Court Opinion

ID: 6323197
Source: CourtListenerOpinion
Date Created: 2022-03-15 00:00:31.756595+00
Date Added: 2024-06-11T09:21:27.568150
License: Public Domain

Case: 20-20623      Document: 00516237520         Page: 1     Date Filed: 03/14/2022

            United States Court of Appeals
                 for the Fifth Circuit                                  United States Court of Appeals
                                                                                 Fifth Circuit

                                                                               FILED
                                                                         March 14, 2022
                                 No. 20-20623
                             consolidated with                            Lyle W. Cayce
                                 No. 21-20126                                  Clerk

   In Re: Ultra Petroleum Corporation,

                                                                            Debtor,

   Federal Energy Regulatory Commission,

                                                                        Appellant,

                                       versus

   Ultra Resources, Incorporated,

                                                                         Appellee.

                 Appeal from the United States Bankruptcy Court
                        for the Southern District of Texas
                               USBC No. 20-32631

   Before King, Graves, and Ho, Circuit Judges.
   King, Circuit Judge:
          We are asked to determine whether Ultra Resources, Inc.’s rejection
   of a filed-rate contract in bankruptcy relieves it of its obligation to continue
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   performance absent the approval of FERC (the Federal Energy Regulatory
   Commission). We are also asked to consider whether, under 11 U.S.C.
   § 1129(a)(6), the bankruptcy court was required to obtain the approval of
   FERC before confirming Ultra Resources’s reorganization plan. We hold
   that under the particular circumstances presented here, Ultra Resources is
   not subject to a separate public-law obligation to continue performance of its
   rejected contract, and that 11 U.S.C. § 1129(a)(6) did not require the
   bankruptcy court to seek FERC’s approval before it confirmed Ultra
   Resource’s reorganization plan. We therefore AFFIRM.
                                         I.
          Ultra Resources, Inc. (“Ultra”) is an energy company whose primary
   business is the production of natural gas. It contracted with Rockies Express
   Pipeline LLC (“REX”) to reserve space on REX’s pipeline for Ultra’s
   natural gas. Under the contract, Ultra would pay a monthly reservation
   charge to reserve a certain amount of space in the pipeline, regardless of how
   much gas it actually shipped (or even if it ultimately shipped no gas). The
   contract was made in the shadow of REX’s application to FERC to construct
   a new pipeline, and Ultra was one of the “anchor shippers” whose
   commitments partially induced REX to construct its pipeline.
          The original agreement between Ultra and REX was made in 2008. In
   2016, after Ultra failed a creditworthiness check, REX sued for damages in
   Texas state court and asserted that the contract had been terminated based
   on Ultra’s failure to meet creditworthiness requirements. Ultra then filed for
   Chapter 11 bankruptcy, and Ultra and REX settled REX’s contract claim.
   Ultra and REX also agreed to a new contract which is the subject of the
   instant case. The new agreement was slated to run from 2019 until 2026, and
   reserved space on the REX pipeline for Ultra’s natural gas at a rate of $169
   million over the life of the agreement—a price Ultra was required to pay

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   whether or not it used the pipeline. Shortly before this new agreement went
   into effect, Ultra suspended its drilling program; it later filed again for
   Chapter 11 bankruptcy. Anticipating the bankruptcy filing, REX had
   previously petitioned FERC for a declaration that Ultra could not reject the
   contract between Ultra and REX without FERC’s approval; Ultra filed for
   bankruptcy before FERC issued a decision.
          As part of the bankruptcy proceedings, Ultra sought permission from
   the bankruptcy court to reject its natural gas shipping contract with REX.
   REX objected and requested that the bankruptcy court refrain from issuing a
   decision until proceedings could occur before FERC, which would decide
   whether rejecting the contract was in the public interest, arguing that FERC
   had exclusive authority to decide whether Ultra should be relieved of its
   obligations under the filed-rate contract with REX. The bankruptcy court
   denied that request, but asked FERC to “participate as a party-in-interest in”
   the bankruptcy proceedings and “comment on whether the rejection of [the
   contract] would harm the public interest.”
          FERC responded by filing a motion for reconsideration with the
   bankruptcy court, arguing that proceedings before FERC were required
   because FERC could only speak through its orders, occurring after said
   proceedings, and could not comment on the public interest through counsel
   in the bankruptcy proceedings. The bankruptcy court denied FERC’s
   motion. Following an evidentiary hearing (which FERC ultimately
   participated in through counsel), the bankruptcy court authorized Ultra to
   reject its contract with REX. In its opinion, the bankruptcy court stated that:
   (1) it had the authority to approve rejection of the contract under our
   precedent in In re Mirant Corp., 378 F.3d 511 (5th Cir. 2004); (2) even giving
   the rejection question heightened scrutiny and considering the effect on the
   public interest, as required under Mirant, rejection was still appropriate as it
   would not harm the supply of natural gas and would significantly benefit

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   Ultra’s estate; (3) any concerns that rejection would allow Ultra to “free
   ride” on the pipeline and “still be able to ship natural gas along the REX
   pipeline, only for substantially less than the cost imposed under [the
   contract]” were a result of FERC’s regulations, not rejection itself, and did
   not counsel against allowing Ultra to reject the contract; and (4) rejection
   “neither modif[ied] nor abrogate[d] the [contract]” and therefore did not
   amount to a rate change requiring approval under 11 U.S.C. § 1129(a). The
   bankruptcy court also confirmed Ultra’s reorganization plan over FERC’s
   objection.
                                          II.
          The question at the heart of this case is one of law and therefore is
   reviewed de novo. In re Glenn, 900 F.3d 187, 189 (5th Cir. 2018). That
   question concerns a clash of two congressionally constructed titans, FERC
   and the bankruptcy courts. Congress has imbued each entity with a
   significant wellspring of authority.
          The bankruptcy court’s power derives from the Bankruptcy Code.
   “Congress intended to grant comprehensive jurisdiction to bankruptcy
   courts so that they might deal efficiently and expeditiously with all matters
   connected with the bankruptcy estate.” Celotex Corp. v. Edwards, 514 U.S.
   300, 308 (1995). Specifically, Chapter 11 sets out the framework for
   restructuring a bankrupt business. In re Mirant Corp., 378 F.3d 511, 517 (5th
   Cir. 2004). One of the options available to a bankrupt business is the rejection
   of an executory contract—that is, a contract in which performance remains
   due on both sides. 11 U.S.C. § 365(a); Mirant, 378 F.3d at 518 n.3. Rejection
   of contracts “is vital to the basic purpose of a Chapter 11 reorganization,
   because rejection can release the debtor’s estate from burdensome
   obligations that can impede a successful reorganization.” Mirant, 378 F.3d at
   517 (quoting In re Nat’l Gypsum Co., 208 F.3d 498, 504 (5th Cir. 2000)).

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   Rejection is subject to the bankruptcy court’s approval and is generally
   considered by the court under the deferential “business judgment” standard.
   Mission Prod. Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 1652, 1658 (2019).
   The rejection of an executory contract is a breach of contract, with “the same
   effect as a breach outside bankruptcy.” Id. at 1666. Rejection leaves the
   counterparty to the contract with “a claim against the estate for damages
   resulting from the debtor’s nonperformance.” Id. at 1658. Due to the nature
   of bankruptcy and the insolvency of the debtor, however, this claim is rarely
   paid in full and the counterparty “may receive only cents on the dollar.” Id.
   Additionally relevant to the Chapter 11 reorganization process described
   herein is 11 U.S.C. § 1129(a)(6), which states that a reorganization plan can
   be confirmed only if “[a]ny governmental regulatory commission with
   jurisdiction, after confirmation of the plan, over the rates of the debtor has
   approved any rate change provided for in the plan, or such rate change is
   expressly conditioned on such approval.”
           Next, because “the business of transporting and selling natural
   gas . . . is affected with a public interest,” 15 U.S.C. § 717(a), the Natural Gas
   Act grants FERC “exclusive jurisdiction over the transportation and sale of
   natural gas in interstate commerce for resale,” Schneidewind v. ANR Pipeline
   Co., 485 U.S. 293, 300–01 (1988). Part of FERC’s responsibility is to ensure
   that all rates charged by natural-gas companies are “just and reasonable.” 15
   U.S.C. § 717c(a). All rates, even those arising from private contract
   negotiations, are “filed” with FERC, 15 U.S.C. § 717c(c), and cannot be
   modified or abrogated absent FERC’s approval, see Mirant, 378 F.3d at 518. 1

           1
             Although Mirant considered a power contract regulated by FERC under the
   Federal Power Act (FPA), the Natural Gas Act is “in all material respects substantially
   identical.” Ark. La. Gas Co. v. Hall, 453 U.S. 571, 577 n.7 (1981) (quoting FPC v. Sierra
   Pacific Power Co., 350 U.S. 348, 353 (1956)). Courts “therefore follow [the] established

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   The requirement that FERC approve any changes to a filed rate applies not
   only to the parties to the contract, but also to the courts—the “filed rate
   doctrine” prevents both parties and courts from modifying the filed rate
   contained in a tariff. Id. When FERC is considering whether to change a filed
   rate, it follows the Mobile-Sierra doctrine, and will change a rate only if the
   existing contract “adversely affect[s] the public interest.” Fed. Power
   Comm’n v. Sierra Pac. Power Co., 350 U.S. 348, 355 (1956); United Gas Pipe
   Line Co. v. Mobile Gas Serv. Corp., 350 U.S. 332, 344–45 (1956). FERC may
   not modify a filed rate simply because a party finds continued performance
   unprofitable. See Mirant, 378 F.3d at 518.
                                              III.
           It is also important to note that this is not the first time these two titans
   have clashed. Instead, today’s battlefield lies in the shadow of our precedent
   in In re Mirant Corp., 378 F.3d 511 (5th Cir. 2004). In that case, our court
   considered “whether a district court may authorize the rejection of an
   executory contract for the purchase of electricity as part of a bankruptcy
   reorganization, or whether Congress granted [FERC] exclusive jurisdiction
   over those contracts.” Mirant, 378 F.3d at 514. The Mirant court answered
   yes to the question regarding rejection of an executory contract, id., and
   FERC does not dispute that holding. The question faced by the Mirant court
   arose in a similar context to the instant case. After Mirant filed for Chapter
   11 bankruptcy, it sought to reject an electricity-purchase agreement. Id. at
   515–16. The contract included filed rates that could only be modified by
   FERC. Id. at 515. The bankruptcy court found that it could reject the contract
   not withstanding FERC’s regulatory authority, and additionally enjoined

   practice of citing interchangeably decisions interpreting the pertinent sections of the two
   statutes.” Id.

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   FERC from not only enforcing the specific contract at issue, but also acting
   in any way to enforce “all of Mirant’s wholesale electric contracts” without
   ten days’ notice. Id. at 516. The district court then withdrew the reference to
   the bankruptcy court and found that “the Bankruptcy Code does not provide
   an exception to FERC’s authority . . . and that Mirant must seek relief from
   the filed rate . . . in a FERC proceeding.” Id. The district court therefore
   denied the motion to reject the contract and “vacated the bankruptcy court’s
   injunctive relief because it would interfere with the performance of FERC’s
   regulatory oversight functions.” Id. at 516–17.
          Our court first acknowledged that “FERC has the exclusive authority
   to determine wholesale rates” and that any attempt to “modify the rates” or
   “abrogate [the contract]” would have to go through FERC. Id. at 519.
   However, we distinguished the action in the bankruptcy court because
   “Mirant’s rejection of the [contract] is a breach of that contract” and FERC
   does not have exclusive authority over a breach of contract claim; “[w]hile
   the FPA does preempt breach of contract claims that challenge a filed rate,
   the district courts are permitted to grant relief in situations where the breach
   of contract claim is based upon another rationale.” Id. Thus, rejection was
   allowed since rejection “would only have an indirect effect upon the filed
   rate” and the “unsecured claim against the bankruptcy estate would be based
   upon . . . the filed rate.” Id. at 519–20. Rejection therefore was not a challenge
   to the filed rate that was under the exclusive jurisdiction of FERC. This was
   so even though part of the reason Mirant sought rejection was that the rate
   was too high, as Mirant additionally stated “it [did] not need the electricity
   purchased under the [contract] to fulfill its obligations to supply electricity.”
   Id. at 520.
          Our court additionally based its holding that rejection of a power
   contract was allowed on the fact that “[t]he Bankruptcy Code does
   not . . . include an exception prohibiting rejection of, or providing other

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   special treatment for, wholesale electric contracts subject to FERC
   jurisdiction.” Id. at 521. This lack of an exception signaled a congressional
   intent to permit rejection since other areas featured “specific limitations on
   and exceptions to the § 365(a) general rejection authority.” Id. at 521; see also
   NLRB v. Bildisco & Bildisco, 465 U.S. 513, 522–23 (1984) (“Obviously,
   Congress knew how to draft an exclusion for collective-bargaining
   agreements when it wanted to; its failure to do so in this instance indicates
   that Congress intended that § 365(a) apply to all collective-bargaining
   agreements covered by the NLRA.”).
          We also rejected FERC’s argument that the bankruptcy court needed
   to ensure that Mirant paid “the full amount of any damages resulting from
   the breach” because any other result would represent a challenge to the filed
   rate. Mirant, 378 F.3d at 520. We stated that payment of less than the full
   damages amount would be “entirely dependent upon Mirant’s bankrupt
   status” and the fact that the amount ultimately paid would “depend solely
   upon the terms applicable to the unsecured creditors as a class under the
   reorganization plan” and not from the act of “rejection itself.” Id. at 520–21.
          Our court then considered the scope of the district court and
   bankruptcy court’s injunctive power over FERC since “the district court also
   vacated all of the injunctive relief that the bankruptcy court entered.” Id. at
   522. We stated: “We recognize that some injunctive relief is necessary to
   bring finality to Mirant’s rejection decisions and allow the reorganization
   process to proceed, but the injunctive relief as previously entered [by the
   bankruptcy court] was overly broad.” Id. at 522–23. Our court accepted that
   a limited injunction was appropriate under 11 U.S.C. § 105(a) because “[t]he
   concern that the bankruptcy court expressed—that FERC could negate
   Mirant’s rejection of an executory power contract by ordering Mirant to
   continue performing under the terms of the rejected contract—is certainly a
   legitimate basis for injunctive relief.” Id. at 523. However, we also noted that

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   a bankruptcy court’s power under § 105(a) is limited and should be used
   sparingly; therefore, the bankruptcy court exceeded its authority because it
   “attempted to accomplish the narrow goal of protecting Mirant’s right to
   reject executory contracts by prohibiting FERC from taking any action”
   against Mirant. Id. at 524. Instead, any injunction had to be limited to
   protecting Mirant from FERC’s attempts to compel Mirant to perform under
   the particular contract that the court enabled Mirant to reject.
          We last considered the standard a court should use when deciding
   whether to approve rejection of a power contract. We stated that “Supreme
   Court precedent supports applying a more rigorous standard” than the
   normal business judgment standard. Id. In addition, “[u]se of the business
   judgment standard would be inappropriate in this case because it would not
   account for the public interest inherent in the transmission and sale of
   electricity.” Id. at 525. We thus recommended that the district court or
   bankruptcy court, on remand, should “carefully scrutinize the impact of
   rejection upon the public interest and should . . . ensure that rejection does
   not cause any disruption in the supply of electricity to other public utilities or
   to consumers.” Id. We further counseled that the courts should “welcome
   FERC’s participation,” which the bankruptcy court had already signaled it
   would, by “includ[ing] FERC as a party in interest for all purposes.” Id. at
   525–26.
          In summary, Mirant teaches the following. First, “the power of the
   [bankruptcy] court to authorize rejection of [a filed-rate contract] does not
   conflict with the authority given to FERC to regulate rates.” Id. at 518.
   Second, and related, rejection “is not a collateral attack upon [the] contract’s
   filed rate because that rate is given full effect when determining the breach of
   contract damages resulting from the rejection.” Id. at 522. Third, in ruling
   on a rejection motion, bankruptcy courts must consider whether rejection

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   harms the public interest or disrupts the supply of energy, and must weigh
   those effects against the contract’s burden on the bankrupt estate. Id. at 525.
                                          IV.
          In light of Mirant, then, what FERC casts as a pitched battle is actually
   a settled truce. Mirant balances the interests of the bankruptcy courts (which
   are ultimately in charge of the rejection decision) and FERC (by requiring
   that rejection of a filed-rate contract is considered under a higher standard
   that considers the public interest and by allowing FERC to participate in the
   bankruptcy proceedings). As a panel of this court, we are bound by our
   precedent in Mirant, which holds that a bankruptcy court can authorize
   rejection of a filed-rate contract, and that, post-rejection, FERC cannot
   require continued performance on the rejected contract. “It is well-
   established in this circuit that one panel of this Court may not overrule
   another.” United States v. Segura, 747 F.3d 323, 328 (5th Cir. 2014) (quoting
   Cent. Pines Land Co. v. United States, 274 F.3d 881, 893 (5th Cir. 2001)). We
   are not permitted to stray from Mirant’s holding even if we were so inclined
   (which we are not).
          As stated earlier, FERC has no quarrel with the proposition that
   Mirant allows a bankruptcy court to approve rejection of a filed-rate contract.
   FERC, however, argues that any statements in Mirant about the
   consequences of such a rejection (including the statement that FERC could
   not enforce full performance and payment under a rejected contract) were
   dicta. However, that portion of the Mirant decision was not dicta, and it
   controls here. We have previously stated that “[a] statement is not dictum if
   it is necessary to the result or constitutes an explication of the governing rules
   of law.” Segura, 747 F.3d at 328 (quoting Int’l Truck & Engine Corp. v. Bray,
   372 F.3d 717, 721 (5th Cir. 2004)). By contrast, “[a] statement is dictum if it
   could have been deleted without seriously impairing the analytical

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   foundations of the holding and being peripheral, may not have received the
   full and careful consideration of the court that uttered it.” Id.
          The language in Mirant regarding the effects of rejection, and a
   bankruptcy court’s powers if it approves rejection of a filed-rate contract, is
   the former; that is, it was necessary to our holding in Mirant. We can glean
   so first from the procedural history of Mirant. FERC puts great weight on the
   fact that no filed-rate contract was ever rejected in Mirant, and that therefore
   any commentary on FERC’s regulatory authority post-rejection was not
   essential to Mirant’s holding. However, FERC’s argument arises from an
   incomplete recounting of the facts facing us in Mirant. When considered in
   context, the single fact that no contract was ever actually rejected buckles
   under the weight that this argument asks it to bear.
          Mirant came to our court after consideration by two separate courts—
   the bankruptcy court and the district court. The bankruptcy court concluded
   that “it had the power to enjoin FERC” as well as “the authority to authorize
   Mirant to reject” the contract. Mirant, 378 F.3d at 516. In addition, the
   bankruptcy court had issued an injunction that prevented FERC from taking
   any action to compel Mirant to honor not only the contract for which it was
   seeking rejection, but any of Mirant’s wholesale electric contracts. Id.
          The district court then found that neither it nor the bankruptcy court
   had the authority to reject a filed-rate contract. The court therefore denied
   the motion to reject and “vacated the bankruptcy court’s injunctive relief
   because it would interfere with the performance of FERC’s regulatory
   oversight functions.” Id. at 516–17.
          Mirant “appeal[ed] each of the district court’s orders.” Id. at 517
   (emphasis added). And in the decretal language of our opinion, we made clear
   that we had answered each question: the “portion of the district court’s order
   dismissing [the] case for lack of jurisdiction to authorize the

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   rejection . . . [was] REVERSED” while “the portion of that order vacating
   the bankruptcy court’s injunctive relief [was] AFFIRMED,” and the case
   was “REMANDED to the district court for proceedings not inconsistent
   with [the] opinion”—the entirety of the opinion. Mirant, 378 F.3d at 526.
   Therefore, the questions before us in Mirant were not only whether the
   contract could be rejected, but also the consequences of that rejection and
   the scope of the injunctive relief that could be issued by the bankruptcy court
   following that rejection. Mirant’s answer to that question—that the
   bankruptcy court had the power to enjoin FERC from enforcing the rejected
   contract, but did not have the authority to issue an injunction preventing
   FERC from taking any action pursuant to its broad regulatory power—was
   not dicta.
            Instead, that language was essential to our holding in Mirant. First and
   foremost, the language regarding the division of authority between the
   bankruptcy courts and FERC was “an explication of the governing rules of
   law.” Segura, 747 F.3d at 328 (quoting Int’l Truck, 372 F.3d at 721). In
   Mirant, we were deciding: (1) whether a filed-rate utility contract could be
   rejected; (2) if so, what rules of law governed that rejection; and (3) the
   bankruptcy court’s authority to enforce that rejection. Analysis of the effects
   that rejection would have cannot be “deleted without seriously impairing the
   analytical foundations of the holding.” Id. (quoting Int’l Truck, 372 F.3d at
   721). The consequences of rejection of a filed-rate contract are central to the
   decision to allow rejection of said contracts, and the governing rules of law
   related to those consequences required explication; that discussion was not
   dicta.
            Otherwise, should the bankruptcy court or district courts have
   rejected the contract, they would have been left adrift when considering how
   to enforce that rejection thereafter. Could either court issue the same
   widespread, near-all-encompassing injunction that the bankruptcy court had

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   previously enacted? Were they blocked from issuing any injunction at all? Or
   was the answer somewhere in between? Knowing that the case would be
   remanded, it was of paramount importance that we establish the proper
   bounds of authority. We did so, notably picking the middle road—that some
   injunctive relief was proper to “bring finality to Mirant’s rejection decisions
   and allow the reorganization process to proceed,” but that an injunction
   implicating any regulatory action taken by FERC (as had been “previously
   entered”) was “overly broad.” Mirant, 378 F.3d at 522–23. Having
   “provid[ed] guidance on remand,” we then “l[eft] the task of crafting the
   language of [the] injunctive relief . . . to the bankruptcy court.” Id. at 522.
   Those words of guidance were not merely suggestions, but instructions the
   bankruptcy court was required to follow. See Harris v. Sentry Title Co., 806
   F.2d 1278, 1280 n.1 (5th Cir. 1987) (concluding that guidance directed to the
   parties and district court on remand “may not be summarily dismissed as
   dictum”); Cole Energy Dev. Co. v. Ingersoll-Rand Co., 8 F.3d 607, 609 (7th
   Cir. 1993) (“[E]xplicit rulings on issues that were before the higher court and
   explicit directives by that court to the lower court concerning proceedings on
   remand are not dicta.”).
          Moreover, our determination in Mirant that rejection has only an
   “indirect effect upon the filed rate” and “is not a collateral attack upon [the
   filed rate]” was a necessary prerequisite to our holding that a debtor can
   reject a filed-rate contract in bankruptcy. Id. at 519–20, 522. FERC would
   only have authority to enforce continued performance if rejection challenged
   the filed rate and represented an attempt to change the filed rate itself, since
   the filed-rate doctrine provides that “courts lack authority to impose a
   different rate than the one approved by [FERC].” Ark. La. Gas Co. v. Hall,
   453 U.S. 571, 578 (1981). Since Mirant clearly holds that rejection of a
   contract is not a collateral attack on the filed rate, FERC does not have the

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   authority to compel continued performance and continued payment of the
   filed rate after a valid rejection.
          We finally note that the above approach is not just the Mirant
   approach—it is also the FirstEnergy approach. The Sixth Circuit
   independently reached the same result as we did in In re FirstEnergy Solutions
   Corp., 945 F.3d 431 (6th Cir. 2019). In doing so, the Sixth Circuit also viewed
   Mirant’s language regarding FERC’s authority post-rejection as binding. It
   stated that “[f]ully and properly applied, Mirant teaches that once the
   bankruptcy court determined that the anticipated FERC action would
   directly interfere with [the debtor’s] request to reject the contracts, 11 U.S.C.
   § 105(a) gave it the power to enjoin FERC from issuing any such
   contradictory order.” Id. at 451. The Sixth Circuit also specifically rejected
   the argument that payment of a filed-rate is a public-law obligation that
   survives rejection. Id.
          “We are always chary to create a circuit split” and doubly so “in the
   context of bankruptcy, where uniformity is sufficiently important that our
   Constitution authorizes Congress to establish ‘uniform laws on the subject
   of bankruptcies throughout the United States.’” In re Ultra Petroleum Corp.,
   943 F.3d 758, 763–64 (5th Cir. 2019) (first quoting United States v. Graves,
   908 F.3d 137, 142 (5th Cir. 2018), then quoting In re Marciano, 708 F.3d 1123,
   1135 (9th Cir. 2013) (Ikuta, J., dissenting)). To view Mirant in the manner
   that FERC asks us and then hold that payment of a filed rate is still required
   even if a contract is rejected would create just such a circuit split. We decline
   to do so.
          Given that it is clear that the challenged language in Mirant is binding,
   the result of this case is straight forward. A district court (and, by extension,
   a bankruptcy court) has the “power . . . to authorize rejection of” a filed-rate
   contract and such rejection “does not conflict with the authority given to

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   FERC to regulate rates.” Mirant, 378 F.3d at 518. Because such a rejection
   “would only have an indirect effect upon the filed rate,” id. at 519–20, it is
   “not a collateral attack upon that contract’s filed rate” that is prohibited
   outside of a hearing before FERC. Id. at 522. That is true so long as the
   rejection is based on other reasons beyond the fact that the debtor would like
   to pay a lower rate (as is the case here), since either modification of the rate
   or full abrogation of the agreement requires FERC’s approval. Id. at 519.
          Each element is satisfied here. The bankruptcy court considered and
   granted rejection of the contract. That rejection did not collaterally attack the
   rate filed with FERC because the rate was still used to set the damage award
   that REX (the creditor) was entitled to after rejection. Ultra (the debtor) did
   not seek to reject the contract because the rates were excessive (which would
   represent a prohibited collateral attack on the rate itself). Instead, Ultra has
   “suspended its drilling program[,] . . . has never shipped natural gas on the
   REX pipeline” under the current contract, and has been “releas[ing] its REX
   pipeline capacity to other natural gas shippers.” Ultra is not just seeking to
   secure a lower rate, but instead wants out of the contract altogether, given
   the suspension of its drilling program and its nonuse of the volume
   reservation. That rejection is valid, and, under Mirant, does not undermine
   FERC’s exclusive authority to set rates.
          In addition, the bankruptcy court did not consider rejection under the
   normal business judgment standard, but instead explicitly considered the
   public interest in reaching its decision. In applying this higher standard, the
   bankruptcy court stated it was employing “Mirant Scrutiny.” We agree with
   the bankruptcy court that Mirant requires consideration of the public interest
   before rejection of a filed-rate contract can be approved but, to dispel any
   confusion, we again reiterate that the use of a higher standard is required. A
   court must determine whether “the equities balance in favor of rejecting”
   the filed-rate contract. Mirant, 378 F.3d at 525 (quoting NLRB v. Bildisco &

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   Bildisco, 465 U.S. 513, 526 (1984)). Specifically, a court must “ensure that
   rejection does not cause any disruption in the supply of electricity,” natural
   gas, or whatever regulated commodity is the subject of the contract under
   consideration. Id. Because the bankruptcy court did so here, its rejection
   decision was proper.
                                          V.
          FERC advances two additional arguments for why the bankruptcy
   court’s rejection decision was improper. It first argues that Mirant requires a
   bankruptcy court to allow FERC to comment on the public-interest
   ramifications of rejecting a filed-rate contract, and that because FERC “is a
   deliberative body that speaks through its orders,” ANR Pipeline Co. Columbia
   Gas Transmission, LLC, 173 FERC ¶ 61, 131 (2020), the only way to satisfy
   that requirement is for FERC to conduct full proceedings before the
   Commission. However, Mirant does not include such a requirement. As
   stated above, Mirant does indeed require consideration of the public interest
   before a filed-rate contract can be rejected. But Mirant makes clear that
   “courts should carefully scrutinize the impact of rejection upon the public
   interest,” not FERC. Mirant, 378 F.3d at 525 (emphasis added). We further
   noted that “the bankruptcy court ha[d] already indicated that it would
   include FERC as a party in interest for all purposes in this case” and
   “presume[d] that the district court would also welcome FERC’s
   participation, if this case is not referred back to the bankruptcy court.” Id. at
   525–26. That way, “FERC [would] be able to assist the court in balancing
   these equities.” Id. at 526 (emphasis added).
          Nothing in that language can be read as requiring a bankruptcy court
   to allow FERC to conduct a hearing before the court can decide on rejection.
   To be sure, FERC’s insight is highly beneficial when a court is weighing the
   complex and interwoven questions at the heart of the decision of whether to

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   reject a filed-rate contract. Therefore, to again avoid the risk that our
   statements in Mirant are read as mere recommendations, rather than
   commands, we make clear here that a bankruptcy court must invite FERC to
   participate in the bankruptcy proceedings as a party-in-interest. Whether
   FERC ultimately decides to participate is up to it, but the court must at least
   extend the invitation. The bankruptcy court did so here, welcoming FERC to
   participate as a party-in-interest, which FERC ultimately did. The
   requirements of Mirant were satisfied.
          In addition, under the circumstances presented by this case, we
   decline to expand beyond our dictates in Mirant by requiring a bankruptcy
   court to halt its progress and allow FERC to hold a hearing on the public-
   interest ramifications of the rejection of a filed-rate contract. We fully
   recognize the expertise FERC has to offer and the importance of ensuring
   that expertise is considered when rejection of a filed-rate contract is being
   contemplated. However, in a Chapter 11 bankruptcy, time is of the essence
   and delay drains the coffers of all involved (except, of course, for those of the
   lawyers who would be paid to hurry up and wait). See Volume G Collier
   on Bankruptcy App. Pt. 44−590 (Richard Levin & Henry J. Sommer
   eds., 16th ed. 2021) (“An oft-cited goal of Chapter 11 is to encourage swift
   and successful reorganizations with lower transaction costs.”); James J.
   White, The Virtue of Speed in Bankruptcy Proceedings, 40 L. Quad. Notes,
   no. 3, 1997, at 76, 79 (“Speed is an antidote to many of the substantive ills in
   Chapter 11. That speed will benefit not only secured creditors, but unsecured
   creditors as well.”). The current approach balances the benefits of providing
   the bankruptcy court with FERC’s insight with the necessity for swift and
   efficient bankruptcy proceedings.
          FERC last argues that the bankruptcy court erred because the
   rejection of the REX contract amounted to a rate change, and its inclusion in

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   Ultra’s confirmed reorganization plan violated 11 U.S.C. § 1129(a)(6). 11
   U.S.C. § 1129(a)(6) states that a reorganization plan cannot be confirmed
   unless “[a]ny governmental regulatory commission with jurisdiction . . . over
   the rates of the debtor has approved any rate change provided for in the plan,
   or such rate change is expressly conditioned on such approval.” FERC
   asserts that a rate change has occurred because Ultra will not actually pay the
   full amount owed on the contract after it is rejected.
          However, we made clear in Mirant that an impermissible rate change
   occurs only if the actual filed rate found in the contract is changed. Such a
   change does not occur here because “the damages calculation from the
   rejection of [the] contract . . . is based upon the filed rate.” Mirant, 378 F.3d
   at 520. FERC in fact made a variation of its § 1129(a)(6) argument to us when
   we were deciding Mirant, asserting that “anything less than full payment
   would constitute a challenge to the filed rate.” That argument did not carry
   the day then, and does not carry the day now. We previously held that “any
   effect on the filed rates from a motion to reject would result not from the
   rejection itself, but from the application of the terms of a confirmed
   reorganization plan to the unsecured breach of contract claims.” Id. at 521.
   We therefore made clear that the filed rate itself is separate from full payment
   of that rate. Since the bankruptcy court did not change the actual rate and
   used it to calculate the damages claim that would result from rejection of the
   contract, the confirmation of the reorganization plan did not violate 11 U.S.C.
   § 1129(a)(6).
          For the foregoing reasons, we AFFIRM.

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