Baldwin County Electric Membership Corp. v. Price Commission

481 F.2d 920, 1973 U.S. App. LEXIS 9369, 1973 WL 302616

• Court: Temporary Emergency Court of Appeals
• Decided: June 18, 1973
• Docket: Nos. DC-4, DC-5
• Status: Published

Opinions

JOHNSON, Judge.

Appellants, various cooperatives and municipalities which are wholesale customers of the Alabama Power Company, seek a reversal of an order of the district court which granted appellees’ motion for summary judgment. The effect of the lower court’s order was to approve an action of the Price Commission allowing certain rate increases by Alabama Power in the sale of electric power to the appellants. We affirm.

On November 1, 1971, the Alabama Power Company filed with the Federal Power Commission (FPC) an application for a rate increase to be effective January 3, 1972, covering sales by the company to the appellants. Rather than reject outright a proposed rate increase, the FPC had authority to approve the increase but delay its effect during a suspension period lasting as long as five months. 16 U.S.C. § 824d(e). On December 30, 1971, the FPC issued an order permitting Alabama Power’s rate increase to go into effect February 2, 1972, after a one-month suspension period ordered to commence January 3. On January 13 and 14, the appellants in this case filed applications for rehearing requesting the FPC to reconsider its order of December 30.

On January 14, 1971, while this application for rehearing was pending, the Price Commission published new regulations dealing with rate increases by public utilities to become effective January 17, 1972. Section 300.16(i)(3) of these new regulations provided:

(i) Regulated public utilities — Interim report on increases put into effect subject to accounting and refund.

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(3) Notwithstanding any other provision of this section, no price of the kind covered by this paragraph (i) may be increased before the end of the maximum suspension period permitted by law unless the regulatory agency has certified to the Price Commission that there is good cause for an earlier effective date, together with its reasons therefor, and the Price Commission has approved that certification.

37 F.R. 653 (January 14, 1972).

On January 21, the appellants filed with the FPC a Supplemental Application for Rehearing requesting the FPC to comply with Section 300.16(i)(3) of the Price Commission Regulations by suspending for the full five-month statutory period Alabama Power’s proposed increase, which had not yet gone into effect. At the same time, the appellants notified the Price Commission of the status of the proceeding before the FPC and specifically of their contention that Section 300.16 required the full five-month suspension of the proposed rate increase. On February 11, the FPC issued an order denying rehearing, finding that Section 300.16(i)(3) did not require alteration of its earlier order:

The order as issued December 30, 1971, is in conformity with the Regulations in effect at that time.¹

On February 17, 1972, appellants filed with the Price Commission their Request For Rescission Or Suspension of Interim Rate Increase Permitted To Go Into Effect In Violation Of The Price Commission’s Regulations. This submission expressly called attention to the FPC’s failure to comply with the provisions of Section 300.16(i) (3). On March 24, 1972, the Price Commission published its Decision List No. 74-56, by which Alabama Power’s rate increase was permitted to stand. On March 31, 1972, in a letter to appellants’ attorney, Mr. Robert D. Banker, Acting Chief of the Public Utilities and Regulated Industries division of the Price Commission, confirmed that their request for rescission or suspension had been taken into account by the Commission in making its decision of March 24. Subsequently, the appellants filed suit in district court pursuant to Section 210(a) of the Eeonomic Stabilization Act Amendments of 1971.²

Appellants argue that the Price Commission violated its own regulations, Section 300.16(i) (3), in failing to require that Alabama Power’s rate increase be suspended for the five-month maximum suspension period permitted by law. It is not argued that the Commission’s approval of the increase was inconsistent with other decisions of the Commission or that the regulation itself is contrary to the purposes of provisions of the Economic Stabilization Act. P.L. No. 91-379 (Aug. 15, 1970), as amended by P.L. No. 92-210 (Dec. 22, 1971). It is argued only that, by its language, Section 300.16(i)(3) applies to Alabama Power’s rate increase, which was scheduled to take effect after January 17. The Price Commission, however, did not interpret the regulation as applying to Alabama Power’s rate increase, since the proposed increase was reviewed and decided upon by the FPC prior to the effective date of the new Price Commission regulations, even though the actual rate increase did not take place until after the regulation was in force.³

Appellants’ argument needs little discussion. It is true that a governmental agency may not act contrary to its own regulations. E. g. Service v. Dulles, 354 U.S. 363, 372, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957); Accardi v. Shaughnessy, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954). Here, however, Section 300.16(i)(3) is silent on the point in issue between the parties. The section states that no price covered by the section may be increased before the end of the maximum suspension period permitted by law. It does not, however, purport to alter the status of valid suspension orders already issued at the time the regulation became effective. Nor does it purport to exempt rate increases which were approved prior to the effective date of the regulations. In such a case, an administrative agency’s interpretation of its own regulation is entitled to great deference by the courts.⁴ See, e. g., Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965); University of Southern California v. Cost of Living Council, 472 F.2d 1065 (Em.App.1972); United States v. Lieb, 462 F.2d 1161 (Em.App.1972). As a further consideration, there is a strong presumption against construing regulations so that they have the effect of altering regulatory actions already taken. See Davis, Administrative Law Treatise § 508. Under these circumstances, it clearly cannot be said that the Price Commission acted arbitrarily or capriciously in determining that its regulation 300.16(i)(3) applied prospectively only.

Accordingly, the judgment of the district court is affirmed.

1 . The applicable regulation at that time was Section 300.16(a) which read in pertinent part as follows :

(a) In general. A person which is a regulated public utility . . . may charge a price, rate or tariff in excess of the base price if that increase has been approved by a regulatory agency or other appropriate legal authority. A public utility which had revenues of $100 million or more during its most recent fiscal year shall inform the Price Commission of all requests for rate increases and immediately notify the Commission in writing of an agency order granting an increase and of any other authorized increase.

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In order to insure that the goals of the economic stabilization program are attained, the Price Commission reserves the right to review and limit the amount of any such requested increase, ordered increase, or other authorized increase.

36 F.R. 23977 (Dec. 16, 1971).

2 . P.L.N. 92-210 (Dec. 22,1971).

§ 210. Suits for damages or other relief (a) Any person suffering legal wrong because of any act or practice arising out of this title, or any order or regulation issued pursuant thereto, may bring an action in a district court of the United States, without regard to the amount in controversy, for appropriate relief

3 . The contention that the decision allowing the rate increase was not an “interpretation” of the regulation because it was made by staff members and not by the Commission is not well-taken. It appears from the record that the authority to appi-ove tiie rate increase, vested in the Price Commission, was properly delegated to staff officials of the Commission. In any case, since the appellants, without complaining to the Commission, proceeded directly to federal court to challenge an action of the Commission, they will not now be heard to argue that, in fact, there ■was no “action” taken by the Commission.

4 . Appellants urge that this doctrine should not apply here since the Price Commission did not articulate a reason for its interpretation of the regulation. It is true that the Commission merely issued a list of approved rate increases. In the context in which the rate increase was approved, however, it was quite clear that the Commission accepted the FPC’s position that its actions had been in compliance with the regulations in effect at the time. The Price Commission was fully aware of the application of appellants to the FPC requesting it to comply with Section 300.16 (i) (3) and of the FPC order denying this application and states its position. Indeed, the appellants had made certain that it was brought to the attention of the Commission. Further, the Commission made known to the appellants by letter that it had considered their request for rescission. Under the circumstances the Commission, by approving the rate increase, assented to the rationale expressed by the FPC.