Opinion ID: 365972
Heading Depth: 2
Heading Rank: 2

Heading: The Commission's Justification for Deviating from Just and Reasonable Prices in this Case

Text: 39 The Commission does not disagree, nor could it, with the principle that in-line prices are a tentative and second-best accommodation. It nevertheless maintains that the instant controversy is ungoverned by the general principle. Its reasoning is straightforward and, we think, ultimately wrong: 40 1. At the time of its decisions in 1966 and 1968, the Commission had authority under Sunray DX to require petitioners via a § 7(c) condition to refund amounts collected under temporary certificates in excess of the in-line rates, 57 and 41 2. The decisions of 1966 and 1968 have become final and would not be reopened absent some extraordinary equitable reasons which have not been shown, 58 but3. If the matter were reopened, the order of 3 March was correct anyway, because 42 4. It was unfair to permit producers subject to in-line pricing orders to choose between the in-line price and the just and reasonable price, 59 and 43 5. There was no undue discrimination in denying petitioners the benefit of the just and reasonable price allowed to others, since petitioners had been compensated with the certainty that their liability would at least be bounded by the initial, in-line price. 60 44 Statement (1) is correct, undisputed and without obvious relevance to the instant dispute. Statement (2) was rejected by this court in Blanco I 61 but will be reconsidered insofar as it is relevant to a somewhat more pragmatic version of the finality argument. The only substantive rationales advanced are contained in Statements (3) through (5). 45 First, it is plain that The principal substantive rationale for deviating from just and reasonable prices that no such prices have been ascertained is foreclosed. Although unavailable in 1966 and 1968, by the time disbursement of the refunds was first ordered in 1976, the just and reasonable price had existed for at least eight years. Thus the only arguments available are those which purport to justify locking in an otherwise disfavored price.
46 It was only conclusorily argued, although we think it a more plausible ground than others advanced, that the orders of 1966 and 1968 be left undisturbed in the interest of finality. Of course, in Blanco I we rejected the Commission's finding that it was barred by principles of finality from considering the merits of petitioners' claims. We said there that inasmuch as petitioners' suit was unripe until just and reasonable prices had been fixed, it was timely when brought thereafter. There again being no question raised whether the Commission has the power to modify its prior orders, we inquire whether there are reasons of policy for it not doing so. 47 Finality ordinarily assures regularity of administrative process and avoids unfairness to parties who have relied on a final decision. The fairness problem is not present here in light of the improbability of reliance by consumers on a retroactive refund order. 62 Although there are imaginable circumstances in which the adjustment of a refund liability would threaten serious inconsistency and disruption to a regulatory scheme, we do not think they are present here either. This is not a case in which a producer seeks a retroactive adjustment to a liability already discharged. Petitioners do not suggest, nor could they, that it would not have been permissible to order refunds based on the in-line prices, had the Commission finally disposed of the matter prior to determining the just and reasonable prices. Nor is this a case in which the flow-through of refunds had begun or was imminent at the time adjustment was sought. In such cases principles of finality and repose or simply of administrative regularity might insist that a final refund order be unaffected by a subsequent price determination. However, those arguments simply are unavailable to the Commission on the facts of this case. Here the Commission, for whatever reasons, postponed the disbursement of refunds By all affected producers 63 until eight years after its Opinion No. 595. In these circumstances, no interests associated with notions of finality would be advanced by preserving an otherwise objectionable decision.
48 In its order of 3 March, the Commission justified still using the in-line rates as petitioners' refund floor in part as follows: 49 On further consideration of this situation in our opinion the basis of the refunds should be the in-line rates. It is true that the in-line rates were an interim device pending determination of the just and reasonable rates, but the parties had every right to count on them as a refund floor. Any other result under these conditions would be contrary to Sunray DX. Even where the just and reasonable rate is higher we must properly require the use of the in-line rate because we do not believe it equitable to allow producers to take their choice between the just and reasonable rate and the in-line price depending on which method is to their financial advantage. 64 50 The putative choice which the Commission finds objectionable is the natural consequence of having two independent refund floors. The ordinary and statutorily favored floor is the just and reasonable price. The other is the final initial price factors afforded by Sunray DX. The apparent have it both ways aspect of having two price floors May in fact be regrettable. But it is so only insofar as it permits variation from the just and reasonable price. This was the plain opinion of the Supreme Court in Sunray DX itself. In a passage referred to earlier the Court said:(i)n view of the fact that an initial price and a refund floor might be used to achieve distinct regulatory goals . . . it seems regrettable that the Commission and courts apparently have never entertained the possibility of separating these two aspects of an in-line price in particular cases. 65 51 Had the Commission bifurcated the price ceiling and refund floor functions of the in-line price as suggested in Sunray DX, the apparent unfairness of a double floor might have been eliminated. Conceivably the Commission might have selected a refund floor more likely to approximate the just and reasonable price. Alternatively, it might have imposed a contingent liability to refund down to a later fixed just and reasonable price. Thus the choice which exists arose from the failure of imagination on the part of the Commission in setting the in-line price. 52 Moreover, the Commission's solution to the choice is fairly extraordinary. By insisting that all producers who have used the in-line prices make refunds on this basis, the Commission maximizes the variance away from just and reasonable prices and leaves undisturbed the prices which are most objectionable on statutory grounds the excessive prices allegedly insulated by Sunray DX. Concededly, our holding does contemplate two independent refund floors. But we simply have been told of no reason why petitioners should be compelled to accept less than the ascertained just and reasonable price. The other floor exists, as we have said, for want of more imaginative use of § 7(e) conditions. 66
53 In its brief the Commission argued that its rate orders did not result in Undue discrimination. 67 It correctly supposed that one relevant group to which to compare petitioners were those producers under temporary certificates throughout the period in question. 68 The Commission said: 54 In these cases Petitioners received in-line permanent certificates and refund limits while those who never received the in-line permanent certificates remained under temporary certificates subject to unlimited refunds. At the time Petitioners received their in-line rates, it was possible that these rates would prove to be higher than the later determined (just and reasonable) area rates . . . Thus, Petitioners had the benefit of a rate which might have proven to be higher than the area ceiling rate but yet served as a refund floor below which the Commission could not order refunds. Petitioners, therefore, were able to conduct their affairs with far more certainty than the producer with only a temporary certificate awaiting the determination of the ceiling rate and the possibility of considerable refunds with no refund floor. 55 Therefore, the in-line permanent certificate was a valuable asset when awarded. The fact that that value was diminished somewhat when the area ceiling rates proved to be higher than the in-line rates does not alter the prior value the in-line permanent certificates offered. If the in-line rate had been higher than area ceiling rates, Petitioners surely would not now be before this Court. 69 56 Even were this ingenious argument more persuasive, we would be inclined to resist it, appearing as it does for the first time on judicial review. 70 However, to avoid needlessly prolonging this marathon proceeding, we consider and reject the novel argument. Essentially the Commission portrays its rate orders as the rational and fair outcome of a rough sort of insurance scheme. Thus petitioners (being risk averse, one supposes), were insured against possibly unlimited refund liability through the in-line price refund floor of Sunray DX. Having exchanged an uncertain liability for a fixed liability, petitioners should not be heard to complain (the Commission supposes), that they would have lost less the other way. 57 Although we could imagine cases in which the insurance analogy would be appealing, on the facts of this case it would appear largely fictional. First, petitioners appear to have had little or no choice whether to use in-line prices or to await the setting of just and reasonable prices. The termination of the in-line pricing proceedings was an agency decision made for administrative reasons. Absent some such choice, simply imposing a losing gamble on some producers and not on others would appear arbitrary Per se. Second, the value of the certainty allegedly obtained by petitioners is entirely conjectural, and probably inevitably so. In any case, it is likely that the Commission overstates the risk from which petitioners were relieved. Nothing in the record suggests that the expected just and reasonable price would tend to be lower than the in-line price. In fact, were the Commission's insurance analogy apt, just the contrary would probably be true. Third, no one knew that if the just and reasonable prices were lower than the in-line prices, the in-line prices would provide a Floor for refunds until the Supreme Court decided Sunray DX. Summarizing, we decline to excuse a configuration of prices which are Prima facie discriminatory on the basis of a speculative theory without substantial record support.