Opinion ID: 184581
Heading Depth: 2
Heading Rank: 2

Heading: FERC's Refusal to Allow Southwest to Use California Interconnection Points as Receipt Points

Text: 29 Southwest contends that it was arbitrary and capricious for the Commission to deny it the use of California interconnection points with El Paso's pipelines as receipt points. Those points were already available to Southwest as delivery points. Had FERC approved Southwest's application, petitioner would have been permitted to deliver gas to its system in southern Nevada by backhaul, which involves the displacement of gas but not physical reversal of a forwardhaul flow of gas. However, FERC rejected the request, concluding that petitioner could use the California Topock delivery points as receipt points only if it paid an additional zonal delivery charge for the displacement service. 64 F.E.R.C. at p 62,830. Southwest contends that FERC's decision denying the use of less costly displacement service to an existing firm customer without payment of higher forwardhaul charges is unreasoned, and therefore arbitrary and capricious. FERC replies that this ruling is a rather straightforward application of the Order No. 636 requirement that the flexibility given firm shippers to choose among specific locations on the transporting pipeline is limited to receipt and delivery points within the path of the shipper's firm service. See Order No. 636-A at 30,582. 30 We agree with FERC. The Commission need not revisit the reasoning of a general order every time it applies it to a specific circumstance. This part of Southwest's petition is no more than an impermissible collateral attack on Order No. 636. Cf. Transwestern Pipeline Co. v. FERC, 988 F.2d 169, 174 (D.C.Cir.1993) (denying challenge to a specific application of a general order). 31 [330 U.S.App.D.C. 244] C. FERC's Requirement of Capacity Release Specification 32 The Commission imposed two conditions on the participation of full requirements customers, such as Southwest, in El Paso's capacity release program. First, it required those customers to limit their capacity releases to a defined level. Second, it required them to designate the amount of capacity they plan to release at each specific delivery point. Southwest attacks these limitations as arbitrary and capricious. The Commission defends them as reasonable measures designed to balance the interests of full requirements and contract demand customers. The Commission's opinion in the administrative proceeding offers a succinct defense of its decision: 33 Assuming that Southwest would otherwise have to designate [contract demands] for its other delivery points that are less than the physical capacity of each point, Southwest could nonetheless tie up 100 percent of the capacity at each point if it retains its full requirements rights at each point. There would be no way for other shippers to acquire any primary rights at any of those points because of Southwest's full requirements rights. It merely would not be able to demand more than its total billing determinant level from all of its delivery points in the aggregate. 34 El Paso Natural Gas Co., 66 F.E.R.C. p 61,183 at 61,381 n. 9 (1994). We find this explanation, taken together with the rest of the Commission opinion, more than adequate to meet the familiar arbitrary and capricious standard of administrative procedure review. See 5 U.S.C. § 706(2). We therefore conclude that we must deny Southwest's petition.