Opinion ID: 457816
Heading Depth: 2
Heading Rank: 4

Heading: Authority to Order Refunds

Text: 45 The LNG companies argue that FERC lacked the statutory authority to order the refunds in this case. The companies correctly point out that remedies ordered pursuant to Sec. 4(a) of the Natural Gas Act, 15 U.S.C. Sec. 717c(a) (1982), after a finding that a rate is illegal, can only be prospective. Public Service Co. v. FERC, 600 F.2d 944, 957-58 (D.C.Cir.), cert. denied, 444 U.S. 990, 100 S.Ct. 520, 62 L.Ed.2d 419 (1979). The companies are also correct in noting that they filed no rate increase pursuant to Sec. 4(e), 15 U.S.C. Sec. 717c(e) (1982), which the Commission suspended so it could subsequently order refunds. Neither of these provisions, however, was relied on by the Commission in this case. 17 46 FERC was interpreting a tariff provision imposed to condition a certificate of public convenience and necessity issued pursuant to Sec. 7 of the Natural Gas Act, 15 U.S.C. Sec. 717f(c), (e) (1982), and its refund order was designed to enforce that condition. 18 We hold that FERC has the authority under Sec. 16 of the Natural Gas Act to order retroactive refunds to enforce conditions in certificates. That section gives the Commission authority to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules and regulations as it may find necessary or appropriate to carry out the provisions of this chapter. 15 U.S.C. Sec. 717o (1982). While the proper interpretation of the breadth of FERC's remedial powers under Sec. 16 has been disputed, all of the cases are in agreement that the section, at a minimum, gives the Commission authority to remedy violations of other substantive sections of the Natural Gas Act. 47 This court recently evaluated FERC's remedial authority under the Natural Gas Act and concluded that [t]he principle fairly drawn from prior cases is that the Commission has broad authority to fashion remedies so as to do equity consistent with the public interest. Columbia Gas Transmission Corp. v. FERC, 750 F.2d 105, 109 (D.C.Cir.1984). In construing a provision of the Federal Power Act analagous to Sec. 16, this court has held that such 'necessary or appropriate' provisions ... authorize an agency to use means of regulation not spelled out in detail, provided the agency's action conforms with the purposes and policies of Congress and does not contravene any terms of the Act. Niagara Mohawk Power Corp. v. FPC, 379 F.2d 153, 158 (D.C.Cir.1967). Section 16 is not, however, an unrestricted grant of authority: it merely augment[s] existing powers conferred upon the agency by Congress, [but] do[es] not confer independent authority to act. New England Power Co. v. FPC, 467 F.2d 425, 430-31 (D.C.Cir.1972) (footnote omitted), aff'd, 415 U.S. 345, 94 S.Ct. 1151, 39 L.Ed.2d 383 (1974). Thus, this court has held that the FPC was not authorized by Sec. 16 to alter its procedures for setting rates because that section cannot enlarge the choice of permissible procedures beyond those that may fairly be implied from the substantive sections and the functions there defined. Mobil Oil Corp. v. FPC, 483 F.2d 1238, 1257 (D.C.Cir.1973). 48 Our precedents and those of other circuits have been read inconsistently, however, in previous attempts to define the scope of Commission authority under Sec. 16. While all the cases reach the same conclusion--that Sec. 16 at least gives the Commission remedial authority when it has acted pursuant to other substantive sections of the Natural Gas Act--these courts fail to recognize that consistency. In Mesa Petroleum Co. v. FPC, 441 F.2d 182 (5th Cir.1971), the Fifth Circuit relied heavily on Niagara Mohawk in concluding that Sec. 16 provided enough authority for the Commission to carry out its duties of certification under Sec. 7 and correct a company's failure to comply with the certificate provisions of the Natural Gas Act. Id. at 186-89. The court went further, however, and implied that Sec. 16 created authority even when no other specific section of the Act is involved. Id. at 188. The Third Circuit gave Mesa this broader reading in Gulf Oil Corp. v. FPC, 563 F.2d 588 (3d Cir.1977), cert. denied, 434 U.S. 1062, 98 S.Ct. 1235, 55 L.Ed.2d 762 (1978), found the positions taken by Mesa and Mobil Oil to be irreconcilable, and staked out an intermediate position that Sec. 16 at least gives the Commission power to take reasonable, temporary measures to assure compliance with its orders. Id. at 607-08. The court upheld a retroactive refund order as an efficient, fair, and reasonable exercise of discretion to compel compliance with section 7(c) of the Natural Gas Act. Id. at 607. 49 These cases present no dispute as to FERC's authority under Sec. 16 to act to remedy violations of other substantive provisions of the Natural Gas Act. We therefore find that FERC had the authority in this case, pursuant to sections 7 and 16 of the Natural Gas Act, to order retroactive refunds when a gas company had improperly collected money under a tariff which conditions a certificate of public convenience and necessity.