Court Opinion

ID: 9555277
Source: CourtListenerOpinion
Date Created: 2023-08-11 15:01:00.223108+00
Date Added: 2024-06-11T15:42:08.543415
License: Public Domain

United States Court of Appeals
          FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 29, 2022            Decided August 11, 2023

                         No. 21-1195

                   FAIRLESS ENERGY, LLC,
                        PETITIONER

                               v.

        FEDERAL ENERGY REGULATORY COMMISSION,
                     RESPONDENT

    TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC,
                   INTERVENOR

                  Consolidated with 21-1264

              On Petitions for Review of Orders
        of the Federal Energy Regulatory Commission

     Jeffrey S. Bucholtz argued the cause for petitioner. On the
briefs were Ashley C. Parrish, Zori G. Ferkin, and Christine M.
Carletta.

    Carol J. Banta, Senior Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.
With her on the brief were Matthew R. Christiansen, General
Counsel, and Robert H. Solomon, Solicitor.
                               2
    Matthew J. Binette argued the cause for intervenor. With
him on the brief was Michael J. Thompson.

    Before: CHILDS, Circuit Judge, and ROGERS, Senior
Circuit Judge.

    Opinion for the Court filed by Circuit Judge CHILDS.

     CHILDS, Circuit Judge: Petitioner Fairless Energy, LLC
(Fairless Energy) contends that it pays too much for the
transportation of natural gas to fuel its electric power
generating plant located in Fairless Hills, Pennsylvania (the
Fairless plant). In these consolidated petitions for review of
orders of the Federal Energy Regulatory Commission (the
Commission), Fairless Energy maintains that the Commission
acted arbitrarily and capriciously, and contrary to reasoned
decisionmaking, when it exercised primary jurisdiction over
Fairless Energy’s natural gas transportation rate dispute with
intervenor Transcontinental Gas Pipe Line Company, LLC
(Transco), and determined that the appropriate rate was the
incremental rate for pipeline expansion under Transco’s Tariff.
For the following reasons, the court denies the petitions for
review.

                               I.

                               A.

    The Natural Gas Act of 1938, 15 U.S.C. §§ 717–717z,
“confers upon [the Commission] exclusive jurisdiction over


 Senior Circuit Judge Silberman was a member of the panel before
his death on October 2, 2022. Judges Childs and Rogers have acted
as a quorum in this opinion. See 28 U.S.C. § 46(d).
                                3
the transportation and sale of natural gas in interstate
commerce for resale.” Schneidewind v. ANR Pipeline Co., 485
U.S. 293, 301 (1988) (citation omitted); see also 15 U.S.C.
§ 717c(a). Under the Natural Gas Act, the Commission must
ensure that the rates for the transportation or sale of natural gas
are “just and reasonable.” See 15 U.S.C. § 717c(a). In
requiring a just and reasonable rate, the Commission generally
allows pipelines to offer two rate options: recourse and
negotiated rates. A recourse rate is “a rate ‘based on a
pipeline’s cost of providing service including an opportunity
for the pipeline to earn a reasonable return on its investment’”;
a negotiated rate is a bargained-for amount “which permit[s] a
pipeline to forgo cost-of-service rates with an individual
shipper.” Sierra Club v. FERC, 38 F.4th 220, 229 (D.C. Cir.
2022) (quoting Alts. to Traditional Cost-of-Service Ratemaking
for Nat. Gas Pipelines, 74 FERC ¶ 61,076, 61,224–25 (1996)).

                                B.

     Transco is a natural gas company under the Natural Gas
Act and owns and operates an interstate natural gas
transportation pipeline. Transco’s pipeline starts in southern
Texas and runs along the Gulf of Mexico through Texas,
Louisiana, Mississippi, and Alabama. From Alabama, the
pipeline runs up to the northeast through Georgia, South
Carolina, North Carolina, Virginia, Maryland, Pennsylvania,
and New Jersey, before reaching the system’s terminus in the
New York metropolitan area. The Fairless plant uses natural
gas transported through this interstate pipeline.

    In December 1999, the Commission conditionally
approved Transco’s proposal “to construct and operate 154.3
miles of . . . pipeline loop and replacement facilities and to add
compression . . . on its existing transmission system between
Leidy, Pennsylvania and the New Jersey suburbs of New York
                                   4
City (the MarketLink project).” Indep. Pipeline Co. ANR
Pipeline Co. Nat’l Fuel Gas Supply Corp. Transcon. Gas Pipe
Line Corp., 89 FERC ¶ 61,283, 61,824 (1999) (Indep. Pipeline
Co.). Transco expected the MarketLink project would create
an additional 700,000 dekatherms per day (Dth/d) of capacity
on its pipeline and would be paid for by the MarketLink’s
shippers.1 “Transco state[d] that it w[ould] provide firm
transportation services for its MarketLink shippers” under
Transco’s rate schedule for firm transportation (Rate Schedule
FT).2 Id. ¶ 61,826. Transco provided shippers with “the option
of paying a cost-based, incremental, recourse rate . . . or an
individually negotiated rate for firm service.”3 Id. In April

1
  A dekatherm or decatherm is a unit of energy used in the natural
gas industry that is “equal to one million British Thermal Units, or
over one billion joules.” Myersville Citizens for a Rural Cmty., Inc.
v. FERC, 783 F.3d 1301, 1307 n.2 (D.C. Cir. 2015).
2
   “Under a firm transportation agreement, a pipeline agrees to
transport a fixed amount of the firm shipper’s natural gas on a regular
basis.” Natural Gas Contracts, ¶ 306.006 (1998). “Under an
interruptible transportation agreement, a pipeline commits to
transport the interruptible shipper’s gas only after the pipeline’s firm
transportation obligations are fulfilled.” Id. “Firm transportation is
generally more expensive and more reliable than interruptible
transportation, because a portion of the pipeline’s capacity is
specifically reserved for firm service.” Id. ¶ 306.006A. “A firm
service agreement gives the shipper the greatest assurance that its gas
will actually be transported.” Id.
3
 Pipelines generally have two ways to “allocate the costs associated
with new or expanded facilities . . . .” Consolidated Edison Co. of
N.Y., Inc. v. FERC, 315 F.3d 316, 320 (D.C. Cir. 2003). “The
pipeline may ‘roll in’ these costs, by distributing additional charges
among all customers of the pipeline system.” Id. Alternatively, the
pipeline may charge an incremental rate to the customers who are
                               5
2000, the Commission fully authorized Transco to construct
and operate the MarketLink project.

    A few months later, Transco and Fairless Energy’s
predecessor, Virginia Power Energy Marketing (Virginia
Marketing), reached a ten-year service agreement (No.
1044181) for a transportation contract quantity (TCQ) of
100,000 Dth/d of natural gas at a negotiated rate of $9.125/Dth.
Transco transported the natural gas using MarketLink capacity
from a receipt point at Leidy, Pennsylvania to the Fairless
plant. The Commission later amended its authorization to
allow Transco to construct the MarketLink project in two
phases and acknowledged that it had notice that Virginia
Marketing was a replacement shipper for the MarketLink
project.

     In October 2002, the Commission accepted an amended
10-year service agreement between Transco and Virginia
Marketing for a TCQ of 100,000 Dth/d at a negotiated rate of
$9.125/Dth commencing on November 1, 2002. A few years
later, in 2006, Transco and Virginia Marketing agreed to a
second amendment of their service agreement (No. 1044181)
to reduce the TCQ from Leidy to the Fairless plant from
100,000 Dth/d to 50,000 Dth/d and add 50,000 Dth/d from
Transco’s Station 210 in Mercer County, New Jersey. In
Amended Exhibit C of their 2006 Agreement, Transco and
Virginia Marketing set out a negotiated rate for both pipeline
routes: from Leidy to the Fairless plant, the negotiated rate was
the “Daily Reservation Rate of $0.30 per dt” and, from Station
210 to the Fairless plant, the negotiated rate would be the
“generally applicable Zone 6 to Zone 6 daily reservation and
commodity rates under Rate Schedule FT.” 2006 Serv. Agt.,

solely expected to benefit from the improved facilities. See id.
(citation omitted).
                                6
J.A. 64. Additionally, Transco and Virginia Marketing
extended the duration of their agreement to November 1, 2018.
The Commission received notice of the amendment in
December 2009, and accepted it the following month.

     In October 2013, the Commission granted Virginia
Marketing’s petition for a temporary waiver of pipeline
capacity requirements to reassign its transportation agreements
to facilitate its exit from the natural gas market. Thereafter, on
March 28, 2014, Transco and Virginia Marketing restructured
their one service agreement into three separate service
agreements. As relevant here, Contract Nos. 9154534 and
9154535 each provided for a TCQ of up to 50,000 Dth/day
from Station 210 to the Fairless plant for a term running from
April 1, 2014, until November 1, 2033. However, the two
contracts had different rate terms and daily reservation rates.
Specifically, Contract No. 9154534 contained a negotiated rate
of $0.16/Dth for a period starting on April 1, 2014, and lasting
until November 1, 2018. Contract No. 9154535 contained a
negotiated rate equal to Zone 6 to Zone 6 from April 1, 2014,
through November 1, 2033. The Commission accepted this
restructuring in April 2014.

     In December 2018, the Commission granted a temporary
waiver of transportation capacity release provisions to allow
Virginia Marketing, now Dominion Energy Fuel Services, Inc.,
to transfer, release, and assign its service agreements with
Transco to Dominion Energy Fairless, LLC (Dominion
Fairless). The Commission acknowledged that the agreements
transferred to Dominion Fairless included the two Transco
service agreements (Nos. 9154534, 9154535) to deliver natural
gas to the Fairless plant from Station 210. Additionally, the
Commission observed that the rate in service agreement No.
9154534 would convert from a negotiated rate to a tariff-based
rate effective November 1, 2018.
                               7
     On December 14, 2018, Transco and Dominion Fairless
executed the service agreement at issue here (the 2018
Agreement) for transportation of the 50,000 Dth/d represented
in No. 9154534. Like prior MarketLink agreements involving
Transco, the 2018 Agreement required Dominion Fairless to
compensate Transco for natural gas delivered in accordance
with the applicable rate in Transco’s Tariff, unless the parties
mutually agreed to a negotiated rate, which would need to be
set out in Exhibit C. In Exhibit C, Transco and Dominion
Fairless stated “None” for the “Specification of Negotiated
Rate and Term.” 2018 Serv. Agt., J.A. 81.

     On February 11, 2019, Fairless Energy, Dominion
Fairless’s successor, communicated to Transco that it was
overcharging for natural gas transportation services rendered
starting in December 2018. Fairless Energy asserted that
Transco’s invoices incorrectly quoted a higher billing rate of
$0.25852/Dth, a MarketLink project incremental rate, instead
of $0.13032/dth, the non-incremental rate for transportation
points within Zone 6 under Rate Schedule FT. Although it paid
the full amount invoiced, Fairless Energy requested a refund of
amounts purportedly overpaid to Transco.

     Almost two years later, Fairless Energy filed a petition
against Transco in Harris County, Texas state court for breach
of contract, damages in the amount of its overpayments, and a
declaration of its rights and obligations under the 2018
Agreement. Transco moved to dismiss the Texas state court
action for lack of subject-matter jurisdiction or, alternatively,
to stay the proceeding pending a decision by the Commission
as to the applicable transportation rate. That same day, Transco
sought a declaration from the Commission that the appropriate
transportation rate was the incremental rate for the MarketLink
project under Transco’s Tariff. Transco asserted that its
petition was properly before the Commission because the
                                8
dispute with Fairless Energy was within the Commission’s
“exclusive and primary jurisdiction.” Pet. 1, J.A. 3.

    The Texas state court subsequently denied Transco’s
motion to dismiss or stay the suit and Fairless Energy moved
to intervene and oppose Transco’s petition before the
Commission. On June 30, 2021, the Commission granted
Transco’s petition after concluding that the Commission
should exercise primary jurisdiction over the dispute between
Transco and Fairless Energy.           Order on Petition for
Declaratory Order, 175 FERC ¶ 61,260, 62,505 (2021) (Pet.
Order) (J.A. 136). The Commission determined that the
appropriate rate for transportation of natural gas to the Fairless
plant was the MarketLink project’s incremental rate under
Transco’s Rate Schedule FT. Id. (J.A. 137).

    On August 30, 2021, the Commission denied Fairless
Energy’s request for rehearing by operation of law, see Notice
of Denial of Rehearing by Operation of Law and Providing for
Further Consideration, 176 FERC ¶ 62,100 (2021), though the
Commission went on to issue an order on November 18, 2021,
addressing Fairless Energy’s arguments for rehearing. Order
Addressing Arguments Raised on Rehearing, 177 FERC ¶
61,116 (2021) (Reh’g Order) (J.A. 234–44). Fairless Energy
timely filed petitions for review of the Commission’s orders
dated June 30, August 30, and November 18, 2021.

                              II.

    This court has jurisdiction to review the Commission’s
orders pursuant to 15 U.S.C. § 717r(b). The court reviews the
Commission’s orders under the familiar arbitrary and
capricious standard of the Administrative Procedure Act, 5
U.S.C. § 706(2)(A). See Am. Gas Ass’n v. FERC, 593 F.3d 14,
19 (D.C. Cir. 2010). The court is empowered “to reverse any
                               9
agency action that is ‘arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.’” Hoopa
Valley Tribe v. FERC, 913 F.3d 1099, 1102 (D.C. Cir. 2019)
(citation omitted). However, the court will uphold the
Commission’s determination if it “examine[d] the relevant data
and articulate[d] a satisfactory explanation for its action
including a ‘rational connection between the facts found and
the choice made.’” Motor Vehicle Mfrs. Ass’n of U.S. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156,
168 (1962)). “‘[A]n agency must conform to its prior practice
and decisions or explain the reason for its departure from such
precedent,’ . . . and must provide ‘reasoned analysis indicating
that prior policies and standards are being deliberately
changed, not casually ignored.’” E. Ky. Power Coop., Inc. v.
FERC, 489 F.3d 1299, 1306 (D.C. Cir. 2007) (alteration in
original) (citations omitted).

     “Congress explicitly delegated to [the Commission] broad
powers over ratemaking, including the power to analyze
relevant contracts.” Tarpon Transmission Co. v. FERC, 860
F.2d 439, 441–42 (D.C. Cir. 1988) (citation omitted). “Judicial
scrutiny under the Natural Gas Act is limited to assuring that
the Commission’s decisionmaking is reasoned, principled, and
based upon the record.” Columbia Gas Transmission Corp. v.
FERC, 628 F.2d 578, 593 (D.C. Cir. 1979).

                               A.

     Fairless Energy challenges the Commission’s decision to
exercise primary jurisdiction over “a contract dispute that could
otherwise be subject to the jurisdiction of another forum.”
Pet’r Br. 34 (citation omitted). “The doctrine of primary
jurisdiction . . . is concerned with promoting proper
relationships between the courts and administrative agencies
                                10
charged with particular regulatory duties.” United States v. W.
Pac. R.R. Co., 352 U.S. 59, 63 (1956). “‘Primary jurisdiction’
. . . applies where a claim is originally cognizable in the courts,
and . . . enforcement of the claim requires the resolution of
issues which, under a regulatory scheme, have been placed
within the special competence of an administrative body . . . .”
Id. at 63–64 (citing Gen. Am. Tank Car Corp. v. El Dorado
Terminal Co., 308 U.S. 422, 433 (1940)).

     Although there is not a fixed formula for primary
jurisdiction, the Commission generally considers three factors
in determining whether it should assert primary jurisdiction
over a dispute:

        (1) whether the Commission possesses some
        special expertise which makes the case
        peculiarly appropriate for Commission
        decision; (2) whether there is a need for
        uniformity of interpretation of the type of
        question raised in the dispute; and (3) whether
        the case is important in relation to the regulatory
        responsibilities of the Commission.

Bay Gas Storage Co., Ltd., 131 FERC ¶ 61,034, at P 21(2010)
(citing Ark. La. Gas Co. v. Hall (Arkla), 7 FERC ¶ 61,175,
61,322 (1979)) (the Arkla factors). “Whether to exercise
primary jurisdiction is a matter solely within the Commission’s
discretion.” Id. (citing Portland Gen. Elec. Co., 72 FERC ¶
61,009, 61,021 (1995)).

     Fairless Energy maintains that none of the Arkla factors
are present and, therefore, the Commission did not engage in
reasoned decisionmaking in choosing to exercise primary
jurisdiction over the dispute. The Commission takes a contrary
position urging that all three Arkla factors support its decision
                                 11
to exercise primary jurisdiction over the rate dispute.4 The
court has not previously had an occasion to reverse the
Commission’s decision to exercise primary jurisdiction over a
natural gas transportation rate dispute. After consideration of
the Arkla factors, the court declines to do so in this matter as
well.

                                 1.

     The first Arkla factor considers whether issues require
some special expertise possessed by the Commission. Bay Gas
Storage Co., 131 FERC ¶ 61,034, at P 21. Fairless Energy
contends that “the parties’ dispute does not raise any issue
within the Commission’s special expertise” because
“[d]etermining which rate the parties agreed would apply is a
straightforward question of state contract law that is
appropriately resolved in state court.” Pet’r Br. 34–35.
Fairless Energy supports this argument by pointing to cases
where the Commission declined to exercise primary
jurisdiction over “routine contractual disputes.” Pet’r Br. 37
(citing Hartree Partners, LP v. N. Nat. Gas Co., 176 FERC ¶
61,017 (2021); BG Energy Merchs., LLC v. Crosstex LIG, LLC,

4
  In the November 18, 2021 order, the Commission explained that
“all of the [Arkla] factors do not need to be present and . . . the
Commission has retained jurisdiction even though none of the typical
factors are present if it has reason to do so.” Reh’g Order at P 19 &
n.40 (J.A. 241) (citing Bos. Edison Co. v. Town of Concord, 49
FERC ¶ 61,213, 61,775 (1989) (the Commission “acknowledg[ed]
[that] none of the factors for primary jurisdiction were met but
resolv[ed] [the] case because of language in a prior order suggesting
[the Commission] would consider billing disputes”); El Paso Nat.
Gas Co. v. Kaneb Energy Co., 54 FERC ¶ 61,262, 61,761 (1991) (the
Commission “consider[ed] whether ‘other special circumstances’
were present suggesting [it] should retain jurisdiction after applying
Arkla factors”)).
                                12
136 FERC ¶ 61,098 (2011); Portland Gen. Elec. Co., 72 FERC
¶ 61,009 (1995); Tex. Am. Energy Corp. v. Tenn. Gas Pipeline
Co., 39 FERC ¶ 61,062 (1987); Arkla, 7 FERC ¶ 61,175).

     The Commission provided a reasoned explanation
consistent with its precedents. The Commission rejected
Fairless Energy’s characterization of the dispute as the
construction of contracts governed by state law and noted that
the contract at issue is Transco’s rate schedule FT pro forma
service agreement, which provides that the appropriate rate
from the tariff applies when, as here, there is no negotiated rate.
Pet. Order at P 44 (J.A. 127–28). The “tariff lists at least 32
incremental rates, all under Rate Schedule FT, in addition to a
general, non-incremental rate under Rate Schedule FT.” Id. at
P 45 (J.A. 128). The Commission explained that determining
which of those rates applied necessitated “interpreting
Transco’s tariff and the service agreement to determine the
facilities being used to provide such service and the rate
applicable to such facilities . . . [and] the relevant certificate
orders relating to the facilities used,” and was thus
distinguishable from the contract cases on which Fairless
Energy relied. Id. at P 45 (J.A. 128). The Commission cited
precedent acknowledging its special expertise in these matters
because of the frequency with which the Commission passes
on expansion rates within rate schedules and the need to
interpret tariffs in light of Commission policy. Id. at P 46
(citing United Illuminating Co. v. Dominion Energy Mktg, Inc.,
111 FERC ¶ 61,224, reh’g granted on other grounds, 112
FERC ¶ 61,279 (2005)) (J.A. 128 n.71). Accordingly, the
Commission’s conclusion that the first Arkla factor weighed in
favor of exercising primary jurisdiction was consistent with
reasoned decisionmaking.
                               13
                               2.

     The second Arkla factor considers whether issues require
“uniformity in interpretation.” Bay Gas Storage Co., 131
FERC ¶ 61,034, at P 21. As to this factor, Fairless Energy
posits that the Commission’s justification for uniformity of
interpretation in relation to the 2018 Agreement “unreasonably
overlooks the specific facts of this case.” Pet’r Br. 43. Fairless
Energy further asserts that answering the only question in this
matter, “which rate in the tariff did the parties agree would
apply,” only requires consideration of “Texas state law and . .
. predecessor agreements, capacity releases, and public
filings.” Pet’r Br. 43.

     The Commission explained that resolution of the rate
dispute would not only affect Transco and Fairless Energy but
could also have industry-wide effects. Pet. Order at P 47 (J.A.
129). The Commission acknowledged Fairless Energy’s
argument that the “dispute requires in part an analysis of the
facts and circumstances of the parties’ contracting history” but
explained that there was still a need for “consistent application”
of how tariffs and service agreements are construed in similar
disputes. Id. Indeed, it pointed to other shippers with service
agreements with Transco for expansion projects that would be
impacted by the interpretation. Id. The Commission also
explained that “allowing Fairless [Energy] to pursue a rolled in
rate . . . undermines the Commission’s longstanding policy
requiring incremental pricing on expansion facilities.” Id. at P
48 (J.A. 129). The Commission concluded that the uniformity
factor alone would justify its exercise of primary jurisdiction.
Reh’g Order at P 20 (J.A. 241–42).

     The Commission’s conclusion regarding the second Arkla
factor also was consistent with reasoned decisionmaking. The
Commission’s explanation adequately shows why the
                                  14
interpretation could have industry-wide ramifications,
including for other shippers on the MarketLink project and
shippers on other expansion projects. The Commission also
sufficiently explained why the need for uniformity in this
matter implicated its policy preference for incremental pricing
rather than rolled-in pricing for expansion facilities, as shippers
using expansion facilities might otherwise argue that they too
should be billed at a rolled-in rate. In this regard, the
Commission sufficiently explained why the natural gas
industry at large is served when there is “consistent application
of how tariffs, service agreements, and related Commission
certificate orders are to be construed in disputes like this.” Pet.
Order at P 47 (J.A. 129) (citation omitted).

                                  3.

     The third Arkla factor considers whether issues relate to
the Commission’s “regulatory responsibilities.” Bay Gas
Storage Co., 131 FERC ¶ 61,034, at P 21. Fairless Energy
argues that the Commission’s reliance on United Illuminating
Co. as support for this factor is improper because the disputed
issues here are neither novel nor involve “unfamiliar regulatory
concepts or policy considerations.” Pet’r Br. 45. Fairless
Energy contends that because this matter involves a private
contract where there is no dispute regarding either the justness
or reasonableness of the applicable rates at issue, the case does
not impact the Commission’s regulatory responsibilities under
the third Arkla factor.

     In addressing the third Arkla factor, the Commission
justified its resolution of this rate dispute on the grounds that it
has “an interest in enforcing [natural gas transportation] rates
and ensuring that pipelines can collect Commission-approved
rates to . . . recover the costs of the certified facilities associated
with such rates.” Pet. Order at P 49 (J.A. 130). The
                                15
Commission cited United Illuminating Co. to support its
proposition that a bilateral contract dispute over cost
responsibilities can implicate the Commission’s regulatory
responsibilities and again explained that this dispute implicates
pricing for expansion facilities beyond the parties to the
agreement at issue. Pet. Order at P 50–51 (J.A. 130–31).

     The Commission’s explanation of its consideration of the
third Arkla factor was also consistent with reasoned decision-
making. It explained its regulatory interest in the rate for
expansion services in the absence of a negotiated rate,
especially in light of its policy preference for incremental
pricing. As it did with the other factors, the Commission
emphasized that this was not merely a private contractual
dispute, contrary to Fairless Energy’s assertions and the
precedents relied on by Fairless Energy. The Commission
sufficiently responded to Fairless Energy’s attempts to
distinguish United Illuminating Co., on which the Commission
chiefly relied.

                              *****

     After considering the Commission’s record explanation of
its decision to exercise jurisdiction in light of the Arkla factors,
the Commission’s decision to exercise primary jurisdiction
over the Transco-Fairless Energy transportation rate dispute
was not arbitrary or capricious.

                                B.

     Fairless Energy next contends that even if the exercise of
primary jurisdiction was proper, the Commission declared a
rate without considering either Fairless Energy’s evidence that
it had reached a negotiated rate with Transco or “the history of
the contract and the evidence of the parties’ course of dealing
                                16
leading up to their 2018 Agreement.” Pet’r Br. 31. “Fairless
[Energy]’s position is that the parties agreed to apply the Zone
6 to Zone 6 reservation rate when they negotiated their 2018
Agreement.” Pet’r Br. 47. To support this position, Fairless
Energy points out that the Commission should have considered
the context surrounding the 2018 Agreement to determine
whether there was an ambiguity. “In failing to do so, the
Commission failed to consider important aspects of the
problem because it did not afford the parties the opportunity to
develop and present evidence.” Pet’r Br. 47. As a result of this
failure, Fairless Energy argues that the Commission’s orders
were arbitrary and capricious.

     The Commission maintains that it reasonably made the
rate determination in this matter. First, the Commission
emphasized that the 2018 Agreement unambiguously did not
specify a negotiated rate so extrinsic evidence could not be
used. Reh’g Order at P 21–23 (J.A. 242–43). The Commission
next observed that Fairless Energy cannot dispute that it and its
predecessors received natural gas transportation services to the
Fairless plant by way of the MarketLink project. Pet. Order at
P 58–59 (J.A. 133). The Commission then explained that
because Fairless Energy used MarketLink project services
without a negotiated rate, the applicable rate was the
incremental rate from Transco’s Tariff.

     The Commission’s rationale is supported by the language
of the 2018 Agreement, which: (1) specifies in its title that it is
the “Form of Service Agreement (For Use Under Seller’s Rate
Schedule FT),” J.A. 132 n.86 (citing J.A. 75); (2) states that
Transco’s natural gas transportation services are provided
pursuant to the MarketLink project, J.A. 133 ¶ 60 (citing J.A.
75); and (3) contains the following provision incorporating
Transco’s Tariff and Rate Schedule FT, unless a negotiated rate
is set forth in the 2018 Agreement:
                               17
       Buyer shall pay Seller for natural gas delivered
       to Buyer hereunder in accordance with Seller’s
       Rate Schedule FT and the applicable
       provisions of the General Terms and
       Conditions of Seller’s FERC Gas Tariff as
       filed with the Federal Energy Regulatory
       Commission, and as the same may be legally
       amended or superseded from time to time. Such
       rate schedule and General Terms and
       Conditions are by this reference made a part
       hereof. In the event Buyer and Seller
       mutually agree to a negotiated rate pursuant
       to the provisions in Section 53 of the General
       Terms and Conditions and specified term for
       service hereunder, provisions governing such
       negotiated rate (including surcharges) and
       term shall be set forth on Exhibit C to the
       service agreement.

J.A. 132 n.87 (citing J.A. 76) (emphasis added).

     Considering these provisions, the Commission reasonably
started its evaluation with the 2018 Agreement’s Exhibit C and
determined that it unambiguously “did not establish a
negotiated rate” because it stated “None” in the location for the
specification of a negotiated rate. Reh’g Order at P 23 (J.A.
243). After reaching this decision, the Commission was
appropriately able to decline to consider extrinsic evidence.
See Iberdrola Renewables, Inc. v. FERC, 597 F.3d 1299, 1304
(D.C. Cir. 2010) (“If a contract is not ambiguous, extrinsic
evidence cannot be used as an aid to interpretation,” and, thus,
“if the intent of the parties on the particular issue is clearly
expressed in the document, ‘that is the end of the matter.’”).
Moreover, because the 2018 Agreement did not contain a
negotiated rate, the Commission sufficiently explained that it
                              18
had to discern the applicable rate from Transco’s rate schedule
FT, which was the incremental rate for use of the MarketLink
project because that capacity was used and identified. In the
context of the foregoing, the Commission’s decision to select
the MarketLink project incremental rate is the product of
reasoned decisionmaking.

                            *****
     For the foregoing reasons, Fairless Energy fails to
demonstrate that either the Commission’s exercise of primary
jurisdiction over the Transco-Fairless Energy natural gas
transportation rate dispute or its decision regarding the
appropriate rate was arbitrary and capricious. The court
therefore denies Fairless Energy’s consolidated petitions.

                                                   So ordered.