# Petition — Arkla, Inc. v. Hall > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_1064%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1983 - **Citation:** 464 U.S. 822 ## Text 82 ' 1968 wy : No. LER- IN THE Supreme Court of the Anited States OCTOBER TERM, 1982 ARKLA, Inc. (formerly ARKANSAS LovisiANA GAs COMPANY), Petitioner, Vv. Frank J. Hai, W. E. Hau, Jk., Mrs. W. E. Haut, Sr., Tre H. M. HARRELL TeESTAMENTARY Trust, JAMES E. HARRELL, JOHN K. HARRELL, Sr., Asa BENTON ALLEN, Stoney G. MEYERS, JR., W. O. Cocuran, THomas F. Puoityaw, Mrs. Enaine ALLEN, JAMES A. Nor, D. B. McConnett, Mrs. Eva L. Weiss, Sot. KapLan and NATIONAL AMERICAN BANK, NEW ORLEANS, Co-TESTAMENTARY EXECUTORS OF THE SUCCESSION OF SEYMOUR WEISS FEDERAL ENERGY REGULATORY COMMISSION, Re spondents. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT Rowert Rowerts, JR. (counsel of record) W. Mickake. ADAMS Kay CowbeEN MEDLIN BLANCHARD, WALKER, O’QUIN & Ropers First National Bank Tower Post Office Drawer 1126 Shreveport, Louisiana 71165 Telephone (318) 221-6858 REUBEN GOLDBERG GLENN W. LETHAM GOLDBERG, FrieLpMAN & LeTtHam, P.C, 1100 Fifteenth Street, N.W. Washington, D.C. 20005 Telephone (202) 463-8300 Attorneys for Petitioner PRESS OF BYRON S. ADAMS PRINTING, INC... WASHINGTON, D.C, QUESTIONS PRESENTED 1. Whether the court below exceeded its review authority by (a) ordering the Federal Energy Regulatory Commission to grant the application of the natural gas producer respondents, Frank J. Hall, et al., for waiver of the notice and filing require- ments of Section 4(d) of the Natural Gas Act instead of remand- ing the case to the Commission for further consideration, and (b) substituting the court's judgment for that of the Commis- sion on matters within the Commission's expertise. 2. Whether the decision of the court below is in conflict with, and the claim of respondents Hall, et al., is barred by, the decision of this Court in Arkansas Louisiana Gas Company v. Hall, 453 U.S. 571 (1981). 3. Whether waiver of the requirements of Section 4(d) of the Natural Gas Act is available for collection of a retroactive rate increase notwithstanding the prohibition of that Act against retroactive rate increases and reparations. 4. Whether it was error for the court below to fail to provide a remedy to permit consideration of Petitioner’s and the Commission's suggestions for rehearing en banc or to refer the matter to this Court for an appropriate remedy in the exercise of this Court’s supervisory powers, when, because of the recusal of nine of the thirteen members of the court below, the opportunity for en banc rehearing as provided in the Judi- cial Code (28 U.S.C. § 46(c)) and the rules of the court below was denied as the result of an absence of quorum even for consideration of the suggestions for rehearing en bane. TABLE OF CONTENTS Page Se i ] STATUTES AND REGULATIONS INVOLVED ............... z OM ee cc, 3 Bren aeee OF FE CAM is kee 3 A. Origin Of The Claim For A Retroactive Rate In- i ei vb oo ec wencn cc. 3 &. Proceedings In The State Courts ............... 5 i. err Proceedines In This Court ............... 6 D. The Commission's Order Denying Hall’s Application For Waiver Of The Notice And Filing Requirements im pero i) Or ee a Cj... 7 BE. Proceedings In The Court Below ............... 10 REASONS FOR GRANTING THE WRIT ................... ll ee 28 APPENDIX: oe vik cae la Me ee 37a a oe ch, 50a fae A ee eee ae 9a me Ll0a iil TABLE OF AUTHORITIES CASEs: Page Ame mn Tel phone & Telegraph Co. v. United States, og 17 Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 57] coe? 6 ici. mo, ¢. 40, Ii, 32, 19, 2, SS Be we Banks v. FAA, 687 F.2d 92 (5th Cir. 1982) .......... 14 City of Piqua v. FERC, 610 F.2d 950 (D.C. Cir. ee ee Zi, 2 Continental Oil Co. v. FPC, 236 F.2d 839 (1956). cer- tioran denied, 352 U.S. 966 (1957) ........ 12, 2, 2 Eastern Petroleum Co. v. Kerr-McGee Corp., 447 F.2d es EA So) ng ie ene oe 4.5 FCC v. Pottsville Broadcasting Co., 309 U.S. 134 (1940) 14 FPC vy. Hope Natural Gas Co., 320 U.S. 591 (1944) .. 25 FPC v. Idaho Power Co., 344 U.S. 17 (1952) ........ l4 FPC v. Interstate Natural Gas Co., 3386 U.S. 597 (1949) 25 FPC v. Sierra Pacific Power Co.. 350 U.S. 348 (1956) 12 FPC v. Tennessee Gas Transmission Cv.. 371 U.S. 145 — crc ssi‘; li, 18 FPC v. Transcontinental Gas Pipe Line Corp., 4538 1) & — l,l, sCsaCdsaCCC..... l4-lo FPC v. United Gas Pipe Line Co., 393 U.S. 71 (1968) 15 Gillring v. FERC, 566 F.2d 1323 (Sth Cir.), cert. denied, go vce noes kines, 21 Vv. Arkansas Louisiana Gas Company, 359 So.2d Wee CE Be CAE, FT) ono ov vo even ccncens 5 Hall v. Arkansas Louisiana Gas Company, 368 So.2d ite coe ccc er eee ae ara e 6 Hall v. Arkansas Louisiana Gas Company, 379 So.2d Oe CE FO, FE i ook vows wo ceccs ccs, 6 Huber Corp. v. Denman, 367 F.2d 104 (5th Cir. 1966) 5 Indiana & Mich wan Electric Co. v. FPC, 502 F.2d 336 nce co cence 26 Mobil Oil Corp. v. FPC, 463 F.2d 256 (D.C. Cir. 1971), certioran denied, sub. nom., Webi! Oil Corp. v. Mat- cacti Paso be a ts 5 Hall iv Table of Authorities Continued Page Montarna-Dakota Utilities Co. v. Northwestern PA . Mee Cle, Oe ook. Nilsen v. City of Moss Point, 701 F.2d 556 (5th Cir. 1983) Permian Basin Area Rate Cases, 390 U.S. 747 (1968) . 17 Presbyterian Hospital of Dallas V. Harris, 638 F.2d 1381 (5th Cir. 1981), certiorari denied, 454 U.S. 940 (1981) 14 pee O. Be SOe ieee) og ook cick... 5 Shell Oil Co. v. FPC, 334 F.2d 1002 (1964) .... 12. 24. 25 l'nited Gas Pipe Line to Vv. Mobile Gas ( ‘Orp., 350 Uy S. I ee ciecaakc.... 24, 25, 26 Vermont Yankee Nuclear Power Corp. v. Natural Re- sources Defense Couneil, Ine., 4835 U.S. 519 (1978) 14 West Texas Gathe rene Co., SO PPC 610 (1962) ....... a Western Pacific Railroad ( ‘orp. Vv. Wi stern Pacitie Rail- eee Ca. Seo tS Ber IGS) jn. vce kk ee: 27 STATUTES: Federal Power Act: mecwon 2g) (1G U.S.C. § Beddid)! .... ... 12 Natural Gas Act: OE RO 888 eS I ee : section 4(d) [15 U.S.C. § 717e(d)] 2, 5, 6, 7, 8, 12, 24. 25 meeceems 1G) 110 (1 0, GTO) gk ok ccc ecu 22, 25 peeteons bm to Ue, St) ................. rae Judicial Code (28 U.S.C.): eee CCB... 27 Federal Energy Regulatory Commission Regulations (18 C.F .R.): a A 2 ewe roeee..ttCtCs‘(It is not unlikely that Hall’s deliberate decision to ignore the requirements of the NGA and to seek a retroactive rate increase through the state courts in the guise of damages for an alleged breach of contract was influenced by the prospect of an adverse interpreta- tion by the Commission of the favored nation provision since Com- mission precedents then in existence clearly established that royalty payments do not constitute a purchase and sale transaction. Morris Mizel, et al., 30 FPC 1103, 1104 (1963); Shell Oil Co., 29 FPC 498 (1963); West Teras Gathering Co., 29 FPC 510 (1962): Huber ‘orp. Vv. Denman, 367 F.2d 104 (5th Cir. 1966): Mobil Oi! Corp. v. FPC, 463 F.2d 256 (D.C. Cir. 1971), cert. denied. sub nom., Mohil Oi] ¢ ‘orp. v. Matzen, 406 U.S. 976 (1972). ” By October 1972, Hall had obtained the status of a small producer which under the Commission's regulations (18 CFR § 157.40) ex- empted Hall from the filing requirements of Section 4(d) of the NGA. provided the increased rates are within the just and reasonable area rates established by the Commission. 6 Court,’ it was held that Hall was excused from compliance with the filing requirements of the NGA and, therefore. entitled to recovery for the period between 1961 and 1972 because Arkla failed to inform Hall of the royalty payments and thereby prevented Hall from complying with the NGA. The Louisiana Supreme Court ruled that had Hall filed a rate increase with the Commission, it would have been approved, and remanded the case to the trial court for the calculation of damages for that period. Hall v. Arkansas Louisiana Gas Company, 368 So.2d 984 (La. 1979). On remand the trial court entered judgment in accordance with the Louisiana Supreme Court's decree which was affirmed by the Louisiana Court of Appeal. Hall vy. Arkan- sas Louisiana Gas Company, 379 So.2d 1142 (La. App. 2d Cir. 1980). C. Prior Proceedings In This Court Arkla filed petitions for writs of certiorari in Case No. 78- 1789 challenging the judgment of the Louisiana Supreme Court and in Case No. 79-1896 challenging the Louisiana Court of Appeal’s affirmance of the trial court's money judgment on remand from the Louisiana Supreme Court. After the Louisiana Supreme Court's award of damages but prior to this Court's grant of Arkla’s petition for certiorar in No. 78-1789, Hall, on May 24, 1979, filed with the Commission an application for waiver of the notice and filing requirements of Section 4(d) of the NGA to permit Hall to collect retroactive rate increases relating back to 1961 - some 18 years before Hall made its filing with the Commission. In response to this Court’s invitation, in Case No. 78-1789, the United States in February 1980 filed its brief as amici curiae. in which the ‘The Louisiana Supreme Court granted Hall's and denied Arkla’s petition for review of the intermediate appellate court’s decision. Arkla sought certiorari in this Court on the question of whether the interpretation of the favored nation clause should have been referred to the Commission. This Court denied the petition. 444 U.S. 878 (1978). ~ government advised the Court of the pending application for waiver and suggested that the Court “may wish to hold the petition to await the Commission's action” since grant of the waiver might moot the case. Arkla’s petition in No. 78-1789 remained pending and on November 5, 1980, the Commission denied the waiver application, 13 FERC © 61,000 (1980) (App. B, infra, pp. 37a to 49a). Thereafter, the United States filed its supplemental memorandum in which it advised the Court of the denial of the application for waiver and recommended “that the Court grant the petition for a writ of certiorari and reverse the judgment of the Supreme Court of Louisiana.” This Court subsequently granted Arkla’s petition in Case No. 78-1789 (449 U.S. 1109(1981)), and on July 2, 1981 in Arkla v. Hall, supra, reversed the Louisiana Supreme Court, ruling that the Louisiana court's award of damages amounted to an “award of a retroactive rate increase based on speculation about what the Commission might have done had it been faced with the facts of this case” which was barred by the filed rate doctrine and the prohibition of the NGA against retroactive rates. Arkla v. Hall, 453 U.S. at 578-579, 580. In a separate order also issued July 2, 1981 (453 U.S. 917), the Court granted Arkla’s petition in Case No. 79-1896, reversed the Louisiana Court of Appeal’s monetary judgment against Arkla and re- manded the case for further consideration in light of the Court’s decision in Arkla v. Hall, supra. D. The Commission's Order Denying Hall's Application For Waiver Of The Notice And Filing Requirements Of Sec- tion 4(d) Of The NGA Hall's application for waiver of the notice requirements of Section 4(d) of the NGA* was conditional. Hall contended that a * Hall's application did not comply with Section 4(d) which requires that notice of the change in rates shall be given by filing and posting a new rate schedule plainly stating the changes. No new rate schedule was filed by Hall with the application and none has ever been filed by Hall. 8 waiver of the filing requirements was not necessary because Section 4(d) has no applicability to a judicial award of damages for breach of contract and requested a ruling from the Commis- sion to that effect (App. B, infra, p. 39a). Alternatively, Hall alleged as good cause for granting the waiver that timely compliance with the requirements of Section 4(d) “was im- possible” because Arkla “had concealed the facts that would have made timely notice possible” and that Hall was “now for the first time, able to file the appropriate information with the Commission.’” In its order of November 5, 1980, denying Hall’s application for waiver, the Commission first rejected Hall’s contention that Section 4(d) was inapplicable, ruling that the filed rate doctrine applied to the award of damages for the 1961-1972 period since the damage award constituted a retroactive rate increase without the Commission having determined that the new rate is just and reasonable to the detriment of the Federal statutory scheme (App. B, infra, pp. 40a-46a). The Commission then ruled that good cause had not been shown and denied the waiver on a number of grounds (App. B, infra, pp. 46a-49a). The Commission noted that there is a strong “statutory bias” against retroactive rate increases under the NGA. The Commission found that the retroactive rate increase in this case would be “particularly unacceptable” because of the “uncommonly severe nature of the retroactivity imposed” since consumers would be exposed to liability for higher rates beginning in 1961 and continuing for some 11 years thereafter—a result the Commission found it “simply cannot sanction” (App. B, infra, p. 46a). ¢ * May 24, 1979, was not, of course, the first time Hall was “able to file the appropriate information with the Commission.” Hall was obviously possessed of all the information necessary to comply with Section 4(d) in 1974 when Hall made a conscious and deliberate decision to by-pass the Commission and initiate an action for damages in the state courts to secure the retroactive rate Increase 9 The Commission found further that the waiver should be denied because of the “possible unsettling effect that a waiver in this case might have on other gas purchase transactions” since the grant to Hall of a higher rate for its gas effective in 1961 posed “a strong likelihood that claims would arise assert- ing that this increase triggered the operation of indefinite price escalator provisions in other contracts in the Sligo Field geo- graphical area,” involving pipeline companies other than Arkla, and opening “the door to additional rate increase re- quests and to requests for waiver for the same period” (App. B, infra, pp. 46a-47a)."” | The Commission found, as a matter of policy, that it is not “in the public interest to take actions in the name of equity that have the potential for reopening transactions which took place almost 20 years ago.” (App. B, infra, p. 47a). The Commission held that it could not assume that if Hall had made a timely filing in 1961 that the Commission would have approved the increase, noting that the Commission might well have concluded that the royalty payments did not trigger the favored nation clause and that even if they did trigger the clause, in light of the Commission outlawing indefinite pricing provisions in 1961 in new contracts, the Commission might have determined that the public interest would not permit the grant of rate increases based on indefinite price escalation provisions in existing contracts (App. B, infra, p. 48a; see also, n. 5, supra, p. 45). Finally, the Commission rejected Hall's only claim of good cause, pointing out (1) that the Louisiana courts did not find fraud or deceit in Arkla’s failure to disclose information and (2) Hall represents only 48 percent of the total interests committed to Arkla in the Sligo Field. If the waiver sought by Hall were granted, the other 57 percent interests would be entitled to the same retroactive rate increase sought by Hall. Non-litigants in the Sligo Field have made such claims upon Arkla. Additionally, royalty own- ers, at the instigation of Hall, have made claims upon Arkla for “compensatory damages.” 10 that the Commission's “own review of the record before us leads us to conclude that Arkla could have reasonably assumed that the government royalty payment did not trigger the in- definite price escalator in the contract with the Hall group” (App, B, infra, pp. 48a-49a)."’ E. Proceedings In The Court Below After the Commission denied rehearing on January 2, 1981, of its order denying the application for waiver, 14 FERC © 61,003 (1981), Hall filed a petition for review of the Commis- sion’s order in the court of appeals. Hall’s petition for review was pending when this Court granted Arkla’s petition for certiorari in case No. 78-1789, and was still undecided when this Court’s July 2, 1981 opinion was rendered. Arkla v. Hall, 453 U.S. at 576, n. 6." In a2 to 1 opinion rendered November 26, 1982, Chief Judge Clark dissenting, the court below reversed the Commission’s order denying the waiver, and remanded the case to the Com- mission with specific instructions to grant the waiver and the '! This Court in Arkla v. Hall took a similar view of Hall's appeal to equitable considerations to escape the filed rate doctrine arising out of Hall’s claimed misconduct of Arkla in failing to inform Hail of the royalty payments. This Court said (453 U.S. at 583, n.13): "We do not find this argument compelling. The court below did not’find that Arkla intentionally failed to inform respondents of its lease payments to the United States in an effort to defraud them. Consequently, we are not faced with affirmative misconduct, and we need not consider the application of the filed rate doctrine in such a case,” agreeing with the Commission’s finding that Arkla “could have reasonably assumed that the government royalty payment did not trigger the [favored nation clause. |” 2 On July 21, 1981, this Court denied Hall's motion for a stay of the mandate and extension of time for filing a petition for rehearing in Case Nos. 78-1789 and 79-1896. Hall’s request was made principally on the ground that the Fifth Circuit review proceeding was pending and that this Court should withhold the mandate until that proceed- ing was complete. 1] retroactive rate increase, leaving to the Commission only the determination of the level of the retroactive rate increase. The court held that the waiver should be granted because this case does not involve a retroactive rate increase but rather delayed implementation of a contractually authorized rate increase. The court also held that the waiver provision of Section 4(d) of the NGA is available to permit a rate increase for a past period even though retroactive rate increases are barred by the NGA." In an order issued March 14, 1983, the court “denied” both Arkla’s and the Commission’s suggestions for rehearing en banc, and Arkla’s petition for rehearing (App. A, infra, p. 30a). Chief Judge Clark dissented from the denial of panel rehearing, stating that due to the fact that nine of thirteen regular active service judges had disqualified themselves from the case, the denial of the suggestion for rehearing en banc gave an “erroneous impression” that the suggestions were considered on their merits by the thirteen judges, when, in reality, because of disqualifications the suggestions for rehear- ing en banc of the panel’s decision could not even be considered due to the absence of a quorum of the court (App. A, infra, p. 33a). Arkla’s motion for relief from the court’s order denying en banc rehearing was denied on April 27, 1983 (App. A, infra, p. 34a). REASONS FOR GRANTING THE WRIT The decision of the court of appeals presents multiple ques- tions of substantial importance with respect to the proper role ‘ Arkla’s motion to dismiss the review proceedings on the grounds of res judicata and collateral estoppel was preliminarily denied by the Court (App. A, infra, p. 36a) but carried along with the case on the merits. The Court's November 26, 1982 opinion denied the motion, principally on the ground that Hall had an “administrative action” for “rates” as distinguished from the claim for “damages” rejected by the Supreme Court in Ark/a v. Hall, although the Supreme Court had ruled that the claim for damages was, in fact, a claim for a retroactive rate increase. 453 U.S. at 578-579, 580. 12 of the courts in reviewing the Commission’s orders under the NGA. Moreover, since the relevant review provisions of the Federal Power Act (“FPA”) “are in all material respects sub- stantially identical” to the NGA, the decision will affect review of the Commission’s orders under the FPA. The decision. if allowed to stand, will substantially undermine the Commis- sion’s administraton of both statutes. FPC v. Sierra Pacific Power Co., 350 U.S. 348, 353 (1956). The decision of the court of appeals also presents important questions of law as to whether it is in conflict (1) with the decision of this Court in Arkla v. Hall, supra, (2) with the decision of another panel of the Fifth Circuit in Continental Oil Co. v. FPC, 236 F.2d 839, 843 (1956), cert. denied, 352 U.S. 966 (1957), and (3) with the decision of the Third Circuit in Shell Oil Company v. F PC, 334 F.2d 1002 (1964). These conflicts in- volve fundamental errors committed by the court below in having reversed the Commission's order denying Hall's appli- cation for waiver and in awarding to Hall the same retroactive rate increase it was denied by this Court’s decision in Arkla v. Hall. Additionally, the decision of the court of appeals presents an important question involving the meaning and scope of Section 4(d) of the NGA, the outcome of which will significantly affect the Commission's administration of the NGA as well as the FPA. See Section 205(d) of the FPA. The question is one which this Court noted but did not find necessary to address in Arkla v. Hall, namely, whether waiver of the notice requirements of Section 4(d) “is available for retroactive collection of a higher rate than the one on file” with and approved by the Commission (453 U.S. at 578, n.8). The decision of the court of appeals denying the suggestions for rehearing en banc of the Commission and Arkla because of the unusual circumstance of the recusal of 9 of the 13 members of the court of appeals presents the important question of whether a remedy is available to enable litigants seeking re- view of orders issued under the NGA to have the full opportun- 13 ity for en banc review as provided by the Judicial Code and the rules of the court below. These important questions reach beyond this immediate case and its litigants. With respect to the proper role of the courts vis-a-vis administrative agencies, the questions pre- sented may arise in any review of Commission orders under the statutes it administers and, indeed, may arise in any re- view of the orders of any of the federal administrative agen- cies. As for the availability of waiver of the notice provisions of the statutes administered by the Commission, the question presented can arise in any ratemaking proceeding involving natural gas pipeline companies and producers and in ratemak- ing proceedings involving electric companies. The court- ordered waiver of the Commission’s regulations could under- mine the statutory scheme as well as the regulations developed by the Commission to implement its responsibilities under the statute. 1. The court below usurped the Commission's statutory authority in reversing the Commission's order denying Hall's application for waiver and failed to accord proper deference to the Commision’s findings and expertise. The court ruled that the Commission’s reasons for denving the waiver were based on an erroneous premise that the retroactive rate increase violated the NGA; the court also ruled that the Commission's policy against retroactive rate- making was not involved. The court further found that the Commission’s reasons for denying the waiver were not rational (App. A, infra, pp. 12a-22a). Instead of reversing and remand- ing the order to the Commission for further consideration consistent with the court’s opinion, the court below made the finding that Hall had shown good cause for the waiver and directed the Commission to grant the waiver and the increase, leaving to the Commission only the determination of the level of the increase based on restrictions from the court on that matter (App. A, infra, pp. 22a-26a). 14 a. Even assuming, arguendo, that the court was right in overturning the Commission’s order as an abuse of discretion, the court nonetheless exceeded its authority by substituting itself for the Commission in determining that “good cause” existed to grant the waiver and prohibiting Commission reconsideration of the matter on remand. Rather than permitt- ing the Commission to supply record support where the major- ity found the present record inadequate or to reconsider whether other reasons might militate against the waiver, the court completely foreclosed that result oy deciding, on its own, that good cause existed for the waiver and directed grant of the waiver and rate increase. The function of a court of appeals on review of an administra- tive agency’s order is to lay bare and correct an error of law. When the appellate court has done that. it has exhausted the only power which Congress gave it. The court's review func- tion is at an end and the agency's order is to be remanded to the administrative agency for reconsideration in light of the court’s opinion. As this Court said in FPC v. Idaho Power Co., 344 U.S. Lt, 21 (1952), the “power ‘to affirm, modify or set aside’ the order of the Commission in whole or in part’ is “not power to exercise an essentially administrative function.” As another panel of the Fifth Circuit said in Banks v. FAA, 687 F.2d 92, 96-97 (5th Cir. 1982), citing Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 919, 524- 025 (1978): “We are ill-equipped to decide whether new hearings could be productive in this proceeding, or whether the appellants must be made whole without further hearings. We leave this to the administrative agency.” Seealso FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 145 (1940); Presbyterian Hospital of Dallas v. Harris, 638 F.2d 1381, 1389 (5th Cir. 1981), cert. denied, 454 U.S. 940 (1981), The court below overstepped the bounds of its review author- ity in issuing its order in this case and improperly propelled itself into the domain reserved to the Commission. Pry ¥. 15 Transcontinental Gas Pipe Line Corp., 423 U.S. 326 (1976): FPC v. United Gas Pipe Line Co., 393 U.S. 71 (1968). The Court’s error in this case is manifested in the rationale that it used to justify the grant of the waiver, arationale which is at war with the basic scheme of rate regulation under the NGA. The court in determining that the waiver and retroac- tive rate increase should be granted sought to avoid the adverse impact that the increase would have on consumers by Suggesting to the Commission that it could protect the con- sumers if Arkla were denied the right to recover the increase from its customers and suggested that Arkla’s failure to inform Hall of the royalty payments warranted denial of such recov- ery. The court’s reasoning would stand NGA rate regulation on its head. Judge Clark’s dissent (691 F.2d at 1199) set the matter straight: “The majority assumes that the Commission, in its discre- tion, may and should deny Arkla the rate increase it will surely seek as a result of today’s decision. I respectfully disagree, Under the due process clause no public utility may be compelled to absorb its own costs. The most basic of such costs are expenditures for gas purchases, whether incurred routinely or, as here, as thee final product of protracted litigation. Because Arkla’s ratepayers rather than Arkla received the benefit of its noncompliance with the ‘most favored nation’ clause in the 1960s, it follows inevitably, in my view, that the ratepayers must bear the burden of Arkla’s belated compliance now.” The effort of the court below to convince the Commission that it could at one and the same time grant a retroactive rate increase to Hall and deny Arkla recovery of that increase from its customers is not only groundless but emphasizes the error of the court in overstepping its bounds and improperly project- ing itself into the Commission's domain. In its suggestion for rehearing en banc, which was not considered for lack of a quorum, infra, pp. 26-28a, the Commission advised the court below that it could not legally deny Arkla recovery of the increase in costs flowing from the waiver because Arkla had 16 acted properly under the NGA. The Commission stated (Com- mission suggestion for rehearing en banc, pp. 8-9): “To be sure, the Commission may disallow ‘imprudent’ expenditures from being "mean on to ratepayers. See, e.g., Missouri ex rel. Southwestern Bell Telephone Co. v. PSC, supra, at 289 n. 1, (Brandeis and Holmes, JJ. con- curring). But there was no imprudence in this case. As the panel majority acknowledged, Arkla’s ‘delay’ resulted from the fact that the pipeline acted on an opinion of counsel that the royalty payment did not bring into the play the ‘favored nation clause.’ Slip op. at 780. The ‘delay’ stemmed from the pipeline’s ‘non-fraudulent’ (id. at 787) attempt to hold rates down.” The Commission noting the anomolous result produced by the court’s decision under the NGA, went on (id. at 9): “To hold that such conduct is imprudent, is to em ty that standard of any real meaning. * iaboonty it would lead to anomolous results. Thus, under the approach suggested by the majority in this case, pipelines would be dis- couraged from resisting producer demands in acting on behalf of customers to keep rates down in close cases. For, as the majority concedes, had Arkla agreed at an early stage that the royalty triggered a rate increase to Hall and made timely payment, the pipeline could recoup its costs from customers. However, by resolving doubts in favor of customers and litigating the issue, Arkla’s conduct some- how can be termed ‘imprudent,’ thus, barring any recov- ery from its ratepayers when it is determined that it is obliged to pay its seller. Such an incongruous result stands in marked contrast to the Supreme Court's statement that the Commission must counter the lack of incentives pipe lines have ‘to bargain prices down.’ F PC vy. Te.raco, supra, 417 U.S. at 391.” b. In addition to exceeding its review authority in direct- ing the commission to grant the waiver and the rate increase, supra, pp. 14 to 16, the court of appeals also exceeded its review functions by failing to give proper deference to the Commission's findings, expertise and experience and in sub- stituting the court's judgment for that of the Commission. As 17 stated by this Court in Permian Basin Area Rate Case, 390 U.S. 747, 767 (1968): “Congress has entrusted the regulation of the natural gas industry to the informed judgment of the Commission, and not to the preferences of reviewing courts.” And see: American Telephone & Telegraph Co. v. United States, 299 U.S. 232, 236-237 (1936): “This court is not at liberty to substitute its own discretion for that of administra- tive officers who have kept within the bounds of their adminis- trative powers... What has been ordered must appear to be “the expression of a whim rather than an exercise of judg- ment.” One example of the many instances of the court’s failure to respect the Commission's informed and expert judgment, and the substitution of its judgment for that of the Commission in an area where the court has no expertise is the rejection of what the court below described as the “most compelling reason” for denial of the waiver, i.e., that consumers would be exposed by the waiver to a potential liability for higher rates for 11 past years (1961-1972), a retroactive effect of “uncommonly severe nature.” The court below stated that the Commission's concern was “that 1980 consumers might be exposed to liability for rates attributable to 1961 consumers”; that “a different group of consumers will pay for the gas than the one which used it.” (691 F.2d at 1193). While conceding that logic supports this concern, the majority opinion concluded that the “Commission's reasoning lacks a firm basis of support” because “the record is devoid of information in this regard.” But no evidence is needed to support the concededly logical proposition that the 1961 consumers are not identical with the pay the increase. FPC v. Tennessee Gas Transmission Co., 371 U.S. 145 (1962). In Tennessee, this Court, reversing the Fifth Circuit which had held that the Commission abused its discretion, affirmed a Commission order providing for prompt refunds, noting that “the transient nature of our societs 18 often prevents refunds from reaching those to whom they are due.” 371 U.S. at 154-55. There was no evidence to support this statement and none was necessary. Logic is enough." In addition to being wrong on this count, the court also misstated the Commission’s concern which was the exposure of consumers to liability for 11 years of higher charges whether the consumers were the same or not the same as the dissenting opinion of Chief Judge Clark correctly pointed out (691 F.2d at 1199). As the dissent demonstrated, the majority opinion mistakenly focused on the equities between Arkla and Hall when “the balance must be struck between the ratepayers and Hall” for the primary purpose of the NGA is protection of the consumers (691 F.2d at 1199). The Commission’s concern regarding the severe impact on consumers was a reasonable and rational exercise of the Commission's discretion and is Strengthened, not weakened, by the fact that in a period of more than 20 years there are bound to be changes in the identity of the consumers as the dissent points out (691 F.2d at 1199). The Commission could legitimately take into account in exercising its discretion to deny the waiver that if the waiver Was granted the Commission would be forced to permit Arkla to recover the increase from its ratepayers (691 F.2d at 1199). 2. The decision of the court below is in direct conflict with the decision of this Court in Arkla vy. Hall. supra, on matters '* The egregious nature of the court's substitution of its judgment for the Commission's is shown by its reliance on an unsupported assertion during oral argument by Hall's counsel that “to the best of his information, the gas purchased from Hall was sold by Arkla to line industries in Southwest Arkansas wherein the possibility that con- sumers over the twenty-year period would be similar is more prob- able.” 691 F.2d at 1193, n.15. The assertion is an absurdity. Arkla is an integrated utility with multiple sources of gas which are comming- led in its lines. In such circumstances the ability to trace particular molecules of gas from a point of production in Louisiana to particular customers in Arkansas is impossible. 19 that are critical to the court of appeals’ reversal of the Commis- sion’s order denying Hall's application for waiver. Acknowledging that in light of this Court’s decision in Arkla v. Hall, “the only avenue available to Hall, ifany exists at all, is the administrative one arguably provided by Section 4(d),” the court of appeals ruled that such an “administrative compo- nent to this case . . . remains alive” because “[{a]lthough Hall is not entitled to contractual damages by virtue of the filed rate doctrine, it is entitled to the rates which it contracted with Arkla to receive over which the Commission has authority to regulate” and because the rate increase sought by Hail is not a retroactive rate increase (App. A, infra, p. 13a; 691 F.2d at 1191-1192; emphasis supplied). The court of appeals’ effort to distinguish between “con- tractual damages” and “rates” was made by Hall to this Court in Arkla vy. Hall. Hall argued that the award of the Louisiana courts was one for compensatory damages for breach of con- tract to which the filed rate doctrine has no application. This Court held that the compensatory damages, which repre- sented the difference between the contract rates paid by Arkla and the contract rates Hall contended Arkla should have paid had the favored nation clause gone into effect, were an award of a retroactive rate increase barred by the filed rate doctrine and the NGA’s prohibition against retroactive rates. 453 U.S. at 974, 578-579, 580. Thus, the distinction attempted by the court below between the compensatory damages (or contractual damages) and rates is non-existent. They are one and the same—a claim for a retroactive rate increase. The lower court has engaged in a futile attempt to separate the inseparable, Cf. Montana-Dakota Utilities Co. vy. Northwestern P.S.C.. 34] U.S. 246, 251 (1951); and its decision is in a head-on collision with the ruling of this Court in Arkla v. Hall. The court's effort to avoid the bar created by this Court’s decision on the ground that the parties are not the same and the actions are not identical is also without merit. In each action the parties are Hall and Arkla as the court below recognized when it referred to the “present action,” i.e., the administra- 20 tive action, as “involving Hall and Arkla” (App. A, infra, p. 11a; 691 F.2d at 1194). The actions are also identical. Each is based on and arises out of the same gas purchase contract, the same favored nation clause, and the same facts. In each the objective is the same, to secure nothing less than a retroactive rate increase. The conflict between the decision of the court below and of this Court in Arkla v. Hall results entirely from the effort of Hall to relitigate the same issues." Hal] made his selection freely, to seek damages in the state courts and not to seek a waiver from the Commission. Hall is bound by that election and is not entitled to two bites at the cherry because the first bite was unsuccessful. Hall's determination not to pursue any remedy through the Commission is particularly illustrated by Hall's vigorous oppo- sition to Arkla’s 1975 filing with the Commission, in FERC Docket No. RI76-28, requesting issuance of a declaratory order asserting the Commission’s primary jurisdiction over the dispute. Hall successfully defeated Arkla’s efforts to have the matter heard by the Commission, but did not make the “conditional” filing for a waiver until 1979 and. ironically, made it in the same declaratory order proceeding initiated by Arkla. It is clear that in opposing Arkla’s 1975 filing, Hall was deter- mined to pursue its remedy on/y in the state court. Hall has done so and lost, and is not entitled to start over with an alleged administrative remedy. The court below ordered the FERC to raise the price during the period involved. This Court’s judg- ment prohibits the award of damages during the period that Hall was subject to Commission jurisdiction. The two decrees are irreconcilable. In a case decided en banc since its decision in the present case, Nilsen v. City of Moss Point, 701 F.2d 556. 560 (oth Cir. 1983), the Fifth Circuit stated that “. . . one who has a choice of more than one remedy for a given wrong .. . may not assert them serially, in successive actions, but must advance all at once on pain of bar.” In Nilsen, the Court held a subsequent claim was barred when a job bias claimant whose Title VII claim was dismissed for failure to make the requisite EEOC filing, attempted to assert a new action arising out of the same transaction and alleging the same discrimination. Equally futile is the court of appeals’ effort to avoid a conflict with this Court’s ruling by attempting to transform the retroactive rate increase into a prospective rate increase, on the authority of City of Piqua v. FERC, 610 F.2d 950 (D.C. Cir. 1979)."° A retroactive rate increase is no more transformed into a prospective rate increase by a waiver than the retroac- tive rate increase was transformed into compensatory dam- ages by resort to a court lawsuit. 453 U.S. at 579, n. 8. Piqua does not support the court of appeals’ decision, assuming, arguendo, Piqua was correctly decided.” In Piqua, as the D.C. Circuit emphasized, an agreed upon rate and agreed upon effective date were involved; there was no substitution retroactively of a different rate (610 F.2d at 955). In this case. in contrast, as the court below concedes (App. A, infra, p. 22a; 691 F.2d at 1196), there is no agreed upon rate." A rate will have to be determined retroactively and substituted by the Commission. The court of appeals’ decision also collides with Arkla v. Hall when it asserts (691 F.2d at 1189) that this Court recognized the availability of the waiver provisions to permit an alteration of rates without a timely filing (691 F.2d at 1189). This Court's reference in a footnote to the waiver provision of section 4(d) did not recognize the use of that power to grant a retroactive rate increase (453 U.S. at 578, n. 8). Indeed, the Court in that same footnote expressly disavowed any intention to suggest '* The court of appeals criticized the Commission’s citation of Gill- ring V. FERC, 566 F.2d 1323, 1325 (5th Cir.), cert. denied, 439 U.S. 823 (1978), as support for the reference in its order to its “long- established ‘statutory bias’ against retroactive rate increases” ( App. B, infra, p. 46a). The criticism is mistaken. As the court of appeals’ own analysis of Gillring confirms, the Commission’s citation of Gi//- ring was on the mark (691 F.2d at 1191; App. A, infra, p. 13a). '’ See infra, pp. 24-26. '* The court below while conceding that the facts of Piqua “are not totally analogous to this case” dismissed the distinctions as insignifi- cant. (691 F.2d at 1191, n.13). The difference in facts between Piqua and this case is the difference between day and night. 22 that the waiver power is available for a retroactive rate in- crease, Saying, “[a]ssuming, arguendo, that waiver is available for retroactive collection of a higher rate than the one on file 19 Even the court of appeals’ finding of good cause is in conflict with this Court’s decision in Arkla vy. Hall. Although the court below did not provide any reasons for its finding, it apparently agreed with Hall that Arkla’s failure to inform Hall of the higher royalty payments to the United States was the only reason why Hall failed to make the administrative filing for waiver with the Commission and to receive the higher rates (691 F.2d at 1191, 1193. 1198-99), *° Hall made the same appeal to equitable considerations in Arkla v. Hall, contending that the filed rate doctrine should not bar recovery when Arkla’s misconduct in failing to inform Hall of the higher payments prevented filing of a higher rate (453 U.S. at 583). This Court did not find “this argument compelling,” pointing out that Arkla did not intentionally fail to inform Hall in an effort to defraud Hall and agreeing with the Commission, which had also rejected the same argument in ‘We show later that waiver is not available for retroactive rate increases as the Supreme Court. the Third Circuit, and the Fifth Circuit have held, infra, pp. 24-26. ” As already noted, n.9, Supra, p. &, Arkla cannot possibly be blamed for Hall's failure to file for a Waiver between 1974 and 1979. Additionally, contrary to the court’s assumption that Hall would have received the higher rates if it had made a filing therefor, if Hall had made a rate change filing in 1961 as required by Section 4(d) ofthe NGA, the receipt of the higher rates was not a certainty. The filing would have been subject to suspension and refund and Hall would have had the burden of proof to show that the new higher rate was authorized by the favored nation clause and Was just and reasonable. 15 U.S.C. § 717¢(e). The Commission, consistent with its precedents, could well have held that the favored nation clause was not triggered or, if triggered, that the higher rate exceeded the allowable ceiling rate. See n.5, supra. 23 denying waiver, that Arkla “could have reasonably assumed that the government royalty payment did not trigger the” favored nation clause (453 U.S. 583 and n. 13). Similarly, in assuming that this Court in Arkla v. Hall merely noted the Commission's reasons for denying the waiver but neither adopted nor relied on them, the decision of the court below is again in conflict with Arkla v. Hall. With re- spect to Hall’s contention that the filed rate doctrine was inapplicable to the case because the state court only deter- mined “damages” suffered as a result of breach of contract and because no “federal interests ... are affected by the state court’s action,” this Court rejected that contention on the ground that the Commission in its order denying waiver (citing the order) “found that permitting this damages award could have an ‘unsettling effect . . . on other gas purchase transac- tions’ and would have a ‘potential for disruption of natural gas markets.’ ” 453 U.S. at 579. This Court did not thereby merely note the Commission's reason. This Court relied on the Com- mission’s finding to reject Hall’s contention. With respect to the Commission's refusal to sanction the waiver because it would expose consumers to a multi-million dollar liability for higher rates beginning in 1961 and continu- ing for some 11 years thereafter, this Court rejected Hall's assertion that the damages awarded would be paid entirely from Arkla’s corporate assets and would not be passed on tothe consumers, saying (453 U.S. at 579, n. 10): “the record does not support respondents’ assertion that Arkla could not pass the damages award along to its cus- tomers. In its order denying respondents’ request for a waiver of the § 4(d) notice requirement, the Commission conceded that Arkla would have the right to do so, even though all the natural gas for which Arkla would be paying was long since sold. 13 FERC, at 61, 213.” Here, again, this Court relied on the Commission’s finding and did not merely note the action taken by the Commission. Thus, as has been demonstrated, the lower court's opinion is in direct conflict with Ark/a v. Ha// in many respects crucial to 24 its decision, particularly the lower court’s finding that no retroactive rate increase is involved and this Court's finding that the damage award of the Louisiana courts was “nothing less than a retroactive rate increase” forbidden by the NGA. 3. The effort of Hall to secure the retroactive rate increase denied by Arkla vy. Hall presents the important question of whether “waiver is available for retroactive collection of a higher rate than the one on file” with the Commission. 453 U.S. at 578, n. 8. As this case demonstrates, the waiver provision of the notice requirement of Section 4(d) of the NGA is not intended, and should not be used, to authorize retroactive rate increases because of the adverse impact that retroactive increases have on consumers.”' The court of appeals’ decision, if allowed to stand, will seriously undermine the consumer protection in- tended to be provided by the prospective rate increase struc- ture of the NGA. The waiver provision of Section 4(d) of the NGA has received the attention of this Court in United Gas Pipe Line Co. v. Mobile Gas Corp., 350 U.S. 332 (1956): of the Fifth Circuit in Continental Oil Co. v. FPC, 236 F.2d 839. 843 (1956), cert. denied, 352 U.S. 966 (1957); and of the Third Circuit in Shell Oil “The waiver provision of Section 4(d) of the NGA provides as follows: “The Commission, for good cause shown. may allow changes to take effect without requiring the thirty days’ notice herein pro- vided for by an order specifying the changes so to be made and the time when they shall take effect and the manner in which they shall be filed and published.” The Commission's regulations (Is CFR § [55.4s implementing Section 4(d) provide “Upon application and for good cause shown. the (ommission may by order provide that a rate schedule or a change in rate schedule shall be effective on less than 20 days’ notice. The (ommission Upon request and for wood Cause -nown May permit a rate schedule for a change in rate schedule to be filed prior to 40 davs before the effective date 25 Co. v. FPC, 334 F.2d 1002 (1964). Each of these courts has interpreted Section 4(d) of the NGA as meaning that the effec- tive date of a change in rate cannot precede the date on which the notice is filed. The decision of the court below and the decision of the D.C. Circuit in Pigua, as interpreted by the court below, are in direct conflict with these decisions. In Wobile, this Court ex- plained that the 30 days’ “advance notice of changes is essential to afford the Commission a reasonable period in which to determine whether to exercise its suspension powers under Section 4(e)” (350 U.S. at 342; emphasis supplied). In Con- tinental Oil, citing Mobile, the Fifth Circuit said: “since it thus affirmatively appears that prior notice is required, it necessar- ily follows that the effective date of a change in rate cannot precede the date on which notice is filed” (236 F.2d at 843; emphasis in original). Similarly, in She// Oil the Third Circuit affirmed an order of the Commission holding that the NGA prohibits any change in existing rates except in the manner provided in Section 4(d) and specifically holding that changes in filed rate schedules “must be prospective in operation” (334 F.2d at 1009). The Third Circuit went on to hold as follows (id. ): “We find nothing in the Act which authorizes a natural gas company to retroactively amend existing rates either by contract or otherwise.” The fundamental purpose of the NGA and the companion FPA is to protect the ultimate consumers. F PC v. Hope Natu- ral Gas Co., 320 U.S. 591, 610 (1944); FPC v. Interstate Natu- ral Gas Co, 336 U.S. 597, 581 (1949). Retroactive ratemaking and reparations are incompatible with that fundamental statutory purpose and are, therefore, barred by the NGA and FPA. Waiver of the notice period to permit a rate increase to be effective retroactively nullifies important aspects of consumer protection incorporated into the NGA and FPA. Suspension of the increased rate is an important element of consumer protec tion for, unless the effective date of the rate change is sus pended, the Commission is without power to order refunds 26 even if the Commission determines at the end of the investiga- tion that the increased rates are unjust and unreasonable. The notice requirement in advance of the effective date serves the “essential” function of affording the consumers the opportun- ity to advise the Commission of their views respecting suspen- sion of the rate change (whether it should be suspended and for what period) and “is essential to afford the Commission a reasonable period in which to determine whether to exercise its suspension powers under § 4(e).” Mobile, supra, 350 U.S. at 342. The Commission has no statutory power to suspend a rate change after the proposed effective date has passed. /n- diana & Michigan Electric Co. v. FPC, 502 F.2d 336, 342-343 (D.C. Cir. 1974). Congress intended that the just and reasonable rate stand- ards of the NGA and the FPA should be prospective in effect. To that end the Commission was armed with powers to provide itself with the information needed to evalute the rate increase before it becomes effective and thereby to protect consumers through its suspension and refund powers. To misuse the waiv- er provision, as the court below has done, so as to authorize collection of a retroactive rate increase will frustrate the con- sumer protection intended by Congress in the prospective rate structure of the NGA. 4. Review by this Court is particularly necessary because the Fifth Circuit was not able to complete the appellate process in this case. In dissenting from the denial of panel rehearing, Chief Judge Clark called attention to the fact that, because of disqualifica- tion of nine of the thirteen Fifth Circuit judges in regular active service, the court could not pass on the suggestions for rehear- ing en bane filed by Arkla and the Commission. The problem deseribed by Chief Judge Clark is a serious one as it affects every case before the Fifth Circuit in which the Commission is a party. In order to avoid regular problems with recusals in these cases, the Fifth Circuit established a “Gas Panel” to hear all cases before the court in which the Commission is a party. While the Fifth Circuit still has enough regular active service judges to constitute a panel, the number of judges who con- sider themselves capable of serving on these gas cases has dwindled to four. Consequently, when read with the rules on en banc rehearings, the clear result in every case is that the parties are denied the opportunity even to have a suggestion for rehearing en banc considered because the remaining four judges do not constitute a quorum under 28 U.S.C. § 46(¢). Thus, they can technically neither grant nor deny any such suggestion. Although Arkla recognizes that this Court has stated in Western Pacific Railroad Corp. v. Western Pacific Railroad Co., 345 U.S. 247 (1953), that the litigants do not have a “right” to have their appeal reviewed by every one of the circuit judges and that the device of rehearing en banc looks primarily to- ward avoiding intracircuit conflicts, the Court also stated that even though not a right, it is important that the rules should be applied in such manner as to accomplish their objective (345 U.S. at 258-261). In this case, when Hall appealed to the Fifth Circuit in January 1981, for review of the Commission’s order, Arkla promptly intervened and joined with the Commission in mov- ing the court for an order, pursuant to 28 U.S.C. § 2112(a), transferring the case to the United States Court of Appeals for the District of Columbia Circuit where one branch of this same case was pending and where another branch of the case had already been decided. The Fifth Circuit, in an order issued March 13, 1981, denied the transfer (App. A, infra, p. 35a). Arkla’s motion to transfer was briefed and denied without the litigants’ knowledge that a Commission case could not, under the court’s rules and their application by the court, obtain en banc consideration. Because of judge disqualifica- tion, the Fifth Circuit was unable to complete the appellate process in this case as provided by 28 U.S.C. § 46(c) and the court’s rules or, as Judge Clark suggests (App. A, /fra, p. 33a), In any Gas Panel Case. These extraordinary circum- stances have made consistent application of all the rules of Ds judicial procedure impossible. Judge Clark in his dissent (App. A, infra, p. 33a) suggested that resort to this Court's supervisory power may be the only recourse. Arkla submits that the importance of the en banc rehearing is sufficient to justify consideration of some alternative to permit consideration and review of the intercircuit and intra- circuit conflicts present in this case. CONCLUSION For the reasons stated, a writ of certioram should be granted in this case to review the judgment rendered on November 26, 1982 by the United States Court of Appeals for the Fifth Circuit; and that judgment should be reversed. Respectfully submitted, ROBERT Roserts, JR. (counsel of record) W. MICHAEL ADAMS Kay COWDEN MEDLIN BLANCHARD, WALKER, O'QUIN & ROBERTS First National Bank Tower Post Office Drawer 1126 Shreveport, Louisiana 71163 Telephone (318) 221-6858 REUBEN GOLDBERG GLENN W. LETHAM GOLDBERG, FIELDMAN & LETHAM. P.C. 1100 Fifteenth Street, N.W. Washington, D.C. 20005 Telephone (202) 463-8300 Attorne ys for Petitioner APPENDIX la APPENDIX A UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT. November 26, 1982 No. 81-4011. Frank J. HALL, et al., Petitioners. Vv. FEDERAL ENERuY REGULATORY COMMISSION, Respondent. Natural gas producers petitioned for review of an order of the Federal Energy Regulatory Commission denying their application for a waiver of the filing requirements of the Natu- ral Gas Act. The Court of Appeals, Garza, Circuit Judge, held that Federal Energy Regulatory Commission abused its dis- cretion in denying natural gas producers’ application for a waiver and corresponding rate adjustment. Reversed and remanded with instruction. Clark, Chief Judge, filed dissenting opinion. Petition for Review of an Order of the Federal Energy Regulatory Commission Before CLARK, Chief Judge, GARZA and JOHNSON, Cir- cuit Judges. GARZA, Circuit Judge: This case presents for review an order of the Federal Ener- gy Regulatory Commission’ (FERC) denying the application ' The Federal Energy Regulatory Commission assumed most of the duties of the Federal Power Commission on October 1, 1977. In this opinion, the term “Commission” refers to either FERC or its predecessor agency, whichever was active during the time period referenced. ). owt of appellants, the Hall group (Hall), for a waiver of the notice requirements contained in § 4(d) of the Natural Gas Act? so as to permit the Hall group to collect from intervenor, Arkansas Louisiana Gas Company (Arkla), the difference between the purchased gas rate which the Hall group charged Arkla from September, 1961, to October, 1972, and the rate which Arkla paid the United States in royalties for gas obtained on leases during the same period. The instant action is but apart of a complex series of actions’ in which Hall has attempted to enforce its contractual rights against Arkla as set forth in a 1952 contact. After eight years of contractual litigation in the Commission, the Louisiana state courts and the Supreme Court of the United States, it appears that Hail’s only avenue for relief with respect to the time period between 1961 and 1972 is through the administrative provisions of the Natural Gas Act. Such relief was denied by the Commission and those orders are now presented to us for review. Because of the complexity of this case and its unusual posture before us, we set forth the facts and procedural background in detail. * NGA § 4(d), 15 U.S.C. § 71 7e(d), provides: Unless the Commission otherwise orders. no change shall be made by any natural gas company in any such rate, charge, classification or service, or in any rule, regulation or contract relating thereto, except after thirty days’ notice to the Commis- sion and to the public . . . . The Commission for good cause Shown, may allow changes to take effect without requiring the thirty days’ notice herein provided for by an order specifying the changes so to be made and the time when they shall take effect and the manner in which they shall be filed and published. ‘ By this Court's count, the present action represents the six “1 on an teenth time a court or agency has either affirmatively rule issue in this case or has declined to review thereby affirming the lower court. See Appendix A, jnfra 3a Background’ Appellants, the Hall group, are producers of natural gas; Arkla is a customer who purchases their gas. In 1952, Hall and Arkla entered into a contract under which Hall agreed to sell Arkla natural gas from the Sligo Gas Field in Louisiana. The contract contained a fixed price schedule and a “favored na- tions clause.” The favored nations clause provided that if Arkla purchased Sligo Field natural gas from another party at a rate higher than the one they were paying Hall, then Hall would be entitled to a higher price for their sales to Arkla.’ In 1954, Hall obtained a certificate from the Commission to sell the gas under this contract. Pursuant to the relevant provisions of the NGA, Hali filed the contract containing the scheduled in- creases and the favored nations clause as its rate schedule with the Commission. In September, 1961, Arkla purchased certain leases in the Sligo Field from the United States and began producing gas on its leasehold. Arkla’s payments to the United States for gas and liquids produced from that leasehold were higher than Arkla’s payment to Hall under the 1952 contract. Prior to entering into this agreement, Arkla sought a legal opinion from its attorneys as to whether a favored nations clause would be triggered by its contract with the United ‘ The facts at issue in this litigation have been largely decided in the contractual action between Hall and Arkla in the Louisiana state courts and in Arkansas Louisiana Gas Co. vy. Hall, 453 U.S. 571, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981). Our restatement reflects these findings. > The favored nations clause provided: If at any time during the term of this agreement buyer should purchase from another party seller gas produced from the sub- ject wells or any other well or wells located in the Sligo Gas Field at a higher price than is provided to be paid for gas delivered under this agreement, then in such event the price to be paid for gas thereafter delivered hereunder shall be increased by an amount equal to the difference between the price provisions hereof and the concurrently effective higher price provisions of such subsequent contract. da States. Content that such escalation clauses were not trig- gered, Arkla made no effort to inform Hall about its payments to the United States. The Hall-Arkla Contractual Litigation In 1974, Hall discovered the higher payments which the United States was receiving from Arkla as royalties for the gas produced from the Sligo Field contract. Hal] instituted suit in the Louisiana state courts seeking damages for Arkla’s asserted breach of contract amounting to the difference be- tween the prices which Arkla paid the United States and those which it paid Hall. The state trial court found that Arkla’s payment had triggered the favored nations clause. but held that the filed rate doctrine’ precluded an award of contractual damages for the period prior to 1972. The court entered an award of damages for the post-1972 period during which appel- lants were “small producers” and. therefore, not bound by the filing requirement of the NGA. The Louisiana Court of Appeals affirmed the trial court with modifications, Hall y. Arkansas Louisiana Gas Co.. 359 S0.2d 255 (La.Ct.App.1978), and both parties appealed. The Louisiana Supreme Court denied Arkla’s petition for review, Hall y. Arkansas Louisiana Gas Co., 362 So.2d 1120 (La. 1978), and certiorari was denied by the United States Supreme Court on the question of whether the interpretation of the favored na- tions clause should have been referred to the Commission. Arkansas Louisiana Gas Co. v. Hall, 444 U.S. S78, 100 S.Ct. 166, 62 L.Ed.2d 108 (1980) (Docket No. 78-796). The Louisiana Supreme Court, however. did agree to re- view the lower court's findings with respect to the contractual damages sought by Hall for the 1961-72 penod. The court " The filed rate doctrine “forbids a regulated entity from charging rates for its services other than those properly filed with the appro- priate federal regulatory agency.” Arkansas Louisiana Gas Cu. \ Hali, 453 U.S. 571. 577. 101 S.Ct. 2925, 2930, 69 L.Ed 2d 84561148] da reversed the Louisiana lower court's holding that the filed rate doctrine barred Hall’s contractual right to relief for Arkla’s breach.’ Hall v. Arkansas Louisiana Gas Co., 368 So.2d 984 (La.1979). The United States Supreme Court granted Arkla’s petition for a writ of certiorari and reversed the Louisiana Supreme Court. The Court held that Hall's action seeking contractual damages was barred by the filed rate doctrine. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981) (hereinafter, Arkla v. Hall). The Primary Jurisdiction Action Before The Commission After Hall initially filed suit in the Louisiana state court, Arkla petitioned the Commission for a declaratory order requesting them to take exclusive jurisdiction and declare that Arkla’s royalty payments to the United States did not trigger the favored nations clause of the 1952 contract with Hall. The Commission declined, however, to exercise primary jurisdic- tion stating in three successive and “clarifying” opinions” that it would adhere to its policy against assuming jurisdiction over matters pending before a court. Arkla sought review of the Commission's orders in the United States Court of Appeals for the District of Columbia who, upon request of the Commission, remanded the administrative record to the agency for further * In aecordance with its opinion, the Louisiana Supreme Court remanded the measure of damages question to the state district court to enter judgment. The state court entered such judgment, and Arkla appealed its determination through the state system and ultimately to the United States Supreme Court in Docket No. 79- 18%. After the Supreme Court reversed the Louisiana Supreme Court in Arkla vy. Ha/l, Docket No. 78-1789, it remanded No. 79-1896 for action consistent with its opinion. Arkansas Lowisiana Gas Co. \ Hall, 453 U.S. 917, 101 S.Ct. 3152, 69 L.Ed.2d 999 (1981) i Nee Arkansas Lowisiana (7S Co. ¥ Hall, Docket No R] 76-28, Order Denying Petition (March &, 1976); Order Denying Application for Rehearing (June 4, 1976); Order Clarifving Commission Order Denving Rehearing (November 11, 1976 6a consideration on May 25, 1978. FERC subsequently declined to exercise primary jurisdiction in an order issued May 18, 1979. The agency ultimately decided that the interpretation of the favored nations clause presented no issue upon which the Commission had particular expertise. Arkansas Louisiana Gas Co. v. Hall, Docket No. RI 76-28. Order Declining Jurisdiction (May 18, 1979) at 6-7. Arkla again petitioned the D.C. Circuit for review during which time the United States Supreme Court decided the contractual action against Hall in Docket No. 78-1789. On motion of [intervenor] Hall, the D.C. Circuit dismissed Arkla’s appeal on the issue of primary jurisdiction without opinion.’ Hall's Application For A Waiver The present action arose as a corollary to the contract action. Following the Louisiana Supreme Court's decision that Hall Was entitled to contractual damages, notwithstanding the filed rate doctrine, for the period between September, 1961 and October, 1972, the Commission informed Hall that in order to collect such damages, they would have to apply for a formal Waiver of the notice filing requirements of NGA § 4(d). Hall filed its application conditionally asserting that a waiver of notice requirements was not necessary since § 4(d) did not apply to a judicial award of damages. Alternatively, they argued that “good cause” existed justifying the grant of the waiver. The Commission denied Hall’s request asserting four bases for its decision. Arkansas Louisiana Gas Co. v. Hail, Docket No. RI 76-28, Order Denying Application for Waiver (Novem- ber 5, 1980). First, the Commission contended that a grant of * The court declined to dismiss a corollary issue which Arkla had continuously raised in the administrative proceedings concerning the “small producer” status of the Hall group. That case has now been affirmed in an unpublished memorandum opinion issued May 28, 1982. See also Arkansas Louisiana Gas Co. v. FERC, 679 F.2d 260 (D.C. Cir. 1982) (affirmance reported without opinion). 7a waiver would violate its “long-established ‘statutory bias’ against retroactive rate increases.” Jd. at 10. Second. the Commission believed that the granting of Hall's request would expose present consumers to a potential liability for higher rates which should have been collected beginning in 1961, /d. Third, the Commission uttered its concern about “the possible unsettling effect that a waiver... might have on other gas purchase transactions.” Jd. Finally, FERC was “troubled by the prospect of speculating as to what the Commission would or would not have done in 1961 had it been confronted at that time with a rate increase filing by the Hall group.” /d. at 11. Although the Commission recognized that the “equities [were] favorable to the Hall group,” it concluded that in the context of its “broader regulatory responsibilities,” the waiver should be denied. Hall now appeals from that order contending that it is arbitrary and capricious, unsupported by substantial evidence in the record, contrary to precedent and the Commission's long-standing policy of protecting contractually authorized prices, and based upon speculation and conjecture on the part of the Commission. Intervenor Arkla contends that further action in this administrative proceeding is precluded by the Supreme Court’s subsequent decision in Ark/a v. Hall, supra. Arkla contends that the issues presented here were deter- mined in the contractual litigation and are precluded from further consideraticn by the doctrines of res judicata and col- lateral estoppel." It is also asserted that the present con- troversy is moot. The Commission contends that its decision is a proper exercise of its discretion and should, therefore, be affirmed. In the context of our opinion below, we dispose of each of these contentions. Arkla moved to dismiss this action on September 21, 1981. After the parties briefed the issue, this court denied Arkla's motion by order entered November 16, 1981, but agreed to carry the motion with the case. Sa The Vitality Of The § 4 Proceeding We turn first to Arkla’s motion to dismiss this review proceeding. Arkla asserts that the Hall group's attempt to obtain a waiver of the NGA filing requirements and a corre- sponding rate adjustment from the Commission is an attempt to relitigate their action for contractual damages which the Supreme Court held was barred under the filed rate doctrine. Arkla, however, misreads and construes too broadly the Su- preme Court’s decision in Arkla vy. Hall, supra. In Arkla vy. Hall, the Supreme Court did not hold, as Arkla contends. that the filed rate doctrine barred a grant to Hall of a waiver of the $4 notice filing requirements and subsequent collection of rates; rather, the Court found that the filed rate doctrine barred Hall’s claim for contractual damages (amounting to a retroactive rate increase). The Court stated that Hall could not obtain in a civil action for breach of contract what the Commis- sion could not “impose” itself. Arkla v. Hall, 453 U.S. at 578 & n. 8, 101 S.Ct. at 2953 (emphasis in original). In the same statement, however, the Court clearly recognized the waiver provisions of § 4(d) and the power of the Commission to “waive the usual requirement of timely filing of an alteration ina rate.” Id. Additionally, the Court expressly recognized that review of the Commission’s November 5 Order denying waiver was pending before the United States Court of Appeals [for the Fifth Circuit]. 7d., n. 6. If indeed, Arkla v. Hall precluded further consideration of the waiver application, then there would have been no need for the Court to acknowledge the current proceedings. It would have been appropriate instead to recognize the mootness of the proceedings. The Supreme Court’s opinion is further instructive with respect to this question. We note that the Court specifically acknowledged the preemptive authority which FERC holds in ' The Court’s opinion mistakenly cites to the order as pending before the District of Columbia Circuit. The Commission, however, subsequently notified the Court of the pendency of those proceedings in this Circuit. Ya rate cases. /d. at 577-78, 101 S.Ct. at 2930-31. Furthermore, citing to § 4(d) ofthe NGA, the Court went on to state, “E.rcept when the Commission permits a waiver, no regulated seller of natural gas may collect a rate other than the one filed with the Commission.” /d. (emphasis added). This statement clearly evidences the Supreme Court's recognition of the vitality of the proceeding before us. Arkla v. Hall does not, as intervenor asserts, expressly foreclose the current administrative action. Arkla also asserts that the issue before us—whether the Commission erred in denying Hall’s request for waiver under § 4(d)—is moot since each of the reasons cited by the Commis- sion for denying the waiver were expressly approved by the Supreme Court in its opinion. Again, Arkla overreads the high Court’s decision. While the Supreme Court acknowledged the reasons set forth by the Commission in its November 5, 1980 Order denying Hall’s waiver, it did not address the merits of the Commission’s reasoning in the context of Hall’s application for a waiver nor was that issue before the Supreme Court or determinative of the issue before it. Indeed, most of the Court’s discussion of FERC’s November 5, 1980 Order was merely in reference to what actions the Commissien had taken, not whether such actions supported denial of Hall's applica- tion."* The thrust of Arkla’s motion to dismiss is based upon its *. For example, the Court expressly disapproved of the Louisiana Supreme Court’s assumption that the higher rates sought by Hall would have been found reasonable by the Commission. In so doing, the Court stated, “{F Jar from approving the rate here in issue, the Commission has expressly declined to speculate on what its prede- cessor might have done.” 453 U.S. at 581, 101 S.Ct. at 2932. Clearly, this statement does not evidence the Court's belief that the above reason supported the denial of Hall's waiver application; rather, it is acknowledged to support the Court's finding that the Louisiana Supreme Court improperly attempted {by assumption) to perform a duty expressly reserved to the Commission—the determination of the reasonableness of rates. In another instance, the Court stated: In asserting that the filed rate doctrine has no application here, {the Hall Group] contend[{s] first that the state court has done no l0a erroneous and overbroad reading of the Supreme Court’s deci- sion in Arkla v. Hall, and accordingly, it is without merit. There are still other reasons to deny Arkla’s motion. Princi- ples of res judicata bar relitigation of the same cause of action between identical parties in which a valid final judgment has been rendered on the merits. See Judgments and Orders, Federal Procedure, L.Ed. § 51:189 (Interim Binder 1982). more than determine the damages they have suffered as a result of Arkla’s breach of the contract. No federal interests. they maintain, are affected by the state court's action. But the Com- mission itself has found that permitting this damages award could have an ‘unsettling effect ... on other gas purchase transactions’ and would have a ‘potential for disruption of natu- ral gas markets.’ 453 U.S. at 579, 101 S.Ct. at 2931. Again, the Court's statement only recognizes, without express approval or disapproval, the actions previously taken by the Commission in a separate, but related. administrative proceeding. On still another occasion, the Court made the following statement ina footnote which bears upon the Commission's concern that current ratepayers might potentially bear the burden of rates attributable to prior customers: a in an effort to challenge this determination, re- spondents assert that the damages would be paid entirely from Arkla’s corporate assets and would not be passed on to con- sumers. We see no reason why this fact, even if true, would alter our analysis. In any case, the record does not support respon- dents’ assertion that Arkla could not pass the damages award along to its customers. In its order denying respondents’ request for a waiver of the § 4(d) notice requirement, the Commission conceded that Arkla would have the right to do so, even though all the natural gas for which Arkla would be paying was long since sold. 453 U.S. at 579 n. 10, 101 S.Ct. at 2931. No one, however, challenges Arkla’s right to seek a rate increase to account for any additional rate payments it might have to make to Hall. The Court's statement does not suggest whether the Commission would have to grant sucha rate increase, nor does it intimate what weight this factor should carry in consideration of Hall's application for waiver. lla Similarly, collateral estoppel precludes relitigation of identical issues previously decided in an action. /d. § 51:214. The state court action involved a dispute on a contractual claim between Hall and Arkla. The present action involves an administrative claim under the Natural Gas Act between Hall and the Com- mission. The waiver issue was not and could not have been litigated in the state court action. Accordingly, these princi- ples do not support Arkla’s assertion that the present action is barred. We do, however, note the unusual posture in which this case is presented to this court. When Hall originally filed its applica- tion for a waiver, the Commission believed that the waiver was “technically” necessary so that Hall’s recovery of contractual damages (which at the time had been authorized by the Louisiana Supreme Court) would not contravene the notice filing requirements of the NGA. See, Arkansas Louisiana Gas Co. v. Hall, Docket No. RI 76-28 (May 18, 1979 Order). After the Supreme Court’s decision in Ark/a v. Hall, supra, this proceeding took on a very different outlook. What was previ- ously considered a technical requirement suddenly became the an administrative one—for Hall to recover its only method contractually authorized rates. This case was in some respects mooted by the Supreme Court’s prior opinion. Since it was originally filed so that Hall could comply with what FERC believed to be the technical requirements of the NGA before petitioners could recover contractual damages in the state court action, the Supreme Court's decision that Hall could not recover contractua! dam- ages negated the need for this court to rule on the propriety of the Commission's denial of the “technical” waiver. If Hall could not recover contractually, it did not need to technically comply with the NGA. There is, however, an administrative component to this case which we believe remains alive. Although Hall is not entitled to contractual damages by virtue of the filed rate doctrine, it is entitled to the rates which it contracted with Arkla to receive 12a over which the Commission has authority to regulate. The only reason Hall has not received these rates is that it failed to administratively file for them with the Commission because Arkla did not inform them of the higher payments it was making to the United States. Section 4(d) permits the Commis- sion, for good cause shown, to waive the notice of filing require- ment. Since the Supreme Court has foreclosed the civil action remedy, it thus appears that the only avenue of relief available to Hall, if any exists at all, is the administrative one arguably provided by § 4(d). The Propriety Of The Commission's Orders We turn, therefore, to the orders presented for review to determine if the Commission erred in denying the application of Hall for a waiver of the notice requirements contained in NGA § 4(d). In reviewing Commission orders granting or denying waivers of rules or regulations, we have deferred to the Commission when its decision did not represent an abuse of discretion. See. e.g., Columbia Gas Transmission Co. v. Allied Chemical Corp., 652 F.2d 503, 520 n. 16 (5th Cir. 1981); Columbia Gas Deve lopment Co. v. FERC, 651 F.2d 1146. 1160 n. 18 (5th Cir.1981). A Commission order denying a waiver of statutory re ements is similarly entitled to affirmance if there exists « ational basis for the Commission's decision. and it is supported by “substantial evidence.” /d.: see City of Pi- qua, Ohio v. FERC, 610 F.2d 950, 955 (D.C. Cir.1979). It is necessary then to examine the record and applicable law to determine if the four reasons set forth by the Commission in its order support its denial of Hall's application for a waiver. We find that the record does not support the Commission’s order. (1) Retroactive Ratemaking The first reasons set forth by the Commission justifying its denial of Hall's application for a § 4(d) waiver was its “long- established ‘statutory bias’ against retroactive rate increases.” As support for its position, the Commission cited to this court’s decision in Gillring v. FERC, 566 F.2d 1323. 1325 (5th Cir), l3a cert. denied, 439 U.S. 823, 99 S.Ct. 91, 58 L.Ed.2d 115 (1978). However, neither Gillring nor the Commission's policy against retroactive ratemaking are applicable to the facts of this case. In Gillring, the petitioner sought a retroactive increase in the rates it had on file with the Commission during one time period so that it could offset the amount obtained in that increase against amounts the Commission had ordered Gillring to refund for a different period in which the company’s rates had exceeded area rate ceilings. Gillring sought to obtaina rate increase up to the Commission’s ceiling to be applicable to a time period in which Gillring had filed and collected a lower rate in accordance with the gas purchase contract it had filed as a rate schedule. There was no question in Gil/ring that when it filed its schedule, it intended and had contracted to obtain a designated rate. Subsequently, the company sought a rate higher than that ever filed with the Commission or con- templated by the rate schedule/contract. A purer example of an action for a retroactive rate increase would be difficult to imagine; a waiver of § 4(d) notice filing requirements was neither involved nor applicable in Gillring. The question in the present case—whether the grant of a waiver to permit parties to effectuate their contractual agree- ment violates a policy against retroactive ratemaking—was squarely presented to the United States Court of Appeals for the District of Columbia Circuit in City of Pigua, Ohio v. FERC, 610 F.2d 950 (D.C. Cir. 1979). ‘3 While the facts of Piqua are not totally analogous to this case, we do not find the distinctions significant for purposes of our analysis here. Piqua involved application of the waiver provisions of the Federal Power Act, 16 U.S.C. § 824d(d) (1976). It is well settled, however, that the relevant provisions of the Federal Power Act and Natural Gas Act “are in all material respects substantially identical.” FPC v. Sierra Pacific Power Co., 350 U.S. 348, 353, 76S.Ct. 368, 100 L.Ed. 388 (1956); Accord, Arkla v. Hall, 453 U.S. at 577 n. 7. 101 S.Ct. at 2930. In Piqua, the waiver granted was for a time period less than one year as opposed to the twenty-year period presented in this l4a In Piqua, the D.C. Circuit was presented with a case in which FERC had granted a waiver of the analogous statutory notice filing requirements of the Federal Power Act. The city challenged FERC’s grant of the waiver and assignment of a retroactive date to the rate increases on the grounds that the grant was: (1) unauthorized by statute; (2) prohibited by the policy against retroactive ratemaking; and (3) unsupported by substantial evidence. The court affirmed on all three grounds. Having found that the Commission was Statutorily authorized to allow rates to take effect without requiring advance notice, the court reasoned that it would not constitute retroactive ratemaking, when good cause was shown. for the Commission to give effect to the intent of the parties whose contractually authorized rate schedules called for a rate increase to be effec- tive at a designated time. The court stated: In this case, two parties agreed on new rate schedules and on the effective f ar for the new contract. The negotiated rate change was not retroactive: it was prospective from the date of the contract. Filing under section 205(d) al- lowed the Commission to review the agreement to ensure its reasonableness. Such review does not. when good cause is shown, however, preclude enforcing the contract provision as of the date specified therein. Moreover. the Commission, in finding the Agreement reasonable, did not retroactively substitute a rate: it merely approved the rate change and effective date agreed upon by the parties. case. We discuss the relevancy of the twenty-year delay sub- sequently; however, we note that the interval for which a waiver is sought does not affect the question of whether the grant of such waiver violates a policy against retroactive rate increases. Finally, we find no significance in the fact that the parties in Piqua had agreed on new rate schedules and a new effective date for the new contract and the present situation where the parties provided in the original contract for new rates to take effect upon a date triggered by a specified transaction (i.e., the payment by Arkla of higher prices for gas to another party). In both cases, the intentions of the parties were the same: the effectuation of new rates to be charged prospectively from a date ascertainable in the contract. loa 610 F.2d at 954-55 (emphasis added). A similar position was espoused by FERC in the administrative proceeding in which it had granted the waiver. See, Dayton Power & Light Co., Docket No. ER77-546, Order Granting Rehearing and Correcting Prior Order (January 18, 1978); Order Denying Rehearing (April 3, 1978). The facts of this case have been established by prior litiga- tion in this dispute. Those facts establish that the 1952 contract between Hall and Arkla contained an escalation clause provid- ing for the effectuation of an increase in rates should Arkla pay an amount higher than those rates it submitted to Hall. It is now also established that the parties intended the favored nations clause in their contract to cover the present situation thereby permitting the Hall group (had they filed) to recover from Arkla the equivalent” of the rates it paid the United States beginning in September, 1961. We agree with the D.C. Circuit Court that the policy against retroactive ratemaking which precludes Commission “substitution of an unreasonably high or low rate with a just and reasonable rate” is “immediate- ly distinguishable” from the present situation where the Com- mission’s waiver gives prospective application to the rates contractually authorized by the parties at the effective date contemplated by the contract. The Commission erred in not giving effect to this policy which it had previously distin- guished and espoused. (2) Exposure Of Present Consumers To Liability The second and perhaps most compelling reason set forth by the Commission justifying its denial of the $ 4(d) waiver was its concern that 1980 consumers might be exposed to liability for rates attributable to 1961 consumers. The clear import of this reasoning is that a different group of consumers will pay for the 4 We use the term “equivalent” assuming for present purposes that the rate sought by Hall would be just and reasonable. We discuss this issue in more detail; infra. l6a gas than the one which used it. While the proposition is a logical one, we note that there is little evidence in the record to Suggest that Arkla’s 1961-72 customers are in fact different from its 1980 customers.” To the extent that the record is devoid of information in this regard, the Commission's reason- ing lacks a firm basis of support. It is also to be noted, however. that the Commission’s reasoning admits that its concern is merely one of potential liability to the consumer. It is far from clear that Arkla would be entitled to pass along to its customers an amount represent- ing its delayed payment for purchased gas when the delay, particularly the length of the delay, was the result of Arkla’s own, albeit non-fraudulent, actions. Before any rate paid by Arkla to Hall could be passed on to the consumer, Arkla would have to file with the Commission a schedule and notice of rate change and bear the burden of establishing the just and reasonableness of its request. FPC v. Tennessee Gas Trans- mission Co., 371 U.S. 145, 83 S.Ct. 211, 9 L.Ed.2d 199, (1962): Natural Gas Act § 4(e), 15 U.S.C. § 717e(e). It is well settled that the Commission’s duty under the NGA statutory scheme when considering the reasonableness of rates is “to afford consumers a complete, permanent and effective bond of protection from excessive rates and charges.” Atlantic Refin- ing Co. v. Public Service Commission (CATCO), 360 U.S. 378, 388, 79S.Ct. 1246, 1253, 3 L.Ed.2d 1312. 1319(1959). The clear import of Supreme Court decisions. as evidenced by CATCO, is that the underlying purpose of the NGA is protection of the consumer “even though this may result in some injustice to the producers.” See Summers, Oil and Gas § 926 (1966) (emphasis added). Although it is undisputed that the cost of purchased > At oral argument, for example, Hall's counsel asserted that to the best of his information, the gas purchased from Hall was sold by Arkla to line industries in Southwest Arkansas wherein the possibil- ity that consumers over the twenty-year period would be similar is more probable. 17a gas is a basic component of a regulated entity’s rate structure, the Commission’s duty under the Act to protect consumers together with the unusual delay attributable to Arkla’s own actions present a scenario in which it is far from clear whether Arkla could justify its requested rate increase. CATCO teaches that as between Arkla and its customers, the Commis- sion has a duty to protect the consumer even if such results in some “injustice” to, in this case, Arkla."” We do not make these observations to foreclose FERC’s consideration of a potential rate increase application by Arkla, but only to emphasize that the reason proffered by the Com- mission as to the “potential” liability of present consumers is very much a speculative proposition at this point in time. This reason, by itself, does not support the Commission’s denial! of '* There are other considerations which weigh against the con- clusion that Arkla would be entitled to pass on to its consumers a rate increase resulting from increased payments to Hall. As between Hall and Arkla, the Commission has admitted that the equities favor the Hall group. The NGA was drafted to encourage and protect the right of parties to establish rates by individual contract. The Act “evinces no purpose to abrogate private rate contracts as such.” United Gas Pipe Line Co. v. Mobile Gas Corp., 350 U.S. 332, 338, 76 S.Ct. 373, 378, 100 L.Ed. 373 (1956). In granting Hall’s waiver, the Commission could promote the purposes of the Act and preclude Arkla from breaching its contract by delaying Hall's notice filing and using the length of delay to defeat Hall’s application. On the other hand, if the Commission took this course but felt compelled to grant a rate in- crease to Arkla, it would neglect in some respects its duty to protect consumers. The dilemma is one which suggests that the Commission deny any subsequent application for rate increase by Arkla arising from these proceedings. In so doing, the Commission would effectu- ate dual purposes of the Act. Clearly, the Commission could consider these factors in ruling on whether a rate could pass on. We do not intimate that this is the course which the Commission should take: we only use this as an illustration of the uncertainty of the Commission's reliance on potential liability to the consumer as a reason for denying Hali’s application. l&a Hall’s waiver.'’ We, therefore, examine the remaining reasons proffered by the Commission in determining whether it has abused its discretion. (3) Unsettling Effect On Other Contract Purchases The third reason cited by the Commission for denying Hall's application was “the possible unsettling effect that a waiver in this case might have on other gas purchase transactions.” The Commission found that if Hall were granted a higher rate for its gas, a strong likelihood existed that other claims would arise asserting that this increase triggered the operation of indefinite price escalator provisions in other contracts in the Sligo Field geographical area. Hall contends that this assertion is speculation and conjecture on the part of the Commission about unidentified pipeline companies and that there is no substantial evidence to support this reasoning in the record of the subject proceeding. It is true that most of the arguments in brief to this court with respect to this issue were drawn from information outside the administrative record. It is conceded that the Commission may draw from its own knowledge and expertise, as well as its own records, information upon which to support this con- clusion. Our review of such information does not, however, support the Commission's concern that numerous transactions would be affected. '’ The authority of the Commission to deny any request by Arkla for a rate increase was expressly recognized by Justice Stevens in his dissent in Arkla v. Hall, supra, The short answer to the first concern [that the burden of the award might be passed on to consumers] is that there is no more reason to assume that this award will justify an increase in utility rates than any other damages judgment that a public utility may be required to pay; if the regulatory concern is valid, the agency having jurisdiction over Arkla’s sales has ample authority to require its stockholders rather than its customers to bear this edition! cost. 453 U.S. at 607, 101 S.Ct. at 2945-46. 19a The Commission's reasoning is additionally flawed by the unique posture of this case. In this action, the Louisiana courts determined the effect of the royalty payments on the most favored nations provision with the approval of Hall and the sanction of the Commission. On two occasions, the Commission declined to exercise primary jurisdiction” and decide the issue for itself. The determination of the Louisiana courts, however, is clearly precedential only in the present action involving Hall and Arkla. Several factors compel this conclusion. First, the Supreme Court has ruled that the only avenue available to Hall to obtain the rates for which it contracted is for the Commission to grant a waiver to permit the rate sched- ule to take effect. This procedure. therefore, is the only method available to other parties who might be entitled to similar relief. Unlike the present action, however, other par- ties would not be entitied to rely upon the Louisiana courts’ interpretation of the 1952 contract rate schedule at issue presently. Those decisions simply have no res judicata or col- lateral estoppel effect in a different administrative proceeding between different parties. If an issue similar to the present one were ever addressed to the Commission again, the agency would have to decide it rather than defer to a state court as occurred in this case. The Commission has previously considered many factors which effectuate the “triggering” of a most favored nations clause, see Shell Oil Co.. Opinion No. 382, 29 F.P.C. 498, 499 (affirmed Shell Oil Co. v. FPC, 334 F.2d 1002 (3d Cir. 1963)), and as the Commission notes in brief, such factors do not suggest that, if the Commission was deciding, a royalty payment such as the present one would necessarily trigger operation of a most favored nations clause. The Commission, in fact, has expressly recognized that varying interpretations to favored nations clauses result in differing outcomes. In its May 18, 1979 Order ~ See Appendix A, Chronology of Agency Court Action on Pri- mary Jurisdiction Issue, infra. 20a declining to exercise primary jurisdiction in this very action, FERC argued: Since the meaning of a favored nation clause depends upon the intentions of the parties to the contract. we see noneed for uniform interpretation of all favored nation clauses. Indeed, uniform interpretation would seem to be impossible." There is little support then in the record for the Commission's conclusion that the granting of Hall’s waiver would have an “unsettling effect” on other gas purchase contracts. Indeed, the applicable law leads to a conclusion quite the contrary. Finally, we acknowledge the reasoning of Justice Stevens in dissent in Arkla v. Hall who addressed the merits of the very concern set forth by the Commission: The second concern [that other claims might arise] seems exaggerated because it applies only to contracts executed before 1961, . . . and it seems unlikely that many large purchasers of natural gas could successfully have con- cealed violations of escalation clauses from their suppliers. To the extent that this case does have counterparts in such contracts, however, it seems to me that those cases should be decided in the same Way. 453 U.S. 607-08, 161 S.Ct. at 2946. In summary, we find no record support, legal support, or for that matter, practical support for the Commission's conclusion that other gas pur- chase transactions would be affected. ” Arkansas Louisiana Gas Co. \ Hall, Docket No. RI 76-28, Order Declining Jurisdiction (May 18, 1979) at 8. Citing to the above administrative case. this court similarly recog nized the less-than-absolute meaning and effect that an interpreta- tion of a favored nations clause in one case would have on others in general. In Pennzoil ¢ ‘company NV. FERC, 645 F.2d 360, 386 (5th ¢ ‘Ir, 1981), cert. denied. ___ lo... S.Ct. 1000, 71 L.Ed.2d 293 (1982), we stated: Since the escalation clause’s meaning depends on the contracting parties’ intentions, which in turn depends on the circumstances of its execution, identical language in different contracts could be interpreted to have different meanings .... Zla (4) Speculation About 1961 Commission The final reason set forth by the Commission to justify its decision was its reluctance to speculate as to what the Commis- sion would have done if confronted in 1961 with a Hall request for enforcement of its most favored nations clause. The fact is that FERC wholly ignores or refuses to recognize exactly what the 1961 Commission decided when faced with an identical question. In The Pure Oil Company, 25 F.P.C. 383 (1961), the Commission concluded that although favored nations clauses would be prohibited in the future, it would not eliminate such provisions from previously executed contracts. Jd. at 388-89; Order No. 232, 25 F.P.C. 379 (1961). Speculation as to what the 1961 Commission would have done, therefore, was wholly un- necessary. FERC’s attempts at distinguishing The Pure Oil Company are futile and without merit. Indeed, the Commis- sion today concedes the legality of the 1952 contract when it acknowledges Hall’s right to contractual damages following 1972. See, Hall v. Arkla, 453 U.S. at 606-07, 101 S.Ct. at 2945 (Stevens, J. dissenting). We note that, even if some ambiguity as to what the 1961 Commission would have done existed, FERC has previously speculated over long time periods about what a prior Commis- sion would have done. See, €.¢@.., Plaquemines Oil and Gas Company, Opinion No. 572-A (April 29, 1970) (1970 Commis- sion found that 1961 Commission likely would have found rates acceptable). Finally, FERC’s argument that the 1961 Commission very likely would have looked with disfavor on a Hall filing and found no triggering of the escalation clause is not compelling. Twice, FERC was asked to decide the issue and declined thereby permitting the state court to consider it. It seems particularly arbitrary that the Commission could (1) decline to exercise primary jurisdiction over an issue, deferring to a state court's power to interpret the contractual provision, (2) take issue with the state court's determination contrary to what the = ~ (Commission “may have found, and then (3) use the excuse DO. fee none that they are unable to determine what a prior Commission would have done to deny Hall’s waiver in the related adminis- trative proceeding. In conclusion, we find that the only reason set forth by the Commission which even arguably suppports the denial of Hall’s application for a § 4(d) waiver is the concern that present consumers might potentially be subjected to lability for prior rates if Arkla were permitted to pass on such rates. As previ- ously noted, this concern is highly speculative at this time and an impressive argument exists supporting the conclusion that Arkla would not be permitted such a rate increase. Potential liability to consumers, by itself, simply does not support the Commission’s decision to deny Hall’s waiver request, particu- larly when the equities of this action weigh more in favor of Hall than Arkla. We find that the Commission abused its discretion in denying Hall's application for a waiver. Relief Our decision that the Commission erred in failing to grant Hall’s requested waiver does not end the proceeding before us. On brief, Hall requests only that the Commission's orders be reversed. As part of its rather convoluted argument, however, Hall contends that the rates which it seeks to obtain (which it asserts are equivalent in amount to the contractual damages sought in the state court action) have been found by the Com- mission to be below just and reasonable area rates in effect for the time period involved, Accordingly, the question arises as to whether this court can remand this case to the agency topermit Hall to collect the rates which it seeks without allowing further action by the Commission. We believe there are several reasons to decline from so acting, and accordingly, we remand this proceeding to the Commission to determine the just and reasonableness of the rates sought by Hall. First, it is to be noted that in the latter part of the state court action, the Commission reversed itself and declined to specu- late on the reasonableness of the rate schedule submitted by 23a Hall. Hall asserts, however, that the Commission is bound by earlier admissions in this action. On several occasions, the Commission has stated that the contractually authorized prices sought by Hall were within the applicable just and reasonable area rates. Its first statement to this effect came in its May 18, 1979 Order declining to exercise primary jurisdiction over the contractual action. In its order, the Commission discussed the impact of the contractual dam- age action on its regulatory responsibilities. In finding such impact to be minimal, the Commission stated, “on the facts of this case, the damages do not exceed the applicable area rate ceilings” and “the rates requested are within what the Com- Sh A) mission had determined to be the zone of reasonableness. ’™ The Commission again acknowledged the reasonableness of the rates sought by Hall in its brief as Amici Curiae to the United States Supreme Court in Docket No. 78-986. In that action Arkla sought review of the question of whether the interpretation of the most favored nations clause in the 1952 contract should have been referred to the Commission. In its brief, FERC contended that Hall sought only to recover from Arkla damages which did not exceed Commission applicable area rate ceilings. Finally, the Commission again recognized the reasonable- ness of the rates seught by Hall in its original order before us on review. In footnote 4 of its November 5 Order, the Commission stated, The rates (11.7432 cents per Mef to 14.0508 cents per Mcf) would, however, be within the Commission ceilings in effect during that time. The following day, FERC issued an “Errata Notice” deleting the text of footnote 4 from its opinion. In its Order Denying Rehearing issued January 2, 1981, the Commission explaind ” Arkansas Louisiana Gas Co. v. Hall. Docket No RI 76-28, Order Declining Jurisdiction (May 18, 1979) at 10. 24a that “the deleted footnote was not a necessary part of the Commission's decision” and that its inclusion “was an in- advertent printing error.” While the latter explanation is ques- tionable, we note that the deleted footnote is clearly not bind- ing on the Commission. The Commission now asserts that it has reconsidered its prior determinations which were based on erroneous in- terpretations of the 1952 contract and has concluded that the Hall rates are not so clearly within the maximum, lawful area rates. The Commission first indicated its reconsideration of this question in its brief filed in November, 1980, as Amici Curiae to the Supreme Court in Docket No. 79-1896. That case Was the appeal from the Louisiana state court system award- ing contractual damages to Hall consistent with the Lousiana Supreme Court decision in Hal/ v. Arkansas Louisiana Gas Co., 368 So.2d 984 (La.1979) (reversed subsequently in Arkla Vv. Hall, supra, Docket No. 78-1789). Arkla sought review of the Louisiana Court of Appeals’ ruling that the contractual! damages awarded (for both the pre- and post-1972 periods) to Hall exceeded Commission ceilings. In its brief the Commis- sion explained the reasons for its reversal: The decision of the Louisiana Court of Appeal rejecting Arkla's contention is based in part on the Commission’s conclusion, in its order refusing to exercise primary jurisdiction, that “the damages do not exceed applicable area ceiling rates.” Upon careful reexamination of the information available to it, the Commission has deter- mined that its earlier conclusion was based on an incorrect understanding of the contract between Arkla and respon- dents that is involved in this case. At the present time the Commission is unable to determine conclusively whether its ceiling rates have been exceeded as a result of the damages awarded to respondents. The Commission's previous conclusion that “the dam- ages does not exceed applicable area ceiling rates,” was premised upon the erroneous belief that Arkla’s contract Zoe with respondents was based on sales at the plant, and not at the wellhead. *' As a result of this incorrect interpreta- tion, the Commission eliminated from its calculations those damages that apparently represented payment for removable liquids, and found that the damages awarded for the actual gas (/.e., residue gas) were within the area ceiling rates. That premise is now undermined by the ruling of the Louisiana courts ... that Arkla’s contract with respondents provided for sales of the entire gas stream at the wellhead, including removable liquids. On the same day that the United States Supreme Court re- versed the Louisiana Supreme Court in Arkla v. Hall, supra (Docket No. 78-1789), it granted certiorari in Docket No. 79- 1896, vacated the damage computation awarded by the Louisiana Court of Appeals, and remanded the case in light of its decision in Docket No. 78-1789. Ark/a v. Hall, 453 U.S. 917, 101 S.Ct. 3152, 69 L.Ed.2d 999 (1981). With respect to Hall's contention that the FERC is bound by its prior statements acknowledging the reasonableness of Hall's requested rates, the Court’s decision in Docket No. 79-1896 undermines and defeats whatever weight such reasoning possessed. Even more fundamental, however, to this court’s decision to remand this case to the Commission on the question of the reasonableness of rates, is the statutory scheme of the Natural (;as Act itself. The regulation of rates for the sale of natural gas *! All natural gas produced at the wellhead contains varying amounts of liquefiable hydrocarbons (LHC's) in a gaseous state. Natural gas including these LHC’s is known as wet gas. At the plant, LHC’s can be extracted from the wet gas and after processing can be sold as a separate product. Natural gas from which LHC’s have been removed is known as dry gas. Under the contract Hall sold Arkla wet gas. The Commission's rate regulations prescribe the same max- imum rate for the sale of dry and wet gas. Arkla contends that the contractual damage award granted Hall the market value of the LHC’s in addition to the price of gas as though the sale only involved a plant sale of dry gas. As a result, it is asserted that the rate previous- ly acknowledged as reasonable exceeds by almost two times the maximum rate for wet gas to which Hall is entitled. 26a for resale in interstate commerce by producers of natural gas was vested by Congress exclusively in the Commission under the Natural Gas Act. Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591. 6] 1-12, 64S.Ct. 281, 291-92. 38 L.Ed. 333 (1944): Colorado Interstate Gas Co. vy. FPC, 324 U.S. 581, 65 S.Ct. 829, 89 L.Ed. 1206 (1945): Phillips Pet- roleum Co. v. Wisconsin, 347 U.S. 672, 748.Ct. 794, 98 L.Ed. 1035 (1954). In the context of this administrative action, our finding that the Commission should have granted Hall's appli- cation for waiver of the notice provisions of § 4(d) does not end the Commission's duty to determine the just and reasonable- ness of those rates. It is, therefore. necessary that we remand this action to permit the Commission to grant Hall's waiver and to provide Hall with the opportunity to file its rates for Com- mission review on their reasonableness. In so doing, we make the following observations. First. the Commission's determination of the reasonableness of Hall's rates should not be inconsistent with the computation of Hall's damage recovery for the post-1972 period, at least to the extent that these computations are analogous. Second, should the Commission find the rates requested by Hall to exceed the applicable area rate ceilings, it would appear that the Hall group would at least be entitled to the ceiling rate. Final Considerations Two final considerations merit attention with respect to our decision. First, unlike the situation presented in Hall y. Arkla. supra, in which the “filed rate” doctrine precluded the award of contractual damages amounting to a retroactive rate increase, the grant of a waiver by the Commission does no violence to the filed rate doctrine. The D.C. Circuit addressed this contention in City of Piqua v. FERC, supra, and we adopt their reason- ing: “[T )he filed rate doctrine provides that a utility] can claim no rate as a legal right that is other than the filed rate : This court, in discussing the doctrine, stated: “The con- siderations underlying the [filed rate] doctrine ... are 27a preservation of the agency’s primary jurisdiction over reasonableness of rates and the need to insure that reg- ulated companies charge only those rates of which the agency has been made cognizant.” City of Cleveland v. FPC, 174 U.S.App.D.C. 1, 10, 525 F.2d 845, 854 (1976). This purpose is unaffected by the Commission's waiver of the notice requirement rg good cause, thus allowing rate changes, found by the Commission to be just and reasonable, to become effective on the date agreed by the parties. 610 F.2d at 955. Second, our decision today promotes each of the policies underlying the Natural Gas Act, particularly } 4. Congress in drafting these provisions sought to preserve the integrity of private contractual arrangements. At the same time, Con- gress required companies to comply with its requirements of notice for a rate change so as to provide the Commission with the opportunity to review rates. In so doing, Congress ex- pressed both “its conviction that the public interest require: the protection of consumers from excessive prices” and its “(manifest] concern for the legitimate interests of natural gas companies.” United Gas Pipe Line Co. v. Me mphis Light, Gas & Water Division, 358 U.S. 103, 113, 79 S.Ct. 194, 200, 3 L.Ed.2d 153 (1958). The granting of a waiver by the Commis- sion gives effect and preserves the integrity of the private contractual arrangement entered into by Hall and Arkla. The granting of a waiver, but only for good cause shown, gives credence to the § 4 notice filing requirements drafted by Con- gress. In remanding to the Commission, we acknowledge the authority of the agency to review rates so as to protect con- sumers from unauthorized, excessive prices. Finally, our deci- sion recognizes the legitimate interests of the Hall group whose showing of good cause entitles them to the waiver o notice filing requirements. REVERSED and REMANDED WITH INSTRUCTIONS 28a Appendix “A” A. Chronology of decisions on the contractual issues: (2) October 14, 1977—Louisiana state court renders ori- ginal opinion. May 1, 1978—Louisiana Court of Appeals affirms with modifications. September 22, 1978—Louisiana Supreme Court de- nies Arkla’s petition on the interpretation of the fa- vored nations clause. March 5, 1979—Louisiana Supreme Court reverses lower courts on damages for the 1961-72 contractual period and remands. May 17, 1979—-On remand, Louisiana state district court enters award of damages for Hall. October 1, 1979—United States Supreme Court de- nies Arkla’s petition for certiorari on interpretation of favored nations clause. January 22, 1980—Louisiana Court of Appeals affirms state district court entry of damages. May 2, 1980—Louisiana Supreme Court declines to review damages question. (9) (10) July 2, 198i1—United States Supreme Court re- verses Louisiana Supreme Court's ruling in (4) above. July 2, 1981—United States Supreme Court re- mands damages question in (7) above. B. Chronology of agency court action on primary jurisdiction Issue: (11) March 8 Jie oe November %, 1976—The ( ‘ommis- sion declines to grant Arkla’s motion fora declarato- ry order May 25, 19785—United States ( ourt of Appeals for the District of Columbia Circuit remands ( ommis s10n s orders at their request May 18, 1979-—FERC declines to exercise primar’ jurisdiction 29a (14) October 19, 1981—The D.C. Circuit grants motion to dismiss appez]. C. Chronology of present action on waiver issue: (15) November 5, 1980—The Commission denies Hall’s request for a walver. (16) Hall appeals in present action to United States Court of Appeals for the Fifth Circuit. CLARK, Chief Judge, dissenting. The majority assumes that the Commission, in its discretion. may and should deny Arkla the rate increase it will surely seek as a result of today’s decision. I respectfully disagree. Under the due process clause no public utility may be compelled to absorb its own costs. The most basic of such costs are ex- penditures for gas purchases, whether incurred routinely or, as here, as the final product or protracted litigation. Because Arkla’s ratepayers rather than Arkla received the benefit of its noncompliance with the “most favored nation” clause in the 1960s, it follows inevitably, in my view, that the ratepayers must bear the burden of Arkla’s belated compliance now. This conclusion alters the analysis of this dispute for me. Rather than weighing the equities between Arkla and Hall. the balance must be struck between Arkla’s ratepayers and Hall. When the Commission made this inquiry, it decided that imposing the costs of compliance on today’s ratepayers would be inequitable. I cannot disagree. If these ratepayers are not the same as those who should have borne the cost twenty years ago, the inequity is obvious. Even if the identity of the rate- payers has remained constant, however, the effects of a retroactive increase on the jong-completed business affairs of innocent ratepayers would be equally unjust. In either case. there is sufficient evidence to support the Commission's con ‘ Fi — a ; clusion Therefore without reaching the other grounds dis cussed by the majority. | respectfully dissent 30a UNITED STATES COURT OF APPEALS. FIFTH CIRCUIT. March 14, 1983. No. 81-4011. Frank J. HALL. et al. P. titioners. V. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. Petition for Review of an Order of the Federal Energy Regulatory Commission. ON PETITION FOR REHEARING AND SUGGESTIONS FOR REHEARING EN BANC (Opinion November 26, 5 Cir., 1982, 691 F.2d 1184) Before CLARK, Chief Judge, GARZA and JOHNSON, Cir- cuit Judges. PER CURIAM: The Petition for Rehearing is DENIED. and no member of this panel nor judge in regular active service on the court having requested that the court be polled on rehearing en bane (Rule 35, Federal Rules of Appellate Procedure: Local Fifth Circuit Rule 16), the Suggestions for Rehearing En Banc are DENIED. CLARK, Chief Judge, dissenting: For the reasons stated in my dissent to the panel opinion, I dissent from the denial of panel rehearing. To avoid an improper implication of agreement from the aliure of any member of the pane! or judge In regular active sla service on the court to request that the court be polled on rehearing en banc, I must note that only four members of this now thirteen active judge court could initiate or participate in such a poll. Since no senior judge is a member of the panel, none is eligible to participate in the en banc process. In any event, they would not have a vote in the en bane polling process. 28 U.S.C. § 46(e). Nine judges in regular active service have disqualified them- selves in this case. There are sound reasons for this situation. Rulings of regulatory agencies often have a pronounced ripple effect. This causes 28 U.S.C. § 455(b)(4) and Canon 3(C)(1) of the Code of Judicial Conduct for United States Judges to erect very broad barriers to a judge’s participation in appeals from the Federal Energy Regulatory Commission.! This is in- tensified by the only opinion of the Advisory Committee on '28U.S.C. § 455. Disqualification of Justice, Judge, Magistrate or Referee in Bankruptcy. (a) Any justice, judge, magistrate, or referee in bankruptcy of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. (b) He shall also disqualify himself in the following cireum- stances: (4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a finan- cial interest in the subject matter in controversy . . .: (d) For the purposes of this section the following words or phrases shall have the meaning indicated: (4) “financial interest” means ownership of a legal or equi- table interest, however small, . . .; (e) No = judge, magistrate, or referee in bankruptcy shall accept from the parties to the proceeding a waiver of any ground for disqualification enumerated in subsection (b). 32a Codes of Conduct specifically relevant to appeals from this agency.” The inclusion of such appeals in the general mix of cases assigned to randomly selected panels of this court created an abnormal number of disqualifications and resulted in numerous docketing problems. In response, the court administratively created a special panel of judges whose property ownership would not regularly cause disqualification in Federal Power Commission and Federal] Energy Regulatory Commission cases. * This “Gas Panel” solution worked acceptably until the num- ber of judges who were not disqualified dwindled to three. At least one judge thinks the court’s consensus interpretation for participation standards in this class of cases is uniquely too narrow.’ Even though it has recently risen to four, that num- * A paragraph of Advisory Opinion 62 reads: A judge who was the beneficial owner ofa fractional interest in land under mineral lease to two oil companies, raised the ques- tion as to his serving on a special panel that would have cases before it, the disposition ot Which could result in increasing wae of oil or gas. There is presently no production from the and in which the judge has an interest, but he does share in annual lease payments. Since the outcome of the proceeding could substantially affect his beneficial interest in the leases, the Committee concluded he had a disqualifying financial interest in the subject matter in controversy (Doc. 180). * Fifth Circuit Internal Operating Procedures © 6(c). ‘ The Judge observes: When we decide a matter of cor orate taxation, we potentially affect almost any corporation. When, as in this case, the panel decides—or strongly infers—that retroactive rate increases can't be passed on to consumers. that may well have as much potential economic effect on panel members (as consumers of Gas) as it does on another judge whose spouse owns a little production, or as it does on a Judge who owns shares in a mutual fund owning stock in a corporate party to the case before the judge, or as it does on a ft who owns a life insurance policy and sits on a diversity case in his own state construing life insurance policies. 33a ber seems to me to constitute an entirely unacceptable judicial base to permit this court to continue to review significant challenges to the broad-ranging and financially impactive affairs involved in many of these appeals. Litigants are entitl [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_1064%3A1. Public record. Not legal advice.