Opinion ID: 186662
Heading Depth: 2
Heading Rank: 3

Heading: The FERC Proceedings

Text: 20 The present controversy began in January 2001, when Big West brought challenges to Frontier's and Anschutz's local tariffs, principally under ICA § 13(1), alleging that both were substantially out of proportion to the individual costs of the respective carriers and thus unreasonable under § 1(5). First 2001 Order, 94 FERC at 62,256-57. Further, Big West challenged the Express joint tariff as unreasonable under § 1(5), First 2001 Order, 94 FERC at 62,259, and included Express as a respondent, solely on the ground that Express (whose local rate the complaint didn't question) was, as a participant in the joint rate, jointly and severally liable for reparations arising from it, id. at 62,257; Big West Oil Co. v. Frontier Pipeline Co., 95 FERC ¶ 61,281, at 61,986, 2001 WL 576471 (2001) ( 2001 Rehearing Order ). 21 On receiving the complaints, FERC reached the conclusion that Big West's evidence, although confined to the local rates of two of the pipelines providing the through service, could without more show the joint rate covering all four pipelines to be unreasonable. In rejecting the carriers' motions to dismiss, FERC acknowledged that Big West failed to contest [i.e., to offer evidence against] the joint tariff rates in their entirety. First 2001 Order, 94 FERC at 62,259. FERC insisted, however, that this was not an obstacle to Big West's challenge to the joint tariffs, since the shipper was disputing [the local] rates because they are used to determine the amount of joint rates. Id. We return later to the question what the phrase used to determine may have meant. If the ALJ found the local rate to be reasonable, FERC ruled, it can be assumed that the subject Express joint rates meet the standard set forth in Texaco,  but if the ALJ found the local rate to be unreasonable, then, the Express joint rates must be recalculated in accordance with Texaco,  First 2001 Order, 94 FERC at 62,260. 22 A month after Big West's complaints, Chevron Products brought essentially identical challenges to the same rates and included the same carriers as respondents. Second 2001 Order, 95 FERC at 61,792-93. Chevron Products' affiliate, Chevron Pipeline, was not a direct participant in the joint rate and was not included as a respondent in either complaint. 23 FERC consolidated Big West's and Chevron Products' complaints for the purpose of settlement procedures and ordered that, should those procedures fail, there would be two ALJ hearings: one for all challenges to Frontier's local tariff and one for all challenges to Anschutz's local tariff. 2001 Rehearing Order, 95 FERC at 61,986; Second 2001 Order, 95 FERC at 61,794. As to the dispute over the joint rates, FERC adopted, for the purpose of all complaints, the same theory that it had originally adopted for Big West's complaints, the only difference being that two local rates rather than one would be at issue. Second 2001 Order, 95 FERC at 61,793-94. 24 Because settlement procedures did not lead to an agreement, ALJ proceedings began; but soon afterward the shippers and Anschutz settled all pending issues, including the unreasonableness of the joint tariff insofar as it concerned Anschutz. The shippers and Frontier also reached a settlement during the ALJ hearing, covering reparations for past movements under the local Frontier tariff and a future reduction in the local and joint tariffs. But as to reparations for shipments under the joint tariffs, Frontier and the complainants agreed only that for the purpose of calculating the reparations, if any,  the just and reasonable rate for Frontier's local tariff for the relevant past period was $0.57 for light petroleum, i.e., the only type of petroleum involved in the disputed shipments. Joint Stipulation of July 18, 2002 at 7 (emphasis added). The $0.57 was much less than the actual local rate charged in the period, which had been about $1.50. 25 In August 2002, Frontier submitted to FERC a compliance filing, arguing that it owed no reparations on the joint tariff. FERC rejected the filing in February 2004, concluding that the Express joint rate was unreasonable to the extent it exceeded the sum of the applicable local rates, including the stipulated $0.57 per barrel for Frontier. Big West Oil Co. v. Frontier Pipeline Co., 106 FERC ¶ 61,171, at P 17, p. 61,571, 2004 WL 318430 (2004) ( Reparations Order ). In other words, it calculated reparations as the difference between (1) the joint rate filed and actually charged and (2) the sum of (a) the stipulated rate for the Frontier segment and (b) the local rates on file for the reparations period for the remaining three segments. Frontier and Express requested rehearing, which FERC denied. Big West Oil Co. v. Frontier Pipeline Co., 108 FERC ¶ 61,183, at PP 8-53, pp. 62,097-62,105, 2004 WL 1784378 (2004) ( Rehearing Order ).