Court Opinion

ID: 185304
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:30:23+00
Date Added: 2024-06-11T17:26:14.744845
License: Public Domain

234 F.3d 1286 (D.C. Cir. 2000)
Tesoro Alaska Petroleum Company, Petitionerv.Federal Energy Regulatory Commission and United States of America, RespondentsWilliams Alaska Petroleum Inc., et al., Intervenors
No. 99-1223,99-1224, 99-1239 and 99-1250
United States Court of Appeals  FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 16, 2000Decided December 19, 2000

On Petitions for Review of Orders of the Federal Energy Regulatory Commission
Virginia A. Seitz and Robert H. Benna argued the causes  for petitioners Exxon Company, U.S.A. and Tesoro Alaska  Petroleum Company.  With them on the briefs were Eugene  R. Elrod, Steven S. Hill and Jeffrey G. DiSciullo.
Andrew K. Soto, Attorney, Federal Energy Regulatory  Commission, argued the cause for respondents.  With him on  the brief were John H. Conway, Acting Solicitor at the time  the brief was filed, Timm L. Abendroth, Attorney, Joel I.  Klein, Assistant Attorney General, John J. Powers, III and  Robert J. Wiggers, Attorneys.  Jay L. Witkin, Solicitor, and  Susan J. Court, Special Counsel, Federal Energy Regulatory  Commission, entered appearances.
John A. Donovan argued the cause for intervenors BP  Exploration (Alaska), Inc. et al.  With him on the brief were  Matthew W.S. Estes, Bradford G. Keithley, Charles William  Burton, Jason F. Leif, Richard Curtin, Randolph L. Jones,  Jr.  John W. Griggs and W. Stephen Smith.  Dean H. Lefler  entered an appearance.
Albert S. Tabor, Jr., John E. Kennedy and S. Scott Gaille  were on the brief for intervenors TAPS Carriers.  Alex A.  Goldberg entered an appearance.
Before:  Williams, Randolph and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Williams.
Stephen F. Williams, Circuit Judge:

1
The Trans Alaska Pipeline System ("TAPS") is a 48-inch diameter pipeline carrying crude  oil from Alaska's North Slope approximately 800 miles south  to Valdez, Alaska.  Each shipper delivers its own crude oil to  the pipeline, in which the oils are commingled;  at the terminus the shipper takes delivery of a proportional share of the  common stream.  The crude oils delivered initially differ from  each other in various characteristics that affect market value. Because of the commingling, a shipper will not in all likelihood receive the same quality of oil at Valdez that it delivered  to the pipeline.  Without some adjustment, the ones delivering relatively higher-value crudes would unfairly lose, and the  ones delivering lower-value crudes would unfairly gain.  The parties here battle over the formula governing the adjustment, which the Federal Energy Regulatory Commission  controls in the exercise of its authority to regulate interstate  oil pipeline rates.1

2
Exxon Company, U.S.A.2 and Tesoro Alaska Petroleum  Company filed complaints with the Federal Energy Regulatory Commission assailing aspects of the prevailing formula. Exxon challenges the formula itself, a so-called "distillation"  methodology that the Commission adopted in 1993 and later  modified in 1997;  Tesoro contests the specific valuation of  two "cuts" of petroleum, West Coast naphtha and West Coast  vacuum gas oil ("VGO").  A rate order must be modified  where "new evidence warrants the change."  Tagg Bros. &  Moorhead v. United States, 280 U.S. 420, 445 (1930).  Both  Exxon and Tesoro appear to have offered evidence that is  new in relation to what was before the Commission in its  earlier determinations and sufficiently compelling to require  reconsideration of the earlier resolution.  We therefore reverse and remand the case for the Commission to reconsider  the adoption of the distillation methodology and the pricing of  West Coast naphtha and West Coast VGO, or to provide a  suitable explanation for why it should not.

3
*  *  *

4
In 1984 the Commission approved a settlement agreement  establishing a "Quality Bank" to make the required adjustments between shippers.  See Trans Alaska Pipeline System, 29 FERC p 61,123 (1984).3  The Quality Bank initially  used a so-called "gravity" method.  As the term gravity is  used here, it is a measure of density established by the  American Petroleum Institute ("API").  In contrast to "specific gravity", a higher API gravity represents a less dense  crude oil or petroleum product.  See Exxon Co., U.S.A. v.  FERC, 182 F.3d 30, 35 n.1 (D.C. Cir. 1999).  Because crude  oil was generally more valuable to the extent that it was  "higher"-gravity, i.e., lighter, the Quality Bank initially valued  crude oils according to their gravity.

5
Starting in 1987, the amount of natural gas liquids  ("NGLs") in the stream increased, changing the picture--or  at least the perception.  Two factors contributed to this  increase.  First, natural gas operations expanded in Prudhoe  Bay, resulting in sharply increased deliveries of NGLs at the  head of the pipeline.  OXY USA, Inc. v. FERC, 64 F.3d 679,  691 (D.C. Cir. 1995);  see also Exxon Co., U.S.A. v. Amerada  Hess Pipeline Corp., 87 FERC p 61,133 at 61,521 (1999)  ("Exxon Decision").  Second, expansion of one refinery and  construction of another along the route led to an increase in  removal of valuable mid-weight petroleum products from the  stream, apparently leaving a higher proportion of the lighter  NGLs in the petroleum at the end of the pipeline.  OXY, 64 F.3d at 691;  see also 57 FERC p 63,010, at 65,053 (1991). NGLs have a much higher API gravity relative to other  petroleum components, but critics of the gravity method  argue that NGLs reduce rather than raise the value of the  common stream.  See OXY, 64 F.3d at 686.

6
Responding to the resulting complaints under § 13(2) of  the Interstate Commerce Act, the Commission in 1989 started  to investigate the gravity method.  It found that the method  was no longer just and reasonable and, in approving a contested settlement in 1993, adopted the distillation method. See 65 FERC p 61,277 (1993) ("Distillation Decision"), order  on reh'g, 66 FERC p 61,188 (1994), further order on reh'g, 67  FERC p 61,175 (1994).  This latest method recognizes eight  "cuts" of petroleum products (propane, isobutane, normal  butane, natural gasoline, naphtha, distillate, VGO and resid)  in each stream entering TAPS, ranked by their boiling points. The cuts are individually priced.  Each shipper's delivery is  categorized under this system and valued in accordance with  the volume-weighted price of its component cuts.  Because  Alaskan North Slope ("ANS") oil is sold in both the Gulf  Coast and West Coast markets, each cut is assigned Gulf  Coast and West Coast prices.  Distillation Decision, 65  FERC at 62,290.

7
For some cuts there were acceptable indicators of market  value from the Oil Price Information Service ("OPIS") or  Platt's Oilgram.  No such markers were available, however,  for distillate, VGO or resid, or for West Coast naphtha.  For  these cuts the settlement proposed to use prices for kindred  products, adjusted for differences between them and the  actual cuts.  The Commission rejected this approach, saying  that for a system to be non-discriminatory it must use  "market prices, uncomplicated by subjective adjustments." Id. at 62,289.  As part of this "No Adjustment Policy," the  Commission rejected the proposed use of adjusted West  Coast prices to value the West Coast naphtha cut and instead  set a Gulf Coast price for the cut.  On rehearing, it also  ordered the use of Gulf Coast prices for West Coast deliveries  of VGO.  Tesoro Alaska Petroleum Co. v. Amerada Hess  Pipeline Corp., 87 FERC p 61,132 at 61,514 (1999) ("Tesoro  Decision").  In OXY we affirmed the switch from the gravity  to the distillation method but remanded to the Commission its  refusal to adjust the reference prices for the distillate and  resid cuts. 64 F.3d at 701.  In due course the Commission  approved a nine-party settlement on these issues, providing  for some redefinition of cuts and for use (for several of the  cuts) of petroleum product prices adjusted to reflect processing costs.  See 81 FERC p 61,319, at 62,462-65 (1997).  On  review, we rejected the revised valuation of the resid cut and  again remanded.  Exxon, 182 F.3d at 42.

8
In 1996, while the OXY remand was under way, Exxon filed  a complaint against seven TAPS owners pursuant to SS 9,  13(1) and 15(1) of the Interstate Commerce Act, 49 U.S.C.  App. SS 9, 13(1), 15(1) (1988)--leading to the present case. Upholding an ALJ decision, the Commission dismissed the  complaint, holding that Exxon had failed to produce evidence  of changed circumstances to justify re-examination of the  1993 adoption of the distillation method.  Exxon Decision, 87  FERC at 61,527-30.

9
Tesoro participated in the proceedings before the ALJ on  Exxon's complaint, raising issues that the ALJ ultimately  identified as different from Exxon's.  The ALJ's order of  dismissal mooted Tesoro's arguments but noted that Tesoro  was free to file its own complaint.  Exxon Co., U.S.A. v.  Amerada Hess Pipeline Corp., 83 FERC p 63,011, at 65,102 &  n.90 (1998).  It did so in August 1998, attacking the valuation  of the naphtha and VGO cuts.  The Commission dismissed  this, also on a finding of no changed circumstances.  Tesoro  Decision, 87 FERC at 61,517-20.

10
Petitioners argue that because their complaints were disposed of by Motion for Summary Disposition, our review is de  novo.  That would be true if we were reviewing a district  court's equivalent action.  But these dismissals implicate the  Commission's expertise and policy-making authority, compelling deference.  Motor Vehicle Manufacturers Ass'n of the  United States v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43 (1983).  The requisite deferencedoes not, however,  mean passive acceptance of irrational or unexplained decision  making.  Id.;  see also Louisiana Public Service Comm'n v.  FERC, 184 F.3d 892, 895 (D.C. Cir. 1999).  Here we find the  Commission's answers to the evidence unconvincing.

11
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12
In Tagg Bros. & Moorhead v. United States, 280 U.S. 420  (1930), the Supreme Court held that a "rate order is not res  judicata."  Id. at 445.  Specifically, where a party presents "new evidence [that] warrants the change," the regulatory  agency has the power and duty "to institute new proceedings."  Id.  Just as a plaintiff may allege a new cause of  action for every time a conspiracy in restraint of trade  operates against him, see Stanton v. District of Columbia  Court of Appeals, 127 F.3d 72, 78 (D.C. Cir. 1997), so each  new shipment by a carrier gives rise to a new cause of action,  as to which a previous adverse determination is not res  judicata, Interoceanica Corp. v. Sound Pilots, Inc., 107 F.3d 86, 91 (2d Cir. 1997);  Hawaiian Telephone Co. v. Public  Utilities Comm'n of Hawaii, 827 F.2d 1264, 1274 (9th Cir.  1987).  Issue preclusion might nonetheless be applicable, but  Tagg Bros. suggests that any such application is quite weak.

13
The Commission acknowledges the authority of Tagg Bros.,  but reframes Justice Brandeis's formula--allowing re-opening  for "new evidence"--into one requiring evidence of "changed  circumstances."  It is unclear if any such limit may be  imposed.  In OXY itself we observed, "[t]he fact that a rate  was once found reasonable does not preclude a finding of  unreasonableness in a subsequent proceeding." 64 F.3d at  690 (internal quotation omitted).  See also Texas Eastern  Transmission Corp. v. FERC, 893 F.2d 767, 774 (5th Cir.  1990).  In OXY, as we noted, there were changed circumstances--the increased proportion of NGLs in the common  stream, and in Texas Eastern there was an issue that the  prior determination had not confronted (the consistency of  minimum commodity bills with cost allocation based on the  modified fixed variable approach), 893 F.2d at 774.  In rate  cases that look toward the setting of a future rate (as this  does, having been brought under § 13(1) of the Interstate  Commerce Act), unacceptable competitive distortions could  occur if one shipper were perpetually locked into a rate less  advantageous than the one enjoyed by a competitor.  The  Supreme Court has emphasized this concern in the tax context:

14
[A] subsequent modification of the significant facts or a change or development in the controlling legal principles may make that [judicial] determination obsolete or erroneous, at least for future purposes.  If such a determination is then perpetuated each succeeding year as to the taxpayer involved in the original litigation, he is accorded a tax treatment different from that given to other taxpayers of the same class.

15
Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591,  599 (1948).  Accordingly, we have upheld the denial of issue  preclusion where the Commission had initially rejected a  requested rate on grounds of difficulties in tracing costs of  service, but in a later proceeding the utility offered a solution. Second Taxing Dist. of Norwalk v. FERC, 683 F.2d 477, 484  (D.C. Cir. 1982).  The new solution was perhaps a changed  circumstance, but it was one under the control of the utility  and thus seems somewhat akin to new evidence.  In any  event, because the outcome of our decision here does not turn  on the distinction between evidence of changed circumstances  and evidence that is merely new, we need not decide whether  there is any reason to retreat from the language of Justice  Brandeis.

16
Exxon provided the testimony of Dr. Pavlovic, an economic  consultant, who tested the accuracy of the modified distillation methodology for 34 crude oils in the California crude oil  market from 1993 to 1996.  Pavlovic used regression analysis tocompare the relative values of the cuts produced by the  distillation method with actual market prices.  He claimed his  tests showed that the distillation method "substantially overvalues low-value, heavier petroleum and substantially undervalues high-value, lighter petroleum."  Joint Appendix  ("J.A.") at 430.  He also testified that this bias "increase[d]  dramatically in 1994 and remain[ed] large thereafter."  Id. at  451.  A perfect pricing method would produce a coefficient of  1.0 in a regression of the method's relative values on those of  the benchmark market.  Whereas the coefficient--also called  a bias measure--was indeed just over 1.0 for 1993 (1.07), it  jumped in 1994 to 1.65 and remained around 1.6 for the next  two years.  Id. at 495.  Pavlovic argued that he could reject,  at a statistically significant level, the hypothesis that the bias measure was 1.0 in 1994-1996.4 Id. at 453.

17
Pavlovic's testimony appears to constitute not only new  evidence but changed circumstances as well.  It shows that,  for reasons not yet conclusively determined, the degree of  bias resulting from the use of the distillation method rose  from imperceptible to severe after 1993.  The Commission's  answer--that it "consistently has refused to base its decisions  on how the TAPS Quality Bank should operate based on  regression analyses of West Coast or world crude values,"  Exxon Decision, 87 FERC at 61,528--baffles us.  The Commission cannot be saying that regression analysis, good  enough to be a valuable tool for everyone else interested in  quantitative analysis, is never good enough for the Commission.

18
The Intervenors offer an explanation that may be part of  what the Commission in fact had in mind:  "Dr. Pavlovic's  analysis was like testing a methodology designed to value  Alaskan apples by applying that methodology to a crate of  California oranges."  Intervenors' (BP Exploration (Alaska),  Inc. et al.) Br. at 13 ("Intervenors' Br.").  This glib use of the  old apples-oranges metaphor overlooks the problem confronting the Commission:  There simply are no market prices for  the Alaskan crude oils delivered into TAPS.  If there were,  there would be little or no issue about inferring their relative  values.  To the extent that the California crudes are similar  to the Alaskan crudes, Pavlovic's technique seems to test the  accuracy of the distillation method.  Compare J.A. at 440-43.

19
Exxon also provided the testimony of Mr. Moore, an engineer, and Dr. Hausman, an applied economist.  Moore  stressed that the gravity of ANS crude oil (consisting of the  streams that enter at the start of the pipeline at Pumping  Station #1 and the return stream from refineries along its  path) had increased from about 28  API in 1996.  Id. at 323.  In the face of the theory that gravity increases due to NGL blending had undermined the  gravity formula, Moore tracks the seemingly close positive  relationship between the fraction of NGLs and gravity of this  crude oil, and, critically, between the gravity and price of  ANS crude (measured against West Texas Intermediate, a  "marker crude" used as a reference for valuing other crudes). Id. at 323, 419, 421.

20
Exxon invokes the testimony of Moore not only to suggest  that the premise of the 1993 abandonment of gravity was  mistaken, but also to explain why one should expect occurrence of the sort of distortions that Pavlovic seemingly  showed in the distillation method.  Although there is an  obvious link between crude oil values and petroleum product  prices, they do not move in lockstep.  The same event may  drive the prices of the two in different directions.  If a  refinery shuts down because of equipment problems, for  instance, it is likely to raise the market price of therefined  petroleum product, but may reduce demand for crude oil and  lower its price.  See id. at 342.

21
Hausman testified that regression results on price and  gravity data from 1988 to 1997 showed that gravity was a  significantly positive predictor of the price of ANS crude.  Id.  at 511-13.  This evidence seems to show a positive correlation  between (1) NGL blending, (2) gravity, and (3) value.  Petitioners rely on the Moore and Hausman testimony to suggest  that the distillation method seriously undervalues the NGL  contribution to the TAPS stream.  Aspects of Hausman's  testimony might pose questions about the line between evidence that is "new" and evidence of changed circumstances. After all, Hausman claims that his regression results apply to  the entire period of his data--from 1988 to 1997--indicating  that the pre-1993 data also show the positive effect of gravity  on ANS value.  Overall, however, it certainly confirms the  implication of the Pavlovic and Moore testimony that the  distillation method is seriously flawed.

22
To dismiss the testimony of Moore and Hausman, the  Commission's decision invoked our deference in OXY to the  ALJ's conclusion that "the current straight line gravity basis for valuing crude oil does not assign an accurate value for  NGLs," and our statement, "It follows from this conclusion  that shippers delivering oil with a high NGL content were  either being overcompensated or under compensated under  the gravity methodology...." 64 F.3d at 691 (cited by the  Commission, Exxon Decision, 87 FERC at 61,528).  But  these remarks were plainly not intended to suggest indifference to the impact of NGL contributions to the value of the  common stream.  Quite the reverse:  We were endorsing the  ALJ's point that "the issue was not whether the gravity  methodology accurately valued NGLs per se, but whether it  placed a proper value on petroleum whose gravity had been  increased as a result of the injection of substantial quantities  of NGLs." 64 F.3d at 691.  That issue is precisely what  Exxon's testimony speaks to, seemingly calling into question  the Commission's 1993 determinations.

23
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24
Tesoro challenges the current pricing of the naphtha and  VGO cuts based on Gulf Coast market prices under the  modified distillation method.  Tesoro wants the Quality Bank  to value West Coast naphtha using a formula based on West  Coast gasoline prices and West Coast VGO using OPIS's  quoted price for West Coast high sulfur VGO.

25
Tesoro argues that the Commission's use of the published  Gulf Coast price, rather than a formula based on West Coast  gasoline prices, significantly undervalues West Coast naphtha.5  Its claim is based on three propositions.  First, Tesoro  presents evidence, and the Intervenors acknowledge, that  Gulf Coast deliveries of ANS crude "have declined considerably from the somewhat less than 20% level that existed in  1993."  Intervenors' Br. at 25;  see also Distillation Decision,  65 FERC at 62,290.  The nearly complete disappearance of Gulf Coast ANS sales suggests that the Commission's current  reliance is more dubious now than in 1993.

26
Second, the Commission has changed its outlook on the use  of "adjusted" market prices.  In OXY we held that the  Commission's "No Adjustment Policy," which used market  prices instead of formulas, lacked an adequate foundation  with respect to the distillate and resid cuts. 64 F.3d at 694  (holding that the Commission "cannot, consistent with the  requirement of reasoned decision making, value some cuts  precisely and others haphazardly").  On remand, the Commission seems to have abandonedits No Adjustment Policy,  adopting adjusted prices for several cuts.  See 81 FERC at  62,460-65.  The Commission tries to distinguish its treatment  of distillate and resid by suggesting that its No Adjustment  Policy could be trumped only when there is no reliable  published price for a cut in either market.  See Respondents'  Br. at 56.  But our decision in OXY does not rely on this  distinction.  See 64 F.3d at 693.  In fact, we made clear in  OXY that our concern was that the Commission use uniform  methods, id. at 694, a principle that would be breached if the  availability of an adequate non-adjusted benchmark for the  Gulf Coast prevented the use of an adjusted benchmark for  the West Coast.  See also Exxon, 182 F.3d at 38 ("[W]e did  not remand because the old method was inaccurate, but  because it was unfairly nonuniform.").

27
Despite the Commission's claims to the contrary, its decision to use the Gulf Coast price for West Coast deliveries of  naphtha appears to have been based at least in part on the  now abandoned No Adjustment Policy.  Indeed even its brief  invokes the benefits of making no adjustments.  See Respondents' Br. at 13.  And the Intervenors admit that the Commission declined to adopt a formula based on West Coast  gasoline prices for naphtha because it did not want to assume  "the risk that the formulas the parties proposed would be  manipulated in some fashion to favor one party over another." Intervenors' Br. at 26.  Even on a narrow view of OXY's  impact on the No Adjustment Policy, the changes in the Gulf  Coast naphtha market improve the trade-off for using an adjusted price rather than one from the dwindling Gulf Coast  market.

28
Third, Tesoro presents evidence that appears to show a  large disparity between the Commission's valuation and the  true value of West Coast naphtha.  According to Mr. Stancil,  an engineer and energy consultant, the quoted Gulf Coast  naphtha price in December 1996 ($26.38 per barrel) undervalued West Coast deliveries by $2.71 per barrel.6  This alleged  disparity dwarfs the ones that required remand in OXY.  See  81 FERC at 62,462 (revising valuation of light distillate by  $0.005 per gallon, or $0.21 per barrel, after OXY remand).

29
These three propositions may well be answerable by the  Commission.  But without an adequate Commission response,  they at the least establish a prima facie case that new  evidence warrants re-examination of how West Coast naphtha  should be valued.

30
Tesoro also challenges the valuation of the VGO cut.  In its  original decision on the distillation method, the Commission  found that illiquidity in the West Coast market required it to  use Gulf Coast prices for West Coast VGO.  67 FERC at  61,531.  Tesoro suggests that because the Commission later  found the West Coast NGL market, which is allegedly less  liquid than the West Coast VGO market, to be sufficiently  liquid to be used for NGL cuts, the Commission should also  use West Coast VGO prices for West Coast VGO.

31
The Commission provides two responses.  The first is  plainly inadequate.  The Commission says that it considered  Tesoro's evidence in 1998 in evaluating--and rejecting--a  proposal to change the valuation of West Coast VGO because  of a change in how Gulf Coast VGO prices were being  reported.  82 FERC p 61,343 (1998).  See also Tesoro Decision, 87 FERC at 61,519 (citing the 1998 decision).  But when  Tesoro sought review of the resulting order in this court, the  Commission moved--successfully--for dismissal of the petition for review on the ground that the order was non-final. Petitioners' Br. at App. A.  Agencies may not use shell games  to elude review.  See AT&T Co. v. Federal Communications  Commission, 978 F.2d 727, 731-32 (D.C. Cir. 1992).

32
Second, the Commission argues that in its decision to use  the West Coast NGL market another factor was in play-differences between the coasts' petrochemical industries and  consequently their demand for NGLs--that is apparently  inapplicable to VGO.  That much is true.  In approving a  switch to reliance on the West Coast market for West Coast  NGLs in 1998, it reasoned that the higher demand for NGLs  on the Gulf Coast made it a less reliable standard for West  Coast NGLs than the West Coast market, despite the latter's  illiquidity.  81 FERC at 62,466.  But Tesoro's argument is  more subtle.  It is that the switch to reliance on the illiquid  West Coast NGL prices reflects a liberalization in the Commission's liquidity standards.

33
To this the Commission's reply is that it has no "generic  standards for liquidity."  Respondents' Br. at 57.  Thus the  1998 decision on NGLs could not have reflected a change in  such standards.  But the answer is illogical.  Clearly the  Commission regards illiquidity as a factor weighing against  the use of a possible benchmark.  When it changed its  position in 1998 to allow use of the illiquid West Coast market  it invoked disparities between the Gulf and West Coast  markets, but it never asserted that there has been a change  in those disparities.  Accordingly, Tesoro's inference that the  NGL change reflects a reduced Commission anxiety about  illiquidity is hardly unfair.  Of course it may be that for VGO  the Commission might reasonably find the balance to tilt  more strongly in favor of Gulf Coast prices, so that Tesoro's  claim will ultimately lose.  But Tesoro has shown enough to  get its foot in the door, entitling it to an attempt to persuade  the Commission to make a different trade-off on VGO.

34
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35
Whether or not Exxon's ultimate goal is to resurrect the  gravity method in some form (a matter the parties dispute),  its evidence at least suggests changed circumstances regarding the reasonableness of the distillation methodology.  Tesoro has also supported its prima facie case about the valuation  of the naphtha and VGO cuts.  The Commission's failure to  respond meaningfully to the evidence renders its decisions  arbitrary and capricious.  Unless an agency answers objections that on their face appear legitimate, its decision can  hardly be said to be reasoned.  International Harvester Co.  v. Ruckelshaus, 478 F.2d 615, 648 (D.C. Cir. 1973);  see also  City of Vernon v. FERC, 845 F.2d 1042, 1048 (D.C. Cir. 1988).

36
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37
Exxon in a footnote arguably challenges the Commission's  observation that "changes in the quality bank would be on a  prospective basis, and no damages awarded."  Exxon Decision, 87 FERC at 61,524 n.28 (cited in Petitioners' Br. at 1011 n.8).  The issue appears premature, as there has yet been  no finding that the prevailing methodology is not just and  reasonable.  Presumably the availability of damages turns in  the first instance on the applicable statutory language.  See,  e.g., 49 U.S.C. App. § 15(1)(1988) ("Whenever, after full  hearing, upon a complaint made as provided in section 13 [of  the Interstate Commerce Act] ... the Commission shall be of  opinion that any ... rate ... is or will be unjust or unreasonable ..., the Commission is authorized and empowered to  determine and prescribe what will be the just and reasonable  ... rate ... to be thereafter followed....").  See also 49  U.S.C. App. § 13(2) (1988) (withholding authority to make  "orders for the payment of money" under this section);  49  U.S.C. App. § 15(7) (1988) (providing for Commission suspension of carrier-filed rate schedules pending hearing, and for  refunds when the rate issues are resolved);  cf. OXY, 64 F.3d  at 698-700.  But see Exxon, 182 F.3d at 49-50.  Because the  claim is premature, we do not address it.

38
*  *  *

39
The absence of a reasoned Commission explanation requires us to reverse and remand the case for further proceedings.

40
So ordered.

Notes:

1
  The authority was originally vested in the Interstate Commerce Commission, then transferred to the Federal Energy Regulatory Commission when it replaced the Federal Power Commission  in 1977.  See 49 U.S.C. App. SS 1 et seq. (1988);  see also 49 U.S.C.  S 60502 ("The Federal Energy Regulatory Commission has the  duties and powers related to the establishment of a rate or charge  for the transportation of oil by pipeline or the valuation of that  pipeline that were vested on October 1, 1977, in the Interstate  Commerce Commission or an officer or component of the Interstate  Commerce Commission.") (emphasis added).  The Commission's  jurisdiction over the rates for oil going through to Valdez is  uncontested.  See Trans Alaska Pipeline System, 23 FERC  p 61,352 at 61,762 (1983).

2
  Exxon Company, U.S.A. was a division of Exxon Corporation. Since filing its appeal, Exxon Corporation has merged with Mobil  Corporation to become Exxon Mobil Corporation.

3
  Unless stated otherwise, all citations to FERC orders have  the title "Trans Alaska Pipeline System".

4
  The parties appear to agree that here the reference point is  November 30, 1993, the day on which the Commission ruled that  the distillation method was just and reasonable.  See Exxon Decision, 87 FERC at 61,526.

5
  Naphtha is used to make gasoline.  Because there are considerable trades on the Gulf Coast, there is a quoted price for Gulf  Coast naphtha.  On the West Coast, however, refineries overwhelmingly use their own naphtha rather than buying it.  See J.A.  at 940-41.

6
  Using adjusted gasoline prices, Stancil claims that West Coast  naphtha is worth $29.09 per barrel.  See J.A. at 1001.