Opinion ID: 457816
Heading Depth: 2
Heading Rank: 3

Heading: Construction of the Refund Date

Text: 39 The Commission's reasoning was at its most mercurial in the selection of a refund date. The three opinions specified three different dates: April 24, 16 June 30, and May 31. FERC's final choice of a refund date was, however, a product of reasoned decisionmaking, not an unprincipled about-face to reach a predetermined result. See Consolidated Brief at 17. As FERC correctly points out, a number of different dates could have been selected by the Commission, all subject to some weaknesses. There is no clearly correct date upon which the LNG companies should have invoked their minimum bill provisions. FERC Brief at 32. The Supreme Court has acknowledged that such a problem can occur and held that the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence. Consolo v. Federal Maritime Commission, 383 U.S. 607, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131 (1966) (citations omitted). We find the choice of May 31 as the date on which the minimum bill should have been invoked to be supported by substantial evidence. 40 The May 31 refund date is based on two conclusions. The first is that April 1 was the date on which the LNG companies recognized the supply cessation by reducing their delivery volumes substantially. Op. 202-B at 61,099. The second is that the LNG companies would need a six to eight week period to plan and implement shutdown procedures and deplete the remaining LNG entirely. Id. 41 The April 1 date is consistent with the Commission's interpretation of the minimum bill provision and is based on substantial evidence in the record. The LNG companies argue that the April 1 date is an unreasonable benchmark because it is based on an implicit finding by FERC that the decision to husband the LNG as of that date was not prudent. Such a finding, they argue, is not reasonable or based on substantial evidence because as of April 1 the last shipment of LNG had not yet arrived and United States-Algerian negotiations had not yet begun. FERC, however, explicitly disavowed reliance on whether or when the LNG companies knew that the embargo would continue indefinitely. Op. 202-B at 61,097. FERC's decision to focus on decreases in deliveries after which normal deliveries would not resume in fairly short order was designed to exclude variations in deliveries lasting only a few days, Op. 202-B at 61,098, not to re-introduce the issue of the companies' subjective expectations as to the length of the service disruption. The April 1 date was chosen because it marked the point at which the companies' actions created a significant drop in deliveries such that base load deliveries 'within the broad parameters of historic deliveries'  were no longer being made. Id. at 61,098-99. The record supports the finding that April 1 was the beginning of the husbanding program, J.A. at 103-04, and therefore the end of base load operation at the Cove Point terminal. 42 FERC found that an eight week period following April 1 would have been necessary to allow the LNG companies to develop and implement new technical procedures for emptying and de-cooling the terminal in an orderly, but not unreasonably attenuated, manner. Op. 202-A at 61,169. This finding was based on testimony by a Columbia LNG witness that the earliest date by which all the LNG could have been sent out from the Cove Point terminal was the end of May. Mr. Max Levy, a senior vice president, explained that [w]e had no procedures to rid the offshore piping of LNG. We had never envisioned a need to do that. So we would have had to have developed procedures.... J.A. at 16. Intervenors argue that FERC should not have allowed for this shutdown period because the LNG companies would have had procedures in place if they had acted prudently, in which case deliveries could have continued at the same level and the LNG tanks would have been empty by April 24, as stipulated. J.A. at 61,189. 43 Like Commissioner Richard, we believe that FERC's decision to allow an eight week shutdown period was a close call. Op. 202-A at 61,172 (Comm'r Richard concurring). In reviewing FERC's choice of a refund date, however, we must remember that [b]y giving the agency discretionary power to fashion remedies, Congress places a premium on agency expertise. Consolo, 383 U.S. at 621, 86 S.Ct. at 1027. Our standard of review for FERC's relief orders is highly deferential [because] '[t]he breadth of agency discretion is, if anything, at its zenith when the action assailed relates ... to the fashioning of policies, remedies and sanctions.'  Columbia Gas Transmission Corp. v. FERC, 750 F.2d 105, 109 (D.C.Cir.1984) (quoting Niagara Mohawk Power Corp. v. FPC, 379 F.2d 153, 159 (D.C.Cir.1967)). If the Cove Point terminal had been operating as a base load facility, it would not necessarily cease to so operate when the time came to shut down. Had the embargo never occurred, the terminal would have shut down at some point in the future and under a reasonable interpretation of the minimum bill provision the LNG companies could have billed under the cost-of-service tariff until the final day of operation. The intervenors' arguments that the shutdown could have taken place faster had plans been in place goes to the prudence of the LNG companies' actions, an issue we and FERC have found to be irrelevant to the interpretation of the minimum bill. See supra at p. 1547-48. FERC's use of the eight week period is a rational decision based on record evidence and is therefore affirmed. 44 Several parties argue that the minimum bill should have been invoked on April 24, based on the parties' stipulation that the LNG in storage at Cove Point would have been exhausted on April 23 had deliveries continued at the average daily delivery level for March, 1980. J.A. at 61, 189. The calculation in this stipulation, however, is based on a stricter interpretation of the minimum bill than that adopted by FERC because it effectively bars any variations from historical levels. Under FERC's interpretation, the minimum bill is triggered by deliveries falling below the broad parameters of historical deliveries without resuming at normal levels in fairly short order. FERC properly rejected the refund date based on the stipulation and other contrary constructions of the refund date. We affirm the Commission's selection of the May 31 refund date as a rational exercise of its broad remedial powers.