Opposition Brief — Exxon Mobil Corp. v. Federal Energy Regulatory Commission (No. 08-212)

\\\ | Siprene Cook TS

NOV 1 9 2008

No. 08-212 SRRICE OF THE CLERK

IN THE

Supreme Court of the GAnited States

EXXON MOBIL CORPORATION,

Petitioner,

v.

FEDERAL ENERGY REGULATORY COMMISSION, ET AL.,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals for

the District of Columbia Circuit

BRIEF IN OPPOSITION

FOR RESPONDENT PETRO STAR INC.

RICHARD A. CURTIN DANIEL P. COLLINS

General Counsel Counsel of Record

PETRO STAR INC. JONATHAN BLAVIN

3900 C Street, Suite 401 MUNGER, TOLLES & OLSONLLP ~-

Anchorage, AK 99503 355 South Grand Avenue

(907) 339-6660 Los Angeles, CA 90071

(213) 683-9100

Counsel for Respondent Petro Star Inc.

QUESTION PRESENTED

Whether the Constitution forbids Congress from

enacting a statute that imposes an explicit temporal

limit on an administrative agency's yet-to-be-

exercised equitable discretion to impose retroactive

rates in a pending administrative ratesetting pro-

ceeding involving the Trans Alaska Pipeline System.

(1)

RULE 29.6 STATEMENT

Respondent Petro Star Inc. is a wholly owned sub-

sidiary of Arctic Slope Regional Corporation. No

publicly held company owns 10% or more « either

corporation’s stock.

(II)

TABLE OF CONTENTS

Page

itn hn iasis cneemstemitienaitinmpaniaiieniicbatihin 1

i cr cmamesinitce 2

REASONS FOR DENYING THE P2TITION ......... 10

I. Petitioner's Novel Claim That Congress

May Not Act to Narrow an Agency’s

Equitable Discretion in a Non-Final

Administrative Ratemaking Proceeding

Does Not Warrant Review. ................cccccscsseeeeees 12

A. The Particular Question on Which

Certiorari Is Sought Is Not Presented

by the Facts of This Case ........................02. 12

B. There Is No Conflict With Klein or

Any Decision of This Court........................ 17

C. There Is No Conflict Among the Lower

5 AERIS SIs Soe yO ae ae a 22

Il. _Petitioner’s Rational-Basis Challenge to

the Statute Presents No Split of

Authority and Is Insubstantial...................... 27

I i diiriciiiisiiiinibditschaietnintinsediceaemnndiisecianinennns 30

(ill)

ee

TABLE OF AUTHORITIES

Page(s)

CASES

City of New York v. Beretta U.S.A. Corp.,

524 F.3d 384 (2d Cir. 2008) ..................cceceeceeeeeeeees 23

Colorado Interstate Gas Co. v. Federal Power

Comm’n,

I a etiam 21

Crater v. Galaza,

491 F.3d 1119 (Sth Cir. 2007) ....ccccccocccsccccccccscccccess 23

Davis v. Straub,

445 F.3d 908 (6th Cir. 2006) .................ccccsnsnseeeeeees 24

District of Columbia v. Beretta U.S.A. Corp.,

ee Bs HIE ccecesccscossecccesccessesecescessonse 24

Evans v. Thompson,

I SII cnccccccocccccescocneseseseceseccesess 23

Exxon Co., USA v. FERC,

182 F.3d 30 (D.C. Cir 1999)..................... 4,5, 15, 21

FCC v. Beach Communications, Inc.,

a 27

Glidden Co. v. Zdanok,

en 1, 20

Green v. French,

143 F.3d 865 (4th Cir. 1998)....................cccccce.covcee 23

Gutierrez de Martinez v. Lamagno,

NE 23

Johnson v. Arizona,

we a 28

(IV)

. CASES—Continued

Lindh v. Murphy,

96 F.3d 856 (7th Cir. 1996),

| 22

Marshall Field & Co. v. Clark,

Ss i)

National Coalition to Save Our Mall v. Norton,

269 F.3d 1092 (D.C. Cir. 2001).................. 24, 25, 26

New Orleans Pub. Serv., Inc. v.

Council of City of New Orleans,

a 16, 21

OXY, U.S.A. v. FERC,

64 F.3d 679 (D.C. Cir. 1995)............cscccssesscsssssees 4,6

Paramino Co. v. Marshall,

i ictnnccccnnnnaccndennnnininaitiminndines 1, 20

Pension Benefit Guar. Corp. v. R.A. Gray & Co.,

gS RI een eC 27

Plaut v. Spendthrift Farm, Inc.,

ce 1, 20, 28

Robertson v. Seattle Audobon Soc’y,

BOB UE, Ga Ce et saccccvcccccccccccccesccees 11, 15, 16, 25

Schiavo ex rel. Schindler v. Schiavo,

404 F.3d 1270 (11th Cir. 2005) .....200....... cece eee eeeee 24

Shawnee Tribe v. United States,

423 F.3d 1204 (10th Cir. 2005)..........................000- 23

Tesoro Alaska Petroleum Co. v. FERC,

234 F. 3d 1286 (D.C. Cir. 2000) ..............ccccccccscccccoee 5

United States v. Klein,

80 U.S. (13 Wall.) 128 (1871)......................00 passim

VI

CASES—Continued

United States v. Padelford,

76 U.S. (9 Wall.) 531 (1870) ..0...... cece eeteceeceeeeeeees 18

Williams v. United States,

ns cncsscsccsssccsccvccccsesooceee 19, 20

CONSTITUTIONAL PROVISIONS

U.S. Constitution, Article IT1................... 19, 20, 23, 24

STATUTES AND RULES

ee 8, 21

EES eee 20

Pub. L. No. 109-59, § 4412,

119 Stat. 1144, 1778 (2005) ...............cseeeeeeeee passim

Trans Alaska Pipeline Authorization Act,

IIL, «cc csnsesensonssoncqcoossosees 2

EE TD 8

LEGISLATIVE MATERIALS

H.R. Rep. No. 108-792 (2004)............cccccccroesssseserceecers 8

as censrnsascnsannnnesontese 8

151 Cong. Rec. S3752 (daily ed. Apr. 15, 2005)........ 28

ADMINISTRATIVE DECISIONS

Trans Alaska Pipeline System,

eR 6

Trans Alaska Pipeline System,

81 FERC 4 61,319 (1997)................cesscroccsecceesseees 6,7

Trans Alaska Pipeline System,

108 FERC { 63,030 (2004)..................scscescsssesssssseees 7

INTRODUCTION

Petitioner seeks review of the D.C. Circuit’s unpub-

lished decision rejecting all challenges to a Federal

Energy Regulatory Commission (FERC) order that

terminated a nearly 20-year-long ratemaking pro-

ceeding concerning oil transported in the Trans

Alaska Pipeline System (TAPS). Specifically, Peti-

tioner challenges the application of a new federal

statute—enacted before FERC ruled in this case—

that imposed a temporal limit on FERC’s equitable

discretion to give retroactive effect to certain rate

changes affecting TAPS. Even though the statute af-

fected only the future exercise of equitable discretion

by an administrative agency, Petitioner ominously

(and wrongly) contends that the statute usurps a

“core judicial function” by “dictat{ing] the result{)” in

a pending proceeding in violation of principles estab-

lished in United States v. Klein, 80 U.S. (13 Wall.)

128 (1871). See Pet. 10-11 (emphasis added). For

several reasons, the Petition presents no certworthy

question, lacks merit, and should be denied.

The ruling below does not conflict with any deci-

sion of this Court or of any other court of appeals.

Petitioner has failed to identify any federal appellate

decision that has ever extended Klein to the adminis-

trative context, much less to an administrative rate-

making proceeding. On the contrary, this Court has

consistently emphasized that Congress’s power to af-

fect “administrative orders” is significantly greater

than its power to “affect{) judicial judgments.”

Paramino Co. v. Marshall, 309 U.S. 370, 381 n.25

(1940); see also Plaut v. Spendthrift Farm, Inc., 514

U.S. 211, 232 (1995) (constitutional limits on legisla-

tive reopening of federal court judgments did not

apply to “administrative agencies”); Glidden Co. v.

Zdanok, 370 U.S. 530, 568 (1962) (plurality) (Klein

only applies to entities “invested with judicial

power”) (emphasis added). See post, pp. 17-21.

2

Moreover, the record in this case does not even

raise the specific question presented, because the

statute at issue did not “dictatle]” any particular re-

sult. During the FERC proceedings, the parties

raised a variety of contested points concerning

whether retroactivity should be ordered and, if so, for

what specific time frames. The statute did not at-

tempt to resolve all of these issues, so as to specify a

particular outcome. Instead, the statute preserved

FERC’s equitable discretion on these questions, sub-

ject only to the statute’s imposition of an explicit cap

on the maximum length of any period of retroactivity.

Post, pp. 12-16. In addition, Petitioner’s theory that

the statute improperly singles out this ratemaking

proceeding for differential treatment rests on a clear

misinterpretation of the underlying statute: indeed,

Congress arguably was more permissive in allowing

retroactivity in this pending case than the statute

allows in future cases. Post, pp. 28-30.

Collectively, these features make this case a par-

ticularly unsuitable vehicle for exploring Petitioner’s

novel and splitless issue concerning the reach of Klein

in administrative ratemaking proceedings. The Peti-

tion should be denied.

STATEMENT

1. Congress passed the Trans Alaska Pipeline

Authorization Act, 43 U.S.C. § 1651, et seg., in order

to facilitate the building of TAPS after major crude

oil reserves were discovered on Alaska’s North Slope.

TAPS operates as a commingled pipeline. As a re-

sult, the value of the oil that a company places into

TAPS may be different from the value of the homoge-

nous oil that is delivered to all companies from TAPS

3

at its Valdez terminus. TAPS receives oil both from

the North Slope fields and from commercial refineries

along the pipeline (including those belonging to

Respondent Petro Star) that receive their oil supplies

from TAPS, distill the oil, retain some fractions to use

as fuel or to manufacture products for sale, and

return the remainder to TAPS.

The TAPS carriers who manage the pipeline estab-

lished the “TAPS Quality Bank” system to adjust for

these differences in value. At each point along the

pipeline where oil is added to the common stream,

the Quality Bank compares the relative value of that

oil to the value of the common stream. Each shipper

is then paid—or pays—the difference in value be-

tween the oil that it tendered into TAPS and the oil

that it received from TAPS.

2. The current proceedings have a long and com-

plex history extending back to 1989. In 1993, FERC

approved, with modifications, a settlement imple-

menting a new Quality Bank methodology. Under

this so-called “distillation” or “assay” methodology,

the relative value of each barrel of oil is determined

by splitting the oil into its components, or “cuts,”

assigning a value to each cut, and then calculating

the value of the whole barrel as the weighted average

value of the different cuts. Where available, market

prices were to be used as reference prices for the dif-

ferent cuts. However, appropriate reference prices

were not available for all of the cuts. Accordingly, the

settlement established a methodology for valuing the

so-called “Resid” cut (which consists of the densest

material in crude oil). After FERC approved this

methodology with modifications, Exxon and several

other parties petitioned for review of the order. The

4

D.C. Circuit granted the petition in part, rejected

FERC’s Resid valuation, and remanded the matter

for further proceedings. See OXY, U.S.A. v. FERC, 64

F.3d 679, 694 (D.C. Cir. 1995).

3. Following the OXY remand, all of the parties to

the proceeding except Exxon and Tesoro (Tesoro be-

ing the remaining Alaska refiner, and a competitor of

the other refiners who are dependent on TAPS)

reached a new settlement.! Among other things, this

settlement provided a new methodology for valuing

Resid and advanced a new rationale for this valua-

tion. The settlement also provided that its new

methodology would be prospective only, from the date

that the settlement was approved by FERC.

Exxon contested the settlement, but after resolving

the disputed issues on the merits, FERC approved it.

Exxon again petitioned for review. The D.C. Circuit

accepted in part and rejected in part the settlement’s

method for valuing Resid. Exxon Co., USA v. FERC,

182 F.3d 30 (D.C. Cir 1999). As to the retroactivity

issue, the court “agree[d] that FERC does have a

measure of discretion in determining when and if a

rate should apply retroactively.” Id. at 49. Ordinar-

ily, “the proper remedy is one that puts the parties in

the position they would have been in had the error

not been made,” but the court acknowledged that

there may be “other considerations properly within

[FERC’s] ambit [that] counsel otherwise” in any given

case. Id. (citation omitted). The court held, however,

that FERC had abused its discretion by failing

' The parties that joined the settlement were ARCO Alaska,

Inc.; BP Exploration (Alaska), Inc; MAPCO Alaska Petroleum,

Inc.; OXY USA, Inc.; Petro Star; Phillips Petroleum Company;

Union Oil Company of California; and the State of Alaska.

5

adequately to explain why it did not make the

changes retroactive to 1993. Id. at 49-50. The valua-

tion of the Resid cut and the issue of retroactivity

were remanded to FERC.

4. On remand, proceedings concerning these two

issues were consolidated with proceedings addressing

separate complaints that had been remanded by the

t decision in Tesoro Alaska Petroleum Co.

v. FERC, 234 F. 3d 1286 (D.C. Cir. 2000), as well as

with a new proceeding concerning another cut known

as the “Heavy Distillate” cut. On the eve of the con-

solidated hearing before an Administrative Law

Judge (ALJ), all parties entered into a stipulation

that provided for a new Resid valuation methodology

but that left open certain questions about what spe-

cific values the agreed-upon methodology should

yield, as well as the question of whether to apply this

valuation retroactively. The stipulation also estab-

lished a reference price for Heavy Distillate and set a

February 1, 2000 effective date for that new valua-

tion (subject to certain adjustments that remained to

be litigated).

Eight of the parties adopted a common position on

all remaining issues except the valuation of another

cut not at issue here. They presented evidence

establishing the equitable reasons why retroactive

implementation of the new Resid valuation would not

be appropriate. First, they explained how the Resid

valuation was of crucial importance to the refiners.

In particular, because the refiners retained little or

2 These “Eight Parties” were Petro Star; BP America Production

Company; BP Exploration (Alaska) Inc.; ConocoPhillips Alaska,

Inc.; OXY USA Inc.; the State of Alaska; Union Oil Company of

California; and Williams Alaska Petroleum Inc.

6

no Resid, their “return oil” had a relatively higher

concentration of Resid than the TAPS common

stream. As a result, the retroactive assignment of a

low value for Resid would hit the refiners particularly

hard, because it would substantially reduce—after

the fact—the overall value of their more Resid-heavy

return oil. Second, the “Eight Parties” presented evi-

dence showing how Quality Bank considerations can

drive refiner decisions, in real time, about whether or

not to manufacture particular products for particular

markets. If Quality Bank payments are high, a re-

finer can mitigate that effect on its costs and profits

by producing fewer fuel products that incur those

costs—which in turn would reduce the total Quality

Bank payments owed. Because refiners typically

cannot make retroactive adjustments to the prices

they received for fuel sold long ago, any retroactive

Quality Bank adjustments can transform a decision

that was good when made into a money-loser. The

upshot of this evidence was that the equitable goal of

placing all of the parties in the positions they would

have occupied had FERC not erred in its original

Resid valuation was now unobtainable.

Moreover, when FERC ordered a new distillation

methodology in 1993, the refineries had no way of

predicting a future Resid valuation or that it would

be imposed retroactively. As of 1993, Exxon advo-

cated a valuation method for Resid that was materi-

ally different from the approach finally stipulated in

2002. Trans Alaska Pipeline System, 65 FERC

q 61,277, at 62,282-62,288 (Nov. 30, 1993). As late as

1997, when it approved the settlement that followed

the OXY remand, FERC itself believed that prospec-

tive implementation of a new Resid valuation was

appropriate. Trans Alaska Pipeline System, 81 FERC

7

{ 61,319 at 62,467 (Dec. 17, 1997). Because Peti-

tioner was unsuccessful in urging retroactive applica-

tion of the Resid cut until the court of appeals’ 1999

Exxon decision first ordered FERC to re-examine the

question, it did not appear probable before then that

any retroactivity would be ordered. Moreover, even

then, there was no way to predict the extremely low

valuation that the ALJ would ultimately place on

Resid (a valuation lower than that advocated by any

party at the hearing). This Resid valuation, com-

bined with the possibility that it might be imposed

over a very long retroactive period, threatened the

viability at least of Petro Star, a small Alaska-Native-

owned business refiner.

The ALJ issued a lengthy “Initial Decision” that,

inter alia, addressed the Resid retroactivity issue.

Trans Alaska Pipeline System, 108 FERC { 63,030

at 65,612-65,661 (Aug. 31, 2004). He held that the

Eight Parties had made “a strong case based on equi-

table considerations for holding that the values of the

remand cuts should be made effective on a prospec-

tive basis only.” Pet. App. 17la. Nevertheless, the

ALJ concluded that, “since the adoption of the distil-

lation method there never had been a just and rea-

sonable Resid proxy until this proceeding, and the

proxy which is determined herein for Resid is the

only just and reasonable value for it since December

1, 1993, and it must be made effective on that date

notwithstanding any equitable consideration.” Id.

The Eight Parties filed timely exceptions to the Ini-

tial Decision, contending (inter alia) that the ALJ had

erred in ordering retroactive application of the new

Resid valuation. Pet. App. 174a-183a. Pursuant to

FERC’s rules, these filings prevented the Initial

8

Decision from becoming a final decision of the

Commission, 18 C.F.R. § 385.708(d), and FERC thus

commenced its own review with “all the powers which

it would have in making the initial decision.”

5 U.S.C. § 557(b).

5. As the protracted Quality Bank litigation con-

tinued, Congress became concerned about its conse-

quences. Pet. 6-7. On July 28, 2004, a House Con-

ference Report stated: “Considering the specific equi-

ties of this case, the general importance of continued

domestic refinery activity in order to protect national

fuel supplies and the need to limit business uncer-

tainty associated with the use of the Trans Alaska

Pipeline System, Congress expects the Federal En-

ergy Regulatory Commission to evaluate carefully the

disputed Resid valuation and related retroactive re-

fund matter affecting the TAPS Quality Bank Ad-

justments.” H.R. REP. No. 108-792 at 1640 (2004).

On September 21, 2004, a Senate Appropriation

Committee report expressed a similar view. S. REP.

108-353 at 146 (2004). Both reports observed that

“[(Congress] is particularly concerned about the equity

of assigning retroactive refunds beyond a term of 15

months.” H.R. REP. No. 108-792 at 1640; S. REP. 108-

353 at 146. In April 2005, the Alaska congressional

delegation restated the views expressed by the Com-

mittees in a letter to FERC that was placed in the

public record of the proceedings before it. Fearful of a

legislative intervention, Exxon convinced an Alaska

Senator in May 2005 “to delay pressing for a

Congressional solution to give settlement talks more

time to proceed.” Pet. App. 205a.°

3 This successful exercise of Exxon’s own First Amendment right

to petition during Congress’s evaluation of TAPS ratemaking

9

No settlement was reached, however, and while the

proceedings still were pending before FERC, Con-

gress enacted legislation aimed at the problems it

had identified. See Pub. L. No. 109-59, § 4412, 119

Stat. 1144, 1778 (2005). Section 4412 requires FERC

to conclude Quality Bank proceedings initiated after

the statute’s enactment within 15 months of their

being filed, and prohibits FERC from ordering retro-

active Quality Bank adjustments “for any period that

exceeds the 15 month period immediately preceding

the earliest date of the first order of the [FERC] im-

posing quality bank adjustments in the proceeding.”

Id., § 4412(b\(2). For proceedings that were pending

when section 4412 was enacted, however, Congress

allowed more generous retroactivity, dating back to

the fixed date of February 1, 2000. Id., § 4412(b)(1).

6. On October 20, 2005, the Commission issued its

Opinion No. 481 and Order on Initial Decision. Pet.

App. 89a-201a. The Commission largely affirmed the

Initial Decision, including its allowance of equitable

refunds, but held that “as required by recent Con-

gressional action,” it would limit “any retroactive re-

funds resulting from the new valuations to February

1, 2000, rather than back to December 1, 1993.” Pet

App. 91a, 165a-166a.

Exxon again petitioned the D.C. Circuit for review.

It contended that section 4412(b)(1) was unconstitu-

tional because it applied only to the pending FERC

proceeding resolved in Opinion No. 481 and thus de-

belies Exxon’s unfounded innuendo that the ultimate legislation

was a product of some sort of “shocking mischief.” Pet. 2. More-

over, Exxon’s complaint that the ultimate legislation was

adopted without “hearings or floor debate,” Pet. 7, is irrelevant.

Cf. Marshall Field & Co. v. Clark, 143 U.S. 649, 672-73 (1892).

10

nied Exxon substantive due process and equal protec-

tion of the laws, and also interfered with a pending

adjudication in violation of the separation of powers.

The court of appeals rejected these contentions in a

brief unpublished decision. Pet. App. 1a, 4a.

REASONS FOR DENYING THE PETITION

Petitioner asks this Court to review the question

whether Congress may usurp a “core judicial func-

tion” by “dictat[ing]” the outcome of a “pending adju-

dication” without amending the applicable law. Pet.

10, 14. The Petition can and should be denied for the

simple reason that no such question is even pre-

sented by the D.C. Circuit’s unpublished decision up-

holding the order issued by FERC in this case. The

“adjudication” involved here was not a judicial pro-

ceeding, much less one involving the exercise of “core

judicial function(s)”; rather, it was an administrative

ratemaking proceeding involving the exercise of

regulatory discretion. Moreover, by enacting tempo-

ral limits on the extent to which FERC could set rates

retroactively for oil shipped in the TAPS, Congress

did not “dictate” the outcome of the FERC proceeding;

rather, it merely set an outer boundary on the

agencys equitable discretion to impose retroactive

rates to remedy its own errors. Under the statute,

FERC retained substantial discretion that required it

to resolve several contested points between the par-

ties, and Congress did not purport to decide these

issues or to direct a specific outcome. In addition, the

statute did change the applicable law and did so be-

fore the agency had reached a decision about how to

exercise its discretion. That Petitioner seeks to raise

a contrived issue that is not actually presented on the

record here is a sufficient reason to deny the Petition.

11

In addition, Petitioner’s contention that the deci-

sion below conflicts with United States v. Klein, 80

U.S. (13 Wall.) 128 (1871), is without merit, raises no

split of authority, and does not warrant review. Peti-

tioner has failed to identify any federal appellate

decision—and Respondent is unaware of any—that

extends Klein to administrative proceedings, much

less to administrative ratemaking proceedings. In-

deed, this Court has repeatedly indicated that Klein

does not apply to such matters. And even if Klein did

extend to such proceedings, there is no support for

Petitioner's argument that Congress lacks the

authority to regulate the exercise of equitable discre-

tion in a pending administrative proceeding, espe-

cially where (as here) Congress acts before the agency

exercises that discretion. |

Petitioner's passing suggestion that the statute at

issue here lacks a rational basis, Pet. 17, raises a

meritless and factbound issue that is plainly un-

certworthy. TAPS is a unique element of our

Nation’s overall energy supply system, and Congress

could appropriately be concerned about the possible

consequences flowing from the absence of fixed tem-

poral limitations on FERC’s ability to impose retroac-

tive TAPS rates on shippers and refiners. Indeed,

this Court has upheld statutes with a comparably

narrow sweep affecting at most a handful of pending

actions. See, e.g., Robertson v. Seattle Audobon Soc’y,

503 U.S. 429 (1992). Moreover, as set forth below,

Petitioner’s entire premise that the statute at issue

unfairly imposes a different standard for this one

case rests on a debatable (and, in Respondent’s view,

erroneous) construction of the statute as a whole—a

contested legal issue that is currently the subject of a

separate and unrelated pending FERC proceeding.

12

I. Petitioner's Novel Claim That Congress

May Not Act to Narrow an Agency’s Equi-

table Discretion in a Non-Final Adminis-

trative Ratemaking Proceeding Does Not

Warrant Review

Petitioner's request to address the scope of Klein

should be rejected because (1) this case does not pre-

sent the broader issue Petitioner seeks to frame;

(2) the decision below does not conflict with Klein or

any other decision of this Court; and (3) the decision

likewise does not conflict with that of any other court

of appeals.

A. The Particular Question on Which

Certiorari Is Sought Is Not Pre-

sented by the Facts of This Case

Petitioner asks this Court to review the question

whether it is unconstitutional for Congress, without

“amend[ing] applicable law,” to “direct{] results” in a

“single pending adjudication under old law.” Pet. 14;

see also id. at i (Congress cannot “dicat{e]” the rem-

edy “in a single pending adjudication”); id. at 10

(Congress does not have a “blanket license to dictate

the retrospective monetary relief available to private

parties in a single case”); id. at 11-12 (Congress may

not “pass[{] laws that dictate the results in pending

cases”) (all emphases added). This question, how-

ever, is simply not presented here, because none of

the predicates for the application of this supposed

rule are present on the facts of this case.

1. Contrary to what Petitioner repeatedly suggests,

section 4412 did not “direct” or “dictate” a particular

result in the FERC proceeding at issue. In contrast

to the extreme hypotheticals cited in the Petition, in

13

which Congress directs the entry of a judgment in a

common-law cause of action for a specified amount,

see id. at 20, Congress here simply imposed a tempo-

ral limit on the range of FERC’s equitable discretion

to impose retroactive rate changes in an administra-

tive ratemaking proceeding.

At the time Congress enacted section 4412, the

various Respondents were asserting a variety of dif-

ferent arguments before FERC concerning what

Quality Bank rates should be and whether and to

what extent any rates should be retroactive. These

latter arguments included the following: that there

should be no retroactivity at all, see Br. on Exceptions

of the Eight Parties Before FERC at 93-158 (Nov. 16,

2004); that retroactivity should be limited to a later

date (such as August 29, 2000, the date of the Eight

Parties’ settlement), id. at 170; and that there should

be no retroactive award of interest, id. at 170 n.133.

Petitioner's position, by contrast, was that there

should be full retroactivity, with interest, all the way

back to 1993. Pet. App. 4a. And after section 4412

was enacted, Respondents continued to press similar

arguments that there should be no retroactivity at

all, id. at 75a-77a, 174a-183a; that retroactivity

should be limited to a later date (such as January 1,

2004), id. at 79a; and that there should be no retroac-

tive interest, id. at 77a-79a, 183a. Congress’s enact-

ment of section 4412 did not determine which of these

positions was correct, under old law. Instead, Con-

gress simply imposed an outer limit on the extent to

which FERC could exercise its equitable discretion to

impose retroactive rate changes. It remained for

FERC to decide, within those limits, how to exercise

its discretion, and it did so: FERC ultimately decided

to reject, on the merits, Respondents’ various equita-

14

ble arguments for no retroactivity at all, for no retro-

activity earlier than 2004, and for no retroactive in-

terest. Id. at 79a-88a, 183a-192a.

Notably, FERC’s retroactivity decision relied, in

part, on the enactment of section 4412 in deciding to

reject some of Respondents’ equitable arguments.

Pet. App. 81a (in light of Congress’s prohibition on

retroactivity earlier than February 1, 2000, “the

validity of [certain Respondents’) equitable argument

has been undermined”) (emphasis added). Thus, to

the extent that some Respondents argued that retro-

activity was inequitable because they would have

conducted their refining operations and sales activi-

ties differently if they had known that changes would

be retroactive, FERC concluded that these equities

were no longer present in 2000, which was after the

D.C. Circuit had already held, in 1999, that retroac-

tivity could be required. Id. (concluding that, after

1999, refiners “were on notice that they should mod-

ify their operations” and “after 1999, refiners could

have protected themselves contractually”). This rul-

ing only underscores that FERC retained substantial

discretion to evaluate the equities as it saw fit.

Because section 4412 merely imposed an outer limit

on the exercise of FERC’s equitable discretion, while

leaving to the agency the task of evaluating, within

those limits, the numerous competing equitable ar-

guments concerning retroactivity, there is simply no

sense in which Congress can be said to have “dic-

tated” or “directed” a specific outcome.‘

* Indeed, the materials submitted by Petitioner confirm that

Congress deliberately refrained from attempting to direct a spe-

cific outcome to the pending FERC proceedings. Pet. App. 206a

(Letter of Senator Murkowski to President of Petitioner Exxon

15

2. For similar reasons, Petitioner is simply wrong

in stating that section 4412 does not “amend applica-

ble law.” Pet. 14. Prior to the enactment of the stat-

ute, FERC possessed discretion to determine whether

to apply a rate retroactively to correct agency error,

and this exercise of discretion was not subject to any

explicit temporal limit. See Exxon Co., U.S.A. v.

FERC, 182 F.3d 30, 49 (D.C. Cir. 1999) (“We agree

that FERC does have a measure of discretion in de-

termining when and if a rate should apply retroac-

tively.”). Congress thought the lack of any such ex-

press limitation to be excessive here, and it therefore

imposed such limits in section 4412. That is a change

in the applicable law, not a direction to reach a par-

ticular result under old law. See Robertson, 503 U.S.

at 438 (statute “compelled changes in law, not find-

ings or results under old law” where, inter alia, there

was “nothing in [the statute] that purported to direct

any particular findings of fact or applications of law,

old or new, to fact”).

Petitioner’s suggestion that a statute cannot be said

to amend applicable law unless it effects an amend-

ment of generally applicable law, see Pet. 13, is flatly

contradicted by Robertson. There, the Court ex-

pressly found that the statute at issue “did amend

applicable law” even though it assertedly “swept no

more broadly, or little more broadly, than the range

of applications at issue in the pending cases.” 503

U.S. at 441 (emphasis in original); see also id. at 433

Mobil) (“[W]hile Congress could have imposed a final resolution

in this case, we deliberately chose not to, allowing FERC to re-

view the findings of its Administrative Law Judge and give all

parties a fair opportunity to appeal FERC’s decision from that

review.”).

16

& n.1 (noting that the statute only applied to timber

sales from specified areas in Oregon and Washington

that were then the subject of pending litigation).

3. Petitioner’s characterization of this case as a

“pending adjudication” is incorrect in two major re-

spects. First, unlike all of the cases on which Peti-

tioner relies, this case does not involve Congress’s

application of new law to a pending judicial proceed-

ing. See post, 22-24. Although Petitioner contends

that Congress’s enactment of section 4412 represents

an unconstitutional legislative “exercise of a core

judicial function,” Pet. 10 (emphasis added), no such

question is presented here. Rather than presenting

an opportunity to examine longstanding questions

concerning “congressional power to have any individ-

ual judicial case among private parties decided as

Congress wishes,” id. at 18 (emphasis added), this

case presents an entirely novel question concerning

Congress’s power over pending administrative pro-

ceedings. Second, even assuming arguendo that some

administrative proceedings could be considered “ad-

judications” in a sense relevant here, a ratemaking

proceeding is surely the poorest possible candidate for

such a rule. As this Court has held, “[rjatemaking is

an essentially legislative act,” not an adjudicative

one. New Orleans Pub. Serv., Inc. v. Council of City

of New Orleans, 491 U.S. 350, 371 (19839).

- . *

- For all of these reasons, the factual context of this

case does not properly present the particular question

on which Petitioner seeks this Court’s review. This

factor alone is sufficient to warrant denial of the Peti-

tion.

17

B. There Is No Conflict With Klein or

Any Decision of This Court

In any event, Petitioner is wrong in contending that

this case conflicts with Klein. Petitioner can point to

no decision of this Court even suggesting that Klein

applies to administrative proceedings, much less to

administrative ratemaking proceedings. Nor does

any case from this Court support Petitioner’s appar-

ent position that Congress lacks the authority to

regulate the exercise of equitable discretion in a

pending administrative proceeding, even where (as

here) Congress acts before there is final agency action

purporting to exercise that discretion.

1. In Klein, Treasury agents seized, as abandoned

property, a large amount of cotton owned by a Con-

federate sympathizer named V.F. Wilson. 80 U.S. at

132. However, the statute under which the cotton

had been seized and sold allowed owners to file a

claim in the Court of Claims upon satisfactory proof

that the claimant owned the property and that “he

has never given any aid or comfort to the present re-

bellion.” Jd. at 131 (citation omitted). After Wilson

died, the administrator of his estate (Klein) filed a

claim under the statute, showing that Wilson had

owned the cotton and seeking compensation for its

seizure. As proof of Wilson’s loyalty, Klein relied

upon Wilson’s receipt of a Presidential pardon. Id. at

132. Specifically, President Lincoln had issued a

proclamation in December 1863 granting a full par-

don “with restoration of all rights of property” to any-

one who would take a “prescribed oath of allegiance”

and “keep and maintain said oath inviolate.” Id. at

131-32. Wilson had taken the required oath in 1864

and “kept the same inviolate” until his death in 1865.

18

Id. at 182. In 1869, the Court of Claims ruled in

Klein’s favor and awarded him $125,300 for the

seized cotton. The Government appealed the judg-

ment to the Supreme Court. Id.

While the appeal was pending, the Supreme Court

held in United States v. Padelford, 76 U.S. (9 Wall.)

531 (1870), that the receipt of such a Presidential

pardon established that the claimant “was as inno-.

cent in law as though he had never participated” in

the rebellion, and that the statutory loyalty require-

ment for return of seized property was thereby satis-

fied. Klein, 80 U.S. at 133. Congress responded by

passing a statute that provided, inter alia, that in

any case in which the return of seized property was

sought based on the claimant’s receipt of a pardon

that “recite[d] in substance that such person took

part in the late rebellion,” then the pardon should be

taken as “conclusive evidence” of the claimant’s dis-

loyalty and the suit was to be dismissed. Id. at 134

(citation omitted). Invoking this statute, the Gov-

ernment filed a motion to remand the case to the

Court of Claims with instructions to dismiss Klein’s

suit. Jd. at 130.

This Court held the statute unconstitutional, de-

nied the Government’s motion to remand, and in-

stead affirmed the judgment in Klein’s favor. The

Court concluded that the clear purpose of the statute

was “to deny to pardons granted by the President the

effect which this court had adjudged them to have.”

80 U.S. at 145. As such, the Court held that the stat-

ute suffered from two constitutional defects. First,

the statute “prescribeld] a rule for the decision of a

cause in a particular way”: if, based on Padelford’s

construction of the effects of the pardon, the Court

19

found “that the judgment must be affirmed,” the

statute decreed that in that circumstance the Court

was instead “directed to dismiss the appeal.” Jd. at

146. Upholding Congress’s attempt to “prescribe

rules of decision to the Judicial Department” in “cases

pending before it,” the Court reasoned, would “allow[]

one party to the controversy to decide it in its own

favor.” Id. Second, the Court held that the statute

was “also liable to just exception as impairing the

effect of a pardon and thus infringing the constitu-

tional power of the Executive.” Id. at 147.

2. Neither of the two constitutional defects found

in Klein is present in this case. This case, of course,

does not involve any congressional attempt to in-

fringe upon the Executive’s pardon power. Nor does

this case involve an attempt to “prescribe rules of de-

cision to the Judicial Department,” such that the

courts are required to make a finding on a specific

factual issue (in Klein, Wilson’s loyalty) that is con-

trary to what is required, under the Court’s prece-

dents, on the record of the case. Klein, 80 U.S. at 146

(emphasis added). Here, Congress acted to limit the

equitable discretion of an administrative agency in a

ratemaking proceeding before that discretion was

finally exercised; it did not, as in Klein, purport to di-

rect a court to make specific findings or to enter a

specific judgment that is contrary to the one an Arti-

cle III court believed to be required by law.°

6 Klein involved an effort by Congress to direct this Court—

which is, of course, an Article I] Court—to enter a specific

judgment that was contrary to the one the Court believed to be

required by law. Klein also expressly characterized the Court of

Claims as “one of those inferior courts which Congress author-

izes” under Article III]. 80 U.S. at 145. This Court subsequently

rejected that characterization of the Court of Claims in Williams

20

As FERC correctly noted in its brief in the D.C. Cir-

cuit, Petitioner has “cited no case, and we know of

none, in which Klein has been held to limit Con-

gress’s powers vis-a-vis administrative agencies.” Ct.

of App. Br. of FERC and US. at 75-76. Because there

is no decision of this Court that even remotely sug-

gests that Klein applies to administrative agencies,

there is no conflict with the decisions of this Court.

Indeed, what authority there is suggests exactly the

opposite. The Court has long held that Congress’s

power to affect “administrative orders” is signifi-

cantly greater than its power to “affect[] judicial

judgments,” Paramino Co. v. Marshall, 309 U.S. 370,

381 n.25 (1940), and the Court has likewise held that

the constitutional limits on legislative reopening of

federal court judgments do not apply to “administra-

tive agencies.” Plaut v. Spendthrift Farm, Inc., 514

U.S. 211, 232 (1995). And in Glidden, a plurality of

the Court dismissed out of hand the notion that Klein

would apply outside the context of judicial decision-

making. Glidden, 370 U.S. at 568 (plurality) (“Surely

no such concern would have been manifested [in

Klein] if it had not been thought that the Court of

Claims was invested with judicial power.”).

Moreover, even assuming arguendo that Klein

could extend to some administrative proceedings,

v. United States, 289 U.S. 553, 568, 580-81 (1933), although Wil-

liams itself was abrogated 30 years later. See Glidden Co. v.

Zdanok, 370 U.S. 530, 552-58, 562-84 (1962) (plurality) (reject-

ing Williams as wrongly decided); id. at 586-87 (Clark, J. con-

curring in judgment) (Williams superseded by subsequent statu-

tory changes confirming that the Court of Claims was an Article

ITI court). (The Court of Claims no longer exists, and its succes-

sor, the Court of Federal Claims, is expressly declared to be an

Article I court. 28 U.S.C. § 171(a).)

21

there is no decision of this Court. that supports the

view that it would apply to this sort of proceeding. As

noted above, ante, p.16, this Court has held that

“ratemaking is an essentially legislative act,” not a

judicial one. New Orleans Pub. Serv., 491 U.S. at 371

(emphasis added); see also Colorado Interstate Gas

Co. v. Federal Power Comm’n, 324 U.S. 581, 589

(1945) (“Rate-making is essentially a legislative func-

tion,” because Congress had not provided a “formula”

that required the agency to adopt one particular

method). In addition, unlike Klein, this case does not

involve a judgment recognizing and enforcing a

party’s statutory entitlement to a sum-certain. On

the contrary, at the time Congress acted, there was

no final agency action at all—the matter was still un-

der review by FERC, which remained free to accept

or reject the ALJ’s Initial Decision as it saw fit. See 5

U.S.C. § 557(b) (“on ... review of the initial decision,

the agency has all the powers which it would have in

making the initial decision except as it may limit the

issues on notice or by rule”). And the underlying non-

final decision before FERC involved, not the recogni-

tion and enforcement of specific and unambiguously

defined property rights, but rather the exercise of

equitable discretion. See Exxon Co., 182 F.3d at 49.

In short, there is no authority from this Court (or

elsewhere, see post, pp. 22-24) that would support

Petitioner’s view that Congress lacks the authority to

impose any limitations on an administrative agency's

yet-to-be-finally-exercised equitable discretion in a

rate-setting proceeding.

22

C. There Is No Conflict Among the

Lower Courts

The Petition likewise presents no conflict among

the circuits. As noted earlier, Petitioner cannot point

to a single case in the lower courts that purports to

apply Klein to an administrative proceeding. Ante,

p.20. Each and every one of the cases cited in the

Petition as supposedly creating a split involves a

judicial proceeding, not an administrative rate-

making. Moreover, none of the federal appellate

cases cited by the Petition even finds a Klein violation

to be present. Petitioner thus cannot point to any

case in which a Klein violation has been found by an-

other circuit court on even remotely similar facts.

The lack of a split is plain, and the Petition should be

denied.

1. Petitioner’s effort to conjure a conflict among the

circuits fails at the outset, because Petitioner com-

pletely ignores the critical, threshold issue of whether

Klein applies in the administrative agency context at

all. On that issue, the caselaw across the circuits is

uniform: no court has ever extended Klein to the ad-

ministrative context.

The cases Petitioner cites in support of its argu-

ment that the lower courts are divided over “Klein’s

ultimate import” only serve to confirm that Klein’s

application is limited to the judicial branch. In Lindh

v. Murphy, 96 F.3d 856 (7th Cir. 1996) (en banc),

rev'd on other grounds, 521 U.S. 320 (1997), the

Seventh Circuit considered and rejected a contention

that the restrictive standards for granting federal

habeas relief in the Antiterrorism and Effective

Death Penalty Act of 1996 (AEDPA) unconstitution-

ally infringed upon the “interpretive power of the

23

courts.” Id. at 182 (emphasis added). In fact, most of

the cases upon which Petitioner relies likewise ad-

dress whether AEDPA usurps the authority of the

federal courts. See Crater v. Galaza, 491 F.3d 1119,

1128 (Sth Cir. 2007) (cited at Pet. 20) (no Klein issue

because AEDPA “does not restrict the federal courts’

power to interpret the law, but only sets standards

for what state court errors of law require federal

habeas relief’) (emphasis added), cert. denied, 128

S. Ct. 2961 (2008); Green v. French, 143 F.3d 865,

874-75 (4th Cir. 1998) (cited at Pet. 20) (AEDPA

“does not limit any inferior federal court’s independ-

ent interpretive authority to determine the meaning

of federal law in any Article III case or controversy”)

(emphases added); Evans v. Thompson, 518 F.3d 1,

11 (1st Cir. 2008) (cited at Pet. 21, 22) (noting that in

Klein, “Congress had ‘prescribed’ a ‘rule of decision,’

thereby encroaching on Article III") (emphasis

added), cert. denied, 129 S. Ct. 255 (2008).

The remaining cases cited by Petitioner likewise

reinforce the view that Klein’s application is limited

to the judiciary. See Shawnee Tribe v. United States,

423 F.3d 1204, 1217-18 (10th Cir. 2005) (cited at Pet.

20) (citing Klein and noting that the “principle of

separation of powers does place some limits on the

ability of Congress to dictate the work of the Article

III courts”) (emphasis added); Gutierrez de Martinez

v. Lamagno, 515 U.S. 417, 430 (1995) (cited at Pet.

21) (under Klein Congress lacks authority to “in-

struct(] a court automatically to enter a judgment

pursuant to a decision the court has no authority to

evaluate”) (emphasis added), cert. denied, 522 U'S.

931 (1997); City of New York v. Beretta U.S.A. Corp.,

524 F.3d 384, 395 (2d Cir. 2008) (cited at Pet. 22)

(under Klein “Article III forbids legislatures from

24

‘prescrib[ing] rules of decision to the Judicial

Department of the government in cases pending be-

fore it”) (emphasis added) (citation omitted); District

of Columbia v. Beretta U.S.A. Corp., 940 A.2d 163,

172-73 & n.7 (D.C. 2008) (cited at Pet. 22) (applying

Klein to judicial proceeding and finding statute

constitutional; declining to answer whether Klein

extends to non-Article II] “independent judicial

bodies, including the District of Columbia courts”).®

2. Petitioner nonetheless suggests that there is a

split of authority in light of the court of appeals’ reli-

ance here on National Coalition to Save Our Mall v.

Norton, 269 F.3d 1092 (D.C. Cir. 2001), cert. denied,

537 U.S. 813 (2002). Because National Coalition re-

jected a Klein claim in the judicial context, Petitioner

contends that the D.C. Circuit’s reliance on that

precedent here means that the decision below must

somehow be understood as “announc(ing] a rule of

unprecedented sweep that applies not only to agency

adjudications, but also to any adjudication in court.”

Pet. 16. For multiple reasons, this argument fails.

* Two of the opinions Petitioner cites are not even opinions for

the court, but separate opinions respecting rehearing en banc.

However, they too confirm that Klein applies only to judicial

proceedings. Davis v. Straub, 445 F.3d 908, 911 (6th Cir. 2006)

(cited at Pet. 22) (Martin, J., joined by Daughtrey, Moore, Cole,

and Clay, JJ., dissenting from denial of rehearing en banc)

(AEDPA relegates “[flederal judges” to “spectators with ‘no

adjudicatory function to perform”) (emphasis added), cert.

denied, 127 S.Ct. 929 (2008); Schiavo ex rel. Schindler v.

Schiavo, 404 F.3d 1270, 1274 (11th Cir. 2005) (cited at Pet. 22)

(Birch, J. concurring in denial of rehearing en banc) (Congress

may not “require[] federal courts to exercise their Article III

power ‘in a@ manner repugnant to the text, structure, and

traditions of Article IIT”) (emphasis added) (citation omitted).

25

National Coalition held that Klein did not bar Con-

gress from prohibiting judicial review of challenges to

the decision where to locate the World War II Memo-

rial, even though the effect of the statute was to re-

quire dismissal of a pending lawsuit challenging the

location decision. 269 F.3d at 1097. The court held

that the statute presented no Klein problem because,

inter alia, the statute “amends the applicable sub-

stantive law” in a manner that was no less narrow

than the statute upheld in Robertson. Id. Notably,

Petitioner does not challenge the result or reasoning

in National Coalition, and instead affirmatively con-

cedes that that decision “is perfectly reconcilable with

the rule of Klein.” Pet. 15. Rather, Petitioner only

challenges the application of National Coalition in

the specific context of this case. Pet. 19 (challenging

the court of appeals decision “extending National

Coalition” in this case). Petitioner’s factbound chal-

lenge to the court of appeals’ application of the con-

cededly correct decision in National Coalition is not

certworthy.

Moreover, Petitioner is wrong in contending that

the unpublished decision below will have significant

implications for contexts other than the one presented

here. This case presents an effort to raise a Klein is-

sue in the context of administrative ratemaking, and

that is what this Court would be reviewing if it

granted certiorari here. Thus, even if National Coali-

tion were in conflict with other circuit decisions in

construing Klein in the judicial context—and it is

not—this case simply does not present an appropriate

vehicle for resolving any such issue.

Apart from these problems, there is nothing about

the D.C. Circuit’s application of National Coalition

26

here that conflicts with a decision of any other circuit.

In the proceedings below, the Government properly

relied upon, inter alia, National Coalition’s holding

that, under Robertson, a statute that amends the ap-

plicable law may be applied to a pending proceeding

even if it sweeps very narrowly and addresses only a

specific problem. Ct. of App. Br. of FERC and US. at

83-84; see also National Coalition, 269 F.3d at 1097.’

The court of appeals apparently agreed with that ar-

‘gument, because it summarily rejected Petitioner’s

separation of powers argument as contrary to

National Coalition. Pet. App. 4a. As explained ear-

lier, the statute in this case does amend the applica-

ble law, and the decision here therefore does not ex-

tend National Coalition in a way that conflicts with a

decision of another court of appeals. Petitioner's

claimed split is illusory for the further reason that

the grab bag of Klein cases on which Petitioner relies

(most of which arise in the AEDPA context) does not

include a single case in which a court found a Klein

violation to have occurred. Ante, pp. 22-24. To the

extent that Petitioner (wrongly) contends that there

are differences in the particular verbal formulations

used by different courts in analyzing the meaning of

Klein, Petitioner has simply failed to show that any

such differences have any real-world significance and

have led to conflicting results.

’ The Government notably also relied on the fact that Klein has

never been applied in the administrative context. Ct. of App.

Br. of FERC and US. at 75-80.

27

II. Petitioner’s Rational-Basis. Challenge to

the Statute Presents No Split of Author-

ity and Is Insubstantial

In a single paragraph, Petitioner briefly contends

that section 4412 lacks a rational basis. See Pet. 17.

Petitioner conspicuously does not contend that there

is a split on this issue, but instead makes a wholly

factbound argument that Congress lacked a rational

basis for applying a different rule to pending TAPS

ratemaking proceedings than to proceedings filed af-

ter section 4412’s effective date. This question is not

remotely certworthy. Congress had an ample ra-

tional basis for treating the two categories differently.

Moreover, Petitioner exaggerates the significance of

Congress’s distinction between the two situations by

mischaracterizing the scope of the rule that applies to

after-filed cases (a matter that is currently the sub-

ject of dispute before FERC in other proceedings).

1. Rational basis review “is not a license for courts

to judge the wisdom, fairness, or logic of legislative

choices.” FCC v. Beach Communications, Inc., 508

U.S. 307, 313 (1993). Laws subject to rational basis

review “must be upheld ... if there is any reasonably

conceivable state of facts that could provide a rational

basis” for them. Jd. As the D.C. Circuit correctly

stated below, this standard “is plainly satisfied” here

given that “Congress could easily have concluded that

limiting the retroactivity of refunds would help pro-

vide certainty to parties affected by FERC’s decision.”

Pet. App. 4a; cf. Pension Benefit Guar. Corp. v. R.A.

Gray & Co., 467 U.S. 717, 731 (1984) (refusing to

second-guess balance of benefits and harms struck by

Congress in selecting a statute’s effective date, noting

“the enactment of retroactive statutes confined to

28

short and limited periods required by the practicali-

ties of producing national legislation ... is a custom-

ary congressional practice”); Johnson v. Arizona, 462

F.2d 1352, 1354 (9th Cir. 1972) (changes in the law

may be applied “retroactively” or “limitedly retroac-

tively” so long as the application has “some rational

basis, announced with reasonable precision”).

In enacting section 4412, Congress rationally con-

cluded that the imposition of retroactive monetary

awards all the way back to 1993 would disturb and

dislocate the financial interests and activities of re-

finers and shippers, particularly where (as here) the

administrative proceedings have lasted nearly twenty

years because of FERC’s repeated errors. See 151

Cong. Rec. S3752 (daily ed. Apr. 15, 2005) (statement

of Sen. Murkowski) (noting with respect to proposed

act that refineries “have no way to make rational

business decisions when the value of their products

can be determined retroactively long after they can

protect themselves for perceived mistakes in FERC-

approved valuation methodologies”). Further, Con-

gress legitimately could have concluded that such

protections were necessary given the unique nature

of TAPS. See Plaut, 514 U.S. at 239 n.9 (“Even laws

that impose a duty or liability upon a single individ-

ual or firm are not on that account invalid ....”).

2. Moreover, Petitioner's argument rests on a mis-

taken premise: Petitioner misapprehends the import

of Congress’s distinction in section 4412 between

pending proceedings and proceedings commenced af-

ter the statute’s enactment date.

Specifically, Petitioner mischaracterizes the scope

of subsection 4412(b)(2), which provides that “[iJn a

proceeding commenced after the date of enactment of

29

this Act, the Commission may not order retroactive

changes in TAPS quality bank adjustments for any

period that exceeds the 15-month period immediately

preceding the earliest date of the first order of the

Federal Energy Regulatory Commission imposing

quality bank adjustments in the proceeding.” Pub. L.

No. 109-59, § 4412(bX2), 119 Stat. at 1778-79 (em-

phasis added). This 15-month period exactly co-

incides with the 15-month limitation on how long

FERC can take to issue a final order on a claim re-

lated to a Quality Bank adjustment. See id.,

§ 4412(cX2). Reading the sections in pari materia

and according to their plain terms, it is clear that,

under section 4412(b), retroactive changes are limited

to no more than a “15-month period” and that the

period is calculated with reference to the “first order”

that imposes such “retroactive changes” in “TAPS

quality bank adjustments” (a term defined to mean

“monetary adjustments paid” in connection with the

Quality Bank, id., § 4412(a) (emphasis added)).

Petitioner, however, erroneously argues that in

“every TAPS Quality Bank proceeding other than this

one,” section 4412(b)(2) “authorize[s] the Commission

to order retroactive Quality Bank adjustments back

to the original claim, with no limitation on refunds if

(as here) proceedings are extended by repeated judicial

vacatur of the Commission’s orders.” Pet. 8 (empha-

ses added). Petitioner thus contends that “[wlere it

applied to this case,” the “section 4412(b)(2) rule”

would have resulted in refunds “ordered back to Sep-

tember 1992 (if otherwise permitted by law),” because

the “Commission’s first order adjusting valuations

was issued on November 30, 1993.” Pet. 14. Peti-

tioner therefore argues that, if section 4412(b)(2)

were applicable here, it would have allowed FERC,

30

when the agency first imposed retroactive changes in

quality bank adjustments in October 2005, to impose

more than twelve years of retroactive payments. This

argument ignores the statutory text, which limits the

term of possible retroactivity to a “15-month period”

and fixes the start of that period as the date such ret-

roactive changes are first ordered. Pub. L. No. 109-

59, § 4412(b)(2). Indeed, 15 months prior to October

2005 would produce a retroactivity period that is less

favorable than the one Petitioner obtained below un-

der section 4412(b)(1).

Notably, the meaning of subsection 4412(bX2) is

currently the subject of a separate proceeding cur-

rently pending before FERC. See Protest of Flint

Hills Resources Alaska LLC to Compliance Filing of

the TAPS Carriers, Docket No. ORO6-10-000 (FERC),

dated April 17, 2008, at 2-5. That Petitioner’s equal

protection and due process arguments rest on a de-

batable and unsettled legal premise provides yet an-

other reason to deny review.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted,

November 2008 DANIEL P. COLLINS

Counsel of Record

JONATHAN H. BLAVIN

MUNGER, TOLLES & OLSON LLP

RICHARD A. CURTIN

PETRO STAR INC.

Counsel for Respondent

Petro Star Inc.