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Occidental Chemical Corp. v. Federal Energy Regulatory Commission

decided: February 22, 1989.

OCCIDENTAL CHEMICAL CORPORATION, AND PEOPLE OF THE STATE OF NEW YORK, AND THE PUBLIC SERVICE COMMISSION OF THE STATE OF NEW YORK, PENNSYLVANIA PUBLIC UTILITY COMMISSION, LONG LAKE ENERGY CORPORATION, NATIONAL INDEPENDENT ENERGY PRODUCERS, ULTRASYSTEMS DEVELOPMENT CORPORATION, PETITIONERS,
v.
FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT, ORANGE AND ROCKLAND UTILITIES, INC., ROCKLAND ELECTRIC CO. AND PIKE COUNTY LIGHT & POWER CO., AMERICAN REF-FUEL, PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA, THE INDEPENDENT POWER PRODUCERS OF NEW YORK, CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., EDISON ELECTRIC INSTITUTE, NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, THE CONNECTICUT LIGHT AND POWER COMPANY, POTOMAC ELECTRIC POWER COMPANY, COGENERATION & INDEPENDENT POWER COALITION OF AMERICA, INC., ULTRASYSTEMS DEVELOPMENT CORP., CONNECTICUT RESOURCES RECOVERY AUTHORITY, INTERVENORS



Petition for review of an April 14, 1988 order of the Federal Energy Regulatory Commission no longer permitting states to impose rates exceeding avoided cost on wholesale rates in interstate commerce.

Pratt and Altimari, Circuit Judges, and Sand, District Judge.*fn*

Author: Sand

SAND, District Judge.

Petitioners seek review of an order issued on April 14, 1988 by The Federal Energy Regulatory Commission ("Commission"). The Commission has stayed the order, which is said to be prospective only, and commenced a rulemaking proceeding addressing the identical issues raised by this appeal. We hold that judicial review is premature and dismiss the petitions without prejudice.

BACKGROUND

Section 210 of the Public Utility Regulatory Policies Act of 1978 ("PURPA") requires the Commission to prescribe rules governing the purchase and sale of power by electric utility companies from and to cogeneration and small power production facilities. 16 U.S.C. ยง 824a-3 (1982). In its 1980 preamble to its PURPA rules, the Commission said that states were free to charge rates for purchases from cogenerators and small power producers in excess of the utility's "avoided costs." In its April 14, 1988 order, however, the Commission reversed that position, declaring that in light of changes that had occurred in the industry since 1980, states would no longer have such authority.

The Commission's order, and its subsequent denial of rehearing, created considerable uncertainty in the industry. In recognition of the impact that its ruling would have and in view of the desire of many in the industry to be heard, the Commission issued a rulemaking proposal that would elicit public comment on the proposed change.

By separate order dated June 16, 1988, the Commission stayed its April 14, 1988 order, pending judicial review or until completion of the supplemental rulemaking proceeding. In oral argument, the Commission advised the Court that the comment phase had been completed and that the Commission has had the matter under advisement since last summer. The composition of the Commission has changed since April 1988 so that three of the five members of the present Commission either voted against or did not participate in the April 14, 1988 order.

Discussion

The current status of the Commission's actions raises the issue of ripeness. The Supreme Court has said that ripeness is important in order to

prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.

Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967). The four criteria for determining ripeness, as set forth by the Supreme Court in Abbott, and enunciated more recently by the Fifth Circuit in Pennzoil Co. v. Federal Energy Regulatory Commission, 742 F.2d 242, 244 (5th Cir. 1984), are:

(1) whether the issues presented are purely legal; (2) whether the challenged agency action constitutes 'final agency action' within the meaning of the Administrative Procedure Act; (3) whether the challenged agency action has or will have a direct and immediate impact on the petitioner; and (4) whether the resolution of the issues will foster, rather than impede, effective enforcement and administration by the agency.

According to these four criteria, this case is not ripe for review. First, the pending rulemaking process makes the stayed April 14, 1988 order "particularly inappropriate for judicial resolution at this time" because the rulemaking "could alter the very regulations applied" in that order. United States Defense Committee v. Federal Election Commission, 861 F.2d 765, 772 (2d Cir. 1988). Further, the rulemaking process, with its public comments, may lead to new factual information that will inform the Commission's final decision. Second, there has been no final agency action. The Commission's order is stayed and the rulemaking is sub judice. Were the Court to intervene at this stage, we would "den[y] the agency an opportunity to correct its own mistakes [if any] and to apply its expertise." Federal Trade Commission v. Standard Oil Co., 449 U.S. 232, 242, 66 L. Ed. 2d 416, 101 S. Ct. 488 (1980). Third, the challenged agency action will not have a direct impact on the petitioner because the order ...


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