Opinion ID: 527537
Heading Depth: 4
Heading Rank: 1

Heading: December Effective Date

Text: 101 Section 5(a) of the NGA provides that whenever, after a hearing, the Commission finds that a rate is unjust and unreasonable, it shall fix ... by order the rate determined to be just and reasonable. 15 U.S.C. Sec. 717d(a). Construing a Federal Power Act section that contained language virtually identical to that in section 5(a), we held in Electrical District, 774 F.2d at 492-95, that FERC fixes a new rate on the date it approves a gas company's compliance filing that specifies its exact rates--not on the date of an earlier Commission opinion describing the legal and accounting principles to be used in calculating the new rates. 102 Quantum maintains that FERC imposed prospective changes in Panhandle's rate structure after a section 5 ratemaking proceeding (rather than simply approving the pipeline's proposed rates), and thus Electrical District dictates an effective date of December 31, when the Commission accepted Panhandle's new rates filed in compliance with FERC's decision. In Quantum's view, the Commission lacked the statutory authority to prescribe an earlier date. 103 FERC distinguishes Electrical District on the ground that the parties in that case had not executed a settlement agreement that would determine when the agency's orders would take effect. According to the Commission, such an agreement, not Electrical District, controls the effective date issue, as held in Public Service Co. v. FERC, 851 F.2d 1548, 1556-57 (5th Cir.1988). See Opinion No. 265-A, 40 F.E.R.C. at 61,599. 104 Quantum responds that Public Service does not apply for two reasons. First, it contrasts the contract in Public Service--which referred specifically to the date of a FERC order requiring changes in ratemaking methods and principles (i.e., the initial decision), see 851 F.2d at 1556-57--with the Agreement here, which focuses on the Commission order disposing of [the] issues (i.e., the date FERC fixed Panhandle's rates by accepting the compliance filing per section 5). This argument, however, rests on the unfounded assumption that the parties intended the disposing of language to refer to a Commission order approving a compliance filing. 105 Second, Quantum asserts that a settlement document must clearly express the parties' intent to waive their section 5 rights by establishing an exact effective date for ratemaking changes. As the Agreement does not identify which Commission order disposing of [the reserved] issues will provide the effective date, Quantum concludes that the date of FERC's order accepting Panhandle's compliance filing must be used. 106 Quantum, however, provides inadequate support for its theory. The Agreement addressed the effective date precisely because the parties wished to avoid the necessity of an independent Commission decision on this issue, which would have been unpredictable given certain legal uncertainties that existed in the early 1980's. In particular, Panhandle sought assurance that any rate changes resulting from a FERC order would be prospective rather than retroactive, as would ordinarily be the case if the agency found a rate unreasonable. The Commission approved this settlement. Under these circumstances, a reviewing court's role is to determine whether FERC's choice of an August 19 effective date rests on a reasonable construction of the contract, not to discard the Agreement altogether by imposing a December 31 date. 107