public utility." DC Commissioners Order

No. 65-768 (D.C. Police Regulations, Article

47, Section 4), is a general police regulation

prohibiting discrimination based

upon race, color, religion, national origin or

sex.

-23-

unreported order, April 29, 1971; and Re Pacific

Gas & Electric , 87 PUR 3d 270, 312 (1971).

In substance, the ifornia Commission found mi-

nority hiring practices to be a matter not within

the scope of the state utility laws, but, rather,

under the State Fair Employment Practices Act.

Petitioners refer to various state fair ern

ployment practice laws. We do not find regulatory

jurisdiction in this Commission based upon those

provisions. Moreover, as noted, Supra, even the

Equal Employment Opportunity Commission must defer

to state agencies having jurisdiction in this area

under an exhaustion of remedies principle.

We wish to make clear that should the Congress

assign to this agency responsibility of the type

proposed by petitioners, we would undertake the en-

forcement thereof as a matter of highest priority.

We indicated in Pacific Gas and Electric P

a, 44 FPC 1368, our full commitment to *

te national policy that discrimination in employ-

ment is to be eliminated by all elements of our

society, public and private. * * *".

Limitations of the Proposed Rule — As will

be apparent fram an examination of the rule as

proposed by petitioners, the processing of any com

plaints thereunder before an agency such as this

Commission, which must observe the requiremnts of

the Administrative Procedure Act and general pub-

lic disclosure procedures, 5 U.S.C. 551 et °°”

would inevitably do violence to the san eis

disclosure principles of the Civil Rights Act, 86

Stat. 104, 42 U.S.C. 2000e-5(a), 78 Stat. 264, 42

U.S.C. 2000e-8(e). Complaints of discrimination

under Section 9 of the proposed rule, or Section 10

intervenor actions, would be public information

under this agency's procedures, 18 CFR 1.36(c).

Charges of discrimination are not public under the

Civil Rights Act, 86 Stat. 104. Similarly, a gener-

-24-

al public disclosure of annual employment report-

ing data (EEO-1), pursuant to Section 6 of the

proposed rule, would appear to transcend the non-

disclosure principle of the Civil Rights Act, 78

Stat. 264

Additionally, the proposed rule transcends

basic legal requirements of the Federal Power and

Natural Gas Acts. The statutory bases upon which

this Commission mist judge particular applications

are set forth in the two Acts. Section 11 of the

proposed rule would have that judgment accomplished

basically in accordance with standards of the Civil

Rights Act and general public interest concepts.

Also, the penalty and enforcement provisions of the

Natural Gas and Federal Power Acts, 15 U.S.C. 717s,

717t, 16 U.S.C. 825m, 825n, 8250, relate to pro-

scribed conduct under those Acts. Section 14 of

the proposed rule is directed to other laws. Sec-

tion 15 of the proposed rule presents a similar

legal difficulty in respect to appellate review

procedures. Natural Gas and Federal Power Acts, 15

U.S.C. 7l7r, 16 U.S.C. 8251. Section 13 of the pro-

posed rule assumes authority in this Commission to

provide counsel fees. This agency does not have

such authority. See, Power Authority of the State

of New York, Order Denying Motions and Appeals,

- FRC, issued October 29, 1971 (mimeo. ed.,

pp. 3-4).

Administratively, the rule, as proposed, would

be duplicative of established procedures which now

operate throughout the Nation in respect to equal

a Se These procedures are as

pore pe ee ne lh ee ne eall

stituted a of enforcement actions under those

- See, for example, United States v.

Louisville Gas and Electric Company, United States

District Court for the Western District of Ken-

tucky, Civil Action No. 7312-G, order June 30, 1972;

United States v. Piedmont Natural Gas Company,

United States District Court for the Western Dis-

trict of North Carolina, Civil Action No. 72-128,

-25-

order June 15, 1972; United States v. Virginia

Electric and Power Company, et al., 327 F. Supp.

1034 (1971), 4 EPD Paragraph 7502 (1971); and,

United States v. Georgia Power , 3 EPD Para-

graphs 8143, 8318 (appeal pending SSCA, No. 7l-

344).

To adopt the proposed rule would (a) make the

criminal penalties of the Natural Gas Act, 15

U.S.C. 717t, and the Federal Power Act, 16 U.S.C.

8250, apply to violations of whatever employment

codes were adopted by the Commission, and there is

no indication of Congressional intent for this re-

sult; (b) make the determination of a violation

subject to administrative hearings rather than

through trial in court, and the 1972 Act makes

clear that the Congress intended a judicial, not

an administrative, forum, pp. 10-11, supra; (c)

make the determination of a just and reasonable

rate turn on employment practices rather than upon

adequate and reliable service to consumers at the

lowest reasonable rate. In our view, Congress has

rates to campanies which have FPC approved employ-

ment plans and lower rates to companies which do

not; (d) make the determination of whether new

facilities to supply needed energy to all citizens

can be licensed turn upon the question of whether

the company proposing the facilities has an FPC

approved employment plan. Conversely, facilities

already supplying needed energy would presumably

be shut down as a sanction for violation of an FPC

approved employment plan. There is no indication

that Congress intended such a result; and (e) make

a further proliferation of agencies having concur-

rent jurisdiction at a time when Congress has made

clear its intent to coordinate such activities.

This agency could not “coordinate” with other agen-

cies on cases which are controlled by the Admini-

strative Procedure Act.

-26-

ag

x

:

7

F

tion labor and employment practices lies in

other agencies, as petitioners recognize when

their proposed rule calls for the FPC to defer to

It is necessary and appropriate for the pur-

poses of the Natural Gas Act and the Federal Pow

er Act, 15 U.S.C. 7170, 16 U.S.C. 825h to order as

hereinafter provided.

The Commission orders:

The petition as described above, is hereby

dismissed for lack of jurisdiction

(SEAL)

Kenneth F. Plumb,

APPENDIX C

UNITED STATES OF AMERICA

FEDERAL POWER COMMISSION

Before Commissioners: John N. Nassikas, Chainrman;

Albert B. Brocke, Jr.,

and Pinkney Walker.

The National Associaiton for the

Advancement of Colored People et al.

:

ORDER DENYING PETITION FOR REHEARING

(Issued August 21, 1972)

Petitioners in the above-entitled matter @m

August 8, 1972, filed a petition for rehearing of

Commission Opinion No. 623, Declaratory Opinim

and Order m Petition for Issuance of a Rule Rela

tive to Employment Practices, issued July 1l, 1972.

Petitioners annex to their petition a letter of

Chairman William H. Brown, III, Equal Employment

Opportunity Cammission, dated July 13, 1972, ad

dreseed to the Chairman of the Federal Power Can-

mission.

The assignments of error and grounds for re-

hearing set forth in the petition, including

Chairman Brown's letter, set forth no new facts or

principles of law which were not fully considered

by the Commission when it issued its Opinion No.

623, or which, having now been considered, warrant

any modification of that Opinion. Opinion No. 623

dismissed for lack of jurisdiction a petition

filed Jume 22, 1972.

-2-

The Commissiam further finds:

It is necessary and appropriate for the pur-

poses of the Natural Gas Act and the Federal Power

Act, 15 U.S.C. 7170, 16 U.S.C. 825h, 1, to order

as hereinafter provided.

APPENDIX D

The Commission orders:

Opinion No. 623, issued July 11, 1972, is hereby OPINION OF THE UNITED

denied. STATES COURT OF APPEALS

By the Commission.

(S EA L) FOR THE DISTRICT OF

(No. 72-1959, February 5, 1975)

Mary B. Kidd,

Acting Secretary.

Notice: This opinion is subject ‘» formal revision before publication

in the Federal Reporter or U.S. App. D.C. Reports. Users are requested

to notify the Clerk of any formal errors in order that corrections may be

made before the bound volumes go to press.

United States Cowt of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 72-1959

THE NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF

COLORED PEOPLE, ET AL., PETITIONERS

Vv.

THE FEDERAL POWER COMMISSION, RESPONDENT

Petition for Review of Order of

The Federal Power Commission

Decided February 5, 1975

Howard A. Glickstein, of the bar of the Court of Ap-

peals of New York, pro hac vice, by special leave of court,

with whom William L. Taylor was on the brief, for peti-

tioners.

John H. Burnes, Attorney, Federal Power Commission,

with whom Leo E. Forquer, General Counsel, and George

W. McHenry, Jr., Acting Solicitor Federal Power Com-

mission, were on the brief, for respondent.

Martin Slate, Attorney, Equal Employment Opportu-

nity Commission, as amicus curiae. Julia P. Cooper,

Assistant General Counsel Equal Employment Opportu-

2

nity Commission, and Beatrice Rosenberg, Attorney,

Equal Employment Opportunity Commission, filed a brief

on behalf of the Equal Employment Opportunity Com-

mission as amicus curiae urging reversal.

Before BAZELON, Chief Judge, and MCGOWAN and MAc-

KINNON, Circuit Judges.

Opinion for the Court filed by Circuit Judge MCGOWAN.

McGoWAN, Circuit Judge: This petition for direct re-

view of an order of the Federal Power Commission raises

a question as to the precise scope of the regulatory

authority vested in that agency by the Congress. It con-

cerns in particular a request made of the Commission,

and dismissed by it for lack of jurisdiction, to initiate

rule making proceedings in respect of asserted employ-

ment discrimination by its regulatees. Because of the

confused and contradictory manner in which the im-

portant jurisdictional issues involved in this case are

presented by all parties to this appeal, we vacate the

Commission’s order of dismissal, and remand the case

for further consideration in light of this opinion.

I

Petitioners are a number of organizations concerned

with advancing the interests of black, Spanish surnamed,

native, and female Americans. Charging widespread dis-

crimination in the employment of these groups by natural

gas and electric utility companies, they petitioned the

Commission for “the issuance of a rule requiring equal

employment opportunity and nondiscrimination in the

employment practices of its regulatees,”* and attached

to their petition a “proposed rule,” which we append to

this opinion. We recount its operative provisions.

Section 2 declares that equal employment opportunity

will be considered an element of the “public interest,” a

' Petition of NAACP, et al; FPC Docket No. R-447, JA 1.

3

criterion by which the Commission must make many of its

rate making and licensing decisions. Section 3 details

the substantive duties of regulatees not to discriminate

in any employment practice on the basis of race, color,

religion, sex or national origin. Sections 4 and 5 im-

pose on regulatees the duty to devise and to implement

affirmative “equal employment opportunity programs,”

the general purpose of which is to involve every reg-

ulatee in a “continuing campaign to exclude every form

of prejudice or discrimination . . . from its personnel

policies and practices,” and the specific contents of which

are to include such measures as the active recruitment of

minority and female employees through advertisement in

media having significant circulation among those groups,

the avoidance of selection techniques and tests that have

the effect of disadvantaging minority groups and fe

males, and the publication to the regulatee’s management

staff and employees of a rigid anti-discrimination policy.

Section 6 of the proposed rule requires each regulatee

to file annually with the Commission a copy of the “EEO-

1” form which it already must file annually with the

United States Equal Employment Opportunity Commis-

sion. Section 7 makes it a necesary part of each regu-

latee’s application for a rate change, license or other

necessary Commission approval that a report be sub-

mitted on the nature and success of the regulatee’s af-

firmative “equal employment opportunity program” and

on any complaints of employment discrimination that

have been made against the regulatee. Section 9 obli-

gates the Commission to entertain individual complaints

of employment discrimination by regulatees, and to con-

duct hearings and issue decisions and orders pursuant

to its existing procedural regulations.’

* Such of those complaints as claim violations of any pro-

vision of Title Vil of the Civil Rights Act of 1964 may be

referred to the Equal Employment Opportunity Commission.

4d

The proposed rule’s section 10 authorizes intervention

by complainants of employment discrimination in any

rate making or licensing proceeding involving the regu-

latee complained against. Section 11 reinforces section

2, described above, by specifying that a regulatee’s record

of compliance with the proposed rule will be given

“material consideration” by the Commission when it

passes on any request by that regulatee for a rate change,

license, or other necessary Commission approval, with

Commission action on such requests being denied or con-

ditioned accordingly. Section 14 imposes, for violation

of the proposed rule, the usual $500-a-day fine for viola-

tion of Commission rules.

The response of the Commission was to treat the peti-

tion for rule making as one for a declaratory order,

and to issue such an order, the substance of which was a

refusal to initiate the requested rule making on the

ground that the Commission had “no jurisdiction to adopt

such a rule.”* When they requested a rehearing by the

Commission, petitioners appended a letter supporting

their position from the Chairman of the Equal Employ-

ment Opportunity Commission, id. at 90, which agency

* JA 56, 77. We note in passing that there is some uncer-

tainty as to what exactly is before us for review. We are con-

fronted with what is styled a declaratory order, though why

the Commission thought this the proper medium through

which to assert a jurisdictional barrier to the requested

rule making is not clear to us. The procedural waters have

been further muddied by the wording of the Commission’s

formal order, which dismissed the petition “as described

above,” id. at 77, the Commission having treated the petition

as one for a declaratory order. It might therefore be said

that what we are confronted with is not even a declaratory

order refusing to initiate rule making, but a declaratory order

refusing to issue a requested declaratory order. We pass over

these ambiguities, however, preferring to treat the Commis-

sion as having done exactly what in substance it did do,

namely, to refuse on jurisdictional grounds to initiate the re-

quested rule making.

°

has also filed an amicus brief with this court. The Com-

cission denied the petition for rehearing as “setting forth

no new facts or principles of law,” id. at 93, and the

way was thus cleared for this direct review proceeding.

A close analysis of the procedural posture of this ap-

peal reveals a double ambiguity. By requesting “a rule

requiring equal employment opportunity and nondiscrim-

ination in . . . employment practices,” the petitioners

left unclear whether they were askirg for their pro-

posed rule and no other, or merely for a rule making pro-

ceeding on the subject of employment discrimination gen-

erally, with the proposed rule perhaps serving only as a

model or point of departure. By asserting its lack of ju-

risdiction to adopt “such a rule,” the Commission in turn

left: unclear which of these requests it was denying its

jurisdiction to grant. We do not know whether its order

asserted a lack of jurisdiction to adopt (1) the specific

proposed rule, or (2) any rule relating to employment

discrimination by regulatees.

The ambiguity is unfortunately not resolved by ex-

amining the positions taken by the parties in the record

and in their briefs. In their petition for rule making,

petitioners first proposed the adoption of “a rule” relating

to employment discrimination, but then went on to ask

the Commission more expansively to “[p]rescribe regula-

tions prohibiting discrimination . . . and assuring equal

opportunity in the employment practices of its regu-

latees.” (Emphasis added.) Jd. at 3. The Commission’s

opinion denying the rule making petition, although it de-

voted considerable attention to the jurisdictional prob-

lems raised by certain aspects of the proposed rule in

particular and concluded by denying its jurisdiction to

adopt “such a rule,” stated at an earlier point that

“ft}he Commission lacks the legal authority to promul-

gate equal employment opportunity regulations . . . be-

cause its lacks the requisite delegation of Congressional

6

authority to act in that area.” (Emphasis added.) Jd. at

57, 75-77.

The confusion persists in the briefs filed in this court.

In footnote 87 (at p. 54) of their brief, petitioners re-

spond to the Commission’s objections to particular aspects

of the proposed rule, one such objection being that it

would result in public disclosure of information protected

from such disclosure by the Civil Rights Act. The peti-

tioners’ answer that “[wle are confident that sufficient

expertise and competence exists at the Commission to de-

vise a rule against employment discrimination that would

be effective and in harmony with other laws and regula-

tions,” suggests that petitioners do not view themselves

as having asked for and been denied a specific proposed

rule but rather rule making in general. On the other

hand, they conclude their brief in this court by asking

“that the Federal Power Commission be directed to pro-

ceed with utmost dispatch in issuing the rule requested.”

(Emphasis added.) Jd. at 54, 68-69.

Similarly, the Commission in its brief (at 3-4) states

in one sentence that it “dismissed the petition for lack of

jurisdiction to adopt the requested rule,” and in the next

sentence states that it “denied the requested relief be-

cause, in its view, it lacked the requisite Congressional

authority to promulgate equal employment opportunity

regulations. . . .” Further, there are internal contradic-

tions in the Commission’s brief. It states the issue to be

whether it has any jurisdiction, in the course of dis-

charging its regulatory responsibilities, to take the ex-

istence of proven employment discrimination into ac-

count, and broadly argues that it does not. However, at

one point in its brief (at 30) the Commission says:

_ [I]t will suffice to say that no costs can be

passed on to the ultimate consumer without the ap-

proval of the Commission. If any party wishes to

challenge the propriety of certain costs, e.g., those

7

incurred through discrimina employme

tices, he is free to semen A a aga

known in the appropriate rate proceeding.

It is obvious that a concession of this kind i

| \ s kind is not com-

patible with any flat statement that the Commission

no authority to consider the fact of employment discrim-

ination in its public interest determinations.

In its amicus brief the EEOC sta a i

pat meg ge tes the “Question

_ Whether the Federal Power Commission i

cising its public responsibilities has the cuthentty ts

— the discriminatory employment practices of

i 3 regulatees, or whether it must ignore such dis-

crimination on the basis of Race, sex, or national

origin, no matter how blatant or wide-spread?

It indicates generally in its brief that the i i ether

the FPC has jurisdiction to adopt some “a po to

employment discrimination, stating at one point (at 4-5)

that ‘we do not argue that the Power Commission is re-

quired to consider every complaint of discrimination

against a utility which it regulates . . . [but only that

it cannot] ignore widespread general discrimination. . . .”

It is possible that the parties are cl

they think. Whether this is true or ox Ste wee

fore us on representations by both sides which, on close

analysis, suggest that the parties may be talking past

— other. We cannot ignore the fact that this con-

usion exists, for it is crucial to our disposition, as will

become clear from the discussion hereinafter of the

parent boundaries of the Commission’s jurisdiction. aoa

this point forward it is important to distinguish be-

tween two kinds of jurisdiction: One—to which the pro-

= rule extends—embraces power on the part of the

mmission to prescribe personnel practices in detail and

to receive complaints, adjudicate them, and punish di-

rectly infractions of those practices. The other—which

8

even the Commission appears to contemplate may exist—

is power to take into account, in the performance of its

regulatory functions, including licensing and rate review,

evidence that the regulatee is a demonstrated discrimina-

tor in its employment relations.

II

Petitioners assert first a statutory and then a consti-

tutional basis for their claims of broad Commission ju-

risdiction over the employment practices of regulatees.*

We shall consider these in the same order, concluding

that the Commision is neither empowered nor required to

adopt the rule as proposed, but that it does possess ju-

risdiction of the more limited kind conceded by it in its

brief.

There is one preliminary observation to be made. In

arguing for their proposed rule, petitioners emphasize

the great importance of the fight against employment

discrimination. While reiterating our belief in that im-

portance, we must also note the limited relevance of that

belief to this appeal. For one thing, Congress need not

be accused of slighting the importance of achieving equal

employment opportunity merely because of a decision

* Petitioners’ brief contains a third section in which argu-

ments are made that (1) no other federal law “preempts”

the Commission from acting to proscribe employment dis-

crimination by regulatees and (2) the Commission’s doing so

would effectively promote the national policy against such

discrimination. Br. 45-54. A claim of “preemption,” if it is

at all distinct from the assertion that statutory authority is

simply lacking, adds only the notion that such authority

might once have existed and been withdrawn. In fact no such

distinct contention appears to have been made by the Com-

mission, and, accordingly, we do not treat the matter separ-

ately. Neither do we treat separately the alleged potential

efficacy of the Commission in combatting employment dis-

crimination, of which the only apparent relevance to this ap-

peal is the possible inference that Congress should not be

considered to have eschewed the use of so powerful a weapon.

9

on its part that this task is not one it chose to assign

to the Federal Power Commission. There are good reasons

why Congress might have reached such a decision. The

goal itself might have been thought better served by cen-

tralizing responsibility for its achievement (in the Jus-

tice Department and the Equal Employment Opportunity

Commission, for example) rather than by diffusing it

among many and thus suffering a loss in the degree of

accountability and a gain in the number of jurisdictional

overlaps and conflicts.

More important, Congress may have felt that other

significant goals would be inadequately served if the at-

tentions of the agencies set up to pursue them were

divided. The Commission’s principal task of passing on

statutorily specified license and rate applications is pro-

digious.* To perform it, a staff has been built up of

specialists in the technical aspects of gas and electric

power production and distribution. The unfamiliar prob-

lems of employment discrimination regulation might di-

vert an inordinate amount of their energies and skills

from the ends to which these are most productively ap-

plied.

This discussion of the merits of combining in one

agency the responsibilities for insuring efficient power pro-

* The dimensions of the task are suggested by a partial list

of applications to, and actions by, the Commission during

fiscal 1973: 56 wholesale electric rate increase applications; 11

electric company sale and consolidation applications (all dis-

posed of), 75 electric company securities issuance applica-

tions (all disposed of); 116 electric power project license and

permit applications (90 disposed of, leaving 529 pending) ; 215

pipeline rate increase applications; 280 pipeline construction

certificate applications (212 disposed of, leaving 214 pend-

ing); 6,844 gas producer rate increase applications; 1,383 gas

producer certificate applications (955 disposed of, leaving

2,059 pending); 216 gas producer abandonment applications

(171 disposed of, leaving 287 pending). FPC, 1973 ANNUAL

REPORT 19, 20, 41, 56, 58, 59, 60 (1973).

10

duction and for curtailing employment discrimination is

obviously much abbreviated. We do not prolong it, how-

ever, for the reason that, beyond assuring ourselves that

it would not be unreasonable for Congress to divide these

responsibilities or to allocate their sharing in differing

manners and proportions, we are not concerned with why

Congress may have done so, but whether it did; and to

that question we now turn.

A. The Relevant Statutes.

1. Federal Water Power Act.

The Commission was first brought into being by the

Federal Water Power Act of 1920.* The principal powers

delegated to it by that Act, along with the stated criteria

for their exercise, are as follows: to issue licenses, with

appropriate conditions, for “necessary or convenient”

navigation and power projects on Federal waterways; '

to recommend that “the development of any water re-

source for public purposes . . . be undertaken by the

United States itself,” refusing to renew existing licenses

on that account;* to require modification of proposed

projects in order to effect a “comprehensive plan” for the

use of Federal waterways in commerce, power genera-

tion, and “other beneficial public uses, including recrea-

tional purposes”;* to regulate the operation of licensed

projects “for the protection of life, health, and prop-

erty”; *° in the absence of state regulation, to regulate

security issuances by licensees, and also to set “reason-

41 Stat. 1063 (June 10, 1920), as amended 16 U.S.C.

§§ 791-823 (1970).

716 U.S.C. §§ 797(e), 799, 817 (1970).

* Id. §§ 800(b) and (c), 807.

* Id. § 803 (a).

1° Id. § 803(e).

11

able, non-discriminatory, and just” rates for interstate

sales of power from licensed projects."

On its face, the Act thus displays a primary congres-

sional concern for the orderly and coordinated develop-

ment of water resources, and also for interstitial Federal

regulation of the sale of power derived therefrom. Other-

wise, the only expressed concern with the internal opera-

tions of licensees relates to health and safety features

of licensed projects. Broad references to the “public in-

terest,” on which petitioners place such great emphasis,

are rare in the Act. Where they do occur, moreover, they

strongly suggest by their contexts that what is meant is

not the public interest generally, but the public’s interest

in the optimal use of the waterways. Thus, Section 4

requires that contemplated improvements in waterways

be “desirable and justified in the public interest for the

purpose of improving or developing a waterway .. .

(emphasis added).” **

The legislative history of the Act holds few surprises.

It reveals a Congress whose attention was steadily fixed

upon two principal objectives: to exploit the hydro-elec-

tric resources of a nation that even then was energy-

deficient,“ and to substitute for its earlier piecemeal

approach to the problem a method of comprehensive plan-

ning which would accomplish, among other things, the

conservation of natural resources."

Id. § 813.

* Id. § T97(e). See also id. §§ 797(g), 800(a).

** See H. R. REP. No. 61, 66th Cong., Ist Sess. 4-5 (1919);

S. Rep. No. 180, 66th Cong., Ist Sess. 2-3 (1919).

‘See H. R. REP. No. 61, supra note 36, at 2-3; Scenic

Hudson Preservation Conference v. FPC, 354 F.2d 608, 613

(2d Cir. 1965). See also Udall v. FPC, 387 U.S. 428 (1967).

12

2. Federal Power Act.

The Commission’s authority was substantially broad-

ened by the Federal Power Act, enacted as Title II of the

Public Utility Act of 1935.*° Among its newly delegated

powers were the following: to order such interconnec-

tions of electric power transmission facilities, setting such

terms and conditions for the same, as are “necessary or

appropriate in the public interest’”;** to approve such

asset sales and consolidations of interstate electric power

companies as are “consistent with the public interest”; '’

to approve such securities issuances by those companies

as are “compatible with the public interest” and “con-

sistent with the proper performance of service ... as

a public utility”; '* to determine “just and reasonable”’

rates for interstate sales and transmissions of electric

power; '* and to order that “proper, adequate or suffi-

cient” interstate power service be rendered.”

The Act’s preamble echoes the generality of the fore-

going quoted phrases, declaring that the sale and trans-

mission of electric power are “affected with the public

interest,” federal regulation of interstate aspects being

“necessary in the public interest.” ** The statute itself

nowhere defines the “public interest,” but instead leaves

the precise ambit of the Commission’s concern uncertain.

Of the Commission’s primary task there is no doubt, how-

ever, and that is to guard the consumer from exploita-

"1849 Stat. 803, 838 (Aug. 26, 1935), as codified 16 U.S.C.

§§ 824-25 (1970).

16 U.S.C. § 824(a) (1970).

* Id. § 824(b). ,

8 Id. § 824(e).

* Id. § 824(f).

°° Id. § 824(f).

1 Id. § 824(a).

13

tion by non-competitive electric power companies. The

Act itself speaks of “assuring an abundant supply of

electric energy throughout the United States with the

greatest possible economy.” * It was passed in conjunc-

tion with the Public Utility Holding Company Act of

1935, whose stated policy was to undo the effects of

the holding companies’ exercising undue control over the

power industry, one of these effects being excessive

charges to subsidiaries because of “an absence of arm’s-

length bargaining [and] restraint of free and independent

competition.” * Congress’s central concern with exploita-

tion is of course reflected in the statute’s emphasis on

just and reasonable prices, as well as by its frequent

references to the financial and accounting aspects of

electric company operations.* The legislative history of

the Act adds little to our understanding. It reveals that

Congress’s goal was, once again, the “planned coordina-

tion of the facilities of the industry which alone can pro-

duce an abundance of electricity at the lowest possible

price.” 25

3. Natural Gas Act.

The Natural Gas Act of 1938 * further empowered the

Commission, in part: to approve imports and exports

of natural gas unless it finds that these “will not be in

* Id. § 824(a). See also id. § 825(s) (government-produced

power to be disposed of “in such a manner as to encourage

the most widespread use thereof at the lowest possible rates

to consumers”) .

* Public Utility Holding Company Act of 1935 § 1(b) (2),

15 U.S.C. § 79a(b) (2) (1970).

“See 16 U.S.C. §§ 824g, 824h(b), 825(a), 825a, 825c,

* S. Rep. No. 621, 74th Cong., Ist Sess. 17 (1935).

* 52 Stat. 821 (June 21, 1938), as codified, 15 U.S.C. § 717

et seq. (1970).

14

the public interest”; * to set “just and reasonable” rates

for the interstate transportation and sale of natural

gas; to order such expansions and interconnections of

natural gas transportation facilities as are “in the public

interest” and do not impose an “undue burden”;” to

disallow abandonments except as the “public convenience

and necessity permit{s]”;* and to license interstate

transportation and sale of gas by reference to the “public

convenience and necessity.” ™

As in the case of the Federal Power Act, the statute’s

preamble declares that interstate gas operations are

“affected with a public interest” and must “in the public

interest” be regulated, but leaves the exact content of

these terms in doubt. Again, however, there is no ques-

tion that the exploitation of the gas consumer was upper-

most in Congress’s mind. The statute begins with a ref-

erence to certain reports made by the Federal Trade Com-

mission, the central conclusion of which had been that

anticompetitive practices and overconcentration of con-

trol in the natural gas industry were leading to the pay-

ment of excessive prices by the consumer.” The statute

evinces the same concern for “just and reasonable” rates

as does the Federal Power Act, with an added preference

for decreasing rather than increasing those rates,” and

*7 15 U.S.C. § 717b (1970).

8 Jd. § 717¢ and d.

2° Jd. § T17f(a).

© Jd. § T17f(b).

* Jd. § T17f(e).

32 See Federal Trade Commission, FINAL REPORT TO THE

SENATE PURSUANT TO S. Res. No. 83, 70th Cong., Ist Sess.

S. Doc. No. 92, Pt 84-A, 70th Cong., Ist Sess. (1936) at

581-617; FPC v. Hope Natural Gas Co., 320 U.S. 591, 610

(1944).

%3 The Commission may decrease but not increase rates on

its own motion. 15 U.S.C. § 717d (1970).

15

there is the same frequency of reference to the financial

and accounting aspects of gas company operations.”

The elements of the “public interest” are never de-

tailed in the congressional debates and reports, but there

are innumerable references to the problem of consumer

exploitation.” Indeed, the Act as originally passed stated

its primary concern with this problem in as many words:

... [I]t [is] the intention of Congress that -

ral gas shall be sold in interstate commerce hog <4

sale for ultimate public consumption for domestic,

commercial, industrial, or any other use at the lowest

possible reasonable rate consistent with the mainte-

nance of adequate service in the public interest.*

The quoted passage was lost to later amendments, but

these were not intended as revisions either of Congress’s

objective or of the Commission’s charter.”

B. — Regulation of Employment Discrimination Per

The more extensive of the two kinds of jurisdiction

described above—that consistent with the adoption of the

petitioners’ proposed rule—would in our view necessarily

entail a power on the Commission’s part to regulate em-

ployment discrimination per se, a power, in other words,

to act to curtail employment discrimination merely for

the sake of seeing that practice curtailed. The Commis-

sion could only have such power, of course, if the cur-

* See 15 U.S.C. §§ 717h, 717, 717m(b), 7170, 717p(b).

** See S. REP. No. 1162, 75th Cong., Ist Sess. (1987): H. R

REP. No. 709, 75th Cong., 1st Sess. (1937): 81 Cong. Rec.

6720-33, 9314-17 (1987). a

* Natural Gas Act §7(c), 52 Stat. 821, 825 (1

amended, 15 U.S.C. 717f (1970). cisions

™ Act of Feb. 7, 1942, 56 Stat. 88 (1942), as codified 15

U.S.C. § T17f(c)-(h). See also H. R. REP. No. 1

Cong., ist Sess. (1941). a

16

tailment of employment discrimination were itself among

the Commission’s statutorily defined objectives. To judge

the validity of the proposed rule, therefore, we must

first ask whether the Congress did indeed entrust to the

Commission this particular responsibility.

Judicial precedent suggests that the Commission’s re-

sponsibilities are limited to those that we have identified

above in discussing the statutes and their histories. The

courts have, for example, described the Federal Water

Power Act as “the outgrowth of a widely supported effort

on the part of conservationists,” Scenic Hudson Preserva-

tion Conference v. FPC, 334 F.2d 608, 613 (2d Cir.

1965), and have stated that a “major purpose of the

whole [Federal Power] Act is to protect consumers

against excessive prices.” Pennsylvania Water & Power

Co. v. FPC, 343 U.S. 414, 418 (1952). It has been said

that the Commission’s task under the Natural Gas Act is

to effect “a balancing of the investor and the consumer

interests,” on the one hand, to see that “the return to

the equity owner [is] sufficient to maintain confidence

in the financial success of the enterprise, so as to main-

tain its credit and attract capital,” and, on the other,

to “protect consumers against exploitation at the hands

of natural gas companies.” FPC v. Hope Natural Gas,

320 U.S. 591, 603, 610 (1944).*

A concise description of the principal objectives of

Commission activity must therefore be the following: first,

to oversee the orderly development of water power and

other natural resources, and, second, to bring about

the production of power in the greatest possible quantity

and at the lowest possible cost to the consumer in the

long run—in the economist’s terms, to insure the efficient

performance of an industry in which the normal forces

* See also Atlantic Refining Co. v. Public Service Commis-

sion of New York, 360 U.S. 378, 388 (1959) (“purpose of

the Natural Gas Act was to underwrite just and reasonable

rates to the consumer’).

17

of competition are for one reason or another not equal

to the task.**

Petitioners maintain, however, that the Commission

may properly concern itself with employment discrimina-

tion per se under the statutory command to the Com-

mission to regulate “in the public interest,” and by

similar vague criteria. We turn, then, to the question of

the proper interpretation of these criteria, and there-

after to a consideration of whether our views are con-

sistent with prior decisions of analogous questions of

agency jurisdiction.

1. The “Public Interest.”

The Supreme Court. has stated that the words “public

interest” do not constitute a “mere general reference to

the general welfare, without any standard to guide de-

terminations.” Rather the Court, in interpreting the

Interstate Commerce Act, insisted that “the term ‘public

interest’ . . . has direct relation to the adequacy of

transportation service, to its essential conditions of econ-

omy and efficiency, and appropriate provision and best

use of transportation facilities... .” New York Central

Securities Co. v. United States, 287 U.S. 12, 24 (1982).

ed A particularly lucid elaboration of this latter function

was given by Judge Wright in Northern Natural Gas v. FPC,

399 F.2d 953, 959 (D.C. Cir. 1968):

oe [The] basic goal of direct governmental regula-

tion through administrative bodies and the goal of indi-

vidual government regulation through the antitrust laws

is the same—to achieve the most efficient allocation of re-

sources. For instance, whether a regulatory body is dic-

tating the selling price or that price is dictated by a

market free from unreasonable restraints of trade, the

desired result is to establish a selling price which covers

costs plus a reasonable return on capital... .

See also Lynchburg Gas Co. v. FPC, 336 F.2d 942, 949-50

(D.C.Cir. 1964).

18

As was succinctly said in McLean Trucking Co. v. United

States, 321 U.S. 67 (1944), also involving the powers of

the Interstate Commerce Commission, its primary statu-

tory objective of insuring efficient transportation service

is “the Commission’s guide to the public interest.” /d.

at 82.

We ourselves noted in Alabama Electric Cooperative

Inc. v. SEC, 353 F.2d 905, 907 (D.C. Cir. 1965), cert.

denied, 383 U.S. 968 (1966), that

“lwlords like ‘public interest’... , though of wide

generality, take their meaning from the substantive

provisions and purposes of the Act.”

And in a recent case where the jurisdiction of the FPC

in particular was at issue, we declared that:

A particular statute may have such a setting that,

on consideration of its legislative history, the nature

of the agency, and breadth of responsibility involved,

and other materia] factors, a court may come to the

conclusion that though its public interest language

is broad its meaning in context warrants a rela-

tively restricted reading.

City of Lafayette v. SEC, 454 F.2d 941, 948 (D.C. Cir.

1971), aff'd sub nom. Gulf States Utilities Co. v. FPC,

411 U.S. 747 (1973).*

*” See alsc National Broadcasting Co. v. United States, 319

U.S. 190, 216, 219 (1943) (FCC not empowered by “public

interest” criteria to act upon “generalities unrelated to the

living problems of radio communication”); Federal Radio

Commission v. Nelson Bros. Bond & Mortgage Co., 289 U.S.

266, 285 (1933) (“public interest” to be interpreted in light

of “its context . . . the nature of radio transmission and

reception, [and] . . . the scope, character, and quality of

service”); Banzhaf v. FCC, 405 F.2d 1082 (D.C. Cir. 1968)

(“Especially with First Amendment issues lurking in the

background, the ‘public interest’ is too vague a criterion for

administrative action unless it is narrowed by defineable

standards.”), cert. denied, °96 U.S. 842 (1969); City of

ly

We must conclude, therefore, that Congress has not

charged the Commission with advancing all public in-

terests, but only the public’s interest in having the par-

ticular mandates of the Commission carried out, its

interest, in other words, in the conservation of natural

resources and the enjoyment of cheap and plentiful elec-

tricity and natural gas.

2. Related Jurisdictional Issues.

a. The FPC and Antitrust Considerations.

Much is made by petitioners of our numerous hold-

ings that the Commission may, and in some cases must,

take into account the anticompetitive activities of regu-

latees as well as the auticompetitive effects of proposed

Commission actions. See, e.g., City of Lafayette v. SEC,

supra; Northern Natural Gas Co. v. FPC, 399 F.2d 953

(D.C.Cir. 1968); City of Pittsburgh v. FPC, 237 F.2d

741 (D.C.Cir. 1956).** These do not, however, establish

that the content of the “public interest” criterion is gen-

erally supplied by other national policies and laws. Some

such policies and laws are surely relevant, but not sim-

ply because they exist. They are relevant because their

objectives “can be related to the objectives of the statute

administered by the agency.” City of Chicago v. FPC,

385 F.2d 629, 635 (D.C.Cir. 1967). Recalling the pri-

mary objectives of the Commission as we have described

Chicago v. FPC, 385 F.2d 629 (D.C. Cir. 1967) (agency may

consider congressional objectives expressed in other legisla-

tion “assuming they can be related to the objectives of the

statute administered by the agency”), ««'t. denied, 390 U.S.

945 (1968).

*t See also Denver & Rio Grande Western R. Co. v. United

States, 387 U.S. 485, 492-493, (1967); California v. FPC,

369 U.S. 482, 484-485 (1962); United States v. Borden

Co., 308 U.S. 188, 198-199 (1939); Lynchburg Gas Co. v.

FPC, 336 F.2d 942, 946, 949-950 (D.C. Cir. 1964); Pennsyl-

vania Water & Power Co. v. FPC, 193 F.2d 230, 235 (D.C.

Cir. 1951), aff'd. 343 U.S. 414 (1952).

20

them above, one would be hard put to think of a matter

of more direct and proper concern to the Commission

than the state of competition in the regulated industry.

By doing whatever is within its power to enhance that

competition, the Commission serves the same objective as

' it does by direct regulation of price; indeed, Commission

decisions affecting the structure of the power industry

could scarcely be made rationally without regard to the

impact they will have on the competitive climate.

If express statutory authority to consider antitrust

policies were needed, moreover, it would not be lacking.

Although the Commission is nowhere empowered to en-

force the antitrust laws as such,** it is authorized by the

Natural Gas Act to transmit evidence of apparent viola-

tions of those laws to the Attorney General. 15 U.S.C.

§717s(a) (1970). The Federal Water Power Act speci-

fies, moreover, that project licenses are to be issued by

the Commission with the condition that:

Combinations, agreements, arrangements, or under-

standings, express or implied, to limit the output of

electrical energy, to restrain trade, or to fix, main-

tain, or increase prices for electrical energy or serv-

ice are hereby prohibited.

16 U.S.C. § 803(h) (1970). See also Northern Natural

Gas v. FPC, 399 F.2d 953, 959-60 (D.C.Cir. 1968).

b. The FPC and Environmental Considerations.

It has also been held that environmental considera-

tions are the proper concern of the Commission. See,

e.g., Udall v. FPC, 387 U.S. 428 (1967) ; Scenic Hudson

Preservation Conference v. FPC, 354 F.2d 608 (2d Cir.

1965). But, as we have seen, the Commission’s explicit

mandate includes the preservation as well as the exploita-

*? Compare 15 U.S.C. §21(a) (1970) (enumerating other

agencies empowered to enforce the Clayton Act).

21

tion of water resources, the Water Power Act of 1920

having been “the outgrowth of a widely supported effort

on the part of conservationists.” Scenic Hudson Preser-

vation Conference v. FPC, supra at 613. The Act itself

instructs the oe to consider the “recreational

purposes” to which water resources might be put. 1

U.S.C. § 803(a) (1970). Finally, ll aa yo

erations have been expressly made the business of all

Federal agencies by the National Environmental Policy

po bp tees PP U.S.C. § 4332(A)-(H) (1970);

v. " .2d 199 (5th Cir. . denied,

401 U.S. 910 (1971). re

It is convenient at this point to mention Title VII of

the Civil Rights Act of 1964 and the Equal Employment

Opportunity Act of 1972,*° counterparts of NEPA in the

field of employment discrimination. In thus specifically

legislating in the area of equal employment opportunity,

Congress did not in our view curtail any agency’s exist-

ing authority in that area, but there are several other

things it did not do. It did not, in the manner of NEPA,

explicitly enjoin every federal agency to concern itself

with employment discrimination; to the contrary, it cen-

tralized responsibility for such matters in the Equal Em-

ployment Opportunity Commission. Strong evidence of

Congress’s specific desire not to diffuse authority over

employment discrimination among federal agencies other

than the EEOC is also found in section 604 of Title VI

of the Civil Rights Act of 1964.‘ All federal agencies

are directed by that Title to administer contracts and

subsidies in such a way as to insure that discrimination

is not practiced “under any program or activity receiv-

ing Federal financial assistance.” Section 604 provides

however, that:

** 42 U.S.C. § 2000e (1970).

** 42 U.S.C. § 2000d et seg. (1970).

22

Nothing contained in this subchapter shall be con-

strued to authorize action under this subchapter by

any department or agency with respect to any em-

ployment practice of any employer, employment

agency, or labor organization except where a pri-

mary objective of the Federa! financial assistance is

to provide employment.

42 U.S.C. 2000d-3 (1970).

c. The FCC and Employment Discrimination.

Our attention is directed to the fact that the Federal

Communications Commission has adopted regulations gov-

erning the employment practices of its regulatees. See

47 CFR §§ 21.307, 76.311. While the validity of these

regulations is not now, and appears never to have been,

before us, that issue is in any case readily distinguishable

from the one that is.

We have specifically recognized the responsibility of

the FCC to guard against racially discriminatory pro-

gramming. Office of Communication of the United Church

of Christ v. FCC, 359 F.2d 994 (D.C. Cir. 1966). The

FCC has reached the conclusion that a broadcaster’s pro-

gramming will inevitably fail fairly to reflect the tastes

and viewpoints of minorities if those minorities are sys-

tematically excluded from the broadcaster’s employ.“

‘s The FCC in its Memorandum Opinion and Order and

Notice of Proposed Rulemaking on this matter stated in part

that:

A refusal to hire Negroes or persons of any race or re-

ligion clearly raises a question of whether the licensee is

making a good faith effort to serve his entire public.

Thus, it immediately raises the question of whether he is

consulting in good faith with Negro community leaders

concerning programming to serve the area’s needs and

interests. Indeed, the very fact of discriminatory hir-

23

This is a far different question from the one involved

in the appeal before us. The FPC is expressly charged

with proscribing any discrimination, including, of course,

racial discrimination, in the services that its regulatees

render to the public. 15 U.S.C. §§717¢(b) and d(a);

16 U.S.C. §§ 824d(b) and e(a) (1970).** But the likeli-

hood that racial discrimination in employment might

work its way into the provision of those services seems

to us a slight one. More important perhaps, we would

expect such service discrimination to be far more easily

identified and remedied than is true of discrimination in

programming, which might be so subtle and unsusceptible

of direct remedy as to require the eradication of its root

cause.

d. Other Agenices and Employment Discrimina-

tion.

Petitioners cite several other instances of agency action

tw curb employment discrimination by regulatees. The

Securities and Exchange Commission in 1971 issued a

release which called attention to existing requirements

that registrants disclose on appropriate SEC forms the

pendency of civil rights proceedings which could affect

their business activities. In thus acting, however, the

SEC appears to us merely to have been fulfilling its

proper role of seeing that investors are fully informed

of circumstances which might bear on the financial pros-

ing policies may effectively cut the licensee off from

success in such efforts.

33 F.R. 9960, 9962 (1968).

«es It is io this specific statutory instruction to prohibit

service discrimination by regulatees, rather than to the “pub-

lic interest” standard, that the Commission points as sup-

a ~— te nae of discrimination at recreational fa-

cilities at hyrdoelectric facilities. Br. 29; Order No. 3

FPC 775 (1967). acted

24

pects of securities-issuing corporations. A corporation’s

involvement in civil rights litigation may constitute such

a circumstance, as may its involvement in any other

kind of litigation. Indeed, the SEC release in question

was only partly directed at disclosure of pending civil

rights proceedings; it also called attention to the existing

requirement that registrants disclose the pendency of

suits against them under federal environmental protec-

tion laws. See SEC Securities Act Release No. 5170 &

Exchange Act Release No. 9252 (1971).

We note also that the SEC has expressly declined to

promulgate rules concerning employment discrimination

by regulatees, reasoning that “[a]lthough . . . the Com-

mission may act to assure that regulated entities do not

follow practices (including employment practices) that

may prove inimical to the investing public or . . . other

elements of the Commission’s concern,” it has not been

adequately shown “what the impact of such practices

might be on the investing public and our capital mar-

kets.” 39 Fed. Reg. 2809, 2810 (1974). See also 37 Fed.

Reg. 28,767 (1972).

The Interstate Commerce Commission and Civil Aero-

nautics Board have each given notice of proposed rule-

making on the subject of employment discrimination by

regulatees, but neither agency has taken any further

action. See 36 Fed. Reg. 10,741 (1971); 37 Fed. Reg.

15,518 (1972). Of the Federal Home Loan Bank Board’s

regulations governing the employment practices of regu-

lated banks, 12 C.F.R. § 528.7 (1974), it suffices for the

moment to say that their validity is not an issue in this

appeal.

C. FPC Regulation of Employment Discrimination Co-

incidentally to Proper Commission Concerns.

The foregoing suggests our inability to find that Con-

gress intended for the Commission to entertain and to

25

adjudicate individual complaints of employment discrim-

ination by its regulatees, and to impose sanctions unre-

lated to the performance of its central regulatory pur-

poses. At the same time we cannot state flatly that the

Commission may never “regulate” employment discrimi-

nation, if by that it is meant that such discrimination

can never figure in the Commission’s regulatory calcu-

lations. We can foresee situations in which considera-

tion by the Commission of a regulatee’s discriminatory

employment practices, including rules governing the in-

vocation of that consideration, could be reasonably re-

lated to the pursuit of the Commission’s proper objec-

tives. We therefore conclude that the Commission does

have jurisdiction over employment discrin.ination in the

narrower sense described at the outset of the discussion.

The Commission’s task in protecting the consumer

against exploitation can be alternatively described 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 dis-

crimination 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 con-

cern: (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 govern-

ment contracts terminated because of employment dis-

crimination,’ (3) the costs of legal proceedings in either

of these two categories, (4) the costs of strikes, demon-

strations, and boycotts aimed against regulatees because

*' See Exec. Order No. 11,246 3 C.F.R. 169 (1974) (all con-

tracts with federal government to include private contractor’s

promise not to discriminate in employment; contracting gov-

ernment agencies to cancel for breach of such promise).

26

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 regula-

tory contexts, including both rate and certificate pro-

ceedings. We therefore do not attempt to detail all the

various ways the Commission may thus “regulate” em-

ployment discrimination, leaving this in the first instance

to the Commission itself.

A regulatee’s performance in the area of equal employ-

ment opportunity may also be relevant to that company’s

efforts to secure a license renewal or other Commission

authorization. It is conceivable that an applicant’s rec-

ord could be so riddled with discrimination-related legal

difficulties, and its future so lacking in any promise of

improvement on that score, that the Commission could

validly conclude that for this reason it should not be

permitted to be the recipient of franchise grants. In

the long run, after all, the most efficient, lowest-cost

production and distribution of electricity and natural

gas will be that which is conducted in compliance with

the laws, employment discrimination laws and other

laws alike.

Moreover, the Commission is not necessarily confined

to consideration of employment discrimination in suc-

cessive adjudicatory proceedings. There are any number

of matters on which it might be positively beneficial for

the Commission to make rules rather than proceed on a

27

case-by-case basis. There is the potentially quite complex

question of what costs associated with employment dis-

crimination litigation will and will not be disallowed.

It is at least conceivable that a regulatee with a very

poor equal employment opportunity record might be pre-

sumed to have incurred excess labor costs because of its

exclusionary practices, and that these costs, being diffi-

cult to quantify and prove, will be rebuttably presumed

to equal a certain percentage of actual labor costs.

The line is always to be drawn between regulation rea-

sonably related to the Commission’s central functions,

and regulation of employment discrimination for its own

sake. The line may well be difficult to draw oa »ccasion,

but it is the business of agencies—and of courts—to do

sO.

D. The Commission’s Constitutional Obligations.

Petitioners’ claim founded on the Constitution is that

it not only empowers but also requires the Commission

to proscribe employment discrimination by regulatees.

This is because the actions of the regulated companies

are assertedly “state action” and therefore subject to the

Fifth Amendment’s prohibition of racial discrimination.

Three circumstances are relied on as establishing the

necessary intertwining of government with private entity

which results in the latter’s conduct being considered

“state action.” These are (1) the otherwise comprehen-

sive extent of federal regulation of the FPC regulatees;

(2) the enjoyment by the companies of what amounts to

a government-granted monopoly; and (3) their per-

formance of a governmental function in the production

and transmission of energy. The Commission meets the

“state action” claim by denying that the government

is “significantly involved” with the regulated companies.“

** We note that the Supreme Court recently held in Jackson

v. Metropolitan Edison Co., ——- U.S. —— (Dec. 23, 1974),

28

In our view, however, the question that is most immedi-

ately relevant to the powers and duties of the Commis-

sion to regulate employment discrimination is not the

familiar one of “state action” vel non, but the distinct,

if seldom isolated, issue of what the consequences may be

of a finding of “state action.”

The most familiar, and perhaps also the most natural,

consequence of the erasure of the distinction between

government and private entity is that the constitutional

obligations of the government—not to discriminate on

racial grounds, not to infringe freedom of speech, etc.—

devolve as well upon the ostensibly private entity and

are enforceable against it.” It is possible, however, that

the existence of the “state action” relationship also im-

poses some new obligation on the government. If the per-

that the termination of service by a state-regulated electric

utility did not constitute “state action” subject to the Four-

teenth Amendment’s due process clause. For the reason stated

in text, however, we do not undertake the sifting of particular

facts and circumstances necessary to say whether the same

is true of the employment practices of the various kinds of

Commission regulatees, among them some that are actually

situated “upon . . . the public lands and reservations of the

United States.” 16 U.S.C. §797(e) (1970). Cf. Burton v.

Wilmington Parking Authority, 365 U.S. 715 (1961).

* See, e.g., Evans v. Newton, 382 U.S. 296, 302 (1966)

(“public character” of recreation facility required that it be

“treated as a public institution subject to the command of

the Fourteenth Amendment”); Burton v. Wilmington Park-

ing Authority, 365 U.S. 715 (1961) (lessee of state property

must comply with proscriptions of Fourteenth Amendment) ;

Terry v. Adams, 345 U.S. 461 (1953) (exclusion of Negroes

by county political organization held unconstitutional) ; Smith

vy. Allwright, 321 U.S. 649 (1944) (exclusion of Negroes by

state political party held unconstitutional); Simkins v. Moses

H. Cone Memorial Hospital, 323 F.2d 959 (4th Cir. 1963)

(federally funded hospital may not discriminate on racial

grounds).

29

sistence of such a relationship between the government

and one practicing racial discrimination constitutes an

ongoing constitutional violation, for example, perhaps the

government incurs an obligation to terminate the rela-

tionship.” This like other obligations of the government

would be enforceable in a court of law, and, if it had not

already been so enforced, would presumably be a ground

for objecting in proceedings before the Commission to

license renewals and the like.

But the petitioners urge on us a third possible conse-

quence of the “state action” relationship, namely, that

while that relationship lasts the government must affirm-

atively regulate its private partner to insure that the

latter discharges the constitutional obligations devolving

upon it because of the relationship. Precedent for an

agency’s being constitutionally required to detail the con-

stitutional obligations of its regulatees is very limited,

however. In Business Executives Move for Vietnam

Peace v. FCC, 450 F.2d 642 (D.C. Cir. 1971), a division

of this court, with one judge dissenting, held that the

Constitution prohibited regulated broadcasters from re-

jecting all controversial advertising, and the FCC was

commanded to develop “reasonable regulatory guidelines”

*° See, e.g., MceGlotten v. Connally, 338 F. Supp. 448 (D

1972) (Treasury Secretary enjoined from ee ‘

benefits to private clubs and fraternal orders that excluded

Negroes); Green v. Connally, 330 F. Supp. 1150, 1164-65

(D.D.C. 1971), aff'd sub nom. Green v. Colt, 404 U.S. 997

(1971) (federal government permanently enjoined from ex-

tending tax benefits to racially segregated private schools) :

Green v. Kennedy, 309 F.Supp. 1127 (D.D.C. 1970) (pre-

liminary injunction in same case); Irvis v. Scott, 318 F.

Supp. 1246 (M.D. Pa. 1970) (state liquor license of fraternal

order that excluded Negroes held invalid), rev’d sub nom.

Moose Lodge No. 407 v. Irvis, 407 U.S. 163 (1972); Ethridge

v. Rhodes, 268 F. Supp. 83 (S.D. Ohio 1967) (state enjoined

from entering construction contracts with private parties

practicing employment discrimination).

30

to carry out this constitutional command. /d. at 665.”

That decision was, however, reversed by the Supreme

Court sub nom. Columbia Broadcasting System, Inc. v.

Democratic National Committee, 412 U.S. 94 (1973). The

notion of constitutionally requiring the FCC to regulate

in a certain way was the specific subject of considerable

criticism by the Court, id. at 125-27, though it no doubt

was concerned with the problem that regulation of broad-

casters under the authority of the First Amendment would

itself raise First Amendment problems.

Moreover, a requirement of affirmance regulation would

raise many problems. Which of the various constitutional

commands addressed in the first instance to the govern-

ment must the government reinterpret for its private

collaborators, and what degree of specificity is required?

If, as we have found to be true in the case before us,

an agency lacks the statutory power to “regulate” in this

way, does the Constitution itself piggy-back such power

onto the statutory powers whose exercise gave rise to the

state-action relationship? No such problem exists where

the private entity is directly subject to the legislature

without the intercession of an agency, but the proposition

then becomes a truly anomalous one, namely, that the

Constitution compels the legislature affirmatively to legis-

late in a certain way.

‘\ See also Burton v. Wilmington Parking Authority, 365

U.S. 715, 725 (1961) (“By its inaction, . . . the state has —

made itself a party to the refusal of service... .) (dictum);

Public Utilities Commission v. Pollak, 343 U.S. 561 (1952)

(where challenge made to government’s allowance of allegedly

unconstitutional conduct of regulatees, the Court found it

“appropriate to examine into what restriction . . . the First

and Fifth Amendment place upon the Federal Government”)

(dictum).

31

Ill

In the light of what has been said above, the position

taken by each side appears to be partially right and

partially wrong. Insofar as petitioners maintain that

the Commission is not completely without jurisdiction

to consider, and indeed to write regulations concerning,

employment discrimination by its regulatees, they ap-

pear to be correct. It is also clear, however, that they

have proposed a rule which, at least in certuin of its

provisions, is well beyond the Commission’s power to

adopt. Section 9, for example, imposing on the Commis-

sion the duty to entertain and to act upon individual dis-

crimination complaints, seems to us not reasonably re-

lated to the furtherance of the Commission’s proper ob-

jectives. The hearing and adjudication of individual com-

plaints would be an inordinately time-consuming process

in view of the very slight impact it might have on the

efficient operation of the regulated industries. On the

other hand, those sections providing for the annual filing

with the Commission of a form already due the EEOC

(section 6), and for intervention and receipt of evidence

in Commission proceedings (sections 10 and 11), might

well be viewed as orderly methods of bringing to the

Commission’s attention information which could be rele-

vant to its deliberations in the ways described in Part II

of this opinion.

We do not attempt a section-by-section appraisal of the

rules at this time. That would be inappropriate on this

record, and in the absence of prior Commission con-

sideration in rule making by reference to the statutory

boundaries to its authority demarcated hereinabove.

Turning briefly to constitutional considerations, we

doubt for reasons already stated that the Commission is

required to enforce the constitutional obligations of its

regulatees by affirmative regulations. The Commission

32

does not appear to have refused all affirmative regulation,

however. In this context the confusion over this point

in the record, along with our practice of not deciding

constitutional questions unnecessarily, persuades us not

to pursue the matter any further, except to say that,

however we might resolve our difficulties with the proposi-

tion that the Commission is constitutionally required to

adopt some anti-discrimination rule, we are very sure

that it is not required to adopt this one. Constitutional

obligations are occasionally translated by the courts into

terms as detailed, specific, and far removed from the

constitutional language as are the terms of this rule.

See, e.g., Miranda v. Arizona, 384 U.S. 426 (1966) ;

United States v. Frazier, 317 F. Supp. 1079 (M.D. Ala.

1970). This is done only occasionally, however, and after

some experience has shown the need of such strict pro-

phylaxis. In any case, it is not the courts but the Federal

Power Commission which must particularize any consti-

tutional obligation that may exist, and this task should

certainly be left in the first instance to the Commission.”

If the petitioners have been extravagant in their claims,

however, the Commission has been miserly in its response.

The request for the adoption of the proposed rule may

have been excessive, but it is not at all clear that the

Commission was free to consider that this was the only

request made. It was not in any event free to deny even

that request for the reason (if it was its reason) that

it had no authority whatsoever to promulgate any rules

relating to employment discrimination.

The result for the purposes of the disposition of this

review proceeding is that the important jurisdictional

°? Even in Business Executives Move for Vietnam Peace,

supra note 67, this court chose to “leave the Commission and

licensee broad latitude to develop ‘reasonable regulations.’ ”

450 F.2d at 663.

questions inherent in it have not been framed in a

meaningful way. The parties themselves have blunted and

obscured their extreme positions to the point of retreat,

although one that cannot in either case be exactly meas-

ured. Not wishing to be understood either to imply by

a reversal that the petitioners’ proposed rule could be

adopted as is, or to endorse by an affirmance the Com-

mission’s broad disavowal of any jurisdiction over racial

discrimination by its regulatees, we have concluded that

the wisest course is to vacate the Commission’s order and

remand for further proceedings consistent with this

opinion.*

It is so ordered.

bs We have concerned ourselves herein only with the Com-

mission’s jurisdiction—with its power to adopt rules relating

to employment discrimination. Nothing has been said of the

Commission’s considerable discretion, in common with other

agencies, not to promulgate rules even when it has the author-

ity to do 80. The Commission might well determine that rule

making in the area of employment discrimination, though

permissible, should be deferred at least temporarily in favor

of the information and experience to be gained from case-by-

case consideration of such matters as they arise in normal

rate maxing and licensing proceedings. Since the Commission

&-J not purport to exercise such discretion in this case, the

question of whether it could validly do so is not before us.

34

Before the

FEDERAL POWER COMMISSION

Docket No. R-447

EQUAL EMPLOYMENT OPPORTUNITY IN THE ELECTRIC

AND GAS UTILITY INDUSTRY

PROPOSED RULE

Section 1. Definitions. As used in this rule: (1)

“Commission” means the Federal Power Commission ;

(2) “licensee” means any person, State or municipality

licensed under the provisions of section 4 of the Federal

Power Act, and any assignee or successor In interest

thereof; (3) “natural gas company” means a person

engaged in the transportation of natural gas in inter-

state commerce, or the sale in interstate commerce of

such gas for resale; (4) “person” includes an individual

or a

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