Court Opinion

ID: 9484448
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:53:58.465176+00
Date Added: 2024-06-11T17:50:15.285189
License: Public Domain

SENTELLE, Circuit Judge,
concurring:
While I am in general agreement with the majority’s reasoning and result, I do not share its conclusion that FERC applied the correct standard in approving the contested settlement. Commission Rule 602,18 C.F.R. § 385.602 (1991), provides, in pertinent part, that “[a]n uncontested offer of settlement may be approved by the Commission upon a finding that the settlement appears to be fair and reasonable and in the public interest.” 18 C.F.R. § 385.602(g)(3) (1991). Also, in partially contested settlements, if the uncontested and contested issues are severable, “the uncontested portions may be severed and decided” as an uncontested settlement. 18 C.F.R. § 385.602(h)( 1)(iii).
As to contested settlements, such as the United settlement, FERC “may decide the merits of the contested settlement issues, if the record contains substantial evidence upon which to base a reasoned decision or the Commission determines there is no genuine issue of material fact.” 18 C.F.R. § 385.-602(h)(l)(i). However:
If the Commission finds that the record lacks substantial evidence or that the contested issues can not be severed from the offer of settlement, the Commission will:
(A) Establish procedures for the purpose of receiving additional evidence before a presiding officer ...; or
(B) Take other action which the Commission determines to be appropriate.
18 C.F.R. § 385.602(h)(l)(ii).
Laclede’s argument that in approving the contested United settlement FERC erroneously applied the “fair and reasonable” standard that governs uncontested settlements appears correct to me. FERC’s order denying rehearing recognized that “Laclede is correct that a finding that the settlement appears to be ‘fair and reasonable’ is a requirement ... for approving an uncontested settlement, but is not applicable to contested settlements.” United Gas Pipe Line Co., 57 Fed.Energy Reg.Comm’n Rep. (CCH) ¶ 61,-161, at 61,583 (1991). Nonetheless, FERC ruled (and argues on appeal) that in reviewing a contested settlement under Rule 602(h), the issue presented is “whether, under all of the circumstances, the remedy proposed in the settlement offer was reasonable and appropriate,” an issue which FERC views as “not a factual issue, but matter of policy or judgment.” Id.
Mindful that we must give an agency’s interpretation of its own regulation “controlling weight” unless it is “plainly erroneous or inconsistent with the regulation,” Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed. 1700 (1945); see also TransCanada Pipelines Ltd. v. FERC, 878 F.2d 401, 411 (D.C.Cir.1989) (same), I would nonetheless reject FERC’s interpretation of Rule 602(h). First, I cannot accept FERC’s contention that whether a contested settlement should be approved presents only a policy matter for FERC’s determination. Quite plainly, such a settlement presents FERC with, in the language of Rule 602(h), a question of “evidence” or “fact” — whether it appears, by substantial evidence in the rec*949ord, that approving the settlement proposal will establish just and reasonable rates. See Mobil Oil Corp. v. FPC, 417 U.S. 283, 313, 94 S.Ct. 2328, 2348 (1974). That is why, for example, Rule 602(h) commands FERC to rule on contested settlements on the basis of “substantial evidence,” except where “there is no genuine issue of material fact,” 18 C.F.R. § 385.602(h)(l)(i), and, inter alia, to “[establish procedures for the purpose of receiving additional evidence ... upon which a decision on the contested issues may reasonably be based.” 18 C.F.R. § 385.-602(h)(l)(ii)(A). Thus, FERC’s interpretation of Rule 602(h) to present only policy issues in reviewing contested settlements is contrary to the plain meaning of the rule.
Moreover, I fail to see how FERC’s suggested “reasonable and appropriate” standard differs substantively from the “fair and reasonable” standard governing uncontested settlements. Both standards suggest that FERC will only cursorily review the reasonableness of proposed settlements; indeed, the fact that FERC concluded, in scarcely more than one page of analysis, that the United settlement was “reasonable and appropriate” highlights the superficial nature of FERC’s scrutiny of the settlement. See United Gas Pipe Line Co., 57 Fed.Energy Reg.Comm’n Rep. (CCH) at 61,583. While such limited scrutiny is appropriate when the settlement is uncontested, the presence of a challenge to the settlement “triggers the Commission’s obligation, under § 7 of the NGA and § 385.602(h)(1 )(i) of its rules, to examine the potential impact of the [settlement] upon the[ ] [challenger’s] interests and to support its conclusions with substantial evidence.” Tejas Power Corp. v. FERC, 908 F.2d 998, 1003 (D.C.Cir.1990); see also id. (holding that Rule 602 “provide[s] that [FERC] may approve a contested settlement ... only if ‘the record contains substantial evidence upon which to base a reasoned decision or the Commission determines there is no genuine issue of material fact’ ”) (quoting 18 C.F.R. § 385.602(h)(l)(i)). In view of Te-jas Power, I would hold that FERC’s interpretation of Rule 602(h) is plainly erroneous and inconsistent with the language of the rule.