Opinion ID: 553831
Heading Depth: 2
Heading Rank: 1

Heading: The Commission's Interpretation of the Settlement Agreement.

Text: 12 Transco challenges the Commission's actions on the ground that the fuel retention rate was not properly before the ALJ and the Commission, but was instead resolved in the April, 1984 Settlement Agreement. As discussed supra, the Commission, in reaching its decisions, determined that the Settlement Agreement did not in fact resolve the fuel retention rate, but simply reserved the issue for later hearing and disposition. Thus, Transco is requesting this Court to overturn the Commission's interpretation of a settlement agreement. 13 This Court, however, affords a high degree of deference to the Commission's interpretation of a settlement agreement. In National Fuel Gas Supply Corp. v. FERC, 811 F.2d 1563 (D.C.Cir.), cert. denied, 484 U.S. 869, 108 S.Ct. 200, 98 L.Ed.2d 151 (1987), this Court stated that, despite other circuits' varying treatment of agencies' interpretations of settlement agreements, the correct view requires a court to give deference to an agency's reading of a settlement agreement even where the issue simply involves the proper construction of language. 811 F.2d at 1569. The Court found that this deference arises from Congress's express delegation of adjudicative authority to the agency, a delegation that closely resembles a direct congressional authorization to implement the provisions of a statute through regulations. Id. See also Western Union Telegraph Co. v. FCC, 815 F.2d 1495, 1502 (D.C.Cir.1987) (the law in this circuit requires a reviewing court to defer to an agency's interpretation of a settlement agreement concerning matters within its statutory field of administration). 14 This Court must still determine whether the agency's interpretation reflect[s] reasoned decisionmaking that has adequate support in the record and must include an 'understandable' agency analysis and rationale. Panhandle Eastern Pipe Line Co. v. FERC, 881 F.2d 1101, 1118 (D.C.Cir.1989) (quoting Vermont Dept. of Public Service v. FERC, 817 F.2d 127, 134 (D.C.Cir.1987)). However, if the choice lies between dark grey and light grey, the conclusion of the agency, unmistakably possessed as it is of special expertise, in favor of one or the other will have great weight. National Fuel Gas Supply, 811 F.2d at 1572. 15 Here, Transco relies on three factors that it believes indicate that the Commission's interpretation of the Settlement Agreement is erroneous. First, Transco argues that the Settlement Agreement was comprehensive of all the issues included in RP83-137, and therefore, because the Agreement did not explicitly reserve the fuel retention rate for later hearing, it implicitly resolved the fuel retention rate at the proposed 6.1%. Second, Transco argues that the internal logic of the Settlement Agreement requires that the fuel retention rate be established at 6.1%. As the Settlement Agreement used a throughput rate of 1005 Bcf. to derive its sales and transportation rates, Transco argues that the Agreement implied resolution of the fuel retention rate at 6.1%, the level appropriate to a 1005 Bcf. throughput rate. Moreover, it asserts, using a lower throughput rate to determine the fuel retention rate is unfair to Transco; Transco argues that the high throughput rate in the Settlement Agreement resulted in lower sales and transportation rates to the customer, while the ALJ's use of the lower throughput rate resulted in a lower fuel retention rate, also to the benefit of the customers and to the detriment of Transco. Finally, Transco argues that the conduct of the parties following the Settlement Agreement implied that they believed the fuel retention rate was resolved in the Settlement Agreement. 16 However, as the Commission pointed out in its opinions, none of these factors compel the conclusion that the Settlement Agreement resolved the fuel retention rate. Although Transco claims that the Settlement Agreement comprehends all of the issues in RP83-137, there is no language in the Agreement itself to so indicate that is the case. Compare, e.g., Natural Fuel Gas Supply, 811 F.2d at 1572 (finding settlement to be comprehensive where it expressly stated that it resolved all issues now pending before the Commission in the rate proceeding). Further, while it might appear consistent to use the same throughput rate to calculate both the sales and transportation rates in the Agreement and the fuel retention rate, it is also true that the Settlement explicitly reserved Rate Schedules T-I and T-II, each of which included a fuel retention rate, thus leaving open at least the possibility that the parties contemplated potentially disparate throughput rates being used in establishing these rate schedules. Finally, the conduct of the parties following the Settlement Agreement does not provide any clear indication of their intent. The ALJ found that later attempts by the LDCs to address the issue of fuel retention rates, both through later settlement agreements and individual comments by Philadelphia Gas Works, indicated that the parties did not believe the fuel retention rate to be resolved by the Settlement Agreement. See Order on Initial Decision, 46 F.E.R.C. p 61,227 at 61,684. 17 Essentially, then, the import of the Settlement Agreement toward the fuel retention rate is ambiguous. Thus, we are faced with just such a situation as the Court addressed in National Fuel Gas Supply, in which the choice lies between dark grey and light grey. 811 F.2d at 1572. Consistent with the Court's dictate in that case, we accord great weight to the Commission's interpretation. The Commission has presented rational analysis in support of its decision. We therefore affirm its conclusion that the Settlement Agreement did not resolve the fuel retention rate, and that it was thus properly a subject for the Commission's determination. 18