Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-09-01025/USCOURTS-caDC-09-01025-0/pdf.json

Parties Involved:
BP Pipelines (Alaska) Inc.
Petitioner
Federal Energy Regulatory Commission
Respondent

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 7, 2010 Decided December 3, 2010

No. 08-1270

FLINT HILLS RESOURCES ALASKA, LLC,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION AND 

UNITED STATES OF AMERICA,

RESPONDENTS

ANADARKO PETROLEUM CORPORATION, ET AL.,

INTERVENORS

Consolidated with 08-1271, 09-1025, 09-1026, 09-1030, 09-

1031, 09-1033, 09-1215, 09-1222, 09-1223, 09-1229, 09-1232

On Petitions for Review of Orders 

of the Federal Energy Regulatory Commission

Steven Reed argued the cause for petitioners Flint Hills 

Resources Alaska, LLC, et al. With him on the briefs were 

Steven H. Brose, Daniel J. Poynor, Eugene R. Elrod,

Christopher M. Lyons, David D'Alessandro, M. Denyse Zosa, 

Patricia F. Godley, Jonathan D. Simon, Albert S. Tabor, Jr., 

John E. Kennedy, Dean H. Lefler, J. Patrick Nevins, and 

USCA Case #09-1025 Document #1281073 Filed: 12/03/2010 Page 1 of 16
2

Edward D. Greenberg. Dennis Lane, James F. Bendernagel,

Jr., David K. Monroe, Travis A. Pearson, Howard E. Shapiro, 

and Richard A. Curtin entered appearances. 

Bradley S. Lui argued the cause for petitioner State of 

Alaska. With him on the briefs were Deanne E. Maynard, 

Seth M. Galanter, and Daniel S. Sullivan, Attorney General, 

Attorney General’s Office of the State of Alaska. Bruce J. 

Barnard and Robert H. Loeffler entered appearances.

Judith A. Albert, Senior Attorney, and Carol J. Banta, 

Attorney, Federal Energy Regulatory Commission, argued the 

cause for respondent. With them on the brief were Thomas R. 

Sheets, General Counsel, and Robert H. Solomon, Solicitor. 

Robert J. Wiggers and John J. Powers III, Attorneys, U.S. 

Department of Justice, entered appearances.

Robin O. Brena argued the cause for intervenors 

Anadarko Petroleum Corporation, et al. in support of 

respondent. With him on the brief were David W. Wensel, 

Anthony S. Guerriero, Joseph S. Koury, Jeffrey G. DiSciullo, 

Andrew T. Swers, Albert S. Tabor, Jr., John E. Kennedy, and

Dean H. Lefler.

Albert S. Tabor, Jr., John E. Kennedy, Dean H. Lefler, J. 

Patrick Nevins, Edward D. Greenberg, Steven H. Brose,

Steven Reed, Daniel J. Poynor, Eugene R. Elrod, Christopher 

M. Lyons, David D’Alessandro, M. Denyse Zosa, Patricia F. 

Godley, and Jonathan D. Simon were on the brief for 

intervenors Flint Hill Resources Alaska, LLC, et al. in support 

of respondents. James M. Armstrong entered an appearance.

Bradley S. Lui, Deanne E. Maynard, Seth M. Galanter, 

and Daniel S. Sullivan, Attorney General, Attorney General’s 

Office of the State of Alaska, were on the brief for intervenor 

USCA Case #09-1025 Document #1281073 Filed: 12/03/2010 Page 2 of 16
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State of Alaska. Bruce J. Barnard and Robert H. Loeffler

entered appearances.

Before: GARLAND, Circuit Judge, and WILLIAMS and 

RANDOLPH, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS.

WILLIAMS, Senior Circuit Judge: This case arises 

primarily out of the stresses involved in a shift from one 

system of regulatory ratemaking to another. 

For many years the oil pipeline companies owning and 

operating the Trans Alaska Pipeline System (“TAPS”) 

charged shippers rates based on a 1985 settlement agreement 

between them (initially six of the carriers, but ultimately all 

eight) and the state of Alaska. (Alaska’s anticipation of 

royalties and tax receipts gave it a stake in the matter; the 

shippers in the early years, by contrast, were largely affiliates 

of the pipeline companies, and so had little adversity of 

interest.) The TAPS Settlement Agreement (“TSA”) 

established the TAPS Settlement Methodology or “TSM,” a 

ratemaking methodology to be used for computing interstate 

rates until 2011, the end of the pipeline’s then projected useful 

life. Although no shippers joined the agreement, the Federal 

Energy Regulatory Commission, by this time the agency with 

authority to regulate oil pipeline rates under the Interstate 

Commerce Act, 49 U.S.C. §§ 1 et seq. (“ICA”),1

 1 In the Department of Energy Organization Act, Pub. L. No. 95-91, 

§ 402(b), 91 Stat. 565, 584 (1977), codified as 49 U.S.C. § 60502 

(2010), Congress transferred regulatory authority over oil pipelines 

from the Interstate Commerce Commission to FERC. FERC’s 

regulation of oil pipelines is governed by the ICA as it existed on 

October 1, 1977. See Revised Interstate Commerce Act, Pub. L. 

No. 95-473, § 4(c), 92 Stat. 1337, 1470 (1978). All references to 

approved it 

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as “fair and reasonable and in the public interest.” 18 C.F.R. 

§ 385.602(g); see Trans Alaska Pipeline System, 33 FERC 

¶ 61,064, 61,138 (1985) (“TAPS I”); Trans-Alaska Pipeline 

System, 35 FERC ¶ 61,425, 61,977 (1986) (“TAPS II”). The 

Commission’s order left shippers free to later protest rates as 

unjust or unreasonable. TAPS II, 35 FERC at 61,977. In 

practice, the TSM governed the pipeline’s interstate rates 

through 2004. 

But when the carriers filed rates for 2005 and 2006, 

Alaska and two shippers (Anadarko Petroleum for both years, 

Tesoro Corporation for 2006) protested. Alaska, exercising 

rights it preserved in the TSA, alleged that the proposed rates 

violated the non-discrimination and anti-preference provisions 

of the ICA, as they were higher than the intrastate rates set by 

the Regulatory Commission of Alaska (“RCA”). The shippers 

argued that the rates were unjust, unreasonable, and otherwise 

unlawful. The Commission responded by scuttling the TSM. 

Instead it applied a methodology that it had developed for oil 

pipeline ratemaking generally in Williams Pipe Line Co., 31 

FERC ¶ 61,377 (1985) (“Opinion No. 154-B”). 

Stated in very general terms, the Commission’s orders 

found the rates filed for 2005 and 2006 to be unjust and 

unreasonable, but not discriminatory or unduly preferential. 

Though deciding that the just and reasonable rates would be 

below the 2004 rates, it limited refunds, in accordance with 

§ 15(7) of the ICA, to the difference between the 2005 and 

2006 filed rates and the prior unchallenged (2004) rate. BP 

Pipelines (Alaska) Inc., 123 FERC ¶ 61,287 (2008) (“Opinion 

No. 502”); BP Pipelines (Alaska) Inc., 125 FERC ¶ 61,215 

 

the ICA in this opinion are to that version of the ICA, which can be 

found in 49 U.S.C. §§ 1-15 (1976), or reprinted in 49 U.S.C. §§ 1-

15 (1988). 

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(2008) (“First Rehearing Order”); BP Pipelines (Alaska) Inc.,

127 FERC ¶ 61,317 (2009) (“Second Rehearing Order”). 

The carriers assert a host of methodological errors in 

these decisions; we are unpersuaded. Alaska seeks relief 

against the Commission’s refusal to provide remedies for the 

alleged price discrimination; we find that even if there was 

discrimination, Alaska has not made the showing necessary to 

justify reparations. The Commission also issued a number of 

orders that either have not jelled in clear enough form for 

judicial review or present an undue likelihood of piecemeal 

review; we find these unripe. 

We review FERC’s orders under the familiar standard for 

agency actions: we must set them aside if they are not 

supported by substantial evidence or are “arbitrary, capricious, 

an abuse of discretion, or otherwise not in accordance with

law.” 5 U.S.C. § 706(2)(A). 

* * *

Commission use of rate base balances from the TSM era. 

In calculating the maximum just and reasonable rate for 

service after 2004, it is obviously important to know how 

much of the rate base (essentially the pipeline’s initial capital 

cost) the carriers had recovered as of December 31, 2004. A 

just and reasonable rate would allow it to recover thereafter 

only such sums as it had not recovered before. The carriers 

had recovered accelerated depreciation under the TSM, and 

the Commission found that they should use the amounts so 

calculated to determine the unrecovered balance as of the end 

of 2004. The Commission rejected their contrary proposal—

to use straight-line depreciation figures shown in their filings 

of FERC Form 6, the carriers’ annual financial reports—on 

the simple ground that it would enable them “to receive 

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benefits related to accumulated depreciation more than one 

time.” Opinion No. 502, P 76. See also id. P 82. The carriers 

assert before us that there “is also no double-recovery when 

Opinion No. 154-B is consistently applied, as the Carriers’ 

presentation did,” Joint Pet. Br. at 21. While their submission, 

see Prepared Rebuttal Testimony of Robert G. Van Hoecke, 

J.A.852, indicates that revenues received under the TSM were 

less than the hypothetical revenue flow under Opinion No. 

154-B, it does not show why this required the Commission to 

recharacterize TSM return of capital as something different 

for purposes of estimating the post-TSM rate base balance.

Instead, they claim that FERC’s ruling violates their right 

not to have the TSA used as precedent against them—a right

enshrined, as we just saw, in the Commission’s approval of 

the TSA and in our Arctic Slope decision affirming that 

approval. See Arctic Slope Regional Corporation v. FERC, 

832 F.2d 158, 163 (D.C. Cir. 1987). In a slightly different 

variant of the same point, they say that the shippers, because 

they were not parties to the TSA, cannot benefit from it. 

But FERC’s use of the rate balances created by the TSA’s 

operation is not a “precedential” use of the TSA. Since 1985, 

the carriers have justified the rates that they charged shippers 

based on an accelerated depreciation schedule. It makes no 

difference what the cause of the carriers’ having characterized 

a portion of their rates in this manner may have been—the 

TSA, the tax implications, rolling dice, arm-wrestling, etc. 

The past is what it was. For the Commission to rely on those 

justifications to determine how much of the rate base has been 

recovered is not arbitrary and capricious. 

Our rejection of the carriers’ claims here encompasses not 

only those claims related to accelerated depreciation but two 

additional categories that appear to be functionally equivalent. 

One of these is $450 million in previously disputed costs that 

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the carriers amortized under the TSA. The second is 

“deferred return.” This is a sum (1) annually extracted from 

the inflation component of the nominal rate of return on 

equity and added to a capital account and then (2) amortized 

over the capital item’s remaining life. Opinion No. 154-B 

explains the method and provides a helpful mathematical 

example. See Williams Pipe Line Co., 31 FERC ¶ 61,377 at 

61,834; Opinion No. 502 PP 95-102. The carriers do not 

claim that the Commission has in any way removed from the 

rate base amounts added thereto (and not amortized by the end 

of 2004) under the TSM’s deferred return system. Rather, at 

least judging from their briefs before the Commission (which 

are clearer than the ones filed with us), the claim is that the 

Commission should have assumed a recovery of deferred 

return altogether different from what actually happened under 

the TSM. See Initial Brief of the TAPS Carriers before the

Commission at 56-59; Reply Brief of the TAPS Carriers 

before the Commission at 44-46. We see nothing arbitrary in 

the Commission’s rejection of these claims. 

Starting rate base write-up. The carriers contend that as 

part of using Opinion No. 154-B methodology, they are 

entitled to a one-time “write-up” of their rate base. The claim 

arises out of the transition from FERC’s pre-Opinion No. 154-

B regulatory approach and the methodology it adopted in that 

opinion. In the pre-154-B era, the Commission had used a socalled “valuation rate base,” an “arcane” formula representing 

primarily a weighted average of original and reproduction 

costs. See Farmers Union Central Exchange v. FERC, 734 

F.2d 1486, 1495 (D.C. Cir. 1984). Opinion No. 154-B 

replaced the “valuation” system with a “trended original cost”

methodology (“TOC”), which was to apply to all pipelines, 

new and old. To enable pipelines that had previously used the 

valuation method to make a smooth transition and to protect 

the reasonable expectations of their investors, Opinion No. 

154-B provided that such pipelines would be entitled to a oneUSCA Case #09-1025 Document #1281073 Filed: 12/03/2010 Page 7 of 16
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time increase of their rate base. 31 FERC ¶ 61,377, 61,835-

36. See also Lakehead Pipe Line Company, L.P., 71 FERC 

¶ 61,338, 62,309 (1995). In the current proceeding FERC 

refused to allow the TAPS carriers any comparable write-up. 

FERC never approved valuation-based rates for the TAPS 

pipeline. Opinion No. 502, P 114. To be sure, the carriers

filed rates between 1977 and 1985 using valuation 

methodology, see Trans Alaska Pipeline System, 355 ICC 80, 

84-86 (1977) (establishing interim rates for TAPS using 

valuation methodology), but in fact, as the carriers’ own 

expert witness Dr. Joseph Kalt acknowledged, the rates finally 

adopted were based on the TSM, which called for a TOC 

methodology akin to that specified by Opinion No. 154-B. 

See Opinion No. 502, P 114. Accordingly, by the time of the 

TSA any reasonable investor would have abandoned any 

hopes in the valuation methodology. Thus, neither the

transition theory nor the interest in protecting investor 

expectations called for a rate base write up. The 

Commission’s rejection of the claim was anything but 

arbitrary and capricious. 

Treatment of 2005 depreciation in rate base calculation 

for 2006. Although FERC’s rulings for 2005 implied a 

different calculation of unrecovered rate base than would have 

occurred had FERC continued with the TSM, the Commission 

nonetheless computed a starting rate base balance for 2006 as 

if the 2005 rates had been calculated under the TSM. The 

carriers claim that this renders the Commission’s calculation 

of unrecovered rate base for 2006 inaccurate and arbitrary.

The Commission’s primary response is that any such 

miscalculation had no impact. The just and reasonable rates 

calculated for 2006 were well below the 2004 rate, but the 

Commission had no authority to provide a remedy for 

shippers that would reduce the net unrefunded charges below 

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the 2004 level. As a result, the miscalculation alleged had no 

impact on the rates and refunds at issue here. First Rehearing 

Order, P 83. The carriers acknowledge the absence of any 

impact on the 2006 refunds, Pet. Reply Br. at 14, and the 

Commission in this proceeding made no final ruling on rates 

to be in effect thereafter. 

Use of a “new” methodology as a basis for ordering 

refunds under ICA § 15(7). The carriers invoke our decision 

in Sea Robin Pipeline Co. v. FERC, 795 F.2d 182 (D.C. Cir.

1986), for the proposition that in a proceeding under ICA 

§ 15(7) the Commission cannot order refunds when its 

calculation of the just and reasonable rates depends on a 

methodology different from the one employed for the preexisting pipeline-filed rate. The carriers are quite wrong, but 

it is a little complicated to explain why.

First, we note that the carriers’ reliance, in an ICA 

proceeding, on a Natural Gas Act (“NGA”) case such as Sea 

Robin is orthodox and presumptively permissible. We have 

recognized the similarity between the operative language of 

§§ 15(7) and 15(1) of the ICA and of §§ 4 and 5 of the NGA, 

and have relied on cases interpreting one act to decide cases 

under the other. See Association of Oil Pipe Lines v. FERC, 

83 F.3d 1424, 1440-41 (D.C. Cir. 1996) (analogizing §§ 15(7) 

and 15(1) of the ICA to §§ 4 and 5 of the NGA). We say 

“presumptively permissible” because the statutes are not exact 

carbon copies; the assumption of similarity is not absolute. 

Here, however, we assume in the carriers’ favor that the 

message of Sea Robin is fully applicable. The carriers’ 

problem is that they have misread the message. 

Sea Robin involved the often critical issue of the burden 

of proof under different sections of the NGA. Under § 4, a 

carrier can file an increase in rates, and, if the rates are 

challenged, can sustain the increase only if it meets the burden 

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of showing that the new rates are just and reasonable. If it 

fails, then refunds are ordered that have the effect of limiting 

the carrier’s charges to those prevailing before the filing. See 

Amoco Production Co. v. FERC, 271 F.3d 1119, 1122 (D.C. 

Cir. 2001) (holding that “the pre-existing lawful rate” set a 

floor beneath which FERC could not order refunds, despite its 

conclusion that the just and reasonable rate for that period was 

lower); Distrigas of Massachusetts Corp. v. FERC., 737 F.2d 

1208, 1222-24 (1st Cir. 1984). This parallels ICA § 15(7); 

our immediately preceding discussion of the rates and refunds 

for 2006 reflects this understanding. 

By contrast, in a proceeding under § 5 of the NGA the 

Commission evaluates a pre-existing rate. Before setting it 

aside, the Commission must carry the burden of showing that 

that rate is unjust and unreasonable. If it succeeds, it can limit 

rates to a newly determined just and reasonable level, but can 

do so only prospectively. This parallels action under ICA 

§ 15(1). 

Sea Robin involved a complex interaction of carrier 

filings and Commission initiatives. Although the precise 

moves and countermoves at issue aren’t altogether clear, the 

carriers fix on the following passage:

The rate methodology FERC imposed on Sea Robin was 

not proposed by the pipeline; thus, the order cannot 

represent an approval, in whole or part, of changes 

suggested by Sea Robin. Nor was the Commission’s 

methodology a return to Sea Robin’s pre-filing rates; the 

order, in other words, also does not represent a rejection 

of proposed new rates and a reinstatement of old, 

established rates. The Commission’s action, therefore, 

does not fall into the narrow section 4 range of 

acceptance.

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795 F.2d at 187 (quoted in Pet. Br. at 35-36). The carriers 

propose to extend Sea Robin’s message about NGA § 4 to 

ICA § 15(7)—itself a perfectly permissible move. And they 

contend that, as the Commission dropped the TSM and 

adopted the Opinion No. 154-B methodology, the first quoted 

sentence bars the Commission, in this § 15(7) proceeding, 

from limiting the carriers’ 2005 and 2006 rates to those 

previously in place. 

But the next quoted sentence destroys that claim. All the 

Commission has done here is to limit the 2005 and 2006 

charges to those prevailing in 2004—in the words of Sea 

Robin, to the carriers’ “pre-filing rates.” Id. See also East 

Tennessee Natural Gas Co. v. FERC, 863 F.2d 932, 942 (D.C. 

Cir. 1988). 

Consider briefly the effect of the carriers’ extravagant 

reading of the first sentence. If the Commission cannot test 

the newly filed rates by a new methodology, any rate increase 

running afoul of a new Commission methodology would not 

be subject to § 15(7) refund obligations. Carriers would have 

an incentive to shout “new methodology!” whenever they 

could detect the slightest change in the Commission’s 

ratemaking principles or policy, and the Commission and 

courts would have to parse the newness of any such principle 

or policy. We see nothing in Sea Robin imposing such an 

unwieldy and elusive burden on the Commission.

Alaska’s claim for refunds for alleged discriminatory 

rates. In June 2004, the Regulatory Commission of Alaska

ordered the TAPS carriers to use a new ratemaking 

methodology for setting intrastate rates, and, applying the 

methodology, lowered the intrastate rate from $3.00 to $3.20 

per barrel to $1.96 per barrel. Alaska Pet. Br. at 9. This left 

the carriers’ filed interstate rates for 2005 and 2006 

substantially higher than the intrastate rates. Seeing the 

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interstate rates as having an adverse effect on its royalty and 

tax income, Alaska (but not any of the shippers) claimed that 

the interstate rates filed by the carriers for 2005 and 2006

were unduly discriminatory in violation of §§ 2 and 3(1) of 

the ICA and § II-11(e) of the TSA; it asked FERC to order 

refunds of the full amount of the difference between the 

carriers’ proposed 2005 and 2006 interstate rates and their 

RCA-limited intrastate rates. See Opinion No. 502, PP 252, 

257, 265.

If rates are discriminatory within the meaning of the ICA, 

§§ 2 and 3(1) allow even a shipper paying only a just and 

reasonable rate nevertheless to recover damages from the 

discrimination. ICC v. United States ex rel. Campbell, 289 

U.S. 385, 390 (1933). The amount of damages may be more 

or less than the disparity in rates, and “is something to be 

proved and not presumed.” Id. The relevant question is not 

“how much better off the complainant would be today if it had 

paid a lower rate. The question is how much worse off it is 

because others have paid less.” Id. As that formulation of the 

“question” makes clear, the nub of the issue is competitive 

injury. See also, e.g., Harborlite Corp. v. ICC, 613 F.2d 

1088, 1091-92 (D.C. Cir. 1979). 

It is perhaps a metaphysical question whether a rate that 

causes no competitive injury could be considered 

discriminatory. But assuming arguendo that the disparate 

inter- and intrastate rates were discriminatory, Alaska could 

“recover only the actual damages it has suffered in the 

marketplace as a result of the discriminatory rate.” Council of 

Forest Industries v. ICC, 570 F.2d 1056, 1060 & n.10 (D.C. 

Cir. 1978); Opinion No. 502, P 267. Alaska has shown no 

competitive injury. We are not sure how a non-shipper 

complainant, with interests such as those of the state of 

Alaska, would show competitive injury; after all, it is not in 

the business of making sales of oil transported on the pipeline. 

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In any event, the difficulties confronting a non-shipper don’t 

excuse it from the need to offer such proof. 

Alaska suggests that a casual remark by the Commission 

in Cook Inlet Pipe Line Co., 47 FERC ¶ 61,057, reh’g denied, 

47 FERC ¶ 61,393 (1989), represents a holding that a 

disparity between interstate and intrastate rates gives rise, ipso 

facto, to a remedy under ICA § 2. Whatever FERC may have 

meant, it had no power to sweep aside a century of Supreme 

Court cases construing the ICA. 

In its petition for review Alaska argues that § II-11(e) of 

the TSA may be construed to afford Alaska a remedy not 

available under the ICA. Alaska Pet. Br. at 31. This seems 

unlikely, as the language of § II-11(e) appears merely to 

preserve Alaska’s anti-discrimination rights under the ICA.

But in any event, Alaska never raised this point before the 

Commission in its Brief on Exceptions, arguing instead that 

the TSA did not limit its statutory rights in the event of 

discrimination. Alaska Br. on Exceptions, July 9, 2007, at 27-

28.

Finally, we see nothing in FERC’s authority to award 

refunds on shippers’ complaint under ICA §§ 13, 16, see BP 

W. Coast Prods., LLC v. FERC, 374 F.3d 1263, 1305 (D.C. 

Cir. 2004), that would encompass claims to reparations for 

discrimination without a showing of competitive harm. 

* * *

Besides the claims discussed above, petitioners object to 

several rulings by the Commission relating to the expected 

costs of dismantlement and removal of the pipeline, and of 

restoration of the land (the “DR&R” costs), and to rates to be 

collected after 2006. With a trivial exception we find these 

unripe.

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DR&R costs. The Commission ruled that if the 

accumulated prepayments made by shippers to fund these 

costs, plus the earnings imputed to them, proved to exceed the 

actual DR&R costs, the carriers would have to refund the 

surplus (the Commission does not say how such a refund is to 

be allocated among shippers over the pipeline’s long history). 

It also stated the principles that would govern the imputation 

of earnings to these accumulated prepayments, namely 

Moody’s Aa bond rate for the years 1977 through 2005 and 

the TAPS carriers’ weighted cost of capital for 2006 on. 

Finally, it ordered the carriers to compile records to account 

for the potential DR&R refund liability. 

When considering ripeness, the court must balance “the 

fitness of the issues for judicial decision” against the 

“hardship to the parties of withholding court consideration.” 

Abbott Laboratories v. Gardner, 387 U.S. 136, 149 (1967); 

Nat’l Treasury Employees Union v. United States, 101 F.3d 

1423, 1431 (D.C. Cir. 1996). An agency decision may be fit 

for judicial review when the disputed issue is purely legal, and 

when no institutional interests favor the postponement of 

review. Public Service Electric & Gas Co., v. FERC, 485 

F.3d 1164, 1168 (D.C. Cir. 2007). Even though the legal 

issues may be clear, a case may not be ripe for review when it 

would be inappropriate for a court to spend scarce resources 

on claims that, “though predominantly legal in character, 

depend[] on future events that may never come to pass, or that 

may not occur in the form forecasted.” Devia v. NRC, 492 

F.3d 421, 425 (D.C. Cir. 2007) (citing McInnis-Misenor v. 

Maine Medical Center, 319 F.3d 63, 72 (1st Cir. 2003)).

The carriers contend that FERC’s refundability order 

poses a purely legal issue, one that is thus “presumptively 

reviewable.” Sabre, Inc. v. DOT, 429 F.3d 1113, 1119 (D.C. 

Cir. 2005). Moreover, they assert that FERC’s rulings cause

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them significant and immediate hardship because the resulting 

uncertainty will injure the value of the firms’ stock. 

Though the case is close, we think the challenge unripe

(with an exception to be addressed shortly). First, it is unclear 

whether the refund obligation will ever materialize. That 

depends on whether the costs of whatever dismantlement, 

removal and restoration duties may be imposed prove to be 

greater than, less than or about equal to the prepayments and 

the imputed earnings thereon. While there is uncertainty as to 

whether any refunds will be ordered, there is no evidence that 

they will be significant; so the effect of the uncertainty on 

investor assessment of the carriers’ financial position seems 

likely to be minor. Finally, any ultimate order of refunds 

seems likely to encounter a host of additional issues (such as 

which shippers the refunds would go to), all of which are 

better resolved in one case rather than piecemeal. Thus the 

case is one where adjudication now would lead to “piecemeal 

review which at the least is inefficient and upon completion of 

the agency process might prove to have been unnecessary.” 

See FTC v. Standard Oil Co., 449 U.S. 232, 242 (1980). 

The Commission’s order that the carriers account for 

these prepayments on their Form 6 filings of course involves 

an immediate change in conduct. The Commission itself does 

not seriously assert unripeness. The carriers’ objection here is 

the same as their objection to the Commission’s order that 

sums unused for DR&R must be refunded to the shippers—

namely, that this involves retroactive ratemaking. Indeed, to 

the extent that the Form 6 accounting were seen as prejudging 

the issue of a duty to pay over the hypothetical surplus, the 

two issues would seem to merge. But insofar as the 

Commission’s accounting order merely requires a segregated 

account, its ultimate disposition being unresolved, the order

does not appear equivalent to retroactive ratemaking. 

Accordingly, on the understanding that our decision on the 

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accounting mandate in no way forecloses the carriers’ claims 

as to the status and disposition of the funds, we reject their 

objection to the accounting order. 

Future “uniform rates” and “pooling.” Another carrier 

challenge is to FERC’s instructions to them to file “uniform 

rates” and to employ a “pooling” mechanism (the latter a 

response to the fact that the carriers vary in the relationship 

between their ownership shares and the amounts they ship). 

Both issues are currently being litigated before the 

Commission. See BP Pipelines (Alaska) Inc., 127 FERC 

¶ 61,316 (2009); Unocal Pipeline Co., 129 FERC ¶ 61,275 

(2009). All parties recognize that the ultimate form of pooling 

(if any) is completely unknown. Despite FERC’s seemingly 

unequivocal instructions to the carriers to file uniform rates, 

FERC does not seem to contemplate sanctioning them for 

failure to agree. Oral Arg. Tr. at 25-26. Delaying review will 

not only avoid our becoming entangled in the meaning and 

validity of as yet inchoate rules, see Abbott Laboratories, 387 

U.S. at 148-49, but will give FERC “an opportunity to correct 

its own mistakes and to apply its expertise,” FTC v. Standard 

Oil, 449 U.S. at 242.

* * *

We have examined all the petitioners’ contentions and, 

except for those found unripe, reject all; to the extent that we 

have not discussed particular ones, it is only because of the 

obviousness of the grounds for rejection. Thus, except as to 

the claims found unripe, we affirm FERC’s orders in all 

respects.

So ordered.

USCA Case #09-1025 Document #1281073 Filed: 12/03/2010 Page 16 of 16