# Opposition Brief — Pennzoil Co. v. Associated Gas Distributors

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1985
- **Citation:** 474 U.S. 847

## Text

Ss Supreme Court, U.S.
| ae Ne oe

No. 85-139 AUG 26 [985

JR.

IN THE eee

Supreme Court of the United States

OCTOBER TERM, 1985

PENNZOIL COMPANY, et al.,

. Petitioners,

ASSOCIATED GAS DISTRIBUTORS, et al.,
Respondents.

On Petition for Writ of Certiorari to the
United States Court of Appeals
for the District of Columbia Circuit

BRIEF OF RESPONDENTS
THE PROCESS GAS CONSUMERS GROUP AND
THE AMERICAN IRON AND STEEL INSTITUTE
IN OPPOSITION

EDWARD J. GRENIER, JR.

GLEN S. HOWARD
(Counsel of Record)

JAMES M. BUSHEE

SUTHERLAND, ASBILL
& BRENNAN
1666 K Street, N.W.
Suite 800
Washington, D.C. 20006-2803
(202) 872-7800
Attorneys for Respondents
The Process Gas Consumers
Group and The American Iron
and Steel Institute

WILSON - EPES PRINTING Co.. INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

Whether, if fairly characterized, any question arising
from the decision below warrants review by this Court
on certiorari:

1. Whether it was prejudicial error for the court of
appeals to state that a motion to enforce compliance with
a previous mandate can serve concurrently as a petition
for review where the court, specifically holding that its
mandate to the Federal Energy Regulatory Commission
(FERC) had been circumvented, entered a judgment
specifically granting the enforcement motion as such.

2. Whether, even assuming that the court of appeals
did treat an enforcement motion concurrently as a peti-
tion for review under Section 506 of the Natural Gas
Policy Act, 15 U.S.C. § 3416, the procedural require-
ments for such review were offended where (a) the
agency order involved was already an order on rehearing
of the very matter at issue and (b) that order demon-
strated on its face the agency’s disobedience of the court
of appeals’ previous mandate.

3. Whether a grant of an enforcement motion, lim-
ited to rejection of a collateral attack on the court’s pre-
vious mandate requiring refunds, and causing no preju-
dice to petitioners’ rights subsequently to purscc review
of wholly distinct and severable issues, offended any con-
siderations of judicial economy.

4. Whether the court of appeals, by vacating a FERC
order found to be in violation of the court’s previous
mandate requiring refunds, deprived petitioners of any
due process rights where (a) petitioners conceded that
refunds were required; (b) petitioners were afforded full
opportunity to address the merits and did so; (c) all
other issues of interest to petitioners were fully pre-
served for subsequent review in the same court, and
(d) the funds which petitioners sought to obtain via
these proceedings have since been ordered to be paid
to them in full by September 30, 1985?

(i)

3

>»
—*

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TABLE OF CONTENTS

QUESTIONS PRESENTED ...........02.0022...2....2-.c.eeceeee-eeeee
Tame Oe AUTO ie ..........................-.—....-00.0.
STATEMENT OF THE CASE ......00000.22...eeeee eee

REASONS FOR DENYING THE WRIT ......................

I. The D.C. Circuit’. Reasoning That An Enforce-
ment Motion Could Be Treated Concurrently As
A Petition For Review Was, If Error At All,
Merely Harmless Error Since All Applicable
Procedural Requirements Were Met And No
Party’s Due Process Rights Were Violated........

II. The Court of Appeals Did Not Intrude On
FERC’s Discretionary Authority -............0000000....

III. The D.C. Circuit’s Decision Below Was Both
ES EE ce

lai cahtniesenisiscctonnvaenennscacavenuninasscedeceencenes

(iii)

Page

15

17

iv

TABLE OF AUTHORITIES

Cases: Page
Belco Petroleum Corp. v. FERC, 589 F.2d 680

a IN 1 IE alichinhabssichiceliGeiitscieervecicliddamnmiaiiaintenantaniehods 15
Cities of Anaheim and Riverside v. FERC, 692

f &: 8 Sh, | ae 11
Ecee, Inc. v. FERC, 611 F.2d 554 (5th Cir. 1980).. 9
FPC v. Tennessee Gas Transmission Co., 371 U.S.

ERTL AA oe EN et AO ee 6, 8, 14, 15
Helvering v. Gowran, 302 U.S. 238 (1937) -........... 9
Interstate Natural Gas Ass’n of America v. FERC,

716 F.2d 1 (D.C. Cir. 1983), cert. denied, —-—

U.S. , 104 8. Ct. 1615 (1984) -.................... passim
Interstate Natural Gas Ass’n of America v. FERC,

(i Be & Bye fis Se | eeemmuaee passim
Magnum Import Co. v. Coty, 262 U.S. 159 (1923)... 14
Mobil Oil Exploration & Producing Southeast Inc.

v. FERC, No. 84-4775 (5th Cir. filed Nov. 20,

ap Se ARE RAR ea ee a ns ee ene 4, 7,11
Mobil Producing Texas & New Mexico Inc. v.

FERC, No. 85-4485 (5th Cir. filed July 24,

|| as SERN A en gee SNE NY), BECP 7
Pennzoil Co. v. FERC, 742 F.2d 242 (5th Cir.

BUI ksi cascinsahiecsibdacielinicaiaaniniecvkdlandeadechonabdeiaatabcadeiboclans 11
Public Serv. Comm’n v. FPC, 472 F.2d 1270 (D.C.

ON 11
Public Serv. Comm’n v. FPC, 543 F.2d 757 (D.C.

I ki i a 9
Public Serv. Co. of New Hampshire v. FERC, 600

F.2d 944 (D.C. Cir.), cert. denied, 444 U.S. 990

CERIN a AAO Se Ee LER OL 15
Rice v. Sioux City Memorial Park Cemetery, 349

I I a 16
Shell Oil Co. v. FPC, 520 F.2d 1061 (5th Cir.

1975), cert. denied sub nom. California Co. v.

Be Ie I I TED iicecccsasatvenrchncchiccnncepneesenee 4

Statutes:
Natural Gas Act
Section 5, 15 U.S.C. § 717d (1982) .................. 15

Vv

TABLE OF AUTHORITIES—Continued

Page

Natural Gas Policy Act, 15 U.S.C. §§ 3301-3432
0 RISER PATSA PS eet ester ETN a SOON PN ah eA CS AR NAOT 14
Section 506, 15 U.S.C. § 3416 (1982) -................ 1
ae ners ed eccnacntdiban etic 9

Administrative Authorities and Regulations:

FERC Order No. 94-A, 48 Fed. Reg. 5152 (1983),
aff'd in part, vacated in part, and dismissed in
part, Texas Eastern Transmission Corp. v.
FERC, No. 83-4390 (5th Cir. Aug. 19, 1985) ..3, 7, 15, 16
FERC Order No. 94-F, 50 Fed. Reg. 31,347

PIII hs dsakincancdiinsceiieesnioatalesNiakacadplieleiaesacisasalismactaaahiglianadsiches 16
FERC Order No. 399, 49 Fed. Reg. 37,735 (1984)

(to be codified at 18 C.F.R. Part 154) 2.00... passim
FERC Order No. 399-A, 49 Fed. Reg. 46,353

EIT «croc tindisiestalanadansaacatateaninnniaaddieaagcinaieaanae possim
FERC Order No. 399-B, 50 Fed. Reg. 30,141

PANU nina. sinkcsadpoiacinuindlinsaninninteenetdiaaiadeaaaaale passim

Rules:

Federal Rule of Appellate Procedure 35(a) ............ 14

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-139

PENNZOIL COMPANY, et al.,
. Petitioners,
ASSOCIATED GAS DISTRIBUTORS, et al.,
Respondents.

On Petition for Writ of Certiorari to the
United States Court of Appeals
for the District of Columbia Circuit

BRIEF OF RESPONDENTS
THE PROCESS GAS CONSUMERS GROUP AND
THE AMERICAN IRON AND STEEL INSTITUTE
IN OPPOSITION

Respondents the Process Gas Consumers Group and
the American Iron and Steel Institute respectfully re-
quest that this Court deny the Petition for Writ of
Certiorari sought herein to review the judgment and
opinion of the United States Court of Appeals for the
District of Columbia Circuit in Nos. 81-1690, et al.’

1 Respondent, the Process Gas Consumers Group (“PGC”), is an
association of industrial consumers of natural gas. PGC is partici-
pating in this proceeding through an ad hoc committee, the members
of which are: Armco Inc., Bethlehem Steel Corporation, Borg-
Warner Corporation, Carpenter Technology Corporation, Cone Mills

2

STATEMENT OF THE CASE

Contrary to the broad characterization offered by peti-
tioners (“Producers”), this case does not involve any
sweeping changes in the relationships among federal
agencies, reviewing courts, and the parties before them.
(See Petition at 9.) Rather, this case involves only a
series of ordinary (though admittedly protracted) regu-
latory and judicial proceedings, culminating in a court
of appeals’ decision to enforce its own mandate by vacat-
ing an agency order that clearly violated that mandate
and reinstating an ageney order that complied with it.
Among the extraordinary facts leading up to that deci-
sion, the following aré key:

Corporation, General Motors Corporation, LTV Steel Company,
Owens-Corning Fiberglas Corporation, and Owens-Illinois, Inc.

Respondent, the American Iron and Steel Institute (“AISI”), is
a trade association representing the steel industry. The corporate
members of AISI are: The Algoma Steel Corporation, Limited,
American Cast Iron Pipe Company, Armco Inc., Atlantic Steel
Company, Atlas Steels, The Babcock & Wilcox Company, Bethlehem
Steel Corporation, Carpenter Technology Corporation, CCX, Inc.,
The Cleveland-Cliffs Iron Company, Columbia Tool Steel Co., Com-
pania Siderugica Huachipato, S.A., Copperweld Corporation,
Dofasco, Inc., Electralloy Corporation, A. Fink] & Sons Co., George-
town Industries, Inc., Green River Steel Corporation, Harsco Cor-
poration, Hi Specialty America, HYSLA, S.A., Ingersoll Steel,
Inland Steel Company, Interlake, Inc., International Metals Recla-
mation Co., Inc., IPSCO, Inc., Jessop Steel Company, Earle M.
Jorgensen Company, Laclede Steel Company, Lone Star Steel Com-
pany, LTV Steel Company, Lukens, Inc., The M.A. Hanna Com-
pany, McLouth Steel Products Corporation, National Steel Cor-
poration, New Jersey Steel Corporation, North Star Steel Company,
Northwestern Steel and Wire Company, Oglebay Norton Company,
Oregon Steel Mills, Pickands Mather & Co., Raritan River Steel
Company, Rhode Island Forging Steel, Inc., Rome Strip Steel Com-
pany, Inc., Sandvik, Inc., Sharon Steel Corporation, Sharea Tube
Company, Shenango Incorporated, SIDBEC-DOSCO, Inc., Stelco,
Inc., Sydney Steel Corporation, Teledyne Vasco, The Timken Com-
pany, United States Steel Corporaiton, Valley Mould and Iron Com-
pany, Weirton Steel Corporation, Wheatland Tube Company, and
Wheeling-Pittsburgh Steel Corporation.

3

(1) that a final D.C. Circuit decision (“7JNGAA I’)?
imposed upon Producers and others a large refund
obligation to their customers; this obligation to make
“Btu refunds” arose from overcharges collected dur-
ing the period December 1978-December 1983 due to
certain illegal pricing methods;

(2) that previously, as a result of a wholly unrelated
FERC proceeding (as to which appellate review was
then still pending) ,* Producers and others had become
eligible to receive certain payments from their cus-
tomers for eligibie production costs; such payments
were to be made to them in equal installments over a
22-month period from February 1983 through Decem-
ber 1984;

(3) that, although no stay was ever issued of FERC’s
order that those production cost payments be made,
many pipelines unilaterally decided not to make the
required payments to their suppliers during the 22-
month period allowed; and

(4) that, in the FERC proceeding on remand from
INGAA I, Producers saw a completely unrelated pool
of dollars from which they hoped finally to obtain
payment of the production debts allegedly owed them;
thus, they urged FERC to allow them to offset their
INGAA I obligations to their pipeline customers
against those customers’ unrelated production debts
to them. Other parties vigorously opposed this at-
tempt by producers and pipelines to settle their pro-
duction cost disputes with refund monies belonging
not to the pipelines, but to those consumers who had
been overcharged in the past.

2 Interstate Natural Gas Ass'n of America v. FERC, 716 F.2d 1
(D.C. Cir. 1988), cert. denied, U.S. ——, 104 S. Ct. 1615
(1984) (“INGAA I”).

8 FERC Order No. 94-A, 48 Fed. Reg. 5152 (1983), aff'd in part,
vacated in part, and dismissed in part, Texas Eastern Transmission
Corp. v. FERC, No. 83-4390 (5th Cir. Aug. 19, 1985).

4

In its Order No. 399,‘ the FERC correctly rejected the
Producers’ requests that it authorize offsets, instead
ordering that the required INGAA I refunds be made
generally via lump sum cash payments. In so doing,
FERC noted that to allow offsets could undermine case-
by-case production cost disputes, further complicate an
already difficult process, frustrate pending Fifth Circuit
review of production cost issues (see note 3 supra), and
“prevent the Btu refunds from reaching as many of
the customers actually overcharged as possible.” (Peti-
tion App. at 27a-28a).

Subsequently, however, upon rehearing of the offset
issue, a bare majority of the FERC Commissioners issued
Order No. 399-A, 49 Fed. Reg. 46,353 (1984) (Petition
App. at 8la-126a), which, as the D.C. Circuit correctly
characterized it below, “abruptly reversed {[FERC’s]
position on offsets . . . without addressing the weighty
rationale behind its earlier Order [399].” Interstate
Natural Gas Ass’n of America v. FERC, 756 F.2d 166,
169 (D.C. Cir. 1985 (“INGAA II’) (Petition App. at
9a). Although certain Producers immediately raced to
file appeals in the Fifth Circuit with respect to Order
399-A’s treatment of other non-offset-related issues,’ four

449 Fed. Reg. 37,735 (1984) (to be codified at 18 C.F.R. Part
154). See also Appendix B to Producer’s certiorari petition, at
16a-80a. The appendices to Producers’ petition are hereinafter cited
as “Petition App. at —a” and “Petition Supp. App. at —-b.”

5E.g., Mobil Oil Exploration & Producing Southeast Inc. v.
FERC, No. 84-4775 (5th Cir. filed Nov. 20, 1984) (“MOEPSI v.
FERC”).

It bears noting that, when Order 399-A was issued, Producers
urged “that no further rehearings should be permitted” by FERC,
asserting their belief that the agency had already “afforded all
parties a full opportunity to express their positions and arguments
in support thereof. . . .” Conditional Request for Rehearing of
Indicated Producers, filed Dec. 20, 1984, in FERC Docket Nos.
RM84-6-003, et al., at 3, citing Shell Oil Co. v. FPC, 520 F.2d 1061
(5th Cir. 1975), cert. denied sub nom. California Co. v. FPC, 426
U.S. 941 (1976).

5

of the Respondents herein (including PGC and AISI)
concluded that ordinary judicial review would be in-
apposite to, and an inadequate remedy for, their con-
cerns regarding FERC Order 399-A. Those concerns
were not with the details of the agency order (cf. Pro-
ducers’ concern with the order’s treatment of certain
working interest owners’ obligations), but rather went
to the threshold question of the agency’s compliance
vel non with the INGAA I mandate. Such being the
case, the Respondents sought not “judicial review” of
Order 399-A but, instead, to bring to the attention of
the INGAA I court the single fact that its mandate was
being disobeyed on remand. Respondents thus requested
the D.C. Circuit to invoke its inherent jurisdiction in aid
of its prior mandate rather than stand by helplessly as
Producers first persuaded FERC to reverse itself and
circumvent that mandate and then raced to ask another
court of appeals to interpret that mandate.

Producers submitted detailed written responses to each
of the Respondent’s enforcement motions in the court
of appeals below, not only challenging Respondents’ reli-
ance on the enforcement motion procedure, but also ad-
dressing the merits of whether offsets in fact operated
to frustrate the court’s mandate.

Upon full consideration of the issue and the arguments
thereon, the D.C. Circuit in INGAA II confirmed that
an “inexorable” requirement of its INGAA I mandate
had been to “remedy the effects of past use of the im-
proper pricing method at the earliest possible moment.”
756 F.2d at 168. (Petition App. at 7a). Accordingly, it
rejected Producers’ arguments® that the offset scheme

® Response of Indicated Producers To Motion of Petitioner
Associated Gas Distributors for Order Directing Compliance With
Mandate, filed Dec. 3, 1984, in Interstate Natural Gas Ass’n of
America v. FERC, Nos. 81-1690, et al. (D.C. Cir.) at 3, 5, 7-8, 10.

6

modified only the method of payment, but not the amount,
of the required refunds, holding:

{[P]ermitting producers to offset their refund obliga-
tions would bring delay and confusion into an al-
ready complex area. Moreover, the principles of law
and the customers involved in the refund arrange-
ment are far from iacntical to those implicated in
the Section 110 [production] costs proceedings. . .
Involving disparate issues in a matter on appeal to
another court can only complicate, delay, and ob-
fuscate the refunds at issue here.

The law requires the ordering of refunds at the
earliest possible moment. That moment has come and
gone.'7! The offset scheme embodied in Order No.
399-A will only further delay refund of the over-
charges, circumventing our mandate in [INGAA I]
and the clear instruction of the Supreme Court in
[FPC v.] Tennessee Gas [Transmission Co., 371 U.S.
145 (1962) J.

INGAA II, supra, 756 F.2d at 171 (emphasis added)
(Petition App. at 12a) .®

While declaring that the “availability of mandamus to
confine FERC to the terms of this court’s mandate is
fully supported by precedent”, 756 F.2d at 169 (Petition
App. at 9a), the court of appeals nevertheless reasoned
that it did not need to address directly the propriety of
mandamus in this specific case since direct review and

7 As of the March 1985 date of INGAA II, it had been more than
a year and a half since the August 1983 INGAA I decision and well
more than a year since the INGAA I mandate issued in December
1983.

8 Circuit Judge Scalia concurred in the judgment on grounds that
the offset scheme violated the statutory prohibition against retro-
active ratemaking. (Petition App. at 15a). Although Judge Scalia
subsequently replaced his concurring opinion with a dissent ad-
dressing only the propriety of the procedure followed (Petition
App. at 133a-135a), he made no effort to recant his previous firm
conclusion that such offsets are prohibited as a matter of law.

7

mandamus “may be sought in the alternative’, 756 F.2d
at 170 (Petition App. at 10a), and since the parties to
the case had already “amply addressed the merits”. Jd.
(Petition App. at lla). However, notwithstanding its
statement that Respondents’ motions to enforce the man-
date may be treated “as a petition for review”, id., the
judgment issued by the court of appeals in the case spe-
cifically ordered “that the motion by Associated Gas Dis-
tributors to direct compliance with the Court’s mandate
herein is granted. . .” (Petition App. at 13la).

Producers’ suggestion for rehearing en banc was circu-
lated to the full D.C. Circuit and the same was denied
with no participating member of the court requesting the
taking of a vote thereon. (Petition App. at 136a).

On August 19, 1985, the Fifth Circuit issued its deci-
sion on appeal from FERC Order No. 94-A (see note 3
supra) confirming, wholly apart from any offset issue,
the general validity of production cost debt obligations.
Having thus disposed of the cases involving the debts
against which the unrelated refund offsets had been pro-
posed, the Fifth Circuit simultaneously ordered tranis-
ferred to the D.C. Circuit both Btu refund cases, 1.e.,
MOEPSI v. FERC, supra (Producers’ appeal of non-
offset-related issues arising from FERC Onler Nos. 399
and 399-A) and Mobil Producing Texas & New Mexico
Inc. v. FERC, No. 85-4485 (5th Cir. filed July 24, 1985)
(Producers’ appeal of the FERC Order (No. 399-B, 50
Fed. Reg. 30,141 (1985), Petition Supp. App. at 1b-9b)
implementing the D.C. Circuit’s anti-offset mandate in
INGAA II.)

8
REASONS FOR DENYING THE WRIT

I. The D.C. Circuit’s Reasoning That An Enforcement
Motion Could Be Treated Concurrently As A Petition
For Review Was, If Error At All, Merely Harmless
Error Since All Applicable Procedural Requirements
Were Met And No Party’s Due Process Rights Were
Violated.

The judgment entered by the court of appeals below
(Petition App. at 131a) specifically granted motions to
enforce its previous mandate notwithstanding the state-
ment in the court’s opinion that it “need not enter the
debate over the propriety of resort to mandamus in this
case” and its discussion of the availability of direct review
and mandamus in the alternative. 756 F.2d at 169-70.
(Petition App. at 9a-1la.)* Under the unusual circum-
stances involved—in which the court of appeals specifi-
cally concluded that the FERC was not only circumvent-
ing the court’s 15-month-old mandate but also defying the
teaching of this Court concerning the prompt ordering of
refunds to consumers ?°—the court’s exercise of its in-
herent authority to construe and enforce its mandate was
indeed justified. Producers’ hyperbolic suggestion ( Peti-
tion at 8-9) that the court’s action below will open the
floodgates to use of enforcement motions in lieu of peti-
tions for review is but a bugbear, ignoring the strictly
limited factual and legal context in which that action was
taken. While Producers’ vision of a world of procedural
chaos may raise questions of academic interest, this case
presents no basis to decide them. Nor is there, beyond
mere ipse dixit, any credible suggestion that the unusual

® Producers incorrectly represent in their Petition herein that the
court of appeais “[saw] that mandamus did not properly lie.”
(Petition at 21.) No such decision was reached.

10FPC v. Tennessee Gas Transmission Co., 371 U.S. 145, 155
(1962), quoted below at 756 F.2d at 170-71. (Petition App. at
1lla-12a).

9

context in which this case arose lends itself to repetition.
The D.C. Circuit gave full consideration to the specific
issue presented and decided it correctly in the particular
circumstances presented; that court’s exercise of its clear
discretion to enforce its mandate without prejudicing di-
rect review of other aspects of FERC Order 399-A does
not warrant a grant of certiorari.

Moreover, even if, notwithstanding its judgment spe-
cifically granting enforcement motions, the D.C. Circuit
intended to treat the motions before it in part as peti-
tions for review, that intention does not rise above the
level of harmless error."

A. Producers err in insisting that, because no appli-
cations for rehearing were first filed and denied by
FERC, the enforcement motions below could not have
been treated concurrently as petitions for review. The
rehearing requirement is intended only to give an agency
an initial opportunity to correct its errors before an
appeal is taken and to give the reviewing court the
benefit of the agency’s analysis. Ecee, Inc. v. FERC, 611
F.2d 554, 565 (5th Cir. 1980). But Order No. 399-A
was itself an order on rehearing of the offset issue, and,
as Producers themselves recognized at that time, all
parties had by then had “full opportunity to express their
positions and arguments in support thereof.” See note 5
supra. The purposes of the statute having thus been
satisfied, there was no need for further rehearing prior
to judicial review. See Public Serv. Comm’n v. FPC,
543 F.2d 757, 774-75 n.116 (D.C. Cir. 1974) (“Surely a
modification of a prior administrative decision o[n] re-
hearing does not generate a need to request another

11 See Helvering v. Gowran, 302 U.S. 238, 245 (1937): “In the
review of judicial proceedings the rule is settled that if the decision
below is correct, it must be affirmed, although the lower court

relied upon a wrong ground or gave a wrong reason.” See also
28 U.S.C. § 2111.

10

rehearing where the litigant has already presented his
point to the Commission for decision. . . .”)*

B. Producers similarly err in asserting that the D.C.
Circuit was required to have before it the entire FERC
record on remand. Given the limited enforcement relief
sought and granted, the court of appeals needed nothing
more before it than its own INGAA I mandate and
FERC’s order purporting to implement it. Even so, al-
though the court itself was certainly the best interpreter
of the requirements of its own mandate, it did also have
the benefit of all parties’ views on the merits of the offset
issue.'* No further record was needed to permit the court
of appeals to take the limited step of exercising its juris-
diction to enforce its mandate. Certiorari is not war-
ranted to review the court of appeals’ discretion concern-
ing the adequacy of the evidentiary record before it to
enforce its own mandate—and certiorari is certainly not
warranted where Producers had full opportunity to cite
to the court any portion of the record deemed relevant.

C. The court of appeals had clear jurisdiction to enter
its judgment below,’* and its doing so did not result in

12 Although, in the decision cited in the text, the petitioner itself
had applied for rehearing of the agency’s previous order, the court
of appeals’ reasoning was more broadly applicable:

The obvious purpose of the statutory [rehearing] require-
ments is to afford the Commission the first opportunity to con-
sider, and perhaps dissipate, issues which are headed for the
courts. . . . We have consistently held that our authority to
review actions of the Commission is unaffected by events—even
irregularities—which do not hamper attainment of that
objective.

Id. (citations omitted and emphasis added).
13 In fact, Producers utilized the two opportunities afforded them
to address those merits prior to the panel’s decision.

14 Since no record had yet been filed in any other court, no court
yet enjoyed exclusive jurisdiction to review Order 399-A, see 15
U.S.C. § 3416 (a) (4). Certainly no court could at that time claim

11

any “piecemeal review” offensive to considerations of
judicial economy.** Respondents did not seek, and the
D.C. Circuit below did not grant, comprehensive judicial
review of Order 399-A. The D.C. Circuit was fully aware
that Producers had already sought that type of review in
the Fifth Circuit, see 756 F.2d at 169 (Petition App. at
9a), and the judgment it entered in INGAA II was care-
fully limited to a single threshold issue—doing nothing to
prejudge the issues raised by Producers in their Fifth
Circuit appeal.’® Judicial review of Producers’ issues may

a valid right to deprive the D.C. Circuit of jurisdiction to enforce
its own mandate—a fact implicitly recognized by the Fifth Circuit’s
decisions to defer the filing of the record until the completion of the
D.C. Circuit’s threshold consideration of FERC’s compliance with
its previous mandate. (See Petition App. at 137a, 138a). Such
deference to pending proceedings in a sister court of appeals, which
had already issued a mandate in an earlier phase of the same matter,
was fully consistent with sound practice and the goal of maintaining
decisional continuity. See Public Serv. Comm’n v. FPC, 472 F.2d
1270, 1272 (D.C. Cir. 1972).

15 Cases cited by Producers on this point (Petition at 16) have
no relevance to the instant proceeding. The court’s concern in
Cities of Anaheim and Riverside v. FERC, 692 F.2d 773, 779 (D.C.
Cir. 1982), was that review of an order only initially accepting an
application for filing would invade the administrative province,
particularly where the netitioner would later have an opportunity to
address the merits before the agency. Similarly, Pennzoil Co. v.
FERC, 742 F.2d 242 (5th Cir. 1982), involved only an interlocutory
order, review of which would have invaded the administrative
province and offended judicial economy. In contrast, in the instant
case, all parties have been fully heard and the Commission’s order
was a final one.

16 According to pleadings filed by Producers originally in the
Fifth Circuit, their appeals from FERC Order Nos. 399 and 399-A
raised two issues wwrceriing (1) whether, apart from any offset,
FERC used the correct formula to calculate the amount of producers’
individual refund obligations and (2) certain working interest
owner refunds. See Producers’ “Motion Under The All Writs Act
For An Emergency Stay”, etc., filed July 26, 1985, and “Reply of
Producers In Support of Motion”’, etc., filed August 18, 1985, both
in MOEPSI v. FERC, supra, at pp. 11-14 and 20-23, respectively.

12

proceed just the same as it would have had INGAA II
not been issued since, as Producers emphasized to the
court of appeals below, they have “never argued that they
did not have to make refunds.” *”

Moreover, since Producers’ requests for stays of their
Btu refund obligations were denied by the FERC (on
May 1, 1985), by the D.C. Circuit (on May 20, 1985),
and by Chief Justice Burger as Circuit Justice for the
District of Columbia Circuit (on June 8, 1985), their
obligation to make refunds must be met by the August 30,
1985 deadline prescribed in FERC Order 399-B. (Peti-
tion Supp. App. at 7b). This too confirms the fact that
Producers’ appeals on non-offset issues will be heard in
the very same posture as if INGAA II had never been
issued: that is, the Btu refunds will have been paid *
subject only to potential recalculation and partial repay-
ment in the event of a D.C. Circuit order reversing FERC
on other issues raised by Producers in the appeals origi-
nally filed in the Fifth Circuit.

17 “Petition of Indicated Producers for Rehearing and Suggestion
for Rehearing En Bane,” filed March 8, 1985, at 18. See also “Re-
sponse of Indicated Producers To Motion of Petitioner Associated
Gas Distributors For Order Directing Compliance With Mandate,”
filed Dec. 3, 1984, in INGAA v. FERC, Nos. 81-1690, et al. (D.C.
Cir.) at 8, where Producers twice conceded that refunds were
required by INGAA I. Nevertheless, in their certiorari petition to
this Court, Producers felt free to contradict directly those prior
statements. (Petition at 22).

18 Producers have consistently argued that the Order 399-A off-
set procedure changed only the “method” of refund payment, not
the amount of the refunds. See, e.g., Petition at 4, 17. Under that
theory, therefore, Producers cannot be heard now to complain that,
but for INGAA II, they would net have been required to “pay”
their refund obligations prior to completion of the pending pro-
ceedings transferred from the Fifth Circuit to the D.C. Circuit.
(Order 399-A required all offsets to be completed before January 1,
1985. See Petition App. at 88a.)

13

Thus, Producers have suffered no prejudice due to the
D.C. Circuit’s decision in INGAA II merely to enforce its
INGAA I mandate pending the Fifth Circuit’s anticipated
review of other issues.’? No considerations of judicial
economy have been offended. To the contrary, even prior
to the Fifth Circuit’s recent transfer to the D.C. Circuit
of the appeals from FERC Order Nos. 399, 399-A and
399-B, the interests of judicial economy were advanced
by the D.C. Circuit’s decision in INGAA II to confirm the
scope of its previous mandate as a threshold matter, 1.e.,
before the agency record was filed in the Fifth Circuit
and before that court began an unnecessarily broad re-
view of the issues presented to it. Those interests of
judicial economy were indeed promoted by confining the
anticipated Fifth Circuit proceedings to new issues aris-
ing on remand from INGAA I and relieving that court
from having to review issues previously decided by a sis-
ter court of appeals. A fortiori, now that those review
proceedings have been transferred to the D.C. Circuit,
the judicial economy issue is even less apposite, if not
moot.

II. The Court Of Appeals Did Not Intrude On FERC’s
Discretionary Authority.

Finally, Producers have presented to this Court the
question of whether, even if the procedure followed was
proper, the D.C. Circuit below impermissibly intruded
upon FERC’s discretion. (Petition at i, 21). While that
claim may be of interest to the private parties to this
case, the specific question presented is hardly one of

19 To the extent that Pitts Oil Company, not a party to the pro-
ceeding below, may raise in the now-transferred Fifth Circuit
proceedings “the question of whether refunds should have been
ordered by FERC at all” (Petition at 17), its efforts may be seen
as a bald collateral attack on the D.C. Circuit’s 1983 decision in
INGAA I. Producers’ careful distancing of themselves from that
position (id.) suggests their recognition of that fact.

14

broader public interest or an appropriate one for this
Court’s review on certiorari.”°

Moreover, contrary to Producers’ view, the court of
appeals below did not simply substitute its discretion for
that of FERC. The offset procedure, pressed upon FERC
by producers (and by pipelines eager to settle their debts
to producers with money belonging to consumers), af-
fected not merely how refunds would be made, but
whether those refunds would ever be enjoyed by those
pipeline customers who were originally overcharged under
the rules invalidated in INGAA I. Making such refunds
was not simply a matter of FERC discretion. Rather, it
was a result compelled as a matter of law both (1) by
the requirements of the Natural Gas Policy Act, 15
U.S.C. §§ 3301-3432, that gas prices charged by pro-
ducers not exceed maximum prescribed levels, and (b'
by this Court’s requirement that refunds be implementec
expeditiously. FPC v. Ternessee Gas Transmission Co.,
supra. INGAA II did no more than enforce those re-
quirements.

Thus, neither FERC’s discretion nor its expertise were
intruded upon below. Rather, after the agency’s 15-
month delay in implementing the INGAA I mandate,
the D.C. Circuit had a legal responsibility to order—
as an “inexorable” consequence of that mandate—that
FERC “remedy the effects of past use of the improper
pricing method at the earliest possible moment.” JNGAA
II, supra, 756 F.2d at 168. (Petition App. at 7a). In-

20 Not a single member of the D.C. Circuit (including Judge
Scalia) voted to grant rehearing of this issue en banc, indicating
that no member of the court of appeals considered the proceeding
to involve “a question of exceptional importance.” Fed. R. App.
P. 35(a). A fortiori, then, this is not a matter warranting cer-
tiorari; it is well settled that certiorari jurisdiction is not conferred
“merely to give the defeated party in the circuit court of appeals
another hearing.” Magnum Import Co. v. Coty, 262 U.S. 159,
163 (1923).

15

deed, rather than substituting its juaymen: for FERC’s,
the court of appeals merely re-established the status quo
ante by vacating Order 399-A, an order which violated
the court’s mandate, and reinstating Order 399, an order
which complied with it. Persuaded by “the weighty
rationale behind [FERC’s] earlier Order [399],” and
finding that the agency’s abrupt change of course was
without adequate explanation and thus potentially “arbi-
trary and capricious,” the court simply left the agency’s
own well-reasoned earlier order in effect. 756 F.2d at
169, 170 (Petition App. at 9a, 1la).

III. The D.C. Circuit’s Decision Below Was Both Correct
And Fair.

The “offset” scheme was originally proposed by Pro-
ducers and others as a convenient opportunity to obtain
payment of claims wholly unrelated to their INGAA /
refund obligations to their customers. Notwithstanding
such offsets’ violation of both the INGAA I mandate and
the statutory prohibition against retroactive rate in-
creases,*? FERC reversed itself and permitted offsets
because of (a) many pipelines having simply flouted the
requirements in FERC Order 94-A that they pay off
their production cost debts in equal installments between
February 1983 and December 1984, and (b) producers’
growing despair of ever being paid those debts. By over-
turning Order 399-A’s authorization of offsets, the D.C.
Circuit correctly prohibited FERC from allowing those
unrelated production cost claims to “complicate, delay,
and obfuscate” the payment of the required Btu refunds
to those entitled to them.”

21 See Section 5 of the Natural Gas Act, 15 U.S.C. § 717d; FPC
v. Tennessee Gas Transmission Co., supra, 371 U.S. at 152-53;
Public Serv. Co. of New Hampshire v. FERC, 600 F.2d 944, 957-61
(D.C. Cir.), cert. denied, 444 U.S. 990 (1979); Belco Petroleum
Corp. v. FERC, 589 F.2d 680, 687 (D.C. Cir. 1978).

22 The parties ultimately entitled to the Btu refunds were the
gas consumers who were overcharged as early as December 1978

16

Moreover, as a result of INGAA II, FERC not only
issued an order (No. 399-B) requiring the payment of
all Btu refund obligations by August 30, 1985, but was
also motivated to issue an order (No. 94-F, 50 Fed. Reg.
31,347 (1985)) requiring all long-overdue production
cost payments to producers to be made once and for all
by September 30, 1985. Thus, in the absence of any stay,
the payments that inspired the “offset” scheme in the
first place will properly have been made within but a
few weeks of the date of this brief.

At this point, then, it appears that the result desired
by Preducers with respect to attempted offsets will shortly
be achieved and that the particular procedural road
taken by the parties and the courts to get to that point,
theugh perhaps interesting, will clearly be of nothing
more than “academic or . . . episodic” interest.** Such
matters, it is respectfully submitted, do not warrant
the exercise of certiorari jurisdiction.

and ending December 1983. (See, e.g., Order 399, Petition App. at
40a). In contrast, the consumers responsible for paying the pro-
duction costs allowed under FERC Order No. 94-A were those buy-
ing gas during February 1983-December 1984 (or even later).

Thus, although overlapping, the identity and financial interest of
the two groups of consumers downstream of the pipelines were far
from identical. By disapproving offsets, therefore, the court of
appeals kept producers and pipelines from agreeing to reduce the
refunds owed ultimately to tlic former group of consumers by the
amount of production costs owed ultimately by the latter group
of consumers.

23 Rice v. Sioux City Memorial Park Cemetery, 349 U.S. 70,
74 (1955).

17

CONCLUSION

For the foregoing reasons, the Petition for Writ of

Certiorari should be denied.

/s

August 26, 1985

Respectfully submitted,

Glen S. Howard

EDWARD J. GRENIER, JR.

GLEN S. HOWARD
(Counsel of Record)

JAMES M. BUSHEE

SUTHERLAND, ASBILL
& BRENNAN
1666 K Street, N.W.
Suite 800
Washington, D.C. 20006-2803
(202) 872-7800
Attorneys for Respondents
The Process Gas Consumers
Group and The American Iron
and Steel Institute

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0500%3A3. Public record. Not legal advice.