Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-01062/USCOURTS-caDC-97-01062-0/pdf.json

Parties Involved:
Federal Energy Regulatory Commission
Respondent
Union Pacific Fuels, Inc.
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 2, 1998 Decided May 22, 1998

No. 97-1028

Public Utilities Commission of the State of California,

Petitioner

v.

Federal Energy Regulatory Commission,

Respondent

Mojave Pipeline Company, et al.,

Intervenors

Consolidated with

Nos. 97-1058, 97-1059, 97-1060, 97-1061,

97-1062, 97-1078, 97-1082

----------

On Petitions for Review of Orders of the

Federal Energy Regulatory Commission

Mark Fogelman argued the cause and filed the briefs for

petitioner Public Utilities Commission of the State of California.

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Katherine B. Edwards argued the cause for Interstate

petitioners, with whom Frederick T. Kolb, Philip D. Gettig

and Norman A. Pedersen were on the joint briefs. Jason F.

Leif entered an appearance.

Frederick Moring, Clifton S. Elgarten, Jessica R. Herrera,

David J. Gilmore, A. Karen Hill, Charles D. Gray, James

Bradford Ramsey, Mike Florio, Nicholas W. Fels, James F.

Walsh, III, and Christopher J. Barr were on the joint briefs

for petitioners Southern California Gas Co., et al.

Samuel Soopper, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent, with whom

Jay L. Witkin, Solicitor, and Susan J. Court, Special Counsel,

were on the brief.

Katherine B. Edwards, Frederick T. Kolb, Philip D. Gettig,

Norman A. Pedersen and Jason F. Leif were on the joint

brief for intervenors Amoco Energy Trading Corporation, et

al.

Mark Fogelman, David J. Gilmore, Frederick Moring,

Clifton S. Elgarten, Jessica R. Herrera, A. Karen Hill,

Charles D. Gray, James Bradford Ramsey, Mike Florio,

Nicholas W. Fels, James F. Walsh, III, and Christopher J.

Barr were on the joint brief for intervenors Public Utilities

Commission of the State of California, et al. Roberta L.

Halladay entered an appearance.

Before: Edwards, Chief Judge, Ginsburg and Tatel,

Circuit Judges.

Opinion for the Court filed by Chief Judge Edwards.

Edwards, Chief Judge: The Federal Energy Regulatory

Commission ("FERC") found that the Public Utilities Commission of California ("CPUC") impermissibly infringed on

federal jurisdiction when it authorized Southern California

Gas Co. ("SoCal"), an intrastate pipeline, to charge interstate

shippers for access to local service. In reaching this conclusion, FERC properly stated the boundaries of federal and

state regulatory jurisdiction under the Hinshaw Amendment

to the Natural Gas Act, 15 U.S.C. s 717(c) (1994), and reasonUSCA Case #97-1062 Document #354225 Filed: 05/22/1998 Page 2 of 15
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ably applied the applicable law to the facts at hand. Yet,

having found the access charge illegal, FERC inexplicably

declined to order the intrastate pipeline to refund to the

interstate shippers the $800,000 collected in illegal access

fees. Instead, citing alleged comity interests, FERC proposed to wait and see if the CPUC would order the refund.

This delay was arbitrary and capricious. FERC, not CPUC,

clearly had jurisdiction over the interstate shippers, and the

concept of "comity" did not apply. Because FERC had

jurisdiction to declare the access charge illegal, it could and

should have ordered the intrastate pipeline to refund the

charge.

I. BACKGROUND

On February 17, 1993, CPUC authorized SoCal to construct

facilities that would connect its intrastate pipeline to the

interstate Kern/Mojave pipeline at Wheeler Ridge, California.

See Re Southern California Gas Co., D.93-02-055, 48

C.P.U.C. 2d 251 (1993), reprinted in Joint Appendix ("J.A.")

138; see also Union Pac. Fuels, Inc. v. Southern California

Gas Co., 76 F.E.R.C. p 61,300, at 62,491 (Sept. 19, 1996). On

May 7, 1993, CPUC made a similar authorization for SoCal to

connect with the intrastate Pacific Gas and Electric Company

("PG&E") pipeline at Kern River, California. See Re Southern California Gas Co., D.93-05-009, 49 C.P.U.C. 2d 182

(1993), reprinted in J.A. 160; see also 76 F.E.R.C. p 61,300, at

62,491. Also on May 7, 1993, CPUC approved a tariff under

which SoCal would charge rates for interconnection applicable

to

natural gas transportation deliveries nominated by shippers into [SoCal's] intrastate system at the Wheeler

Ridge and Kern River Station points of receipt ("interconnects") with the interstate systems of [Kern/Mojave]

and the Pacific Gas and Electric Company Expansion

project.

76 F.E.R.C. p 61,300, at 62,492. The interstate shippers

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affected by the tariff 1 challenged it in petitions before FERC

and petitions for rehearing before CPUC. FERC did not act

on the petitions, but on January 19, 1994, CPUC annulled the

tariff and ordered SoCal to refund the interconnection

charges it had collected from interstate shippers between

July 13, 1993, and December 31, 1993. See id.

Had the CPUC refund order remained in place, this case

would never have reached this court. But on further rehearing, after an evidentiary hearing before a California Administrative Law Judge ("ALJ"), CPUC concluded that a refund

was inappropriate because the interstate shippers had received service and use of the interconnection facilities from

SoCal. See id. CPUC based its revised decision on the

process used to direct shipment of the gas. The interstate

shippers informed SoCal of gas deliveries to be made to the

Wheeler Ridge interchange, and of the intended end users of

such deliveries. Once received at Wheeler Ridge, the gas

was transported to local end users under contracts between

SoCal and the end users. SoCal then billed the interstate

shippers based on the volumes delivered to SoCal and billed

the local end users based on actual transportation. For their

part, the interstate shippers charged a bundled price to the

end users.

According to CPUC, no refund was appropriate because

the interstate shippers nominated deliveries into the interconnection facility. CPUC reasoned:

It is obvious to us that these nominators are customers of

SoCalGas; service was provided to the interstate shipper. In California they nominate in writing to SoCalGas

for SoCalGas to transport gas to be delivered by the

__________

1 The interstate shippers who appear as Petitioners before this

court are: Amoco Energy Trading Corporation; Burlington Resources Oil & Gas Company; CanWest Gas Supply U.S.A., Inc.;

Petro-Canada Hydrocarbons, Inc.; Southern California Utility

Power Pool/Imperial Irrigation District; and Union Pacific Fuels,

Inc.

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nominator to SoCalGas at Wheeler Ridge; the destination of the gas is the facility of the end user; the

shippers agree to pay SoCalGas' access charge; SoCalGas accepts the nomination; they deliver the gas to

SoCalGas in California at Wheeler Ridge; SoCalGas

accepts the gas in accordance with the terms of the

nomination and transports it to the end user in California; SoCalGas bills the nominator for the access charge;

the nominator pays the access charge. On these facts,

we cannot reach any conclusion other than that the

nominators are customers of SoCalGas.

Re Southern California Utility Power Pool, D.95-07-12, 60

C.P.U.C. 2d 462, 468 (1995), reprinted in J.A. 417. In

CPUC's view, the key point was that the interconnection

charge applied to deliveries "nominated" by shippers. Nomination, CPUC claimed, sufficed to make the shippers into

intrastate customers of SoCal and hence subject to the jurisdiction of CPUC.

After CPUC decided not to order a refund, the interstate

shippers asked FERC to reconsider their petitions; FERC

did so. Over CPUC's objections, FERC held that CPUC

never had authority to make the tariff applicable to interstate

shippers. FERC acknowledged that, under the Hinshaw

Amendment to the Natural Gas Act, 15 U.S.C. s 717(c),

SoCal was an intrastate shipper generally exempt from

FERC jurisdiction. See 76 F.E.R.C. p 61,300, at 62,494.

However, FERC explained, where FERC has jurisdiction, its

jurisdiction is exclusive. The interconnection charge at issue

fell within FERC's jurisdiction because it was "a charge to

interstate shippers for the act of moving gas over the [interstate] Kern/Mojave pipeline and delivering it to SoCal rather

than a charge for any service performed by SoCal after its

receipt of the gas." Id. at 62,495.

FERC explained that mere nomination by the interstate

shippers did not make the shippers into intrastate actors. In

FERC's view, the Hinshaw Amendment "clearly and positiveUSCA Case #97-1062 Document #354225 Filed: 05/22/1998 Page 5 of 15
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ly" drew the line between intrastate and interstate service by

restricting the exception to "gas received ... within or at the

boundary of a State." 15 U.S.C. s 717(c). To FERC, this

meant that demarcation occurs "at the point when the intrastate company receives the gas from an interstate shipper."

76 F.E.R.C. p 61,300, at 62,495. Because SoCal performed no

service for the interstate shippers after the point of receipt of

the gas, FERC reasoned, the Hinshaw Amendment did not

apply, and CPUC had no authority to allow SoCal to charge

the tariff.

In its first order, FERC declined to order a refund. It

held that because SoCal was an intrastate pipeline subject to

the Hinshaw Amendment, FERC lacked authority to require

SoCal to make a refund. See id. at 62,496. FERC Commissioner (now Chairman) James Hoecker dissented on the issue

of the remedy, pointing out that in the past FERC had

ordered intrastate pipelines to pay refunds and had been

upheld by the courts. See id. at 62,498. Because FERC's

finding satisfied neither CPUC and SoCal (whose actions had

been held illegal) nor the interstate shippers (who received no

remedy), all parties sought rehearing.

On rehearing, FERC reaffirmed its conclusion as to the

merits, finding the tariff illegal. See Union Pac. Fuels, Inc.

v. Southern California Gas Co., 77 F.E.R.C. p 61,283 (Dec. 19,

1996). On the remedy issue, FERC withdrew its earlier

statement that it lacked jurisdiction to order the refund, and

instead was silent as to jurisdiction. "[R]egardless of the

extent of [its] legal authority," FERC now asserted, it

thought it best to let state regulatory agencies like CPUC

correct their own errors. See id. at 62,250. Citing "considerations of comity," FERC decided to give CPUC an opportunity to remedy its error by ordering a refund. See id. at

62,249. The interstate shippers then returned to CPUC to

ask for a remedy; the California ALJ in charge of the case

announced his intention to defer a decision on a remedy until

after this court's ruling. All parties now petition for review.

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II. ANALYSIS

A. Merits

1. Reasonableness of FERC's Determination

FERC found that the tariff which CPUC authorized SoCal

to charge to interstate shippers was not a permissible charge

for intrastate services rendered, but, rather, an access charge

for the privilege of introducing gas into SoCal's intrastate

system. FERC therefore concluded that the charge illegally

infringed on FERC's jurisdiction over interstate shipment of

gas, because the access charge was essentially a charge for

carrying gas interstate to the Wheeler Ridge interchange.

SoCal and CPUC argue that this determination by FERC

was arbitrary and capricious or otherwise not in accordance

with law. See 5 U.S.C. s 706(2)(A) (1994). Reviewing in

accordance with this standard, we hold that FERC's determination that the tariff was an access charge was reasonable,

not arbitrary, and that FERC's conclusion that the tariff was

illegal was a proper interpretation of 15 U.S.C. s 717(c).

FERC explained clearly why it rejected CPUC's theory

that the interstate shippers were customers of SoCal: SoCal

did not render any identifiable service to the interstate

shippers. See 76 F.E.R.C. p 61,300, at 62,495. The contracts

for actual transportation of gas from Wheeler Ridge to the

California end users were between the end users and SoCal.

As FERC put it on rehearing, the interstate shippers' "only

connection to SoCal [was] that they nominated deliveries to

Wheeler Ridge." 77 F.E.R.C. p 61,283, at 62,246. None of

the interstate shippers contracted with SoCal for gas delivery. Indeed, although this point is not necessary for our

holding, we note that the interstate shippers may not even

have had the option under CPUC's regulations of contracting

directly with SoCal for transportation of their gas to the end

users, at least not without obtaining special permission from

CPUC. See Independent Energy Producers Ass'n v. Southern California Edison Co., D.91-11-023, 42 C.P.U.C. 2d 668,

683 (1991), reprinted in J.A. 573-75 ("Only end-use customers

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will be able to subscribe to intrastate delivery from the

utility.")

Furthermore, the "nomination" on which CPUC's determination focused was nothing more than a formal announcement

to SoCal of the destination of the gas. The interstate shippers would never have made this nomination unless it had

been required by the tariff. The interstate shippers agreed

to the nominations and the tariff only under duress, after

SoCal warned them it would block their access if they did not

pay the fee. Their supposed "consent," therefore, cannot

serve as evidence that they were paying for a service. It is

true that in its order on rehearing, FERC acknowledged that

intrastate shippers also had to pay the access charge, and

that such a charge was a matter for CPUC and outside

FERC's jurisdiction. See 77 F.E.R.C. p 61,283, at 62,246.

This acknowledgment, however, has no bearing on whether

the tariff was indeed an access charge to interstate shippers,

because it was clearly within CPUC's jurisdiction to authorize

an access charge to intrastate shippers for intrastate transport.

In sum, Petitioners never point to any service that they can

convincingly claim the interstate shippers were buying from

SoCal. FERC acted reasonably, therefore, when it concluded

that the tariff was an access charge that interstate shippers

were compelled to pay in order to deliver their gas to the

SoCal pipeline. This leads directly to the question of FERC's

jurisdiction over the charge made to interstate shippers.

2. FERC's Jurisdiction

In order to decide whether it had jurisdiction over the

access charge leveled here, FERC had to interpret the Hinshaw Amendment to the Natural Gas Act, 15 U.S.C. s 717(c).

The Hinshaw Amendment carves out an exception to FERC

jurisdiction for natural and legal persons engaged in the

transportation of "natural gas received by such person from

another person within or at the boundary of a State if all the

natural gas so received is ultimately consumed within such

State." 15 U.S.C. s 717(c). As all parties acknowledge,

SoCal is a so-called "Hinshaw pipeline," covered by s 717(c)

and regulated primarily by the CPUC with regard to its

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intrastate activities. A Hinshaw pipeline can, however, come

under FERC authority when it engages in activities that go

beyond the intrastate transport of gas. SoCal, for example,

holds a certificate from FERC permitting it to engage in

certain non-exempt, interstate transport activities that fall

within FERC's jurisdiction. See 18 C.F.R. s 284.224 (1997).

We defer to FERC's "interpretation of its authority to

exercise jurisdiction" if it is reasonable. See Oklahoma Natural Gas Co. v. FERC, 28 F.3d 1281, 1283-84 (D.C. Cir. 1994)

(citing Chevron U.S.A., Inc. v. Natural Resources Defense

Council, 467 U.S. 837 (1984)). FERC interpreted the Hinshaw Amendment as "drawing the line of demarcation between Federal and State regulation at the point when the

intrastate company receives the gas from an interstate shipper." 76 F.E.R.C. p 61,300, at 62,495. This interpretation

certainly accords with the plain meaning of the statutory

words "received by such person from another person." See

s 717(c). It is entirely reasonable for FERC to understand

the Hinshaw Amendment to mean that when an intrastate

pipeline receives gas from an interstate pipeline within or at

the border of its state, jurisdiction switches from FERC to

the state. Indeed, this appears to be the common-sense

meaning of the statute.

Because FERC took the view that the tariff required the

interstate shippers to pay an access charge, the charge related to something that occurred, by definition, prior to the

transfer of the gas from the interstate shippers to SoCal, the

intrastate party. It followed reasonably that the access

charge belonged within FERC's jurisdiction. In functional

terms, a charge to interstate shippers for access to intrastate

service directly and significantly affects interstate shipment

of gas by increasing its cost. The access charge thus fell

squarely within FERC's regulatory bailiwick both in legal and

policy terms.

SoCal and CPUC pose several challenges to FERC's interpretation of its jurisdiction. First, they argue that because

the Hinshaw Amendment exempts from FERC jurisdiction,

"persons" who engage in certain defined intrastate activities,

rather than the activities themselves, see s 717(c), FERC

cannot regulate a "person" who engages in intrastate activity.

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Because SoCal is a Hinshaw pipeline, the argument runs,

s 717(c) "precludes the FERC from regulating SoCalGas'

transportation of natural gas within California, as well as its

rates, services, and facilities." See Brief for Petitioner CPUC

at 11. This reading of s 717(c), which purports to rely on its

legislative history, would place the tariff in question within

the scope of CPUC's authority and outside that of FERC.

This conclusory argument, which might be generously construed as a Chevron step one argument about the statute's

plain meaning, obviously misses the point of the Hinshaw

Amendment. On its face, the Hinshaw Amendment only

exempts from FERC jurisdiction persons "engaged in or

legally authorized to engage in" intrastate gas transport. See

s 717(c). This provision was certainly intended to exempt

such persons from FERC regulation only for the purposes of

their involvement in intrastate gas transport, not for the

purposes of their involvement in interstate or other regulated

activities. A Hinshaw pipeline can unquestionably come under FERC authority when it engages in activities that go

beyond the intrastate transport of gas.

Section 717(c) cannot plausibly mean that any person who

engages in intrastate activities is exempt from FERC jurisdiction in all activities; otherwise any interstate pipeline

could free itself from all FERC regulation simply by engaging in some intrastate transport. Thus when the Supreme

Court once in passing described the Hinshaw Amendment as

a provision "to exempt persons receiving natural gas within a

State and transmitting or selling it for consumption solely

within the same state," see F.P.C. v. Southern California

Edison Co., 376 U.S. 205, 216 n.9 (1964), the Court was simply

paraphrasing the language of s 717(c), and did not mean to

confer blanket freedom from FERC jurisdiction on all persons who engage in intrastate gas transport.

Legislative history also provides no basis for the argument

proposed by SoCal and CPUC. The one passage from a

Senate report to which SoCal and CPUC refer merely states

that the Hinshaw Amendment will provide "that a company

shall not be subject to the Act by reason of the fact that it is

engaged in the transportation, within a State, of out-of-State

gas received within or at the state border." See S. Rep. No.

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83-817, at 2 (1953). The fact that the Act is directed towards

a company--the same as the "person" mentioned in the Act

itself--does not mean that the Act excludes from FERC

jurisdiction persons who engage in interstate activities as well

as intrastate ones. There is thus no basis for CPUC's

apparent contention that the text and history of s 717(c)

somehow preclude FERC's interpretation of the Hinshaw

Amendment.

CPUC and SoCal also urge that three passages from

opinions of this court countermand FERC's interpretation of

its jurisdiction here. In Altamont Gas Transmission Co. v.

FERC, 92 F.3d 1239 (D.C. Cir. 1996), we reviewed FERC

orders that related to a CPUC tariff for the intrastate PG&G

pipeline, which CPUC authorized at the same time that it

authorized the SoCal tariff. There, we held that the FERC

exceeded its jurisdiction by promulgating orders explicitly

intended to affect CPUC's rate-setting for the intrastate

pipeline, rate-setting which undisputedly fell within CPUC's

sole jurisdiction. See id. at 1246-47. We explained that,

under the Hinshaw Amendment, FERC had no authority "to

do indirectly what it could not do directly," namely regulate

the rates for intrastate pipelines. See id. at 1248. In the

conclusion to that opinion, we used the following formulation:

Although the Commission generally has the authority to

consider a matter beyond its jurisdiction if the matter

affects jurisdictional sales--at least if there would otherwise be a regulatory gap--here there is no such gap but,

on the contrary, an express congressional reservation of

jurisdiction to another body.

Id. CPUC and SoCal rely on this language to suggest that

here, too, FERC sought to infringe on matters beyond its

jurisdiction.

Our opinion in Altamont Gas does not control this case.

Unlike the FERC action in Altamont Gas, FERC's orders

here do not seek to affect CPUC's tariff-setting for a matter

that is undisputedly within CPUC's jurisdiction. Instead, the

dispute here focuses precisely on the question of which agency in fact had jurisdiction over a tariff charged for access to

interchange facilities. FERC did not seek to do indirectly

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what it could not do directly: rather it simply acted directly

in an area in which it found that it had the right to act. In

other words, there can be no doubt over the fact that the

access charge in question did "affect[ ] jurisdictional sales."

See id. This was so, FERC found, because the tariff required interstate shippers to pay an access fee that was

unrelated to any actual provision of service. In short, our

conclusion in Altamont Gas provides no help to SoCal and

CPUC.

SoCal and CPUC next argue that, under Southwest Gas

Corp. v. FERC, 40 F.3d 464 (D.C. Cir. 1994), FERC cannot

"compel" SoCal to accept gas from interstate shippers "free

of charge." They maintain that by disallowing the access

charge, FERC is requiring SoCal to accept gas "for free." In

Southwest Gas, we rejected a petitioner's challenge to FERC

action on standing grounds. In that case, we observed that

under its contracts with an interstate shipper, a particular

intrastate pipeline had "complete control" over whether to

permit other intrastate shippers to take delivery from the

interstate shipper at certain delivery points. See id. at 467.

Because the intrastate pipeline controlled access to the delivery points under its contracts, we concluded, it could not

claim that it would suffer an injury if the other intrastate

pipelines took delivery at those points. See id.

Obviously, our holding in Southwest Gas is inapposite to

the case at bar. Our opinion in Southwest Gas says nothing

whatever about any party, private or public, compelling a

local pipeline to do anything at all. Our observation that the

intrastate pipeline had "complete control" over access was

neither more nor less than a descriptive statement about the

effect of the contracts at issue there. See id. We neither

announced nor hinted at any general rule of law regarding

access. The argument proposed by SoCal and CPUC

wrenches one phase of our opinion from its context, and is

entirely unavailing.

Finally, SoCal and CPUC advert to an amended footnote

which they claim precludes FERC's jurisdiction here. See

United Distrib. Co. v. FERC, 88 F.3d 1105, 1153 n.62 (D.C.

Cir. 1996) (footnote amended by order, Oct. 29, 1996). In

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that footnote, we rejected a claim urged by intrastate pipelines "given that [the local pipelines] do not suggest that

FERC has improperly exercised jurisdiction over the release

of capacity held on non-jurisdictional Hinshaw pipelines." Id.

The argument of SoCal and CPUC appears to be that if

FERC may not require release of capacity on Hinshaw

pipelines, it cannot require such pipelines to receive gas into

their systems. But this argument rests on a false premise.

The footnote by its terms clearly did not constitute a holding

that FERC may not exercise jurisdiction over capacity on

Hinshaw pipelines. Rather, the footnote merely noted the

absence of an allegation of improper exercise of jurisdiction.

In no way does this imply that a proper mode of exercising

jurisdiction over capacity on Hinshaw pipelines could not

exist. In sum, none of the cases cited by SoCal and CPUC

precludes FERC's interpretation of its jurisdiction.

B. Remedy

In its first order, FERC took the strange position that it

lacked authority to order SoCal to refund the impermissibly

collected tariff. See 76 F.E.R.C. p 61,300, at 62,496. On

remand, FERC withdrew from this misguided position, but

instead cited "comity" as a reason to await CPUC's determination of whether it would offer a refund. See 77 F.E.R.C.

p 61,283, at 62,249-50. The interstate shippers challenge

FERC's delay as arbitrary and capricious; they could as

easily call it an abuse of discretion. See Koch Gateway

Pipeline v. FERC, 136 F.3d 810, 816 n.14 (D.C. Cir. 1998)

(explaining that in FERC refund context arbitrary and capricious standard and abuse of discretion standard converge).

The interstate shippers have been "aggrieved" under the

meaning of section 19(b) of the Natural Gas Act, 15 U.S.C.

s 717r (b) (1994). Aggrievement requires an injury in fact.

See Southwest Gas, 40 F.3d at 466. Under our precedent, a

party has suffered injury in fact where FERC has denied it a

refund due to it. See Tennessee Gas Transmission Co. v.

F.P.C., 322 F.2d 1006, 1008 (D.C. Cir. 1963). And there can

be no claim here that FERC's order is not "final," see Papago

Tribal Util. Auth. v. FERC, 628 F.2d 235, 239-40 (D.C. Cir.

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1980), because the order here has the final effect of definitively delaying the refund which, by FERC's own lights, is due to

the interstate shippers.

FERC possesses considerable discretion in fashioning remedies. See Laclede Gas Co. v. FERC, 997 F.2d 936, 944 (D.C.

Cir. 1993). Nonetheless, where FERC "fail[s] to establish

that its decision represents a 'reasonable accommodation of

the relevant factors' and that the [remedy] is 'equitable under

the circumstances,' we must vacate FERC's action and remand for reconsideration." See Koch Gateway Pipeline, 136

F.3d at 816 (citing Laclede Gas Co., 997 F.2d at 944). Here,

FERC failed to provide a logically coherent, reasonable explanation for delaying the refund; furthermore, the delay

itself was clearly inequitable.

The doctrine of comity typically applies in circumstances of

overlapping jurisdiction. In this case, however, there was no

question of overlapping jurisdiction between FERC and

CPUC. The tariff was illegal precisely because CPUC intruded into FERC's jurisdiction over the interstate transport

of gas. There is also no question that FERC had jurisdiction

to order SoCal to refund the tariff to the interstate shippers.

We have in the past upheld FERC authority to direct refund

orders at intrastate Hinshaw pipelines normally outside

FERC's jurisdiction. See Panhandle E. Pipeline Co. v.

FERC, 95 F.3d 62, 73-74 (D.C. Cir. 1996). It therefore

makes no sense to argue, as FERC did in its order, that

comity permits FERC to make the interstate shippers suffer

delay until CPUC orders a refund. Similarly, the interstate

shippers were not required to "exhaust" state remedies before seeking relief from FERC with respect to a matter solely

within FERC's jurisdiction.

Finally, FERC's decision does not appear to accord with

equity. The interstate shippers paid a tariff which FERC

found to be illegal. SoCal therefore collected a windfall

profit. It is not obvious how delaying the refund actually

serves any interests of FERC: we find it difficult to imagine

that having found the CPUC's tariff illegal, FERC really

expects that CPUC will be mollified by FERC's supposed

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deference on the refund issue. But the delay certainly seems

unfair to the interstate shippers, whose only interest is recovering the money they were illegally compelled to pay. We

therefore remand the delay of remedy to FERC for proper

resolution of this issue.

III. CONCLUSION

FERC reasonably found that the tariff was an access

charge for interstate petitioners, and properly found it illegal.

However, FERC acted arbitrarily in deferring a remedy, and

we remand to FERC on the remedy issue. The petition for

review is therefore denied in part and granted in part.

So ordered.

USCA Case #97-1062 Document #354225 Filed: 05/22/1998 Page 15 of 15