Opinion ID: 721438
Heading Depth: 3
Heading Rank: 2

Heading: Gas producers' exemption from GSR costs

Text: 283 In the Order No. 636 series proceedings, petitioners presented several alternative [319 U.S.App.D.C. 121] solutions to the transition cost problems, some of which would have required that FERC abrogate existing contractual obligations between pipelines and gas producers. These alternative solutions would have forced gas producers to bear part of the transition costs. FERC declined to adopt these proposals on the grounds that, among other things, it lacked § 5 authority to abrogate producer-pipeline contracts. Order No. 636-A, p 30,950, at 30,643. The Commission is correct that it lacks such authority. We have already said as much in AGA II, 912 F.2d at 1505, where we concluded that Congress unambiguously restricted FERC's § 5 powers to jurisdictional contracts. And FERC's jurisdiction over wellhead contracts began to decline as soon as Congress eliminated such jurisdiction over new wellhead contracts. See NGPA § 601(a)(1)(A), (B), 15 U.S.C. § 3431(a)(1)(A), (B); Pennzoil Co. v. FERC, 645 F.2d 360, 380 (5th Cir.1981). The PUCs' claims that FERC's authority to regulate pipeline rates for the benefit of consumers gives it implicit authority over nonjurisdictional contracts crumble against the wall of the AGA II holding. 284 The PUCs also argue that, even if AGA II applies, FERC still retained jurisdiction over some old gas contracts when it issued Order No. 636 and that it should have used its § 5 authority to reform those contracts. (In AGA II we recognized that FERC still had jurisdiction over some wellhead contracts, noting that [t]he proportion of wellhead sales that is subject to FERC jurisdiction steadily declines ... as old gas is exhausted. AGA II, 912 F.2d at 1505.) But exercising such jurisdiction would have conflicted with Congress' clear intent that FERC get out of the business of regulating wellhead gas prices, making such an approach a questionable vehicle for addressing the petitioners' concerns. Furthermore, as FERC noted in Order No. 636-A, its jurisdiction over most producer/pipeline supply contracts has already been removed under the NGPA. As of January 1, 1993, there will be no remaining vestiges of such jurisdiction by virtue of the Decontrol Act. Order No. 636-A, p 30,950, at 30,643 n.460. In light of these concerns, it would be unreasonable to conclude that FERC should have reformed any producer-pipeline contracts to force producers to bear part of the GSR costs. We accordingly decline to accept the petitioners' invitation to remand this issue to the Commission. 285