United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 13, 2005 Decided October 28, 2005

 Reissued December 23, 2005

No. 04-1094

AMERICAN GAS ASSOCIATION,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

PIEDMONT NATURAL GAS COMPANY, INC., ET AL.,

INTERVENORS

Consolidated with

04-1096, 04-1097, 04-1098, 04-1099, 04-1100, 04-1101,

04-1108

On Petitions for Review of Orders of the

Federal Energy Regulatory Commission

Jonathan D. Schneider and Howard L. Nelson argued the

cause for petitioners/intervenors. With them on the briefs were

M. Denyse Zosa, Jeffrey M. Petrash, Frank R. Lindh, Anne K.

Kyzmir, Kelly A. Daly, William T. Miller, Joshua L. Menter,
2

Thomas C. Gorak, Grace Delos Reyes, Gary E. Guy, William H.

Roberts, Thomas P. Thackston, Kenneth T. Maloney, James H.

Jeffries, IV, and Dena E. Wiggins. Jay V. Allen, Stephen J.

Keene, Kirstin E. Gibbs, and Susan P. Grymes entered

appearances.

Lona T. Perry, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. With her on the

brief were Cynthia A. Marlette, General Counsel, and Dennis

Lane, Solicitor.

Henry S. May, Jr. argued the cause for intervenors Interstate

Natural Gas Association of America, et al., in support of

respondent. With him on the brief were Catherine O’Harra,

Susan S. Lindberg, Joan Dreskin, and Timm L. Abendroth. Paul

M. Teague, Christopher J. Barr, and Patrick J. Hester entered

appearances.

James H. Jeffries, IV, was on the brief for intervenor

Piedmont Natural Gas Company.

Before: GINSBURG, Chief Judge, and EDWARDS and TATEL,

Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: Three years ago, in Interstate

Natural Gas Ass’n of America v. FERC, 285 F.3d 18, 29 (D.C.

Cir. 2002) (INGAA), we resolved several matters relating to the

Federal Energy Regulatory Commission’s efforts to “increase

flexibility and competition in the natural gas industry,” but

remanded two issues to the Commission for further

consideration. The first issue is whether FERC’s pre-granted

abandonment scheme “appropriately balance[s] the protection

of captive customers with the furtherance of market values.” Id.
3

at 52. Twice the Commission imposed caps on the contract

length existing customers must bid to retain service rights in the

face of competing bids from new customers. Twice we rejected

FERC’s justification for the cap length selected and remanded

the issue for further explanation. In the order now before us the

Commission removed the cap altogether. The second issue

involves FERC’s decision to allow shippers to make what are

known as “forwardhaul” and “backhaul” deliveries of gas “to a

single point in an amount greater than the shipper’s contracted

for capacity at” that point. Id. at 40. On remand, FERC again

defended, though in greater detail, its decision to allow these

transactions. 

Various petitioners now challenge the new order. Finding

that the Commission engaged in reasoned decision making with

respect to both issues, we deny the petitions for review.

I.

We begin with the matching-term cap. In INGAA we held

that section 7(b) of the Natural Gas Act (NGA), 15 U.S.C.

§ 717f(b), protects long-term pipeline capacity holders by

prohibiting “‘natural gas compan[ies]’ from ceasing to provide

service to their existing customers” when their contracts expire

“unless, after ‘due hearing,’ FERC finds ‘that the present or

future public convenience or necessity permit such

abandonment.’” INGAA, 285 F.3d at 51 (quoting 15 U.S.C.

§ 717f(b)). For twenty years the Commission has struggled to

streamline the regulatory process for contract termination by

allowing pre-approved abandonment while meeting its

obligations under § 7(b) to protect customers from pipeline

market power. See id. at 50-51. 

In United Distribution Cos. v. FERC, 88 F.3d 1105 (D.C.

Cir. 1996) (UDC), we reviewed FERC’s regulation providing
4

captive shippers with a right of first refusal (ROFR) which

allowed such shippers to avoid pre-approved abandonment and

extend their contracts if they matched the rate and duration—up

to a twenty-year cap—offered by competing bidders. We

approved “the basic structure of the right-of-first-refusal

mechanism,” finding that it “provides the protections from

pipeline market power required for pre-granted abandonment

under § 7.” Id. at 1140. At the same time, we remanded the

twenty-year cap, in part because we saw no reasoned

explanation of how it would adequately meet the Commission’s

§ 7(b) obligation to protect captive customers from the exercise

of pipeline market power. Id. at 1140-41. 

On remand, FERC adopted a five-year cap. Pipeline

Service Obligations and Revisions to Regulations Governing

Self-Implementing Transportation Under Part 284 of the

Commission’s Regulations, 78 F.E.R.C. ¶ 61,186, at 61,774

(1997). We vacated and again remanded, citing (1) FERC’s

unsupported decision to rely on the median contract length; (2)

FERC’s concerns that the cap would “result[] in a bias toward

short-term contracts,” fostering an “imbalance of risks between

pipelines and existing shippers” and raising “the overall cost of

pipeline transportation”; and (3) FERC’s earlier suggestion that

“elimination of the cap would foster efficient competition.”

INGAA, 285 F.3d at 52-53 (internal quotations marks omitted).

We also noted that the Commission provided neither “an

affirmative explanation for the selection of five years, nor a

response to its own or the pipelines’ objections.” Id. at 53. 

“[W]hether a term-matching cap must be required as part of

the ROFR,” FERC explained, “turns on whether [it] is necessary

to protect the existing long-term shipper from the pipeline’s

exercise of market power.” Regulation of Short-Term Natural

Gas Transportation Services, and Regulation of Interstate

Natural Gas Transportation Services, 101 F.E.R.C. ¶ 61,127, at
5

61,522 (2002) (“Order on Remand”) (citing UDC, 88 F.3d at

1140), aff’d, 106 F.E.R.C. ¶ 61,088 (2004) (“Order on

Rehearing”). According to the Commission, “[m]arket power

is exercised through the withholding of capacity to create an

artificial scarcity, thereby raising prices.” Id. at 61,521. Finding

that existing regulations adequately control the exercise of

market power, FERC abolished the cap altogether. Id. at 61,519.

In finding the term cap unnecessary, FERC employed the

reasoning we sustained in Process Gas Consumers Group v.

FERC, 292 F.3d 831 (D.C. Cir. 2002) (“PGC II”), a recent

decision in a parallel line of cases addressing term-matching

caps for new, rather than existing, customers. In PGC II, we

rejected challenges to FERC’s removal of a twenty-year cap for

new shippers, accepting the Commission’s determination that

“existing regulatory controls already limit [pipelines’] market

power, thereby minimiz[ing any] danger that the pipeline will

withhold . . . capacity from the market to create [the] artificial

scarcity necessary to force shippers to bid for supercompetitive

contract terms.” Id. at 836 (alteration and omission in original)

(internal quotation marks omitted). In the order at issue here,

the Commission cited several “existing controls” it believed

would protect existing shippers from any pipeline exercise of

market power: (1) traditional cost-of-service rate regulation; (2)

pipelines’ obligation to offer to sell all existing capacity; (3) the

Commission’s complaint process, Order on Remand, 101

F.E.R.C. at 61,521; Order on Rehearing, 106 F.E.R.C. at 61,298;

(4) the opportunity customers have to offset the cost of

unwanted capacity through capacity release, Order on

Rehearing, 106 F.E.R.C. at 61,304; and (5) the constraints on

contract conditions imposed by the pro forma tariff reviewed by

FERC, id. at 61,303. Given these regulatory controls, FERC

concluded that pipelines could exert market power only by

refusing to “build additional capacity when demand requires it.”

Order on Remand, 101 F.E.R.C. at 61,521. According to the
6

Commission, however, “pipelines would have a greater

incentive to build new capacity” since pipelines could only

increase profits by investing “in additional facilities to serve the

increased demand. Moreover, if [pipelines] did refuse to build

new capacity, the shippers could file a complaint.” Id.

FERC acknowledged that unlike the new customers at issue

in PGC II, existing shippers enjoy statutory protection from

pipeline market power. Id. at 61,522. The Commission

explained, however, that the ROFR adequately protects existing

customers by “ensur[ing] that, if the existing customer is willing

to pay the maximum approved rate and match the contract term

of a rival bidder, the pipeline may not abandon service to that

customer.” Id. 

Represented by petitioner American Gas Association, a

collection of existing shippers now challenge FERC’s

elimination of the matching-term cap, charging that the

Commission reversed “ten years of practice” and failed to

provide “coherent support for the conclusion that the

Commission need no longer concern itself with the exercise of

pipeline monopoly power upon contract expiration.” Pet’rs’

Opening Br. 24. For such claims, our standard of review is both

well established and highly deferential. We will “uphold

FERC’s factual findings if supported by substantial evidence

and . . . endorse its orders so long as they are based on reasoned

decision making.” Texaco, Inc. v. FERC, 148 F.3d 1091, 1095

(D.C. Cir. 1998). In addition, we must ensure that FERC has

adequately responded to our concerns in INGAA. PGC II, 292

F.3d at 836. As we have already recognized, however, because

selection of the matching cap duration must be “somewhat

arbitrary,” we “defer to the Commission’s expertise if it

provides substantial evidence to support its choice and responds

to substantial criticisms of that figure.” UDC, 88 F.3d at 1141

n.45.
7

In INGAA, we evaluated the evidence upon which FERC

relied to determine appropriate term caps, examining the data it

used as well as its explanation linking those data to the cap

length selected. See 285 F.3d at 51-53; see also Process Gas

Consumers Group v. FERC, 177 F.3d 995, 1003 (D.C. Cir.

1999) (“PGC I”) (asking the same questions). We do the same

here. 

As to the first inquiry, petitioners argue that FERC ignored

available evidence—indeed, that it failed to look at any data at

all. FERC responds that the only existing evidence came from

regulated markets and that such evidence reveals nothing at all

about the duration of pipeline contracts in competitive markets.

Order on Rehearing, 106 F.E.R.C. at 61,305. FERC is correct.

As we explained in PGC I, the relevant question for assessing a

term cap is “whether it will prevent the [pipelines] from

compelling shippers to offer the pipeline longer contracts than

they would in a competitive market.” PGC I, 177 F.3d at 1003

(emphasis added). 

Even were we to find the available data useful, under our

second inquiry—the linkage between the evidence before the

Commission and the cap length selected—FERC’s analysis of

the evidence is reasonable. First, FERC found that the evidence

gathered both before and after the imposition of the five-year

cap demonstrates that “the five-year term-matching cap has not

led to shorter contract terms than would otherwise occur,” and

that “customers have generally been able to negotiate contract

terms of less than five years and do not desire longer contracts

because of the risk that their needs will change.” Order on

Remand, 101 F.E.R.C. at 61,523. Second, FERC explained that

the evidence of stable contract duration indicates that regulation

without a term cap fulfills its obligations to the natural gas

market. With this market-based distributive policy, FERC

effectively responded to its own concern, cited in INGAA, “that
8

the cap would foster an imbalance of risks between pipelines

and existing shippers,” adversely affecting allocation of both

cost and capacity. INGAA, 285 F.3d at 53 (internal quotation

marks omitted); Order on Remand, 101 F.E.R.C. at 61,522. We

therefore agree with FERC that since the “matching cap is not

necessary to limit the exercise of market power by the

pipelines,” there is “no justification for distorting the bidding

process and not allocating scarce pipeline capacity to the shipper

placing the highest value on obtaining” it. Order on Rehearing,

106 F.E.R.C. at 61,300.

Having satisfied INGAA’s evidentiary requirements, FERC

must still demonstrate it has adequately responded to

petitioners’ “substantial criticisms.” INGAA, 285 F.3d at 52

(quoting UDC, 88 F.3d at 1141 n.45). Petitioners assert that

PGC II’s holding that existing regulations are sufficient to

protect against abuses of market power has no applicability here

because pipelines can exercise greater market power over

existing customers than over new customers. While in the

context of new shippers “market power can be exercised only by

withholding capacity in order to create artificial scarcity,”

petitioners argue, “the exercise of pipeline monopoly power visà-vis existing customers lies in a pipeline’s ability to threaten

termination of service to customers who require essential

pipeline services.” Pet’rs’ Opening Br. 34-35. Where shippers

have no viable alternatives for service, contract term becomes a

substitute for price, undermining rate regulation established

under NGA sections 4 and 5. Id. at 44. 

Although we decided PGC II in a context where the

Commission owed no extra duty to protect shippers from

pipeline market power, PGC II, 292 F.3d at 838 (noting the

difference), our reasoning there applies equally to existing

customers. As repeatedly quoted by the Commission, PGC II

found that “shippers may at times bid up contract length” but
9

that such bidding “likely reflects not an exercise of [pipelines’]

market power, but rather competition for scarce capacity.” 292

F.3d at 837. Petitioners are therefore incorrect when they assert

that pipelines inevitably exercise market power merely because

scarcity deprives existing customers of alternatives or forces

them to bid higher terms than they desire. See Pet’rs’ Opening

Br. 41-45; see also PGC I, 177 F.3d at 1003 (noting pipelines

should be prevented “from compelling shippers to offer the

pipeline longer contracts than they would in a competitive

market”). Rather, to demonstrate that pipelines exercise market

power, petitioners must show that the pipelines manipulate that

scarcity by intentionally withholding capacity to drive up the

value of bids or to extract special advantages or concessions.

Order on Rehearing, 106 F.E.R.C. at 61,301-03. Having found

captive shippers fully protected from such manipulation by

existing regulatory controls, see supra at 5, FERC concluded not

only that retaining the cap was unnecessary, but also that it

would interfere with allocation of capacity to shippers who

value it most and simply protect captive customers “from actual

competition.” Opp’n Br. 40.

Petitioners next argue that FERC failed to address the

impact of scarcity on historical captive customers either (1)

forced to compete with new electric generation customers for

capacity or (2) held captive by virtue of retail access programs.

As to the first point, petitioners contend that removal of the term

cap, which allows new customers to bid up contract term,

conflicts with FERC’s policy requiring new shippers to pay

higher rates reflecting the cost of new construction. Pet’rs’

Opening Br. 48-49. This argument is without merit. Petitioners

presented no evidence that existing ROFR shippers competing

to renew capacity on a fully subscribed pipeline with different

vintages in capacity are not also subject to incremental pricing.

See Regulation of Short-Term Natural Gas Transportation

Services and Regulation of Interstate Natural Gas
10

Transportation Services, F.E.R.C. Stats. & Regs. [Reg.

Preambles 1996-2000] (CCH) ¶ 31,099, at 31,635-36 (“Order

No. 637-A”), reh’g, F.E.R.C. Stats. & Regs. [Reg. Preambles

1996-2000] (CCH) ¶ 31,091 (“Order No. 637”), order den.

reh’g, 92 F.E.R.C. ¶ 61,602 (2000) (“Order No. 637-B”). 

For their second point, petitioners argue that in balancing

consumer and pipeline risks, the Commission failed to account

for the greater risks faced by local distribution companies

(LDCs) bound by retail access programs that threaten their

market share while simultaneously obligating them to serve as

suppliers of last resort. Pet’rs’ Opening Br. 50-54. Given this

predicament and the lack of alternative sources of capacity,

petitioners contend that the Commission’s rule will allow

customers “with greater buying power to bid up the pipeline’s

firm, long-term services.” Id. at 53. As a result, LDCs will be

forced to “enter into long-term pipeline contracts now to serve

markets they may or may not serve in the future.” Id. at 54. 

This argument depends on two false assumptions: (1) that

existing regulations without a term cap leave pipeline market

power unregulated and (2) that § 7(b) obligates FERC to

guarantee shippers the ability to renew their contracts

indefinitely rather than simply provide them the opportunity to

do so. PGC II makes clear that a market is not unregulated just

because shippers have no alternative sources of service. 292

F.3d at 837. In INGAA, moreover, we accepted as valid FERC’s

concern about creating “an imbalance of risks between pipelines

and existing shippers, allowing shippers indefinite control over

pipelines’ capacity, but giving the pipelines no corresponding

protection.” 285 F.3d at 53 (internal quotation marks omitted).

As for petitioners’ concern that uncertainties about future

markets require extra protection, we have made clear that

“LDCs are no different from other industry participants in that
11

they will have to evaluate future risks in determining how much

capacity to reserve.” UDC, 88 F.3d at 1140-41 n.44. The costs

versus the benefits of renewal are, we explained, financial

determinations all companies, including LDCs, must make. Id.

Having considered these risks, FERC concluded that the

possibility that LDCs may end up with unneeded capacity does

not outweigh the benefit of allocating scarce capacity to parties

valuing it the most. Order on Rehearing, 106 F.E.R.C. at

61,300. Moreover, because FERC’s capacity release program

allows LDCs to market capacity they retain but cannot use,

LDCs may “mitigate any business harm that might occur . . .

from elimination of the term matching cap.” Id. 

In sum, since FERC must protect existing shippers from

market power, not from competition, and given its conclusion

that existing regulations protect against the exercise of market

power, the Commission reasonably concluded that the ROFR

gives existing shippers the competitive advantage that § 7(b)

requires while allowing for the most efficient allocation of

capacity. We will therefore deny the petitions for review on this

issue.

II.

The second issue before us has its origins in Order No. 636,

in which FERC adopted a segmentation policy and expanded

flexible point rights for shippers with firm service. Pipeline

Service Obligations and Revision to Regulations Governing

Self-Implementing Transportation Under Part 284 of the

Commission’s Regulations, F.E.R.C. Stats. & Regs. [Reg.

Preambles 1991-1996] (CCH) ¶ 30,939, reh’g granted & denied

in part, F.E.R.C. Stats. Regs. [Reg. Preambles 1991-1996]

(CCH) ¶ 30,950 (“Order No. 636-A”), order on reh’g, 61

F.E.R.C. ¶ 61,272 (1992) (“Order No. 636-B”). These changes

allowed shippers to segment their capacity and use any receipt
12

and delivery point within the zone for which they pay

reservation charges. Through shipper ability to release excess

firm capacity, FERC also created a secondary market for firm

capacity in competition with pipeline interruptible service. With

this new market, shippers acquired increased control over the

capacity for which they pay. In addition to allowing

segmentation, the Commission allowed shippers to engage in

“backhaul/forwardhaul transactions” to the same delivery point.

In INGAA, we upheld segmentation and flexible point rights as

a general matter, 285 F.3d at 38-40, but remanded for further

explanation FERC’s decision to allow backhaul/forwardhaul

segmented transactions. Id. at 41. 

INGAA describes backhaul/forwardhaul transactions as

follows: 

Suppose a pipeline runs from A to B to C,

and has 10,000 dekatherms of daily

capacity, all of which is contracted for

from A to C and of which X holds 1000.

X’s market at C declines, and X would

like to ship only to B and to release the

1000 in B-C capacity. X learns of . . . Y,

who has a right to 1000 dekatherms at C

and would like to sell it at B. 

Id. at 40. X then forwardhauls 1000 dekatherms to B and

releases the B-C portion to Y, who backhauls 1000 dekatherms

to B. The result is 2000 dekatherms at point B, 1000

dekatherms in excess of the amount X contracted to have pass

through that point.

On remand, FERC defended its decision to allow

backhaul/forwardhaul transactions. Order on Remand, 101

F.E.R.C. ¶ 61,127. Various pipelines, represented by
13

Tennessee Gas Pipeline Company, now challenge that decision.

They argue that FERC’s policy effectuated an increase in

shippers’ delivery point entitlements and the services pipelines

are required to provide, thereby modifying existing contracts.

Those contract modifications cannot stand, they argue, because

FERC failed to make findings under either the Mobile-Sierra

heightened public interest standard or NGA § 7. See generally

MCI Telecomms. Corp. v. FCC, 822 F.2d 80, 87 (D.C. Cir.

1987) (describing the Mobile-Sierra standard); 15 U.S.C. §

717f(a). We disagree.

To begin with, contrary to petitioners’ argument, nothing

in INGAA “found that the Commission’s policy will modify

contracts.” Pet’rs’ Opening Br. 61. Noting the difference

between contract modification and operational feasibility,

INGAA remanded the backhaul/forwardhaul issue to the

Commission “so that it can more clearly confront the question

of whether this aspect of the orders can stand without additional

findings.” INGAA, 285 F.3d at 41. This language does not

direct FERC to make Mobile-Sierra or § 7 findings. Instead, it

directs the Commission to “more clearly confront the question

of whether” additional findings are necessary. Id. (emphasis

added). This left FERC free to determine “whether” its

backhaul/forwardhaul policy modified pipeline contracts, and

if so to make the necessary Mobile-Sierra or § 7 findings.

Examining the issue, FERC concluded that the policy did not

modify the contracts, and we agree.

FERC’s conclusion rests on the difference between firm

and guaranteed service. As the Commission explained, its

flexible point policy distinguishes

between primary points and secondary

points. Firm contracts between pipelines

and their shippers typically provide that
14

the pipeline will transport up to a

specified contract demand from a primary

receipt point or points listed in the

contract to a primary delivery point or

points listed in the contract. This

provision specifies a shipper’s guaranteed

right to firm service. 

Order on Rehearing, 106 F.E.R.C. at 61,305 (emphasis added)

(footnotes omitted). In contrast to primary firm service, “an outof-path, secondary firm transaction”—the usual categorization

of a backhaul—“receives a lower scheduling priority than

primary firm service.” Id. at 61,308. Since backhauls are

secondary transactions rather than guaranteed service,

backhauling shippers utilize the delivery point on a secondary

basis—a basis not covered by the contract. Id. 

Even if it is true, as petitioners contend, that the contract

specifies the maximum daily quantity of gas parties agree to

transport on a firm basis and that released capacity delivered on

a secondary basis constitutes firm service, see Order No. 636-A,

F.E.R.C. Stats. & Regs. at 30,583 (noting that secondary rights

are firm rights that are subordinate to primary rights but superior

to interruptible rights for scheduling and curtailment purposes),

petitioners have not challenged FERC’s contention that given its

segmentation and flexible point policy, shippers make use of

two types of firm service, primary and secondary, with only the

former amounting to guaranteed service. See Order on

Rehearing, 106 F.E.R.C. at 61,308. Therefore, secondary

transactions—firm but not guaranteed—are not covered by the

contracts. Id. Because the terms of primary service for which

the parties have bargained remain unchanged, FERC’s decision

does not modify contracts, even if it affects them.

Petitioners also contend that the backhaul/forwardhaul
15

policy allows shippers to get “more service than they are paying

for.” Id. at 61,309. As FERC explained, however, 

it is the Commission’s policy that a

shipper may use all of the points in a

zone for which it is paying on a

secondary basis precisely because the

shipper must pay the costs of the entire

zone. . . . The shipper is getting no more

than what it pays for. The pipeline, for

its part, has fully allocated its costs and is

collecting those costs from its shippers. 

Id. at 61,310 (footnotes omitted). The Commission further

explained that since backhaul/forwardhaul transactions do not

alter pipelines’ certificated service levels or specified service

entitlements by changing the quantity provisions of their

transportation contracts, the policy merely changes the terms of

an existing service. Id. at 61,313. Finally, FERC pointed out

that should a backhaul/forwardhaul transaction cause the

pipeline to lose significant revenue, “then a pipeline is permitted

to file a new rate case in which more of its costs would be

allocated to firm service.” Id. at 61,310. 

Because FERC’s backhaul/forwardhaul policy does not

abrogate pipeline contracts, the Commission had no obligation

to make either Mobile-Sierra or § 7 findings. Instead, to justify

its new policy, the Commission needed to comply only with

NGA § 5, 15 U.S.C. § 717d. Under NGA § 5, before replacing

an existing rate or tariff with a new one, the Commission must

demonstrate by substantial evidence that the existing rate or

tariff has become unjust or unreasonable, and that the proposed

rate is both just and reasonable. 15 U.S.C. § 717d; W. Res., Inc.

v. FERC, 9 F.3d 1568, 1579-80 (D.C. Cir. 1993). 
16

FERC found that since backhaul/forwardhauls represent a

type of segmented transaction, failure to permit them is unjust

and unreasonable for the same reasons the Commission gave in

Order No. 637 and that we accepted in INGAA, i.e., “it restricts

efficient use of capacity without adequate justification.” Order

on Remand, 101 F.E.R.C. at 61,529; INGAA, 285 F.3d at 38

(citing Order No. 637, at 31,304). At the same time, FERC

found that permitting these transactions is “just and reasonable

because it creates additional supply alternatives for shippers and

enhances competition on the pipeline’s system . . .[,] because it

provides the kind of flexibility that pipelines enjoyed prior to

Order No. 636 and because it will assist in creating more

competition in the transportation market.” Order on Rehearing,

106 F.E.R.C. at 61,307. 

“[I]t is within the scope of the agency’s expertise to 

make . . . a prediction about the market it regulates, and a

reasonable prediction deserves our deference . . . .” Envtl.

Action, Inc. v. FERC, 939 F.2d 1057, 1064 (D.C. Cir. 1991).

Petitioners have given us no reason to second guess FERC’s

conclusion that the benefits of segmentation and flexible point

policy apply equally to backhaul/forwardhaul transactions.

III.

On remand from INGAA, FERC reevaluated both the term

cap and the backhaul/forwardhaul issues and gave satisfactory

explanations for its decisions. The petitions for review are

denied.

So ordered.