Opposition Brief — Gulf States Util. Co. v. FPC

oy PY FILED

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is iia MICHAEL RODAK, JR.,

Supreme Court of the Rnited States |

October Term 1971

GULF STATES UTILITIES COMPANY,

Petitioners,

Vv.

FEDERAL POWER COMMISSION

CITY OF LAFAYETTE, LOUISIANA

CITY OF PLAQUEMINE, LOUISIANA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

MEMORANDUM FOR THE CITIES OF LAFAYETTE

AND PLAQUEMINE, LOUISIANA, IN OPPOSITION

GEORGE SPIEGEL

ROBERT C. McDIARMID

Suite 312

2600 Virginia Avenue, N. W.

Washington, D.C. 20037

Counsel for Respondent Cities

of Lafayette and Plaquemine,

Louisiana

April 12, 1972

Leen mene ene aaecetinel

BEACON PRINTING — 293-7160 — Washington, D.C. 20006

en

BLEED Tt

No. 71—1178

are to the Joint Appendix filed in the court below.

IN THE

Supreme Court of the Anited States

October Term 1971

GULF STATES UTILITIES COMPANY,

Petitioners,

v:

FEDERAL POWER COMMISSION

CITY OF LAFAYETTE, LOUISIANA

CITY OF PLAQUEMINE, LOUISIANA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE |

DISTRICT OF COLUMBIA CIRCUIT

MEMORANDUM FOR THE CITIES OF LAFAYETTE

AND PLAQUEMINE, LOUISIANA, IN OPPOSITION

Section 204 of the Federal Power Act, 16 U.S.C. 824

(Pet. 47a - 49a)4/ provides that, with certain exceptions not

here relevant, no public utility shall issue any security unless

authorized to do so by the Federal Powef Commission, which

shall make such authorization only if, inter alia, it finds that

the issue “is for some lawful object . . compatible with the

public interest, which is necessary or appropriate for or con-

sistent with the proper performance by the applicant of service

as a public utility ....”

4/ “Pet.” references are to the petition for Certiorari.“R” references

sh canis sats tp sein POOR COPY

—

Section 204(b) of that Act provides that the Federal

Power Commission may act, “after opportunity for hearing” to

grant any application in whole or in part, with such modifica-

tion and upon such terms and conditions as it may find neces-

sary or appropriate, and may from time to time after opportun-

ity for hearing and upon good cause, make supplemental orders

which may “modify the provisions of any previous order as to

the particular purposes, uses, and extent to whichg or the con-

ditions under which, any security so theretofore duthorized or

the proceeds thereof may be applied... .” Section 204 (c) of

that Act specifies that no proceeds of a security issue authoriz-

ed by the Federal Power Commission shall be spent for any pur-

pose not specified in the Commission’s order.

Petitioner, Gulf States Utilities Company (“Gulf States”)

sought the authorization of the Federal Power Commission

under Section 204 of the Federal Power Act for the issuance of

bonds, the proceeds of which would be used to pay off a part

of the Company’s short term indebtedness. 2/ Respondents, the

Cities of Lafayette and Plaquemine, Louisiana (“‘Cities’’) filed

a protest and petition to intervene iw the Federal Power

Commission, charging that the funds authorized would be used

in the course or furtherance of a conspiracy among Gulf States

and two other electric utilities to monopolize the wholesale or

bulk supply of electric energy in Louisiana, in violation of the

antitrust laws and policies of the United States, and thus for

objects which were neither lawful, compatible with the public,

interest, nor necessary or appropriate for the proper perform.

ance by Gulf States of »service as a public utility.2 =! The

Federal Power Commission, without hearing, granted the

authorization sought by Gulf States (Pet. 32a-37a), and ©

thereafter denied rehearing (Pet. 41a - 42a).

2/ Gulf States and the Commission have taken the position that

the reduction of short term indebtedness by refinancing would free for

further use without new authorization that much of the Gulf States’

previous short term financing authorization as is so released by refinancing.

w

3/ The Cities Protest and Petition to Intervene is set out in full at

R 54-160

3

The reversal of this action of the Federal Power Commis-

sion by the Court of Appeals of the District of Columbia Circuit

(Pet. 1a - 29a) was clearly correct, and the petition for certiorari

raises no issues of substance appropriate for resolution at this ©

time.

1. Petitioners contend (Pet. 5-10) that because the

Federal Power Commission is not delegated responsibility by

Section 11 of the Clayton Act, 15 U.S.C. 21, to enforce that

Act, it must ignore violations of the Sherman and Clayton Acts

when it determines whether the proposed use of funds “is for

some lawful object... compatible with the public inter-

est ....” under Section 204. The short answer is that Section

204 of the Federal Power Act is simply not susceptible to such

a narrow reading. Moreover, as this Court held in Denver and

Rio Grande Western R. v. United States,387 U.S. 485, 492-493

(1967), interpreting a statute after which Section 204 was

modeled, the term “public interest” is to be read “broadly, to

requiré consideration of all important consequences including

anticompetitive effects.” See also, e.g., California v. FPC, 369

U.S. 482 (1962); FMC v. Aktiebolaget Svenska Amerika Linien,

390 U.S. 238 (1968); Municipal Electric Association of

Massachusetts v. SEC, 413 F.2d 1052 (D.C. Cir. 1969); Marine »

Space Enclosures v. FMC, 420 F.2d 571 (D.C. Cir. 1969);

Northern Natural Gas Company v. FPC, 399 F.2d 953 (D.C.

Cir. 1968), none of which involve agencies given specific

enforcement functions by Section 11 of the Clayton Act.

©

2. Petitioners contend (Pet. 10) that there is no support

in logic or policy for interpreting Section 7 of the Public Utility

Holding Company Act, 15 U.S.C. 79g, differently from Section

204 of the Federal Power Act. The Cities consider that there

are inconsistencies between the interpretations of the two acts

by the court below, and if certiorari is granted, reserve the right

to argue that both statutes require review-by the agencies of

anticompetitive consequences of the authorization. That does

not warrant the grant of certiorari at the present time, however.

4

3. Petitioners contend: (Pet. 10-12) that the cow

below erred in setting aside a decision of the Federal Powe

Commission supported by “substantial evidence”. The onfj

evidence in the record before the Federal Power Commissiog

was the application of Petitioners, since the Federal Powe

Commission approved the issuance of the bonds without giving

the Cities the statutorily required opportunity for a hearing. Tg

the extent that the Federal Power Commission’s order might

have been thought to rest upon a contention that a mere change

in form from short to lorig term debt was not relevant, thai

contention was in effect abandoned when the Commission

conceded that (as noted by the court below, Pet. 20a) the

issuance of $30 million in bonds would free an additional $30

million in short term note authorization. 4

It is therefore respectfully submitted that the petition for.

a writ of certiorari should be denied. 4

GEORGE SPIEGEL

ROBERT C. McDIARMID

. 2600 Virginia Avenue, N.W.

Washington, D. C. 20037

April, 1972