United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 29, 2022 Decided August 11, 2023 

No. 21-1195 

FAIRLESS ENERGY, LLC, 

PETITIONER

v. 

FEDERAL ENERGY REGULATORY COMMISSION, 

RESPONDENT

TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC, 

INTERVENOR

Consolidated with 21-1264 

On Petitions for Review of Orders 

 of the Federal Energy Regulatory Commission 

Jeffrey S. Bucholtz argued the cause for petitioner. On the 

briefs were Ashley C. Parrish, Zori G. Ferkin, and Christine M. 

Carletta. 

Carol J. Banta, Senior Attorney, Federal Energy 

Regulatory Commission, argued the cause for respondent. 

With her on the brief were Matthew R. Christiansen, General 

Counsel, and Robert H. Solomon, Solicitor. 
2 

Matthew J. Binette argued the cause for intervenor. With 

him on the brief was Michael J. Thompson.

Before: CHILDS, Circuit Judge, and ROGERS, Senior 

Circuit Judge.



 Opinion for the Court filed by Circuit Judge CHILDS. 

 CHILDS, Circuit Judge: Petitioner Fairless Energy, LLC 

(Fairless Energy) contends that it pays too much for the 

transportation of natural gas to fuel its electric power 

generating plant located in Fairless Hills, Pennsylvania (the 

Fairless plant). In these consolidated petitions for review of 

orders of the Federal Energy Regulatory Commission (the 

Commission), Fairless Energy maintains that the Commission 

acted arbitrarily and capriciously, and contrary to reasoned 

decisionmaking, when it exercised primary jurisdiction over 

Fairless Energy’s natural gas transportation rate dispute with 

intervenor Transcontinental Gas Pipe Line Company, LLC 

(Transco), and determined that the appropriate rate was the 

incremental rate for pipeline expansion under Transco’s Tariff. 

For the following reasons, the court denies the petitions for 

review. 

I. 

A.

The Natural Gas Act of 1938, 15 U.S.C. §§ 717–717z, 

“confers upon [the Commission] exclusive jurisdiction over 



 Senior Circuit Judge Silberman was a member of the panel before 

his death on October 2, 2022. Judges Childs and Rogers have acted 

as a quorum in this opinion. See 28 U.S.C. § 46(d). 
3 

the transportation and sale of natural gas in interstate 

commerce for resale.” Schneidewind v. ANR Pipeline Co., 485 

U.S. 293, 301 (1988) (citation omitted); see also 15 U.S.C. 

§ 717c(a). Under the Natural Gas Act, the Commission must 

ensure that the rates for the transportation or sale of natural gas 

are “just and reasonable.” See 15 U.S.C. § 717c(a). In 

requiring a just and reasonable rate, the Commission generally 

allows pipelines to offer two rate options: recourse and 

negotiated rates. A recourse rate is “a rate ‘based on a 

pipeline’s cost of providing service including an opportunity 

for the pipeline to earn a reasonable return on its investment’”; 

a negotiated rate is a bargained-for amount “which permit[s] a 

pipeline to forgo cost-of-service rates with an individual 

shipper.” Sierra Club v. FERC, 38 F.4th 220, 229 (D.C. Cir. 

2022) (quoting Alts. to Traditional Cost-of-Service Ratemaking 

for Nat. Gas Pipelines, 74 FERC ¶ 61,076, 61,224–25 (1996)). 

B. 

Transco is a natural gas company under the Natural Gas 

Act and owns and operates an interstate natural gas 

transportation pipeline. Transco’s pipeline starts in southern 

Texas and runs along the Gulf of Mexico through Texas, 

Louisiana, Mississippi, and Alabama. From Alabama, the 

pipeline runs up to the northeast through Georgia, South 

Carolina, North Carolina, Virginia, Maryland, Pennsylvania, 

and New Jersey, before reaching the system’s terminus in the 

New York metropolitan area. The Fairless plant uses natural 

gas transported through this interstate pipeline. 

 

In December 1999, the Commission conditionally 

approved Transco’s proposal “to construct and operate 154.3 

miles of . . . pipeline loop and replacement facilities and to add 

compression . . . on its existing transmission system between 

Leidy, Pennsylvania and the New Jersey suburbs of New York 
4 

City (the MarketLink project).” Indep. Pipeline Co. ANR 

Pipeline Co. Nat’l Fuel Gas Supply Corp. Transcon. Gas Pipe 

Line Corp., 89 FERC ¶ 61,283, 61,824 (1999) (Indep. Pipeline 

Co.). Transco expected the MarketLink project would create 

an additional 700,000 dekatherms per day (Dth/d) of capacity 

on its pipeline and would be paid for by the MarketLink’s 

shippers.1

 “Transco state[d] that it w[ould] provide firm 

transportation services for its MarketLink shippers” under 

Transco’s rate schedule for firm transportation (Rate Schedule 

FT).2

 Id. ¶ 61,826. Transco provided shippers with “the option 

of paying a cost-based, incremental, recourse rate . . . or an 

individually negotiated rate for firm service.”3

 Id. In April 

1

 A dekatherm or decatherm is a unit of energy used in the natural 

gas industry that is “equal to one million British Thermal Units, or 

over one billion joules.” Myersville Citizens for a Rural Cmty., Inc. 

v. FERC, 783 F.3d 1301, 1307 n.2 (D.C. Cir. 2015). 

 

2

 “Under a firm transportation agreement, a pipeline agrees to 

transport a fixed amount of the firm shipper’s natural gas on a regular 

basis.” Natural Gas Contracts, ¶ 306.006 (1998). “Under an 

interruptible transportation agreement, a pipeline commits to 

transport the interruptible shipper’s gas only after the pipeline’s firm 

transportation obligations are fulfilled.” Id. “Firm transportation is 

generally more expensive and more reliable than interruptible 

transportation, because a portion of the pipeline’s capacity is 

specifically reserved for firm service.” Id. ¶ 306.006A. “A firm 

service agreement gives the shipper the greatest assurance that its gas 

will actually be transported.” Id. 

3

 Pipelines generally have two ways to “allocate the costs associated 

with new or expanded facilities . . . .” Consolidated Edison Co. of 

N.Y., Inc. v. FERC, 315 F.3d 316, 320 (D.C. Cir. 2003). “The 

pipeline may ‘roll in’ these costs, by distributing additional charges 

among all customers of the pipeline system.” Id. Alternatively, the 

pipeline may charge an incremental rate to the customers who are 
5 

2000, the Commission fully authorized Transco to construct 

and operate the MarketLink project. 

 

A few months later, Transco and Fairless Energy’s 

predecessor, Virginia Power Energy Marketing (Virginia 

Marketing), reached a ten-year service agreement (No. 

1044181) for a transportation contract quantity (TCQ) of 

100,000 Dth/d of natural gas at a negotiated rate of $9.125/Dth. 

Transco transported the natural gas using MarketLink capacity 

from a receipt point at Leidy, Pennsylvania to the Fairless 

plant. The Commission later amended its authorization to 

allow Transco to construct the MarketLink project in two 

phases and acknowledged that it had notice that Virginia 

Marketing was a replacement shipper for the MarketLink 

project. 

In October 2002, the Commission accepted an amended 

10-year service agreement between Transco and Virginia 

Marketing for a TCQ of 100,000 Dth/d at a negotiated rate of 

$9.125/Dth commencing on November 1, 2002. A few years 

later, in 2006, Transco and Virginia Marketing agreed to a 

second amendment of their service agreement (No. 1044181) 

to reduce the TCQ from Leidy to the Fairless plant from 

100,000 Dth/d to 50,000 Dth/d and add 50,000 Dth/d from 

Transco’s Station 210 in Mercer County, New Jersey. In 

Amended Exhibit C of their 2006 Agreement, Transco and 

Virginia Marketing set out a negotiated rate for both pipeline 

routes: from Leidy to the Fairless plant, the negotiated rate was 

the “Daily Reservation Rate of $0.30 per dt” and, from Station 

210 to the Fairless plant, the negotiated rate would be the 

“generally applicable Zone 6 to Zone 6 daily reservation and 

commodity rates under Rate Schedule FT.” 2006 Serv. Agt., 

solely expected to benefit from the improved facilities. See id.

(citation omitted). 
6 

J.A. 64. Additionally, Transco and Virginia Marketing 

extended the duration of their agreement to November 1, 2018. 

The Commission received notice of the amendment in 

December 2009, and accepted it the following month. 

In October 2013, the Commission granted Virginia 

Marketing’s petition for a temporary waiver of pipeline 

capacity requirements to reassign its transportation agreements 

to facilitate its exit from the natural gas market. Thereafter, on 

March 28, 2014, Transco and Virginia Marketing restructured 

their one service agreement into three separate service 

agreements. As relevant here, Contract Nos. 9154534 and 

9154535 each provided for a TCQ of up to 50,000 Dth/day 

from Station 210 to the Fairless plant for a term running from 

April 1, 2014, until November 1, 2033. However, the two 

contracts had different rate terms and daily reservation rates. 

Specifically, Contract No. 9154534 contained a negotiated rate 

of $0.16/Dth for a period starting on April 1, 2014, and lasting 

until November 1, 2018. Contract No. 9154535 contained a 

negotiated rate equal to Zone 6 to Zone 6 from April 1, 2014, 

through November 1, 2033. The Commission accepted this 

restructuring in April 2014. 

In December 2018, the Commission granted a temporary 

waiver of transportation capacity release provisions to allow 

Virginia Marketing, now Dominion Energy Fuel Services, Inc., 

to transfer, release, and assign its service agreements with 

Transco to Dominion Energy Fairless, LLC (Dominion 

Fairless). The Commission acknowledged that the agreements 

transferred to Dominion Fairless included the two Transco 

service agreements (Nos. 9154534, 9154535) to deliver natural 

gas to the Fairless plant from Station 210. Additionally, the 

Commission observed that the rate in service agreement No. 

9154534 would convert from a negotiated rate to a tariff-based 

rate effective November 1, 2018. 
7 

On December 14, 2018, Transco and Dominion Fairless 

executed the service agreement at issue here (the 2018 

Agreement) for transportation of the 50,000 Dth/d represented 

in No. 9154534. Like prior MarketLink agreements involving 

Transco, the 2018 Agreement required Dominion Fairless to 

compensate Transco for natural gas delivered in accordance 

with the applicable rate in Transco’s Tariff, unless the parties 

mutually agreed to a negotiated rate, which would need to be 

set out in Exhibit C. In Exhibit C, Transco and Dominion 

Fairless stated “None” for the “Specification of Negotiated 

Rate and Term.” 2018 Serv. Agt., J.A. 81. 

On February 11, 2019, Fairless Energy, Dominion 

Fairless’s successor, communicated to Transco that it was 

overcharging for natural gas transportation services rendered 

starting in December 2018. Fairless Energy asserted that 

Transco’s invoices incorrectly quoted a higher billing rate of 

$0.25852/Dth, a MarketLink project incremental rate, instead 

of $0.13032/dth, the non-incremental rate for transportation 

points within Zone 6 under Rate Schedule FT. Although it paid 

the full amount invoiced, Fairless Energy requested a refund of 

amounts purportedly overpaid to Transco. 

Almost two years later, Fairless Energy filed a petition 

against Transco in Harris County, Texas state court for breach 

of contract, damages in the amount of its overpayments, and a 

declaration of its rights and obligations under the 2018 

Agreement. Transco moved to dismiss the Texas state court 

action for lack of subject-matter jurisdiction or, alternatively, 

to stay the proceeding pending a decision by the Commission 

as to the applicable transportation rate. That same day, Transco 

sought a declaration from the Commission that the appropriate 

transportation rate was the incremental rate for the MarketLink 

project under Transco’s Tariff. Transco asserted that its 

petition was properly before the Commission because the 
8 

dispute with Fairless Energy was within the Commission’s 

“exclusive and primary jurisdiction.” Pet. 1, J.A. 3. 

The Texas state court subsequently denied Transco’s 

motion to dismiss or stay the suit and Fairless Energy moved 

to intervene and oppose Transco’s petition before the 

Commission. On June 30, 2021, the Commission granted 

Transco’s petition after concluding that the Commission 

should exercise primary jurisdiction over the dispute between 

Transco and Fairless Energy. Order on Petition for 

Declaratory Order, 175 FERC ¶ 61,260, 62,505 (2021) (Pet. 

Order) (J.A. 136). The Commission determined that the 

appropriate rate for transportation of natural gas to the Fairless 

plant was the MarketLink project’s incremental rate under 

Transco’s Rate Schedule FT. Id. (J.A. 137). 

On August 30, 2021, the Commission denied Fairless 

Energy’s request for rehearing by operation of law, see Notice 

of Denial of Rehearing by Operation of Law and Providing for 

Further Consideration, 176 FERC ¶ 62,100 (2021), though the 

Commission went on to issue an order on November 18, 2021, 

addressing Fairless Energy’s arguments for rehearing. Order 

Addressing Arguments Raised on Rehearing, 177 FERC ¶ 

61,116 (2021) (Reh’g Order) (J.A. 234–44). Fairless Energy 

timely filed petitions for review of the Commission’s orders 

dated June 30, August 30, and November 18, 2021. 

II.

This court has jurisdiction to review the Commission’s 

orders pursuant to 15 U.S.C. § 717r(b). The court reviews the 

Commission’s orders under the familiar arbitrary and 

capricious standard of the Administrative Procedure Act, 5 

U.S.C. § 706(2)(A). See Am. Gas Ass’n v. FERC, 593 F.3d 14, 

19 (D.C. Cir. 2010). The court is empowered “to reverse any 
9 

agency action that is ‘arbitrary, capricious, an abuse of 

discretion, or otherwise not in accordance with law.’” Hoopa 

Valley Tribe v. FERC, 913 F.3d 1099, 1102 (D.C. Cir. 2019) 

(citation omitted). However, the court will uphold the 

Commission’s determination if it “examine[d] the relevant data 

and articulate[d] a satisfactory explanation for its action 

including a ‘rational connection between the facts found and 

the choice made.’” Motor Vehicle Mfrs. Ass’n of U.S. v. State 

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting 

Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 

168 (1962)). “‘[A]n agency must conform to its prior practice 

and decisions or explain the reason for its departure from such 

precedent,’ . . . and must provide ‘reasoned analysis indicating 

that prior policies and standards are being deliberately 

changed, not casually ignored.’” E. Ky. Power Coop., Inc. v. 

FERC, 489 F.3d 1299, 1306 (D.C. Cir. 2007) (alteration in 

original) (citations omitted). 

“Congress explicitly delegated to [the Commission] broad 

powers over ratemaking, including the power to analyze 

relevant contracts.” Tarpon Transmission Co. v. FERC, 860 

F.2d 439, 441–42 (D.C. Cir. 1988) (citation omitted). “Judicial 

scrutiny under the Natural Gas Act is limited to assuring that 

the Commission’s decisionmaking is reasoned, principled, and 

based upon the record.” Columbia Gas Transmission Corp. v. 

FERC, 628 F.2d 578, 593 (D.C. Cir. 1979). 

A. 

Fairless Energy challenges the Commission’s decision to 

exercise primary jurisdiction over “a contract dispute that could 

otherwise be subject to the jurisdiction of another forum.” 

Pet’r Br. 34 (citation omitted). “The doctrine of primary 

jurisdiction . . . is concerned with promoting proper 

relationships between the courts and administrative agencies 
10 

charged with particular regulatory duties.” United States v. W. 

Pac. R.R. Co., 352 U.S. 59, 63 (1956). “‘Primary jurisdiction’ 

. . . applies where a claim is originally cognizable in the courts, 

and . . . enforcement of the claim requires the resolution of 

issues which, under a regulatory scheme, have been placed 

within the special competence of an administrative body . . . .” 

Id. at 63–64 (citing Gen. Am. Tank Car Corp. v. El Dorado 

Terminal Co., 308 U.S. 422, 433 (1940)). 

Although there is not a fixed formula for primary 

jurisdiction, the Commission generally considers three factors 

in determining whether it should assert primary jurisdiction 

over a dispute: 

(1) whether the Commission possesses some 

special expertise which makes the case 

peculiarly appropriate for Commission 

decision; (2) whether there is a need for 

uniformity of interpretation of the type of 

question raised in the dispute; and (3) whether 

the case is important in relation to the regulatory 

responsibilities of the Commission. 

Bay Gas Storage Co., Ltd., 131 FERC ¶ 61,034, at P 21(2010) 

(citing Ark. La. Gas Co. v. Hall (Arkla), 7 FERC ¶ 61,175, 

61,322 (1979)) (the Arkla factors). “Whether to exercise 

primary jurisdiction is a matter solely within the Commission’s 

discretion.” Id. (citing Portland Gen. Elec. Co., 72 FERC ¶ 

61,009, 61,021 (1995)). 

 

Fairless Energy maintains that none of the Arkla factors 

are present and, therefore, the Commission did not engage in 

reasoned decisionmaking in choosing to exercise primary 

jurisdiction over the dispute. The Commission takes a contrary 

position urging that all three Arkla factors support its decision 
11 

to exercise primary jurisdiction over the rate dispute.4

 The 

court has not previously had an occasion to reverse the 

Commission’s decision to exercise primary jurisdiction over a 

natural gas transportation rate dispute. After consideration of 

the Arkla factors, the court declines to do so in this matter as 

well. 

1. 

The first Arkla factor considers whether issues require 

some special expertise possessed by the Commission. Bay Gas 

Storage Co., 131 FERC ¶ 61,034, at P 21. Fairless Energy 

contends that “the parties’ dispute does not raise any issue 

within the Commission’s special expertise” because 

“[d]etermining which rate the parties agreed would apply is a 

straightforward question of state contract law that is 

appropriately resolved in state court.” Pet’r Br. 34–35. 

Fairless Energy supports this argument by pointing to cases 

where the Commission declined to exercise primary 

jurisdiction over “routine contractual disputes.” Pet’r Br. 37 

(citing Hartree Partners, LP v. N. Nat. Gas Co., 176 FERC ¶ 

61,017 (2021); BG Energy Merchs., LLC v. Crosstex LIG, LLC, 

4

 In the November 18, 2021 order, the Commission explained that 

“all of the [Arkla] factors do not need to be present and . . . the 

Commission has retained jurisdiction even though none of the typical 

factors are present if it has reason to do so.” Reh’g Order at P 19 & 

n.40 (J.A. 241) (citing Bos. Edison Co. v. Town of Concord, 49 

FERC ¶ 61,213, 61,775 (1989) (the Commission “acknowledg[ed] 

[that] none of the factors for primary jurisdiction were met but 

resolv[ed] [the] case because of language in a prior order suggesting 

[the Commission] would consider billing disputes”); El Paso Nat. 

Gas Co. v. Kaneb Energy Co., 54 FERC ¶ 61,262, 61,761 (1991) (the 

Commission “consider[ed] whether ‘other special circumstances’ 

were present suggesting [it] should retain jurisdiction after applying 

Arkla factors”)). 
12 

136 FERC ¶ 61,098 (2011); Portland Gen. Elec. Co., 72 FERC 

¶ 61,009 (1995); Tex. Am. Energy Corp. v. Tenn. Gas Pipeline 

Co., 39 FERC ¶ 61,062 (1987); Arkla, 7 FERC ¶ 61,175). 

The Commission provided a reasoned explanation 

consistent with its precedents. The Commission rejected 

Fairless Energy’s characterization of the dispute as the 

construction of contracts governed by state law and noted that 

the contract at issue is Transco’s rate schedule FT pro forma 

service agreement, which provides that the appropriate rate 

from the tariff applies when, as here, there is no negotiated rate. 

Pet. Order at P 44 (J.A. 127–28). The “tariff lists at least 32 

incremental rates, all under Rate Schedule FT, in addition to a 

general, non-incremental rate under Rate Schedule FT.” Id. at 

P 45 (J.A. 128). The Commission explained that determining 

which of those rates applied necessitated “interpreting 

Transco’s tariff and the service agreement to determine the 

facilities being used to provide such service and the rate 

applicable to such facilities . . . [and] the relevant certificate 

orders relating to the facilities used,” and was thus 

distinguishable from the contract cases on which Fairless 

Energy relied. Id. at P 45 (J.A. 128). The Commission cited 

precedent acknowledging its special expertise in these matters 

because of the frequency with which the Commission passes 

on expansion rates within rate schedules and the need to 

interpret tariffs in light of Commission policy. Id. at P 46 

(citing United Illuminating Co. v. Dominion Energy Mktg, Inc., 

111 FERC ¶ 61,224, reh’g granted on other grounds, 112 

FERC ¶ 61,279 (2005)) (J.A. 128 n.71). Accordingly, the 

Commission’s conclusion that the first Arkla factor weighed in 

favor of exercising primary jurisdiction was consistent with 

reasoned decisionmaking. 

 
13 

2. 

The second Arkla factor considers whether issues require 

“uniformity in interpretation.” Bay Gas Storage Co., 131 

FERC ¶ 61,034, at P 21. As to this factor, Fairless Energy 

posits that the Commission’s justification for uniformity of 

interpretation in relation to the 2018 Agreement “unreasonably 

overlooks the specific facts of this case.” Pet’r Br. 43. Fairless 

Energy further asserts that answering the only question in this 

matter, “which rate in the tariff did the parties agree would 

apply,” only requires consideration of “Texas state law and . . 

. predecessor agreements, capacity releases, and public 

filings.” Pet’r Br. 43. 

The Commission explained that resolution of the rate 

dispute would not only affect Transco and Fairless Energy but 

could also have industry-wide effects. Pet. Order at P 47 (J.A. 

129). The Commission acknowledged Fairless Energy’s 

argument that the “dispute requires in part an analysis of the 

facts and circumstances of the parties’ contracting history” but 

explained that there was still a need for “consistent application” 

of how tariffs and service agreements are construed in similar 

disputes. Id. Indeed, it pointed to other shippers with service 

agreements with Transco for expansion projects that would be 

impacted by the interpretation. Id. The Commission also 

explained that “allowing Fairless [Energy] to pursue a rolled in 

rate . . . undermines the Commission’s longstanding policy 

requiring incremental pricing on expansion facilities.” Id. at P 

48 (J.A. 129). The Commission concluded that the uniformity 

factor alone would justify its exercise of primary jurisdiction. 

Reh’g Order at P 20 (J.A. 241–42). 

The Commission’s conclusion regarding the second Arkla

factor also was consistent with reasoned decisionmaking. The 

Commission’s explanation adequately shows why the 
14 

interpretation could have industry-wide ramifications, 

including for other shippers on the MarketLink project and 

shippers on other expansion projects. The Commission also 

sufficiently explained why the need for uniformity in this 

matter implicated its policy preference for incremental pricing 

rather than rolled-in pricing for expansion facilities, as shippers 

using expansion facilities might otherwise argue that they too 

should be billed at a rolled-in rate. In this regard, the 

Commission sufficiently explained why the natural gas 

industry at large is served when there is “consistent application 

of how tariffs, service agreements, and related Commission 

certificate orders are to be construed in disputes like this.” Pet. 

Order at P 47 (J.A. 129) (citation omitted). 

3. 

The third Arkla factor considers whether issues relate to 

the Commission’s “regulatory responsibilities.” Bay Gas 

Storage Co., 131 FERC ¶ 61,034, at P 21. Fairless Energy 

argues that the Commission’s reliance on United Illuminating 

Co. as support for this factor is improper because the disputed 

issues here are neither novel nor involve “unfamiliar regulatory 

concepts or policy considerations.” Pet’r Br. 45. Fairless 

Energy contends that because this matter involves a private 

contract where there is no dispute regarding either the justness 

or reasonableness of the applicable rates at issue, the case does 

not impact the Commission’s regulatory responsibilities under 

the third Arkla factor. 

In addressing the third Arkla factor, the Commission 

justified its resolution of this rate dispute on the grounds that it 

has “an interest in enforcing [natural gas transportation] rates 

and ensuring that pipelines can collect Commission-approved 

rates to . . . recover the costs of the certified facilities associated 

with such rates.” Pet. Order at P 49 (J.A. 130). The 
15 

Commission cited United Illuminating Co. to support its 

proposition that a bilateral contract dispute over cost 

responsibilities can implicate the Commission’s regulatory 

responsibilities and again explained that this dispute implicates 

pricing for expansion facilities beyond the parties to the 

agreement at issue. Pet. Order at P 50–51 (J.A. 130–31). 

 The Commission’s explanation of its consideration of the 

third Arkla factor was also consistent with reasoned decisionmaking. It explained its regulatory interest in the rate for 

expansion services in the absence of a negotiated rate, 

especially in light of its policy preference for incremental 

pricing. As it did with the other factors, the Commission 

emphasized that this was not merely a private contractual 

dispute, contrary to Fairless Energy’s assertions and the 

precedents relied on by Fairless Energy. The Commission 

sufficiently responded to Fairless Energy’s attempts to 

distinguish United Illuminating Co., on which the Commission 

chiefly relied. 

 

***** 

After considering the Commission’s record explanation of 

its decision to exercise jurisdiction in light of the Arkla factors, 

the Commission’s decision to exercise primary jurisdiction 

over the Transco-Fairless Energy transportation rate dispute 

was not arbitrary or capricious. 

B. 

Fairless Energy next contends that even if the exercise of 

primary jurisdiction was proper, the Commission declared a 

rate without considering either Fairless Energy’s evidence that 

it had reached a negotiated rate with Transco or “the history of 

the contract and the evidence of the parties’ course of dealing 
16 

leading up to their 2018 Agreement.” Pet’r Br. 31. “Fairless 

[Energy]’s position is that the parties agreed to apply the Zone 

6 to Zone 6 reservation rate when they negotiated their 2018 

Agreement.” Pet’r Br. 47. To support this position, Fairless 

Energy points out that the Commission should have considered 

the context surrounding the 2018 Agreement to determine 

whether there was an ambiguity. “In failing to do so, the 

Commission failed to consider important aspects of the 

problem because it did not afford the parties the opportunity to 

develop and present evidence.” Pet’r Br. 47. As a result of this 

failure, Fairless Energy argues that the Commission’s orders 

were arbitrary and capricious. 

The Commission maintains that it reasonably made the 

rate determination in this matter. First, the Commission 

emphasized that the 2018 Agreement unambiguously did not 

specify a negotiated rate so extrinsic evidence could not be 

used. Reh’g Order at P 21–23 (J.A. 242–43). The Commission 

next observed that Fairless Energy cannot dispute that it and its 

predecessors received natural gas transportation services to the 

Fairless plant by way of the MarketLink project. Pet. Order at 

P 58–59 (J.A. 133). The Commission then explained that 

because Fairless Energy used MarketLink project services 

without a negotiated rate, the applicable rate was the 

incremental rate from Transco’s Tariff. 

 

The Commission’s rationale is supported by the language 

of the 2018 Agreement, which: (1) specifies in its title that it is 

the “Form of Service Agreement (For Use Under Seller’s Rate 

Schedule FT),” J.A. 132 n.86 (citing J.A. 75); (2) states that 

Transco’s natural gas transportation services are provided 

pursuant to the MarketLink project, J.A. 133 ¶ 60 (citing J.A. 

75); and (3) contains the following provision incorporating 

Transco’s Tariff and Rate Schedule FT, unless a negotiated rate 

is set forth in the 2018 Agreement: 
17 

Buyer shall pay Seller for natural gas delivered 

to Buyer hereunder in accordance with Seller’s 

Rate Schedule FT and the applicable 

provisions of the General Terms and 

Conditions of Seller’s FERC Gas Tariff as 

filed with the Federal Energy Regulatory 

Commission, and as the same may be legally 

amended or superseded from time to time. Such 

rate schedule and General Terms and 

Conditions are by this reference made a part 

hereof. In the event Buyer and Seller 

mutually agree to a negotiated rate pursuant 

to the provisions in Section 53 of the General 

Terms and Conditions and specified term for 

service hereunder, provisions governing such 

negotiated rate (including surcharges) and 

term shall be set forth on Exhibit C to the 

service agreement. 

J.A. 132 n.87 (citing J.A. 76) (emphasis added). 

 

Considering these provisions, the Commission reasonably 

started its evaluation with the 2018 Agreement’s Exhibit C and 

determined that it unambiguously “did not establish a 

negotiated rate” because it stated “None” in the location for the 

specification of a negotiated rate. Reh’g Order at P 23 (J.A. 

243). After reaching this decision, the Commission was 

appropriately able to decline to consider extrinsic evidence. 

See Iberdrola Renewables, Inc. v. FERC, 597 F.3d 1299, 1304 

(D.C. Cir. 2010) (“If a contract is not ambiguous, extrinsic 

evidence cannot be used as an aid to interpretation,” and, thus, 

“if the intent of the parties on the particular issue is clearly 

expressed in the document, ‘that is the end of the matter.’”). 

Moreover, because the 2018 Agreement did not contain a 

negotiated rate, the Commission sufficiently explained that it 
18 

had to discern the applicable rate from Transco’s rate schedule 

FT, which was the incremental rate for use of the MarketLink 

project because that capacity was used and identified. In the 

context of the foregoing, the Commission’s decision to select 

the MarketLink project incremental rate is the product of 

reasoned decisionmaking. 

***** 

 For the foregoing reasons, Fairless Energy fails to 

demonstrate that either the Commission’s exercise of primary 

jurisdiction over the Transco-Fairless Energy natural gas 

transportation rate dispute or its decision regarding the 

appropriate rate was arbitrary and capricious. The court 

therefore denies Fairless Energy’s consolidated petitions. 

So ordered.