United States Court of Appeals,

Fifth Circuit.

No. 91–4399.

MONSANTO COMPANY, Petitioner,

v.

FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

June 26, 1992.

Petition for Review of an Order of the Federal Energy Regulatory Commission.

Before JOHNSON, DAVIS, and SMITH, Circuit Judges.

PER CURIAM:

Petitioner seeks review of the Federal Energy Regulatory Commission's decision to retain

petitioner'sfiling fee for a certificate of convenience and necessity. We hold that the Commission had

authority to retain the filing fee. We therefore deny the petition.

I.

We summarize only those facts necessary to this petition. A more detailed factual predicate

to this controversy is found in our previous decision, Florida Gas Transmission Co. v. FERC, 876

F.2d 42 (5th Cir.1989). In July 1987, the Federal Energy Regulatory Commission (FERC or

Commission) authorized Florida Gas Transmission Company to provide interruptible transportation

service to petitioner Monsanto Company under section 7(c) of the Natural Gas Act. 40 FERC ¶

62,104 (1987). Although Florida Gas had applied for a five-year authorization, FERC acted pursuant

to a fixed policy and authorized the transportation service for one year or until Florida Gas accepted

a blanket "open access" transportation certificate under 18C.F.R. § 284.221 (whichever occursfirst).

Florida Gas appealed the Commission's standing policy of grant ing only one-year individual

certificates of convenience and necessity. Florida Gas, 876 F.2d 42.

While that appealwas pending before this court, Florida Gastwice renewed its certificate with
the Commission. On May 27, 1988, Florida Gas filed an application to renew its service for

Monsanto and to increase the volume of gas it was entitled to transport on behalf of Monsanto. The

Commission issued the requested certificate on January 17, 1989 with another one-year expiration

attached. 46 FERC ¶ 61,028 (1989). Monsanto does not contest the fee associated with this filing.

On April 27, 1989, Florida Gas again applied to renew its certificate to serve Monsanto. Florida Gas

paid the required filing fee of $19,450 under protest pending the outcome of its appeal. The

Commission granted Florida Gas's certificate on September 18, 1989, with another one-year

limitation. 48 FERC ¶ 62,206 (1989).

About a month before the Commission issued its September 1989 order, our mandate issued

in Florida Gas. We vacated the Commission's application to Florida Gas of its standing one-year

limitation policybecause it had not "substantiated its policy to limit individual certification to one year

in this case." Florida Gas, 876 F.2d at 44. We remanded the case back to the Commission for

further consideration in light of our opinion. On December 20, 1989, the Commission issued its order

addressing the remand from this court. 49 FERC ¶ 61,375 (1989). In that December 1989 order the

Commission attempted to more fully explain why it applied the one-year limitation policy to Florida

Gas.

Monsanto intervened in the Florida Gas proceedings because it was contractually obligated

to reimburse Florida Gas for all filing fees associated with certificate applications. Florida Gas and

Monsanto both appealed to the Commission to reconsider its September 1989 order limiting the

certificate to a one-year term in light of our Florida Gas decision. Monsanto also sought a refund

of the filing fee associated with the April 1989 application. The Commission denied the appeal and

the request for a refund in January 1990. 50 FERC ¶ 61,082 (1990). In March 1991, the

Commission denied rehearing of its December 1989 and January 1990 orders. 54 FERC ¶ 61,305

(1991). Monsanto timely appealed to this court.
II.

A.

We briefly address our jurisdiction. FERC contends that the current controversy is moot

because Florida Gas accepted a blanket certificate on July 16, 1990. We agree with Monsanto that

the issue of refunding application fees is not moot. As FERC itself recognizes, to "invoke the

jurisdiction of a federal court, a litigant must have suffered, or be threatened with, an injury traceable

to the defendant and likely to be redressed by a favorable judicial decision." Lewis v. Continental

Bank Corp., 494 U.S. 472, 110 S.Ct. 1249, 1253, 108 L.Ed.2d 400, 410 (1990). Monsanto claims

that it suffered an injury by virtue of its loss of $19,450 when FERC arbit rarily and capriciously

demanded an application fee on April 27, 1989. The fact that Florida Gas has now accepted a blanket

certificate means only that no future annual applications are necessary. Such acceptance, however,

does not render moot the question of whether FERC was entitled to retain the application fee paid

in April 1989. Monsanto's appeal is not moot, and we now turn to the merits of its petition.

B.

The narrow issue before usis whether Monsanto is entitled to a refund of $19,450 associated

with Florida Gas's April 1989 application for renewal of its certificate. We will reverse FERC's order

refusing to refund Monsanto's application fee only if that decision is "arbitrary, capricious, or

otherwise not in accordance with law." Florida Gas, 876 F.2d at 44; 5 U.S.C. § 706(2).

Monsanto claims that our decision in Florida Gas vacating FERC's one-year limitation on

individual certificates meansthat FERC wasforbidden fromfurther enforcing its one-year policy and

collecting any application fees associated with that policy. FERC responds that it has rehabilitated

its term limitation policy and, accordingly, is entitled to retain application fees associated with that

policy. We agree with FERC.

We did not hold in Florida Gas that FERC's policy of one-year limitations on individual
certificates could never be applied to Florida Gas. Rather, we held that FERC had deprived Florida

Gas of due process by not substantiating its standing policy with respect to Florida Gas. Florida

Gas, 876 F.2d at 44, 45. The Commission's original orders had simply stated that the Commission

was applying a standing, prophylactic rule of limiting individual certificates to one-year terms. We

held that "FERC must be able to substantiate the generalrule" with respect to Florida Gasso that the

affected parties might be allowed to challenge the basis of the rule. Id. at 44. We faulted FERC for

failing to substantiate "either through the development of specific facts or by making a reasoned

explanation." Id. at 45.

In its December 1989 order, FERC provided a more reasoned explanation of its decision to

apply the general policy to Florida Gas. First, the Commission stated that annual review is

"particularly appropriate where allegations of undue discrimination have been raised against a

company." 49 FERC ¶ 61,375 at 62,370. The Commission found that such an allegation had been

raised byPeoples Gas SystemInc. (Peoples), a Florida Gas customer, in December 1986 with respect

to service for Monsanto. Although Peoples withdrew the protest in April 1987, the Commission felt

that "such allegations [are] grounds for proceeding cautiously as to individual certificate

applications." Id.

Additionalprotests were lodged against Florida Gasin July 1988 and August 1989 by various

parties. Monsanto points out that these protests were in other dockets, not involving service to

Monsanto. But FERC is charged wit h regulating pipeline companies such as Florida Gas. If

complaints have been lodged concerning Florida Gas's allegedly discriminatoryconduct toward other

customers, the Commission does not act arbitrarily or capriciously by deciding to proceed cautiously

with all of Florida Gas's individual certificates, including those of Monsanto.

The Commission also explained that it wanted to review annually Florida Gas's certificate

because o f the "degree of control over access to specific markets enjoyed by Florida Gas." Id. at
62,371. Florida Gas is the only interstate pipeline serving the state of Florida. Id. The certificates

at issue involved interstate service for Monsanto. We conclude that it was not arbitrary or capricious

for the Commission to consider the structure of Florida Gas's system when issuing the certificates.

Finally, the Commission stated in its December order that annual scrutiny was warranted

because of Florida Gas's multi-year restructuring. This restructuring involved lengthy negotiations

between Florida Gas and its customers. The Commission noted that in the preceding five years, "in

the various proceedings involved in this restructuring, intervenors have been concerned with

perceived inequitiesin Florida Gas' existing or proposed transportation system." Id. at 62,371. This

restructuring process was still active in April 1989, the time of the renewal in question. Given this

fact, it was not arbitrary or capricious for the Commission to tread cautiously by granting

transportation certificates of limited duration.

Monsanto urges us to consider the propriety of FERC's one-year limitation policy, the

inequities of its enforcement, and the harm that its enforcement has caused Monsanto. We decline

to do so. Monsanto has simply appealed the lawfulness of FERC's retention of the filing fee

associated with the April 1989 application in light of our holding in Florida Gas. As we already

explained, our holding in Florida Gas was that FERC had violated Florida Gas's due process rights

by failing to substantiate its policy with respect to Florida Gas, not that the policy was arbitrary per

se. The Commission's December 1989 order explains its decision in a non-arbitrary way and

rehabilitates its decision to limit Florida Gas's certificates to a single year's duration. We conclude

that this decision, therefore, is not arbitrary or capricious. Because the decision to impose one-year

limits is not arbitrary or capricious, it follows that the decision to retain filing fees associated with

annual applications is not arbitrary or capricious either. Accordingly, the petition for review of

FERC's orders is

DENIED.