Opinion ID: 394102
Heading Depth: 1
Heading Rank: 3

Heading: october 31st filing

Text: 23 Mississippi Valley makes two arguments challenging the October 31st filing with respect to those parts proposing a phase out of rate zones. First, Mississippi Valley maintains that Stipulation I prohibited Southern from unilaterally filing a proposed change in rate design. Stipulation I reads in pertinent part: 24 The parties submit that all issues and aspects of the cost classification, cost allocation (including zoning) and rate design on the Southern System must be resolved in the public hearings scheduled to commence on November 28, 1978, in Phase I of this (Docket No. RP78-36) proceeding. 25 (R. 1314). Mississippi Valley contends that in Stipulation I, Southern bargained away any right it had under the NGA to file any change in its method of cost classification, allocation, zoning and rate design in any docket other than Docket No. 78-36. In other words, Southern had agreed to adhere to the traditional method of cost allocation and retain the mileage factor in any subsequent rate filing until resolution of the mileage allocation issue in Docket No. 78-36. This claim is analogous to those often made under the Mobile-Sierra 15 doctrine that a contract bars a party from filing unilaterally any change in rates or terms of service. Second, Mississippi Valley contends that the October 31st filing did not comply with § 154 of the Commission's Regulations, 18 C.F.R. § 154, especially § 154.63(f) Statement J, specifying information to be filed when a filing pertains to allocation of cost by service. 16 26
27 The Commission raises the threshold issue of reviewability, maintaining that its order accepting the October 31st filing is not reviewable. Of course, if material issues of fact remained to be resolved, we would not have jurisdiction as there would be no finality. However, Mississippi Valley's arguments raise no factual issues, but rather assert that the Commission should have rejected the October 31st filing as a matter of law. We, therefore, must decide whether we have jurisdiction under § 19(b) of the NGA, 15 U.S.C.A. 717r(b) (West 1976), to review this Commission order denying Mississippi Valley's motion to reject the October 31st filing. Section 19(b) provides in pertinent part: 28 Any party to a proceeding under this chapter aggrieved by an order issued by the Commission in such proceeding may obtain a review of such order in the court of appeals of the United States 29 .... 30 15 U.S.C.A. § 717r(b) (West 1976). Although this statute does not impose a requirement of ripeness on the Commission's orders to establish jurisdiction for judicial review, the courts have long held that orders under this provision must be ripe for judicial review before they will address the merits of any petition. FPC v. Metropolitan Edison Co., 304 U.S. 375, 58 S.Ct. 963, 82 L.Ed. 1408 (1938); Pennzoil Company v. FERC, 645 F.2d 394 (5th Cir. 1981); ECEE, Inc. v. FERC, 611 F.2d 554 (5th Cir. 1980). 31 A determination of ripeness is by no means easy. The Supreme Court in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), held that the issue of ripeness for judicial review requires a court to evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration. 387 U.S. at 149, 87 S.Ct. at 1515. The Supreme Court set out four important factors: (1) whether the issues presented are purely legal; (2) whether the challenged agency action constitutes final agency action within the meaning of § 704 of the Administrative Procedure Act, 5 U.S.C.A. § 704 (West 1977); (3) whether the challenged agency action has or will have a direct and immediate impact upon the petitioner; and (4) whether resolution of the issues will foster, rather than impede, effective enforcement and administration by the agency. Abbott Laboratories v. Gardner, 387 U.S. at 149-54, 87 S.Ct. at 1515-18; Pennzoil Co. v. FERC, supra; ECEE, Inc. v. FERC, supra. 32 To better understand whether these claims made by Mississippi Valley are reviewable, a brief explanation of the procedure for implementing changes in terms and rates on file with the Commission would be helpful. Under the NGA, a gas pipeline subject to the Commission's jurisdiction must adhere to the rates and terms on file. To change these rates and terms, the utility must file a proposed change with the Commission 30 days before the change is to take effect. Section 4(d). The Commission has the authority to reject summarily those filings which are grossly defective in form, or are so patently a nullity as a matter of substantive law, that administrative efficiency and justice are furthered by obviating any docket at the threshold rather than opening a futile docket. Municipal Light Boards v. FPC, 450 F.2d 1341, 1346 (D.C.Cir.1971), cert. denied, 405 U.S. 989, 92 S.Ct. 1251, 31 L.Ed.2d 445 (1972). Once the Commission accepts a filing, it may suspend the proposed change for up to five months, during which time the Commission may conduct hearings to determine whether the proposed change is just and reasonable. If the Commission has not reached such a determination at the end of the suspension period, the proposed change takes effect. If the change is an increase in rates, the Commission may require a refund if the rates are ultimately determined to be excessive. 33 Rejection of a rate filing is clearly a final order. It is conceded by Commission's counsel that rejection of a rate filing is reviewable and this concession is echoed in the case law. Appalachian Power Co. v. FPC, 529 F.2d 342 (D.C.Cir.), cert. denied, 429 U.S. 816, 97 S.Ct. 58, 50 L.Ed.2d 76 (1976). See also FPC v. Texaco, Inc., 377 U.S. 33, 84 S.Ct. 1105, 12 L.Ed.2d 112 (1964); Papago Tribal Utility Authority v. FERC, 628 F.2d 235, 241 n.16 (D.C.Cir.), cert. denied, --- U.S. ----, 101 S.Ct. 784, 66 L.Ed.2d 604 (1980) (Papago II ). However, the determination to accept a rate filing is interlocutory. It merely initiates the proceeding which typically involves an extensive hearing. Acceptance of a rate filing implies nothing concerning the merits of the case. It is only after a hearing that the merits are resolved. Yet, although the Commission's acceptance of the October 31st filing at issue is interlocutory, it may nevertheless be reviewable under the Mobile-Sierra doctrine. 34 The Mobile-Sierra doctrine applies where a contract between parties purports to limit the legality of the filing. See Richmond Power & Light Co. v. FPC, 481 F.2d 490 (D.C.Cir.), cert. denied, 414 U.S. 1068, 94 S.Ct. 578, 38 L.Ed.2d 473 (1973). If a utility has bargained away its right to file unilaterally revised rate schedules, then it may not file a change in rates under § 4 of the NGA. More importantly, the Commission must reject a rate filing made in contravention of such contractual obligations upon timely motion of another party to the contract. The primary rationale for the Mobile-Sierra doctrine is that it enables a purchaser of gas to enter into a fixed-price contract with the assurance that those rates will not change absent a Commission determination under § 5(a) that the contractual rate is unjust or unreasonable. 35 The District of Columbia Circuit has consistently reviewed orders of the Commission accepting a rate change filing despite a Mobile-Sierra objection. Papago Tribal Utility Authority v. FERC, 610 F.2d 914 (D.C.Cir.1979) (Papago I ); Borough of Lansdale, Pa. v. FPC, 494 F.2d 1104 (D.C.Cir.1974); see also, Papago II (dictum). In this circuit, the question of reviewability has not been expressly addressed. 17 Although the District of Columbia's analysis in Papago II on the reviewability of orders accepting filings despite Mobile-Sierra objections is dictum, it is the most thorough exegesis of this question. We have reviewed carefully that reasoning and find it convincing. 36 We agree with the District of Columbia Circuit that four factors, corresponding to the four factors of Abbott Laboratories, 18 point toward the reviewability of a rate filing over an objection based on Mobile-Sierra grounds. First, the issue here is purely legal, involving merely an interpretation of Stipulation I. No factual findings need be made by the Commission to resolve this issue. Second, the Commission's decision on this issue is effectively final at this point. Mississippi Valley's Mobile-Sierra claim will ordinarily not be an issue in the § 4(e) hearings to determine whether Southern's new method of transportation allocation is just and reasonable. Third, the Commission's decision will have a direct and immediate impact upon Mississippi Valley. We indicated in Atlanta Gas Light Co. v. FPC, 476 F.2d 142 (5th Cir. 1973), that an immediate impact meant the order of the Commission must be definitive, that is, that the order must have some substantial effect on the parties which cannot be altered by subsequent administrative action. 476 F.2d at 147. 19 The improper rejection by the Commission of a motion that a filing is barred by Mobile-Sierra denies the movant his valuable bargained-for right to have rates charged at the agreed-upon amount for the contractual period. Moreover, the denial of a claim that a rate change is barred under the Mobile-Sierra doctrine may eliminate the only effective weapon the movant has to attack a filing. This is graphically illustrated in the petitions before us. The Commission has found Southern's proposed change in method of allocation to be just and reasonable in Docket No. ER78-36, a finding we affirm in Part IV of this opinion. There is nothing in the record to indicate that the result with respect to the October 31st filing should be any different. Thus, the Commission's rejection of Mississippi Valley's Mobile-Sierra claim may well end Mississippi Valley's attack on this filing. Fourth, resolution of a claimed Mobile-Sierra bar will foster, rather than impede, effective administration by the agency. The court will decide an issue not ordinarily to be decided again by the agency, and its decision affirming the Commission need not interfere with proceedings before the Commission. A judicial determination that there does exist a Mobile-Sierra bar to a filing, on the other hand, may result in the elimination of unnecessary proceedings before the agency. 37 Applying the four Abbott Laboratories factors, and following the rule of the District of Columbia Circuit, we conclude that Mississippi Valley's Mobile-Sierra claim is reviewable. 38
39 Mississippi Valley's Mobile-Sierra claim is that Article II of Stipulation I prohibited Southern from filing unilaterally any change in its historical rate zones prior to August 1, 1980, except through the Docket No. RP78-36 proceeding. 20 The pertinent part of Article II reads: 40 The parties submit that all issues and aspects of the cost classification, cost allocation (including zoning) and rate design on the Southern System must be resolved in the public hearings scheduled to commence on November 28, 1978, in Phase I of this (Docket No. RP78-36) proceeding. 41 In accepting the October 31st filing, the Commission declared that Stipulation I: 42 (P)rovides only for hearing and resolution of the zoning issues, but does not restrict or preclude Southern from filing rates which reflect its position on such issues, and from collecting such rates, subject to refund, pending resolution of such issues. 43 (R. 1314). We believe the Commission correctly interpreted Stipulation I. 44 The language of the stipulation does not expressly bar rate filings other than that in Docket No. RP78-36. Indeed, Article IV(b) of Stipulation I anticipates the possibility that Southern would make additional rate filings during the locked-in period to be covered by the Stipulation I. 21 Because the parties anticipated future filings, had they meant to preclude Southern from a particular type of filing, i. e., changes in the zoning allocation, Stipulation I should have stated as much in unambiguous terms. This was the issue on which they still disagreed and was so important that had the parties intended to preclude filings reflecting a change in rate design, we think that they would have included such provision in the stipulation. See Louisiana Power & Light Co. v. FERC, 587 F.2d 671, 675 (5th Cir. 1979); Public Service Co. of New Mexico v. FPC, 557 F.2d 227 (10th Cir. 1977). 45 Mississippi Valley perceives in Article VI.D. of Stipulation I an exchange whereby Mississippi Valley gave certain assurances to Southern in exchange for Southern's agreement not to file for changes in its transportation cost allocation. If Southern could not change its transportation cost allocation during the pendency of Docket No. RP78-36, then a Commission decision that zones should be abolished possibly would mean that Southern would have to refund excess payments to some zones, but would be unable to collect undercollections from other zones. In such event, Mississippi Valley would have been a major customer in the undercharged zone. Mississippi Valley interprets this Article VI.D. as constituting a promise by Mississippi Valley to reimburse Southern for any such undercollections, should the Commission ultimately abolish zones in Docket No. RP78-36. Article VI.D. reads: 46 If Southern is required to make interim and/or final refunds prior to the entry of a final and nonappealable order on the Phase I issues in Article II hereof, Southern shall be entitled (1) to offset any excess interim refunds made to any customer against the final refunds if such final refunds are made pursuant to a final non-appealable order and (2) to collect a rate surcharge to recoup any excess refunds not offset in (1) which surcharge shall be collected in a manner agreed upon by the parties to this proceeding or as determined by the Commission. 47 This provision, though, provides not only for surcharge, but also for offset. It is clearly related to Article VI.A.-C. which provided for an interim refund during the locked-in period if certain orders were issued by the Commission. It also provided for final refunds at the end of the locked-in period if certain orders had issued. Article VI.D. is designed to correlate any refund given before final approval of rate design with the ultimate refund or revenues due after final Commission approval of rate design. Moreover, Article VI.D. allows Southern to surcharge and offset only to obtain any excess refund made before final determination of rate design. By its own language, it does not protect Southern from undercollection of revenues in the event the Commission were to order the abolition of zones at the conclusion of Docket No. RP78-36. Thus, Article VI.D. cannot be construed as Mississippi Valley's promise to Southern to protect it from undercollections in exchange for its promise not to file changes in transportation cost allocation during the locked-in period. 48 Finally, although we believe the Stipulation I by its language clearly leaves open the right to Southern to file for rate design change, subject only to the condition that the resolution of the design problem in Docket No. RP78-36 would control that issue in subsequent filings, we are impressed by the fact that the October 31st filing occurred three days before Stipulation I. The absence of any reference in Stipulation I to the October 31st filing is telling. 22 The parties undoubtedly knew of the October 31st filing, but imposed no requirement that it be withdrawn. Had Mississippi Valley wished to terminate that filing, it should have done so in clear, unambiguous language in Stipulation I. 49
50 Mississippi Valley argues that Southern's October 31st filing clearly did not comply with the Commission's regulations pertaining to the information and supporting data to be included in a filing. See 18 C.F.R. § 154.63. Mississippi Valley claims the filing was deficient because the accompanying data included statements by Southern officials indicating their belief that a modified rate zone method of allocating transportation cost was still preferable, despite the October 31st filing's proposal to eliminate zones. Mississippi Valley also claims that data regarding zone allocation or costs required by Statement J of § 154.63(f) of the Commission's regulations was absent. Mississippi Valley therefore claims the filing was patently invalid. 51 The Commission's regulations preserve to the Commission the right to reject filings deficient in form: 52 The Commission reserves the right to reject any material submitted for filing which fails to comply with the requirements set forth in this part. 53 18 C.F.R. § 154.24 (1980). Clearly, summary rejection of a filing is appropriate where the filing is patently ... either deficient in form or a substantive nullity. Municipal Light Boards v. FPC, 450 F.2d at 1345. However, the Commission has been given discretion to relax its filing requirements since its filing rules are designed to give the Commission necessary information to make an informed decision. Id. at 1348; City of Groton v. FERC, 584 F.2d 1067 (D.C.Cir.1978). 54 In American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 90 S.Ct. 1288, 25 L.Ed.2d 547 (1970), competing carriers argued that an application for temporary operating authority with the Interstate Commerce Commission should be denied because the application violated that agency's filing requirements concerning information to be supplied. The Court there stated: 55 We agree with the Commission that the rules were promulgated for the purpose of providing the necessary information for the Commission to reach an informed and equitable decision on temporary authority applications.    The rules were not intended primarily to confer important procedural benefits upon individuals in the face of otherwise unfettered discretion   . Thus there is no reason to exempt this case from the general principle that (i)t is always within the discretion of a court or an administrative agency to relax or modify its procedural rules adopted for the orderly transaction of business before it when in a given case the ends of justice require it. The action of either in such a case is not reviewable except upon a showing of substantial prejudice to the complaining party. NLRB v. Monsanto Chemical Co. (8 Cir.), 205 F.2d 763, 764.    56 397 U.S. at 538-539, 90 S.Ct. at 1292. This understanding of filing requirements has been applied to the Commission. Papago II; Municipal Light Boards v. FPC, supra. 23 Mississippi Valley has made no showing of substantial prejudice resulting from any deviation from the Commission's regulations, assuming such deviation has occurred. The issues are clear to all parties involved and Mississippi Valley has had an opportunity to present its views on the issues in Docket No. RP78-36. Arguably, any harm suffered by Mississippi Valley is less than that suffered by the protesting carriers in American Farm Lines v. Black Ball Freight Service, supra, since in that case the ICC's action authorized the applicant to begin operations, resulting in a real threat of economic loss to the protesting carriers. 57 Accordingly, we find that the Commission has not abused its discretion in dealing with the issues relating to compliance with the Commission's filing requirements, and we reject Mississippi Valley's claim that the filing was patently defective.