Petition for a Writ of Certiorari — Gulf States Util. Co. v. FPC
Supreme Court brief1973
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@2-1178 | FETE
E COPY MAR 13 1972
MICHAEL ROBAK, uR_cLeRg cn
In THE
Suprente Court of the vit States
OctosEeR Term, 1971
IAG: iticin
Guur Srates Urtmities Company,
Petitioner,
v.
FreperRaL Power CommMIssIoN,
Crry or Larayetre, Louisiana,
City or PLaquemine, Louisiana,
Respondents.
PETITION OF
GULF STATES UTILITIES COMPANY
FOR WRIT OF CERTIORARI
TO THE
UNITED STATES COURT OF APPEALS
FOR THE
DISTRICT OF COLUMBIA CIRCUIT
Bengamin D. OrGain
B. H. HuGues
Orcarn, Bett & Tucker
4th Floor
Beaumont Savings Building
Beaumont, Texas 77701
Counsel for Petitioner
FIDELITY PRINTING COMPANY, INC., HOUSTON
Opinions Below ..........sssscssssssssesssssssssesssssssssnssnsssssssensasesneensensensesens
RIE ciacec ceccsmisnntipsidsaiareseritinion enpliehartaeathentnaniainectimmstiarasmenbits
Questions Presented ..........+-.cvssssssssssssssesscsssssnsserssesensensesscsnsesneess
abs ERGURVOE cxcccsnencasnvsnnnsscsasveininicinn tabsiecnmensetisiiiamieneiecineienes
Rintement ....ccccrccrsecocscecccceseccerecccecescoves ssvscetesesgvcidcseosete
Reasons for Granting the Wit .0..........cccsssssessssseeceeeseeseersess
COnClUSION .......:ccescesseeeessseeeceee seusseosseues 6taesvesssieessosteescsaseses
Appendices
A Court of Appeals Opimion 2.00.0... eecseeteeeceeeseeseeeesees
B Court of Appeals Judgment ......0.......cccecseesseeeeeseeseees
C Court of Appeals Order Overruling Motion for
II scien vecsteteianntinsresicensncsengeenciitiinthenetisiiensmpennsin
D Federal Power Commission Order Authorizing
Issuance of Bonds, Granting Intervention
and Denying Hearing 2.0.............cccccscessescessceecescceases
E Federal Power Commission Supplemental Order ......
F Federal Power Commission Order Denying
Application for Rehearing ................ccccccsceseesseseceeees
G Statutes Involved oo. lccececscecessccescseceeccceccecececees
CITATIONS
Cases
Alabama Electric Cooperative v. S.E.C., 122 US. App. D.C.
367, 353 F.2d GOS (1963) cecccecccsssecccssssesssssesssssesssssescrcsesessseeses
California v. Federal Power Commission, 369 U:S. 482
RADE isesbrschecnsste basen tsonsincsinennexvsvedsueserseevsinlucnisvanianiasaiionnne
California Motor Transport Co., et al, v. Trucking Unlimited,
92 S.Ct. 609 (January 13, 1972) coecccscssssccsssesesesseesssesecees
Cardillo v. Liberty Mutual Insurance Co., 330 U.S, 469
ERE -icssinssxasiseees asst edastonsiosecdoacanarnventeasssindainseaiosdussouset teecioccs
City of Pittsburgh v. Federal Power Commission, 99 U.S.
App. D.C. 113, 237 F.2d 741 (1956) coiccccccsccsccscccssessssseeseeeen
pbs a eS thn RP ROY
aX
sant
ii
Pace
Denver & Rio Grande Western R. Co. v. United States, 387
Ries: I LAE) siigeitvsiainndciNcaNienidtekiclgses hotapadeei aiid 5, 6,7, 8,9
Eastern Railroad’s President’s Conference v. Noerr Motor
COIS, FaGig, Se Sees BARE CREE Bi: sencsisnissiquanciobtasbopesersvenivicecs 10
Federal Power Commission v. Florida Power & Light Co.,
OF B. Ce, SEE CAM BG, TITS) vrrisessscnsitictssscccaviesscsnesenininsnres 11
Gainesville Utilities Dept. v. Florida Power Corp., 402 U.S.
BUR CN ey D cecknidecisctesrsscsiesionsneciaipndtbeaasnelaniineitideinins ll
Gray ¥. Powell, 314 U.5. G02 (1961) cncscssscscscesssssccsceceseveonsonssere ll
Interstate Commerce Commission v. Jersey City, 322 US.
Pe iii cs see ireeartisondetenmnnis ll
McLean Trucking Co. v. United States, 321 U.S. 67 (1944)... 4
Municipal Elec. Assn. of Massachusetts v. SEC, 134 USS.
App. D.C. 145, 413 F.2d 1052 (1969) ....ecsssecssseeessssnnnessesen 3
Municipal Elec. Assn. pf Massachusetts v. SEC, 136 US.
App. D.C. 175, 419 FZ TST (20GB) .ncoscseneosccsscosessencsoveconcese 5
Northern Natural Gas Co. v. Federal Power Commission,
130 U.S. App. 220, 399 F.2d 953 (1968) ............cccsceccssseseee 5
Pacific Power & Light Co., 27 F.P.C. 623 (1962) wu g
Securities and Exchange Commission v. Central-IIlinois
Securities Corp., 338 U.S. 96, 127 (1949) wc ceseseeseenne 1]
Securities and Exchange Commission v. Chenery Corp., 332
ys EF eh iiss ah inc stnieaconieatncienenigneibdocilcomnianceettpsinibavents 1]
Securities and Exchange Commission v. New England Elec-
tric Byastems, GOO US. BOT (YOGG): insccssccsdsscosesscsvesncssovsnssconeess 10
United States v. Drum, 368 U.S. 370 (1962) ou... eessssessseene ll
Udall v. Tallman, 380 U.S. 1 (1965) ......7iiiuuu....sccccscsccssssssesees 9
Statutes
Fodoral Power Act. .cccccsccssscsescssssosesnavessevees seseseescsenevessssvevensseccsoves 9, 12
Rieti BOE; BE BG, GOI css vecicescsin sssvesacssencsiconenstiicceinnn GF
Section 202, subsections (a) and (b), 16 U.S.C. §824a.... 3,10
Beotion 20S, 16 UB... SABE .cecscscssocereccoovesencoversevevesnssssin 3, 10
Section 904, 16 U.B.C., SBBKC .nrcrocoscrcesooseseosese 2, 3, 5, 9, 10,11
Section 205, 16 U.S.C., §824d .....scsssssseseesseensenssssnessenssesees 3, 10
ili
PAGE
Section 206; 16 U.8.C., §824e .......scccccsrsrceposees saausaana 3, 10
Moston SOG. 16 UB... GORGE cnssecsscccssesssescescecsssqoososssorenses 3, 10
ties SU TE TG, II wins iesticsncicsessicticxsnesicninasieess. GAD
las Oe OEE BONE is ssniscsssninteaisavoscctoatesndnicavatn 3, 10
Dailies BI Fie Tike Aides SON: sscakasenspetsnscavssimnbeiiseirisesishcnne 3, 11
Clayton Act
eet FFE TIT: GAO Siirsetinsntiaiesdictsnnineasoroniviatseieveiateneteses 7,10
Section 11, subsections (a) and (b), 15 U.S.C. §21........ 3,7
Interstate Commerce Act
Ri RR AEE hy GH snsipevcntnsncrncnintetevesssnaesctncrenbinsendaiecs 5, 8, 9
Public Utility Holding Company Act
ai A Fe EF oath cash ssntictoermecsanesentiivinsnvenensietinv’ 2,10
ema FT TG UA g Be tei iittinetenicasntonaisraninsdsninncssiscinese 2,10
Sherman Act least aieputganils op eclinlad ah ova alceneiiicipeiipiactenainda isi beleanebd 4,7,9
RE OR OE ip SONNEI, SOBSEEIA CEs CEC sea ne ar eR 2
Miscellaneous
National Transportation Policy. ......0.cccssessessssesssssseesesiesssoresseces 8,9
OPY
In THE
Supreme Court of the ¥inited States
OcroserR Term, 1971
Se
Guiry Srates Urtiities Company,
Petttioner,
v.
FreperaL Powrer CoMMISSION,
Ciry or LAFAyETTE, LOvIsIANA,
Crry or PLaquemine, Louisiana,
Respondents.
PETITION OF
GULF STATES UTILITIES COMPANY
FOR WRIT OF CERTIORARI
TO THE
UNITED STATES COURT OF APPEALS
FOR THE
DISTRICT OF COLUMBIA CIRCUIT
Petitioner, Gulf States Utilities Company (“Gulf
States”), prays that a writ of certiorari issue to review the
opinion and judgment of the United States Court of Ap-
peals for the District of Columbia Circuit, decided October
12, 1971, petitioner’s Motion for Rehearing overruled De-
cember 15, 1971.
OPINIONS BELOW
The opinion of the United States Court of Appeals for
the District of Columbia Cireuit, not yet reported, is
9
_
App. A, infra, at p. la. Judgment of the Court of Appeak
is App. B, infra, at p. 30a. Order overruling petition for
rehearing is App. C, infra, at p. 3la. The order of the Fed.
eral Power Commission (“FPC”) authorizing Gulf States
to issue $30,000,000 principal amount of First Mortgage
Bonds is App. D, infra, at p. 32a; supplemental order ap.
proving price and interest rate is App. E, infra, at p. 389:
and FPC order overruling motion for rehearing filed by
Cities of Lafayette and Plaquemine, Louisiana (“Cities”),
Intervenors in the proceeding before the FPC, is App. F,
infra, at p. 41a.
JURISDICTION o
The order of the United States Court of Appeals for
the District of Columbia Circuit was%entered October 12°
1971. Petition for rehearing was denied on December 1),
1971. The jurisdiction of this Court is invoked under
U.S.C. §1254(1).
QUESTIONS PRESENTED
1. Whether the FPC has a duty to investigate charges of
Sherman Act violations under $204 of the Federal Power
Act.
2. Whether the FPC and the SEC have different duties
for investigation of alleged Sherman Act violations in pro-
ceedings under $204 of the Federal Power Act and, under
§6 (a) and §7 (d) (6) of the Public Utility Holding Con-
pany Act, respectively.
3. Whether the Court of Appeals can require the FPC t
investigate antitrust allegations found to be irrelevant by
the FPC.
FLEED THROUGH POOR COPY
3
STATUTES INVOLVED
Sections 201, 202, subsections (a) and (b), 203, 204, 205,
906, 305, 306, 307, and 313 of the Federal Power Act, 16
USC. S824, SS24a, subsections (a) and (b), {S824b, °S24e,
‘wud, (S24e, (25d, 6S25e, (S25f, and $825 1, and §11,
subsections (a) and (b) of the Clayton Act 15 U.S.C. 621,
subsections (a) and (b), are set forth in Appendix G,
infra, pp. 48a-09a.
STATEMENT ~~ .-
Section 204 of the Federal Power Act (App. G, infra,
fia-49a) provides that no public utility shall issue any
security until, upon application by the public utility, the
FPC by order authorizes such issue. It also provides the
FPC shall make such order only if it finds among other
things that such issue is for some lawful object and com-
patible with the public interest.
On October 12, 1970, Gulf States, a public utility, filed
with the FPC an application for an order authorizing it
to issue and sell bonds at competitive bidding (R. pp. 1-12,
inel.).' The application stated that the proceeds from the
sale of the bonds would be used to pay off part of the
Company's short-term indebtedness. Cities filed a verified
protest which, with appendices, consisted of 106 pages (R.
pp. 04-160, incl.) charging Gulf States with engaging in friv-
olous and repetitive litigation and mounting a public rela-
tious drive and lobbying effort in concert with two other
wility companies over a period of years “apparently” vio-
lative of the antitrust laws, among others, to Cities’ damage.
Gulf States answered (R. p. 263) pointing out that the bond
proceeds would he used merely to refund short-term secur-
*“R” refers to the printed appendix filed in the Court of Ap-
peals in connection with the appeal which resulted in the judg-
ment (App. B, infra, p. 30a) which Gulf States asks this court to
review,
CPOY BOUND CLOSE IN CENTER
4
ities theretofore authorized by an uncontested FPC orde
and urging the irrelevancy of intervenors’ contentions 9,
that and other grounds.
The FPC permitted Cities’ intervention but without ,
hearing overruled the same and granted Gulf States’ ay.
thorization for issuance of the bonds (App. D, infra, at p,
32a). Cities’ petition for rehearing was overuled by the FP¢
(App. F, infra, at p. 41a). Cities filed Petitions for Review
of Orders of the FPC in the U. 8. Court of Appeals for
the District of Columbia Circuit, where it was docketed
as Cause No. 71-1041 and consolidated, for purposes of
argument, with Causes Nos. 24,764 and 24,963 wherein
Cities were petitioners, Securities and Exchange Comnis.
sion (“SEC”) was respondent and Louisiana Power & Light
Company was intervenor. The Court disposed of all three
numbered causes in a single opinion (App.- A, wmfra, p. 1a).
Facts and contentions of the parties are more extensively
set forth in the opinion of the Court of Appeals below(App.
A, infra, p. 1a).?
REASONS FOR GRANTING THE WRIT
The Court of Appeals has imposed an additional duty
upon the FPC to investigate alleged Sherman Act viola-
tions and has relieved the SEC of such duty under compar-
able circumstances, all in face of determinations by both
commissions that the activities alleged to be anticompetitive
in both proceedings were irrelevant to the purposes of the
respective proceedings. In so doing, such Court of Appeals
has decided important questions of federal law whieh have
not been, but should be, settled by this Court, and, the Court
of Appeals in attempting to reconcile its own prior deci
‘2 The Court’s statement (App. A, infra,-p. 10a) of Cities’ argt-
ment in petition for rehearing before the FPC is erroneous but
not thought to be material to consideration of this petition.
FLEED THROUGH POOR COPY
=
4)
ions, has left the only court interpretations in this vital
area of law in a confused and inconsistent state.
The FPC neither filed motion for rehearing with the
Court of Appeals below nor petitioned this Court for certio-
rari. This should not refleet on the importance of the issue.
The FPC may have been stung by the implication of counsel
for the Cities that the F PC's position was that of “an in-
genious Commission which wishes to avoid regulatory prob-
lems by narrowing its own jurisdiction."
1. The importance of granting this petition is documented
by clear evidence that if this case is not reviewed the FPC
_and public utilities subject to its jurisdiction will labor
under a court ordered construction of §204 of the Federal
Power Act arrived at without objective consideration be-
cause of a mistaken belief that it was compelled by an in-
apposite opinion of the Supreme Court. The Court below
selected the opinion of the Supreme Court in Denver & Rio
Grande Western R. Co. v. United States’ as the pattern for
its opinion and judgment. If that opinion does not support
the Court of Appeals, then it has no support. The Court of
Appeals noted that $204 of the Federal Power Act is almost
identical with certain provisions of $20a of the Interstate
Commerce Act which were interpreted in the Supreme
Court's opinion in Denver & Rio Grande and treated that
opinion as controlling here.
Hf the Court of Appeals failed to note that the Supreme
Court in its opinion in Denver and Rio Grande written by
Justice Brennan warns:
* Alabama Elvetric Cooperative v. SEC, 122 U.S. App. D.C. 367,
$93 F.2d 905 (1965); Municipal Electric Ass'n of Massachusetts
0 SEC, WE US. App. D.C. 145, 413 F.2d 1052 (1969) ; Municipal
Ele, Ass'n of Mass. v. SEC, 136 VS. App. D.C. 175, 419 F.2d 757
(69); City of Pittsburgh v. FPC, 99 US. App. D.C. 113, 237
F.2d 741 (1956) ; Northern Natural Gas Co. v. FPC, 130 US. App.
D.C. 220, 399 F.2d 953 (1968). All of these cases are mentioned in
the opinion of the Court below (App.A, infra, p. lai.
‘Brief for Petitioner Cities in Court of Appeals below, p. 20.
5387 U.S. 485 (1967)
CPOY BOUND CLOSE IN CENTER
6
Section 20a, like § 5, must after all be read in thy
context of overall ICC responsibilities. The responsi.
bility under §11 of the Clayton Act to enforce tha
Act’s provisions is one of them.® (Kmphasis supplied,
Further in the same opinion, it is said:
... the Clayton Act is prohibitive, and imposes a posi.
tive obligation upon the ICC to act. The Commissiyy
is directed, whenever it has reason to believe any car.
rier within its jurisdiction is violating §7, to “issy
and serve upon such person... @ complaint stating its
charges . . . and containing a notice of a hearing.”
15 U.S.C. § 21(b), Section 16, 15 U.S.C. § 26, excepts
from the power of private persons to bring §7 suits
for injunctive relief all cases involving matters sub.
ject to ICC jurisdiction. By thus limiting the authority
of private persons to institute court proceedings t
enjoin §7 violations, this proviston underscores the
ICC’s responsibility to act when such violations ar
brought to its attention.’ (Emphasis supplied.)
The Court of Appeals erred in tracking the language just
quoted to reach its own decision in the instant case. In Dev.
rerand Rio Grande, the Court was reviewing an application
to the ICC for authority to issue securities to another car-
rier in which it was cither conceded or assumed arquends
by all parties that “anticompetitive” effects were involved:
The Court said that the TCC need not grant a hearing in
every case, but that when the ICC exercises its discretion to
approve issuances Without first considering important con-
petition issues, the reviewing court must closely serutiniz
its action in light of the ICC's statutory obligations to pro-
tect the public interest and to enforce the antitrust laws:
6 37 US. 485, 493 (1967)
7387 U.S. 485, 502
* At page 491
9 387 U.S. 485, 498. This statement is included by the Court belo
in a quotation (App. A, infra, p. 15a) used to support its insistent
on close scrutiny by the reviewing court of omission of a hearin:
on anticompetitive issues apparently without the Court notice
that the FPC does not have the same statutory obligation as the
ICC.
PLEED THROUGH POOR COPY
7
Having noted " the ICC’s responsibility under $11 of the
Clayton Act, the Court concludes its opinion’® with the
statement:
The Government was correct in its position before the
ICC that this record placed “before the Commission
serious questions under section 7 of the Clayton Act,”
requiring a hearing. (Emphasis supplied.)
The FPC (like the SEC) ts not among the governmental
agencies authorized by §11(a) to enforce $7 of the Clayton
Act. Sections 11(a) and (b) of the Clayton Act (App. G,
infra, p. 97a) confirm what the Supreme Court has else-
where remarked that “Other administrative agencies are
authorized to enforce $7 of the Clayton Act when it comes
to certain classes of companies or persons; but the Federal
Power Commission is not included in the list.’* (Emphasis
supplied.) Thus, Denver and Rio Grande would not have
heen apt authority in the instant case even if Gulf States
had heen accused of Clayton Act violation. But Cities have
invited the FPC’s attention to an “apparent” violation of
the Sherman Act. The Court below has said previously in
City of Pittsburg v. Federal Power Commission that
“...the Commission has no power to enjoin conduct as ille-
gal under the Sherman Act or even to declare such illegal-
ity... 2° Tf the FPC in the remanded proceedings should
enter an order placing restrictions on the use of the pro-
ceeds of future securities issues (the proceeds of the Bonds
have long since been used for the purpose specified in the
FPC’s order), would this not be doing by indireetion what
the same Court has said can not be done directly? Would
this not be in effect a prospective judgment of illegal pur-
1 387 U.S. 485, 501
1 At page 507.
= California v, Federal Power Commission, 369 U.S. 482. 486.
18237 F.2d 741, 754.
CPOY BOUND CLOSE IN CENTER
averse |
sah Bt
‘Se
8
pose and in effect an injunction against anticipated opera.
tions or activities the FPC judged might be illegal?"
The Supreme Court in Denver & Rio Grande declared ap.
other reason for reading anticompetitive issues into the
public interest standards of §20a of the Interstate Coy.
merce Act. Justice Brennan, speaking for the Court, said.
The responsibility to advance the National Transporta.
tion Policy, read into the “public interest” standard of
§5, is another persistent and overriding duty, equally
applicable to §20a."°
The National Transportation Policy *
lation to accomplish various things:
provides for regu.
without unjust discriminations, undue preferences, or
advantages, as unfair or destructive competitive prac.
tices. (Emphasis supplied.)
The declaration of policy contained in §201 of the Federal
Power Act (App. G, infra p. 48a) contains nothing similar
and nothing concerning competitive practices.
What the opinion in Denver and Rio Grande makes crys-
tal clear is that the ICC must read into the “public interest”
test of (20a of the Interstate Commerce Act anticompetitive
responsibilities imposed upon it by the Clayton Act and
14 The bonds were sold when authorized by FPC supplemental
order issued December 9, 1970, almost a year before the Court of
Appeals remanded the cause for FPC attention to anticompetitive
issues. Thus, the FPC was not directed to reconsider whether or
not the bonds should be authorized but to consider whether or no
evidence of unlawful anticompetitive activity should be investigated
and, presumably, if evidence of continuing antitrust violations was
discovered, to take appropriate action. What such action should b
is not easy to envision. One possible action would be to report
possible violation to the Attorney General. However, §314(a) of
the Federal Power Act does not make it the duty of the FPC t
report antitrust violations to the Attorney General as does §20a
of the Natural Gas Act. es
15 387 U.S. 485, 493. See also McLean Trucking Co. v. Unite
States, 321 U.S. 67 (1944).
16 54 Stat. 899, 49 U.S.C.A: (note preceeding §1.)
me Sey The erie POOR COPY
9
the National Transportation Policy. By failing to recognize
those factors, as it must in fairly judging FPC responsi-
bility under $204 of the Federal Power Act, and‘in relying
ona similarity of language between §204 and parts of §20a,
the Court below fell into the error of tracking in our case
the directions of the Supreme Court to the ICC in Denver
and Rio Grande.
Had the Court of Appeals not felt shackled by Denver, it
might have followed the declared practice of the Supreme
Court and shown deference to the interpretation given the
statute by the agency charged with its administration’? by
following the FPC’s construction of §204 in Pacific Power &
Light Co., 27 F.P.C. 623 (1962) noticed by the Court below
at App. A, infra, pp. 16a-17a. The FPC there held the pur-
pose of §204 is to prevent issuance of securities which might
impair financial security or ability to perform public utility
responsibilities.
A subsidiary question, if the FPC is assumed to have
some Sherman Act responsibility under $204 of the Fed-
eral Power Act and if it is assumed that the proceeds
of the securities to be issued might be used in further-
ance of Sherman Act violations, is whether it has a duty
to consider alleged Sherman Act violations not claimed to
arise from or be related to operations or activities subject
to FPC regulation. In the instant case, Cities alleged Gulf
States instigated a series of lawsuits over a period of five
years which delayed the use of funds by a publie electric
authority not a party to this litigation, engaged in frivo-
lous and repetitive litigation and mounted a public relations
drive and lobby effort against such public authority. These
are activities over which the Federal Power Act gives the
Udall vy. Tallman, 380 U.S. 1 (1965).
y +r. -_ = oe ee ee ee ee an eee eT in eee ee
10
FPC no regulatory responsibility.” If Gulf States deene;
it in its best interest to endeavor to protect its business and
retain its customers against the activities of competitors hy
filing lawsuits or engaging in public relations drives, the
Federal Power Act did not require it to first obtain author.
ization from the FPC.”
2. While the structure of §204 of the Federal Power Aq
differs from that of §6 (15 USC, §79f) and §7 (15 TS¢,
$79g¢) of the Public Utility Holding Company Act (49 Stat
838, as amended, 15 USC 879, et seq.), there is no support
in either logic or policy for giving them different interpre.
tations in the respects under consideration.
3. The Court of Appeals below has decided a federal
question in a way which is in conflict with applicable deci-
sions of the Supreme Court in that it has set aside a find.
18 Although the Court below discussed (App. A, infra, pp. 18a,
27a), some of the following sections, the Court referred to n
allegations of violations by Gulf States or requests for relief by
Cities, and there were none, within the scope of §202 in subsections
(a) and (b) (App. G, infra, pp. 44a-45a) relating to interconne-
tions, §203 (App. G, infra, p. 46a) to merger, consolidation an’
acquisitions of another public utility, $205 and $206 ( App. G, inro,
pp. 49a-52a) to rates, and §305 (App. G, infra, p. 52a) to inter-
locking directorates. Had charges been made of violations under
those sections, §306 (App. G, inf, p. 53a) provides for complains
and §307 (App. G, infra, p. 54a) for investigations by the FPC «
violations of the chapter.
19 The Supreme Court has held that publicity campaigns ani
litigation directed toward obtaining governmental action adverv
to prospective competitors is not illegal merely because affected by
an anticompetitive purpose nor is it illegal for one to seek action
on laws in hope of achieving an advantage for himself and a dis
advantage to competitors. Eastern Railroad’s President's Confe-
ence ¥. Noerr Motor Freight, Inc., 365 U.S. 127 (1961). The rule
was recently reaffirmed in California Motor Transport Co., et dl.
v. Trucking Unlimited, 92 S.Ct. 609 (decided January 13, 1972 .
This line of authority only serves to increase the difficulty of the
FPC in determining the direction and scope of actions or orders
which might be appropriate if investigation of antitrust activity
should be undertaken upon remand of this cause.
PLEED THROUGH POOR COPY
11
ing of the FPC supported by substantial evidence.?° If the
FPC has a duty to consider alleged Sherman Act viola-
tions, surely it can be assumed that such duty does not
arise in a £204 proceeding if the proposed use of the pro-
coeds of the securities issue do not relate to furtherance of
any such violations. In effect, this is what the FPC found
in thix case. In its order the F PC found:
(6) the matters asserted and activities alleged in the
filed protest and petition to intervene by the Cities of
Lafayette and Plaquemine, Louisiana, are irrelevent to
the purpose of issuing bonds to refund short-term in-
debtedness heretofore authorized by this Commission.
(App. C, infra, at p. 36a.)
Preliminary to this specific finding the FPC addressed itself
to the refunding purpose of the bond issue in the body of its
order, App. C, at pp. 54a and 35a, the latter part of which
was quoted in the opinion of the court below at App. A, p.
Wa. Gulf States declared the purpose for which its bonds
were to be issued in its verified Application to the FPC (R.,
*" Federal Power Act. $313(b), App. G. p. 54a, 55a; Gainesville
Utilities Dept. v. Florida Power Corp., 402 U.S. 515 (May 24.
W71); Federal Power Commission v. Florida Power & Light Co.,
#28.Ct. 637 (January 12, 1972). Even if the quoted finding be
treated as dealing with more than a “pure” fact question, it is a
finding based on substantial evidence within an area of discretion
assigned to FPC for the exercise of its expertise and should not be
disturbed by the Court. Securities and Exchange Commission vy.
New England #£lectrie System, 390 U.S. 207 (1968) ; United States
Vv. Drum, 368 U.S. 370 (1962); Interstate Commerce Conimission v.
Jersey City, 322 U.S. 503 (1944): Sceuritics and Evchange Coim-
mission V. Central-Ilinois Securitics Corp., 338 US. 96, 127 (19495.
That there is no dispute concerning the evidentiary facts does not
permit Court to substitute its judgment for that of the agency.
Gray v. Powell, 314 U.S, 402, 412 (1941). On undisputed facts, the
Court is free to disturb the Commission’s finding only if it lacks
any rational or statutory foundation. Securitics and Exchange Com-
mission ¥. Chenery Corp., 332 U.S. 194, 207 (1947). A reviewing
Court cannot set aside an inference because it believes an opposite
inference to be more reasonable. If supported by evidence and not
inconsistent with law, the agency’s finding is conclusive. Cardillo
v. Iaberty Mutual Insurance Co., 330 U.S. 469, 477-8 (1947).
CPOY BOUND CLOSE IN CENTER
12
p. 5)."" Despite this clear evidence of a deliberated finding
by the FPC, the Court below said:
It suffices for present purposes to say that the PPC,
terse and cryptic statement did not comply with the
requirement we see in Denver & Rio Grande, that the
ageney’s reason for denying or deferring hearing of
anticompetitive issues be clear on the record, meaning.
ful in findings or discussion. (App. A, infra, pp. 2la,
22a).
In summary, if permitted to stand, the opinion of the
court below will add to the number of governmental agen-
cies with the responsibility or authority to investigate anti-
trust law violations or anticompetitive activities and impose
upon the FPC and public utilities hereafter secking its au.
thority for the financing of construction of electric systems
(for which the Federal Power Act provides no certificating
requirements), the burden, delay, and expense of investiga.
tion and examination of matters which are beyond the scope
of the FPC’s lawful responsibility or regulatory authority.
It will also add two more strands to the tangled web of ae.
tivity in the antitrust field and further compound the con.
fusion by reaching opposite results for the FPC and the
SEC under comparable fact situations. These important
questions should be settled by this Court. Further, the Court
of Appeals should not be permitted to set aside a supported
finding of the FPC in a way which conflicts with applicable
decisions of this Court.
21 Gulf States’ statement in full of the purpose for which the
securities were to be issued under Item J of its application was:
“The proceeds from the sale of the New Bonds will be used by the
Company to refund and pay off part of its commercial paper and
short-term notes to banks to be outstanding as of the date of i»
suance. The Company estimates that on December 16, 1970, the date
the securities are expected to be sold, there will be outstandinz
approximately $55,000,000 principal amount of commercial paper
and short-term notes issued on various dates. The aforesaid com
mercial paper and short-term notes to banks constitute an issuane
of securities previously authorized by the Commission (Docket No
4-7509.” (R., p. 5.)
PLEED THROUGH POOR COPY
13
CONCLUSION
For these reasons this petition for a writ of certiorari
should be granted.
Respectfully submitted,
BENJAMIN D. OrGaAIN
B. H. Hucues
Counsel for Petitioner
March, 1972
APPENDIX A
Notice: This opinion is subject to formal revision before publi-
cation 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 cor-
rections may be made before the bound volumes go to press.
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Nos. 24,764
& 24,963
Crry or LaFayette, Louisiana
Ciry or PLaQvEMINE, Louisiana,
Petitioners
Vv.
SecurITIEs AND ExcHANGE CoMMISSION,
Respondent
Lovistana Power & Licutr Company,
Intervenor
No. 71-1041
City or LAFAYETTE, LOUISIANA
City or PLaqueMminE, Louisiana,
Petitioners
v.
FrepErRAL PowrEr Commission,
Respondent
Gur Srares Urmities Company,
Intervenor
PETITIONS FOR REVIEW OF ORDERS OF
SECURITIES AND EXCHANGE COMMISSION
AND FEDERAL POWER COMMISSION
Decided October 12, 1971
2a
Before BazeLon, Chief Judge, and Fany, Senior Circuit
Judge, and LeventTHAL, Circuit Judge.
LevenTHAL, Circuit Judge: The Cities of Lafayette and
Plaquemine, Louisiana (“Cities”) petition this court to re.
view orders of the Federal Power Commission and the Se.
curities and Exchange Commission which approved appli-
cations, presented to the Securities and Exchange Comnis.
sion by Louisiana Power and Light Company (“LP&L”),
and to the Federal Power Commission by Gulf States Util.
ities Company, proposing issuance of bonds, notes, and
stock to finance capital requirements. The gist of peti-
tioners’ complaint is that the agencies failed to take proper
account of their claims that the proceeds would be used
for the Companies’ unlawful conspiracy to suppress con-
petition. We affirm as to the orders of the Securities & Ex.
change Commission, and remand as to the order of the
Federal Power Commission.
I. BACKGROUND
A. Pertinent Statutes
The Public Utility Act of 1935, passed August 26, 1935,
49 Stat. 803, contains, in Title I, the Public Utility Holding
Company Act, 15 U.S.C. §§ 79 et seq., which provides for
regulation of public utility holding companies and is ad-
ministered by the SEC. Its Title II enacted the Federal
Power Act, Parts II and III, 16 U.S.C. §§ 824 et seq. with
provisions, for regulation of electric utility companies en-
gaged in interstate commerce, administered by the FPC.
Holding Company Act
Sections 6 and 7 of the Holding Company Act give the
SEC jurisdiction over sales of securities by holding con-
panies and their subsidiaries, subject to certain exceptions,
3a
notably an exemption in § 6(b) for issues approved by state
commissions.!
Section 6 forbids the sale of a security by a holding com-
pany or its subsidiary, unless the sale is in accordance with
a declaration it has filed under § 7, and with an order of the
SEC permitting such declaration to become effective.
Under § 7 the SEC may not permit a declaration to be-
come effective unless it finds compliance with certain re-
quirements. One of these requirements, set forth in § 7(c)
(2), is satisfied if the Commission finds “(2) such security
is to be issued or sold solely ... (B) for the purpose of
financing the business of the declarant as a public utility
company... .” If the requirements of §{ 7(c) and (g)? are
met, §7(d) requires that the SEC “shall permit a declara-
tion... to become effective unless it finds that —... (6) the
terms and conditions of the issue or sale of the security
are detrimental to the public interest or the interest of in-
vestors or consumers.”
Finally, § 7(f) provides that the Commission’s order per-
mitting a declaration to become effective “may contain such
terms and conditions as the Commission finds necessary to
assure compliance with the conditions specified in this
section [7].”
‘Section 6 is codified as 15 U.S.C. § 79f. Section 7 is codified as
1) US.C. § 79g. Section 6(b) provides that if a particular security
issue of a subsidiary has been expressly authorized by the appro-
priate state utility commission, the SEC shall exempt the issue
“subject to such terms and conditions as it deems appropriate in
the public interest or for the protection of investors or consum-
Oe Figs “
*§7(g) prohibits a declaration from becoming effective if the
Commission has been informed by a State commission having juris-
diction over a company’s issuance of securities, or alteration of
rights of security holders, that State laws applicable thereto have
not been complied with.
ost
4a
Federal Power Act
Section 204 of the Federal Power Act, 16 U.S.C. § 824,
relates to the issuance of a security by a public utility, —
defined by § 201 as a company transmitting electric energy
in interstate commerce or selling electric energy at whole.
sale in interstate commerce. Section. 204(a) provides that
no such public utility shall issue any security except as an.
thorized by FPC order. It continues:
The Commission shall make such order only if it finds
that such issue... (a) is for some lawful object, within
the corporate purposes of the applicant and compatible
with the public interest, which is necessary or appro.
priate for or consistent with the proper performance
by the applicant of service as a public utility and which
will not impair its ability to perform that service, and
(b) is reasonably necessary or appropriate for such
purposes.
Subsection (b) of § 204 gives the Commission broad av-
thorization to place conditions on the granting of an ap
plication, and specifically contemplates provisions “as to
the particular purposes, uses, and extent to which... any
security ... or the proceeds thereof may be applied. ...”*
Subsection (f) of § 204 establishes an exclusion as to
a utility organized and operating in a state under the laws
of which its security issues are regulated by a State con-
mission.
3(b) The Commission, after opportunity for hearing, may grant
any application under this section in whole or in part, and with
such modifications and upon such terms and conditions as it may
find necessary or appropriate, and may from time to time, after
opportunity for hearing and for good cause shown, make suel
supplemental orders in the premises as it may find necessary or ap-
propriate, and may by any such supplemental order modify the
provisions of any previous order as to the particular purposes, uses
and extent to which, or the conditions under which, any security
so theretofore authorized or the proceeds thereof may be applied.
subject always to the requirements of subsection (a) of this
section.”
ha
B. Petitioners’ Antitrust Allegations
Louisiana Power and Light is a wholly-owned subsidiary
of Middle South Utilities, Inc., a holding company regis-
tered under the Holding Company Act. It is engaged, as
is Gulf States and Central Louisiana Electric Company
(CLECO) (the three companies together being sometimes
referred to as “Companies”), in generating, transmitting
and selling electricity at wholesale and retail in Louisiana.
Gulf States also does this in Texas. The three Companies
are interconnected, engage in sales and exchanges of elec-
tricity among themselves, and are members of the eleven
“South Central Electric Companies” which engage in a
seasonal exchange of energy with the Tennessee Valley Au-
thority. The Companies are owners in Louisiana of major
transmission facilities, handling voltages up to 500 KV.
Petitioners allege that these three Companies engaged
ina conspiracy to suppress and defeat an interconnection
and pooling agreement between the Cities, Dow Chemical
Company and Louisiana Electric Cooperative, Ine.
(“LEC”). LEC, a generation and transmission coopera-
tive financed by the Rural Electrification Administration,
is made up of twelve electric distribution cooperatives,
all of which operate in Louisiana.
In September 1964, the REA undertook to make a $56.5
million loan to LEC for construction of & 200 MW gener-
ating station with 1611 miles of transmission lines through
which the LEC could serve eight of its twelve member
cooperatives. Prior to this time, the three Companies had
been selling power to these cooperatives. According to
petitioners, the Companies succeeded in delaying the ac-
tual use of the funds thus provided for more than five
years, through a series of lawsuits filed by the Companies
themselves and by the Companies’ attorneys on behalf of
other putative plaintiffs.
6a
Petitioners allege that in August, 1968, the Cities, Doy
and LEC executed an Interconnection and Pooling Agree.
ment providing for the interconnection of their generating
systems and a long term pooling and coordination arrange.
ment, with a minimum term of ten years. The agreement,
approved by the REA administrator on November 19,
1968, provided for a combined planning of load require.
ments for the Cities, the LEC members and Dov, [I
meant, according to petitioners, assurance of a market for
all surplus capacity and secondary energy, as well as eo.
ordination, and substantial savings, in the construction of
new generators, in sum, economies of scale, plus benefits jn
the form of back-up for each system and energy inter.
changes.
Petitioners state that by engaging in frivolous and repeti-
tive litigation, and by mounting a public relations drive and —
lobbying effort against LEC, the three Companies were able
to hold up disbursement of the loan money until January,
1969, when a new REA administrator was sworn into office,
This prevented the members of the new pool from going
ahead with their agreement. Furthermore, a rise in costs
during the five-year delay raised a serious question whether
the original loan would suffice to finance all of the LEC:
generation and transmission needs. Therefore, the new Ad-
ministrator advanced funds only for the LEC generating
station, but not for transmission lines, and LEC was left
to negotiate with the three companies for use of their
transmission lines.
Petitioners contend that the conspiracy continued during
these negotiations. They say that the Companies, while
willing to supply transmission of power to some of the
LEC members, refused to supply transmission services
between pool members. They further say that the Com-
panies demanded that LEC limit its power capacity to the
Ta
200 MW already planned, and that the Companies supply
all further power needs of the twelve cooperatives, thus
precluding further LEC expansion to serve its members’
expanding load.
C. Agency Proceedings
1. Securities and Exchange Commission
Case No. 24,764: On September 16, 1970, LP&L filed
with the SEC a declaration for authority to issue and
sell $20 million of first mortgage bonds and $7 million in
preferred stock. The stated purpose of this financing was
to enable LP&L to repay short-term borrowings it had
made as temporary financing for its 1970 construction pro-
gram, and for other corporate purposes,
On October 9, 1970, counsel for the Cities submitted a
letter to the Commission, setting forth the allegations out-
lined above. The Cities asked the Commission to order an
investigation of these matters by its staff, to consult with
the staff of the FPC, and to withhold action on the author-
ization pending the results of the investigation or at least
a conference with the parties. The Cities contended in their
letter that the funds, if approved, would be utilized for the
construction of facilities that would assist LP&L and its
associates in their nnlawful objectives, and asked that such
approval, if granted, be conditioned on cessation of these
activities and the establishment of a program to remedy
the damage already done. The Cities requested that the
matter be set down for hearing unless LP&L’s parent agreed
to such a condition. The Cities also requested a conference
with the Commission and the Companies.
On October 27, 1970, the Commission issued its order
stating that the Cities had not filed a Notice of Appearance
as a party pursuant to Ruie 9(a) of its Rules of Practice,
8a
or requested a hearing. The order further stated that “thj,
controversy does not justify withholding of the requeste
order since it is not relevant to the consideration of th
‘proposed transactions which in all respeets satisfy the stand.
ards of Section 7.”
Case No. 24,963: On November 2, 1970, LP&L filed with
the SEC a declaration for authority to issue and sel] up
to $40 million of short-term notes, during the period throug,
December, 1972. The stated purpose of these borrowings
was to finance the construction of new facilities and improve.
ments, and for other corporate purposes,
On November 30, 1970, petitioners filed with the SEC a
formal “Protest and Intervention,” which contained sub
stantially the same allegations as the October 9 letter, and
further requested that the Cities be made parties to the
proceeding and that the SEC hold hearings.
On December 29, 1970, the SEC issued its Order per.
mitting the declaration to become effective. The SEC
found that the Cities did not directly attack the proposed
use of proceeds or the terms and conditions of the pro-
posed securities, but were simply maintaining “that author-
ization for the proposed financing enhances Louisiana's
financial position to pursué\the alleged violations of the
antitrust laws.” The SEC héeld that its authority under
Section 7(d)(6) of the Act, to impose terms and condi-
tions, related solely to the terms and conditions of the
security to be issued, and “does not extend to the resolution
of collateral and unrelated controversies in which a de-
clarant may be engaged with other parties.” The SEC
concluded that the allegations in the Protest did not present
issues relevant to Section 7 and therefore did not justify
withholding the requested Order.
The SEC made findings in each proceeding “that it is
appropriate in the public interest and in the interest of
PEED TuROICH POOR COPY
9a
investors and consumers” that the declaration be permitted
to become effective. It permitted both declarations to be-
come eifective without a hearing, and the security sales
authorized were promptly completed.
)» Federal Power Commission
Case No. 71-1041: On October 12, 1970, Gulf States filed
an application with the FPC to sell $30 million of first mort-
gage bonds at competitive bidding. The application stated
that the proceeds would be used to pay off part of Gulf
States’ commercial paper and short-term notes. On October
16, 1970, the F PC noticed the application and announced
that protests or petitions to intervene should be filed on or
before November 2, 1970.
On November 2, the Cities filed their protest and peti-
tion to intervene with the Commission. The protest set
forth the allegations outlined above, claiming that Gulf
States had violated the antitrust laws, the Federal Power
Act, and the Holding Company Act. The Cities requested
that the application be set down for hearing unless, as a
condition to receiving approval for the sale of its securi-
ties, Gulf States would agree to purge itself of these al-
leged violations and remedy the damage already done.
Following an answer by Gulf States, the Commission, on
December 3, 1970, entered an order denying a hearing and
authorizing Gulf States to issue the proposed bonds. The
Commission stated that the Cities’ allegations were “ir-
relevant to a requested authorization of securities,” and
further found that:
The proposed issuance and sale of Bonds, as herein-
after authorized, will be for a lawful object, within the
corporate purposes of Applicant and compatible with
the public interest, which is appropriate for and econ-
sistent with the proper performance by Applicant or
CPOY BOUND CLOSE IN CENTER
ee |
10a
service as a public utility and which will not impair its
ability to perform that service, and is reasonably nee.
essary and appropriate for such purposes.*
The FPC refused the Cities’ request. for a hearing
stating:
The requested approval of the issuance of the Bonds
allows the Company only to change the form of a por.
tion of its outstanding indebtedness, it does not call
for the initiation of any construction or other program
by the Company which might effect [sic] the interest
of the Petitioners. The alleged violations which peti-
tioners attempt to raise in this proceeding are irrele-
vant to a requested authorization of securities. There
is no relief that the Commission can order in author.
izing the issuance of the Bonds for refinancing pur-
poses that would have any effect on the interest of the
Petitioners, or solve any of the problems outlined by
them.
In the petition for rehearing, filed December 16, 1970,
the Cities argued that the Commission could not have
known the purpose for which the bond proceeds would be
used, because Gulf States had stated only that they would be
added to the Company’s general funds, to be used as part
of interim funds for construction. Furthermore, the Cities
argued, it was unclear whether the Commission considered
their antitrust allegations irrelevant to a Section 204
determination generally, or only because, in this particwar
case, a refunding rather than new funding was involved.
The Cities again urged that the Commission condition its
approval to assure,that the bond proceeds “would not be
used to the detriment of the Cities or in a manner inimical
to the proposed pool.” The Commission denied rehearing,
stating that the Cities’ grounds for rehearing presented no
4 By amendment filed December 9, 1970, Gulf States advised the
Commission of the terms it proposed to accept in the financing.
The Commission approved these terms by an order filed the same
day, and again stated that the proposed bonds were for a lawful
purpose, and their issuance compatible with the public interest.
PLEED THROUGH POOR COPY
lla
facts or legal principles warranting any change in its
orders.
Il. PROCEDURAL PROBLEMS
Before proceeding to the substantive issues involved in
this case, We note that intervenors LP&L and Gulf States”
contend petitioners are not properly before this court.
Neither the SEC nor the FPC suggest any procedural
obstacle to the petitions.
We find no merit in intervenors’ procedural contention.
LP&L’s initial contention® is essentially grounded in a
claim of failure to exhaust administrative remedies. While
the Cities may not have followed SEC procedures to the
letter, they made plain their objections and the Commis-
sion ruled on the merits. We see no impediment to judicial
review. Joseph v. FCC, 131 U.S.App.D.C. 207, 404 F.2d
207 (1968).
Intervenors contend that the Cities are not aggrieved
by the actions of the SEC and FPC, and therefore may not
seek judicial review of their orders, either under the review
provisions of the particular agency statutes,® or under the
general review provisions of the Administrative Procedure
Act.’
°LP&L argues that in case 24,764 Cities failed to file a notice of
appearance or formally request a hearing, and this amounted to a
failure to urge its objections before the Commission, which pre-
cludes judicial review under § 24(a) of the Holding Company Act,
15 U.S.C § 79x(a).
* Section 24(a) of the Holding Company Act, 15 U.S.C. § 78x‘)
provides judicial review for any “person or party aggrieved by an
order issued by the Commission under this title. . . .” ~Section |
313(b) of the Federal Power Act, 16 U.S.C. § 825 1(b) provides —
judicial review for any “party to a proceeding under this chapter
aggrieved by an order issued by the Commission in such proceed-
ee
; Section 10 of the Administrative Procedure Act, 5 U.S.C. § 702,
grants judicial review to a “person suffering legal wrong becan<e
of agency action, or adversely affected or aggrieved by agency ac-
tion within the meaning of a relevant statute.”
CPOY BOUND CLOSE IN CENTER
12a
This contention must be rejected on the authority of
Data Processing Service v. Camp, 397 U.S. 150 (1970), and
Barlow v. Collins, 397 U.S. 159 (1970). The petitioners have
alleged injury in fact resulting from the Comunission’s —
failure to consider their antitrust contentions relevant,
The interest asserted by the petitioners arguably falk—
within the zone of interests to be protected by the tthe
There is a non-frivolous claim that the “public interest” ~
requirements of these statutes requires consideration of
antitrust conspiracy.’ Even assuming petitioners’ conten.
tions should be rejected on the merits, they raised an
arguable claim of right under the relevant statutes that
establishes procedural standing...
Ill. VALIDITY OF THE ORDERS
The orders of the FPC and SEC are accompanied by
conclusory findings that approval of the applications is in
the “public interest.” The issue is whether these orders
are valid in view of the refusal of these agencies to order
a hearing on the allegations of intervening parties of the
anti-competitive purpose and consequence of each applica-
tion and its approval by the Federal agency involved.
The regulatory library includes a host of decisions e:-
tablishing that when an agency is called upon to determine
whether a proposal or condition satisfies the “public in-
terest,” or another similar broad standard, the agency has
the authority and typically the responsibility to consider
a challenge based on the asserted anti-competitive purpose
or consequence of the proposal.®
8 Northern Natural Gas Co. v. FPC, 130 U.S.App.D.C. 220, 31°
F.2d 953 (1968) ; City of Pittsburgh v. FPC, 99 U.S.App.D.C. 115,
237 F.2d 741 (1956).
®FMC v Aktiebolaget Svenska Amerika Linien, 390 U.S. 23>.
242-246 (1968); Denver & Rio Grande Western R.Co. v. United
o4
Ida
This generality is not necessarily conclusive. The same
statutory phrase may have different meanings in different
contexts, and the statutes, agencies and court decisions are
not necessarily fungible. A particular statute may have
such a setting that, on consideration of its legislative Jis-
térv, the nature of the agency, and breadth of responsi-
bility involved, and other material factors, a court may
ore to the conclusion that though its public interest Jan-
guage is broad its meaning in context warrants a relatively
restricted reading.’°
However it is a fair consensus of the cases cited that
th/nattion’s profound and pervasive devotion to competi-
tion as a fundamental economic policy, and conviction that
the public interest is disadvantaged when private enter-
prises are permitted to engage in anti-competitive agree-
ments and restraints, is applicable at least presumptively
even in the case of monopolies or quasi- monopolies charac-
terized by various degrees of government control and pro-
tection, subject of course to offset or rebuttal on analysis
by the cognizant agency.
With these general observations as a point of departure,
we consider the orders and statutes before us.
States, 387 U.S. 485 (1967) ; United States v. El Paso Natural Gas
Co., 376 U.S. 651 (1964); United States v. Philadelphia National
Bank, 374 U.S. 321 (1963) ; California vy. FPC, 369 U.S. 482, 484-85
(1962) ; United States v. Radio Corporation of America, 358 U.S.
34 (1959); McLean Trucking Co. v. United States, 321 U.S. 67
(1944) ; Marine Space Enclosures, Ine. v. FMC, 137 U.S.App.D.C.
4.17 ff, 420 F.2d 577, 585 (1969) ; Municipal Elec. Ass'n of Mass.
v. SEC, 134 U.S.App.D.C. 145, 413 F.2d 1052 (1969) ; Northern
Natural Gas Co. v. FPC, 130 U.S.App.D.C. 220, 226, 399 F.2d 952.
499 (1968) ; City of Pittsburgh v. FPC, 99 U.S.App.D.C. 113, 237
F.2d 741 (1956)
lw
ee Alabama Electric Cooperative, Inc. v. SEC, 122 US.App.D.C.
367, 353 F.2d 905 (1965), cert. denied, 383 U.S. 968 (1966) = Ala-
~~ Electric Cooperative, Inc. v. SEC, 359 F.2d 434 (5th Cir.
l4a
Federal Power Commission Order
Since Gulf States is an electric utility company engaged
in interstate commerce, subject to regulation under Title
II of the Federal Power Act, its proposal to sell $30 mil.
lion of first mortgage bonds required an application by the
company, and approval by the FPC, under § 204 of the
Federal Power Act. Section 204 of the Federal Power Act
is almost identical with the pertinent provisions of § 20a
of the Interstate Commerce Act, as amended, 49 U.S.C.
§ 20a, which was recently given an authoritative reading
in Denver € Rio Grande Western R. Co. v. United States,
387 U.S. 485 (1967). :
In Denver & Rio Grande the Court was concerned with
an application of Railway Express Agency to sell shares
equal to 20% of its outstanding stock to Greyhound Cor.
poration. On a finding of urgent need the ICC authorized
this issuance without a hearing, and deferred decision of
contentions presented by objectors that the proposal was
not in the “public interest” or for a “lawful object” because
it would result in “control” of the applicant by the car-
rier purchasing the shares, with “anti-competitive” con-
sequences.
The Court rejected the Government’s contention “that
§ 20a was designed to accomplish only the limited objec-
tive of protecting stockholders and the public from fiscal
manipulation. ...”?! The Court held that the ICC had erred
in entering its approval while deferring consideration of the
anti-competitive effects of the transaction, and remanded
to the ICC for further proceedings. It set forth in unmis-
takable terms the authority and responsibility of the ICC
to consider the “anti-competitive” issues. See 387 US. at
492:
11 See 387 U.S. at 491-92.
See AP, 'y
ae
Gat
15a
We do not agree that Congress limited ICC consid-
eration under § 20a to an inquiry into fiseal manipula-
tion. Even if Congress’ primary concern was to pre-
vent sugh manipulation, the broad terms “public in-
terest” and “lawful object” negate the existence of a
mandate to the ICC to close its eyes to facts indi-
cating that the transaction may exceed limitations
imposed by other relevant laws. Common sense and
-sound administrative policy point to the conclusion
that such broad statutory standards require at least
some degree of consideration of control and anti-
competitive consequences when suggested by the cir-
cumstances surrounding a particular transaction. Both
the ICC and this Court have read terms such as “pub-
lic interest” broadly, to require consideration of all
important consequences including anticompetitive ef-
fects.
The FPC observes that in another passage the Court
said that the ICC was not required tohold a hearing in
every case, That language merits exposition. See 387 U.S.
at 498:
We conclude, therefore, that the ICC is required, as
a general rule, under its duty to determine that the pro-
posed transaction is in the “public interest” and for
a “lawful object,” to consider the control and anti-
competitive consequences before approving stock is-
suances under § 20a(2). This does not mean the ICC
must grant a hearing in every case, or that it may
never defer consideration of issues which arise when
special circumstances are present. But it does mean
that, when the ICC exercises its discretion to approve
issuances without first considering important control
and competition issues, the reviewing court must close-
ly serutinize its action in light of the ICC’s statu-
tory obligations to protect the public interest and to
enforce the antitrust laws. Whether or not an abuse
of discretion is present must ultimately depend upon
the transaction approved, its possible consequences,
and any justifications for the deferral.
snail
16a
In this passage the court plainly earmarked the [Ces ay.
thority to omit a hearing on anticompetitive issues or to
defer consideration thereof in cases presenting special cir.
cumstances — as an authority that required agency “justif.
cation” and close scrutiny by the reviewing court to assure
against any abuse of discretion or default in statutory obli-
gation.
The action of the FPC in the order before us is plainly
inconsistent with its duties as developed in Denver & Rig
Grande. The FPC contends to us that § 204 does not re.
quire the FPC to consider antitrust allegations when av-
thorizing the issuance of securities. We are cited to Po-
cific Power & Light Co., 27 FPC 623 (1962), and urged to
show deference to the interpretation given a statute by
the agency charged with its administration.’* In the Pa-
cific Power & Light proceeding the FPC was concerned with
an application to issue “first mortgage bonds and con-
mon stock to use a portion of the proceeds to build a
transmission line from Oregon to California at a higher
voltage than would be presently required.” The FPC noted
that it had not been given certificate jurisdiction and “con-
cluded that Section 204 could not be used as a vehicle for
‘comprehensive licensing-type regulation * * *. 27 FPC
at 626. In the Commission’s view, the plain purpose of
Section 204 was ‘to prevent the issuance of securities which
might impair the company’s financial integrity or its abil-
ity to perform its public utility responsibilities.’ Ibid.”
We are not called upon to review the FPC’s decision in
Pacific Power & Light, or to take account of the points
raised in Commissioner Morgan’s vigorous dissent. The
FPC’s 1962 ruling came prior to the Supreme Court's
1967 decision in Denver d Rio Grande, a point that merits
12 Udall v. Tallman, 380 U.S. 1 (1965).
me l7a
particular emphasis since the FPC itself stressed that
6204(a) was “copied almost verbatim from Section 20a
of the Interstate Commerce Act” (27 F.P.C. at 627), and
relied on the proposition that the purpose of § 20a was to
ensure a sound railroad credit structure.!® But of course
the Court’s Denver and Riv Grande opinion establishes that
while sound financial credit was the dominant objective of
(20a of the Interstate Commerce Act, the breadth of the
“public interest” criterion extends to the anticompetitive
issues, Thus the FPC’s own 1962 reasoning that its law
tracks the ICC’s statute undercuts the survival of its broad
conclusion that ¢ 204(a) is limited to financial matters.
The same may be said for the FPC’s conclusion that its
authority is necessarily limited since an interstate electric
utility may issue short-term notes without FPC authority
pursuant to § 204(e) of the Federal Power Act,'® and could
launch its construction with those funds. The same might
have been said as to the ICC, which has even less authority
over short-term notes than the FPC.'® The short answer
is that a utility would be improvident indeed if it relied on
its short-term authority to obviate agency overview on ap-
plication for approval of the long term securities.
The Pacific Power & Light ruling stated that the FPC
lacks authority to certificate a utility’s operation or expan-
'’ Citing Sharfman, Interstate Commerce Commission, 190 (N.Y.
1931)
The FPC noted that the Senate Committee “stressed” that con-
trol over capitalization is an essential means of safeguarding the
public against unsound financial practices, see S. Rep. No. 621, 74th
Cong., ‘Ist Sess. (1935) p. 50. But this Senate Report in no way
negatives Justice Brennan’s comment in Denver & Rio Grande that
this dominant concern is not exclusive.
Under § 204(e), 16 U.S.C. § 824e(e), the FPC is not given
authority as to notes of less than a year’s maturity aggregating less
than a% of the company’s outstanding securities.
"Under § 20a(9) of the Interstate Commerce Act, 49 U.S.C,
$ 20a(9), the authority of the ICC does not extend to notes of two
Years or less duration not exceeding 5% of outstanding securities.
18a
sion. This has some weight, but not enough. It would haye
more if the FPC were in the same position as the SEC, of
having no regulatory authority over operations of the
utility. But the FPC does have authority over interstate
electric utilities, and that authority is by no means ingub.
stantial. As was rightly said in its most recently available.
annual report, the FPC “exercises national responsibility
for the regulation of the interstate electric power indus.’
wc
Apart from regulating interstate electric utilities jp
regard to their issuance of securities, the FPC is mandated
under the Federal Power Act to regulate their charges for
the interstate transmission of electric energy ({ 206), and
their mergers or consolidations ({ 203).
Significantly the FPC has been given authority and re-
sponsibility by § 202 of the Act, 16 U.S.C. § 824a, in regard
to interconnection and coordination of facilities.
For the purpose of assuring an abundant supply of elec.
tric energy throughout the United States with the greatest
possible economy and with regard to the proper utilization
and conservation of national resources,” § 202(a) directs
the FPC “to divide the country into regional districts for
the voluntary interconnection and coordination of facilities
for the generation, transmission, and sale of electric
energy” and pronounced it the “duty of the Commission
to promote and encourage such interconnection and coordi-
nation within each district and between such districts.”
Section 202(b) gives mandatory authority to the FPC,
upon application of any State commission or of any per-
son engaged in the transmission or sale of electric energy,
to order an interstate electric utility “to establish physical
interconnection of its transmission facilities with the facili-
171970 Annual Report, FPC, p. 24.
19a
ties of one or more other persons engaged in the transmis-
sion or sale of electric energy, to sell energy to or exchange
energy With such persons.” This authority exists if the FPC
makes a finding that its exercise is in the public interest,
subject only to the proviso that the interconnection not
require the regulated utility to enlarge its generating facili-
ties or impair its existing services.
In view of the FPC’s broad public interest charter to
enhance optimum interconnection and interchange of elec-
tric energy, not to mention its array of other activities
in furtherance of electric energy capability,’* the circum-
stance that its jurisdiction has not been extended to cer-
tifieating responsibility is no reason for limiting it under
§ 204 to a tunnel vision of the public interest.
At oral argument the Commission’s General Counsel put
it that the PC is interested in safeguarding costs, rates
and reliability, but it wants to stay out of the fight between
investor-owned utilities on the one hand and cooperatives
and municipalities on the other. Whether or not this is
tactical wisdom, it may not be achieved at the expense
of abdicating responsibility. And we see no reason «why
the responsibility of considering the public interest re-
quires any jeopardy of the kind of objectivity that is eon-
templated for an independent regulatory commission.
The Commission is expected to make determinations as
to the public interest in matters where there is such under-
lying conflict. Its docket contains a number of complaints
'S The 1970 Annual Report discusses, inter alia, its Electric
Power Reliability Policy; adoption in pursuance thereof, of “a
system of comprehensive reporting by all segments of the electric
power industry (private, public, cooperative and Federal) of infor-
mation on operating data and advance planning by power pools,
coordinating groups, and individual utilities and on studies to
support such plans”; its 1970 National Power Survey: and the
work of its Task Foree on Environment. ue
is
24a
appropriately referred to as supple and flexible.*® The
doctrine of primary jurisdiction “has become one of the
key judicial switches” in furtherance of “coordination
between judicial machinery and [administrative] agencies”
in matters of mutual concern.?® Switches operate both
ways, and, depending on the nature of the issue, an ageney
may wait for a court as well as the reverse.
We have been at pains to set forth the latitude available
to the agency in approach and procedure to obviate any
concern that this court seeks to interfere with its exer.
cise of discretion. What the court does require is that the
agency take a “hard look” at problem areas.*°
Securities and Exchange Commission
Section 7(d)(6) of the Holding Company Act is not
written in the same terms as § 204 of the Federal Power
Act. The SEC, in holding petitioners’ antitrust allegations
irrelevant to its determination, and refusing to set the
matter down for hearing, stated :*!
The phrase “terms and conditions” as here used re-
lates solely to the terms and conditions of the security
to be issued, and therefore, the phrase “detrimental to
the public interest” refers to such terms and conditions
and not to extraneous matters. Section 7(f) provides
that “any order permitting a declaration to become
effective may contain such terms and conditions as the
23 .J.M. Huber Corp. v. Denman, 367 F.2d 104, 111 (5th Cir.
1966).
29 Port of Boston Marine Terminal Ass'n vy. Rederiaktiebolaget
Transatlantic, 400 U.S. 62, 68-69 (1970); Brawner Building, Ine.
v. Shehyn, U.S.App.D.C. ——, 442 F.2d 847 (1971). Compare
United States v. Morgan, 307 U.S. 183, 191 (1939).
%9 Greater Boston Television Corp. v. FCC, U.S.App.D.C.
; F.2d (slip opinion at p. 18) (Nov. 13, 1970), cert.
denied, 403 U.S. 923 (June 14, 1971) ; WAIT Radio vy. FCC, 135
U.S.App.D.C. 317, 418 F.2d 1153 (1969).
31 JA 160, Holding Company Act Release No. 16955.
25a
Commission finds necessary to assure compliance with
the conditions specified in this section.” Authorization
to impose terms and conditions under Section 7(f) does
not extend to the resolution of collateral and unrelated
controversies in which a declarant may be engaged with
other parties. See Alabama Power Co., (Holding Com-
pany Act Release No. 15252, June 1, 1965), affirmed,
Alabama Electric Cooperative, Inc. v. SEC, 353 F.2d
905 (1965), cert. denied, 383 U.S. 968.
We turn first to the precedent cited by the SEC. In
Alabama Electric Cooperative v. SEC, 122. U.S.App.D.C.
367, 353 F.2d 905 (1965), Alabama Power, seeking to issue
$14 million of common stock, claimed an exemption from
SEC supervision under §6(b) of the Holding Company
Act, on the ground that the issue was subject to regulation
by a state commission. The Cooperative objected that the
holding company intended to use the proceeds of this sale
so as to duplicate its lines and facilities, and asked the SEC
to prevent such use, through its power to impose conditions
on an exemption “in the public interest or for the protec-
tion of investors or consumers.” When the SEC refused,
the Cooperative argued it had erred in refusing to copsider
the claim of anti-competitive effect. We affirmed the Com-
mission, saying (122 U.S.App.D.C. at 369, 353 F.2d at 907) :
The purpose of the Public Utility Holding Company
Act... was to supplement state regulation—not to sup-
plant it. Nowhere in the Act isthere a provision grant-
ing to the SEC the sort of regulatory power attributed
to it by the petitioner. Indeed, the congressional choice
of that Commission to administer the Act is, in itself,
the strongest sort of proof that the general purpose
of the Act was to regulate the issuance of securities
which could not be reached by state commissions.
In Municipal Electric Ass’n of Massachusetts v. SEC,
134 U.S.App.D.C. 145, 413 F.2d 1032 (1969), however, this
court required the SEC to consider anti-competitive effects.
Vist
cae
tate
ay
22a
comply with the requirement we see in Denver & Rio
Grande, that the agency’s reason for denying or deferring
hearing of anticompetitive issues be clear on the record,
meaningful in findings or discussion.
Accordingly we deem it necessary to remand the order
under review. To avoid misunderstanding, we think it
appropriate to say expressly that an agency is not required
to hold hearings in matters where the ultimate decision
will not be enhanced or assisted by the receipt of evi-
dence.?? And as to interventions raising anti-competitive
issues we see no objection in law to a disposition without
hearing that is accompanied by an explanation, supported
in the record, that the intervenor’s contentions are too in-
substantial or barren to indicate the existence of substantial
anticompetitive issues, or to meet the requirement of a rea-
sonable nexus between the activities challenged and the
activities furthered by the application.‘
We do not undertake to determine now what is involved
in the requirement of reasonable nexus, which we think is
fairly implied in the jurisprudence. Development of this
requirement must await consideration in the first instance
by the agency involved, and an analysis of the factual
context.
We are aware, too, of the pertinence of the comment of
FPC’s counsel, that security issues to provide funds for
a utility’s construction must be decided in a time frame
much more limited than that often contemplated for anti-
23 Denver Union Stock Yard Co. v. Producers Livestock Market-
ing Ass’n, 356 U.S. 282, 287 (1958) ; Citizens for Allegan County
Inc. v. FPC, 134 U.S.App.D.C. 229, 414 F.2d 1125 (1969).
24In Municipal Elec. Ass’n of Mass. v. SEC, 134 U.S.App.D.C.
145, 152, 413 F.2d 1052, 1059 (1969), the court noted that the con-
trol challenged by the cities “is tied in significant manner to the
acquisition of the stock” for which approval was sought.
23a
trust litigation. But the doctrine of public interest con-
sideration does not contemplate that an agency will be
engaged in a determination of antitrust issues as such.?5
In the context of a particular matter, it may become evi-
dent that the agency may approve forthwith a large portion
of the application, and the use of the funds contemplated
thereby, while reserving decision on the difficult issue. In-
deed even an entire application may be approved if the
agency stands ready to proceed with hearing and consid-
eration of the anticompetitive issues, and to take the prob-
lems into account in the disposition of another application
projected for presentation to the agency within a reasonable
time.”6
So far as antitrust issues are concerned the agency has
the opportunity to obtain the comments of the Department
of Justice.*7.It may even, indeed, defer its disposition
pending determination of relevant court litigation where
that will aid in the determination of the “public interest”
issue. This would be in effect a reverse application of the
doctrine of primary jurisdiction, a doctrine that has been
*° Northern Natural Gas Co. v. FPC, supra, note 9, 130 U.S.App.
D.C. at 229-30, F.2d at 962-63.
*6 Even in courts the doctrine of mootness does not apply to
questions of a recurring nature. Southern Pacific Terminal Co. vy.
ICC, 219 U.S. 498 (1911) ; Friend v. United States, 128 U.S.App.
D.C. 323, 388 F.2d 579 (1967).
27 Northern Natural Gas Co. v. FPC, supra, 130 U.S.App.D.C. at
227, 399 F.2d at 960. Intervenor observes that § 314(a) of the Fed-
eral Power Act does not set for a duty in the FPC to report anti-
trust violations to the Attorney General such as appeared in
$20(a) of the Natural Gas Act of 1938. If this is more than an
accident of drafting style, perhaps marking the change between
1935 and 1938, it does not limit the authority of the agency either
to refer matters to the Attorney General or to entertain his presen-
tations.
a a ee ee as i a ei i i |e i hii a i i
20a
by public utilities and by cooperatives against private com.
panies, both for physical interconnection and for termina.
tion of charges attacked as discriminatory or otherwise yp.
lawful.’® It is illuminating that only recently the Supreme
Court sustained an FPC interconnection order that ye:
jected the claim of a private utility to make an intereop.
nection with a municipally-owned utility on terms mor
onerous than those required of other investor-owned utili.
ties.?°
Replacement of Short-Term Notes
The FPC’s counsel vigorously urged an alternative con.
tention, that the Cities’ intervention did not require a hear.
ing since their allegations concerning Gulf States’ opera.
tions could have no. meaningful relation to an application
that only sought to replace short-term notes with long-term
bonds.
This contention is not without appeal, and also not with.
out problems, First, the order giving Gulf States authority
to issue $30 million bonds to replace short term notes ap.
parently operated to give Gulf States authority to increase
its overall debt, since it would have had authority forth-
with to issue an additional $30 million in short-term notes!
It is not clear whether FPC counsel would have urged
1? Annual Report for 1970, Table 10, p. 26.
*° Gainesville Utilities Department et al v. Florida Power Corp.
402 U.S. 515 (1971). The FPC rejected the claim of Florida Power
Co. that the city system pay not only the capital cost of the inter.
connection but also an annual payment for the backup service. It
noted among other matters that Florida Power had not includeda
comparable charge in any of the contracts for interconnection
voluntarily negotiated with members of the Florida Operating
Committee, an informal group coordinating the technical opere-
tions of five Florida utilities.
*1 Its previously granted authority to issue $80 million short term
notes would not have been terminated, though the duration of the
notes authorized would have been reduced by the lapse of time.
a
ELEED THROUGH POOR COPY
2la
the same contention if the outstanding short-term notes
had been of one year’s duration and had been issued by
Gulf States, pursuant to §204(e) of the Act, on its own
authority and without an FPC order. A contention this
broadly put would raise most serious questions.
The ultimate reason, however, for rejecting this conten-
tion of FPC counsel is that the cryptic statement of the
FPC does not permit us to conclude with reasonable confi-
dence that this was the position taken by the FPC. And
we cannot permit arguments of counsel to take the place
of agency findings.??
Our problem is not a merely technical one. The point
here urged by counsel has significance only on the assump-
tion that at another time the FPC would consider the anti-
competitive issues as material. But that assumption means
a modification or restriction of the FPC’s 1962 ruling in
Pacific Power & Light, supra. We have no guidance from
the FPC that it accepted a limitation of that ruling. Indeed
we have been asked to affirm its order on the reasoning of
that 1962 ruling. Moreover when the Cities, in their peti-
tion for rehearing, expressly requested the FPC to advise
whether the reason for denial of a hearing was the nature
of the application as seeking approval for long-term bonds
oi a refunding of short-term notes, the FPC declined to
say this,
We do not consider what ruling we would make on the
basis of such a position if thought through and embodied
in FPC policy and findings. It suffices for present purposes
to say that the FPC’s terse and cryptic statement did not
* Burlington Truck Lines, Inc. v. United States, 371 U.S. 156
(1962) ; Public Serv. Comm. of the State of New York v. FCC,
— U.S.App.D.C. ——, 436 F.2d 904 (1970); WAIT Radio vy.
FCC, 135 U.S.App.D.C. 317, 418 F.2d 1153 (1969) ; Braniff Air-
ways, Ine. v. CAB, 126 U.S.App.D.C. 399, 379 F.2d 453 (1967).
CPOY BOUND CLOSE IN CENTER
26a
That case involved an application by several New England
electric utilities, under §10 of the Holding Company Act,
15 U.S.C. §79j, to approve their acquiring the stock of
two nuclear-power electric generating companies, The
Municipals sought a hearing on their charge that any’ap
proval of the acquisition, to the exclusion of the Municipals’
opportunity to obtain power directly from the nuclear.
power plants, would not be in the public or consumer jp.
terest, since it would deprive the Municipals of access to
a course of cheap power and thus harm them competitively,
The SEC denied the request for a hearing, holding that
the Municipals had presented no issue of fact relevant to
the proceedings. We reversed, and remanded for a hearing
before the SEC concerning the imposition of appropriate
conditions on the transaction.
Petitioners claim that both our action and opinion in
Municipal establish the necessity of considering antitrust
allegations before granting approvals to stock issues under
§§ 6 and 7. However, the Municipal opinion expressly as-
serts that a line, albeit a “fine line,” is to be drawn be.
tween SEC’s approval of an acquisition of stock by a util-
ity, and a sale of securities by a utility. Acquisitions are
governed by §§9 and 10 of the Holding Company Act.
Our Municipal opinion pointed out that §10, unlike 47,
expressly prohibits approval of a transaction if the Com-
mission finds that it will tend toward interlocking rela-
tions or the concentration of control of public-utility com-
panies, of a kind or to an extent detrimental to the public
interest or the interest of investors or consumers.
The Alabama Cooperative case is not to be read as limit-
ing SEC’s consideration under §7(d)(6) solely to review-
‘ing the financial terms of the security to be issued. The
force of that 1965 opinion is weakened, apart from the 1967
opinion in Denver & Rio Grande, by its erroneous assump-
27a
tion of the narrow reading to be given to § 10, an assump-
tion undercut by our 1969 opinion in Municipal. Moreover,
Alabama Cooperative did not involve an SEC approval in
the course of exercising its jurisdiction under §{6 and 7,
but the question whether it could impose terms to qualify -
the exemption provided by §6(d) for security issues ap-
proved by a state commission. In Municipal Elec. Ass’n
of Mass v. SEC, 136 U.S.App.D.C. 175, 419 F.2d 757 (1969),
we specifically reserved the issue of whether antitrust con-
siderations are included in the public interest referred to
in approvals of $46 and 7.
We think proper resolution of the problem now before
us is provided by affirmance of the SEC’s order, but with
modification in part of our discussion in Alabama Coopera-
tive. Where an agency has some regulatory jurisdiction
over operations, it must consider whether there is a reason-
able nexus between the matters subject to its surveillance
and those under attack on anti-competitive grounds, But
the general doctrine requiring an agency to take account
of antitrust considerations does not extend to a case like
the one before us where the antitrust problem arises out
of operations of the regulated company (past and projected )
and the agency, here the SEC, has not been given any regu-
latory jurisdiction over operations of the company. The
SEC has no jurisdiction over operations and stands in a
different posture from the FPC which, as we have already
noted, has regulatory jurisdiction over operations in view
of its authority, inter alia, to direct utilities to interconnect
on reasonable terms, or to prohibit a utility from discrim-
inating in rates and facilities against its municipal cus-
tomers.
In Municipals the utility’s acquisition of stock was sub-
ject to SEC jurisdiction. And the court held that the ex-
ereise of the authority to approve acquisitions requires
28a
consideration of antitrust matters, particularly in view of
the statutory purpose to avoid undue concentration of
control in public utility holding companies. This is a more
static issue than direct surveillance of operations. It js
rather a review of proposed structure to ascertain whether
it embraces a substantial possibility of undue concentra.
tion of control. Of course a decision on structure requires
“economic forecasting” concerning operations, in such mat.
ters as ¢.g., profitability, consequence -of independence of
management. SEC v. New England Elec. System, 390 US,
207, 211, et seq. (1968). Yet although the matters are inter.
related, the SEC’s jurisdiction relates to structure rather
than directly to operations.
To avoid misunderstanding, we are not here accepting
the contention of SEC counsel that the distinction lies
between application under $10 for acquisition, which re.
quires consideration of antitrust—issues, and applications
under §6 for approval of security issues, which do not.
As to applications under §6 the question left open by
second Municipals is still open. So far as this opinion is
concerned the court will be free to determine, if the circum.
stances warrant, that the application under §6 requires
consideration of antitrust issues because the purpose of the
application is significantly related to the structural position
of the applicant in the industry — perhaps by a proposal
for operating affiliation as well as one for capital affiliation
— which presents the kind of issue, of undue concentration
of control, that lies within the regulatory jurisdiction of
SEC upon consideration of an application under § 10.
There may also be circumstances where a particular pro-
posed operating use of funds will, it is claimed, be linked
significantly to operations within the SEC surveillance con-
templated by Congress. Suppose it were objected that the
utility planned a covert use of a significant part of the
29a
proceeds of a security issue to establish a political slush
fund prohibited by §12(h) of the Holding Company Act.
We think the SEC would be under a duty to give considera-
tion to the claim, for the matter challenged is within the
reasonable contemplation of Congress as one in which the
SEC has a sphere of interest, and should explore further
when the issue is brought to its attention.
Addressing ourselves broadly, however, to the question
of sale of securities, and taking into account the regulatory
volumes involved** and the lack of any SEC authority
to regulate operations of utilities, we think an objecting
intervenor cannot require SEC consideration of the appli-
cant’s operating activities from the point of view of un-
due restraints on competitors or potential competitors.
We state this doctrine in terms of broad application rather
than in categorical terms, for we leave open the resolution
appropriate if in a particular case the operations assailed
are of such a nature as to be equivalent, in significance and
consequence, to structural affiliation, or if the purpose of
the utility’s sale of securities is otherwise shown to have a
reasonable nexus to matters within the SEC’s jurisdiction
under other provisions. Within the broad reach of the
doctrine we deem applicable we do not think petitioners
have made a showing of reversible error.
In Nos, 24,764 and 24,963, the orders of the SEC are.
affirmed. In No. 71-1041, the cause is remanded to the
PPC for further proceedings not inconsistent with this
opinion.
So ordered. ‘
__
In fiscal 1970, 15 active registered bidding companies and
their subsidiaries sold 59 issues, pursuant to SEC authorization,
and raised new capital in the amount of $1,684,000,000. SEC 36th
Ann. Report (for 1970) p. 164. :
30a
APPENDIX B
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIKCUIT
SEPTEMBER TERM, 1971
United States Cot of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
FILED Oct. 12, 1971
/s/ Nathan J. Paulson
Clerk
No. 71-1041
Ciry or Larayette, Lovistana
City or PLaqueMIneE, LovisIana,
- Petitioners
v.
-_
FeperaL Power CoMMISssION,
Respondent
Guur States Urmities Company,
Intervenor
Petition for Review of Order of the
Federal Power Commission
Befoge: Bazzton, Chief Judge; and Fany, Senior
Circuit Judge, and Leventuat, Circuit Judge.
JUDGMENT >
This case ¢ame on to be heard on the record from the
Federal Por Commission, and was argued by counsel.
‘Respondent thereafter filed*a supplemental memorandum.
On consideration of the foregoing, it is
ORDERED AND ADJUDGED by this Court that this
case is hereby remanded to the Federal Power Commission
for further proceedings consistent with the opinion of this
Court filed herein this date.
Per Curiam
For the Court:
/s)} NATHAN J. PAULSON
NATHAN J. PAULSON
Clerk °
-
3la ; o
APPENDIX C
Hnited States Court of Appe:
FOR THE DISTRICT OF COLUMBIA CIRCUIT
SEPTEMBER TERM, 1971
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
FILED Dec. 15, 1971
/s/ Nathan J. Paulson
Clerk
No. 71-1041
Ciry or Larayette, Louisiana
Crry or PLaQqueMINeE, Louisiana,
Petitioners
v.
FEperaL Power CoMMIssIon,
Respondent
Guir Srares Urimities Company,
Intervenor
Before: Bazevon, Chief Judge; Fauy, Senior
Circuit Judge and LevenTHAL, Circuit Judge.
ORDER
On consideration of intervenor’s petition for rehearing
on petition to review an order of the Federal Power Com-
mission, it is
ORDERED by the Court that intervenor’s aforesaid
petition is denied.
. Per Curiam
For the Court:
/s/ NATHAN J. PAULSON
NATHAN J. PAULSON
Clerk
meses Seeder ee ee be dee nde
ew |
32a
APPENDIX D
UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
Before Commissioners :
John N. Nassikas, Chairman; Lawrence J. O’Connor, Jr,
Carl E. Bagge, John A. Carver, Jr., and Albert E. Brooke,Jr,
Guur States Urinities Company,
Docket No. E-7567
ORDER AUTHORIZING ISSUANCE OF
FIRST MORTGAGE BONDS, GRANTING
INTERVENTION AND DENYING HEARING
(Issued December 3, 1970)
Gulf States Utilities Company (Applicant), -aen
tion organized under the laws of the State of Texas and
doing business in the States of Texas and Louisiana, filed
an application on October 12, 1970, seeking an order pur-
suant to Section 204 of the Federal Power Act authorizing
it to issue and sell at» competitive bidding, $30,000,000
aggregate principal amount of First Mortgage Bonds, due
2000.
The Applicant proposes to issue the Bonds under their
Indenture of Mortgage to Manufacturers Hanover Trust
Company, dated September 1, 1926, as supplemented and
proposed to be further supplemented by a Twenty-ninth
Supplemental -Indenture dated as of the date of the new
Bonds.
Applicant originally proposed to publish bids for pur-
chase of the Bonds on November 24, 1970, and to accept
a bid-on December 9, 1970. The proposed publication of
bids can be delayed for one-week and still allow the Appli-
cant to meet the date set for bid acceptance.
PLEED THROUGH FOCR COPY
33a
Each bid must be presented by a single bidder or by a
group of bidders to the Company at Manufacturers Han-
over Trust Company, the Federal Room, Fourth Floor, 40
Wall Street, New York, New York 10015, before 11:00 A.M.
New York Time, on December 9, 1970.
Each bid shall specify, among other things, (1) the
interest rate of the Bonds, which shall be a multiple of 4%% ;
(2) the price (expressed as a percentage of the principle
amount), exclusive of accrued interest, to be paid to the
Company for the Bonds, which shall not be less than 99%
and not more than 10242% of the principle amount of the
Bonds, and that accrued interest on the Bonds from the first
day of the month in which the Bonds are issued to the
“date of payment therefor and delivery thereof will be
paid to the Company by the Purchaser or Purchasers.
The proceeds to be realized from the sale and issuance
of the proposed Bonds will be used by the Company to
refund and pay off part of its commercial paper and short-
term notes to banks to be outstanding as of the date of
issuance. The Company estimates that on December 16,
1970, the date the securities are expected to be sold, there
will be outstanding approximately $55 million principal
* amount of commercial paper and short-term notes issued
on various dates. The short-term indebtedness of the Com-
pany was authorized by the Commission in Docket No.
E-7509 and the proceeds from the notes were expended in
connection with the Company’s construction program and
for other corporate purposes. The cost of new construction
is expected to total $110 million in 1970 and $93 million in
1971.
Written notice of the application has been given to the
Texas Railroad Commission, the Louisiana Publie Service
Commission, and to the Governor of each of those States.
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Notice has also been given by publication in the Federal
Register on October 27, 1970 (35 F.R. 16649), stating that
any person desiring to be heard or to make any protest
with reference to the application should on or before No.
vember 2, 1970, file a petition or protest with the Federal
Power Commission, Washington, D. C. 20426,
On November 2, 1970, the Cities of Lafayette and Plaque.
mine, Louisiana, filed a protest and petition to inter.
vene in the proceeding requesting that the Commission
withhold the order authorizing the issuance of the proposed
Bonds and that the proceeding be set for hearing. Inter.
venors allege that activities of the applicant violate Federal
anti-trust laws, Section 10(h) of the Federal Power Act,
and the Public Utility Holding Company Act of 1935. All
violations arising from Applicant’s activities allegedly
prevented construction of generating facilities by certain
utilities in Louisiana and power pooling arrangements in
which the cities are to participate.
On November 12, 1970, the Applicant answered the pro-
test and petition to intervene denying violations of the anti-
trust laws, the Federal Power Act, or the Public Utility
Holding Company Act of 1935, and contending, among
other things that the Cities lack standing to intervene, in
that they have not alleged any interest which may be
affected, or as to which they will be bound by Commission
authorization of the proposed Bond application.
The requested approval of the issuance of the Bonds allow
the Company only to change the form of a portion of its out-
standing indebtedness, it does not call for the initiation
of any construction or other program by the Company
which might effect the interest of the Petitioners. The
alleged violations which petitioners attempt to raise in this
proceeding are irrelevant to a requested authorization of
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securities. There is no relief that the Commission can order
in authorizing the issuance of the Bonds for refinancing
purposes that would have any effect on the interest of the
Petitioners, or solve any of the problems outlined by them.
The Commission finds:
(1) The Applicant, a corporation, is.a public utility
within the meaning of Section 204 of the Federal Power
. Act subject to the jurisdiction of the Commission as here-
tofore determined and set forth in the Commission’s order
issued November 27, 1957, In the Matter of Gulf States
Utilities Company, Docket No. E-6785 (18 FPC 701).
(2) The proposed issuance and sale of Bonds, as de-
scribed above will constitute an issuance of securities within
the purview of Section 204 of the Act.
(3) Applicant is not organized and operating in a State
under the laws of which the security issue here involved is
regulated by a State Commission within the meaning of
Section 204(f) of the Act; and the proposed issuance of
securities is, therefore, not exempt by virtue of that Section
from the requirement of Section 204 of the Act.
(+) The proposed issuance and sale of Bonds, as here-
inafter authorized, will be for a lawful object, within the
corporate purposes of Applicant and compatible with the
public interest, which is appropriate for and consistent
with the proper performance by Applicant or service as
a public utility and which will not impair its ability to
perform that service, and is reasonably necessary and ap-
propriate for such purposes.
(3) Intervention by the above-mentioned petitioners
may be in the publie interest for purposes of Commission
consideration of their petition.
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(6) The matters asserted and activities alleged in the
filed protest and petition to intervene by the Cities of Lafay.
ette and Plaquemine, Louisiana, are irrelevant to the pur.
pose of issuing bonds to refund short-term indebtedness
heretofore authorized by this Commission.
(7) The matters asserted and activities alleged in the ~
filed protest and petition to intervene by the Cities of
Lafayette and Plaquemine, Louisiana, do not raise any
issue which requires a hearing.
The Commission orders:
(A) The above-mentioned petitioners are hereby per.
mitted to intervene in this proceeding subject to the rules
and regulations of the Commission. Provided, however,
That the admission of the afore-mentioned petitioner’s shall
not be construed as recognition by the Commission that
the petitioners might be aggrieved because of any order
or orders of the Commission entered in this proceeding.
(B) The above-mentioned petitioners request for hear-
ing is denied.
(C) The proposed issuance and sale of Bonds upon the
terms and conditions and for the purposes specified in the
application as described above, is hereby authorized, sub-
ject to the provisions of this order.
(D) The proposed issuance and sale of Bonds at com-
petitive bidding shall not be consummated until:
(i) Applicant shall have amended its application
pursuant to the requirements of Section 34.2(g) of the
Commission’s Regulations under the Federal Power
Act relating to compliance with competitive bidding
requirements, and Section 34.2(h) of those Regulations
relating to affiliation, and shall have either filed such
amendments or shall have mailed them and advised
37a
the Commission by telephone and telegraph, as contem-
plated in Section 34.9 of the Regulations;
(ii) The Commission, by a further order, shall have
approved the price to be received by Applicant for the
proposed issuance of Bonds and the interest rate
thereof.
(E) This authorization shall expire unless the trans-
actions hereby authorized are consummated within 90 days
from the date of issuance of this order.
(F) The foregoing authorization is without prejudice
to the authority of the Commission or any other regulatory
body with respect to rates, service, accounts, valuation,
estimates or determinations of cost, or any other matter
whatsoever now pending or which may come before this
Commission.
(G) Nothing in this order shall be construed to imply
any guarantee or obligation on the part of the United States
with respect to any securities to which this order relates.
By the Commission.
(SEAL)
Gordon M. Graut,
Secretary.
38a
APPENDIX E
UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
Before Commissioners: Jolin N. Nassikas, Chairman;
Carl E. Bagge, and Albert B. Brooke, Jr.
Gulf States Utilities Company Docket No. E-7567
SUPPLEMENTAL ORDER AUTHORIZING
ISSUANCE OF FIRST MORTGAGE BONDS
(Issued December 9, 1970)
By order issued December 3, 1970, in the above-entitled
matter, the Commission authorized Gulf States Utility Com-
pany (Applicant), to issue and sell at competitive bidding
$30,000,000 principal amount of First Mortgage Bonds sub-
ject, among others, to the provisions set forth in paragraph
(D) of that order, as follows:
(D) The proposed issuance and sale of Bonds at con-
petitive bidding shall not be consummated until:
(i) Applicant shall have amended its application
pursuant to the requirements of Section 34.2(g) of the
Commission’s Regulations under the Federal Power
Act relating to compliance with competitive bidding
requirements, and Section 34.2(h) of those Regulation:
relating to affiliation, and shall have either filed such
amendments or shall have mailed them and advised
the Commission by telephone and telegraph, as con-
templated in Section 34.9 of the Regulations;
(ii) The Commission, by a further order, shall have
approved the price to be received by Applicant for the
proposed issuance of Bonds and the interest rate
thereof.
i oe “ad <a ae. Bia wa" ar. ee POOR COPY
,
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Applicant, on December 9, 1970, filed an amendment, pur-
suant to the requirements of the afore-mentioned Commis-
sion order, in which it states, among other things that it
proposes to accept, as representing the lowest cost of money
to be paid by the Applicant to the underwriters, the bid
of The First Boston Corporation, Salomon Brothers and
Eastman Dillon, Union Securities & Co. Underwriters to
purchase the proposed $30,000,000 issue of First Mortgage
Bonds carrying a coupon rate of 77% at a price to the
Company of $99.42% of principal amount. Based upon an
initial public offering price of 100.286% of principal
amount, the yield will be 7.85% and the Company’s cost
of money will be 7.9259%.
~ The Commission finds:
(1) Applicant has satisfactorily complied with the re-
quirements contained in. paragraph (D) of the Commis-
sion’s order issued December 3, 1970, in the above-entitled
Docket; and the competitive bid it proposes to accept for
the Bonds and the interest rate thereof are reasonable.
(2) The proposed issuance and sale of Bonds as herein-
after authorized, will be for a lawful object, within the
corporate purposes of Applicant and compatible with the
public interest, which is appropriate for and consistent with
the proper performance of service by Applicant as a public
utility and which will not impair its ability to perform
that service, and is reasonably appropriate for such pur-
poses,
ee
The Commission orders:
(A) The price to be received by Applicant for the pro-
posed Bonds and the interest rate thereof, are approved
as reasonable.
CPOY BOUND CLOSE IN CENTER
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(B) The proposed issuance and sale of Bonds referred
to above, upon the terms and conditions, and for the pur.
poses specified in the application, as supplemented by the
amendment referred to above, are hereby authorized, sub.
ject only to the provisions of paragraph (E), (F) and
(G) and of the Commission’s order issued December 3,
1970, in the above docket.
By the Commission.
(SEAL)
Gordon M. Grant,
Secretary.
4la
APPENDIX F
UNITED STATES OF AMERICA
FEDERAL POWER COMMISSION
Before Commissioners:
John N. Nassikas, Chairman; Lawrence J. O’Connor, Jr.,
John A. Carver, Jr., and Albert B. Brooker, Jr.
Guur Sratres Utinities Company
Docket No. E-7567
ORDER DENYING APPLICATION FOR HEARING
(Issued January 13, 1971)
By order issued December 3, 1970,’ the Commission
authorized Gulf States Utilities Company (Applicant) to
issue, $30,000,000 principal amount of First Mortgage
Bonds, due 2000, subject, however, to further Commission
approval of the price of the Bonds to be paid to the Appli-
cant and the interest rate of the Bonds. The Commission
also granted leave to intervene to the Cities of Lafayette
and Plaquemine, Louisiana, based upon their protest. and
petition to intervene filed November 2, 1970; Hearing in the
proceeding was denied.
By supplemental order issued December 9, 1970, the
Commission approved the price of the Bonds and the
interest rate thereof, thereby authorizing the immediate
issuance of the Bonds.
Intervenors on December 16, 1970, filed in this proceeding
an application for rehearing of the Commission’s orders of
December 3, 1970 and December 9, 1970, seeking withdrawal
of those orders, setting the ease for full hearing, and direct-
ing Commission Staff to pursue an investigation of Appli-
cant’s activities. In their application for rehearing, Inter-
venors incorporate all grounds raised in their original
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petition to intervene as previously considered by the Com.
mission, In addition, Intervenors present the further argp.
ment that the Applicant’s described use of the funds author.
ized in Docket No. E-7567 and Docket No. E-7509, as set
forth in the applications, are not sufficient to support the
Commission’s findings that the issuance of Bonds igs for q
“lawful object ... compatible with the proper performance
by (Gulf States of) service as a public utility. . .”
The Commission finds:
The grounds for rehearing set forth in the application
. filed on December 16, 1970, by the Cities of Lafayette and
Plaquemine, Louisiana in Docket No. E-7567 present no
facts or legal principles which would warrant any change in
or modification of the aforementioned Commission orders
issued December 3, 1970 and December 9, 1970.
The Commission orders:
The application for rehearing filed by the Cities of
Lafayette and Plaquemine, Louisiana on December 16,
1970, in Docket No. E-7567 is denied.
By the Commission.
(SEAL)
Gordon M. Grant,
Secretary.
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APPENDIX G
FEDERAL POWER ACT
TITLE 16 USCA
SUBCHAPTER II.—REGULATIONS OF ELECTRIC
UTILITY COMPANIES ENGAGED IN
INTERSTATE COMMERCE
§824. Declaration of policy; application of subchapter;
definitions
(a) It is 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 regula-
tion of matters relating to generation to the extent provided
in sections 824-825r of this title and of that part of such
business which consists of the transmission of electric ener-
gy in interstate commerce and the sale of such energy at
wholesale in interstate commeree 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.
(b) The provisions of sections 824-824h of this title shall
..“pply to the transmission of electric energy in interstate
commerce and to the sale of electric energy at wholesale in
interstate commerce, but shall not apply to any other sale
of electric energy or deprive a State or State commission of
its lawful authority now exercised over the exportation of
hydroelectric energy which is transmitted across a State
line. The Commission shall have jurisdiction oyer all facili-
ties for such transmission or sale of electric energy, but
shall not have jurisdiction, except as specifically provided
in said sections, oyer facilities used for the generation of
électrie energy or over facilities used in local distribution
or only for the transmission of electric energy in intrastate
>
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commerce, or over facilities for the transmission of electric
energy consumed wholly by the transmitter.
(c) For the purpose of sections 324-S824h of this title.
electric energy shall be held to be transmitted in interstate
commerce if transmitted from a State a nsumed at any
point outside thereof; but only insofar Neda transmission
takes place within the United States.
(d) The term “sale of electric energy at wholesale” when
used in sections 824-824h of this title, means a sale of elec.
tric energy to any person for resale.
(e) The term “public utility” when used in sections 824.
825r of this title means any person who owns or operates fa-
cilities subject to the jurisdiction of the Commission under
sections 824-82+4h of this title.
(f) No provision in sections 824-824h of this title shall
apply to, or be deemed to include, the United States, a State
or any political subdivision of a State, or any agency,
authority, or instrumentality of any one or more of the
foregoing, or any corporation which is wholly owned, di-
rectly or indirectly, by any one or more of the foregoing
or any officer, agent, or employee of any of the foregoing
acting as such in the course of his official duty, unless such
provision makes specific reference thereto. June 10, 1920,
¢. 285, § 201, as added Aug. 26, 1935, ¢. 687, Title I, § 213,
49 Stat. 847.
§ 824a. Interconnection and coordination of facilities;
emergencies; transmission to foreign countries—
Regional districts; establishment; notice to State
commissions
(a) For the purpose of assuring an abundant supply of
electric energy throughout the United States with the
greatest possible economy and with regard to the proper
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utilization and conservation of natural resources, the Com-
mission is empowered and directed to divide the country
into regional districts for the voluntary interconnection
and coordination of facilities for the generation, transmis-
sion, and sale of electric energy, and it may at any time
thereafter, upon its own motion or upon application, make
such modifications thereof as in its judgment will promote
the public interest. Each such district shall embrace an
area which, in the judgment of the Commission, ean eco-
nemically be served by such interconnected and coordinated
electric facilities. It shall be the duty of the Commission
to promote and encourage such interconnection and coor-
dination within each such district and between such dis-
triets. Before establishing any such district and fixing or
modifying the boundaries thereof the Commission shall
give notice to the State Commission of each State situated
wholly or in part within such district, and shall afford each
such State commission reasonable opportunity to present
its Views and recommendations, and shall receive and con-
sider such views and recommendations. *_
Sale or exchange of energy; establishing physical
connections
(b) Whenever the Commission, upon application of any
State commission or of any person engaged in the transmis-
sion or sale of electric entrgy, and after notice to each
State commission and public utility affected and after op-
portunity for hearing, finds such action necessary or appro-
priate in the public interest it may by order direct a public
utility (if the Commission finds that no undue burden will
be placed upon such publie utility thereby) to establish
.physieal connection of its transmission facilities with the
facilities of one or more other persons engaged in the trans-
mission or sale of electric energy, to sell energy to or ex-
change energy with such persons: Provided, That the Com-
mission shall have no authority to compel the enlargement
of generating facilities for such purposes, nor to compel
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such public utility to sell or exchange energy when to do sy
would impair its ability to render adequate service to jts
customers. The Commission may prescribe the terms and
conditions of the arrangement to be made between the per.
sons affected by any such order, including the apportion.
ment of cost between them and the compensation or rej.
bursement reasonably due to any of them. (§202)
§ 824b. Disposition of property; consolidations; purchase
of securities :
(a) No public utility shall sell, leade, or otherwise dispose
of the whole of its facilities subject to the jurisdiction of
the Commission, or any part thereof of a value in excess of
$50,000, or by any means whatsoever, directly or indirectly,
merge or consolidate such facilities or any part thereof with
those of any other person, or purchase, acquire, or take any
security of any other public utility, without first having
secured an order of the Commission authorizing it to do so.
Upon application for such approval the Commission shall
give reasonable notice in writing to the Governor and State
commission of each of the States in which the physical prop-
erty affected, or any part thereof, is situated, and to such
other persons as it may deem advisable. After notice and
opportunity for hearing, if the Commission finds that the
proposed disposition, consolidation, acquisition, or control
will be consistent with the public interest, it. shall approve
the same.
(b) The Commission may grant any application for a
order under this section in whole or in part and upon such
terms and conditions as it finds necessary or appropriate
to secure the maintenance of adequate service and the coor-
dination in the public interest of facilities subject to the
jurisdiction of the Commission. The Commission may fron
time to time for good cause shown make such orders supplr-
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47a
mental to any order made under this section as it may find
necessary or appropriate. June 10, 1920, ¢. 285, § 203, as
added Aug. 26, 1935, e. 687, Title II, § 213, 49 Stat. 849.
§824c. Issuance of securities; assumption of liabilities;
filing duplicate reports with Securities and
Exchange Commission
(a) No public utility shall issue any security, or assume _
any obligation or liability as guarantor, indorser,.surety, or
otherwise in respect of any security of another person, un-
less and until, and then only to the extent that, upon appli-
cation by the public utility, the Commission by order
authorizes such issue or assumption of liability. The Com-
mission shall make such order only if it finds that such issue
or assumption (a) is for some lawful object, within the
corporate purposes of the applicant and compatible with
the public interest, which is necessary or appropriate for
or consistent with the proper performance by the applicant
of service as a public utility and which will not impair its
ability to perform that service, and (b) is reasonably neces-
sary or appropriate for such purposes. The provisions of
this section shall be effective six months after Aug. 26,
1935.
(b) The Commission, after opportunity for hearing,
may grant any application under this section in whole or
in part, and with such modifications and upon such terms
and conditions as it may find necessary or appropriate, and
may from time to time, after opportunity for hearing and
for good cause shown, make such supplemental orders in
the premises as it may find necessary or appropriate, and
may by any such supplemental order modify the provisions
of axy previous order as te the particular purposes, uses,
ea to which, or the conditions under which, any
fecurity so theretofore authorized or the proceeds thereof
€
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48a
may be applied, subject always to the requirements of spb.
section (a) of this section.
(c) No public utility shall, without the consent of the
Commission, apply any security or any proceeds thereof
to any purpose not specified in the Commission's order.
or supplemental order, or to any purpose in excess of the
amount allowed for such purpose in such order, or other.
Wise in contravention of such order.
(d) The Commissi®n shall not authorize the capitaliza-
tion of the right to be a corporation or of any franchise,
permit, or contract for consolidation, merger, or lease jp
excess of the amount (exclusive of any tax or annual
charge) actually paid as the consideration for such right,
franchise, permit, or contract.
(e) Subsection (a) of this section shall not apply to the
issue or renewal of, or assumption of liability on, a note or
draft maturing not more than one year after the date of
such issue, renewal, or assumption of liability, and aggre-
gating (together with all other then outstanding notes and
drafts of a maturity of one year or less on which such
public utility is primarily or secondarily liable) not more
than 5 per centum of the par value of the other securities
of the public utility then outstanding. In the ease of securi-
ties having no par value, the par value for the purpose of
this subsection shall be the fair market value as of the date
of issue. Within ten days after any such issue, renewal, or
assumption of liability, the public utility shall file with the
Commission a certificate of notification, in such form as
may be prescribed by the Commission, setting forth such
matters as the Commission shall by regulation require. »
(f) The provisions of this section shall not extend toa
public utility organized and operating in a State under
the laws of which its security issues are regulated by a
State commission.
FLEED THROUGH on Core
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(g) Nothing in this section shall be construed to imply
—
any guarantee or obligation on the part of the United
States in respect of any securities to which the provisions
of this section relate.
(h) Any public utility whose security issues are ap-
proved by the Commission under this section may file with
the Securities and Exchange Commission duplicate copies
of reports filed with the Federal Power Commission in lieu
of the reports, information, and documents required under
section 77g and sections 781 and 78m of Title 15. June 10,
1920, ¢. 285, § 204, as added Aug. 26, 1935, c. 687, Title II,
{ 213, 49 Stat. 850.
§824d. Rates and charges; schedules; suspension of new
rates
(a) All rates and charges made, demanded, or received
by any public utility for or in connection with the trans-
mission or sale of electrie 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.
(h) No public utility shall, with respect to any trans-
inission or sale subject to the jurisdiction of the Commis-
sion, (1) make or grant any undue preference or advantage
WW any person or subject any person to any undue prejudice
or disadvantage, or (2) maintain any unreasonable differ-
ehee in rates, charges, service, facilities, or in any other
respect, either as between localities or as between classes
of service,
(¢) Under such rules and regulations as the Commis-
‘on may prescribe, every public utility shall file with the
Commission, within such time and in such form as the
CPOY BOUND CLOSE IN CENTER
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a
Commission may designate, and shall keep open in eo.
venient form and place for public inspection schedule
showing all rates and charges for any transmission or sali.
subject to the jurisdiction of the Commission, and the elas.
sifications, practices, and regulations affecting such rates
and charges, together with all contracts which in any man.
ner affect or relate to such rates, charges, classifications.
and services.
(d) Unless the Commission otherwi ise orders, no change
shall be made by any public utility in any such rate,
charge, classification, or service, or in any rule, regula.
tion, 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 sched.
ules 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 speci-
fying the changes so to be made and the time when ther
shall take effect and the manner in which they shall be
filed and. published.
(e) Whenever any such new schedule is filed the Con-
mission shall have authority, either upon complaint or upon
its own initiative without complaint, at once, and, if it 9
orders, without answer or formal pleading by the public
utility, but upon reasonable notice, to enter upon a hearing
concerning the lawfulness of such rate, charge, classifica-
tion, or service; and, pending, such hearing and the decision
thereon, the Commission, upon filing with such schedule:
and delivering to the public utility affected thereby a state
ment in writing of its reasons for such suspension, may |
suspend the operation of such schedule and defer the use of
5la
such rate, charge, classification, or service, but not for a
longer period than five months beyond the time when it:
would otherwise go into effect; and after full hearings,
either completed before or after the rate, charge, classifica-
tion, or service goes into effect, the Commission may make
such orders with reference thereto as would be proper in a
proceeding initiated after it had become effective. If the
proceeding has not been concluded and an order made at the
expiration of such five months, the proposed change of rate,
charge, classification, or service shall go into effect at the
end of such period, but in case of a proposed increased rate
or charge, the Commission may by order require the in-
terested public utility or public utilities to keep accurate
account in detail of all amounts received by reason of such
increase, specifying by whom and in whose behalf such
amounts are paid, and upon completion of the hearing and
decision may by further order require such public utility or
public utilities to refund, with interest, te the persons in
whose behalf such amounts were paid, s@ch portion of such
increased rates or charges as by its decision shall be found
not justified. At any hearing involving a rate or charge
sought to be increased, the burden of proof to show that the
increased rate or charge is just and reasonable shall be upon
the publie 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. June 10, 1920, ¢. 285, § 205, as added
Aug. 26, 1935, ¢. 687, Title IT, § 213, 49 Stat. 851.
§824e. Power of Commission to fix rates and charges;
determination of cost of production or transmission
(a) Whenever the Commission, after a hearing had upon
its own motion or upon complaint, shall find that any rate,
charge, or classification, demanded, observed, charged, or
>*
o2a
collected by any public utility for any transmission or sal
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 preferential, the Commission shall deter.
mine the just and reasonable rate, charge, classification,
rule, regulation, practice, or contract to be thereafter ob.
served and in force, and shall fix the same by order.
(b) The Commission upon its own motion, or upon the
request of any State commission whenever it can do »
without prejudice to the efficient and proper conduct of its
affairs, may investigate and determine the cost of the pro.
duction or transmission of electric energy by means of faci-
lities under the jurisdiction of the Commission in eases
where the Commission has no authority to establish a rate
governing the sale of such energy. June 10, 1920, ¢. 285,
§ 206, as added Aug. 26, 1935, c. 687, Title II, § 213, 49 Star.
852.
§ 825d. Officials dealing in securities; declaring dividends
out of capital account; interlocking directorates
(a) It shall be unlawful for any officer or director of
any public utility to reeeive for his own benefit, directly
or indirectly, any iivney or thing of value in respect of the
negotiation, hypothecation, or sale by such public utility of |
any security issued or to be issued by such public utility,
or to share in any of the proceeds thereof, or to participate
in the making or paying of any dividends of such public
utility from any funds properly included in capital account.
(b) After six months from August 26, 1935, it shall be
unlawful for any person to hold the position of officer or
director of more than one public utility or to hold the
Sel
position of officer or director of a public utility and the |
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position of officer or director of any bank, trust company,
banking association, or firm that is authorized by law to
widerwrite or participate in the marketing of securities of
a public utility, or officer or director of any company sup-
plying electrical equipment to such public utility, unless
the holding of such positions shall have been authorized by
order of the Commission, upon. due showing in form and
manner prescribed by the Commission, that neither public
nor private interests will be adversely affected thereby. The
Commission shall not grant any such authorization in
respect of such positions held on August 26, 1935, unless
application for such authorization is filed with the Com-
mission within sixty days after that date, June 10, 1920,
¢, 285, § 305, as added Aug. 26, 1935, c. 687, Title II, § 213,
49 Stat. 856.
§825e. Complaints
Any person, State, municipality, or State commission
complaining of anything done or omitted to be done by any
licensee or public utility in contravention of the provisions
of this chapter may apply to the Commission by petition
which shall briefly state the facts, whereupon a statement
of the complaint thus made shall be forwarded by the Com-
mission to such licensee or public utility, who shall be called
upon to satisfy the complaint or to answer the same in
writing within a reasonable time to be specified by the Com-
mission. If such licensee or public utility shall not satisfy
the complaint within the time specified or there shall appear
to be any reasonable ground for investigating such com-
plaint, it shall be the duty of the Commission to inv estigate
the matters complained of in such manner and by such
means as it shall find proper, June 10, 1920, ¢. 285, § 306, as
added Aug. 26, 1935, e. 687, Title IT, § 213, 49 Stat. 856.
’'CPOY BOUND CLOSE IN CENTER
54a
§ 825f. Investigations by Commission; attendance of
witnesses; depositions; immunity of witnesses
(a) The Commission may investigate any facts, cond.
tions, practices, or matters. which it may find necessary o
proper in order to determine whether any person has
violated or is about to violate any provision of this chapter
or any rule, regulation, or order thereunder, or to aid jp
the enforcement of the provisions of this chapter or jy
prescribing rules or regulations thereunder, or in obtaining
information to serve as a basis for recommending further
legislation concerning the matters to which this chapter
relates. The Commission may permit any person to file
witk it a statement in writing under oath or otherwise, as
it shall determine, as to any or all facts and circumstances
concerning a matter which may be the subject of investiga.
tion. The Commission, in its discretion, may publish or make
available to State commissions information concerning any
such subject. (4307)
§ 8251. Rehearings; court review of orders
(a) Any person; State, municipality, or State commis.
sion aggrieved by an order issued by the Commission in 4
proceeding under this chapter to which such person, State,
municipality, or State commission is a party may apply
for a rehearing within thirty days after the issuance of
such order. The application for rehearing shall set forth
specifically the ground or grounds upon which such appli-
cation is based. Upon such application the Commission shall
have power to grant or deny rehearing or to abrogate or
modify its order without further hearing. Unless the Con-
mission acts upon the application for rehearing within
thirty days after it is filed, such application may be deemed
to have been denied. No proceeding to review any order of |
the Commission shall be brought by any person unless such
pe
55a
person shall have made application to the Commission for
a rehearing thereon. Until the record in a proceeding shall
have been filed in a court of appeals, as provided in sub-
section (b) of this section, the Commission may at any
time, upon reasonable notice and in such manner as it shall
deem proper, modify or set aside, in whole or in part, any
finding or order made or issued by it under the provisions
of this chapter.
(b) Any party to a proceeding under
grieved by an order issued by the Commissign in such pro-
ceeding may obtain a review of such order\in the United
* “States Court of Appeals for any circuit where\n the licensee
or public utility to which the order relates is located or has
its principal place of business, or in the United States Court
of Appeals for the District of Columbia, by filing in such
court, within sixty days after the order of the Commission
upon the application for rehearing, a written petition pray-
ing that the order of the Commission be modified or set
aside in whole or in part. A copy of such petition shall forth- .
with be transmitted by the clerk of the court to any member
of the Commission and thereupon the Commission shall file
with the court the record upon which the order complained
of was entered, as provided in section 2112 of Title 28.
Upon the filing of such petition such court shall have juris-
diction, which upon the filing of the record with it shall
be exclusive, to aflirm, modify, or set aside such order in
whole or in part. No objection to the order ‘of the Commis-
sion shall be considered by the court unless such objection
shall have been urged before the Commission in the appli-
cation for rehearing unless there is reasonable ground for
failure so to do. The finding of the Commission as to the
facts, if supported by substantial evidence, shall be con-
clusive. If any party shall apply to the court for leave to
adduce additional evidence, and shall show to the satis-
d6a
faction of the court that such additional evidence js Ma-
terial and that there were reasonable grounds for failur:
to adduce such evidence in the proceedings before the Com.
mission, the court may order such additional evidence ty
be taken before the Commission and to be adduced upon
the hearing in such manner and upon such terms and eo,
ditions as to the court may seem proper. The Commissio,
may modify its findings as to the facts by reason of th:
additional evidence so taken, and it shall file with the cour
such modified or new findings which, if supported by sub.
stantial evidence, shall be conclusive, and its recommends.
tion, if any, for the modification or setting aside of th.
original order. The judgment and decree of the court, affirm.
ing, modifying, or setting aside, in whole or in part, any
such order of the Commission, shall be final, subject to
review by the Supreme Court of the United States upon
certiorari or certification as provided in sections 346 ani
347 of Title 28.
(ec) The filing of an application for rehearing under sub.
section (a) shall not, unless specifically ordered by th:
Commission, operate as a stay of the Commission’s order,
The commencement of proceedings under subsection (b) o!
this section shall not, unless specifically ordered by thi
court, operate as a stay of the Commission’s order. Jun
10, 1920, c. 285, § 313, as added Aug. 26, 1935, ¢. 687, Title Il
§ 213, 49 Stat. 860, and amended June 25, 1948, c. 646,32 |
(a), 62 Stat. 991; May 24, 1949, ec. 139, § 127, 63 Stat. 107:
Aug. 28, 1958, Pub.L. 85-791, § 16, 72 Stat. 947.
|
57a
CLAYTON ACT
TITLE 15 USCA
§ 21. Enforcement provisions—Commissions and Boards
authorized to enforce compliance
(a) Authority to enforce compliance with sections 13,
lt, 18, and 19 of this title by the persons respectively
subject thereto is vested in the Interstate Commerce Com-
mission where applicable to common carriers subject to
the Interstate Commerce Act, as amended; in the Federal
Communications Commission where applicable to com-
mon carriers engaged in wire or radio communications or
radio transmission of energy; in the Civil Acronauties
Board where applicable to air carriers and foreign air
carriers subject to the Civil Aeronautics Act of 1938; in
the Federal Reserve Board where applicable to banks, bank-
ing associations, and trust companies; and in the Federal
Trade Commission where applicable to all other character
of commerce to be exercised as follows:
Issuance of complaints for violations; hearing; intervention; filing of
testimony; report; cease and desist orders; reopening and
alteration of reports or orders
(bh) Whenever the Commission or Board vested with
jurisdiction thereof shall have reason to believe that any
person is Violating or has violated any of the provisions of
sections 13, 14, 18, and 19 of this title, it shall issue and
serve upon such person and the Attorney General a com-
plaint stating its charges in that respect, and containing
‘ notice of a hearing upon a day and at a place therein
fixed at least thirty days after the service of said com-
plaint. The person so complained of shall have the right to
‘ppear at the place and time so fixed and show cause why
an order should not be entered by the Commission or Board
requiring such person to cease and desist from the viola-
tion of the law so charged in said complaint. The Attorney
General shall have the right to intervene and appear in
said proceeding and any person may make application,
and upon good cause shown may be allowed by the Com.
mission or Board, to intervene and appear in said pro-
ceeding by counsel or in person. The testimony in any
such proceeding shall be reduced to writing and filed in
the office of the Commission or Board. If upon such hearing
the Commission or Board, as the case may be, shall be of
the opinion that any of the provisions of said sections
have been or are being violated, it shall make a report in
writing, in which it shall state its findings as to the facts,
and shall issue and cause to be served on such person an
order requiring such person to cease and desist from such
violations, and divest itself of the stock, or other share
capital, or assets, held or rid itself of the directors chosen
contrary to the provisions of sections 18 and.19 of this
title, if any there be, in the manner and within the time -
fixed by said order. Until the expiration of the time allowed
for filing a petition for review, if no such petition has been
duly filed within such time, or, if a petition for review
has been filed within such time then until the record in
‘the proceeding has been filed in a court of appeals of the
United States, as hereinafter provided, the Commission or
Board may at any time, upon such notice and in such
manner as it shall deem proper, modify or set aside, in
whole or in part, any report or any order made or issued
by it under this section. After the expiration of the time
allowed for filing a petition for review, if no such petition
has been duly filed within such time, the Commission or
Board may at any time, after notice and opportunity for
hearing, reopen and alter, modify, or set aside, in whole
or in part, any report or order made or issued by it under
this section, whenever in the opinion of the Commission or
EE -
59a
Board conditions of fact or of law have so changed as to
require such action or if the public interest shall so require:
Provided, however, That the said person may, within sixty
days after service upon him or it of said report or order
entered after such a reopening, obtain a review thereof in
the appropriate court of appeals of the United States, in
the manner provided in subsection (c) of this section. (411)
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.