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Boroughs of Ellwood City v. Federal Energy Regulatory Commission

decided: March 4, 1983.



Adams, Garth, and Becker, Circuit Judges.

Author: Adams


ADAMS, Circuit Judge.

In this proceeding, wholesale customers of the Pennsylvania Power Company (PPC), an electric utility, filed a petition challenging an order of the Federal Energy Regulatory Commission (FERC or Commission), which set the length of time that a proposed schedule of increased wholesale electric rates would be suspended. We hold that, under the circumstances of this case, the action of the FERC in suspending the rate inrease for one day, the minimum period provided for by statute, rather than for some longer period up to the statutory maximum of five months, is not subject to review. Accordingly, we dismiss the petition.


The Federal Power Act limits the rates charged by public utilities for the sale and transmission of electricity in those cases in which the transactions are subject to the jurisdiction of the Commission.*fn1 Such rates are required to be just and reasonable. 16 U.S.C. § 824d(a) (1976). Public utilities must, therefore, file with the FERC "schedules showing all rates and charges for any transmission or sale subject to the jurisdiction of the Commission," and give notice to the FERC and the public of any proposed changes. 16 U.S.C. § 824d(c) and (d) (1976 & Supp. V 1981). After an initial review, the Commission may accept the filed rates, suspend the new rates for any period between one day and five months, or reject the new rates altogether. 16 U.S.C. § 824d(d) and (e) (1976 & Supp. V 1981).*fn2 If the FERC suspends the new rates, and does not determine before the end of the suspension period whether the new rates are justified, it may require the utility to keep an accurate account of all amounts received by reason of the increased rates. If the FERC subsequently determines that the increased rates were not just and reasonable, it may order a refund, with interest, to the persons in whose behalf such amounts were paid, of that portion of the increased charges found not justified. 16 U.S.C. § 824d(e) (1976). By suspending the new rates, even for the minimum period of a single day, the Commission is thus able to provide customers with a significant level of protection. The difference between the amount that would have been collected under the new rate schedule and that actually collected under the old rate schedule during the period of suspension is not, on the other hand, subject to recapture even if the Commission later determines that the rates proposed by the utility were, in fact, just and reasonable.


On October 7, 1981, PPC filed a proposed two-step increase in its rates for electric service to five municipal, wholesale customers located in Western Pennsylvania: Ellwood City, Grove City, New Wilmington, Wampum and Zelienople (the Boroughs). PPC projected that the first stage of the increase, Level A, would generate an additional $1,671,950 over current income for this type of service -- a 40.1% increase. It requested that the Level A rates go into effect on the same day that its retail rate increase would be implemented. The Level B increase, $652,870, was to become effective only after it was found to be justified on the basis of an Initial Decision on the merits by the FERC.*fn3 On November 9, 1981, the Boroughs petitioned the FERC for permission to intervene before the FERC and moved to reject PPC's filing as discriminatory and anticompetitive. The Boroughs alleged that the proposed rate increase created a price squeeze designed to drive them out of the retail electricity business.*fn4 In an order dated January 21, 1982, the Commission granted the petition to intervene, refused to require PPC to file additional information, and suspended the effective dates for the minimum suspension period of one day. This meant that the proposed rates would go into effect, but if FERC ultimately found they were too high, the utility would be required to refund the increased portion to its customers, with interest.

The Boroughs contend that the FERC unlawfully refused to consider the potential anticompetitive effects of the alleged price squeeze in setting the length of the suspension period. They argue further that the Commission erred in failing adequately to explain its decision to depart from its normal policy of suspending rates for the maximum period allowed by statute. The FERC insists that it both considered the allegations of potential anticompetitive effects and provided an adequate explanation for its action,*fn5 but that in any event its decision is not reviewable.


Whether a court of appeals may review a decision of the FERC setting the length of a new rate suspension period has not previously been addressed in this Circuit. The seminal case on this issue is Arrow Transportation Co. v. Southern R. Co., 372 U.S. 658, 83 S. Ct. 984, 10 L. Ed. 2d 52 (1963), which construed the nearly identical suspension provisions of the Interstate Commerce Act. In Arrow the Interstate Commerce Commission (ICC) suspended a set of proposed railroad rates for the maximum period provided for in the statute, but had not yet decided the reasonableness of the new rates by the time the suspension period expired. Suit was then filed by a barge line in competition with the railroad, a municipality, and a consumer who received goods by truck, to enjoin the railroad from implementing the proposed rate reductions pending a decision on the merits by the ICC. The Supreme Court held that the courts could not interfere with the suspension power through the use of an injunction, explaining that the Interstate Commerce Act gave the agency "the sole and exclusive power to suspend," and foreclosed "judicial power to interfere with the timing of rate changes." Arrow Transportation Co. v. Southern R. Co., 372 U.S. at 668.*fn6 See also Burlington Northern, Inc. v. United States, 459 U.S. 131, 103 S. Ct. 514, 519, 74 L. Ed. 2d 311 (1982); Consolidated Rail Corp. v. Nat'l Ass'n of Recycling Industries, Inc., 449 U.S. 609, 612, 101 S. Ct. 775, 66 L. Ed. 2d 776 (1981) (per curiam); Southern R. Co. v. Seaboard Allied Milling Corp., 442 U.S. 444, 454, 60 L. Ed. 2d 1017, 99 S. Ct. 2388 (1979); Atchison, T. & S.F.R. Co. v. Wichita Board of Trade, 412 U.S. 800, 37 L. Ed. 2d 350, 93 S. Ct. 2367 (1973); United States v. SCRAP, 412 U.S. 669, 697, 93 S. Ct. 2405, 37 L. Ed. 2d 254 (1973).

Judge Leventhal, relying on Arrow, concluded, in Municipal Light Boards v. FPC, 146 U.S. App. D.C. 294, 450 F.2d 1341 (D.C. Cir. 1971), that a one-day suspension order under the Federal Power Act "is not subject to judicial review, either as to the granting of the one day suspension or the denial of a five month suspension. . . ." 450 F.2d at 1352. The court explicitly confined its holding, however, to situations in which the agency neither acted in defiance of a "clear and mandatory" statutory provision, nor committed error evident on the face of the papers. Id. at 1352. In a later case, Connecticut Light & Power Co. v. FERC, 201 U.S. App. D.C. 8, 627 F.2d 467 (D.C. Cir. 1980), the Court of Appeals for the District of Columbia Circuit held that it did, in fact, have jurisdiction to review an order of the FERC setting the length of a suspension period where the agency acted in defiance of a clear and mandatory provision of the Federal Power Act. The FERC, in Conn. Light & Power, suspended a new rate for the maximum period stipulated in the statute. As required by the statute, the Commission provided the utility with a statement giving its reasons for the suspension. The court found, however, that because the order employed mere "boilerplate" language it did not constitute an adequate statement of reasons. FERC thus violated section 205(e) of the Federal Power Act, 16 U.S.C. § 824d(e) (1976), which provides in relevant part:

The Commission, upon filing with such schedules and delivering to the public utility affected thereby a statement in writing of its reasons for such suspension, may suspend the operation of such schedule and defer the use of such rate, charge, classification, or service, but not for a longer period ...

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