Opposition Brief — Pennzoil Co. v. Associated Gas Distributors
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4 Supreme Court,
US.
1)
y AUG 26 1985
No. 85-139 JOSEFH F. oPANIOL, JR.
naastaners)
IN THE
Supreme Court of the Wuited States
OCTOBER TERM, 1985
PENNZOIL OIL COMPANY, et al.,
Petitioners,
Vi
ASSOCIATED GAS DISTRIBUTORS,
Respondents.
On Petition for a Writ of Certiorari to the
United States Court of Appea!s
for the Dis‘rict of Columbia Circuit
BRIEF IN OPPOSITION FOR RESPONDENTS
ASSOCIATED GAS DISTRIBUTORS
FREDERICK MORING *
HERBERT J. MARTIN
DIANE K. ROGELL
CROWELL & MORING
1100 Connecticut Ave.,
N.W.
Washington, D.C. 20036
(202) 452-5800
Attorneys for Respondents
Associated Gas Distributors
* Counsel of Record
August 26, 1985
WILSON - EPES PRINTING Co.. INC. - 789-0096 - WASHINGTON. D.C. 20001
QUESTIONS PRESENTED
1. Whether a federal court of appeals may enforce
its mandate by directing the agency below to vacate a
portion of a final order issued for the purpose of com-
plying with the mandate but which failed to do so.
2. Whether a federal court of appeals may treat a
motion to enforce its mandate as a petition for review
of final agency action.
(i)
TABLE OF CONTENTS
Page
bg fo gy go) ci i
Nee ss sa sasinsesasocncntenstacotece iii
eee ee A) ee ee ................................-.-22.---...- Vv
aeeeeeeeeee a GP Beem Gees ......................................... 2
SUMMARY OF REASONS FOR DENYING THE
sch deimawniiaatcbsigesenesese 5
REASONS FOR DENYING THE PETITION ............... 7
I. THE COURT OF APPEALS HAD JURISDIC-
TION TO INTERPRET AND ENFORCE ITS
MANDATE BY ORDERING THE COMMIS-
SION TO VACATE PROVISIONS OF OR-
DERS THAT WERE IN CONFLICT WITH IT
AND TO REINSTATE PROVISIONS OF OR-
DERS THAT WERE IN COMPLIANCE .......... 7
A. The Mandate In INGAA I By Law Required
The Commission To Make Refunds At The
Earliest Possible Moment Consistent With
nab nanuseccnans 7
B. The Court Of Appeals Properly Considered
Whether The Offset Provision Complied
ns cncenatemncemence 9
C. The Court Of Appeals’ Action Was Appro-
priate Because The Commission Did Not
Have Discretion To Establish Refund Pro-
visions In Violation Of Applicable Law........ 12
II. THE COURT’S DECISION TO TREAT AGD’S
MOTION FOR AN ORDER DIRECTING COM-
PLIANCE WITH MANDATE AS A PETITION
FOR REVIEW WAS PROPER....... ww... 14
(iii)
LEIS
iv
TABLE OF CONTENTS—Continued
Page
A. The Purpose And Policy Of The NGPA Re-
hearing Requirement Was Fully Satisfied... 15
B. Venue Was Proper In The Court Of Appeals.. 18
C. The Court’s Decision To Treat AGD’s Mo-
tion As A Petition For Review Did Not Vio-
late Producers’ Due Process Rights................. 22
NN iii dececenesgshe hircina cies crcccieaincniensatconanipsiettnnaseicnaatn 23
Vv
TABLE OF AUTHORITIES
CASES
American Public Gas Association v. FPC, 567 F.2d
1016 (D.C. Cir. 1977), cert. denied, 435 U.S. 907
FURR: SRA RE PRAM TNC NABE Toe BO ORO ACI one NN
American Public Gas Association v. FPC, 555 F.2d
I a ieanieeialanen
American Trucking Associations, Inc. v. ICC, 669
F.2d 957 (5th Cir. 1982), cert. denied, 460 U.S.
REE ce W a ee COT ETD
Arkansas Power & Light Co. v. FPC, 517 F.2d
1223 (D.C. Cir. 1975), cert. denied, 424 U.S.
E.R ee RET! SRE: RoI Ne, ot 2 Ea Oe
Atlantic Refining Company v. Public Service Com-
mission of New York, 360 U.S. 378 (1959) ........
Baltimore & Ohio Railroad Co. v. United States,
gh oe SNR ee ee
BASF Wyandotte Corp. v. Costle, 582 F.2d 108
I UI i a ce
Burlington Truck Lines v. United States, 371 U.S.
| —___ORERR REID ee UENCE se Daren rn Te PE OR
Chase v. Robson, 435 F.2d 1059 (7th Cir. 1970)...
Cities of Anaheim and Riverside, California v.
FERC, 692 F.2d 773 (D.C. Cir. 1982)..................
Ciites Service Gas Company v. FPC, 535 F.2d
Re ee te I seh ccna ac carotnnicctesieeaneasibenaacess
City of Cleveland v. FPC, 561 F.2d 344 (D.C. Cir.
1 ¢ RIAA RAS REI Ce ees ae ete nee OS md RN NETS. oan
Dayton Power & Light Company v. EPA, 520 F.2d
Pe I Ne I bial Sticeiinssheneteeiacbesdctciconnaucen
Department of Fish & Game of the State of Cali-
FOP Wa FE, BO Fe To evaenccecsennnincercnsicacreres
Eastern Airlines, Inc. v. CAB, 354 F.2d 507 (D.C.
SEAT lo SER a al DER eS
ECEE, Inc. v. FERC, 611 F.2d 554 (5th Cir.
SI dina ceceisthctiicta tr nnsipiiietihadt clade tenant iB ae
Estate of L.D. French v. FERC, 603 F.2d 1158
IITA et a ae ny olen
Farah Manufacturing Company, Inc. v. NLRB,
481 F.2a 11463 (Sta Cir. 1978) .............................
Page
23
20
9,10
9,10
20, 21
vi
TABLE OF AUTHORITIES—Continued
Page
Farmers Union Central Exchange, Inc. v. FERC,
734 F.2d 1486 (D.C. Cir.), cert. denied sub nom.
Texas Eastern Transmission Corp. v. Farmers
Union Central Exchange, Inc., USS. _
| NE 23
FPC v. Tennessee Gas Transmission Company, 371
EET IEE A DED 3, 8,13
FPC v. Colorado Interstate Gas Company, 348 U.S.
a CR ROR LS I RI RS ne eee 16
Floersheim v. Engmen, 494 F.2d 949 (D.C. Cir.
TE slacclcinans 9, 10
Gillring Oil Company v. FERC, 566 F.2d 1323
(5th Cir.), cert. denied, 439 U.S. 823 (1978)... 13
Greater Boston Television Corp. v. FCC, 463 F.2d
268 (D.C. Cir. 1971), cert. denied, 406 U.S. 950
a RAE RC ey ee eee ee ee 9
Hennesey v. SEC, 285 F.2d 511 (3rd Cir. 1961)... 16
Hormel v. Helvering, 312 U.S. 552 (1941).............. 16
Hudson v. Farmers Home Administration, 654
A ME TPIS RUINED ps concsnsctsscnsnestqntconsneneniensnse 17
In re Sanford Fork and Tool Company, 160 U.S.
REST SS ET RT eae EEO eC ON 9
Interstate Natural Gas Association of America v.
FERC, 756 F.2d 166 (D.C. Cir. 1985) ................ passim
Interstate Natural Gas Association v. FERC, 716
F.2d 1 (D.C. Cir. 1983), cert. denied, U.S.
—, 104 S.Ct. 1615 (1984) ~.....0 passim
ITT World Communications, Inc. v. FCC, 621 F.2d
I et coma 20
Mobil Oil Exploration and Producing Southeast,
Inc. v. FERC, No. 84-4775 (5th Cir.) ...........00...... 4
Motor Vehicles Manufacturers Association v. State
Farm Mutual Automobile Insurance Company,
U.S. , 103 S.Ct. 2856 (1988) 000... 23
National Organization for the Reform of Mari-
juana Laws v. Ingersoll, 497 F.2d 654 (D.C. Cir.
ati RS a a ee ema: 28 Yee 15
Natural Resources Defense Council v. EPA, 465
SE A CME CPEs, UU EE Pcncsikccesescons consstedenscanseseiseincs 21
vii
TABLE OF AUTHORITIES—Continued
Page
New Jersey v. New York City, 296 U.S. 259
6 EEA a yoo CN RO ee 9
Oswald v. McGarr, 620 F.2d 1190 (7th Cir. 1980) .. 9
Pacific Gas & Electric Company v. FPC, 272 F.2d
ie, HI I cicnieickcsssacinsanstieciiebarscnsuiaehocoubinenes 20
Panhandle Eastern Pipe Line Company v. FPC,
843 F.2d 905 (D.C. Cir. 1965) .............................. 21
Pearce v. Director, Office of Workers’ Compensa-
tion Programs, 647 F.2d 716 (7th Cir. 1981) ...... 21
Pennzoil v. FERC, 742 F.2d 244 (5th Cir. 1984)... 21
Porter County Chapter of the Izaak Walton League
of America, Inc. v. Costle, 571 F.2d 359 (7th
Cir.), cert. denied, 439 U.S. 884 (1978) .............. 17
Potomac Electric Power Company v. I.C.C., 702
Fe te Ci I BID - wtchestincincnseniscicnsncesintinnes 9
Public Service Commission of the State of New
York v. FPC, 543 F.2d 757 (D.C. Cir. 1974)......3, 8, 18,
16, 17
Public Service Commission of the State of New
York v. FPC, 329 F.2d 242 (D.C. Cir.), cert.
denied sub nom. Prado Oil and Gas Company v.
fc Bik |: RRR eeerenrsoees 13
Public Service Commission for the State of Nerv
York v. FPC, 472 F.2d 1270 (D.C. Cir. 1972)... 20
Regal Knitwear Company v. NLRB, 324 U.S. 9
SESE OSI EeePC pn mr 9, 10
Rabin v. Cohen, 570 F.2d 864 (9th Cir. 1978)........ 14
Smith v. Illinois Bell Telephone Company, 270 U.S.
TREC eee ea oe vert ease Oo 17
Southern Natural Gas Co. v. FPC, 543 F.2d 530
REE SN UN reesreueerne ane ety Nie omEEDE 9
Sun Ray Mid-Continent Oil Company v. FPC, 364
I 8
Tenneco Exploration Ltd. v. FERC, 649 F.2d 376
ET CER eS ER 16, 18
Tenneco Oil Company v. FERC, 571 F.2d 834 (5th
Cir.), cert. denied, 489 U.S. 801 (1978) .....000000.... 13
viii
TABLE OF AUTHORITIES—Continued
Page
Texas Eastern Transmission Corporation v. FPC,
414 F.2d 344 (5th Cir. 1969), cert. denied, 298
8 EE re ereeaeeren nk Sct aam 13
Texas Eastern Transmission Corpor ation v. FERC,
Bpomte BB-EBOS CGE Cie.) .aninnnnnc nnn ccecccccceessseenss 3
U.S. Alkali Export Association, Ine. v. United
States, 325 U.S. 196 (10465) .............cce-cccccecesesseceess 17
United Gas Improvement Company v. Callery
Properties, Inc., 382 U.S. 223, reh’g denied, 382
Se CN I faeces cea tii acetone ainclintbiaaascinininte 8
United States v. Green, 499 F.2d 538 (D.C. Cir.
RARE oA RE RG eae a Ne ee 14
United States v. New York Telephone Company,
ns TI Ta cn sinininucts cocpsananibsianuecsabnhadubenans 9
United States v. RMI Company, 599 F.2d 1183
i creesiabenbeibiaunaaus 14
Westinghouse Electric Corp. v. United States Nu-
clear Regulatory Commission, 598 F.2d 759 (3rd
a adimannes 20
Whitney National Bank in Jefferson Parish v.
Bank of New Orleans & Trust Company, 379
Or ial teeeinisinnn 16
Yablonski v. United Mine Workers of America,
454 F.2d 1036 (D.C. Cir. 1971), cert. denied,
SIE En mn Pe ONT 9
STATUTES
Natural Gas Act, 15 U.S.C. § 717 et seq. (1982)... 8
FR Bk Pe Sy f | , Sac aaeeN 16
Natural Gas Policy Act of 1978, 15 U.S.C. § 3301
nn ceceuniuinnsneche 2,7
Oy Be te Be ON weccnninnceniccncctsrecesesdennenneinesece 7,12
ey Ue Ps Oe I osc ccnncncnncnscccesanscececsereess 15, 16, 18
Federal Power Act, 16 U.S.C. § 791 et seq. (1982).. 17
I et 17
All Writs Act, 28 U.S.C. § 1651 (1982) 00. 10
28 U.S.C. § 2112 (1982) ...................... 15, 19, 20, 21, 22, 24
ix
TABLE OF AUTHORITIES—Continued
CODE OF FEDERAL REGULATIONS Page
18 C.F.R. § 270.101 (e) (1965)...........................n 7, 12
ORDERS
Order No. 399, “Final Rule and Order Denying
Rehearing of Interim Rule,” 49 Fed. Reg. 37735
RS UII I i ceneaaladlcaeriainiabinieiemninaaad passim
Order No. 399-A, “Order Granting in Part and
Denying in Part Rehearing,” 49 Fed. Reg. 46353
SURI, SE SITE snscaniinndianenmsideipaniadhauleeineesnnantiiitnaninees, passim
Order No. 399-B, “Order on Direction of the Court
Vacating, in part, Order No. 399-A, and on Pe-
titions for Rehearing and Reconsideration,” is-
sued in Docket No. RM84-6-015 through 028,
by the Federal Energy Regulatory Commission
SEE ORES NEE Sever nee” Senne. 2am 5
MISCELLANEOUS
4 K. Davis, Administrative Law Treatise (2d ed.)
I a a seinaanninbinlionh 17
16 Wright & Miller, Federal Practice and Proce-
a ile 14
IN THE
Supreme Court of the United States
OCTOBER TERM, 1985
No. 85-139
PENNZOIL OIL COMPANY, et al.,
Petitioners,
V.
ASSOCIATED GAS DISTRIBUTORS,
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 RESPONDENTS
ASSOCIATED GAS DISTRIBUTORS
Associated Gas Distributors (AGD)’ hereby responds
in opposition to the petition of Pennzoil Company, et al.
1 AGD was a petitioner and intervenor in the proceedings below.
It is an informal association of some 40 local gas distribution
utilities that sell and distribute approximately 25% of the natural
gas sold in the interstate market. Its members purchase most of
their supplies of natural gas from interstate pipeline companies
which, in turn, purchase most of their supplies from producers.
The prices paid by interstate pipelines for gas supplies are flowed
throu zh to the pipelines’ distributor-customers under FERC-
approved purchased gas adjustment (PGA) procedures. Pursuant
to Sup. Ct. R. 28.1, a list of AGD member companies and their
affiliates is attached as Appendix D hereto.
2
(Petitioners) for a writ of certiorari to the United
States Court of Appeals for the District of Columbia
Circuit.
STATEMENT OF THE CASE
In Interstate Natural Gas Association v. FERC, 716
F.2d 1 (D.C. Cir. 1983), cert. denied, USS. :
104 S.Ct. 1615 (1984) (“JINGAA I’’), the United States
Court of Appeals for the District of Columbia Circuit
(“D.C. Circuit”) held that Federal Energy Regulatory
Commission (“FERC” or ‘“Commission”) Order Nos.
93 and 93-A, which contained rules for measuring the
energy (Btu) content of natural gas, resulted in prices
that violated the maximum lawful prices set forth in
the Natural Gas Policy Act of 1978 (“NGPA”), 15
U.S.C. §§ 3301 et seg. (1982). There were, in the D.C.
Circuit’s words, “inexorable” consequences of its decision
in INGAA I: a proper pricing method had to be estab-
lished for the future and a remedy for the overcharges
that had resulted from the use of the improper pricing
method had to be established. Interstate Natural Gas
Association of America v. FERC, 756 F.2d 166 (D.C.
Cir. 1985) (“INGAA II’) (Petitioners’ Appendix at 7a).
The mandate in INGAA I issued on December 8,
1983. On January 19, 1984, FERC issued a Notice of
Inquiry (“NOI”) inviting comments on the issue of Btu
refund procedures. The NOI contemplated a compli-
cated four-phase proceeding, and on February 7, 1984,
AGD objected to FERC that this would unnecessarily
delay the refunds. On March 29, 1984, having heard
nothing from FERC, AGD filed a motion in the D.C.
Circuit asking for an order directing FERC to comply
with the mandate in INGAA I. On April 25, 1984, the
D.C. Circuit denied AGD’s motion to enforce mandate,
stating:
Petitioner has not established that the agency is
in breach of its obligation to direct the payment of
refunds as soon as proper and expedited agency proc-
3
ess allows. See generally Federal Power Commis-
sion v. Tennessee Gas Transmission Co., 371 U.S. 145
(1962); Public Service Commission of the State of
New York v. Federal Power Commission, 543 F.2d
757 (D.C. Cir. 1974).
Our denial is without prejudice to Petitioner’s fil-
ing a subsequent motion if clear indication of agency
compliance with our mandate, such as publication of
a time schedule for a refund procedure, is not forth-
coming at an early date.
Unpublished Order, D.C. Circuit No. 81-1690, issued
April 25, 1984, attached hereto as Appendix A.
During the Spring of 1984, the Commission accepted
comments on the NOI. Several parties raised the issue
of offsetting the Btu refunds against amounts claimed by
the producers for production-related costs pursuant to
NGPA Section 110 and implementing rules issued by
the Commission in Order Nos. 94-A et seg.2 On Mav 3,
1984, the Commission issued an interim rule that did
not provide for such offsets. In the ensuing comment
period, AGD supported the interim rule and specifically
addressed the issue of offsets, pointing out in some detail
why ther were inappropriate* The Commission, ex-
plicitly acting in compliance with the court’s mandate,
issued the final rule, Order No. 399, on September 20,
1984, requiring the producers to refund the Btu over-
charges and forbidding the offset of Btu refunds against
the totally unrelated NGPA Section 110 production-
related costs.
Upon requests for rehearing, the Commission issued
Order No. 399-A on November 20, 1984 (Petitioners’
2 The Order No. 94 series of production-related cost orders were
then on review in the Fifth Circuit in Texas Eastern Transmission
Corp. v. FERC (Docket No. 83-4390) (decided August 19, 1985).
3 See Respondents’ Appendix B for a copy of AGD’s comments on
the offset issue.
4
Appendix A at 81). In this order “granting in part and
denying in part rehearing” of Order No. 399, the Com-
mission adopted a substantial and dramatic modification
of the Final Rule set forth in Order No. 399 by permit-
ting the offsets specifically prohibited therein. In so doing,
the three Commissioners who supported Order No. 399-A
did so “without addressing the weighty rationale behind
its [FERC’s] earlier Order.” INGAA II, Petitioners’ Ap-
pendix at 9a.
On November 21, 1984, AGD filed its second “Motion
For Order Directing Compliance with Mandate” (“AGD
Moticn” or “Motion”) in the D.C. Circuit.* In its Mo-
tion, AGD asked the court to order FERC to comply with
its mandate in INGAA I by vacating the offset portion
of Order No. 399-A and reinstating that part of Order
No. 399 that prohibited offsets.
Meanwhile, on November 20, 1984, one of the pro-
ducers filed a petition for review of Order Nos. 399
and 399-A in the United States Court of Appeals for the
Fifth Circuit.© FERC petitionel the Fifth Circuit for
permission to defer the filing of the record until the
D.C. Circuit had acted on AGD’s motion to enforce the
INGAA I mandate. The Fifth Circuit agreed, deferring
the filing until thirty days after the D.C. Circuit ruled
on AGD’s Motion.
The producers filed an opposition to the AGD Motion
in the D.C. Circuit, arguing the merits of the offset
issue as well as procedural issues. On March 5, 1985,
the court granted AGD’s Motion and ordered FERC to
vacate the offset portion of Order No. 399-A for the
reasons set forth in Order No. 399.
4A copy of this Motion is contained in Respondents’ Appendix C
attached hereto.
5 Mobil Oil Exploration and Producing Southeast, Inc. v. FERC,
No. 84-4775 (5th Cir.). This appeal was transferred to the D.C.
Circuit on August 19, 1985.
5
Various producers filed petitions for rehearing and
suggestions for rehearing en banc which were denied on
May 6, 1985 and May 15, 1985, respectively. The D.C.
Circuit, on May 20, 1985, denied the producers’ petition
for a stay pending the filing with this Court of a peti-
tion for a writ of certiorari. The producers then filed
an “Application for a Stay of Enforcement of the Judg-
ment of the United States Court of Appeals for the Dis-
trict of Columbia Circuit” with the Chief Justice in his
capacity as Circuit Justice for the District of Columbia
Cireuit. AGD opposed that motion and, on June 3, 1985,
the Chief Justice denied the stay. Subsequently, on
July 18, 1985, the Commission issued Order No. 399-B *
in which it vacated the offset portion of Order No. 399-A
and reinstated the offset prohibition contained in Order
No. 399.
SUMMARY OF REASONS
FOR DENYING THE PETITION
The D.C. Circuit’s decision in INGAA I that Order
Nos. 93 and 93-A had permitted producers to charge
rates for natural gas that exceeded the maximum lawful
prices under the NGPA and its order to FERC to cor-
rect that situation are final and binding on all parties.
By law, the court’s mandate necessarily required the
Commission to order refunds and to set in motion pro-
cedures for their payment at the earliest possible mo-
ment consistent with due process. Because the offset
provisions of Order No. 399-A did not comply with the
court’s mandate in INGAA I, AGD moved the court to
order the Commission to vacate those provisions and to
reinstate the offset prohibition contained in Order No. 399.
The court did just that.
A court always has jur sdiction to interpret and en-
force its own mandate. The question of what the D.C.
® Various, producers filed a petition for stay and for review of
Order No. 399-B in the Fifth Circuit. On August 19, 1985, the
Fifth Circuit transferred these matters to the D.C. Circuit.
6
Circuit’s mandate included and whether it had been com-
plied with was uniquely the province of that court. The
Fifth Circuit, as the only other court in which petitions
for review of Order Nos. 399 and 399-A were pending,
recognized this by ordering FERC not to file the record
there until after the D.C. Circuit decided AGD’s motion
to enforce the mandate. The court’s decision in INGAA
II, therefore, did not violate principles of comity. Nor
did the court’s action violate the policy of avoiding piece-
meal review (a principle of judicial economy) because
agency action was complete and the issues raised in the
D.C. and the Fifth Circuits were separate and distinct.
Finally, because the Commission does not have untram-
meled discretion to decide the manner and timing of
refunds and because the D.C. Circuit’s action here only
served to vacate that portion of the order which offended
its mandate, the court did not usurp any discretionary
agency function. For all these reasons, the court’s ac-
tions to enforce its mandate did not constitute a depar-
ture from the accepted and usual course of judicial
proceedings.
In its INGAA II opinion, the D.C. Circuit treated
AGD’s motion as a petition for review under Section 506
of the NGPA. The question before the court was whether
the offset permitted by Order No. 399-A complied with
its mandate in INGAA I. The Commission had already
specifically considered the question of the offset twice
before, and the court had before it the results of those
deliberations in Order Nos. 399 and 399-A. In addition,
the court had been fully briefed on the offset issue, and
the analysis it engaged in was exactly the same as if it
had treated AGD’s motion to enforce mandate only as
such. The court specifically found that no party was prej-
udiced by this procedure, and no due process rights were
violated thereby. Accordingly, the D.C. Circuit’s action
did not constitute a departure from the accepted course of
judicial proceedings.
7
For all these reasons, the petition for a writ of cer-
tiorari should be denied.
REASONS FOR DENYING THE PETITION
I. THE COURT OF APPEALS HAD JURISDICTION
TO INTERPRET AND ENFORCE ITS MANDATE
BY ORDERING THE COMMISSION TO VACATE
PROVISIONS OF ORDERS THAT WERE IN CON-
FLICT WITH IT AND TO REINSTATE PROVI-
SIONS OF ORDERS THAT WERE IN COMPLIANCE
A. The Mandate In INGAA I By Law Required The
Commission To Make Refunds At The Earliest
Possible Moment Consistent With Due Process
In INGAA I, the D.C. Circuit found that the Com-
mission’s new procedures for measuring the Btu content
of natural gas permitted producers to charge more than
the maximum lawful prices for that gas established by
Title I of the NGPA, 15 U.S.C. §§ 3311-3319 (1982). If
no refund were ordered, the Commission would, in effect,
be condoning a ceiling price higher than the maximum
lawful price in violation of Section 504 of the NGPA,
15 U.S.C. § 3414 (1982) and the Commission’s regula-
tions.’
At the time the D.C. Circuit issued its mandate in
INGAA I, the principle had been well established by
this Court that when refunds are required, they must
7Section 270.101(e) of the FERC’s regulations implementing
the NGPA provides that:
Any price collected with respect to a first sale of natural gas
. is collected subject to a general obligation promptly to
refund any portion of such price, together with interest...
which is in excess of the maximum lawful price.
18 C.F.R. § 270.101(e) (1985). There are only a few limited cir-
cumstances, not applicable here, in which the maximum lawful price
may be exceeded. An explanation of those circumstances is con-
tained in footnote 11 to Order No. 399. See Petitioners’ Appendix
at 22a.
8
be made “at the earliest possible moment consistent with
due process.” FPC v. Tennessee Gas Transmission Com-
pany, 371 U.S. 145, 155 (1962); see also United Gas
Improvement Company v. Callery Properties, 382 U.S.
223, 230, reh’g denied, 382 U.S. 1001 (1965). Any other
result would violate the purpose of both the Natural Gas
Act (NGA),* and the NGPA which is
[T]o afford the consumer a complete, permanent and
effective bond of protection from excessive rates and
charges.
Atlantic Refining Company v. Public Service Commission
of New York, 360 U.S. 378, 388 (1959).®° As this court
pointed out in FPC v. Tennessee Gas Transmission Com-
pany, supra, 371 U.S. at 154-155, the mere promise of
refunds in the future does not satisfy this requirement
because
[K]xperience has shown this to be somewhat illusory
in view of the trickling down process necessary to
be followed, the incidental cost of which is often
borne by the consumer, and in view of the transient
nature of our society which often prevents refunds
from reaching those to whom they are due...
The longer the delay in making the refunds, the greater
the chance that the consumers who will ultimately ben-
efit from them will not be the ones who paid the over-
charges. Thus, for these three reasons—(1) the Com-
mission had no authority to permit producers to retain
amounts exceeding the NGPA ceiling prices; (2) the
Commission’s regulations required refunds of amounts
collected in excess of the maximum lawful price; and
(3) well established law required that refunds be made
at the earliest possible moment consistent with due
§15 U.S.C. § 717 et seq. (1982).
® See also, Sunray Mid-Continent Oil Company v. F PC, 364 U.S.
132, 147 (1960); Public Service Commission of the State of New
York v. FPC, 543 F.2d 757 (D.C. Cir. 1974).
9
process—the mandate of the D.C. Circuit in INGAA I
necessarily and implicitly included a requirement that
the Commission order refunds at the earliest possible
moment consistent with due process.
B. The Court Of Appeals Properly Considered Whether
The Offset Provision Complied With Its Mandate
When AGD filed its motion to enforce the INGAA I
mandate, it raised only a single issue—whether the off-
set provision of Order No. 399-A met the mandate of
INGAA I. A court has inherent power to construe and
enforce its mandate. United States v. New York Tele-
phone Company, 434 U.S. 159, 172 (1970).% Once a
court has construed its mandate, it has the power to
issue such orders as are necessary to “effectuate and
prevent the frustration of orders it has previously is-
sued.” United States v. New York Telephor.. Company,
supra, 434 U.S. at 172.'' These principles, ordinarily
10 See also, Regal Knitwear Company v. NLRB, 324 U.S. 9, 15
(1974) ; New Jersey v. New York City, 296 U.S. 259, 261 (1935) ;
In re Sanford Fork and Tool Company, 160 U.S. 247, 255-256 (1895) ;
see also, Potomac Electric Power Company v. ICC, 702 F.2d 1026,
1032 (D.C. Cir. 1983); American Trucking Associations, Inc. v.
ICC, 669 F.2d 957, 960 (5th Cir. 1982), cert. denied, 460 U.S. 1022
(1983) ; City of Cleveland, Ohio v. FPC, 561 F.2d 344, 346 (D.C.
Cir. 1977); Southern Natural Gas Co. v. FPC, 543 F.2d 530, 532
(5th Cir. 1976); Floersheim v. Engmen, 494 F.2d 949, 954 (D.C.
Cir. 1973) ; Greater Boston Television Corp. v. FCC, 463 F.2d 268,
278 (D.C. Cir. 1971), cert. denied, 406 U.S. 950 (1972).
11 See also, In re Sanford Fork and Tool Company, supra, 160
U.S. at 255; Baltimore and Ohio Railroad Co. v. United States, 279
U.S. 781, 785 (1929); Potomac Electric Power Company v. ICC,
supra, 702 F.2d at 1032; American Trucking Associations, Inc. v.
ICC, supra, 669 F.2d at 960 (and cases cited therein); Oswald v.
McGarr, 620 F.2d 1190, 1195-96 (7th Cir. 1980) ; City of Cleveland,
Ohio v. FPC, supra, 561 F.2d at 346; Yablonski v. United Mine
Workers of America, 454 F.2d 1036, 1038 (D.C. Cir. 1971), cert.
denied, 406 U.S. 906 (1972).
10
applied to a superior court’s enforcing of its mandate
vis a vis a lower court, are equally applicable to judicial
review of administrative agency action undertaken pur-
suant to court order. City of Cleveland, Ohio v. FPC,
561 F.2d 344, 346-47 (D.C. Cir. 1977) (“these princi-
ples, so familiar in operation within the hierarchy of ju-
dicial benches indulge no exception for reviews of ad-
ministrative agencies’’).
Here, the D.C. Cireuit in JNGAA II clearly recog-
nized that AGD had asked it only to decide whether the
offset portion of Order No. 399-A complied with its
mandate in INGAA I and, if not, to vacate that por-
tion of the order. That is all the court did.’ (Petition-
ers’ Appendix at 7a). First, it determined what the
law required and explained that its mandate necessarily
included compliance with those requirements:
The law requires the ordering of refunds at the
earliest possible moment.
* * * *
Two consequences of our decision are inexorable:
implement the proper pricing method for future
pricing decisions and remedy the effects of past use
of the improper pricing method at the earliest pos-
sible moment.
Petitioners’ Appendix at 12a, 17a. The court analyzed
Order No. 399’s prohibition of offsets and concluded that
it complied with the court’s mandate for the reasons
12 See also, Regal Knitwear Company v. NLRB, supra, 324 US.
at 15; American Trucking Associations, Inc. v. ICC, supra, 669
F.2d at 960; Floersheim v. Engmen, supra, 494 F.2d at 958.
13 Petitioners incorrectly state that AGD urged the court of ap-
peals to exercise its extraordinary power under the All Writs Act,
28 U.S.C. § 1651 (1982), to issue a writ of mandamus (Petition at
5). AGD did not invoke the All Writs Act in its motion (see Ap-
pendix C), nor did the court do so in its decision and order in
INGAA II.
11
which the Commission itself had stated in Order No.
399,14
The court analyzed the offset provisions of Order No.
399-A and determined that they did not meet the terms
of the mandate. It found that the Commission’s failure
to explain why it so radically changed its mind consti-
tuted arbitrary and capricious action and violated the
requirements of refunds at the earliest possible moment:
The offset scheme embodied in Order No. 399-A will
only further delay refund of the overcharges, cir-
cumventing our mandate in Jnterstate and the clear
instruction of the Supreme Court in Tennessee Gas.
Petitioners’ Appendix at lla-12a. Having thus inter-
preted its mandate and found Order No. 399-A not to
comply, the court granted the relief sought by AGD by
issuing an order directing compliance with the mandate.
In its order, filed March 5, 1985, the court explicitly
stated:
Upon consideration of the Motion of Petitioner As-
sociated Gas Distributors to enforce this Court’s
mandate in the captioned cases and of the various
responses thereto, and of petitioner’s reply, and this
Court having reviewed the record and the pleadings
herein and having heard oral argument on the mo-
tion, it is
44“FERC’s prohibition of offsets was well considered. The con-
troversy over production-related costs to be recouped by producers
under Section 110 constitutes unsettled litigation wholly separate
from the instant case. As such, permitting producers to offset their
refund obligations would bring delay and confusion into an already
complex area. Moreover, the principles of law and the customers
involved in the refund arrangement are far from identical to those
implicated in the Section 110 cost proceedings. By prohibiting off-
sets, FERC designed the system most likely to insure that customers
will receive refunds due them. Involving disparate issues on a
matter on appeal to another court may complicate, delay, and ob-
fuscate the refunds at issue here.” Petitioners’ Appendix at 12a.
12
ORDERED, by the Court, that the motion by Asso-
ciated Gas Distributors to direct compliance with the
Court’s mandate is herein granted and that the Fed-
eral Energy Regulatory Commission is directed to
vacate the offset portion of its Order No. 399-A, for
the reasons set forth in its own order No. 399, in
accordance with the Opinion for the Court filed herein
this date.
Petitioners’ Appendix at 13la, emphasis added.
There is no question that the court had the authority
to do exactly what it did—to interpret its mandate and
to enforce it. Its actions did not in any way depart from
the accepted and usual course of judicial proceedings.
C. The Court Of Appeals’ Action Was Appropriate Be-
cause The Commission Did Not Have Discretion To
Establish Refund Provisions In Violation Of Ap-
plicable Law
Petitioners assert that mandamus could not lie because
“the manner and timing of refunds” is purely discre-
tionary. (Petition at 21-23). That principle is inappli-
cable to the facts of this case because the Commission
does not have untrammelled discretion as to the manner
and timing of refunds. First, refunds where the NGPA
maximum lawful price is exceeded are not discretionary;
they are mandatory.** Moreover, the Commission is lim-
ited by the concept of abuse of discretion and by the need
to comply with other legal requirements affecting the
manner and timing of refunds. The Commission’s discre-
tion, therefore, was limited by the legal requirement that
refunds be made at the earliest possible moment consist-
ent with due process. The court specifically determined
that this legal requirement could not be met if offsets
15 See Section 504 of the NGPA, 15 U.S.C. § 3414 (1982) and
implementing regulations at 18 C.F.R. § 270.101(e) (1985). See
supra at p. 7 and n.7.
el
See CET LT OAL NOLS ES LY OL PO AIT —
me
13
were permitted. It therefore found that the offset provi-
sion of Order No. 399-A constituted an abuse of discretion.
The Commission’s “discretion” with respect to the man-
ner of making refunds is also limited by the requirement
that it give “due weight to considerations of equity”
Gillring Oil Company v. FERC, 566 F.2d 1323, 1325-26
(5th Cir.), cert. denied, 439 U.S. 823 (1978) and that it
engage in “broad” penetrating analysis of all the equi-
table considerations. Public Service Commission of the
State of New York v. FPC, 329 F.2d 242 (D.C. Cir.),
cert. denied sub nom. Prado Oil and Gas Company v.
FERC, 377 U.S. 963 (1964). In that case, the court over-
turned a postponement of refunds because it found that
the interests of consumers in prompt refunds outweighed
the equitable considerations of the producers. The agency
is also required to look at the “backdrop of practical con-
sequences resulting from its refund order. FPC v. Ten-
nessee Gas Transmission Company, 371 U.S. 145, 155
(1962). What is more, the Commission must engage in
reasoned decision making in arriving at its decisions.
Tenneco Oil Company v. FERC, 571 F.2d 834 (5th Cir.),
cert. denied, 439 U.S. 801 (1978).'* Applying these prin-
ciples, the D.C. Circuit has, in the past, specifically re-
jected an offset where it determined that the offset dealt
with unrelated debts. Cities Service Gas Company v. FPC,
535 F.2d 1278 (D.C. Cir. 1976).
Here, the court determined that the reasoning in Or-
der No. 399 satisfied the requirements for proper exercise
of discretion with respect to the manner and timing of
refunds. The decision in Order No. 399 to forbid offsets
was an exercise of the Commission’s limited discretion to
decide the manner and timing of refunds—limited by the
16 See also, Estate ef L.D. French v. FERC, 603 F.2d 1158, 1162-
63 (5th Cir. 1979); Texas Eastern Transmission Corporation v.
FPC, 414 F.2d 344, 347 (5th Cir. 1969) cert. denied, 398 U.S. 928
(1970) ; Public Service Commission of the State of New York v.
F PC, 543 F.2d 757, 826 (D.C. Cir. 1974).
14
requirements of the mandate, the purpose and provisions
of the law, and considerations of equity. Further, the
court determined that the need to make refunds at the
earliest possible moment was required by law and that
the offset portion of Order No. 399-A did not meet that
requirement. It also determined that the lack of rea-
soned decision making in Order No. 399-A constituted an
abuse of discretion. For all these reasons, the court’s de-
cision to vacate the offset provision of Order No. 399-A
was proper.
II. THE COURT’S DECISION TO TREAT AGD’S MO-
TION FOR AN ORDER DIRECTING COMPLIANCE
WITH MANDATE AS A PETITION FOR REVIEW
WAS PROPER
The court had well established precedent for its deci-
sion to treat AGD’s Motion as a petition for review. See
INGAA II, Petitioners’ Appendix at 9a-lla. The cases
cited by the court, as well as others cited below at 19-21,
stand for the proposition that a motion to enforce man-
date may be treated as an appeal provided that principles
of finality and due process are not violated. Here, the
court determined that either pleading could have been
filed at that time,’’ the spirit of the notice requirements
was fully met,’* the relief sought was identical,’® and the
analysis required would be the same.*”® See Petitioners’
Appendix at 10a-lla. It also found that, because the
single issue before it had been briefed and argued, no
one would be prejudiced by treating the matter as a peti-
tion for review. Under these circumstances, the court’s
determination to treat AGD’s motion as a petition for re-
17 U.S. v. Green, 499 F.2d 538, 540, n.5 (D.C. Cir. 1974).
18 Rabin v. Cohen, 570 F.2d 864, 866-67 (9th Cir. 1978) ; see also,
16 Wright & Miller, Federal Practice and Procedure § 3949 (1977).
19 Chase v. Robson, 435 F.2d 1059, 1060, 1062 (7th Cir. 1970).
20 United States v. RMI Company, 599 F.2d 1183, 1187-90 (3rd
Cir. 1979).
15
view was not an abuse of discretion or a violation of
law.”4
In addition to arguing a lack of valid precedent, peti-
tioners argue that the court lacked jurisdiction to reach
the merits of the offset issue for three additional rea-
sions: (1) exhaustion of administrative remedies—the
requirement for seeking agency rehearing as required by
Section 506 of the NGPA (15 U.S.C. § 3416); (2) venue
—the allegation that the Fifth Circuit had exclusive juris-
diction and that the case should have been transferred
there pursuant to 28 U.S.C. § 2112; and (3) the alleged
invalidity of the court’s action for a variety of due proc-
ess complaints. Petitioners’ arguments on each of these
issues should be rejected for the following reasons.
A. The Purpose And Policy Of The NGPA Rehearing
Requirement Was Fully Satisfied
The essence of the petitioners’ argument is that the
court lacked jurisdiction to reach the merits of the offset
portion of Order No. 399-A because AGD’s December 6,
1984 petition for rehearing had not been decided by
FERC.” This argument is without merit because the
purpose of the NGPA rehearing requirement had already
been satisfied with the issuance of Order No. 399-A.
21 Petitioners, in their desire to discredit the court’s action,
totally mischaracterize one of the authorities cited by the court.
See Petition at 20, n.29. In National Organization for the Reform
of Marijuana Laws v. Ingersoll, 497 F.2d 654, 656, n.3 (D.C.
Cir. 1974), the D.C. Circuit specifically treated a petition for
mandamus as a petition for review. The hearing ordered in that
case was not a prerequisite to appellate review. Rather, it was the
relief sought by the petitioners because the agency had denied them
a hearing on the merits.
22 AGD had filed a protective request for rehearing of Order No.
399-A with FERC on December 6, 1984. It had also filed a protec-
tive Petition for Review in the D.C. Circuit on January 18, 1985.
The Commission granted rehearing in Order No. 399-B issued
July 18, 1985, in which the Commission vacated the offset provision
of Order No. 399-A.
16
The rehearing requirement of 15 U.S.C. §§ 3416(a) (2)
and (4) that a party seeking judicial review first seek
rehearing before the Commission is concerned not with
the formality of applying for rehearing but with the ra-
tionale that the agency has particular and specialized ex-
pertise that it ought to be allowed to exercise in correct-
ing any errors it may have made before the court re-
views agency proceedings. Tenneco Exploration Ltd. v.
FERC, 649 F.2d 376, 378-79, n.1 (5th Cir. 1981). In ad-
dition, the rehearing requirement is intended to give the
court the benefit of the agency’s consideration of issues
which involve technical questions of expertise.** The re-
quirement for a rehearing as well as the companion prin-
ciple that issues not raised before an administrative body
may not ordinarily be raised before a reviewing court,
are based on the principle of exhaustion of administra-
tive remedies which is a prudential, not a jurisdictional,
doctrine. In other words, while the statute may, under
ordinary circumstances, require rehearing, that require-
ment is not absolute. As this Court pointed out long ago
in Hormel v. Helvering, 312 U.S. 552, 557 (1941), “Rules
of practice and procedure are devised to promote the
ends of justice, not to defeat them.” So, for example, in
Arkansas Power and Light Co. v. FPC, 517 F.2d 1223,
1236-37 (D.C. Cir. 1975), cert. denied, 424 U.S. 933
(1976), the court stated:
[T]he exhaustion of remedies doctrine which is ex-
pressed in the statute** is not inflexible; it allows
23 See, e.g., FPC v. Colorado Interstate Gas Co., 348 U.S. 492,
500-501 (1955); Whitney National Bank In Jefferson Parish v.
Bank of New Orleans & Trust Co., 379 U.S. 411, 420 (1965) ; ECEE,
Inc. v. FERC, 611 F.2d 554, 556 (5th Cir. 1980); Public Service
Commission of the State of New York v. FPC, 543 F.2d 757, n.116
(D.C. Cir. 1974); Hennessey v. SEC, 285 F.2d 511, 515 (3rd Cir.
1961).
24 Section 19(b) of the NGA, 15 U.S.C. § 717(r), which is, in
all material respects, identical to Section 506 of the NGPA.
17
for deviation where the interests of justice dictate
{citations omitted].
If seeking rehearing would be futile in light of prior
agency action, the court may waive the requirement.”
As the court stated in Public Service Commission of the
State of New York v. FPC, supra, 543 F.2d at 775, n.116:
[MJodification of a prior administrative decision on
rehearing does not generate a need to request another
rehearing where the litigant has already presented
his point to the Commission for decision. (Emphasis
added. )
See also, 4 K. Davis, Administrative Law Treatise (2d
ed.) §§ 26.7 and 26.11 (1983).
Here, the purpose of the rehearing requirement had
been more than adequately met. The Commission, in the
NOI, had invited all interested parties to comment on
the refund procedure. Those comments included discus-
25 See, e.g., U.S. Alkali Export Association, Inc. v. United States,
825 U.S. 196, 210 (1945) ; Smith v. Illinois Bell Telephone Co., 270
U.S. 587 (1926); Hudson v. Farmers Home Administration, 654
F.2d 334, 337 (5th Cir. 1981). See also Porter County Chapter of
the Izaak Walton League of America, Inc. v. Costle, 571 F.2d 359,
864 (7th Cir.), cert. denied, 439 U.S. 834 (1978) (prior agency
action).
26 A good illustration of this principle is found in Department
of Fish and Game of the State of California v. FPC, 359 F.2d 165,
169 (9th Cir.), cert. denied, 38E U.S. 932 (1966). There, petitioner
sought mandamus to enforce the court’s mandate without seeking
rehearing of the latest in a series of orders. The court stated that
since the rehearing requirement of Section 313 of the Federal
Power Act, 16 U.S.C. § 8251 had not been met, it could refuse to
consider the appeal, but the facts were such that the petitioner had
reasonably concluded that filing a petition for rehearing would be
“meaningless”. The court, therefore, proceeded to decide the issue
on the merits. Petitioners cite this case on page 15 of their Petition
for the proposition that, even when seeking mandamus, rehearing
must first be sought and ruled upon. As the discussion here demon-
strates, petitioners have completely missed the point of this case
and its holding.
18
sion of the offset issue. In its comments on the interim
rule, AGD discussed in detail reasons why an offset
would be inequitable and inappropriate. See Respond-
ents’ Appendix B. AGD having raised its concerns be-
fore the Commission in this forum, “FERC was ade-
quately apprised of the petitioner’s contentions” and the
purpose of the rehearing requirement as to the offset
issue was amply met. Tenneco Exploration Ltd. v.
FERC, supra, 649 F.2d at 378-79, n.1.
The Commission cited many of AGD’s reasons as jus-
tification for its denial of offsets in the final rule, Order
No. 399. Having carefully considered the offset issue
there, the Commission considered it again in response
to the producers’ requests for rehearing. Order No.
399-A was the result of that reconsideration. It can thus
hardly be claimed that the agency did not have ample
opportunity to bring its expertise to bear on the offset
issue. Having reached one conclusion and then, upon
reflection, having reversed itself, it was not likely that
the Commission would change its position yet a third
time. Seeking rehearing would therefore have been
futi*e.
Both because the purpose of the rehearing require-
ment was amply met and because it would have been
futile to seek rehearing, the action of the D.C. Circuit
in not requiring agency action on a petition for rehear-
ing before considering AGD’s Motion as a petition for
review was well within the accepted and usual course
of judicial proceedings.
B. Venue Was Proper In The Court Of Appeals
Petitioners’ argument that the court lacked venue is
wrong for three reasons. First, such a conclusion is
belied by the very language of the judicial review pro-
vision that they invoke in their aid. Section 506(a) (4)
of the NGPA provides in pertinent part:
Upon the filing of such petition such court shal! have
jurisdiction, which upon the filing of the record with
19
it shall be exclusive, to affirm, modify, or set aside
such order in whole or in part (emphasis added).
AGD filed its protective petition for review in the D.C.
Circuit on January 18, 1985, before the record had
been filed in the Fifth Circuit and before the court acted
in INGAA II. The lack of a filed record, therefore,
meant that neither the Fifth Circuit nor the D.C. Circuit
had exclusive jurisdiction. Both circuits had appropri-
ate venue.
Petitioners’ second argument—that 28 U.S.C. § 2112
(1982) required transfer to the Fifth Circuit—is also
without merit.**? Section 2112(a) is simply a rule of
comity designed to prevent unseemly conflict among the
circuits. All that was pending before the D.C. Circuit
was a determination of what was contained in the
INGAA I mandate and whether the offset provisions
of Order No. 399-A complied with it. Comity would
have been violated if the Fifth Circuit had attempted
to decide what the D.C. Circuit’s mandate meant. The
Fifth Circuit’s decision to delay the filing of the record
was an implicit recognition of this fact and a determina-
tion on its part not to seek exclusive jurisdiction of the
issues until the D.C. Circuit had decided, as only it
could, whether Order No. 399-A violated its mandate
in INGAA I.
Petitioners’ Section 2112 argument must also fail be-
cause the venue provisions of 28 U.S.C. § 2112 are sub-
ject to an exception which specifically encompasses the
facts of this case. Even if one accepts petitioners’ asser-
tions that their petitions for review in the Fifth Circuit
constituted the first filed appeals, a subsequently filed
appeal need not be transferred to the court of first filing
27 In light of the Fifth Circuit’s recent transfer of Petitioners’
pending petitions for review of Order Nos. 399, 399-A, and 399-B
to the D.C. Circuit, petitioners’ transfer and venue arguments are
moot.
20
[W]lhere the same or inter-related proceeding was
previously under review in the Court of Appeals, and
is now brought for review of an order entered after
remand, or in a follow-on phase, where continuance
of the same appellate tribunal is necessary ‘to main-
tain continuity in the total proceeding.’
Public Service Commission for the State of New York
v. Federal Power Commission, 472 F.2d 1270, 1272 (D.C.
Cir. 1972) citing Pacic Gas and Electric Company v.
Federal Power Commission, 272 F.2d 510, 511 (D.C.
Cir. 1958). Sequential regulations that arise from the
same or irreleated proceedings are normally considered
the same order for purposes of 28 U.S.C. § 2112(a).*
Here, all the Btu measurement and refund issues dealt
with in Orders No. 93, 93A, 399, and 399-A had been
decided by the D.C. Circuit. The only question before
the D.C. Cireuit in INGAA II was whether its man-
date in INGAA I had been properly carried out. That
court was the only one competent to make that deter-
mination. It was, therefore, perfectly proper for the
D.C. Cireuit not to transfer this action to the Fifth
Circuit.
Petitioners’ argument that 28 U.S.C. § 2112 was vio-
lated because the D.C. Circuit’s action resulted in piece-
meal review is also without merit. The concept of piece-
meal review ordinarily applies to judicial review before
agency action is complete. See, e.g., Cities of Anaheim
and Riverside, California v. FERC, 692 F.2d 773 (D.C.
28 See, e.g., BASF Wyandotte Corp. v. Costle, 582 F.2d 108, 112
(1st Cir. 1978); Public Service Commission for the State of New
York v. FPC, supra, 472 F.2d at 1272; Westinghouse Electric Corp.
v. United States Nuclear Regulatory Commission, 598 F.2d 759,
766-67 (3rd Cir. 1979); Eastern Airlines, Inc. v. CAB, 354 F.2d
507, 510-11 (D.C. Cir. 1965). See also, ITT World Communications,
Inc. v. FCC, 621 F.2d 1201, 1208-09 (2nd Cir. 1980); American
Public Gas Association v. FPC, 555 F.2d 852, 857 (D.C. Cir. 1976) ;
Farah Manufacturing Co., Inc. v. NLRB, 481 F.2d 1143, 1145 (8th
Cir. 1973).
21
Cir. 1982); Pennzoil Co. v. FERC, 742 F.2d 242 (5th
Cir. 1984). The danger sought to be avoided is the
waste of judicial and administrative time and resources
that may result from judicial intervention before the
agency has had an opportunity to act fully and finally.
Here, the Commission’s action was clearly final. The
issues raised in the Fifth and the D.C. Circuits were
separate and distinct. There was, therefore, no oppor-
tunity for the dangers associated with piecemeal review
to arise. What is more, as demonstrated above, if trans-
fer were needed to prevent piecemeal review, the Fifth
Circuit could legitimately have been obliged to transfer
petitioners’ appeals to the D.C. Circuit “in the interest
of justice.” 28 U.S.C. § 2112(a) (1982). The Fifth
Circuit’s recent transfer of all the Btu refund proceed-
ings to the D.C. Circuit fully supports this view. For all
these reasons, the purpose of 28 U.S.C. § 2112 was fully
Satisfied.
Finally, even if venue had been initially proper only
. the Fifth Circuit, that court had inherent jurisdiction,
independent of 28 U.S.C. § 2112, to transfer any case to
any other circuit in which jurisdiction and venue could
be proper “in the interests of justice and sound judicial
administration.” Eastern Airlines, Inc. v. CAB, supra,
354 F.2d at 510-511. The Fifth Circuit’s decision to
forego exclusive jurisdiction by delaying the filing of
the record in order to allow the D.C. Circuit to explain
what its mandate meant and to decide whether it had
been violated was apparently the first step in making
such a determination. It has now completed the process
by transferring all outstanding Btu refund appeals to
the D.C. Circuit. Accordingly, neither its actions nor
*® See also, Pearce v. Director, Office of Workers’ Compensation
Programs, 647 F.2d 716, 720, n.3 (7th Cir. 1981); Dayton Power
& Light Co. v. EPA, 520 F.2d 703 (6th Cir. 1975) ; Natural Re-
sources Defense Council v. EPA, 465 F.2d 492, 495-96 (1st Cir.
1972) ; Panhandle Eastern Pipe Line Co. v. FPC, 343 F.2d 905, 909
(8th Cir. 1965).
22
that of the D.C. Circuit were improper or an abuse of
discretion.
For all these reasons, the court’s decision to treat
AGD’s Motion as a petition for review of the offset issue,
and the Fifth Circuit’s acquiescence and cooperation in
that determination, did not constitute a violation of
either the letter or the spirit of 28 U.S.C. § 2112.
C. The Court’s Decision To Treat AGD’s Motion As A
Petition For Review Did Not Violate Producers’
Due Process Rights
Petitioners argue that the court’s action in deciding
whether its mandate had been complied with has resulted
in piecemeal review that has somehow denied them the
opportunity to be heard at a meaningful time and in a
meaningful manner (Petition at 19). This contention is
without merit. As petitioners admit, the “meaningful
time and place” argument applies only when a party is
to be deprived of significant property rights. See cases
cited at Petition, p. 19.
Here, Petitioners have not been deprived of any prop-
erty rights. The court’s order did absolutely nothing to
the amounts owed by petitioners; * it merely affected
the timing of payments. Not surprisingly, petitioners
have cited no authority for their claim that the timing of
payments they owe someone else rises to the level of a
property right. Petitioners have therefore misapplied
the due process doctrine.
Petitioners’ argument that they were denied due
process because the court did not have the full adminis-
trative record before it is similarly without merit. The
court’s determination that the offset portion of Order
%° Petitioners’ claim that if they could argue everything in one
jurisdiction they would somehow save “additional refunds” of $450
million is, to put it in its best light, disengenuous. All that is in-
volved here is the timing and manner of refunds, not the amounts.
23
No. 399-A did not comply with its mandate was based
on its determination that while Order No. 399 was the
product of reasoned decision-making, Order No. 399-A
was not. That is a determination made from the face
of the order under review, 7.e., from an evaluation of
the reasoning engaged in, and the support actually
claimed for, the results reached.*' If the decision of the
agency does not clearly articulate a “rational connection
between the facts found and the choice made,” the deci-
sion is arbitrary and capricious and may not stand.
Farmers Union Central Exchange, Inc. v. FERC, 734
F.2d 1486, 1499 (D.C. Cir.), cert. denied sub nom. Texas
Eastern Transmission Corp. v. Farmers Union Central
Exchange, Inc., U.S. , 105 S.Ct. 507 (1984),
quoting Burlington Trunk Lines v. United States, 371
U.S. 156, 168 (1962). See also, American Public Gas
Association v. FPC, 567 F.2d 1016, 1029-30 (D.C. Cir.
1977), cert. denied, 485 U.S. 907 (1978). The record
relevant to such a determination, therefore, is the order
itself. Here, it was the comparison of Order Nos. 399
and 399-A that revealed the fatal flaw. The D.C. Cir-
cuit, therefore, had all the record it needed to reach the
decision it reached.
CONCLUSION
Petitioners conclude that JNGAA II stands for the
proposition that parties dissatisfied with administrative
agency action no longer need standing, no longer need
to request rehearing, no longer need to file a petition for
review and no longer need a record on appeal before
31 See, e.g., Motor Vehicle Manufacturers Ass’n v. State Farm
Mutual Automobile Insurance Co., US. , 103 S.Ct. 2856,
2866, 2869-71 (1983); Burlington Truck Lines v. United States,
371 U.S. 156, 168 (1962); Farmers Union Central Exchange, Inc.
v. FERC, 734 F.2d 1486, 1500, 1511 (D.C. Cir.), cert. denied sub
nom. Texas Eastern Transmission Corp. v. Farmers Union Central
Exchange, Inc., USS. , 105 S.Ct. 507 (1984).
24
seeking judicial review. (Petition at 9) They also con-
clude that INGAA II has such broad applicability that
“it will fundamentally change the relationships among
federal agencies and reviewing courts, among the various
courts of appeals, and among parties before agencies”
and, as a result, will have a “broad, deleterious effect on
judicial review of administrative decisions generally.”
(Petition at 9-10).
Such hyperbole and exaggerated rhetoric do not ad-
vanee the cause of meaningful judicial review in this
Court. INGAA II does not stand for any of these propo-
sitions. It stands plainly and simply for the propositions
that a court always has jurisdiction to interpret and
enforce its own mandate and that the particular facts
of the situation will control the extent to which proce-
dural formalities may be modified in the interests of
sound judicial administration and equity.
Here, the Commission had fully considered the single
substantive issue—the propriety of offsets—on two pre-
vious occasions. The sole question before the court of
appeals was whether the offsets provided for in Order
No. 399-A complied with the INGAA I mandate. Both
the D.C. Circuit and the Fifth Circuit determined that
the review of that question would be better accomplished
in the D.C. Circuit. Full and complete review of that
issue was had in the D.C. Circuit. It was completely
irrelevant whether the court called its deliberations a
review upon motion to enforce mandate or a review on
the merits upon petition for review. The results reached
were fully supportable in either case and comported with
all appropriate considerations of judicial comity, exhaus-
tion of administrative remedies, standards of sound
judicial administration, and the applicable laws—i.e., the
NGA, the NGPA, and 28 U.S.C. § 2112—all as con-
strued by the courts. The D.C. Circuit’s actions, there-
fore, were not in any way a departure from the accepted
and usual course of judicial proceedings.
25
AGD, therefore, respectfully requests that the petition
for a writ of certiorari be denied.
August 26, 1985
Respectfully submitted,
FREDERICK MORING *
HERBERT J. MARTIN
DIANE K. ROGELL
CROWELL & MORING
1100 Connecticut Ave., N.W.
Washington, D.C. 20036
(202) 452-5800
Attorneys for Respondents
Associated Gas Distributors
* Counsel of Record
APPENDICES
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
September Term, 1983
No. 81-1690
INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA,
Petitioner
v.
FEDERAL ENERGY REGULATORY COMMISSION,
Petitioner
MOBIL OIL CORPORATION, et al.,
Intervenors
And Consolidated Cases
[Filed Apr. 25, 1984]
Before: ROBINSON, Chief Judge; MIKVA and SCALIA, Cir-
cuit Judges
ORDER
Petitioner’s motion for an order directing compliance
with our mandate in the above captioned case is DE-
NIED.
Petitioner has not established that the agency is in
breach of its obligation to direct the payment of refunds
as soon as proper and expedited agency process allows.
See generally Federal Power Commission v. Tennessee
2a
Gas Transmission Co., 371 U.S. 145 (1962) ; Public Serv-
ice Commission of the State of New York v. Federal
Power Commission, 543 F.2d 757 (D.C. Cir. 1974).
Our denial is without prejudice to Petitioner’s filing a
subsequent motion if clear indication of agency com-
pliance with our mandate, such as publication of a time
schedule for a refund procedure, is not forthcoming at
an early date.
Per Curiam
For the Court:
GEORGE A. FISHER
Clerk
By: /s/ Robert A. Bonner
ROBERT A. BONNER
Chief Deputy Clerk
‘ ail
3a
APPENDIX B
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Docket No. RM84-6-000
REFUNDS RESULTING FROM BTU
MEASUREMENT ADJUSTMENTS
COMMENTS OF ASSOCIATED GAS DISTRIBUTORS
ON THE INTERIM RULE
Associated Gas Distributors (AGD) submits the fol-
lowing comments on the Commission’s Interim Rule is-
sued May 3, 1984. AGD appeared at the May 24, 1984
public hearing and participated in one of the panel dis-
cussions conducted by the Commission at the hearing.
The purpose of these comments is to address several is-
sues raised by the participants at the public hearing, par-
ticularly the proposal of the Indicated Producers and
Tennessee Gas Pipeline (Tennessee) that refunds re-
sulting from Order No. 93 be offset by amounts which
the producers have billed the pipelines for production-
related activities as defined in Order No. 94-A and the
related orders implementing Section 110 of the Natural
Gas Policy Act of 1978 (NGPA). For the reasons stated
below, AGD urges the Commission to reject this offset
proposal.
First, however, AGD wishes to state, as it did at the
public hearing, that it strongly supports the Commission’s
Interim Rule and urges the Commission to adopt it with-
out modification as the final rule for Btu refunds. The
Interim Rule presents a balanced answer to the three
critical points on which the Commission sought comment
in its January 19, 1984 Notice of Inquiry: the timing,
method, and monitoring of Btu refunds. The refund pro-
4a
cedures established in the Interim Rule are far more
expeditious than the four-step procedure contemplated
in the Commission’s initial Notice of Inquiry. The periods
within which large and small producers are required to
make refunds to their customers provide adequate pro-
tection to the producers and at the same time satisfy the
Commission’s duty to direct payment of refunds at the
earliest possible moment consistent with due process.’
The Interim Rule requirement that pipelines make cash
refunds to their customers strikes a balance between con-
siderations of the administrative simplicity of making re-
funds via the PGA mechanism on the one hand, and the
more important considerations of refunding overcharges
to those who actually paid them, avoiding disruption of
inter-pipeline market competition, and efficient monitor-
ing of the refund process at both the federal and state
level, all of which clearly favor the lump-sum cash pay-
ment procedure ordered by the Commission. The Interim
Rule, in short, presents a reasonably prompt and fair
basis for compliance with the Court’s mandate in this
matter and should be adopted substantially in its present
form as the Commission’s final rule.
The Proposal to Offset Order 93 Refunds
Should be Rejected
At the May 24, 1984 public hearing, both the Indi-
cated Producers and Tennessee proposed modifications to
the Interim Rule to permit a producer or a pipeline to
offset Btu measurement refunds owed to their customers
with amounts billed by the producers for production-
related activities. The Indicated Producers request that
1 See United Gas Improvement Company v. Callery Properties,
382 U.S. 223, 230 (1965), quoting Federal Power Commission v.
Tennessee Gas Transmission Co., 371 U.S. 145, 155 (1962); see
also Public Service Commission of the State of New York v. Fed-
eral Power Commission, 543 F.2d 757 (D.C. Cir. 1974); Atlantic
Refining Coe. v. Publie Service Commission of the State of New York,
360 U.S. 378, 288 (1959).
5a
the Commission modify the Interim Rule to permit the
producer the right to offset any Btu refunds with
production-related charges billed by the producer to its
pipeline customers. Tennessee requests a modification of
the Interim Rule to permit interstate pipelines to flow
through Btu refunds by credit to Account 191 and to
offset the refund amounts due to their customers with
production-related charges invoiced by the producers.
The Interim Rule permits the producers to make re-
funds to their pipeline customers by means of billing ad-
justments if the pipelines agree to that method. If the
pipelines refuse, then the producers must make the re-
funds by lump-sum cash payment. A producer, therefore,
cannot offset the Order 93 Btu refunds with production-
related charges unless the pipeline (or other first sale
purchaser) agrees to this method or the Commission
grants the seller the right to such an offset in the final
rule.
AGD urges the Commission not to grant such a right.
If the Commission modified the Interim Rule to grant
producers the right to offset Btu refunds with production-
related claims (or any other claims in dispute), the
Commission would intrude upon, and possibly upset, the
parties’ negotiating positions regarding the amounts
which are properly owed for production-related claims
(or any other claims in dispute). Moreover, offsetting
Btu refunds with amounts claimed for production related
activities would considerably complicate the Commission’s
and the States’ monitoring of the Btu refund process.
AGD has even greater concern with Tennessee’s pro-
posal that pipelines be permitted to offset Order 93 re-
funds to their customers with production-related claims
accumulated by Tennessee. AGD urges the Commission
not to mix Order 93 refunds and production-related claims
for the same sound policy reasons enunciated in the In-
terim Rule (mimeo at pp. 18-19) in favor of requiring
cash payment of refunds by pipelines to their customers
6a
instead of a reduction in purchased gas costs for the
future. In fact, each of the reasons cited by the Commis-
sion for requiring lump-sum cash refunds applies with
equal force to the question of whether Btu refunds should
be offset by amounts claimed for production-related activi-
ties. Those reasons will be discussed in order below.
An Offset of Btu Overcharges Will
Penalize Those Entitled to Refunds
The first reason cited by the Commission for favoring
cash refunds by pipelines to their customers is that the
refunds should be made so far as possible to those who
actually paid the Btu overcharges. A refund of these
overcharges through the PGA mechanism would not re-
turn the dollars to those who paid them because of
seasonal disparities in purchasing patterns but even more
important because of substantial changes in purchasing
patterns by pipeline customers through two or three
future PGA periods relative to the purchasing patterns
during the periods when the Btu overcharges were paid.
For several reasons, an offset of Btu refunds with
production-related charges would result in a mismatch of
those entitled to Btu refunds and those who may be re-
sponsible for a share of production-related charges. First,
the periods during which Btu surcharges and production-
related charges apply are substantially different. Order
93 permitted Btu’s to be measured on a “dry” basis for
all volumes sold from December 1, 1978, to January 19,
1984. By comparison, Order 94-A permits the retroactive
collection of delivery and compression allowances from
July 25, 1980 to the present. Thus, Btu surcharges apply
to gas volumes purchased for a period of approximately
twenty months before producers were entitled to claim
any production-related allowances for delivery and com-
pression activities. Moreover, Btu measurement on a
“dry” basis has been prohibited since January 19, 1984;
therefore, surcharges on volumes purchased since then
Ta
would not have been collected by the pipelines. In fact,
some pipelines may have ceased collecting Btu surcharges
shortly after the Court’s decision vacating the “dry” Btu
rule on August 9, 1983. In short, the periods during
which volumes of gas purchased from pipelines were sub-
ject to Order 93 surcharges and _ production-related
charges are substantially different, and any attempt to
match the two would be artificial and unfair to those
who paid Btu measurement overcharges.’
2 Tennessee argues that a mismatch would not occur in its case.
At the May 24 public hearing, Tennessee argued that the percentage
of its total sales volumes taken by those customers who paid most
of the Btu overcharges did not change appreciably during the
period January 1982 through January 1984. Tennessee, therefore,
concludes that it would be fair to offset production-related claims
applicable to that period against Order 93 refunds.
Tennessee’s argument is deficient in several respects. First, a cus-
tomer’s percentage of Tennessee’s total sales may have remained
relatively stable from 1982 to 1984 while its takes from Tennessee
in absolute terms may have varied considerably because of sub-
stantial swings in Tennessee’s total sales during that period. Ten-
nessee’s argument is further deficient because it offers no projec-
tion of what each customer’s purchases may be, either in absolute
terms or as a percentage of Tennessee’s total sales, during the next
two or three PGA periods when Tennessee would flow through the
accumulated production-related charges. In fact, a certificate appli-
cation filed by Tennessee on May 24, 1984 (Docket No. CP84-441),
the same day on which it presented its offset proposal at the public
hearing, Tennessee proposed several major shifts in the contract
demands of its customers. For example, Tennessee proposes a re-
duction of about 232,000 dt per day in the maximum daily quantities
to be sold to Columbia Gas Transmission Corporation; an increase
in the contract demand of Public Service Electric & Gas Company
from 35,700 Mcf per day to 88,000 dt per day—an increase of over
100 percent; and an increase in the contract demand of Granite
State Gas Company from 84,000 Mcf per day to 127,000 dt per day—
a growth of approximately 50 percent. Tennessee, therefore, has
failed to establish that an offset of Btu refunds with accumulated
production-related claims over the next two or three PGA periods
would be fair to those customers who paid the Btu overcharges.
8a
An Offset of Btu Refunds Would
Disrupt Current Market Forces
Offsetting Btu refunds with production-related charges
would also distort competition among pipelines. One of
the reasons cited by the Commission for requiring cash
refunds by pipelines to their customers rather than a
PGA flow-through is that cash refunds will be least dis-
ruptive of current natural gas market forces. Interim
Rule, mimeo, at 18-19. As certain commenters pointed
out in their response to the Commission’s Notice of In-
quiry, permitting a pipeline with substantial Btu refund
responsibility to flow through those refunds by reductions
in its PGA could give that pipeline an artificial com-
petitive advantage over pipelines with substantially less
Btu refund rcsponsibility.*
An offset of Btu refunds with accumulated production-
related charges via the PGA flow-through mechinism [sic]
would have the same disruptive effect on competitive
market forces that the Commission recognizes in the In-
terim Rule and in its Notice of Inquiry on PGA revisions.
If pipelines were permitted to offset Btu refunds with
production-related claims, a pipeline like Tennessee with
substantial Btu refund responsibility and even greater
accumulated production-related claims, could take ad-
vantage of the offset privilege to escape difficult negotiat-
3 The Commission sounded a similar note in its April 27, 1984
Notice of Inquiry in Docket No. RM84-12-000, “Revisions to PGA
Regulations”, where the Commission stated:
For example, the [PGA] flow-through of large refunds from
a period substantially longer than six months may result in an
unfair competitive advantage for the pipeline. The proposed
PGA adjustment will reflect the refund, but not accrued in-
creases in gas costs. Thus, the refunding pipeline’s com-
modity rate could temporarily undercut a competing pipeline’s
rate, despite the fact that the refunding pipeline’s underlying
costs of gas is higher than its competitor’s.
Notice of Inquiry, mimeo, at 11-12. The Commission further
observed that “a lump-sum cash refund avoids distortion of market
signals and unfairness to the pipeline’s competitors.” Jd. at 13.
9a
ing decisions with its producer-suppliers and marketing
decisions with respect to what its markets could tolerate
in PGA pass-throughs. An offset privilege would permit
Tennessee to use the Btu refunds owed to it by its
producer-suppliers as a fund for the settlement of possibly
all of its accumulated production-related claims with the
result that Tennessee could gain a substantial competi-
tive advantage unrelated to its efforts to reduce pur-
chased gas costs.
An offset of Btu refunds with accumulated production-
related claims would not only disrupt competitive market
forces at the pipeline marketing level, it could also disrupt
the bargaining positions of producers and pipelines re-
garding the allowability of production-related charges
claimed by the producers. The record in this proceeding
indicates that many pipelines, including Tennessee, have
paid little or none of the production-related charges in-
voiced by the producers. Tennessee stated that it has been
invoiced approximately $125 million in production-related
charges, which it has been reviewing (Tr. 86), and that
its potential liabilty for retroactive surcharges could
approach $200 to 250 million (Tr. 46, 92}. During the
May 24 hearing, the producers stated that the pipelines
have generally not been paying amounts billed by the
producers for production-related activities (Tr. 117-19,
125-26). The evidence indicates, therefore, that pipelines
have accumulated large amounts of retroactive production-
related surcharges, although the Commission in Order
94-A directed producers and pipelines to spread the col-
lection of retroactive gathering and compression allow-
ances as evenly as possible over 1983 and 1984.*
* Despite this accumulation of unpaid production-related charges,
there is no indication that the producers have taken legal action to
recover these amounts from their pipeline customers, as they have
in certain other cases, when pipelines have refused to take or pay
for gas at levels provided in contracts with their producer sup-
pliers. There is evidence in other proceedings that the pipelines
have disputed the producers’ contractual authority to collect
10a
Whatever the reasons for the accumulation of unpaid
production-related claims, the matter appears to be com-
plicated, and the Commission ought not to upset the rela-
tive bargaining positions of the parties by permitting an
offset of production-related claims against Btu refunds
due. The Commission certainly has no obligation to do so.
Contrary to the statement of the Indicated Producers at
the hearing, the Commission’s duty with respect to col-
lection of production-related allowances is clearly not the
same as its duty with respect to refunds of Btu over-
charges. In the series of orders implementing Section
110 of the NGPA, the Commission simply identified those
production-related activities for which producers could
recover costs incurred, provided that they have express
contractual authority to do so. The Commission has no
obligation to asswre the producers’ recovery of such costs;
rather it has a duty to assure that any recovery of such
costs in addition to the applicable ceiling price meets the
requirements of Section 110 of the NGPA. By compari-
son, the Commission’s duty to enforce the ceiling price
provisions of the NGPA is clear in Section 504 of that
Act. The Commission, therefore, has an obligation to see
to it that Btu refunds are made; it has no corresponding
obligation to assure the producers’ recovery of production-
related charges where such amounts are in dispute.
production-related allowances, even delivery allowances for which
the Commission found an area rate clause to be sufficient contrac-
tual authority in Order 94-A. See, e.g., Request of Crystal Oil
Company for an Interpretation of the General Counsel, filed June 13,
1983; Petition for Reconsideration and Clarification of Michigan
Wisconsin Pipe Line Company, filed in Docket Nos. RM80-47-002,
et al. on June 23, 1983. In addition, the Joint Docketing Statement
of Pipeline Petitioners in the Consolidated Petitions for Review
of Order No. 94-A et seq. includes the following issue: “Whether
the Commission erred in determining that an area rate clause in a
gas purchase contract constitutes contractual authority to collect
delivery allowances regardless of the actual intent of the contracting
parties.”
ln, ill,
lla
Two other reasons cited in the Interim Rule in favor
of cash refunds apply with equal force to the question
of offsetting Btu refunds with production-related charges.
The Commission noted that cash refunds to pipeline cus-
tomers would give greater flexibility to State agencies to
assure that consumers who paid the overcharges receive
the refunds. The Commission further noted that cash
refunds would facilitate monitoring of the refunds at
both the federal and state levels. State public service
commissions are anticipating substantial refunds from
Btu overcharges; the Interim Rule schedule calls for re-
funds to reach distribution companies between November _
1 and December 1, just in time for the State agencies te
direct a cash refund or a reduction in winter rates for
consumers. An offset of Btu refunds with production-
related charges would upset those expectations, confuse
the issues and unnecessarily complicate the monitoring of
the Btu refund process.
In summary, pipelines should not be permitted to offset
Btu refunds with accumulated production related charges.
All of the reasons cited in the Interim Rule for reqtir-
ing cash refunds to pipeline customers rather than PGA
flow-through also favor segregating Btu refunds and
production-related claims. Mixing the two will inevitably
upset the sound refund policy adopted by the Commission
in the Interim Rule.
Secondary Pipelines Should Not Be Exempted
From the Cash Refund Rule
At the May 24 public hearing, Columbia Gas Trans-
mission Corporation (Columbia) proposed that secondary
pipelines be exempt from the cash refund requirement
and be permitted to flow refunds received from other
pipelines through their PGA’s. Columbia cited the ad-
ministrative burden of processing checks to its customers
following receipt of refunds from its pipeline suppliers.
Columbia’s burden appears no greater than other pipe-
12a
lines, many of whom have multiple pipeline suppliers.
Moreover, Columbia fails to show that the administrative
burden of processing refunds from pipeline suppliers
will be substantially greater than processing refunds
from producer-suppliers; yet Columbia asks no exemp-
tion from the cash refund requirement for producer-
supplier refunds. Columbia’s proposal should be denied.
The Commission Lacks the Power to Order
Flow-Through at the State Level
At the May 24 public hearing, the Industrial Groups
urged the Commission to amend the Interim Rule to re-
quire flow-through of Btu refunds at the State level to
industrial users. The Industrial Groups argued that Sec-
tions 501 and 504 of the NGPA give the Commission the
authority to order such a flow-through without conflict
with the jurisdiction of State public service commissions.
Neither section grants the Commission the power to over-
ride State governmental authorities in matters relating
to the disposition of refunds.* Moreover, where Congress
intended to grant the Commission the power to review
State agency determinations, as it did in Section 503 of
the NGPA, or to pre-empt State and local law, as it did
in Section 205(d) of the NGPA regarding passthrough
of incremental pricing surcharges to distribution com-
pany customers, the intent of Congress was clear and
unequivocal. Neither Section 501 nor 504 of the NGPA
grants the Commission sovereign power over the disposi-
tion of refunds at the State and local level. The pro-
posal of the Industrial Groups, therefore, should be
denied.
® The Industrial Groups cite a sentence in the NGPA Conference
Report discussion of Section 504. The report states that the Com-
mission’s authority pursuant to this Section includes the authority
to require refunds from any person. This power, of course, in no
way implies that the Commission also has authority to override
State governmental authorities in the disposition of refunds at
the State or local level.
13a
Reports Should Not Be Required From
Local Distribution Companies
In the Interim Rule, the Commission declined to re-
quire refund reports from local distribution companies
because producer sales to such entities comprise a small
portion of the total sales subject to Btu overcharges.
The Commission nevertheless requested comment on
whether it should require reports from all first-sale pur-
chasers including local distribution companies, Hinshaw
pipelines and end-users. AGD concurs in the reason cited
by the Commission for declining to require reports from
such entities and further suggests that the burden of
producing such reports would far outweigh any benefit
which might result from producing them. In addition,
local distribution companies will likely be required to
file reports with State authorities. It would be particu-
larly burdensome for these entities to be subject to pro-
ducing two different reports for federal and state au-
thorities.
Conclusion
For the reasons stated above. AGD urges the Com-
mission to adopt its Interim Ruie without modification
as the Final Rule in this matter.
Respectfully submitted,
/s/ Herbert J. Martin
FREDERICK MORING
HERBERT J. MARTIN
Crowell & Moring
1100 Connecticut Avenue
Washington, D.C. 20036
Attorneys for Associated Gas
Distributors
Dated: June 21, 1984
l4a
APPENDIX C
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Nos. 81-1690, et al.
INTERSTATE NATURAL GAS
ASSOCIATION OF AMERICA, et al.,
Petitioners,
Ve
FEDERAL ENERGY REGULATORY COMMISSION,
Respondent.
MOTION OF PETITIONER
ASSOCIATED GAS DISTRIBUTORS FOR ORDER
DIRECTING COMPLIANCE WITH MANDATE
Pursuant to Rule 27 of the Federal Rules of Appellate
Procedure and Rule 6 of this Court, Petitioner Associated
Gas Distributors (AGD)* moves this Court for an order
directing Respondent Federal Energy Regulatory Com-
mission (FERC) to comply with this Court’s mandate.
In support of this motion, AGD states as fol'ows:
1. On August 9, 1983, this Court issued its decision
- vacating FERC’s “dry Btu rule”, as then embodied in 18
C.F.R. Section 270.204, on the grounds that such rule
was “fundamentally at odds with the Btu measurement
technique implicit in the NGPA” (Natural Gas Policy
Act of 1978). 716 F.2d at 15.
_ 2. On December 8, 1983, this Court issued its man-
date in these proceedings and denied FERC’s motion for
* The companies known as Associated Gas Distributors are listed
in Appendix A.
15a
a continuation of the stay of the issuance of the man-
date. In a memorandum accompanying its December 8,
1983 order, this Court found that FERC had not estab-
lished good cause for an extension of the stay.
3. On December 14, 1983, AGD filed motions in sev-
eral pipeline proceedings at FERC, requesting the Com-
mission to issue orders directing the pipelines to make
immediate rate reductions to eliminate future overcharges
resulting from erroneous Btu measurement techniques and
to refund past overcharges in order to implement this
Court’s judgment and mandate. In these motions, AGD
cited the irreparable harm which had resulted from past
overcharges and the compounding of that injury if those
overcharges were not immediately terminated and re-
funds ordered.
4. On January 13, 1984, FERC responded to AGD’s
motions for immediate relief in conformity with this
Court’s mandate. The Commission issued a notice stating
that it intends to act on the Court’s decision “including
the refund consequences of the Court’s decision, generi-
cally, and hereby gives notice of its intention to act on
AGD’s motions at that time’. (Emphasis added.) A
copy of this notice is attached as Appendix B.
5. On January 19, 1984, FERC issued its Order No.
356 in Docket No. RM80-33-001. This order revised the
Commission’s regulations in response to this Court’s man-
date by providing that the Btu content of natural gas
must be measured on a “wet” basis rather than a “dry”
basis (as provided in regulations vacated by this Court),
effective as of December 1, 1978 (the effective date of
NGPA). |
6. Also on January 19, 1984, FERC issued a Notice of
Inquiry (“NOI”) in Docket No. RM84-6-000, entitled
“Refunds Resulting From Btu Measurement Adjust-
ments”. In this NOI, FERC requested public comment on
procedures it might adopt to govern refunds for over-
iliac
16a
charges during the period December 1, 1978 to January
19, 1984. A copy of this NOI is attached as Appendix C.
7. On May 3, 1984, FERC issued an Interim Rule re-
quiring refunds of Btu overcharges by natural gas pro-
ducing companies. According to this Interim Rule, “first
sellers” of natural gas (gas producers) were required to
refund their Btu overcharges with interest on November
5, 1984 (the date set for “large producers’) or May 3,
1985 (the date set for “small producers”). Interstate
pipelines were required promptly to pass on these refunds
in lump sum payments to those customers actually over-
charged as a result of the Commission’s vacated “dry
Btu” orders.
8. On September 20, 1984, FERC issued its Order No.
399 adopting as a “Final Rule” the May 3 Interim Rule
with certain clarifications and modifications. This order,
which denied rehearing of the Interim Rule, specifically
prohibited offsets of the Btu measurement overcharges
(Btu refunds) and production-related costs permitted un-
der Section 110 of NGPA. As in the case of the Interim
Rule, this Final Rule required “large” first sellers to pay
refunds on November 5, 1984; “small” first sellers were
required to pay their refunds by May 3, 1985. A copy of
Order No. 399 is attached as Appendix D.
9. On October 24, 1984, FERC issued its “Order
Granting Stay and Rehearing for the Purpose of Further
Consideration” in Docket No. RM84-6-003, thereby post-
poning the effectiveness of Order No. 399 “until the tenth
day following issuance of our order disposing of the peti-
tions for rehearing”. The Commission explained in this
order that it wanted to consider all petitions for rehear-
ing of Order No. 399 and that a “limited stay” of Order
No. 399 was necessary for that purpose.
10. On November 20, 1984, FERC issued its Order
No. 399-A in Docket No. RM84-5-003. Ia this order
“granting in part and denying in part rehearing” of Or-
17a
der No. 399, the Commission (by a vote of 3-to-2)
adopted a substantial and dramatic modification of its
September 20 “Final Rule” requiring “large producer”
refunds of Btu overcharges by November 5, 1984. Spe-
cifically, Order No. 399-A announces two major changes
in the refund procedures previously adopted: First, the
deadline for large producers’ refund payments was ex-
tended to December 31, 1984. Second, in lieu of a cash
payment of refunds by large producers, the Commission
provided that “to the extent that 4 pipeline-purchaser and
first seller agree on an amount of Section 110 allowances
owed by the pipeline to the first seller, such amount shall
be offset against the amount of the Btu refund due to the
pipeline”. (Emphasis added.) A copy of Order No. 399-
A is attached as Appendix E.
ARGUMENT
11. AGD respectfully requests the Court to issue an
order directing the Commission to comply promptly with
this Court’s mandate by reinstating the terms of FERC
Order No. 399. Such an order is required because Order
No. 399-A effectively frustrates this Court’s mandate in
this case.
12. The mandate issued in this case requires two
things: (a) an immediate rate reduction by all first sell-
ers to reflect the adoption of the “wet” Btu standard of
measurement (this part of the mandate has been imple-
mented pursuant to FERC Order No. 356, issued Janu-
ary 19, 1984), and (b) the refund of all first seller’s
overcharges resulting from Btu measurements made pur-
suant of [sic] the now-vacated “dry Btu” rule. (This
part of the mandate would have been implemented by No-
vember 5, 1984 under the terms of Order No. 399; under
Order No. 399-A, the refund portions of the mandate may
never be implemented.
13. FERC’s Order No. 399-A effectively defeats the
orderly and prompt refund process adopted in Order No.
18a
399 and made necessary by this Court’s mandate in this
case. Order No. 399 required gas producers/first sellers
to make cash refunds of Btu-measurement-overcharges by
either November 5, 1984 or by May 3, 1985. Pipelines
receiving these cash refunds were required by Order No.
399 promptly to pass on these payments to their custom-
ers in lump sum payments to those customers actually
overcharged.
14. Order No. 399-A explicitly provides that pipelines
and producers “may choose the method of payment” of
refunds for Btu-measurement-overcharges. See Order No.
399-A, Ordering Paragraph D (p. 45). That order pro-
vides that “to the extent that a pipeline-purchaser and
first seller agree on an amount of Section 110 allow-
ances owed by the pipeline to the first seller, such amount
shall be offset against the amount of the Btu refund due
to the pipeline”. The effect of Order No. 399-A is to
place in the hands of the gas pipelines and the gas pro-
ducers the determination of the amount of refunds the
gas consumer will receive as a result of being the victim
of FERC’s now-vacated rule on Btu measurement. This
extraordinary, unprecedented refund procedure repre-
sents an abdication by FERC of the duty it had to im-
plement this Court’s mandate. Two private parties,
neither of which has any interest in whether the gas
consumer ever receives one cent of refunds, have been
allowed to bargain with each other (until December 31,
1984) over the amount of cash refunds that will be paid
to the consumer as a result of this Court’s August 9, 1983
ruling.
15. The Court will observe that the enforcement of its
mandate herein is not being requested by all the parties
which were “successful” in this proceeding. Apart from
Laclede Gas Company, a local gas distribution company,
the other Petitioners in this case were either interstate
gas pipelines or, in the case of I.N.G.A.A., a trade asso-
ciation representing gas pipelines. The fact that none of
19a
these pipeline petitioners has chosen to bring FERC Or-
der No. 399-A to the Court’s attention as a departure
from or frustration of the Court’s mandate in this pro-
ceeding is understandable. At least some of the larger
interstate pipelines have urged FERC to adopt a refund
order permitting them to bargain with their producer-
suppliers concerning the latters’ refund obligations re-
sulting from this Court’s ruling. See the Commission’s
references tou the positions of Tennessee Gas Pipeline Com-
pany, Consolidated Gas Transmission Corporation, Pan-
handle Eastern Pipe Line Company and Trunkline Gas
Company (pp. 23 and 34, Order No. 399-A). Order No.
399-A makes plain the fact that the “offset” approach to
the determination of refunds was advocated by both the
pipelines and the producers, but opposed by AGD.
WHEREFORE, for the reasons stated above, AGD re-
spectfully requests the Court to grant the relief requested
herein, i.e. to enforce its mandate in this proceeding by
issuing an order requiring FERC to comply with its
mandate in this case by reinstating FERC Order No. 399
or otherwise prohibiting pipelines and producers from
jointly determining the producers’ obligations to make
the cash refunds necessary to redress the irreparable in-
jury sustained by the nation’s gas consumers as a result
of FERC’s invalid “dry Btu” order.
Respectfully submitted,
By: /s/ Frederick Moring
FREDERICK MORING
Attorney for Associated
Gas Distributors
CROWELL & MORING
1100 Connecticut Ave., N.W.
Washington, D.C. 20036
(202) 452-5800
Dated: November 21, 1984
Washington, D.C.
20a
APPENDIX D
ASSOCIATED GAS DISTRIBUTORS
Atlanta Gas Light Company
Subsidiaries:
Georgia Gas Company
Georgia Engine Sales & Service Co.
Trustees Investments, Inc.
Baltimore Gas & Electric Company
Subsidiaries:
Safe Harbor Water Power Corporation
Diversified Holdings, Inc.
Subsidiaries:
Baltimore Biogas, Inc.
Baltimore Capital Resources, Inc.
Resource & Property Management, Inc.
Bay State Gas Company
Subsidiaries:
Bay State Energy Resources, Inc.
Bay State Exploration, Inc.
Bay State Gas Supply, Inc.
Northern Utilities, Inc.
Subsidiary:
Granite State Gas Transmission, Inc.
The Berkshire Gas Company
Boston Gas Company
Parent: Eastern Gas and Fuel Associates
The Brooklyn Union Gas Company
Subsidiaries:
Fuel Resources, Inc.
Gas Energy, Inc.
2la
Star Enterprises, Inc.
Methane Development Corp.
Affiliate: Honeoye Storage Corp.
Centra] Hudson Gas & Electric Corporation
Subsidiaries:
Central Hudson Enterprises Corp.
Central Hudson Cogeneration, Inc.
CH Resources, Ince.
Greene Point Development Corp.
Phoenix Development Co., Inc.
Chesapeake Utilities Corporation
Subsidiary:
Eastern Shore Natural Gas Co.
Subsidiaries:
Dover Exploration Co.
Skipjack, Inc.
Sharpgas, Ince.
City of Holyoke, Mass., Gas & Electric Department
City of Norwich, Dept. of Public Utilities
City of Westfield Gas & Electric Light Department
Colonial Gas Company
Subsidiaries:
Transgas, Inc. ( Mass.)
Massachusetts Associates, Inc. ( Mass.)
Commonwealth Gas Co.
Parent: Commonwealth Energy System
Concord Natural Gas Corporation
Subsiidary: Concord Gas Service Corp.
Consolidated Edison Company of New York, Inc.
22a
Delmarva Power & Light Company
Subsidiaries:
Delmarva Energy Company
Delmarva Industries, Inc.
Delmarva Capital Investments, Inc.
Subsidiary: DCII, Inc.
Elizabethtown Gas Company
Parent: NUI Corporation
Energy North, Inc.
Subsidiaries:
Gas Service, Inc.
Subsidiary: Energy Resources Corp.
Manchester Gas Co.
Subsidiaries:
Rent-A-Space of New England, Inc.
EnergyNorth Realty, Inc.
Essex County Gas Company
Fitchburg Gas & Electric Light Company
Subsidiary: Fitchburg Energy Development Co.
Lynchburg Gas Company
Subsidiary: Lynco Development Corp.
New Jersey Natural Gas Company
Parent: New Jersey Resources Corporation
New York State Electric & Gas Corporation
Subsidiary: Somerset Railroad Corporation
North Carolina Natural Gas Corporation
Subsidiaries:
NCNG Exploration Corp.
Cape Fear Energy Corp.
23a
Northeast Georgia Municipal Gas Utilities
City of Bowman, Ga.
City of Buford, Ga.
City of Commerce, Ga.
City of Covington, Ga.
City of Elberton, Ga.
City of Hartwell, Ga.
City of Lawrenceville, Ga.
City of Madison, Ga.
City of Monroe, Ga.
City of Royston, Ga.
City of Social Circle, Ga.
City of Sugar Hill, Ga.
City of Toccoa, Ga.
City of Union Point, Ga.
City of Winder, Ga.
Subsidiaries:
The Connecticut Light & Power Co.
Western Massachusetts Electric Co.
Holyoke Water Power Company
Northeast Utilities Service Co.
Northeast Nuclear Energy Co.
Northern Utilities, Inc.
See Bay State Gas Company
Pennsylvania Gas & Water Company
Parent: Pennsylvania Enterprises, Inc.
Pequot Gas Co.
Philadelphia Electric Company
Subsidiaries:
Adwin Equipment Company
Adwin Realty Company
Conowingo Power Company
Eastern Pennsylvania Development Company
Eastern Pennsylvania Exploration Company
24a
Philadelphia Electric Power Company
The Susquehanna Electric Company
The Susquehanna Power Company
Philadelphia Gas Works
Providence Gas Company
Parent: Providence Energy Corporation
Public Service Company of North Carolina, Inc.
Subsidiary:
PSNC Natural Resources Corporation
Subsidiaries:
Tar Heel Energy Corp.
PSNC Production Corp.
PSNC Exploration Corp.
PSNC Propane Corp.
Public Service Electric & Gas Co.
Subsidiaries:
Energy Development Corporation
Subsidiary:
Gasdel Pipeline System, Inc.
Energy Pipeline Corporation
Energy Terminal Services Corporation
Mulberry Street Urban Renewal Corporation
PSE&G Overseas Finance N.V.
PSE&G Research Corporation
South County Gas Co.
South Jersey Gas Co.
Parent: South Jersey Industries, Inc.
The Southern Connecticut Gas Co.
Parent: Connecticut Energy Corp.
25a
UGI Corporation
Subsidiaries:
AmeriGas, Ine.
UGI Development Co.
Valley Gas Co.
Parent: Valley Resources, Inc.
Washington Gas Light Co.
Subsidiaries:
Crab Run Gas Co.
Davenport Insulation, Incorporated
Subsidiaries:
Cellin Manufacturing, Inc.
Universal Insulation, Ine.
Featherstone Manufacturing Co., Inc.
) Frederick Gas Co., Ine.
Hampshire Gas Co.
Shenandoah Gas Co.
Brandywood Estates, Inc.
Subsidiary:
Washington Gas Approved Services,
Ine.
Rock Creek Properties, Inc.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.