Opinion ID: 184925
Heading Depth: 2
Heading Rank: 1

Heading: Distillate

Text: 4 Under the original 1993 settlement offer, the distillate cut included the portion of the stream that evaporated between 350 and 650 degrees Fahrenheit. Under the 1993 settlement order, FERC split this proposed cut into two cuts, light distillate (350-450 degrees) and heavy distillate (450-650 degrees). FERC determined that it would price light distillate as jet fuel and heavy distillate as No. 2 fuel oil, the products into which those cuts are normally refined, without adjustment for processing costs. See 1993 Order, 65 FERC p 61,277, at 62,288. We rejected that methodology because each cut would require further processing to reach the quality required for the proxy product. See OXY, 64 F.3d at 693.Because the settlement as modified by FERC essentially valued a raw material as if it were a finished product, we determined that it overvalued these heavier cuts, resulting in a windfall to those shippers whose streams contained the highest relative proportion of heavy crude. See id. Although we recognized that we could not require FERC to achieve a perfect method of valuing petroleum streams, particularly streams including cuts without a market, we nonetheless held that FERC must be consistent in its methodological choices.That is, if the Commission chose to value a portion of the cuts at market without adjusting for processing costs, then it must, at least to the extent possible, attempt to approximate the market value of other cuts without processing. Id. at 694. That is, the Commission cannot consistent with the requirement of reasoned decision making, value some cuts precisely and others haphazardly. Id. We therefore remanded the distillate valuation for further consideration by FERC.