The opinion of the court was delivered by: SMITH
JOHN LEWIS SMITH, Jr., District Judge.
This action concerns alleged violations of price controls under Phase II of the President's Economic Stabilization Program (hereinafter "Phase II").
The case is now before the Court on plaintiffs' motion for partial summary judgment, defendant's cross-motion for summary judgment, and defendant's motion to dismiss. For reasons set forth infra, the Court finds that plaintiffs have failed to exhaust their administrative remedies and accordingly grants defendant's motion to dismiss for lack of subject matter jurisdiction.
The defendant United is a natural gas pipeline company subject to the jurisdiction of the Federal Power Commission. The present controversy involves increases in the price of its natural gas effective January 1, 1973. Plaintiffs Air Products and Chemicals, Inc. and Stauffer Chemical Company are customers of United and parties to 2 of its 55 contracts affected by the price increase. Plaintiffs claim that the increase was made in contravention of then applicable Phase II price controls.
Phase II of the Economic Stabilization Program and the Price Commission were established on October 16, 1971.
Both continued until January 10, 1973, when they were replaced by Phase III and the Cost of Living Council respectively.
On September 16, 1972, the Price Commission issued public utility regulations covering direct industrial gas sales of the type involved in the present case which, with minor subsequent amendments, continued in effect through the end of Phase II on January 10, 1973.
United contends that from September 16, 1972, to the end of Phase II on January 10, 1973, its direct industrial gas sales were subject to the requirements of the Price Commission's public utility regulations.
The primary issue in this case is whether United followed the proper procedure for effectuating its January 1, 1973 price increase. Under the Price Commission's September 16, 1972 public utility regulations, United, whose rates were not subject to the rate jurisdiction of a regulatory agency,
was confronted with two alternate procedures for increasing prices.
The applicability of one procedure over the other depended upon whether the price increase "would cause an increase of more than 1 percent in the aggregate annual revenues of a public utility which requested the increase."
Under the regulations, a public utility which stood to recognize an aggregate revenue increase in excess of one percent was required to prenotify the Price Commission 60 days in advance of the increase, while in the case of an increase not exceeding one percent, the public utility need only to have "self-certified" that the increase was justified and thereafter subject the increase to a 60 working day period of review by the Price Commission.
On November 6, 1972, Pennzoil Company on behalf of its wholly-owned subsidiary, United, made a written request to the Price Commission for guidance on how to apply the one percent test. On November 16, 1972, the Assistant General Counsel for the Price Commission responded that the one percent test should be applied on a contract by contract basis as opposed to an aggregate basis. United followed this decision and self-certified price increases on January 2, 1973, without prenotification to the Price Commission.
Plaintiffs object to a contract by contract application of the one percent test and instead contend that an aggregate approach should have been taken which would have necessitated prenotification to the Price Commission of the January increase.
Plaintiffs argue that, as a consequence of following an improper procedure, United's price increase was illegal and now pray for an injunction against the overcharge.
Jurisdiction is predicated upon 28 U.S.C. § 1331 and upon section 210(a) of the Economic Stabilization Act of 1970, 12 U.S.C.A. § 1904 (Supp. 1973) (note), which provides in pertinent part:
"Any person suffering legal wrong because of any act or practice arising out of this title . . . may bring an action in a district court of the United States . . . ."
United contends in its motion to dismiss that § 210(a) of the Act is unavailable to plaintiffs since an initial agency ruling on the propriety of the January price increase has already been made. It is United's position that in order to avoid a collateral attack through a private civil suit on an outstanding agency ruling, plaintiffs' only remedy is to bring a review proceeding against the Cost of Living Council under § 211 of the Act, 12 U.S.C.A. § 1904 (Supp. 1973) (note). That section provides in part:
"(a) the district courts of the United States shall have exclusive original jurisdiction of cases or controversies arising under this title . . . ."
(d) . . . no order of [any agency exercising authority under this title] shall be enjoined or set aside, in whole or in part, unless a final judgment determines that such order is in excess of the agency's authority, or is based upon ...