Opposition Brief — FPC v. New England Power Co.

Index (Continued)

STATUTES

Page

Federal Power Act, 16 U.S.C. 791 et seg. ............ 2

I tN ar Gian o's os 2k daw ts 60000 sce caeshas 9

Inde t Offices A riations Act for the Year

June 30, 1952, Stat. 290, 31 U.S.C. 483a:

MISCELLANEOUS

OS ee ae ae ete oe Ge

Relating to edule of Fees, 23 F.C.C. 2d 880

(1970), 28 F.C.C. 2d 139 (1971) .............. 16,17 —

Bureau of the Budget Circular A-25, Sept. 23, 1959 .. 4, 5,

9, 11, 12, 13

Compilation entitled State Utility Commission, Sub-

committee on Intergovernmental Relations of the

Senate Committee on Operations, 90th Cong., Ist

Ni ek 6k ka wa 0000s ck ss oc heaseee ca dois 10

97 Cong. Rec. 4809 (1951) (us we ekesdsceed Unb cekbanen 9

FPC Order No. 317 issued January 5, 1966, 35 F.P.C.

Be Co eS AA wl os Siw enn CUR NSOEO08N 6 kia wees 4

FPC Regulations Under the Natural Gas Act:

EY SEE GN GG dn ins sc ai piwhesaas av ccdennics 4

SINC: Stirs be nc.cue Cadi nesweees cavaces 4

—¥, Bs | Eee ores, 6

H. Rep. No. 384, 82nd Cong., Ist Sess. (1951) ........ 9

H. Rep. No. 1348, 90th Cong., Ist Sess. (1969) ........ 13

S. Rep..1375, 90th Cong., Ist Sess. (1969) ............ 13

S. Rep. No. 2120, 8ist Cong., 2d Sess. (1951) ........

IN THE

Supreme Court of the United States

OcroBEeR TERM, 1972

No. 72-1162

FeperaL Power Commission, Petitioner

Vv. ,

New EnGianp Power ComPaANy, e¢ al.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the District of Columbia Circuit

BRIEF IN OPPOSITION OF TENNESSEE GAS PIPE-

LINE COMPANY. A DIVISION OF TENNECO INC.

The opinion of the court of appeals (Pet. App., pp.

la-13a) is reported at 467 F.2d 425. The initial order

(No. 427) of the Federal Power Commission (Pet.

App., pp. 18a-50a) and its order denying rehearing

(Pet. App., pp. 51a-60a) are reported at 45 F.P.C. 440

and 45 F.P.C. 964, respectively.

The judgment of the court of appeals was entered on

August 15, 1972 (Pet. App., pp. 14a-15a), and the

Commission’s petition for rehearing was denied on

‘September 25, 1972 (Pet. App., 16a-17a). By orders

of the Chief Justice, the time for filing a petition for a

writ of certiorari was extended to and including Feb-

ruary 22, 1973. The petition for a writ of certiorari

was filed on February 22, 1973. The jurisdiction of

this Court is invoked under 28 U.S.C. 1254(1), See-

tion 313(b) of the Federal Power Act, 16 U.S.C.

8251(b), and Section 19(b) of the Natural Gas Act, 15

US.C. 717r(b).

Whether the activities of the Federal Power Com-

mission (1) in discharging the accounting and rate

regulation responsibilities imposed upon it by the

Natural Gas Act over pipeline companies selling

natural gas for resale in interstate commerce and (2)

in processing applications of producers of natural gas

for authorization to sell gas to such pipeline companies

result in “‘things of value or utility’’ to such pipeline

companies * within Title V of the Independent Office

Appropriations. Act, 1952, so as to authorize the Com-

mission to recover the costs incurred by it in discharg-

1 Petitioner would also bring before the Court a comparable

question with regard to certain annual charges which the Commis-

sion undertook to assess against electric utilities subject to regula-

tion under the Federal Power Act, 16 U.S.C. 791, et seq. This

question is treated in the separate brief in opposition being filed by

New England Power Company.

3

ing these responsibilities through the assessment of

annual charges against the pipeline companies.”

STATUTE INVOLVED

The provisions of Title V of the Independent Office

Appropriations Act of 1952 are set out in the Petition

at pp. 2-3.

STATEMENT OF FACTS

By Notice of Proposed Rulemaking issued November

5, 1970 (J.A. 1-16) * the Federal Power Commission

(Commission) proposed to assess a ‘‘general annual

charge’’ against all natural gas pipeline companies with

annual gas operating revenues in excess of $1,000,000

subject to its jurisdiction under the Natural Gas Act.‘

This charge was designed to reimburse the Commis-

sion for its costs in regulating pipeline rates under

that Act. The amount of the charges to be assessed each ~

year against each pipeline company was to be deter-

mined by subtracting the amounts collected by the

Commission in filing fees specified in a separate

schedule ° from the Commission’s total costs of admin-

* The question as stated in the Commission’s petition (at p. 2)

assumes that these Commission activities result in specific benefits

to the pipeline companies within Title V. As indicated in the

Question Presented set out in the text, that assumption is improper

since it assumes the answer to the actual question involved.

%**J. A.”’ refers to the Joint Appendix printed in the court of

appeals.

* Respondent, Tennessee Gas Pipeline Company, a Division of

Tenneco Ine. is a natural gas pipeline company subject to Commis-

sion regulation under the Natural Gas Act and has the requisite

revenues.

* The Commission had earlier prescribed a specific schedule of

fees in connection with the filing by pipelines of applications for

various licenses, permits and sanctions required under the Natural

4 $

istering its natural gas pipeline programs under the

Natural Gas Act in that year, and assessing the re-

mainder among the pipeline companies in proportion to

their total deliveries of natural gas in interstate com-

merce in that year.

By this Notice, the Commission also proposed to as-

sess an ‘‘added reserve fee’’ against each pipeline com-

pany which was ‘required to file an Annual Report—

Total Gas Supply on FPC Form No. 15” (J.A. p. 16)

This fee was to be based on ‘one-tenth (1/10) of a mill.

for each Mcf of new reserves certificated during the

year covered by said report as shown for item 14 of

such form.”’’ (J.A. p. 16) and purportedly was designed

to recover the Commission’s costs of processing appli-

cations filed by producers of natural gas for authority

to sell gas to the pipeline companies (J. A. pp. 5-6).

Citing Title V of the Independent Offices Appropri-

ations Act, 1952 (Pet. pp. 2-3) and Bureau of the Bud-

get Circular A-25 (Pet. App. pp. 61a-62a) * as authority

for these proposed charges, the Commission’s Notice

explained its reasoning underlying the proposed gen-

eral annual charge as follows (J. A. p. 5):

Gas Act. (See Sections 159.1 and 159.2 of the Commission’s Regula-

tions Under the Natural Gas Act, originally adopted by Order 317

issued on January 5, 1966, 35 F.P.C. 30, 392, (1966). Its Notice

of Proposed Rulemaking also proposed to increase these fees (See

J.A. pp. 14-15). There is no question here as to the validity of

these fees either as originally adopted or as here increased by the

®Cireular A-25 is dated September 23, 1959 and was issued by

the Bureau of the Budget pursuant to Title V’s directive that steps

be taken to assure that the fees assessed under that Title by the

various Government agencies ‘‘be as uniform as practicable and

subject to such policies as the President may prescribe.”’

5

“The * * * costs [remaining after deduction of

the filing fees] of carrying out the functions of our

a ory programs have not heretofore been made

subject to any charges. In the main, those fune-

tions relate to our activities in passing upon pipe-—

line rate filings."

Following the submission of written comments by

interested industry associations and companies, includ-

ing Tennessee, the Commission on March 18, 1971,

issued Order No. 427 adopting the proposed annual

charges with several modifications not now relevant.*

Holding that the assessment of the general annual

charge came within its authority under Title V of the

1952 Appropriations Act and the criteria provided in

Circular A-25, the Commission stated (Pet. App., pp.

30a-31a) :

‘‘We recognize that the exercise of our respon-

sibilities in preventing the imposition of rates

and charges which are unjust and unreasonable or

7 With regard to the ‘‘added reserves fee’’, the Commission

observed (J. A. p. 5):

‘*We also propose to adopt a fee schedule which will return

to the Treasury the costs of the producer certificate program

based upon the annual commitments of new reserves to the

pipelines for interstate deliveries. For reasons of administra-

tive convenience these charges would be paid by the pipelines

on the basis of new reserves reported as certificated during

each reporting period.”’

8 Among these changes was a change in the basis for determining

each pipeline’s share of the total to be recouped by the general an-

nual charge. Whereas the Commission originally proposed the allo-

cation to be on the basis of each company’s total interstate de-

liveries, the Commission now proposed to make the allocation on

the basis of each company’s total jurisdictional deliveries. This

change had the effect of unreasonably and arbitrarily imposing a

greater proportion of these costs upon these pipelines, such as Ten-

nessee, the bulk of whose natural gas pipeline business is for resale

rather than for direct use or consumption. ;

preferential and prejudicial has provided continu-

ing benefit to consumers, but our actions in this

respect have redounded to the benefit of both indus-

tries by creating the economic climate for greater

usage of the services of the regulated companies

which in turn have further strengthened their

financial stability and their ability to sell debt and

equity securities required for capital additions to

meet ever-increasing demands.”

Thereafter, applications for rehearing were filed

(J. A. 120-126, 132-136), pointing out, inter alia, that in

a earlier proceeding fixing a schedule of pipeline appli-

cation fees, the Commission had acknowledged that it

lacked authority to prescribe annual charges designed

to recover the annual costs of pipeline rate regulation,

since ‘‘these activities are primarily for the benefit of

the general public rather than the regulated com-

panies’’ (See J.A. p. 121; see also 30 Fed. Reg. 12077).

However, in its order denying rehearing issued May 14,

1971 (Pet. App. 51a-60a), the Commission dismissed

this statement as dictum and held instead that its

authority under Title V to assess fees extended to the

assessment of the proposed general annual charges

since they are

“‘* * * predicated on the benefits accorded public

utilities and natural gas companies by the creation

of regulatory agencies at the federal level and the

exercise of the powers delegated to them by the

Congress which in our opinion satisfy the statu-

ry requirements for the imposition of these

charges.”’ (Pet. App. p. 57a) *

* Continuing, the Commission reaffirmed its assessment of the

twp reserve fee’’ against the pipelines stating (Pet. App. p.

57a) :

“*The assessment is limited to only one of the various producer

programs: the certification of producer sales which plainly

7

On appeal, the court of appeals set aside both general

annual charges and the added reserve fees. The court

pointed out that the Commission’s accounting and rate

regulation of natural gas pipelines

‘‘* * * was primarily for the benefit of the public.

Their charter statutes require them to so act. The

thing fundamentally wrong in asseaing charge

entally wrong in assessing

on the basis of benefit to the company when the

Commission must benefit the public. In the absence

of a clear Congressional mandate to the contrary,

we conclude that monies for the administration of

programs benefiting the general public should

come from the general fund of the treasury.”’ (Pet.

App. pp. 9a-10a).

Further, the court noted that the Commission’s claim

that the pipelines had benefited within Circular A-25 by

virtue of the creation of a favorable ‘‘economic climate’’

‘** * * missed the point. The creation of an ‘eco-

nomic climate’ is not a special service nor is a

ee pipeline or gas company the ‘special

neficiary’ of such a climate any more than any

a ine, gas company or the consumer in

general.”’ (Pet. App. Qa)”

benefit pipelines through the Commission’s control of the

initial prices they are required to pay producers for gas pur-

chases. The Commission’s activities in this connection which

provide clear benefits to pipelines through regulatory action

include the issuance of temporary certificates to expedite

deliveries, the elimination of indefinite price escalation pro-

visions, and the control over the quality of natural gas to be

delivered and the length of the period in which supplies may

be delivered where advance payments are made by the pipe-

lines.’’

10 Emphasis supplied throughout unless otherwise noted.

|

8

Since, as this Court has repeatedly held, the primary

purpose of the Natural Gas Act is to protect the ulti-

mate co rs from being charged excessive rates by

the pipeline companies, the Commission’s discharge

of these responsibilities patently does not result in

“*things of value or utility’’ within Title V of the 1952

Appropriation Act to the pipelines so regulated, either

individually, or collectively as the pipeline industry.

Accordingly, the court of appeals was clearly correct

in holding that the Commission had no authority under

Title V to seek to recover from the pipelines the costs

ineurred by it in discharging these responsibilities.

Moreover, since this holding is limited to the specific

Power Commission charges involved in this proceeding,

the judgment of the court of appeals does not raise a

question of general importance and does not conflict

with that of the Fifth Circuit, sustaining certain fees

imposed by the Federal Communications Commission,

in Clay Broadcasting Corp. v. U.S., 464 F.2d 1313,

pending on petition for a writ of certiorari, sub nom,

National Cable Television Assn. v. U.S., No. 72-948.

1. It has long been settled, and, repeatedly reaffirmed

by this Court, that Congress imposed upon the FPC the

responsibility of “‘passing upon pipeline rate filings”’

(supra p. 5; J.A. p. 5) in order to protect the ulti-

mate consumers against excessive rates. See, e¢.g.,

F.P.C. v. Hope Natural Gas Co., 320 U.S. 591 (1944) ;

Phillips Petroleum Co. v. State of Wisconsin, 347 U.S.

672 (1954) ; Atlantic Refining Co. v. New York Public

Service Commission, 360 U.S. 137 (1960); Permian

Basin Area Rate Cases 390 U.S. 747 (1968). Thus, in

Hope, the Court expressly pointed out that Congress

had addressed the Natural Gas Act to “‘specific evils’’

9

disclosed by the Federal Trade Commission investiga-

tion (320 U.S. at 610) ; * ruled that ‘‘the fixing of ‘just

and reasonable’ rates (§ 4) with the powers attendant

i thereto (fn. omitted) was the heart of the new regula-

tory system.” (Id. at 611) ; and concluded that ‘‘those

provisions were plainly designed to protect the con-

sumer interests against exploitation at the hand of

private natural gas companies”’ (Id. at 612).

In claiming that Title V authorizes it to assess the

eosts incurred in discharging these responsibilities

against the pipeline companies subject to such regula-

tion,” the FPC apparently would read into Title V a

general authorization to recover its costs of adminis-

tration against the companies subject to its regulation.

To be sure, there are statutes authorizing the assess-

ment of such charges. For example, Section 10(e) of

Part I of the Federal Power Act, 16 U.S.C. 803 (e)

expressly authorizes the Commission to require licens-

ees under that Act to “‘pay * * * reasonable annual

charges * * * for the purpose of reimbursing the

United States for the costs of administration of this

Part * * *”’ Similarly, several state legislatures have

authorized their local regulatory agencies to assess

| against the companies subject to their regulation the

costs of administration either on a fixed-fee basis for

™ Among the ‘“‘specific evils’’ there noted was that ‘‘state com-

missions found it difficult or impossible to discover what it cost

interstate pipe line companies to deliver gas within the consuming

state; and thus they were thwarted in local regulation.’’ (See 320

U.S. at 610)

2 The Commission apparently has abandoned its claim, asserted

in the court of appeals, that Section 16 of the Natural Gas Act also

provided the requisite authority (See Pet. App., pp. 1la-13a).

10

specific services or as a percentage of some measure of

size or value.”

However, Title V patently does not extend to the as-

sessment of such general costs of administration. To

the contrary, Title V, on its face, authorizes the assess-

ment of fees only when the government agency involved

furnishes something specific and identifiable, .e., “‘any

work, service, publication, report, document, benefit,

privilege, authority, use, franchise, license, permit

certificate, registration or similar thing of value or

utility’? to a specific identifiable beneficiary as dis-

tinguished from the public generally.

That the fees authorized by Title V were intended

to be so limited is clear from its legislative history.

Thus, the House Appropriations Committee explained

that it was recommending the proposed legislation be-

eause “‘the government is not receiving full return

from many of the services which it renders to special

beneficiaries.’’ H. Rep. No. 384, 82nd Cong., 1st Sess.,

p. 2 (1951) ; see also, S. Rep. No. 2120, 81st Cong., 2nd

Sess. (1950). Congressman Yates, a Committee mem-

ber, elaborated on the House floor (97 Cong. Rec. 4809

* (1951)):

‘““The Federal Commniunications Commission

grants franchises, licenses, certificates of conven-

ience and necessity, if you will, to all broadcast-

ing stations upon application for such licenses,

18 See compilation in Committee Print entitled, State Utility

Commissions, Subcommittee on Intergovernmental Relations of the

Senate Committee on Operations, 90th Cong., Ist Sess., p. 22. See

also Memphis Natural Gas Company v. McCanless, 183 Tenn. 635,

194 S.W. 2d 476, 481-482 (1946), appeal dismissed, 329 U.S. 670

(1946) ; Fort Smith Gas Company v. Wiseman, 189 Ark. 675, 74

S.W. 2d 788, 790 (1934).

11

franchises, and certificates. * * * That is a pretty

difficult job and a complicated job, and entails ex-

neve hearings by — Federal Communications

ommission. e companies pay nothing

other than taxes, and I think it is only fair that

in exchange for the franchise that the Government

gives the broadcasting company and the protec-

tion which the Government affords to such broad-

casting company to assure its freedom from inter-

ference in the operation of its broadcasting fa-

cilities in the particular point of the spectrum

which it occupies, that it should pay some of the

- costs of the hearings. * * * Such companies should

assume a greater share of the cost use regu-

lation is necessary.’’

Likewise, the Bureau of the Budget, in its Circular

A-25 has taken a similarly limited view as to the

charges authorized by Title V. As a result, the assess-

ment of the proposed general annual charges here in-

volved clearly is at odds with the provisions of that

Circular. Thus, these charges do not come within the

Circular’s statement of General Policy, providing that

fees may be charged ‘‘to each identifiable recipient

for a measurable unit or amount of Government serv-

ice or property from which he derives a special bene-

fit”” (Pet. App. p. 6la). Nor does the Commission’s

rate regulation activities provide ‘‘special benefits” to

the pipelines ‘‘above and beyond those which accrue to

the public at large.” (Ibid). The absence of any such

“‘special benefits” is highlighted by the fact that the

sole criterion for collecting the charge from a pipeline

in any year is that its revenues in that year exceed

the prescribed minimum without regard to whether the

pipeline itself was involved in any Commission pro-

ceeding in that year. :

12

The assessment of such costs against the pipelines

violates the subparagraph (2) of Circular A-25, pro-

hibiting the assessment of charges ‘‘for service when

the identification of the ultimate beneficiary is ob-

seure and the services can be primarily considered as

benefiting broadly the general public * * *”’ (Pet. App.

62a). As already indicated the principal, if not the

sole, identifiable beneficiaries from the Commission’s

discharge of its rate regulation responsibilities are the

consuming public generally.

There is no merit in the Commission’s claim (Pet.

pp. 9-10), that the proposed general annual charges

are authorized under Circular A-25 because, although

its rate regulation benefits the consuming public, it

also

«<* * * redounded to the benefit of [the natural

gas] industr[y] by creating the economic climate

for greater usage of the services of the regulated

companies which in turn have further strength-

ened their financial stability and their ability to

sell debt and equity securities required for capi-

tal additions to meet ever-increasing demands.”’

To be sure, Circular A-25 refers to ‘‘business stabil-

ity”, but it is in the context of specific agency ac-

tions directed to identifiable beneficiaries “‘ (e.g. certifi- .

cate of necessity and convenience for airline routes or

safety inspection of craft)’’ (See Pet. App. pp. 61a-

62a). The Commission order here involved also con-

tains a schedule of fees to be paid in connection with

requests. for comparable Commission actions (t.e. ap-

plications for certification of public convenience and

necessity under the Act) and there is no question here

as to the validity of these fees.

fran, geet dbpeenanensenictamnresnemaasieeninesitertse sorentreneniemnepteasanes oases

13

In contrast, the alleged beneficial ‘‘economic cli-

mate’’* was not the result of specific actions taken

by the Commission with that objective in mind as con-

templated by Circular A-25. Rather, that ‘‘clima

at best came about as the culmination of the Commis-

sion’s activities over a period of years and resulted

from the reaction of the financial community to the

Commission’s discharge generally of the responsibili-

*ties imposed on it by the Congress. Moreover, even

if the Commission rate regulation has been beneficial

generally to the natural-gas pipelines, the pipelines

have not been ‘‘special’’, or even the primary, bene-

ficiaries of that regulation. In light of the primary

thrust of the statute, any benefits to the natural-gas

pipelines would at most be incidental by-products of

the Commission’s discharge of its responsibilities to

the consuming public.”

Finally, no special benefits resulted to the pipe-

lines justifying the Commission’s assessment of the

14 The finding of such beneficial ‘‘economie climate’’ is itself

questionable since it is based solely upon a report issued by the

Commission in 1950, more than 20 years ago (See Pet. App. 30a-

31a, fn. 5).

15 The recent urgings of the Appropriations Committees of Con-

gress, that the regulatory agencies, including the FPC, review and

increase their fees to offset in part increased operating costs

(See Pet. pp. 6-7) obviously does not serve to enlarge the Commis-

sion’s authority under Title V, in the absence of any affirmative

Congressional action Cf. U.S. v. Southwestern Cable Co., 392 U.S.

157, 170 (1968) and cases there cited. In any case, the Committees’

urgings were directed not to the assessment of charges such as the

general annual charges here involved, but rather, to the increasing

of fees for ‘‘services * * * rendered to special beneficiaries’’ and

‘‘beneficial certificates and privileges granted’’ See e.g., H. Rep. No.

1348, 90th, 2nd Sess. p. 4; S. Rep. No. 1375, 90th Cong., 2d Sess.

p. 3.

14

added reserve fee."* To the contrary, each of the ‘‘ bene-

fits’”’ allegedly accruing to the pipelines as a result of

the Commission’s producer certificate activities is in

fact intended to benefit the consuming public rather

than the pipeline industry. Under the cost-of-service

method used by the Commission in fixing pipeline

rates subject to its jurisdiction (cf. e.g., F.P.C. v.

Hope Natural Gas Co., 320 U.S. 591 (1955)), pipe-

lines are required to pass on, rather than retain for .

themselves, the: benefits which the Commission (Pet.

App. 57a) claims results from its regulation of ‘‘ini-

tial prices [the pipelines] are required to pay pro-

ducers for gas purchases,’’ and ‘‘the elimination of

indefinite price escalation provisions.’ ” E

The further ‘‘benefits’’ allegedly stemming from

“the [Commission] issuance of temporary certificates

to expedite deliveries, * * * and the [Commission] con-

trol over the quality of natural gas to be delivered and

the length of the period in which supplies may be de-

livered where advance payments are made by the pipe-

lines,’”’ (Pet. App. 57a) are also tied in with and are a

part of benefits which those Commission activities are

intended to provide the consuming public. The basic

purpose of this facet of the Commission activities is

to assure that gas will be available to satisfy the re-

quirements of the consuming public generally. Cf.

F.P.C. v. Louisiana Power & Light Co., 406 U.S., 621

(1972). Whatever benefits result to pipeline industry

from these Commission activities are merely inciden-

tal by-products and fall far short of constituting ‘‘spe-

16 The ‘‘administrative convenience’’ justification set forth in the

Commission’s Notice of Rulemaking (J. A. p. 5), obviously is not

an adequate basis for assessing the added reserves fee against the

pipelines rather than the producers.

15

cial benefits above and beyond those which apply to

the public at large’’ within Circular A-

2. There is no conflict between the holding of the

Court below and that of the Fifth Circuit in Clay

Broadcasting Corp. v. United States, supra. To the

contrary, both the Court below and the Fifth Circuit

were in full agreement as to the need of special bene-

fits to identifiable beneficiaries as a prerequisite to the

assessment of any fees or charges, annual or otherwise,

under Title V. Compare Pet. App. 5a-7a with Pet.

App. 78a-8la. The Commission implicitly admits such

to be the case but claims that the difference in a result

reached by the two courts is attributable to ‘‘the ap-

proaches of the two courts in applying Title V [which]

are diametrically opposed.’’ (Pet. p. 16)

In so urging, the Commission would read the opinion

of the Court below as setting the annual charges aside

on the ground that the Commission’s rate regulation

resulted only in industry wide, rather than individual

pipeline, benefits, whereas, according to the Commis-

sion, the Fifth Circuit held that industry-wide bene-

fits were sufficient to satisfy Title V (Pet. p. 16)."

But this alleged ‘difference in approach” does not

exist; the distinction here pressed by the Government .

in fact did not constitute any part of the judgment or.

holding of either court of appeals.

*T But see the FCC’s Brief in Opposition in No. 72-948 (at p.

10):

**As the court stated, the inquiry under [Title V]} is not

whether those regulated agree with the regulators, but rather

‘whether the members of the industry have benefited in a

manner different from the public at large from the regulatory

‘scheme provided by the Commission’ (Pet. App. A-18).’’

16

The Court’s ruling here was simply that the primary

beneficiaries of the Commission’s accounting and rate

regulatory activities were the consuming public, and

hence that the natural gas pipelines, neither individ-

ually nor collectively as an industry, received the ““spe-

cial benefits’’ required by Title V to justify the imposi-

tion of the proposed annual charges (Pet. pp. 9a-10a) :

‘‘In sum, we conclude that the regulation of

these industries is primarily for the benefit of the

public * * *. There is something fundamentally

wrong in assessing charges on the basis of benefit

to the company when the Commission must bene-

fit the public.” - oo

This approach is not opposed, diametrically or other-

wise, to that of the Fifth Circuit. Like that of the

Court below, the Fifth Circuit’s holding was in no way

predicated by any distinction between industry v. in-

dividual company benefits. Moreover, the nature of

the FPC’s rate regulation of the pipeline industry dif-

fer so markedly from the FCC’s regulation of the

broadeast and CATV industries as to make not only

‘‘detailed comparison of the [alleged] respective bene-

fits bestowed by the different regulatory agencies diffi-

cult” as the FPC admits (Pet. p. 16), but-also to

make the different results reached by the two courts

wholly consistent with each other.

Unlike the FPC’s annual general charge ‘have in-

volved which, as shown earlier, is intended to cover

its costs of rate regulation directed at protecting the

ultimate consumers against excessive rates, the FCC

annual charges involved in Clay Broadcasting are un-

related to any rate regulatory responsibilities the FCC

may have under the Federal Communications Act. See

Amendment of Subpart G of Part 1 of the FCC relat-

17

ing to Schedule of Fees, FCC Docket No. 18802, 23

FCC 2d 880 (1970), 28 FCC 2d 139, (1971). Indeed,

since CATV is not ‘‘common carrier’’ under Title IT

of the Communications Act (U.S. v. Southwestern Ca-

ble Co., 392 U.S. 157, 172 (1968)), CATV operators

apparently are ‘‘free to set their own advertising

rates’ Cf. U.S. v. RCA, 358 U.S. 334, 349 (1959).

Furthermore, one of the primary purposes of FCC

regulation of broadcasting and CATV activities is to

allocate the limited air waves and broadcast spectrum

among the various applicants for license and to pro-

tect those having such licenses from interference by

others. See €.g., 23 F.C.C.2d at 890, 897-898, 28 F.C.C.

2d pp. 142-143, 150-151. Although the FCC’s guide-

line in so acting is the ‘‘public interest’’, the Govern-

ment (Pet. pp. 15-16; see also Br. in Opp. in No.

72-948 at pp. 7-8) urges that the Fifth Circuit prop-

erly held that such FCC regulation is highly and di-

rectly beneficial to broadcasters and CATV systems:

““* * * Broadcasters receive the right to operate

on a portion of the public’s electromagnetic spec-

trum, are protected against technical interference

and are part of a FCC controlled market struc-

ture which permits them to operate at a profit

(App. G, mfra, p. 70a). CATV operators, of

course, use the broadcast signals protected and

‘ licensed by the FCC and the relative scarcity of

television outlets creates much of the economic

value of CATV systems; the systems are also

benefited by FCC rules restricting the ownership

of CATV erin by television stations and net-

works and stand to benefit from proposed rules

which would limit the amount of franchise fees

which local governments could charge CATV op-

erators (Id. at 78a-79a).”’

18

Since these valuable benefits are continuing in na-

ture, the assessment of an annual charge, such as that

assessed by the FCC upon CATV operators on the

basis of the number of their subscribers, plainly is so

different from the FPC’s general annual charge in-

tended to recover its rate regulation costs as to render

the result reached by the Court below not inconsistent

with that of the Fifth Circuit.

CONCLUSION

For the foregoing reasons, it is respectfully sub-

mitted that the petition for a writ of certiorari should

be denied.

Respectfully submitted,

Harry S. WELCH

W. O. Strona, ITT

P. O. Box 2511

Houston, Texas 77001

MELVIN RICHTER

LittTMAN, RICHTER, WRIGHT

& TALISMAN

1001 Connecticut Ave., N.W.

Washington, D.C. 20036

(Telephone: 202-638-3394

Attorneys for Respondent

Tennessee Gas Pipeline

Company, a Division of

Tenneco Inc.

April 13, 1973

In the Supreme Gourt of the Wied States

Ocroser Term, 1973

No. 72-1162

FeperaL Power CoMMISSION, PETITIONER

v.

New Encianp Power ComPaNy, ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

INDEX

Relevant Docket Entries =

Notice of Proposed Rulemaking, Issued November 25, 1970__________

Comments of Iowa-Illinois Gas and Electric Co

Comments of Southern California Edison Co.

Comments of Pacific Gas and Electric Co

Comments of Public Service Electric and Gas Co

Comments of New England Power Co Lt

Comments of Louisiana Power and Light Co. i

Comments of Edison Electric Institute 4

Comments of Columbia Gas System Service Corp.

Comments of American Electric r Service Corp.

Comments of Consumers Power Co.

Comments of Wisconsin Electric Power Co.

Comments of Colorado Interstate Gas Co

Comments of Independent Natural Gas Association of America______

Comments of Tennessee Gas Pipeline Co

Order No. 427, Issued March 18, 1971

. Application of Edison Electric Institute for Rehearing

Application of Independent Natural Gas Association of America for

Rehearing

Application of Southern California Edison Co. for Rehearing______

Application of Tennessee Gas Pipeline Co. for Rehearing____________

Application of Montana Power Co. for Rehearing

Application of New England Power Co. for Rehearing

Order Denying Rehearing, Issued May 14, 1971

Order Granting Certiorari

— i a]

BEBSRES Faxaneeeeteeeyenieés

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