Opinion ID: 513412
Heading Depth: 2
Heading Rank: 1

Heading: The Effect of the Commission's Action

Text: 47 Our review of the FERC's action is limited. The Commission has broad discretion in exercising its authority under the Natural Gas Act, see 15 U.S.C.A. Sec. 717o (1976), and a reviewing court must not substitute its judgment for that of the agency. Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2866, 77 L.Ed.2d 443 (1983). The Commission's action must be sustained unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C.A. Sec. 706(2)(A) (1977). 7 48 The FERC's authority in this case arose at the outset under Sec. 4, triggered by Tennessee's first filing of its proposal to offer interruptible transportation to GS customers at the GS-IT rate. Thus Tennessee bore the burden of proving that its proposal was just and reasonable, a burden that the Commission found in its first order Tennessee had not met. This element of the Commission's action in the first order is by itself sustainable. The rate clearly was defective in failing to comply with the technical requirements unambiguously set out by regulation 8 ; moreover, although the first order does not itself demonstrate that the rate was discriminatory by virtue of the method of mileage calculation, 9 in light of the Commission's elaboration of its argument in the rehearing order, the finding of discrimination in the rate is also supported by substantial evidence. 49 Our scrutiny of the Commission's action in this first order must focus on what the Commission did after it had reached this determination that Tennessee's proposal was unlawful. Decoupling the modification of the GS sales rate schedule to allow GS customers to purchase gas from alternative suppliers pursuant to the Seller's Rate Schedule[ ] ... IT from the modification of the proposed Rate Schedule IT, the Commission accepted the former while rejecting the latter. 50 This characterization of the Commission's action as acceptance and rejection of pipeline-proposed rates, however, is misleading. Ordinarily in Sec. 4 cases, only accepted provisions alter the status quo because rejection of a proposed change in a rate leaves existing filed rates in effect. In the ordinary course of events, this ensures that all rates that are ultimately in effect have been found to be just and reasonable: accepted rates have been proved by the pipeline to be lawful; rejected rates leave intact existing rates previously found to be lawful either in a Sec. 4 filing or a Sec. 5 Commission-initiated review. 51 Here, however, the rejected provision altered the status quo. Rejection of the modification to the IT schedule, together with acceptance of the modification to the GS sales schedule constituted imposition of a rate: the regular IT rate for GS interruptible transportation. The subtlety of this rate imposition arises from the fact that Tennessee styled the GS-IT rate as an exception to a schedule otherwise written in universal terms. Had the rate schedule in fact listed each class of customer particularly, identifying the rate at which IT services would be provided by class, then rejection of Tennessee's proposed modification to the IT schedule would have resulted in the maintenance of the pre-filing status quo: the absence of an IT rate for GS customers. Making IT transportation available to GS customers in this context would have required the Commission to take the more visible action of adding the GS customers to the IT schedule and specifying a rate for this class. While less obvious, the Commission's action in this case essentially did just this. Prior to Tennessee's filing, there was no IT rate for GS customers on file; rejection of the proposed GS-IT rate for the new GS interruptible transportation service did not leave the status quo in place. Accomplishing that end would have required a remedy fashioned in a different manner: rejection of both the proposed revision to the full requirements provision and the GS exception in the IT rate schedule. The effect of the Commission's action, decoupling these proposals and accepting one while rejecting the other, was to impose a rate of its choosing for GS interruptible transportation. 52