Opinion ID: 422019
Heading Depth: 2
Heading Rank: 2

Heading: Triton's Refund Duty

Text: 32 The question of whether the Commission actually exercised its authority in Opinions No. 598 and 598-A so as to include Triton in the group of producers who have a duty under those opinions to make refunds for the period from October 1, 1968, to January 1, 1971, obviously turns on an evaluation of the language of those opinions. Ordering paragraph (A) of Opinion 598 sets out the area rates effective in the Southern Louisiana area as of August 1, 1971. 46 F.P.C. at 142-45. No one argues that those rates are applicable to Triton. Instead, the parties' disagreements center on ordering paragraph (B), which states: 33 B. The applicable area rate as defined in ordering paragraph (A) above, shall be effective from and after the effective date of this order and any amount collected in excess thereof on or after that date shall be subject to refund plus interest at 7 percent. 34 Refunds due after the proceedings in Docket No. AR61-2, et al., Docket No. AR69-1, and Docket No. G-13221, et al., all dockets listed in Parts III, IV or V of Appendix B, together with all dockets in Opinion No. 575, issued March 12, 1970, shall be based upon amounts collected by respondent 10 in excess of the following prices: 35 (a) For deliveries prior to January 1, 1965, 20.625 cents per Mcf for onshore gas and 19.625 cents per Mcf for offshore gas. 36 (b) For deliveries from January 1, 1965, to October 1, 1968, 21.25 cents per Mcf for onshore gas and 20.25 cents per Mcf for offshore gas. 37 (c) For deliveries from October 1, 1968, to January 1, 1971, 30.5 percent of the difference between revenues during this period based on rates prior to October 1, 1970, and the revenues resulting during this period through the application of rates established in Opinion Nos. 546 and 546-A, as modified by Opinion No. 567. This percentage factor of 30.5 may be increased as high as 33 percent, in order to bring the refund obligation in this period to within a range of one percent of $150 million dollars. 38 (d) For deliveries on or after January 1, 1971, the base area rates prescribed in (A)(c). 39 Amounts collected by the respondent, even though in excess of the prices in (a) and (b), shall not be subject to refund, to the extent they were collected pursuant to a prior settlement agreement approved by this Commission, or were not in excess of a price set out in a permanent certificate issued by the Commission, or were not in excess of the refund floor provided in an applicable temporary authorization. 40 Id. at 145. 41 There is agreement that, at a minimum, paragraph (B) explains how to calculate refund obligations for four time periods prior to August 1, 1971. The Commission asserts, however, that paragraph (B) also states which parties have refund obligations because it directs that [r]efunds due under various proceedings must be paid by respondents to those proceedings according to the paragraph's refund scheme. Triton's predecessors are listed as respondents in two of those proceedings, Docket No. AR61-2, the proceedings that culminated in Opinion No. 546, and Docket No. AR69-1, the proceedings that the Commission commenced while the courts were reviewing Opinions No. 546 and 546-A, that it ultimately [229 U.S.App.D.C. 428] consolidated with AR61-2, and that resulted in Opinion No. 598. Thus, the Commission concludes, Triton is clearly obligated under the plain language of paragraph (B) to make refunds for the 1968-71 period. 42 In response, Triton advances several theories as to why it is not liable for refunds under paragraph (B). First, it contends, as the district court found, that paragraph (B) does not create a duty to make refunds, but merely sets a basis for determining how much certain producers must pay back to meet refund obligations imposed upon them as a consequence of their participation in the various proceedings listed in the paragraph. The second sentence of paragraph (B), Triton argues, does not state that respondents in any of the various proceedings listed in the sentence must make refunds, but instead simply states that [r]efunds due  under those proceedings shall be based upon a schedule specified in the remainder of paragraph (B). Because it does not owe refunds under any of the listed proceedings (even though it did participate in them), Triton concludes that it has no refund obligations. 43 Second, Triton argues that the district court was correct when it found that it is ordering paragraph (E) of Opinion 598, not paragraph (B), which specifies who is required to make refunds. It does so, Triton asserts, by specifying which producers are required to file refund reports. The relevant part of paragraph (E) reads: 44 By November 1, 1971, refund reports shall be filed with this Commission in triplicate, and one copy served on the buyer, by each producer involved in one or more of the proceedings set out in Appendix B [of Opinions No. 598 and 598-A] and as to which refunds are required under the terms of this decision. 45 46 F.P.C. at 146-47 (emphasis added). Because, Triton argues, neither it nor its predecessors took part in a proceeding listed in Appendix B, 11 the company is not among those producers specified by paragraph (E) as having refund obligations. 46 Finally, the district court found support for its view that only those producers who previously had been collecting rates subject to a refund contingency could be liable for refunds for the years prior to January 1, 1971, in the final sentence of ordering paragraph (B). It quoted that sentence as stating that amounts collected by a respondent 'shall not be subject to a refund, to the extent that they ... were not in excess of a price set out in a permanent certificate issued by the Commission....'  J.A. at 150. Because Triton was operating pursuant to a permanent unconditioned certificate, the court concluded, it is exempted from the paragraph's coverage by that paragraph's own language. 47 None of these arguments convinces us that Triton is not covered by ordering paragraph (B). First, we note, as does the Commission, that the second sentence of paragraph (B) lists several proceedings under which refunds might be due. One of those proceedings is Docket No. AR61-2, the docket that culminated in Opinion No. 546, in which all producers of natural gas in the Southern Louisiana area were respondents. Triton, through its predecessors, was, as it concedes, a respondent in Docket No. AR61-2. As we pointed out above, all producers who were respondents in AR61-2, including Triton's predecessors, were on notice after the issuance of Opinion No. 546 that they might have to refund monies received after October 1, 1968, if they charged rates higher than those listed in that opinion. It does not seem unreasonable to us that the Commission could consider those refunds as refunds due under the proceedings [229 U.S.App.D.C. 429] in Docket No. AR61-2 for the purposes of paragraph (B). 12 48 Second, after examining the language of ordering paragraph (E) and Appendix B to Opinions No. 598 and 598-A, we disagree with Triton's arguments that (1) paragraph (B) only sets forth the basis for calculating refunds, while paragraph (E) specifies who is actually required to make refunds; (2) the two paragraphs do not encompass the same proceedings; and (3) neither it nor its predecessors took part in any proceedings listed in Appendix B. Paragraph (E) is clearly entitled Refund Reports and merely identifies those producers who have to file refund reports with the Commission as required by the terms of this decision. It is our interpretation, as well as the Commission's, that ordering paragraph (B) and Appendix B of Opinions No. 598 and 598-A refer to the same proceedings. Appendix B is not limited to the dockets consolidating filings for rate increases under § 4(e) with the main proceedings. On the contrary, Part I of the Appendix B lists the respondents in the main Southern Louisiana area rate proceedings. 46 F.P.C. at 165-68. Nothing in the language of paragraph (E) excludes these area rate proceedings from the paragraph's operation or limits its scope to the dockets listed in Parts III-V. 13 Two of Triton's predecessors-in-interest, 14 Landa Oil Company and Magna Oil Corporation, are set out in Part I as respondents in the main proceedings. Id. at 167. Triton is therefore clearly a producer involved in one or more of the proceedings set out in Appendix B. Thus, even if ordering paragraph (E) rather than paragraph (B) determined which producers have refund obligations, Triton would still be included. 49 Third, we do not agree with the district court that the final sentence of ordering paragraph (B) exempts Triton from any refund obligations. A close examination of the entire sentence reveals that it is intended to ensure that producers operating pursuant to permanent certificates could not be held liable for refunds prior to 1968, not to exempt such producers from all refund duties. Without the ellipses in the district court's quotation, the sentence states that [a]mounts collected by the respondent, even though in excess of the prices in (a) and (b), shall not be subject to refund, to the extent they were collected pursuant to a prior settlement agreement approved by this Commission, or were not in excess of a price set out in a permanent certificate issued by the Commission, or were not in excess of the refund floor provided in an applicable temporary authorization. 46 F.P.C. at 145 (emphasis added). We read this sentence to mean that if a producer had [229 U.S.App.D.C. 430] been charging rates pursuant to a permanent certificate prior to 1968, as Triton had, it did not have to refund payments collected under rates in excess of those listed in subparagraphs (a) and (b). Since those two subparagraphs set rates (and thus refund obligations) for the years prior to 1965 and for January 1, 1965, to October 1, 1968, Triton owes no refunds for those periods. The sentence does not apply to obligations for the years after October 1, 1968, the time periods described in subparagraphs (c) and (d), and does not exempt respondents who were collecting rates subject to permanent authorization from the refund obligations set out in those latter two subparagraphs. In sum, the sentence limits Triton's refund obligations to the time periods covered by subparagraphs (c) and (d), an outcome in line with the obligations imposed by Opinions No. 546 and 546-A. 50 Finally, our interpretation is supported by a Commission order issued sixteen months after the effective date of Opinion No. 598. Area Rate Proceeding ..., 48 F.P.C. 980 (1972). In this order, the Commission explicitly interpreted Opinion No. 598 to require refunds for the period from October 1, 1968, to January 1, 1971, whatever the nature of the certificate under which a producer was collecting its charges: 51 Refunds, with interest, should be computed for the October 1, 1968, through the December 31, 1970, period ..., even if the rate in question was collected pursuant to a prior settlement agreement, a permanent certificate, or a temporary certificate containing a refund floor above the applicable Opinion No. 546 rate. The last paragraph in Ordering Paragraph (B) of Opinion No. 598, 46 FPC at 145, has no applicability to deliveries made on or after October 1, 1968, and thus producers in the above situations are not relieved of refund obligations for the period commencing October 1, 1968. 52 Id. at 982. While it is true, as Triton points out, that this subsequent order is not itself determinative of the proper interpretation to be given to Opinion No. 598, it does carry some weight. Issued shortly after Opinions No. 598 and 598-A, it affords a reasonably contemporaneous view of what the Commission actually intended to accomplish in those opinions. Certainly, we are entitled to give deference to an agency's construction of its own opinions and orders--especially in the complex area of ratemaking. See, e.g., Florida East Coast Railway Co. v. United States, 259 F.Supp. 993, 997 (M.D.Fla.1966), aff'd per curiam, 386 U.S. 544, 87 S.Ct. 1299, 18 L.Ed.2d 285 (1967). We do so here and conclude that Triton is subject to the refund obligations of subparagraph (c) of paragraph (B) of Opinion 598.