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Parties Involved:
Amoco Production Company
Petitioner
BP Energy Company
Petitioner
Federal Energy Regulatory Commission
Respondent
Wyoming Interstate Company, Ltd.
Intervenor for Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 2, 2001 Decided November 30, 2001

No. 00-1492

Amoco Production Company and BP Energy Company,

Petitioners

v.

Federal Energy Regulatory Commission,

Respondent

Wyoming Interstate Company, Ltd.,

Intervenor

Petition for Review of Orders of the

Federal Energy Regulatory Commission

Jon L. Brunenkant argued the cause for petitioners. With

him on the brief was Cheryl J. Walker. Frederick T. Kolb

entered an appearance.

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Lona T. Perry, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. With her on

the brief was Dennis Lane, Solicitor.

Daniel F. Collins, G. Mark Cook and J. Gordon Pennington were on the brief for intervenor. Howard L. Nelson

entered an appearance.

Before: Edwards and Randolph, Circuit Judges, and

Williams, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

Williams.

Williams, Senior Circuit Judge. Amoco Production Company and its affiliate BP Energy Company (collectively,

"Amoco") appeal from four orders of the Federal Energy

Regulatory Commission. We initially address the first three

orders, all revolving around the Commission's approval of a

rate settlement; we uphold the Commission. Then we address the fourth order, which turns out to be non-final and

thus beyond our jurisdiction.

* * *

Amoco produces natural gas and ships some of it through

pipelines operated by Wyoming Interstate Company. Wyoming Interstate filed for a rate increase in 1997 under s 4 of

the Natural Gas Act, 15 U.S.C. s 717c, and the new rates

went into effect subject to refund on December 1, 1997

(Docket No. RP97-375, the "1997 case"). After some procedural wrangling, the Commission issued an order approving a

contested settlement between Wyoming Interstate and all

parties except Amoco, which was severed so that it could

litigate its interests independently. Wyoming Interstate

Company, 87 FERC p 61,339 (1999) ("June 1999 Order").1

__________

1 The parties have included in the Joint Appendix only typescript versions of the Commission orders under review, rather than

the published versions. As our opinions are more communicative to

the bar if we cite pages in the published versions, the typescript

copies are of little use to us. We have in the past commended use

of the published version (blown-up), see Union Electric Co. v.

The approved settlement provided different rates for each

of two separate periods. Id. at 62,305. For Period I, ending

December 31, 1998, the rates were the same as the settlement

rates approved by the Commission for Wyoming Interstate in

a prior case, Docket No. RP94-267 (the "1994 case")--rates

lower than those in Wyoming Interstate's 1997 filing. Id.

The rates for Period II (running from January 1, 1999 until

the effective date of Wyoming Interstate's next rate filing,

discussed below) were even lower. Id.

Shortly after the approval of this contested settlement,

Wyoming Interstate filed a new s 4 case, in which it sought

new rates effective January 1, 2000 (Docket No. RP99-381,

the "1999 case"). As a result, the period covered by the 1997

filing and settlement was "locked-in," i.e., it could not run

beyond a known date--here, the last day of 1999.

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The Commission saw this new filing as altering the context

of the 1997 case. Denying Amoco's petition for rehearing of

the settlement approval, the Commission not only stuck to its

approval of the settlement for shippers other than Amoco, but

extended the settlement to cover Amoco itself. Wyoming

Interstate Company, Ltd., 89 FERC p 61,028 (1999) ("October

1999 Order"). Its reasoning was that there was no way that

Amoco could benefit from pursuit of its claims in the 1997

case. It addressed three imaginable types of benefit: (1) For

the locked-in period at issue, Amoco could not recover refunds under s 4 of the Natural Gas Act because under

established law, the "floor" for a s 4 refund calculation would

be the prior lawful rate, i.e., the 1994 settlement rates. But

the 1997 settlement rates already secured by others were in

the case of Period I the same as the 1994 rates, and in the

case of Period II even lower. So Amoco had nothing to gain

under s 4. Id. at 61,087-88.

(2) Nor could Amoco recover reparations in the 1997 case

under s 5 of the Act, 15 U.S.C. s 717d. Given the complexity

of Amoco's main issue (whether customers should receive a

credit for a nearly $8 million dollar "exit fee" paid to Wyo-

__________

FERC, 890 F.2d 1193, 1194 n.1 (D.C. Cir. 1989), and counsel seem

generally to have followed our hint.

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ming Interstate by Columbia Gas Transmission), the Commission could not finish the necessary hearing before the end of

the locked-in period. As the Commission can award s 5

reparations only prospectively from the date of a finding that

rates are not just and reasonable, Amoco had nothing to gain

under s 5. Id. at 61,088.

(3) Finally, the Commission reasoned, any finding in the

1997 case could not help Amoco with regard to the 1999 case.

Again, the "floor" for refund purposes there would be the

prior lawful rate. For purposes of the 1999 case, this would

be the Period II settlement rates, and Amoco's maximum

imaginable success in the 1997 case could not produce a prior

lawful rate even that low; apart from the settlement of the

1997 case, there was no basis for any floor lower than the

1994 settlement rates. Id. at 61,088-89.

Accordingly, the Commission terminated the hearing

scheduled for the 1997 case and approved the settlement for

all parties. Id. It subsequently denied rehearing. Wyoming Interstate Company, Ltd., 89 FERC p 61,303 (1999)

("December 1999 Order").

* * *

Amoco first attacks the Commission's June 1999 Order

approving the 1997 settlement as to the parties other than

itself. Amoco argues that there was no "substantial evidence" that the settlement rates were "just and reasonable."

But this misstates the issue. All the non-Amoco shippers

agreed to the settlement. As it was "uncontested" as to

them, the only burden on the Commission was to find that it

was "fair and reasonable." United Municipal Distributors

Group v. FERC, 732 F.2d 202, 207 n.8 (D.C. Cir. 1984). See

June 1999 Order, 87 FERC p 61,339 at 62,308. The Commission clearly recognized the distinction, and that is why it

initially did not force the settlement on Amoco. Id. at

62,309-10. Amoco does not even try to argue that there was

not substantial evidence to support the Commission's finding

that the settlement met the less stringent "fair and reasonable" standard.

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Amoco's next claim is that the Commission's October and

December 1999 Orders erred in concluding that, after Wyoming Interstate's 1999 filing, Amoco had nothing to gain from

pursuit of its claims in the 1997 case. Specifically it attacks

the third element in the October 1999 Order--the conclusion

that a s 5 finding that the "just and reasonable" rates were

below even the 1997 Period II settlement rates could not

benefit Amoco in the 1999 case. Amoco asserts that there is

a potential benefit: Such a lower rate, it claims, could become

the "floor" for s 4 refunds in the 1999 case.

Amoco's argument fatally confronts the text of s 4(e) of the

Natural Gas Act, 15 U.S.C. s 717c. That section provides

that in the period after a gas carrier has filed new rates, and

the same have been suspended and put in effect subject to

refund, the Commission may require the carrier "to keep

accurate accounts in detail of all amounts received by reason

of such increase," and that the Commission may order refunds of "the portion of such increased rates or charges by its

decision found not justified." s 4(e), 15 U.S.C. s 717c(e)

(emphasis added). It was this text that led the Supreme

Court in Federal Power Commission v. Sunray DX Oil Co.,

391 U.S. 9 (1968), to hold that the refund obligation extends

only to rate increases found improper. There the Court dealt

with whether the Commission could order refunds by carriers

that had been charging rates in accordance with a certificate

of convenience and necessity under s 7 of the Act, 15 U.S.C.

s 717f, in the absence of a condition in the certificate allowing

such a refund. The Court looked to s 4, and found that any

ambiguity in the refund provision itself ("the portion of such

increased rates or charges by its decision found not justified")

was resolved by the accounting provision, which was limited

to "amounts received by reason of such increase." Id. at 24

(internal quotes omitted). "If it had been intended that the

refund obligation should extend to greater amounts, the

accounting requirement logically should have extended to

them also." Id. The Court went on to point out an anomaly

that any other interpretation would create:

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It would be anomalous to treat an increased price as a

trigger for a refund obligation which would leave the

producer with a smaller net return than if it had never

increased its price at all.

Id.

In Distrigas of Massachusetts Corp. v. FERC, 737 F.2d

1208 (1st Cir. 1984), the First Circuit applied Sunray under

conditions virtually identical to ours. Distrigas had been

charging a FERC-approved settlement rate, and then filed a

rate increase to take effect July 1979. Id. at 1222. Adjudicating that filing, the Commission found that the "just and

reasonable" rates were lower than the settlement rate, but

refused to order refunds based on a benchmark lower than

the pre-July 1979 rate. Id. at 1224. The court upheld the

Commission. Then-judge Breyer wrote for the court that

under Sunray, FERC could order refunds only for amounts

exceeding "the pre-existing lawful rate," there the settlement

rates in effect prior to the 1979 filing. Id. Judge Breyer

observed that the Court had derived this conclusion "from the

language of the statute and from the fact that, otherwise, a

firm asking for an increase could end up considerably worse

off than if it had not requested one." Id.

Distrigas applies here. For the 1999 case, the "floor"

cannot be lower than the Period II settlement rates. Conceivably Amoco might object that, in distinction to Distrigas,

the settlement rates governing the 1997-99 locked-in period

were neither uniformly agreed to nor found to pass the

relatively demanding standards for a contested settlement.

But if the 1997-99 settlement rates are removed from the

picture, the language of s 4 would drive the Commission back

to the 1994 rates--which are higher than the Period II

settlement rate. Thus any refund "floor" lower than the

Period II settlement rate would--in the face of Sunray and

Distrigas--leave Wyoming Interstate "considerably worse off

than if it had not" made the 1997 or the 1999 filings.

Amoco also claims that the Commission failed to abide by

two of its own precedents--Panhandle Eastern Pipe Line

Co., 77 FERC p 61,284 (1996), and Southern Natural Gas Co.,

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65 FERC p 61,347, at 62,827 (1993). Amoco is mistaken. In

those cases the Commission simply recognized that when a

carrier files first one s 4 rate increase and then another, the

rate found "just and reasonable" in the first case may become

the "floor" in the second. Nothing in either case addressed

the situation presented here.

We affirm the Commission's orders approving the settlement for all shippers, including Amoco.

* * *

In response to motions for clarification of the December

1999 Order approving the settlement, the Commission set

some ground rules for litigation of the 1999 case. Specifically, it ruled that under the settlement all shippers other than

Amoco were bound in the 1999 case by the settlement's

resolution of the Columbia exit fee issue discussed above.

Wyoming Interstate Company, Ltd., 90 FERC p 61,294 (2000)

("March 2000 Order").

Amoco sought rehearing, arguing that it should be able, if

it prevailed in its position on the Columbia exit fee, to have

that ruling applied to the rates charged other shippers,

regardless of their position on the issue. Its reasoning was

that those rates severely impacted the price Amoco could

obtain at the wellhead. (Thus, for example, it could not

normally receive more at the wellhead than the market value

in the destination market, less transportation costs.) Amoco

saw itself in a position parallel to that of buyers at the end of

FERC-regulated electricity transmission systems, which under certain circumstances we had held were entitled to challenge rates agreed to by the relevant transmission companies

and all the shippers. Southern California Edison Co. v.

FERC, 162 F.3d 116 (D.C. Cir. 1999); Tejas Power Corp. v.

FERC, 908 F.2d 998 (D.C. Cir. 1990). Compare FERC Brief,

filed Oct. 9, 2001, in Interstate Natural Gas Association of

America v. FERC, D.C. Cir. No. 98-1333, at 48 n.12 (observing that "lower prices for transportation under maximum rate

regulation translates to a greater share of the delivered price

of gas being retained by the producers").

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In two orders issued September 27, 2000, the Commission

rejected Amoco's argument. Wyoming Interstate Company,

92 FERC p 61,256 (2000); Wyoming Interstate Company, 92

FERC p 61,257 (2000) ("September 2000 Order"). The first

is an order approving the non-Amoco shippers' settlement of

the 1999 case, and the second is an order addressed to

Amoco's litigation of the 1999 case and denying Amoco's

petition for rehearing of the March 2000 Order. Amoco seeks

review only of the second.

We have no jurisdiction over the September 2000 Order.

Although s 19(b) of the Natural Gas Act, 15 U.S.C. s 717r(b),

affords authority to review an "order" of the Commission, this

has long been understood to encompass only "final" orders.

See, e.g., Canadian Association of Petroleum Producers v.

FERC, 254 F.3d 289, 296 (D.C. Cir. 2001); Papago Tribal

Utility Authority v. FERC, 628 F.2d 235, 238-40 (D.C. Cir.

1980) (construing the substantively identical text of the Federal Power Act, 16 U.S.C. s 825l(b), as requiring a final

order); United Municipal Distributors Group, 732 F.2d at

206 n.3 (holding that the Papago analysis is applicable to the

Natural Gas Act). The Commission's position on the indirectinterests issue can affect only the 1999 case, which the

Commission has yet to adjudicate.

* * *

The petitions for review of the June 1999, October 1999 and

December 1999 Orders are denied, and the petition for review

of the September 2000 Order is dismissed.

So 

ordered.

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