Pacific Gas & Electric Co. v. Federal Power Commission
49 F.P.C. 85 (1973)
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Rule of Law:
A general statement of policy by an administrative agency, which announces the agency's tentative intentions for the future but does not establish a binding norm or have an immediate and significant impact on the rights of parties, is not a final, reviewable order and is exempt from the notice-and-comment requirements of the Administrative Procedure Act.
Facts:
- Due to a national natural gas shortage, pipeline companies needed to curtail (reduce) deliveries to certain customers.
- Pipeline companies were uncertain whether to base curtailments on existing contractual commitments or on the most efficient end-use of the gas.
- In 1971, the Federal Power Commission (FPC) issued Order No. 431, directing pipeline companies to file curtailment plans and indicating a preference for plans based on the end-use of the gas.
- In response, various pipeline companies submitted a wide range of different curtailment plans, creating uncertainty and a need for uniform guidance.
- On January 8, 1973, to provide guidance, the FPC issued Order No. 467, titled a 'Statement of Policy,' without prior notice or comment.
- Order No. 467 set forth a priority schedule for gas curtailment based on end-use, giving low priority to large industrial boiler fuel users, such as electric generating companies.
- The order explicitly stated it was a 'guide' and that parties would have the opportunity to challenge the policy's validity and application in future, case-specific proceedings.
Procedural Posture:
- The Federal Power Commission (FPC) issued Order No. 467, a 'Statement of Policy,' without providing prior notice or an opportunity for public comment.
- Numerous customers of pipeline companies, including Pacific Gas & Electric Co., filed petitions for rehearing, reconsideration, or modification of the order.
- The FPC issued Order No. 467-B, which denied the petitions for rehearing and affirmed the policy.
- Petitioners sought review of the FPC's orders in the United States Court of Appeals for the District of Columbia Circuit, arguing the order was procedurally and substantively invalid.
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Issue:
Is a Federal Power Commission 'Statement of Policy,' which announces a preferred priority schedule for natural gas curtailment but is not finally determinative of any party's rights and will be subject to challenge in future individual proceedings, a reviewable order under Section 19(b) of the Natural Gas Act?
Opinions:
Majority - MacKinnon, J.
No. The Federal Power Commission's Order No. 467 is a general statement of policy, not a substantive rule, and therefore is not a final, reviewable order ripe for judicial review. The critical distinction between a substantive rule and a general statement of policy is its practical effect; a substantive rule establishes a 'binding norm' with the force of law, whereas a policy statement merely announces the agency's tentative intentions for the future. Here, the FPC consistently characterized the order as a policy guide and explicitly stated that its validity and applicability could be fully challenged in subsequent individual curtailment proceedings. Unlike a binding rule, the agency must be prepared to support the policy in any future application just as if the statement had never been issued. Because the order has no immediate, binding legal consequences and does not have a significant impact on petitioners until it is applied in a specific curtailment plan, it is not ripe for review. The issues are not fit for judicial decision without a developed factual record, and withholding review does not impose a significant hardship on the petitioners, who retain the right to challenge the policy when and if it is applied to them.
Analysis:
This case provides a foundational framework in administrative law for distinguishing between substantive rules, which carry the force of law and require notice-and-comment procedures, and general statements of policy, which do not. The court's focus on the 'binding norm' or practical legal effect of an agency action, rather than its label, became a crucial element in future analyses of agency pronouncements. The decision reinforces the ripeness doctrine, preventing premature judicial intervention and ensuring that courts review agency actions only when they are final and have a concrete impact, thereby conserving judicial resources and allowing agencies flexibility to announce their policy intentions without immediate litigation.
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