Source: https://law.justia.com/cases/federal/appellate-courts/F2/899/1244/272518/
Timestamp: 2019-04-21 02:40:10+00:00

Document:
On Petition for Review of Orders of The Federal Energy Regulatory Commission.
George L. Weber, with whom Kenneth L. Glick was on the brief, for petitioner.
Jill Hall, Atty., F.E.R.C., with whom Catherine C. Cook, Gen. Counsel, and Jerome M. Feit, Solicitor, Washington, D.C., F.E.R.C. were on the brief, for respondent.
Before WALD, Chief Judge, MIKVA and EDWARDS, Circuit Judges.
In this case, we are called upon to review decisions of the Federal Energy Regulatory Commission ("Commission" or "FERC") disposing of a proposed rate increase by petitioner National Fuel Gas Supply Corporation ("National"). In an order issued thirty-two days after National submitted its rate filing but one day before the proposed rate was to become effective, the Commission suspended National's rate increase and set it for hearing pursuant to section 4(e) of the Natural Gas Act of 1938, 15 U.S.C. § 717c(e) (1988). Relying on a prior settlement with National, the Commission also directed National to modify its filing to incorporate a deduction from its rate base of a "deferred tax reserve" associated with National's gas production facilities. National maintains that the Commission's suspension order was untimely and that the deduction of the tax reserve fund was not authorized by the settlement.
We deny the petition in part and remand the case to the Commission. We find no merit in National's challenge to the timeliness of the Commission's suspension order. Section 4 of the National Gas Act specifies that a pipeline may not institute a rate increase "except after thirty days' notice to the Commission and to the public," 15 U.S.C. § 717c(d) (1988); the statute says nothing about when the Commission must exercise its power to suspend a proposed rate increase. Because we find that the Commission has reasonably "filled" this legislative interstice, we defer to the Commission's conclusion that it may suspend a rate more than thirty days after it is filed so long as the rate has not yet become effective. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-45, 104 S. Ct. 2778, 2781-83, 81 L. Ed. 2d 694 (1984). We remand the case, however, so that the Commission may reconsider its ruling on National's deferred tax reserve in light of the court's recent decision in Public Utilities Commission v. FERC, 894 F.2d 1372 (D.C. Cir. 1990). Moreover, to minimize any prejudice that this disposition may cause National, we order FERC to complete this reconsideration within thirty days.
J.A. 35-36 ("reservation clause") (emphasis added).
National petitions for review. It continues to challenge the timeliness of the Commission's suspension order as well as the Commission's conclusion that the El Paso Order implements the Mid-Louisiana decision for purposes of the reservation clause.
National argues that the Commission failed effectively to suspend National's rate increase because the Commission's suspension order was untimely. According to National, the time limit for suspending the rate under section 4(e) was controlled not by National's selection of an effective date--the Commission's position--but rather by the thirty-day minimum notice period established by section 4(d). Because the Commission suspended National's rate filing thirty-two days after it was filed, National contends that we must void the suspension order and direct the Commission to put National's filed rate into effect as of February 1, 1989, subject only to the Commission's power under section 5 to challenge the rate prospectively.5 We disagree.
Our analysis of the Commission's interpretation of the Natural Gas Act is controlled by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). " [E]mploying traditional tools of statutory construction," we ask first "whether Congress has directly spoken to the precise question at issue"; if so, we "must give effect to the unambiguously expressed intent of Congress." Id. at 842, 843 & n. 9, 104 S. Ct. at 2781, 2781 & n. 9. If not, we "defer to the agency's interpretation of the statute so long as it is reasonable and consistent with the statutory purpose." Ohio v. Department of the Interior, 880 F.2d 432, 441 (D.C. Cir. 1989); see Chevron, 467 U.S. at 843, 104 S. Ct. at 2782.
[u]nless the Commission otherwise orders, no change shall be made by any natural-gas company in any such rate, charge, classification, or service, or in any rule, regulation, or contract relating thereto, except after thirty days' notice to the Commission and to the public.
We find the Commission's answer to this question--that "section 4(d) only requires the Commission to act prior to the proposed effective date," 46 F.E.R.C. at 62,290--to be perfectly "reasonable and consistent with the statutory purpose." Ohio v. Department of the Interior, 880 F.2d at 441. Taken together, sections 4(d) and 4(e) evidence Congress' preference "for the earliest effectuation of ... permissible rate changes consistent with appropriate Commission review." United Gas Pipe Line Co. v. Memphis Light, Gas & Water Div., 358 U.S. 103, 114, 79 S. Ct. 194, 200, 3 L. Ed. 2d 153 (1958). By permitting suspension any time up to the effective date proposed by the pipeline, the Commission's reading of section 4(d) promotes the goal of agency review without detracting at all from the goal of early effectuation of permissible rate changes. Thus, we have no difficulty in concluding that the Commission's position reflects a "permissible construction of the statute." Chevron, 467 U.S. at 843, 104 S. Ct. at 2782.
National resists this conclusion. Pointing to our decision in Indiana & Michigan Elec. Co. v. FERC, 502 F.2d 336 (D.C. Cir. 1974), cert. denied, 420 U.S. 946, 95 S. Ct. 1326, 43 L. Ed. 2d 424 (1975), National argues that the Commission's reading of section 4(d) is inconsistent with case law. National also maintains that the Commission's position represents an unjustified departure from agency policy. These contentions are without merit.
Thirty days is the maximum a utility can be compelled to wait from the time it files rate changes until the date the changes take effect unless the Commission properly exercises its suspension powers.
Id. at 341 (emphasis added). In this case, National, far from being compelled to wait more than thirty days before its rate became effective, chose to do so by filing its rate thirty-three days before the proposed effective date. As the Commission noted, see 46 F.E.R.C. at 62,289-90, Indiana & Michigan Electric says nothing about when the Commission must exercise its suspension powers in a case where a pipeline has elected to give more than the minimum thirty-day period of notice required by section 4(d).8 But even if the case had directly addressed that question, Indiana and Michigan Electric, as a pre-Chevron decision, would not foreclose the Commission from reinterpreting an ambiguity in its organic statute. See Clinchfield Coal Co. v. Federal Mine Safety and Health Commission, 895 F.2d 773, 777-78 (D.C. Cir. 1990); Natural Resources Defense Council v. EPA, 859 F.2d 156, 187 (D.C. Cir. 1988).
Nor did the Commission's decision in this case depart from agency precedent. As early as 1956, FERC's precursor, the Federal Power Commission, construed section 4 to permit suspension more than thirty days after a rate was filed but before the effective date announced by the pipeline. See Midstates Oil Corp., 16 F.P.C. 1213, 1214-15 (1956). In the only judicial decision directly addressing the issue, the Tenth Circuit upheld this reading of the statute in 1961. See Pan American Petroleum Corp. v. FPC, 287 F.2d 469, 471-72 (10th Cir. 1961). The Commission has recently acknowledged this position, Idaho Power Co., 41 F.E.R.C. p 61,196 at 61,510 (1987), and National refers us to no case in which the Commission has disavowed it.
Nevertheless, because the Commission apparently takes action before thirty days in the majority of cases in which a pipeline gives more than the minimum notice period required by section 4(d), National argues that the Commission's suspension order in this case was contrary to FERC's "settled practice." See Petitioner's Reply to FERC Letter at 1 (March 8, 1990). This argument is fallacious. The Commission's contention that it has the authority to suspend an as-yet ineffective rate more than thirty days after filing does not imply that the Commission is prohibited from suspending such a rate before thirty days if the Commission completes its review at an earlier point. In sum, National has failed to offer any ground for upsetting the Commission's permissible construction of the Natural Gas Act.
Our review of the Commission's disposition of National's deferred tax reserve is complicated by an intervening change in the law. Less than three weeks before oral argument--and well after the parties submitted their briefs--the court issued its decision in Public Utilities Commission v. FERC, 894 F.2d 1372 (D.C. Cir. 1990) ("PUC II"), invalidating the Commission's El Paso Order. Although we upheld the Commission's determination that pipelines should retain their deferred tax reserve funds, we held that the NGPA divests the Commission of any authority to regulate the use of these funds. See id. at 1380-82.
PUC II appears to prevent us from upholding the Commission's treatment of National's deferred tax reserve. Even if we were to affirm the Commission's determination that the El Paso Order was an order "implementing" Mid-Louisiana for purposes of the reservation clause, the fact remains that PUC II appears to deprive the El Paso Order of the legal effect that is here sought by the Commission. In addition to having to consider this apparent intervening change in the law, National also urges us to reject the Commission's construction of the reservation clause on the merits. In light of these developments, the Commission now seeks a remand of the case so that it may determine the appropriate basis for affording National relief.
We grant the Commission's request for a remand. We afford broad deference to the Commission's construction of a settlement agreement because we recognize that settlement interpretation implicates both the Commission's superior " 'knowledge of industry conditions and practices,' " National Fuel Gas Supply, 811 F.2d at 1570 (quoting Columbia Gas Transmission Corp. v. FPC, 530 F.2d 1056, 1059 (D.C. Cir. 1976)), and the Commission's exercise of its congressionally delegated powers, see id. at 1569-70. It would therefore be inappropriate for us to venture an assessment of the Commission's reading of the reservation clause now that the legal background against which the Commission rendered its interpretation has been so dramatically--and, no doubt, unexpectedly--altered. Remand under these circumstances also comports with the general principle that an agency should be afforded the first word on how an intervening change in law affects an agency decision pending review. See, e.g., Panhandle E. Pipeline Co. v. FERC, 890 F.2d 435, 438-39 (D.C. Cir. 1989).
We recognize, however, the potential inconvenience of this disposition for National. It has already endured the normal course of appellate review and is entitled to a speedy resolution of its challenge. At oral argument, counsel for the Commission indicated that the Commission would have no objection to affording expedited consideration to National's challenge on remand. We therefore order the Commission to complete its reconsideration of the deferred tax reserve issue within thirty days.
We deny National's petition in part and remand the case to the Commission. Because we find that the Commission has offered a reasonable answer to the question of whether section 4 of the Natural Gas Act authorizes the Commission to suspend a rate more than thirty days after filing but before the rate's effective date, we reject National's challenge to the timeliness of the Commission's suspension order. In light of our recent decision in Public Utilities Commission v. FERC, 894 F.2d 1372 (D.C. Cir. 1990), however, we are unable to uphold the Commission's disposition of National's deferred tax reserve fund. Instead, we remand that aspect of the case to the Commission so that it may take action consistent with this opinion within thirty days.

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