Opinion ID: 726048
Heading Depth: 2
Heading Rank: 3

Heading: The Transco-Columbia Settlement

Text: 63 It is hard to believe that having created such a mess the Commission would then disapprove a settlement agreement between two of the feuding parties just because one would have done better by not settling, but that is just what the Commission did. Columbia had agreed, contingent solely upon Commission approval, to accept a refund of $1.3 million and allow Transco to keep the remainder of what it had improperly billed Columbia. Transcontinental, 70 FERC p 61,160 at 61,491-92. The parties had calculated the refund figure based, in part, upon what they thought Transco could have directly billed Columbia in 1985 on a contract-demand basis. Id. Unlike the settlements between Columbia and the other Pipelines, Columbia's settlement with Transco was not conditioned upon Columbia's ability to pass Order No. 94 costs along to its customers. Transcontinental, 71 FERC p 61,108 at 61,357. 64 The Commission declined to approve the settlement solely because--as the agency revealed in rulings it made after Columbia filed the settlement--Columbia would have fared better had it insisted that any attempt to recover the costs at issue through a direct bill would have violated the filed rate doctrine. Id. at 61,357. The Commission did so despite any waiver of the filed rate doctrine which might have resulted from Columbia's agreement to the rejected settlement. Id. That was a startling abuse of the Commission's discretion to reject a settlement proposal. 65 Neither Columbia nor the Commission suggests that Columbia's decision to settle was in any way tainted as by fraud or duress. True, we have held that the Commission should approve an uncontested settlement only upon a finding that the settlement appears to be fair and reasonable and in the public interest. Tejas Power Corp. v. FERC, 908 F.2d 998, 1003 (D.C.Cir.1990). That Columbia would have fared better by fighting than by settling, however, is not a sufficient basis upon which to conclude that approving the settlement would be unfair, unreasonable, or contrary to the public interest. Parties settle in order to avoid the risk that they might do worse by litigating, both because they might lose and because winning might come at a high cost; both parties to a settlement accept the risk that they might have done better by fighting. It is perverse, therefore, to reject a settlement because later developments make one party's decision appear unwise. Rejecting a settlement upon such a flimsy ground only diminishes the incentive of future disputants to settle their cases.