Montana Power Company v. Federal Energy Regulatory Commission

This case presents the novel question whether the Federal Power Commission (now the Federal Energy Regulatory Commission) may prevent an electric utility from including in its rate base, for accounting purposes, the total cost of acquiring an electric transmission line from a railroad. The Montana Power Company petitions for review, pursuant to 16 U.S.C. § 8257 (b), of an order issued by the Federal Power Commission (“FPC”) on April 19, 1976, which approved the company’s purchase of a railroad’s 100 kv transmission line, while rejecting the Company’s proposed accounting treatment of the transaction. The FPC order permitted Montana Power to include in its rate base account only the portion of the purchase price that represented the depreciated original cost of the line to the railroad that had built it. The difference between the acquisition cost and depreciated original cost was ordered placed in a non-rate base account to be amortized to *297 operating expense. Following the Commission’s denial of a rehearing, Montana Power petitioned for review, challenging the accounting treatment ordered by the FPC.

I

The transmission line acquired by Montana Power was built in 1916 by the…

dissenting:

While Judge Hufstedler writes a more persuasive case for affirming the FERC than the agency presented in its briefs or argument, I dissent.

Like the majority, I look to see whether the accounting treatment contested here is “the expression of a whim rather than the exercise of judgment.” American Telephone & Telegraph Co. v. United States, 299 U.S. 232, 237 , 57 S.Ct. 170, 172 , 81 L.Ed. 142 (1936). See also Northwestern Electric Co. v. FPC, 321 U.S. 119 , 64 S.Ct. 451 , 88 L.Ed. 596 (1944). Since Mr. Justice Cardozo laid down this general guideline, other cases have sharpened the test, indicating specific factors we look for to satisfy ourselves that discretion, not whimsy, produced the action complained of. I do not find these factors present here.

*302 The courts must, of course, accord an administrative agency considerable latitude to set policy in the areas in which it has statutory responsibilities. This truism does not mean, however, that courts should hesitate to intervene when the agency has clearly failed to make a reasoned decision.

More succinctly stated, the courts fulfill the review function assigned them by statute only when they “hold the agency to…

599 F.2d 295 31 P.U.R.4th 191 MONTANA POWER COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. No. 76-2726. United States Court of Appeals, Ninth Circuit. June 22, 1979. William J. Madden, Jr., Debevoise & Liberman, Washington, D. C., for petitioner. Drexel D. Journey, Gen. Counsel, FERC, Lynn N. Hargis, FERC, Washington, D. C., for respondent. On Petition to Review Orders of The Federal Energy Regulatory Commission. Before HUFSTEDLER, GOODWIN, and WALLACE, Circuit Judges. HUFSTEDLER, Circuit Judge: 1 This case presents the novel question whether the Federal Power Commission (now the Federal Energy Regulatory Commission) may prevent an electric utility from including in its rate base, for accounting purposes, the total cost of acquiring an electric transmission line from a railroad. The Montana Power Company petitions for review, pursuant to 16 U.S.C. § 825L (b), of an order issued by the Federal Power Commission ("FPC") on April 19, 1976, which approved the company's purchase of a railroad's 100 kv transmission line, while rejecting the Company's proposed accounting treatment of the transaction. The FPC order permitted Montana Power to include in…