Pacific Gas & Electric Co. v. Federal Power Commission

United States Court of Appeals for the District of Columbia Circuit · Administrative Law

Administrative LawAPANatural Gas ActFPCgeneral statement of policysubstantive rulerulemakingreviewability

Facts

During a natural gas shortage, pipeline companies had to decide whether to curtail deliveries according to contract entitlements or according to end use. To promote guidance and uniformity, the FPC issued Order No. 467 as a "Statement of Policy" setting out preferred curtailment priorities based primarily on end use and stating it proposed to implement that policy in matters arising under the Act. The order was issued without prior notice or comment, but it expressly contemplated later proceedings in which affected parties could challenge or support the policy and seek exceptions based on particular facts or extraordinary circumstances. Petitioners, including customers assigned relatively low priorities, sought immediate judicial review.

Issue

Whether Order No. 467 was a substantive rule requiring notice-and-comment rulemaking under the APA or instead a general statement of policy exempt under § 553(b)(A). If it was a policy statement, whether it was nevertheless reviewable immediately under § 19(b) of the Natural Gas Act.

Rule

A general statement of policy is not a binding norm and is exempt from the APA's notice-and-comment requirements under § 553(b)(A). Unlike a substantive rule, it does not finally determine rights or issues, cannot be applied as law without further support, and merely announces the agency's tentative intentions for future adjudications or rulemakings. Under NGA § 19(b), immediate review is unavailable where the agency action lacks sufficiently immediate and significant impact on petitioners and the record is inadequate to permit meaningful judicial review.

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The National Freight Allocation Board issues a document titled "Statement of Policy" from Washington, D.C., announcing that it prefers rail carriers to allocate scarce cargo space by medical necessity rather than by preexisting shipping contracts. The document states that in later carrier-specific proceedings, affected shippers may contest both the policy's validity and its application, and that the Board will require evidentiary support before adopting any allocation plan.

If several shippers argue the Board violated APA notice-and-comment requirements by issuing the document without prior public participation, how should a court most likely rule?

Explanation. A general statement of policy is exempt from APA notice-and-comment under § 553(b)(A) when it does not establish a binding norm, does not finally determine rights, and merely announces the agency's tentative intentions for future proceedings. Here, the agency expressly leaves the policy open to factual and legal challenge later and says it must still be supported by evidence when applied, which points to a policy statement rather than a substantive rule. (Derived from Pacific Gas & Electric Co. v. Federal Power Commission (n.d.).)