Exxon Pipeline Co. v. U.S.
| Decision Date | 27 January 1984 |
| Docket Number | Nos. 83-1299,83-1626,s. 83-1299 |
| Citation | 725 F.2d 1467 |
| Parties | EXXON PIPELINE COMPANY, Petitioner, v. UNITED STATES of America and Federal Energy Regulatory Commission, Respondents, State of Alaska, Arctic Slope Regional Corporation, Intervenors. BP PIPELINES INC., Petitioner, v. UNITED STATES of America and Federal Energy Regulatory Commission, Respondents, State of Alaska, Arctic Slope Regional Corporation, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of Orders of the Federal Energy Regulatory commission.
Richard J. Flynn, Washington, D.C., with whom Eugene R. Elrod and Stephen S. Hill, Washington, D.C., were on the brief for petitioner in 83-1299.
Quinn O'Connell, Eugene E. Threadgill and R. Brian Corcoran, Washington, D.C., were on the brief for petitioner in 83-1626.
Robert F. Shapiro, Atty., Federal Energy Regulatory Commission, Washington, D.C., with whom Stephen R. Melton, Acting Gen. Counsel, Jerome M. Feit, Sol., Federal Energy Regulatory Commission, were on the brief for respondents. Joshua Z. Rokach and Thomas E. Hirsch, III, Attys., Federal Energy Regulatory Commission, Washington, D.C., also entered appearances for respondents.
John J. Powers, III, Atty., Dept. of Justice, Washington, D.C., also entered an appearance for respondent, United States of America.
Robert H. Loeffler, Deborah L. Leon, John M. Cleary, Frederic L. Wood, Jade Alice Eaton, Washington, D.C., for State of Alaska, and William W. Becker and Richard Landfield, Washington, D.C., for Arctic Slope Regional Corp., were on the brief, for intervenors in 83-1299 and 83-1626.
Before WRIGHT, WALD and EDWARDS, Circuit Judges.
Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.
This case requires us to consider again the proper scope of judicial review of decisions by the Federal Energy Regulatory Commission ("FERC" or "Commission") concerning the reasons given to justify oil pipeline rate suspensions. On March 18, 1983, FERC issued an order suspending for seven months a proposed rate filed by Exxon Pipeline Company for the Trans Alaska Pipeline System ("TAPS"). A seven-month suspension is the maximum period permitted by the Interstate Commerce Act. 1 On March 31, 1983, FERC issued a similar order suspending the effective date of a proposed rate filed by BP Pipelines Inc. ("BP"), also for seven months. In this consolidated action, Exxon and BP challenge the adequacy of the reasons provided by the Commission for the length of the suspensions. 2 We conclude that, under the very narrow standard of review set out below, FERC has articulated adequate reasons to withstand further judicial intervention. Accordingly, we affirm.
The Trans Alaska Pipeline System carries crude oil from producing fields in Alaska to a marine terminal on the Pacific coast of the state. Exxon and BP are two of eight oil companies that hold an undivided interest in TAPS facilities. Each owner files with FERC its own proposed rate for transportation of crude oil through its share of the total capacity.
On February 17, 1983, Exxon filed FERC Tariff No. 268 to increase its tariff by 97 cents, from $5.30 per barrel to $6.27 per barrel, with a proposed effective date of March 19, 1983. On March 7, 1983, the State of Alaska, an intervenor in this action, filed with FERC a protest and petition for a seven-month suspension and an investigation, as authorized by section 15(7) of the Interstate Commerce Act. Alaska argued, inter alia, that the rate was unjust and unreasonable, in violation of section 1(5) of the Act. 3 Exxon responded that the tariff was just and reasonable and that, in any event, a one-day rather than a seven-month suspension would be consistent with established FERC policy. It cited the Commission's decision in Buckeye Pipe Line Co., 13 FERC (CCH) p 61,267 (Dec. 24, 1980), which announced a FERC policy of suspending oil pipeline rates for one day only.
On March 18, 1983, one day before the proposed effective date of the tariff, FERC issued its order suspending the rate for seven months and instituting a formal investigation. 4 The FERC order explained that the rate had "not been shown to be just and reasonable, and may be unjust, unreasonable, unduly discriminatory or otherwise unlawful," 22 FERC (CCH) at 61,569, and that it would therefore be suspended. Addressing the length of suspension, the Commission acknowledged its established policy that oil pipeline rates generally should be suspended for one day only, absent extraordinary circumstances. But, it continued,
[s]uch circumstances are presented here because the rate increase by Exxon could have a detrimental impact on the citizens of Alaska. This is because a higher TAPS transportation rate results in a lower wellhead price paid to the producer, which in turn means a lower royalty payment to the State of Alaska. We will therefore exercise our discretion and suspend the filing for seven months, or until October 19, 1983, at which time it will be allowed to go into effect subject to refund.
BP's tariff increase effort followed a similar course. On March 2, 1983, BP filed FERC Tariff No. 4 to increase its TAPS rates, 5 with a proposed effective date of April 1, 1983. The State of Alaska then filed a protest and petition for suspension. On March 31, 1983, one day before the proposed effective date, FERC issued an order suspending the new rates for seven months and instituting an investigation. 6 As it had done in the Exxon case, FERC referred to the detrimental impact that the new rates might have on the citizens of Alaska to justify the length of the suspension. 22 FERC (CCH) at 61,633.
In this action, Exxon and BP do not challenge the FERC decisions to suspend the proposed tariffs for some period; nor do they contest the decisions to institute investigations. Rather, their challenges focus on the reasons given for the length of the suspensions, and the alleged failure by FERC to explain adequately why the Buckeye one-day suspension rule was not followed.
We begin our analysis with a brief review of the applicable statutory scheme. Section 15(7) authorizes the Commission to institute a proceeding to determine the lawfulness of a proposed rate. Pending final action in that proceeding, the Commission may suspend the proposed rate for up to seven months beyond the time it would otherwise go into effect by delivering to each affected carrier, and filing with the proposed rate, a statement of reasons for the suspension.
If FERC has not issued a final ruling on the rate at the conclusion of the suspension period, the new rate goes into effect. In that instance, the Commission may require the carrier to account for all amounts received under the new rate. In the event that FERC ultimately finds any part of the increased rate to be in violation of the Interstate Commerce Act, it may require the carrier to refund the appropriate amount, with interest. See 49 U.S.C. Sec. 15(7) (1976). If the proposed rate is determined to be reasonable, the carrier is not reimbursed for money foregone during the suspension period.
Several propositions about the narrow scope of judicial review of Commission actions pursuant to this section are absolutely clear. It is well-established that a court may not review a Commission decision as to whether or not to suspend a rate, at least as long as the agency complies with its statutory obligation to give a reason, 7 and in no other way oversteps the bounds of its authority. See Trans Alaska Pipeline Rate Cases, 436 U.S. 631, 638 n. 17, 652-53, 98 S.Ct. 2053, 2058 n. 17, 2065-66, 56 L.Ed.2d 591 (1978); Arrow Transportation Co. v. Southern R. Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed.2d 52 (1963); Municipal Light Boards v. FPC, 450 F.2d 1341 (D.C.Cir.1971), cert. denied, 405 U.S. 989, 92 S.Ct. 1251, 31 L.Ed.2d 455 (1972). It is less well-established, however, whether a court may review the reasons given by FERC to satisfy either a suspension or its length; 8 likewise, it is unclear whether a court may or should remand a case to the agency for reconsideration of the reasons where some flaw is perceived in agency decisionmaking. These narrow yet recurring issues are the ones that we confront today.
In addressing these issues, we do not write on a clean slate. As a starting point, we consider a pair of cases in this Circuit that have grappled with judicial review of decisions by FERC concerning the reasons for the length of a suspension, and a pair of Commission decisions that have established policy relevant to the length of suspensions. We recognize that existing precedent in this Circuit is somewhat obscure, primarily because the two leading cases, Connecticut Light & Power Co. v. FERC, 627 F.2d 467 (D.C.Cir.1980), and Delmarva Power & Light Co. v. FERC, 671 F.2d 587 (D.C.Cir.1982), do not sit well together. Our conclusion on the proper scope of review, set out below, is intended to clarify existing case law and enable parties before the Commission, as well as FERC itself, to glean some clear understanding of the potential (and limited) role of the judiciary in these matters.
In Connecticut Light, the electric utility petitioned for review of a FERC order suspending for five months a proposed new rate schedule. Under section 205(e) of the Federal Power Act, as under section 15(7) of the Interstate Commerce Act, 9 the Commission may suspend rates as long as it gives a statement of reasons. The court considered whether the order provided the requisite statement of reasons, held that it did not, and remanded to the Commission for an accounting of its reasons.
FERC had justified the suspension in Connecticut Light with "boiler plate" language explaining that rates had not been shown to be just...
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