Hall v. F.E.R.C.
| Decision Date | 26 November 1982 |
| Docket Number | No. 81-4011,81-4011 |
| Citation | 691 F.2d 1184 |
| Parties | Frank J. HALL, et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — Fifth Circuit |
James Fleet Howell, Shreveport, La., for petitioners.
Joshua Z. Rokach, Atty., F.E.R.C., Washington, D.C., for respondent.
Goldberg, Fieldman, & Letham, P.C., Glenn W. Letham, Washington, D.C., Blanchard, Walker, O'Quin & Roberts, Robert Roberts, Jr., W. Michael Adams, Shreveport, La., for intervenor.
Petition for Review of an Order of the Federal Energy Regulatory Commission
Before CLARK, Chief Judge, GARZA and JOHNSON, Circuit Judges.
This case presents for review an order of the Federal Energy Regulatory Commission 1 (FERC) denying the application of appellants, the Hall group (Hall), for a waiver of the notice requirements contained in Sec. 4(d) of the Natural Gas Act 2 so as to permit the Hall group to collect from intervenor, Arkansas Louisiana Gas Company (Arkla), the difference between the purchased gas rate which the Hall group charged Arkla from September, 1961, to October, 1972, and the rate which Arkla paid the United States in royalties for gas obtained on leases during the same period. The instant action is but a part of a complex series of actions 3 in which Hall has attempted to enforce its contractual rights against Arkla as set forth in a 1952 contract. After eight years of contractual litigation in the Commission, the Louisiana state courts and the Supreme Court of the United States, it appears that Hall's only avenue for relief with respect to the time period between 1961 and 1972 is through the administrative provisions of the Natural Gas Act. Such relief was denied by the Commission and those orders are now presented to us for review. Because of the complexity of this case and its unusual posture before us, we set forth the facts and procedural background in detail.
Appellants, the Hall group, are producers of natural gas; Arkla is a customer who purchases their gas. In 1952, Hall and Arkla entered into a contract under which Hall agreed to sell Arkla natural gas from the Sligo Gas Field in Louisiana. The contract contained a fixed price schedule and a "favored nations clause." The favored nations clause provided that if Arkla purchased Sligo Field natural gas from another party at a rate higher than the one they were paying Hall, then Hall would be entitled to a higher price for their sales to Arkla. 5 In 1954 Hall obtained a certificate from the Commission to sell the gas under this contract. Pursuant to the relevant provisions of the NGA, Hall filed the contract containing the scheduled increases and the favored nations clause as its rate schedule with the Commission. In September, 1961, Arkla purchased certain leases in the Sligo Field from the United States and began producing gas on its leasehold. Arkla's payments to the United States for gas and liquids produced from that leasehold were higher than Arkla's payment to Hall under the 1952 contract. Prior to entering into this agreement, Arkla sought a legal opinion from its attorneys as to whether a favored nations clause would be triggered by its contract with the United States. Content that such escalation clauses were not triggered, Arkla made no effort to inform Hall about its payments to the United States.
In 1974, Hall discovered the higher payments which the United States was receiving from Arkla as royalties for the gas produced from the Sligo Field contract. Hall instituted suit in the Louisiana state courts seeking damages for Arkla's asserted breach of contract amounting to the difference between the prices which Arkla paid the United States and those which it paid Hall. The state trial court found that Arkla's payment had triggered the favored nations clause, but held that the filed rate doctrine 6 precluded an award of contractual damages for the period prior to 1972. The court entered an award of damages for the post-1972 period during which appellants were "small producers" and, therefore, not bound by the filing requirement of the NGA. The Louisiana Court of Appeals affirmed the trial court with modifications, Hall v. Arkansas Louisiana Gas Co., 359 So.2d 255 (La.Ct.App.1978), and both parties appealed. The Louisiana Supreme Court denied Arkla's petition for review, Hall v. Arkansas Louisiana Gas Co., 362 So.2d 1120 (La.1978), and certiorari was denied by the United States Supreme Court on the question of whether the interpretation of the favored nations clause should have been referred to the Commission. Arkansas Louisiana Gas Co. v. Hall, 444 U.S. 878, 100 S.Ct. 166, 62 L.Ed.2d 108 (1980) (Docket No. 78-796).
The Louisiana Supreme Court, however, did agree to review the lower court's findings with respect to the contractual damages sought by Hall for the 1961-72 period. The court reversed the Louisiana lower court's holding that the filed rate doctrine barred Hall's contractual right to relief for Arkla's breach. 7 Hall v. Arkansas Louisiana Gas Co., 368 So.2d 984 (La.1979). The United States Supreme Court granted Arkla's petition for a writ of certiorari and reversed the Louisiana Supreme Court. The Court held that Hall's action seeking contractual damages was barred by the filed rate doctrine. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981) (hereinafter, Arkla v. Hall ).
After Hall initially filed suit in the Louisiana state court, Arkla petitioned the Commission for a declaratory order requesting them to take exclusive jurisdiction and declare that Arkla's royalty payments to the United States did not trigger the favored nations clause of the 1952 contract with Hall. The Commission declined, however to exercise primary jurisdiction stating in three successive and "clarifying" opinions 8 that it would adhere to its policy against assuming jurisdiction over matters pending before a court. Arkla sought review of the Commission's orders in the United States Court of Appeals for the District of Columbia who, upon request of the Commission, remanded the administrative record to the agency for further consideration on May 25, 1978. FERC subsequently declined to exercise primary jurisdiction in an order issued May 18, 1979. The agency ultimately decided that the interpretation of the favored nations clause presented no issue upon which the Commission had particular expertise. Arkansas Louisiana Gas Co. v. Hall, Docket No. RI 76-28, Order Declining Jurisdiction (May 18, 1979) at 6-7. Arkla again petitioned the D.C. Circuit for review during which time the United States Supreme Court decided the contractual action against Hall in Docket No. 78-1789. On motion of [intervenor] Hall, the D.C. Circuit dismissed Arkla's appeal on the issue of primary jurisdiction without opinion. 9
The present action arose as a corollary to the contract action. Following the Louisiana Supreme Court's decision that Hall was entitled to contractual damages, notwithstanding the filed rate doctrine, for the period between September, 1961 and October, 1972, the Commission informed Hall that in order to collect such damages, they would have to apply for a formal waiver of the notice filing requirements of NGA Sec. 4(d). Hall filed its application conditionally asserting that a waiver of notice requirements was not necessary since Sec. 4(d) did not apply to a judicial award of damages. Alternatively, they argued that "good cause" existed justifying the grant of the waiver.
The Commission denied Hall's request asserting four bases for its decision. Arkansas Louisiana Gas Co. v. Hall, Docket No. RI 76-28, Order Denying Application for Waiver (November 5, 1980). First, the Commission contended that a grant of waiver would violate its "long-established 'statutory bias' against retroactive rate increases." Id. at 10. Second, the Commission believed that the granting of Hall's request would expose present consumers to a potential liability for higher rates which should have been collected beginning in 1961. Id. Third, the Commission uttered its concern about "the possible unsettling effect that a waiver ... might have on other gas purchase transactions." Id. Finally, FERC was "troubled by the prospect of speculating as to what the Commission would or would not have done in 1961 had it been confronted at that time with a rate increase filing by the Hall group." Id. at 11. Although the Commission recognized that the "equities [were] favorable to the Hall group," it concluded that in the context of its "broader regulatory responsibilities," the waiver should be denied.
Hall now appeals from that order contending that it is arbitrary and capricious, unsupported by substantial evidence in the record, contrary to precedent and the Commission's long-standing policy of protecting contractually authorized prices, and based upon speculation and conjecture on the part of the Commission. Intervenor Arkla contends that further action in this administrative proceeding is precluded by the Supreme Court's subsequent decision in Arkla v. Hall, supra. Arkla contends that the issues presented here were determined in the contractual litigation and are precluded from further consideration by the doctrines of res judicata and collateral estoppel. 10 It is also asserted that the present controversy is moot. The Commission contends that its decision is a proper exercise of its discretion and should, therefore, be affirmed. In the context of our opinion below, we dispose of each of these contentions.
We turn first to Arkla's motion to dismiss this review proceeding. Arkla asserts that the Hall group's attempt to obtain a waiver of the NGA filing requirements and a corresponding rate...
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