Opinion ID: 699520
Heading Depth: 3
Heading Rank: 3

Heading: The Third Order

Text: 17 It was then Tennessee's turn to seek rehearing, for which it made two arguments. First, it argued that the Supreme Court had effectively overruled Chevron Oil in James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991); Lampf, Pleva, Lipkind v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991); and Harper v. Virginia Dep't of Taxation, --- U.S. ----, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993). According to Tennessee, the Court had in those cases established a per se rule that a judicial decision (here AGD ) is to be retroactively applied. In the alternative, Tennessee argued that the Commission misapplied Chevron Oil in the Second Order. 18 The Commission granted Tennessee's motion for rehearing in part, changed its direction once again, and vacated National's CD reduction. Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol (In re: Tennessee Gas Pipeline Company), 64 FERC p 61,119 at 61,119 (1993) (Third Order ). With respect to Tennessee's argument that the Supreme Court had effectively overruled Chevron Oil, the Commission thought it was unclear whether Beam and its progeny apply to an agency adjudication. Id. at 61,944. The Commission found it unnecessary to provide a definitive answer to that question, however, because retroactive vacatur of National's CD reduction was proper regardless whether Beam or Chevron Oil was applied. 19 The Commission reasoned that even under Beam et al., Chevron Oil would have a role to play in its analysis. For although the Commission understood the more recent cases to require that a judicial decision be applied retroactively, it also understood them to allow for consideration of individual equities when deciding remedial issues in particular cases, Third Order at 61,945, citing Beam, 501 U.S. at 544, 111 S.Ct. at 2448 (Souter, J., joined by Stevens, J., announcing the judgment of the Court). 20 The Commission then took a fresh look at its Chevron Oil analysis. As to the first element, the Commission reaffirmed its decision that AGD established a new rule of law, Third Order at 61,946. As to the second element, the Commission determined that the retroactive vacatur of National Fuel's CD reduction will neither further nor retard the purposes underlying [AGD ] and Order No. 436. Id. Finally, as to the equities implicated by the retroactive vacatur of National's CD reduction, the Commission found (at 61,950) that: 21 (1) National Fuel did not rely to its detriment on the CD reduction provision by incurring alternative firm gas supply obligations; (2) National Fuel did not rely on the CD reduction option to enter into ... agreements to purchas[e] interruptible transportation service from Tennessee; and (3) National Fuel did not rely to its detriment by opting to reduce its CD, and in so doing, by losing the opportunity to convert its CD. 22 and concluded (at 61,945) that: 23 [B]alancing of the equities, whether undertaken at the remedial stage under the Beam and Harper principles of retroactivity or at the initial choice-of-law level under the third prong of the Chevron Oil analysis ... dictates that Tennessee be afforded the same remedy that it would have obtained had National Fuel not been permitted to reduce its CD from the beginning, i.e., payment to it by National Fuel of the full demand charges associated with its CD reduction.