Petition for a Writ of Certiorari — Southern California Edison Co. v. Federal Power Commission
Supreme Court brief1968
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SUPREME COURT, u. a APR 16 1968
‘Supreme Court of the United States
October Term, 1967
JOHN F. DAS, CLERK ©
Vo E 329
—
a
SOUTHERN CALIFORNIA EDISON COMPANY,
Petitioner,
> vs.
FEDERAL POWER COMMISSION,
1 Respondent.
__ PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF
APPEALS FOR THE THIRD CIRCUIT
Rotim E. Woopsury
Harry W. Srurczs, In.
WLAN E. Marx
Attorneys for Petitioner,
Southern California Edison Company
4 P. O. Box 351
Los Angeles, Calif. 90053
Of Counsel:
WnLIaxM R. CoxxolE
1000 Connecticut Avenue, N. W.
| Washington, D. C.
„R. Crype ——
F. O. Box 188
Shreveport, Louisiana
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TOPICAL INDEX -
of timely: request by Edison for such a oondition-
e. 4
—
8 *
Citation to Opinion below . 1.
Jurisdiction : : 1
Questions presented for · review 2
Constitutional provisions, statutes, and regulations in-
volved neanern 7 3 r 8
Statement of the ease. 5
Reasons for granting Writ. 10
What the Commission did a
1. The Commission flagrantly violated its own Rules
of Practice and Procedure and the Admini i
Procedures Act and denied Edison a fair hearing. 12
2. The Commission frustrated local police regula-
tions designed to- alleviate air pollution which in-
volved no conflict with national air pollution poli-
cies and no conflict with the policies of The Natural
Gas Act as heretofore'construed by this Court and.
in 80 doing exceeded its jurisdiction. — — 20
3. The Commission arbitrarily changed the ground
rules which it had previously established as justifi-
cation for its delay in processing the Gulf Pacific
application is * bd 24
4. The Commission unlawfully applied the provisions
of The Natural Gas Act and in so doing exceeded
its autbbrity. ——— — —V 2
a (a) The Commission ap~lied improper standards
of public convenien:: and neoessity _. 27
(b) The Commission unlawfully applied the pro-
visions of The Natural Gas Act relating to di-
rect. industrial sales . 29
What the Commission did not do ai 90
5. The Commission failed, or refused, after determin-
ing to certificate the El Paso-and Transwestern
Proposals, to so condition such certificates as to
Protect the constitutional rights of Edison in spite
30
3 | Page
What the Court of Appeals did 2 N 31
The Court of Appeals erred in concluding that the :
Commission's orders were rationally based, sup-
ported by the record and reached by pracedares |
required by law... 32
1. The Court of Appeals’ 00 that the Commis-
, Sion’s order was rationally based contained an in-
herent ambiguity and was erroneous upon all alter-
native interpretations. - 32
2. The Court’s conclusion that the G s ac-
tion was supported by the record and reached by
procedures required by law is in error and sanc-
tions such a departure from the accepted and usual
course of administrative procedure as to call for
the exercise of this Court’s power of supervision 36
3. Failure of Court of Appeals to resolve ambiguity
it created. unlawfully auen Edison its statutory a
review ; 37
Conelusion 5 ve . — 38
: Appendices j 2 0
* . of the United States Court of Appeals
for the Third Cireuit, No. 16,434, dated December
21, 1967
Opinion of the United States Court of Appeals for
the Third Circuit, filed December 21, 1967.
— Petition for 15 Mr rn (dated: January 24,
1968 :
B. Constitutional provisions, statutes and innen
U.S. Constitution, Amend V.
amn nee See. 1 (b)
Sed. 7e)
Ses 700.
—
d
PARSE ES 7 N
oad
8 <a
" Administrative e Procedures Act, See 5. 9a
: Sec. 6 33 Ie
aH Sec. 7. — - u
1 iss ah a Sec. 10 . 12a
Title 28 U.S.C. § 1254. 2 8 — 132
Regulations Under the Natural Gas Act, § 157.11. 133
Rules of Practice and Procedure of the
Federal Power Commission, § 1.26 „ 14
C. Chronological Statement 152
D. Revision of Commission’ 8 Gas Balance Study to :
correct defects. 19
E. Summary of reasons 10 stipport of Court of Ap-
peals determination that e case at bar not water 32a
Frage
*
TABLE OF AUTHORITIES CITED |
5 Oases e i Page
Ashbacker Radio. Corp. v. FCW... oa
226 U.S. 327 (1945) — 25,26 24
Cascade Natural Gas Co. v. El Paso Natural Gas Co,
| 386 U.S. 129 (1967) —j 10, 333
El, Paso Natural Gas Co., G-12580, 22 FPC 900........:...19, 21
m Paso‘ Natural Gas Company, Docket -16235, 30
FPO 77....... 7 n
Fro v. Idaho Power Co, 344 U.S. 17 (1952).—— 33
FTC v. Standard Oil Co., 355 U. S. 396 (1958) 37
Federal Power Commission v. Transcontinental Pipe-
line Corp., 365 U.S. 1 (1961)
Florida Gas. ‘Transmission Co g FPO Docket CP65-
393, Op. No. 516 issued 1, .1967.....: 29
Honston Texfs Gas and Oil Corp., et al. 16 FPC 118
(1956) . 20, 27
Huron Cement Co. v. Detroit, 362 U. 8. 440 (1960)...22, 350
Kansas. Pipeline and Gas Company, et al. 2 FPO 29
(1939) 20, 27, 28
Market Street Railway v. Railroad Comm, 324 U.S.
548 (1945) 13, 16, 17, 18, 35
- Montana-Dakota Utilities v. FPC, 169 F.2d 392 (1948) 32
Natural Gas Pipeline Co. of America, FPO Docket No.
CP 62-243, et al., Opinion No. 474 issued September
9, 1965 34 FPC 77¹ - .
Ohio Bell Telephone Co. v. PUC, . | :
301 U.S. 292 (1937) 13, 18, 36, 37
a Pan American Petroleum Our, v. FPC, 376 F.2d 161
(1967). *
People v. Plywood Mfrs. of Cal, eto. 137 0. A.2d 859;
291 P.2d 587 (1955)...: 22
Pittsburgh (City of) v. FPC, 27 F.2d 741 (1956) 2, 320 8
Page
SEC. v. Chenéry Corp., 318 US. 80 (1543) 33
me Soenie Hudson Preservation Conf. v. FPO, 354 F.2d
608 (1965), cert. denied 384 U.S. 941 32, 32a
Sunray Mid-Continent Oil Co. v. Fp C, 353 U.S, 944 .
(i957) 6
Tampa. Electric Co. y. Nashville Coal Co, 365 U.S.
320 (1961) 7
Union Pacifie R. Co. v. Public Service Comm. 103 Utah or
459; 135 P.2d 915... L
United States of America v. El Paso Natural das G |
_.. pany, 376 U.S. 651 (1964) , 10, 348
Welch Co. v. New Hampshire, 906 U.S: ( —
Constitutions |
United States Constitution . Pad Ae
Fifth Amendment ‘ 2 3, 9, 12, 8
a 5 Minselladiecias Sergent
yet eS 18 ALR 2d, pp. 552 et seq............ , ae
"Executive Order 11282 dated May 26, 1966... ‘2.
Pres. Proc. No. 3794-of July 19, 1967. 4 vrai Beat
Regulations Under the Naturel das Act (18 OFR, E
e —— 8 Aan 5
o
Rules for the um States Supreme Court
Rule 19, et seg eee
Rules of Practice and Procedure of the Federal Powe
Commission § 1.26(d) bet 2.5, 12, 20, 36
Rules of the Air Pollution Control District’ of the
County of-Los Angeles adopted by the Los 1
County Board of Supervisors ee 3
Rule 62 F
Rule C8128) wal i oe ag a
; 3 —_ 9 * eg
| Statutes 9 * 5 5
Administrative Procedures Act. n
Section 5(a).— 3 3 25 = °
Section 5(b)..... 0 . 8
ae Section 6(a)........... 3 1
. Section 7 (e) e eee 25,12
„ . we —
Section 10(e).. | | *
2 Quality Act of 1967, Public Law 90448 6 81 Stat.
485 — . 3
* Section 108 (b). A a
Section 109. { 3 R 2 24
Clean Air ‘Act adop ted December 17, 1963, ‘Public Law
88-206, 88th Cong. H. K. 6518 ie 122, 23
Section 205). ; ae. ae
“Natural Gas Act 8 2 3,11, 20, 27, 29, 3
Section 1(b). au aie 3, 5, 29
Section 7 (o) Ene 2, 3, 5, 8, 12524
Section 7 (e) 7 : eee
Section 19(b) jessie 2, 5, 9, 36, 37
United States Codes : Ng
Title 15, Section 717 (b). . a aye
Title 15, Section 717f(c)... | 5, 24
Title 15, Section 717£(e) , — 5
Title 15, Section 717r(b) 1 2, 5, 9
— Title 28, Section 1254 (1) —
Texts
2 Davis, Administrative Lr besu- pager 409-404 2
2 2 Davis, Administrative Law Treatise, page 416. 18.
7
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GLOSSARY We
Edison or Petitioner...... Southern California Edison Com-
„ =
Commission or FPC.......Federal Power Commission
Pacific Lighting — „ Southern California das Span,
8 | Southern Counties Gas Compan
and Pacific: Lighting * and
Supply Company (collectively) ©
| Gulf Pacific... -------, Gulf Pacific Pipeline Company
El Paso — oi El Paso Nataral Gas Company
Transwestern Trinewastenh Pipeline Company
Gulf Pacific Project Bae, That Supply Proposal Applied for
In FPC Docket CP63- P63-223
APCD A Ponntton Control District of n
the County of Los Angeles |
TSP The so-called Tailored Supply Pro-
5 gram of Pacific Lighting Consisting
of the El Paso and Transwestern
Applications in FPC Dockets CP
64-76 and CP6491 Which Was
Adopted By The Commission
It. App. The Joint Appendix Filed With
| The Court of Appeals for —
C in No. 16434
Comm. Br. to the ; ;
0 0 for the 3rd Cir...... Commission's Brief to the Court
5 “ait: : i et oe a ee ene
— .
— , . 3 a
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2 ‘ ; a by
* . th - > —
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Supreme Court of the United States.
5 0 October Term, 1967 CORES
: No. de; A
_ PETITION FOR A WRIT OF CERTIORARI
10 THE UNITED STATES COURT-OF
Petitioner, Southern California Edison Company (Edi-
son), prays that a writ of certiorari be issued to review a
judgment of the United States: Court of Appeals for the
Third Cireuit entered December 21, 1967, in No. 16434
affirming Decisions Nos. 300 (R. 68820-960, Jt. App.“ pp.
738-878) and 500-A (R. 69314-38, Jt. App. pp. 105781) of
the Federal Power Commission** (hereinafter sometimes
referred to as “Commission” or W SS ree
____ CITATION TO OPINION BELOW
The judgment and supporting opinion of the Court of
Appeals for the Third Circuit of December 21, 1967 and
Order denying rehearing are printed as Appendix A hereto
(infra, pp. Ia to 4a) and have not yet been reported. The
orders of the Federal Power Commission under review are
Printed in the Joint Appendix below (R. 68887-90, Jt.
App., pp. 805-8 and R. 69328, Jt. App., p. 1071) and are
reported at 36 FPC 176, and at 36 FPO 1010, respectively.
JURISDICTION ; a
The opinion of the Court of Appeals was filed on Decem-
ber 21, 1967, and the judgment was entered on December
21, 1967. A petition for rehearing was filed by petitioner
on January 5, 1968, and the Court of Appeals’ order deny-
*“Jt. App.” refers to Joi ix filed with the United States
Court of 4 for the Third Crest is No. 16434.
n re Transwestern Pipeline Company, et al, FPC Dockets cP
63-204, et al. c 78
; 2
ing rehearing Was entered on January 24, 1968. Jurisdic-
tion of this Court over said judgment is invoked under Title
28 U.S.C. § 1254(1) pursuant to Rules 19, et seq., of this
Court and Section’ 19(b) of the Natural Gas Act, 15 U.S.C.
§717r(b) (1958). Said statutory provisions are set forth
in Appendix 5 hereto (pp. GaSe, ame, infra).
QUESTIONS PRESENTED FOR REVIEW
1. Whether the Federal Power Commission, under
the guise of administrative expertise, may depart from
procedures specified in its. own rules and in Section 7(c)
and (d) of the Administrative Procedures Act by reaching
a decision in a certificate proceeding, involving competing
applications, through reliance on material outside the rec-
ord which significantly influences the decision and which a
party is denied, after timely request, opportunity to meet
and rebut, particularly when such material is demonstrably
wrong in a number of material respects, and results in a
denial of a fair hearing and in the deprivation of property
without due process of law in cöntravention of the Fifth
Amendment to the Constitution of the United States (U. S.
Const. Amend. V; Natural Gas Act (Sec. 7 (e)); Adminis-
trative e ‘Act (Sec. 50a) and (b) and Sec. 7 (e).
and (d)); Regulations Under The Natural Gas Act
($157.11) ; and 61.26 (d) of the Rules of Practice and Pro-
cedure, of the Federal Power Commission.
2. Whether the grant of the certificating powers to the
Federal Power Commission in the Natural Gas Act is in-
tended to permit the FPC effectively to preempt state and
local air pollution control laws and regulations, which are
not incompatible with any defined policy of the Federal
Government, and to be so broad as to permit the FPO, to
frustrate and prevent the consummation of a pipeline proj-
cet which undeniably would have reduced fuel oil burnihg
in the local area involved, i in accordance with the desires
of “the Air Pollution Control authorities and the public,
>
? oe 3 ee ae
particularly where there was no finding that the consuin-.
mation of such project would be harmful to any other areas
or would deprive them of adequate gas supplies and where
there was no question of the projects’ meeting the tradi-
tional tests of public convenience and necessity, i.e., ade-
quacy of supply and market, economic feasibility and ability
to finance (Natural Gas Act, Section 7(c)). ; :
3. Whether the Federal Power Commission in granting
_ Certificates of public convenience and necessity under the
Natural Gas Act (Sec. 7(c)) can arbitrarily, under the
guise of administrative discretion, refuse to attach condi-
tions which are both appropriate and essential to protect
a party’s rights Ao due process of law under the Fifth ;
Amendment of the Constitution of the United States (U. S.
Const., Amend. vo.
4. Whether the Commission, in denying the Gulf Pacific
Pipeline Company (Gulf Pacific) application, exceeded its
authority and improperly applied the statutory standards.
of the Natural Gas Act: | : | £
a. By preventing more adequate compliance with the
local air pollution controls, thereby frustrating their pur-
pose and the desires of the public; 3 |
b. By utilizing its: certificate powers to perpetuate a
monopolized gas supply situation by requiring Edison to
take gas service from its chief competitors for the energy
market, instead of from a new independent gas supplier
in one of the few areas in the United States now served
solély by one affiliated gas utility system; and
o. By determining in this case that the statutory ex-
emption for direct sales (Section 1(b) of the. Natural Gas
Act, (15 U.S.C. §717(b)) is limited to such sales which
are “a useful adjunct to the normal pattern of interstate
pipelines.” (R. 68881, It. App., p. 799) ies ?
5. Whether the Commission arbitrarily denied to Edison ©
fair comparative consideration upon the basis that it had
, 4 .
. Previously established for the proceeding, namely “to de-
termine how the long term needs for natural gas deliveries
to Southern California may be met in the manner which is
most desirable from the standpoint of the public interest”.
(Re El Paso Natural Gas ‘Company, Docket G-16235, 30
FPO 77, 92). e 5
6. Whether the Court of Appeals erred in concluding
that the Commission’s orders were rationally based, sup-
ported by the record and reached by procedures required
by law. ; ‘ N ü ; 4 fer \
7. Questions arising from an inherent ambiguity of the:
decision of the Court of Appeals: af
a. Whether the Court of Appeals, in its decision af-
firming the orders of the Federal Power Commission,
concluded that a basis different from that used by the
Commission could rationally support the result and, in
80 doing, has exercised its judicial review in a way in
conflict with the applicable decisions of this Court and
with the decisions of other Courts of, Appeal and, in so
doing, has erred; ae MES BRS el ae aes |
5. Whether the Court of Appeals, in its decision affirm-
ing the orders of the Federal Power Commission, upheld
the reliance by that Commission upon its defective gas
_balanee study and other material also outside of the
record and, in so doing, has sanctioned such a departure
of judicial and administrative proceedings as to call for
, Al exercise of this Court’s power of supervision.
8. Whether the Court of Appeals erred in denying Edi-
son’s petitiotl for rehearing which sought clarification of
in order that the patties and this reviewing Court could be
‘Sppropriately apprised: of the basis for the Court of Ap-
) as a public
etre 5 :
9. Whether the Court of Appeals denied petitioner the
appropriate judicial review to which itis entitled under
the. Natural Gas Act (Section 19(b)). | ith. fort
CONSTITUTIONAL PROVISIONS, STATUTES -
The provision of the United States Constitution involved
is Amendment V (U.S. Const. Amend. V). r ee
a The statutory provisions involved are Title 28 U. S. C.,
Seetion 1254 (1); Sections 1(b), 7(e), 7(e) and 19(b) of
the Natural Gas Act (15 U.S. C. Sections 717 (b), 717£(c),
717£(e) and 717r(b)) and Sections 5(a) and (b), 6(a), 7(e)
and (d), and 10(e) of the Administrative Procedures Act
(Chapter 24 — Public Law 404, 60 Stat. 237-244 (1946).
The regulations involved are 9 157.11 of Regulations
Under The Natural Gas Act (18 C. F. R. 5 157.11) and § —
1.26(d) of the Rules of Practice and Procedure of the
Federal Power Commission (18 C. F. R. § 1.26(d)).
The Constitutional provision, statutes and regulations
relied upon are printed in Appendix B hereto as pp. 5-14.
Edison, a
ness of gene
_ tered into the arrangements underlying the Gulf Pacific.
Project to firm up supplies for its long term needs for gas
fuel from a reliable competitive source. ,
The needs of Edison for long-term assured natural gas
supply arrangements, of the type. exemplified by those in-
volved in the Gulf Pacific Project, resulted from the
changed circumstances which have occurred in the southern
California area since World War II, requiring ‘revolu-
tionary changes in the operations of the eléctric utilities.
in that area. These resulted primarily from two main -«,
.
| . The demands of an exploding postwar population in
e e Wess Was
t upon
2 5
=
7 7 : :
During the period since the end of World War II, the
Sas supplies available to Edison for electric generation
have principally come from the Pacific Lighting companies
(Southern California Gas Company and Southern Counties
Gas Company of California, referred to herein along ggith
Pacific Lighting Service and Supply Company as “Pacific
ighting”) which provided service to the electrie gen-
e utilities only upon an “interruptible” basis,? with
the electric generating utilities having the lowest priority
and being the first to be curtailed. The amount of gas avail-
able under such type of service varies greatly from time
to time during the year and from year to year, depending
upon the gas resources available at any particular time
to Pacific Lighting and its other market requirements, and
these, in turn, are substantially affected by the weather,
since its higher priority customers utilize many times more
gas in cold weather than in warm weather (Ex. 41, pp. 54,
56, 57, R. 29309, 29311-12, Jt. App., Pp. 190-2).4 5 0 }
As has heretofore been recognized by this Court, the .
assurance of a steady and ample supply of fuel for steam
_ electric generation and the need for adequate arrangements
therefor by an electric utility is in, the public interest;
otherwise electric consumers are exposed to unjustified
increased costs and to service failures. . (See: Tampa Elec-
tric Co. vs. Nashville Coal Co., 365 U.S. 320, 334 (1961)).
Pollution Control District of the County of Los ‘Angeles (APCD
adopted. by the “Ee oe County Board of Supervisors One 19
a 24, 24a, R. 2-3, It. App., pp. 235-6; orton, R. 303-5,
1, “Interruptible” gas schedules permit the seller to curtail buyers’
) nd read
(Pacific Lighting) who are also Edison , principal rival for the
et in southern 7 myn C.f., Chart
* „pp. 1 ). - ss
“For example, between an avera; and a cold year, ga
br Uae cee year anc ee
ralent of
_ Cs: Faced with these circumstances, Edison and the City of
Los Angeles Department of Water and Power negotiated
contracts with Humble Oil and Refining Company and
other Texas producers for an assured gas supply for a
_ twenty-year period, and with Gulf Pacific for the transpor-
tation of such supply to their respective steam electric
generating stations in the Los Angeles area, the net result
of which was stabilized delivered prices for gas for twenty
years at levels which were competitive with the prices
being paid by the electric utilities for the inferior service
of the Pacific Lighting companies (Horton, R. 306-10,
Jt. App., pp.-7-9). In addition, the utilization of such gas
in such electric generating stations would have uncon-
tradictably meant that substantially less fuel oil would
have had to be burned in the area, in accordance with the
demands of the public in southern California, and would
have permitted greater compliance with the regulations
and desires of the air pollution control authorities in south-
- ern California (Horton, R. 303-7, Jt. App., pp. 6-8; Proctor,
R. 18156, 18163, 18419.22, It. App., pp. 1314; Ex. 639, 640,
R. 35979-82, Jt. App., pp. 364-7). : ae |
Tue Commission’s proceedings below involved the pur-
ported ‘comparative determination by the Commission of
three separate applications for certificates of public con- —
venience and necessity under Section 7(c) of the Natural
das Act for facilities required to deliver additional gas
to California. The proceedings, which were held before
an FPO Examiner, involved 170 days of hearing, a tran.
data, including a
purporting to de-
0
would meet the market requirements at the lowest oost)
which was the central basis of its conclusions’ upon the
comparative economics involved ; such data were never pre-
sented at the hearings, and Edison was denied all oppor-
tunity to test or rebut such data, though it made timely
request to be permitted to do so in its petition to the Com: :
mission for rehearing.“ The Commission also committed a
number of additional legal errors which were ‘prejudicial
Edison, an intervenor and interested party in the pro-
ceedings and one of the entities for whom Gulf Pacific was 5
to transport gas in FPC Docket No. CP63-223, being
‘ aggrieved by Opinions Nos. 500 and 500-A, and accompany-
ing Orders dated July 26, 1966, and December:9, 1966,
. Tespectively, sought review of said orders in the United
States Court of Appeals for the Third Cireuit under Sec-
tion 19(b) of the Natural Gas Act (13 USC S 717r(b)).
The Court of Appeals having affirmed. the Commissions
orders on December 21, 1967, and denied Edison's petition
for rehearing on January 24, 1968, Edison seeks here to
have said Commission orders reviewed as well as the Third
Circuit’s judgment affirming those orders.“ .
_ REASONS FOR GRANTING WRIT :
Petitioner is gravely.concerned with the effect of the afore-
_ said unlawful. actions on its ability to obtain adequate
fuel supplies for its electric generating plants in the years.
ahead so as to continue te provide essential electric utility
service in a reliable, efficient and economical manner to the ;
regulatory agencies and the public generally to discontinue :
use of conventional fuel oil in such generating plants and
_ § Edison’s petition to ission fi ing; p. 14, R. 66 8
Jt Ape N . e Commission for cheat 5. ‘6899
a AN 2 eas ‘ ,
forth Appendix Cnn teen of theoreti ee
<
| „
situation heretofore dealt with by this Court in USA v. EI
Paso Natural Gas Oo," and Cascade Natural Gas Co., v. El 3
Paso Natural Gas Co.“ So long as the Commission’s decision
in the case at bar stands unreversed, it imposes a formid- :
able burden on anyone seeking to — bse suppliers
in mounting any new project similar} ed to. serve
the electric utilities in southern California. 7
To the nt that petitioner is denied success in its
more than 10-year effort to obtain an adequate and com-
petitive supply. of gas fuel for the enormous and inereas-
ing requirements of its electric generating plants, it is
faced with a Hobson's choice of either rua place in-
creased reliance udon conventional resid el oil (the
burning of which has been restricted by air pollution con-
trol authorities in southern California and the local pro-
duction of which is being severly limited by the oil pro-
dueing industry in southern California because of such
action by the air pollution control authorities), or of hav-
ing to resort to the use of considerably more costly “low
sulphur” fuel oil that is only available to a limited extent
and then only: from ‘overseas sources of supply (primarily
Indonesia), thus rendering such alternative supply not
only costly But of questionable reliability from both a
: logistics and national security standpoint. (Cf., Pres. Proc-
* lamation No. 3794 July 19, 1967, 32 FR. 10547). The Com-
mission’s failute to consider such aspects of this increas-
; fair hearing on these and related economie issues and tlie
apparent = es thereof by the Court of Appeals
has lead Fe ison to seek further review of the Copamission’s
Court because of the importance of the
n involved which so vitally affect euch
7
difficult community problem, its denial to Edison of a ata
parties, despite their timely request,
meet. and rebut outside-of-the-record material that is so
"flict with che policiés thereof as heretofore established by
We believe that this Court will not consider lightly ::(1)
any decision and order by a regulatory agency that results
in placing in jeopardy essential electric energy supplies
for more than 7,000,000 people, as well as for essential in-
dustries and enterprises such as hospitals and defensé ‘in-
stallations and requiring increased reliance on foreign
sources of oil, as did the challenged ‘Commission orders;
nor (2) any administrative decision which requires the
electric utilities to operate in an unfavorable economic
manner in order to permit the competing gas utilities to
operate in what they deem te be the most economic manner
from their standpoint, thus imposing added economic bur-
dens upon electric ‘consumers for the benefit of gas con-
sumers and unfairly discriminating against the former;
nor: (3) any administrative procedures rae deny to the
all
pportunity to
relied upon and utilized in reaching administrative deter-
minations at the very heart or center of the controversy;
nor (4) any federal administrative decision which unnec-
essarily frustrates state and local policies designed to al-
leviate air pollution and which are not incompatible with
any federal policy or provision in the Natural Gas Act
but which, in fact, are encouraged and supported by other
agencies of the federal government and by federal ‘laws;
nor (5) an administrative decision which misappliés ‘the
statutory standards of the Natural Gas Act and is-in con-
> * 7
this Court; nor (6) any judicial decision which sanctions
such policies and procedures of an administrative agency. | |
5
such actions go unreversed, they must, be expected to oon.
tinue to have a significant adverse effect upon the existing
asa piviedent that could he expected to undermine the in-
2 of the entire administrative process.
-. WHAT THE COMMISSION vm
With this background regarding the results of the
Commission action, let us review in detail what the Com-
mission erroneously did which achieved such unfortunate
results for southern California electricity. users.
1. The Commission Tlagrantly violated Its Own Rules
Of Practice and Procedure and the Administrative Pro-. |
cedures Act and Denied Edison A Fair Hearing.
The Commission, in ‘relying on material outside the
record without allowing the parties opportunity to meet .
‘and rebut it, or otherwise respond thereto, has violated the
requirements of both its own: Rules of Practice and Pro-
cedure ($1.26(d)) and the Administrative Procedures Act
(Sec. 7(c) and (d)), denied Edison the fair hearing re-
quired by thé Natural Gas Act (Sec. 7(¢)) and unlawfully
deprived it of its property without due process of law in
violation of the Constitution of the United States (Amend.
V).
The Commission reversed the W of its Presiding
Examiner which was based on the record and, in so doing,
demonstrably relied upon material outside. the record; it
placed: its principal reliance upon a complicated off-the-
record. study (which included admitted errors) of the com-
parative, cost of the alternative supply arrangements in-
. volved in tlie proceeding. The Commission further refused
Edison’s timely request to be permitted to meet and rebut
ae the oll. che. record material, contrary to the unequivocal
mts of the Commission’s.own Rules of Practice
aud Procedure and of the Administrative Procedures Act.
This is 4 clear violation of the basic requirements of a fair
ig in istrative proceedings. As stated by Pro-
fessor den in ie Adnitative Lat Fats, |
a}
** 5
. “The basic principle is that parties should. have op-
_ .Portnnity to meet in the appropriate fashion all ma:
- > terials that influence decision. Nothing short of op-
portunity for cross examination and presentation of
. rebuttal evidence is appropriate for disputed adjudi-
cative facts at the Center of the controversy”. ( 2 Davis 3
Administrative Law Treatise, page 403-404). |
Better illustrations of the violations of this basie prin-
ciple could hardly be imagined than those provided by the
case at bar.“ f
(a) In reaching its ection: the Commission relied upon
a number of reports and studies made by Congressional
Committees and others which were nowhere presented in
the record and which bore dates subsequentito the close of
the record, and denied all opportuntiy to cross-examine or
to present rebuttal testimony, even though Edison made
. timely request to do so in a its bewegt for — 3 to the
Commission.
9 See Ohio Bell Telaphone Co. v. PUC, 301 US 292 (1937) ; ‘Man
« ket Street Railway v. Railroad Comm., 324 US 548 (1945) ; Davis, :
Adm. Law Treatise, Vol, 2, p. 418; see also annotation f
tive decision or findings FFC hearing,
and nde presence of interested party or counsel,” 18
et
P “The Ade
quacy: of Technology for Pollution Abatement,” a report of the Re-
search Management Advisory Panel (Subcornimittee on Science and
. Astronautics, U.S. . Be sues)
[R. 68839, APP.» P. 757]; and Control”,
Report to the F Council for Science and Tes by the
„
14
As stated in the Dissent to Opinion. No, 500-A (R.
: Jt. App. „ P. 1073):
he extent to which the majority relied on these
reports in making its determination to certificate a
_. , Short-term supply is evidenced in its discussion of re-
mote mine-mouth generation and extra high voltage
transmission (EHV) in the initial opinion. It said
regarding EHV and the West Coast Intertie, ‘One
_ 835-mile line is scheduled to be energized in 1969 and
the second in 1971.“ For this proposition it cited,
‘Hearings Senate Subcommittee on Public Works,
Committee on Appropriations, June 13, 1966.’ It is not
coincidental. that the apparent availability ‘of. these
sources of energy by 1969 and 1971 coincides with the
time TSP" will require more gas. This report obvi-
ously had an influential effect on the majority in its
decisional process, yet the report deals with such spec-
ulative issues as timing, energy, and availability which
the protesting parties could not inquire into. Nor was
this an isolated instance. Further, in the initial opin-
ion, the majority refers to a study introduced by Pa-
- Cifie. Lighting pertaining to production of electrical
energy in southern California by nuclear plants. This
| study was attacked in the hearing by Gulf Pacific as
being too optimistic. Nevertheless, the majority, hav-
ing the advantage of a report entitled, ‘Comparison of
Coal-fired and Nuclear Power Plants for the TVA
System’, published in June 1966 by the Tennessee
Valley Authority, stated, Whatever merits Gulf Pa-
cific’s position. may have had in 1964-when testimony
! on this subject was taken, it now appears that nuclear
Seneration is meeting this economic test.“ IR. 68883, .
It. App., P. 771] [Our emphasis added]. Of course,
a “sinee the TVA report was outside the record it could
1 e f i
TSP ref eee e Pacific
anit
not be questioned or looked into by the protesting
parties. Furthermore, in the highly contested matter
of air pollution, two. recently published reports were.
relied upon by the ‘Commission without the parties
having the opportunity to cross examine or introduce ä
additional or -counterbalancing evidence. The dictates
of a fair hearing would seem to require that they be
able to meet them in some manner. On this point I would
refer to Davis, Administrative Law Treatise; Vol. 2,
‘Our thesis is that the reconciliation can best be ac-
complished by recognizing that the cardinal principle
of fair hearing is not that all facts should be in the
record or that all facts should be subject to eross-
examination, but rather that parties should have op-
portunity to meet in the appropriate fashion any
materials that influence decision.’ (emphasis added).
Thus, I cannot look upon a ‘timely request’ so lightly
as the majority and would allow an opportunity for
the protesting parties to respond to these documents
. which were obviously relied upon heavily by the ma- .
jority in its decision to certificate TSP rather than
the often promised, bes: never granted, long-term sup-
_ ply of natural gas.”
(b) The very foundation of the Gonttnisstin’s decision
(Opinion No. 500) was a comparative cost analysis on the
basis of which the Commission made specific findings (R.
68869, 68880, Jt. App., pp. 787, 798) but which was also
outside the record and as to which no opportunity to cross
examine, rebut; or prove to the contrary ever has been
granted.” The Commission’s analysis in this case was based )
in The Commission itself emphasized R. 68865, t. App.,
Pushape decisive rola. Lx Opin a Bes Jt App, |
econ atte: Je: Opinion Tod tha (at R.
. it clear beyond question that the
55 comp 5 ee
tion indeed, the Gas n
5
1
tif ng ee bse, ; 7 16 : x
upon a gas balance study (such gas balance studies are
designed to determine which combination of alternative, .
available gas supplies will meet the market requirements
at the lowest cost) involving complex assumptions and com-
plicated computations that were not disclosed at any time
before the Commission’s decision denying rehearing. That
this was the procedure followed has really nowhere been
denied. Rather, the Commission attempted to justify it,
in its brief to the lower. Court (P. 22), upon the grounds
of alleged “expertise” and on a purported reliance upon
the Market Street Railway base, 324 U.S. 548 (1945). In
contrast to the facts in the case at bar, this Court, in that
ease in which the outside-the-record material utilized by
the Commission was material which the Market Street Rail-
way Company’s own employees had ove peer mn
ol its own reports, pointed out:
No contention is made here that the information was
erroneous or was misunderstood by the Commission,
and no contention is made that the Company could
, have disproved it or explained away its effect for the
purpose for which the Commission used it . It does
Hil
1
11165
1
:
1
re
i
55
l
i
:
10
Hl
Til
ui
115
115
U
\
„
‘diced thereby, and it makes no showing that, if a
rehearing were held to introduce its own reports, it
would gain much by cross-examination, ‘rebuttal, or
_ impeachment of its own auditors or the reports they
had filed.” (324 U.S. 548, 561-2). (our emphasis)
That the contrary is true in the case at bar is demon-
strated by Edison’s “Revision of the Commission’s Gas
Balance Study to Correct Defects” (Appendix D hereto)
which Edison presented to the Court of Appeals to indicate
the kind of evidence which could have been presented to
the Commission in refutation of its study. Even when
using the same principal assumptions used by the Com-
mission,” Edison's revision of the Commission’s gas bal-
ance “With Gulf Pacific” (the proposal supported by Edi-
son) for the Commission’s test year 1970 shows an average
cost af gas to the market which is 0.86 cents per Mef
less than with the Commission’s gas balance Without
Gulf Pacific” (the proposal adopted by the Commission).
_ In total dollars this represents more than $10 million less
cost per year “With Gulf Pacific” than “Without Gulf Pa-
_ Cifie”, when applied to the potential gas market found by
the Commission.
This Court, in the Market Street Railoay case, went on
to say:
Due process, of course, requires that commissions
proceed upon matters in evidence and that parties
have opportunity to subject evidence to. the test of
cross-examination and rebuttal. But due process deals
with matters of substance and is not to be trivialized
by formal objections that have no substantial bearing
@ , Nobody in the case at ber has contended, nor could any-
one, that more than $10 million less annual cost “With Gulf
Pacific” is not substantial.
A miach ‘loser ‘parallel to the factual ‘and procedural
situation’ in the ease at bar is that which was involved
in Ohio Bell ‘Telephone Company v. PUC, 301 U.S. 292
(1987) where this Court, in a unanimous decision written
by Mr. Justice Cardozo, reversed.a rate order bécause of
the Commission’s having gone outside the record in fixing
property values for rate-making purposes, and stated:
, Without warning or even the hint of warning that the
ease would be considered or determined upon any other
basis than the evidence submitted; the ion cut
~ down the values for the years after the date certain
upon the strength of information secretly collected
~ and never yet disclosed. The company protested. It
‘asked disclosure of the documents indicative of price _
trends, and an opportunity to examine them, to analyze
them, to explain and to rebut them. The response was
a curt. refusal. Upon the strength of these unknown ä
documents refunds have been ordered for sums mount-
ing into millions, the Commission reporting its con-
clusion, but not the underlying proofs. The putative
: debtor does not know the proofs today. This is not the
7 Fee eee It is condemna-
Pea ithout trial.” (301 US 292, 300). a
2 in . ela “expertise” of the Commission in the
case at bar, it is also pertinent to point out that reliance
| of the Court in the Market Street Railway case was placed
upon the fact that there the state Commission was “so
experienced. . with the affairs of [the] particular ap-
(324 “DS, 548, 860); such justification for the
: 110 ie actions does not exist here, for neither the
Fro nor its Staff is ‘so “experienced with the affairs” of
7 “li ne ne ane a
8
jurisdiction, with whom it has core into coritaét upon sup:
ply issues only occasionally, and whose load balancing op:
"erations and economic behavior differ ‘materially from
natural gas transmission systems (c.f. El Paso Natural
Gas Co. G-12580, 22 FPC 900, 9037·eſ⁊a
As one demonstration of thé’ Commission’s lack af ex-
pertise in this regard, we would respectfully urge the Court
to consider this fact: tlie Commission's gas balance study
“Without Gulf Pacific”, which was disclosed for the first
time in the Commission’s decision denying rehearing
(Opinion No. 500-A, R. 69333-88, It. App. pp. 1076-81), pos-
tulates gas storage operations which force the Pacific
Lighting system into the winter peak heating season with |
a zero gas storage e e of need. The oo-
currence of a severe peak in Décember or early January —
could literally mean disaster from the ‘standpoint of thoge ~
distributing companies’ operations. No one has claimed,
and no one with any expertise could claim, that the Pacific
Lighting system could be operated this way, for it ‘would
violate every principle of sound management of a gas
aut Gulf Pacific” by employing a supply which admittedly
economics’ of the situation, admittedly without u consider:
ation of all ot the cost factors which would inécesbarily ba,
involved. The recognized. hecessity 0 buying m ‘eo
3
would obviously require the construction of a completely
new study and a completely new gas balance to make any
_ orrect determination of the cost of gas at the load center
and of the most economic’ supply combinations to meet at
least the minimum requirements. Such a new study, to be
electric generating plants in that area, would no so, the
. FPC’s view have an appreciable effect upon air pollu-
tion control,” in spite of the determinations of the local
air pollution control authorities to the contrary® and in
spite of its own previous recognition that “the state and
local agencies „have the best knowledge of the smog
problems” and that the F'PC should not “pre-empt the ex-
pertise of the California authorities” (re El Paso Natural
Gas Co. 22 FPC 900, 903). In this case, the Commission
‘did effectively pre-empt the expertise of the California,
authorities and create a serious conflict between its policy
position and that of the local regulatory authorities and did
so because of its conclusion, based upon its dost study that
did not reflect all the costs, that it would be more economi-
cal (supra, pp. 19 and 20).
There is no such conflict between W air pollu-
tion poliey or the federal agencies directly responsible
therefor, such as the Department of Health, Education and
Welfare and local authorities, but, rather, the announced
federal policies relating to air pollution and policy actions
of the federal executive department and enactments of · the
Congress support the aims and objectives of the local
authorities involved (see infra, pp. 22-4). A resolution of
the conflict created in this case between the pre-emptive
actions by the FPO on the one hand and the air pollution ake
control policies of the federal executive and legislative
branches and the local air pollution control authorities on
the other hand is urgently needed to enable those canght on
the horns of the dilemma thereby created to resolve the
resulting Problems and to eliminate the cross-currents of
administrative jurisdiction and control which, until re-
ate eee
tional policies on air pollution.
"3 Opinion No. 300 K. 68839, j E
Griswold, 0 1718} Rules 62 and 621 of
APCD, Ee de 8 JR me 238.6.
22 :
This FPC created conflict seems. clearly in violation of
decisions of this Court as well as the policy pronouncements
and legislative enactments of the federal government. v It
is well established that the Constitution, in conferring upon
Congress the regul ation of commerce, never intended to
prevent the from legislating upon all subjects relat-
ing to the health, life and safety of their citizens. In
elch Co. v. New Hampshire, 306 U.S. 79 (1939), this Court
stated: ee, ee e, c
Plainly Congress by mere grant of power to the Inter-
_, State Commerce Commission did not intend to super-
sede state police regulations established for the protec-
tion of the public sing state highways.” (306 U.S. 79,
and in Huron Cement Co. v. Detroit™ this Court stated:
Legislation designed to free from pollution the very
: air that people breathe clearly falls within the exercise
: “of everi the most traditional ‘concept’ of what is oom.
3 : Ne know as the police power.” (362 U.S. 440,
ü Un the ubsenee of conflict or incompatibility of such loeal
police regulations dealing with air pollution with some
Aaeariy defined pélivy of the Federal Government, the regu-.
- lations and their objectives are entitled to full recognition
and support and should not be frustrated by any action of
The clearly defined policy’ of the federal government
supports such local air pollution control regulations. As
stated by this Court in the Huron case, supra, at page 445:
4 Clean Air Act of 1963; Public Law 88.206; Air Quality Act of
pene 90-148, disc ‘de
‘11282 dated 25, 196 relating to restrictions governmental
—
. R. 4415, Mar e
1 As disclosed record, the APCD been most successful
in defending its Penton in 8 People Ply.
CER en ee {une 2 1 5 0, Jane 3, 1956) 2
wood Mfrs. of Cal. etc, Ia CA2; 859, 201 Pad 587 1955),
Amen Coment Co. t Detroit; 361 US: 40 (18600.
0 8 7 8 : 1 2 1 7 2 5
“By contrast, the sole aim of the Detroit.ordinance is
the elimination of air pollution to protect the health
2 enhance the cleanliness = ee :
Congress recently recognized the importance legiti-
macy of such a purpose, when in 1955 it provided: oe
ln recognition of the dangers to the publie
health and welfare, injury to agricultural crops and
livestock, da e to and deterioration of property, |
and hazards to air and ground transportation, from
_ air pollution, it is hereby declared to be the policy of
‘sibilities and rights of the states and local govern-
ments in controlling air pollution, to support and aid
technical research to devise and develop methods of
Sorernment air pollution control agencies and other
public or private agencies and institutions in the
|. formulation and execution of their air pollution
abatement research programs’. 69 Stat. 322; 42
“Congressional recognition that the problem of air
. a matter of state and local con-
cern is ifest in this legislation. Such recognition is
“underlined in.the Senate Committee Report: =
The committee recognizes that it is the primary
responsibility.of State and local governments to pre-
' Cong., Ist Sess. 3.“ Fas
This compatible and supportive Federal Polic has been
further supplemented by the Clean Ai Act adopted De-
cember 17, 1963, (Public Law a A At H. R.
6518) which contains, among other things, ‘Section 2(b)
This reference is to the act formerly known as the “Clean Air
Act” adopted on July. 14, 1955, and now known as “An act to provide
5 More recently (in fact, last year) the Congress enacted
the Air Quality Act. of 1967 (Public Law 90-148, 81 Stat.
485) reiterating a national policy to encourage and not to
_ displace action by local agencies to abate air pollution.
may be met in the manner which is most desirable from
the standpoint of the public interest” (EI Paso Natural
Gas Company Docket G-16235, 30 FPC 77, 92). After hav-
sion arbitrarily refused, in its Opinion and Order, to com...
_ pare and analyze the alternative proposals before it on
the comparative basis upon which the proceeding was or-
dered, thereby denying to Edison and the other proponents:
of the Gulf Pacifie Project any true comparative hearing
(ef. Ashbacker Radio Corp. v. FOC, 326 US. 327 (1945)).
That off-the-record study, on which the Commission
based its cost. conclusions, was, aside from its other pro-
cedural and substantive defects, a ‘One-year study pur-
portedly covering the year 1970, but using 1968 levels of
gas supply to the market, which it conceded to be grossly
inadequate.” This was the basic: economic “evidence” con-
sidered by the Commission (Op. 500; R. 68869, Jt. App,
p. 787; Edison Petition to Commission for Rehearing, pp.
48-51, Exh. C to Petition for Review, pp. 5la, et seq.; Op.
than fifteen days before the commencement of a hearing on a pending
lication and seeks rity to serve some or all of the markets
. petege ee ee
. or is o ise competitive there-
|. Of ee ndings Caowhene made n fOr beating, in the absence
0 no in case), until a C
mission decision on the pending applicati lacked
ke power to compel competitive ings ; it improvised the purported
suing invi
alternative of tations, and provi ample time for filing.
> 5 : . *¢ P bli 1 1
Request for Early Hearing, filed June 7, 1963, R. 55204210 It.
a pp. 468-74, Motion for Prompt Consolidated Hearing of
: C163. Fe and CP63-223, filed June 21, 1963, R. 55252-266 jt.
App., pp. 475-89, Motion to ite ‘filed 2;
1963, RP 55349-361, Jt. App., pp. 490-502. See Appendix C for a
more : 0 dings). Time
500A, R. 69323-4, Jt. App., Pp. 1066-7) in a proceeding
which it well in advance had “advertised” as one in which
it would determine “how the long-term needs for natural
gas deliveries to Southern California may be met in the
manner. which is most desirable from the standpoint of the.
public interest”. (Emphasis added). (Re El Paso Natural
Gas Company, FPC Docket No. G-16235, 30 FPC 77, 92).
‘The Commission’s determination in its decision which
followed (based upon its asserted “objective” review of
the long term and upon its “knowledge”. external to the
record) that “flexibility”, which avoids the making of
_ Commitments necessary to any long-term solution, was to
be the governing criteria was tantamount to an arbitrary
abandonment of any long-term solution, and constituted a
reversal of the ground rules previously laid down by it as
the reason for its extensively delaying the processing the
Gulf Pacific application and for ordering a comparative
hearing. Certainly, as a short-term solution, the Tailored
Supply Program (TSP) sponsored by the gas companies
and adopted by the Commission is not mutually exclusive
with the long-term solution provided by the Gulf Pacific
Project, and such comparison is thus not proper for a com-
parative hearing.“ (Cf., Ashbacker, 326 US. 327, supra.)
The Commission in its opinion and order doesn’t even
make a finding of mutual exclusivity. As pointed out in
*
*
7
*
5
denied.“ (R. 68904, It. App., p. 822
27
the’ Dissent: “There is no finding that additional 5 : ) of
beyond 1968 are not necessary. There is no finding that
El Paso expanded is not required. Neither is there a finding
on @ comparative basis as to why Gulf Pacific must be
versal, after the conclusion of the hearing, of the ground
rules which were theretofore used by the Commission as
a basis for delaying the prompt processing of the Gulf
Pacific Project, constitutes a denial to Edison of a prompt
4. The Commission Unlawfully Applied The Provisions
Of The Natural Gas Act And In So Doing Exceeded Te
Authority,
While assuming that there would be adequate future
supplies of gas available to serve the needs of the Califor- ~
nia market and that there would be no future problems
with respect to gas acquisition and supply (R. 68841,
Jt. App., p. 759), the Commission applied improper stand-
ards of public convenience and necessity® and in so doing
exceeded its statutory authority by denying to the southern
California publie a higher level of gas service, which the
record shows it wanted and was willing to pay for, simply
21 App. B. hereto, pp. 10a-1 Ia. an :
rad tid ot question the fact that Gulf Pacific met the traditional
e of public convenience and necessity (i.e, adequacy of
supply and market, economic feasibility and ility to finance
Kansas Pipeli Gas Company, et al, 2 29 193);
pollution is relccted ie gg enten. Tad in Los Angeles County
expended nearly $108 million for air control equipment
28 Se
because the Commission did not agree with the public’s
| desires (or the reasons therefor) for increases in the level
of gas service to the area. In so doing, the Commission
made no finding and expressed no determination that the
satisfaction of the public’s insistent demands in this regard
would deprive other areas of adequate gas service. The
denial of the Gulf Pacific Project (which the record showed
without dispute would provide for substantially less burn-
ing of fuel oil and a higher level of gas service in the area
in accordance with the public's demands — Exs. 639-640,
R. 3597982, Jt.App., pp. 364-7; Proctor, R. 18156, 18168,
Jt. App., pp. 131-2) for such a reason, involves a misinter-
pretation and an arbitrary, capricious and unlawful ap-
plication of the statutory standard of public convenience
_ and necessity. (Cf., re Kansas Pipeline & Gas Co., 2 FC
29, 56; Union Pacific R. Co. v. Public Service Comm., 103
Utah 459, 135 P(2d) 915, 918.). It is no different in this
respect than would be an administrative determination in 2
Washington that the people of southern California who
prefer to enjoy total electric living should be deprived. of
the opportunity to do so because of a determination that
(b) The Commission U wiully Applied The Provisions 2
Of The Natural Gas Act Relating To Direct Indus-
The Commission erroneously interpreted the exemption
kor direet sales to be limited. to situations in which direct
sales are “a useful adjunct to the normal operational pat-
tern of interstate pipelines” (R. 68881, It. App., p. 799).
This restrictive interpretation of Section 1(b) (see App.
B., p. Sa) of the Natural Gas Act is nowhere to be found
in the Act, is without authority in law, and is contrary to 5
the intent of the law. * 8 „
As stated in the dissenting opinion, “Such a decision
direct sales from Commission jurisdiction” (R. 68956,
Jt.App., p. 874) The effect of the ) ion’s attempt
so to exceed its statutory authority by denying a certificate
to Gulf Pacific is to deny to Edison the benefits of, and
property rights in its contracts underlying the Gulf Pacific
Project without due process of ly mp. 1 ee
In Opinion No. 500-A (R. 69324, It. App., p. 1067), the
Commission purports to explain away its aforesaid state-
ment from Opinion No. 500 regarding direct industrial
sales as being directed at the nature of Gulf Pacific’s pro-
posed operation as an exclusively industrial pipeliné and
not at direct sales as such, but then goes on to refer to
other cases where the Commission had certificated pipelines
which do not make sales for resale“ “where the particular
a : * e
Corp. $68 051 685 * Natural Cas Piper Co. of America,
Docket No. CP 62:243, et al., Opinion No. 474 issued Sen |
965; 34 FP@.771:' ee
as lat year in other proceedings of commingling gus fo f
‘Florida Gee Tae Ce FPC Docket
516 issued March 1, 1967). N x
S
2
TE
1
i
at
.
8
a
i
5
K
f
1
30 Pa
cireumistances indicated that such operations. would not
adversely affect other gas customers in the area Served.
The circumstance that the Commission may have properly
applied the standard of the Natural Gas Act in other
casés, of course, does not constitute an adequate answer
to the charge that it improperly applied the law in this
ease nor does it justify the application in this case of an
Waden Wege engage
Mar THE COMMISSION DID NOT DO
5. The Commission Failed, Or Refused, After Deter. |
mining To Certificate The El Paso And Transwestern Pro-
posals, To So Condition Such Certificates As to Protect
Request By Edison For Such A Condition. N
Alfter making its determination that the substitution of
gas for conventional fuel oil in electric generation would
not significantly contribute to air pollution control (R.
68839, Jt. App., p. 757) the Commission concluded that
economics should be the con lling consideration (R.
68868, It. App., p. 783), but thereafter arbitrarily refused
to condition its certificate, in an appropriate. way, which
" © As found by thé Eee & 6662931 8 App. pp. 6746)
i ect would
served. :
the‘record showed that operations of the Gulf
-
SS
desigried — ae Lighting to effect the most economiical
level of service from the standpoint of the gas companies
A 6887-8, Jt. App, pp. 768 6). It was also established
and unchallenged in the record that such level of service
R. 69322, It. App., p. 1065) and is not the most economical
level ‘from their standpoi (c.f.,. Dissent to Op. 500, R.
6894 2.3, Jt. App., pp. 860.1). . been en,
It is respectfully submitted that, under such conditions
and so long as economics are deemed to be the controlling
criteria, the only way in which the interests of Edison and
its customers can be afforded due ‘process, in such a case,
is for the Commission’s order to contain a condition which
would provide that such gas could not be made available
by the gas companies to the electric utilities for electric
generation when there were cheaper alternatives available
to the electric utilities. Under such circumstances, the in-
clusion: of such a condition is necessary to provide equal
protection and due process, and cannot be discretionary —
with the Commission,
WHAT THE COURT OF APPEALS DID. :
At the outset, in view of the Court of Appeals having
taken occasion in its opinion to make reference to the
circumstances: that Humble Oil & Refining Company and
‘other producers have terminated their gas supply con-
tracts and that Gulf ‘Pacifie Pipeline Company has now
been dissolved, we feel constrained to point out to this
Court the fact that it was previously determined by the
Court of Appeals, following motions to dismiss and full
argument thereon, that such cireumstances do not render
_ the ease moot (Order of Court of Appeals dated Sept. 29,
1967 on Intervenors’ Motion to Dismiss) and that it did
not in its decision overrule its determination in this
as indeed it could not have properly done’ We have m.
-_ 8 Reference is also made to Edison's Answers to. Motions to I
cluded in Appendix E, a brief summary of the sound bases
for such determination under the principles established by
| City of Pittsburgh vs. PC, 287 Fady 741 (1956), Scenic
Hudson ‘Preservation Conf. v. VC, 354 F(2d) 608 (1965),
FPC, 169. ¥ (2a) 302, 899 (1948) and an example of the
appropriate relief which could now be granted to petitioner
than announce its conelusic that on reviewing the record,
“the questions compel answers in the affirmative” and did
that all three conditions had
Court of Appeals’ affirm-
" Feached stich conclusion.’ However, it is dear that it did err
sion’s action is ascertained the reviewing viewing power is estopped
| from: further consideration of the Commission’s action.”
(our emphasis). In doing so, the Court of Appeals eréated .
an inherent ambiguity which it declined, to clarify when
called to its attention by Edison’s Petition for Rehenring
This Court’s attention is respectfully directed to the fact
that such statement of the Court of Appeals is‘subject
to two very different interpretations,’ namely: (1) that
the Court of Appeals concluded that the same basis which
‘the Commission used was rational, or (2) that the Court of
Appeals concluded that a basis different from that used
by the Commission could
the Court of. Appeals was demonstrably in error:
(a) If the Court of Appeals affirmed the * 5
U.S., 944 (1957); C. E. O. vs. Chenery Corp., 318 U.S. 80
lis); see also FPC vs. Idaho. Power Co,, 344 U. 17
~ (1952)) and with decisions of other Courts of Appeal con-
cerning the proper review of decisions of administrative |
agencies, (Pan American Petroleum Corp. v. FPC, 376
F(2d) 161, 174 (1967)). These cases hold that once it is
_ By the regulatory agency is unlawful, its inquiry, is prop. g-
erly at an end and that the reviewing court cannot
~ Properly sustain the action on some different basis, Neither
ol the cases cited by the Cour of Appeals in its decision —
_ Supports.s conttary view.
eon the other hand, if the Gourt of Appeals afirmed.
935-8, 1065-6), was not a study upon which the Commission's
order. could be rationally based: 124
e) The Commissions decision was admittedly based
upon its own comparative cost study which in turn, was
\. admittedly based upon the Commission’s “Gas Balance”
(ess references in preceding paragraph and Comm. Br. to
CA for the. 3; Cir., p. 21), neither of which was ever
presented in the record, and neither of which petitioner,
operations which would force the Pacific Lighting system
into the winter peak heating season with a zero gas stor-
d Balance “at a time of need” (Comm. Br. to the CA for
e 3rd Cir, p. 28). No one claimed, and no one with any
cs expertise oon claim, that the Pacific Lighting system could
(ü! The Commission’s response, while not denying that
its “Gas Balahce Study” reflected such zero balance, was
that the problem could be resolved by simply buying more
that the buying of more gas, Le., a higher level of service,
produce high (B. 68847-48, R. 68879, Jt App.
ATSE AE,
75
is a purported testing of the economics of the situation ad-
o~
35 ;
mittedly without a consideration of all of the cost factors
sity of buying more gas would obviously require the con:
struction of a completely new study and a completely new
gas balance to meet at least the minimum market require-
ments in order to make any rational determination of the
ee ea at the load center and of the most economic
4 Before the Court of Appeals, the Commission, while con-
and the Commission, conceded in its argument before the
Court of Appeals (Com. Br. to the C. A. for the Third
Cireuit, page 21) that the system could not be so operated.
without purchasing more gas than was reflected in its study.
The costs of such required additional gas were also not
teflected in the study (see pp. 19-20, supra).
The Court of Appeals obviously could not properly con-
clude that the orders of the Commission were rationally
based upon the same basis as that used by the Commission
inadequate, incompléte and erroneous.
2. The Court’s Conclusion That The Commission’s Action
Was Supported-By The Record And Reached By Pro-
_ cedures Required By Law Is In Error And Sanctions Such
A Departure From The Accepted And Usual Course Of
| Administrative Procedure As To dan For The Exercise
Of This Court's Power Of Supervision. 20K
As we have heretofore demonstrated supra pp. 12 et
seq.), the decision of the Commission in this proceeding —
was made in reliance upon materials and studies that were
outside of the reoord, on which its findings on comparative
economics were based (R. 68869, 68880, Jt. App., pp. 787,
798) in violation of See. 19(b) of the Natural Gas Act (App.
B, pp. 8a-9a) and with respect to which the petitioner was
denied all opportunity for cross-examination and presenta-
tion of rebuttal evidence, despite its timely request that it
be permitted so to test and contest the disputed adjudica-
tive facts covéred thereby which. were at the very center .
of the controversy. a 5
The Commission's reliance upon week off-the-record
studies constituted a patent violation of the Commission’s
own Rüles of Practice and Procedure (§ 1:26(d)), and the
Administrative Procedures Act (Sec. 7(d)), both of which
require that any party ‘shall on timely request be af-
forded an opportunity: to.show the contrary” when the ad-
ministrative agency relies on material not appearing in
evidence in the record. (See App. B, pp. 12a 14a).
Tus actions of the Commission also violated the guide-
lines heretofore recognized in Ohio Bell Tel. Co. vs. PUC,
301 U.S. 292, 300 (1936), where this Court, in reversing
a rate order because of the Commission’s having gone
outside’ of the record in fixing property values for rate-
making purposes, stated: “This is not the fair hearing
essential to due process. It is condemnation without triaj.”
‘If: the Court of Appeals’ decision constitutes an in-
tended judicial approval of the procedures followed by
— —¼——'. — —— —
0 =
_ the Commission here, under the guise of administrative
_ . “discretion” referred to in the Court of Appeals’ decision,
and if such decision: were allowed to stand, it could, we
submit, lead to a breakdown of the integrity of adminis-
trative justice and procedural due process. We are con-
fident that in the case at bar, as in the past, such denial of
a fair hearing essential to due process is of concern to this |
Court and would not: be sanctioned by it and that this Court.
will invoke its power of supervision. (Ohio Rell Telephone
Co. v. PUC, 301 US 292, 30)...
2. Failure Of Court Of Appeals To’ Resolve
quest to do so by Edison in its petition: to that Court for
rehearing, denied to Edison any effective review of the
Commission orders ‘as required by Section 19(b) of the
- Natural.Gas Act. Yet in the absence of supporting reasons
by the Court, such affirmance of. unlawful Commission
action could be construed as a precedent supportive of such
- unlawful action in future administrative proceedings. 3
When a party, such as Edison here, has a statutory -
right to a review of administrative agency action, such
review should, in fairness, comprise a consideration of
and disposition of all the issues raised by the petitioning
Party and the articulation of the basis for such disposition.
(et. FIC v. Standard Oil Co, 355 US 396 (19380). This
the Court of Appeals has clearly failed to do and such
failure is legal error, resulting in a denial to Edison of its
statutory right of appropriate judicial review under Sec-
tion 19(b) of the Natural Gas Act. ee
<i J 38 3 5
ö . » GONCLUSION Dias 2
We respectfully submit that this case, involving, -as it
does, a flagrant abuse of the administrative process in deal-
ing with continuing controversies concerning competition
for the California gas market, conflicts between the policies
of the FPO, and those of federal, state and local air
pollution control authorities concerning the use of gas for
air pollution control purposes, and the preservation of pro-
eedural due process where the vital interests of millions of
people have been so cavalierly and unexplainably dealt
with and in which the public interest and the integrity
of the entire administrative Process is so imperiled, merits
review by this Court. G
We therefore respectfully urge that this Petition for
Writ of Certiorari be granted... a
RNespectfully submitted,
Roxx. E. Woobnunr
Hunnr W. Srondns, Jr.
Wn zan E. Marx
By 7, Wim E. Manx
Attorneys for Petitioner 45
Southern California Edison Company
Dated: April 16, 1968
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