Interstate Natural Gas Ass'n of Am. v. F.E.R.C.

Citation285 F.3d 18
Decision Date05 April 2002
Docket NumberNo. 00-1418.,No. 00-1278.,No. 00-1416.,No. 98-1349.,No. 00-1380.,No. 00-1291.,No. 00-1220.,No. 00-1414.,No. 00-1367.,No. 00-1280.,No. 00-1308.,No. 00-1319.,No. 00-1360.,No. 00-1419.,No. 00-1410.,No. 00-1286.,No. 00-1411.,No. 98-1333.,No. 00-1217.,No. 00-1395.,No. 00-1244.,No. 00-1315.,98-1333.,98-1349.,00-1217.,00-1220.,00-1244.,00-1278.,00-1280.,00-1286.,00-1291.,00-1308.,00-1315.,00-1319.,00-1360.,00-1367.,00-1380.,00-1395.,00-1410.,00-1411.,00-1414.,00-1416.,00-1418.,00-1419.
PartiesINTERSTATE NATURAL GAS ASSOCIATION OF AMERICA, Petitioner v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Missouri Gas Energy, Division of Southern Union Company, et al., Intervenors
CourtU.S. Court of Appeals — District of Columbia Circuit

Thomas J. Eastment argued the cause for petitioners Opposing Lifting of Rate Cap. With him on the briefs were John P. Elwood, Douglas W. Rasch, Frederick T. Kolb, Stan Geurin, Paul B. Keeler, Bruce A. Connell, Charles J. McClees, Jr., Linda Geoghegan, Dena E. Wiggins, Katherine P. Yarbrough, Edward J. Grenier, Jr., David M. Sweet, John W. Wilmer, Jr. and Joseph D. Lonardo.

James D. McKinney, Jr. argued the cause for petitioners Opposing Limitation on Lifting of Rate Cap to Exclude Pipeline Short-Term Service. With him on the briefs were John J. Wallbillich, James L. Blasiak, John H. Burnes, Jr., Paul I. Korman, B.J. Becker and Paul W. Mallory.

Michael E. McMahon and Henry S. May, Jr. argued the cause for petitioners and supporting intervenors on Multiple Issues Related to Segmentation. With them on the briefs were Joan Dreskin, Robin Nuschler, Kurt L. Krieger, Robert T. Hall, III, John R. Schaefgen, Jr., James D. McKinney, Jr., John J. Wallbillich, James L. Blasiak, John H. Burnes, Jr., Paul I. Korman, B.J. Becker, Paul W. Mallory, Brian D. O'Neill, Bruce W. Neely, David P. Sharo, Merlin E. Remmenga, R. David Hendrickson, Daniel F. Collins, G. Mark Cook, J. Curtis Moffatt, Susan A. Moore, Rodney E. Gerik, Steven E. Hellman, Judy M. Johnson, Catherine O'Harra and Richard D. Avil, Jr.

Frank X. Kelly argued the cause for petitioner Enron Interstate Pipelines Opposing Change in Capacity Allocation at Secondary Points. With him on the briefs were Steve Stojic, Drew J. Fossum and Maria K. Pavlou.

James L. Blasiak argued the cause for petitioners and intervenors Opposing Changes in Penalties. With him on the briefs were E. Duncan Getchell, Jr., Brian D. O'Neill, Bruce W. Neely, David P. Sharo, Merlin E. Remmenga, Kurt L. Krieger, Robin Nuschler, Rodney E. Gerik, Steven E. Hellman, Mike McMahon, J. Curtis Moffatt, Susan A. Moore, Joan Dreskin, John H. Burnes, Jr., B.J. Becker, Judy M. Johnson, Catherine O'Harra, Robert T. Hall, III and John R. Schaefgen, Jr.

Henry S. May Jr. and Mark K. Lewis argued the cause for petitioners and intervenor Opposing Limitations on the Right-Of-First-Refusal. With them on the briefs were Bruce F. Kiely, Niki Kuckes, Edward J. Grenier, Jr., Barbara K. Heffernan, Debra Ann Palmer, William T. Miller, Joshua L. Menter, Denise C. Goulet and Jennifer N. Waters.

Catherine O'Harra, Henry S. May, Jr., Judy M. Johnson, S. Scott Gaille, Rodney E. Gerik, Steven E. Hellman, James D. McKinney, Jr., John J. Wallbillich, Carl M. Fink, Lee A. Alexander, Robin Nuschler, Kurt Krieger, John H. Burnes, Jr., Paul I. Korman, B.J. Becker and Paul W. Mallory were on the briefs for petitioners and intervenors.

Philip B. Malter argued the cause and filed the briefs for petitioner on Discount Adjustments.

Thomas J. Eastment argued the cause for petitioners Opposing New Rate and Service Options. With him on the briefs were Joshua B. Frank, Douglas W. Rasch, Frederick T. Kolb, Stan Geurin, Bruce A Connell, Charles J. McClees, Jr., Linda Geoghegan, David M. Sweet, John W. Wilmer, Jr., Joseph D. Lonardo, Denise C. Goulet and Robert S. Tongren.

Christopher J. Barr argued the cause for petitioners and intervenors Opposing Limitations on Pre-Arranged Releases. With him on the briefs were C. Brian Meadors, Frank H. Markle, Barbara K. Heffernan, Debra Ann Palmer and Denise C. Goulet. Kent D. Murphy and Mary E. Buluss entered appearances.

Dennis Lane, Solicitor, Federal Energy Regulatory Commission, Andrew K. Soto and Lona T. Perry, Attorneys, argued the causes and filed the brief for respondent.

Karen A. Hill, Jeffrey M. Petrash, Kenneth T. Maloney and Edward B. Myers were on the brief for intervenors in support of Lifting the Rate Cap. Jeffrey L. Futter entered an appearance.

Joan Dreskin, Henry S. May, Jr., Judy M. Johnson, Catherine O'Harra, Rodney E. Gerik, Steven E. Hellman, James D. McKinney, Jr., John J. Wallbillich, R. David Hendrickson, Daniel F. Collins, Carl M. Fink, Lee A. Alexander, Robert T. Hall, III, John R. Schaefgen, Jr., Michael E. McMahon, J. Curtis Moffatt, Susan A. Moore, Frank X. Kelly, Steve Stojic and Shelley A. Corman were on the brief for intervenor Interstate Pipeline. Stefan M. Krantz entered an appearance.

Mark R. Haskell argued the cause for intervenors in support of respondent on Multiple Issues Related to Segmentation and Changes in Capacity Allocation. With him on the brief were Peter G. Esposito, Dena E. Wiggins, Katherine P. Yarbrough and Edward J. Grenier, Jr.

Thomas J. Eastment, Dena E. Wiggins, Katherine P. Yarbrough, James M. Bushee, Edward J. Grenier, Jr., Kirstin E. Gibbs, Jeffrey M. Petrash, A. Karen Hill, William T. Miller, John P. Gregg, Joshua L. Menter, Frederick T. Kolb, Stan Geurin, Bruce A. Connell, Peter G. Esposito, Jennifer N. Waters, Douglas W. Rasch, Philip B. Malter, David M. Sweet, John W. Wilmer, Jr., Glenn W. Letham, Denise C. Goulet, Barbara K. Heffernan, Debra Ann Palmer, Charles J. McClees Jr., Linda Geoghegan, Bruce F. Kiely, Mark K. Lewis and Niki Kuckes were on the brief for intervenors Amoco Production Company, et al. Lois M. Henry, Jennifer S. Leete, William H. Penniman and Irwin A. Popowsky entered appearances.

Before: EDWARDS and TATEL, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

                TABLE OF CONTENTS
                   I. RAT CEILING ISSUES................................................................29
                       A. Waiver of the rate ceilings for short-term capacity releases by shippers......29
                           1. Expected range of market rates............................................31
                           2.  Non-cost factors.........................................................33
                           3.  Oversight.................................................................34
                       B.  Retention of the rate ceilings for short-term pipeline releases...............35
                  II.  SEGMENTATION......................................................................36
                       A.  General validity..............................................................37
                       B.  Specific defects..............................................................39
                           1.  Primary point rights in segmented releases................................39
                           2.  Forwardhauls and backhauls to the same delivery point.....................40
                           3.  Virtual pooling points....................................................41
                           4.  Reticulated pipelines.....................................................42
                           5.  Discounts.................................................................43
                 III.  SECONDARY POINT CAPACITY ALLOCATION...............................................44
                  IV.    PENALTIES.......................................................................46
                       A.  INGAA attack on penalty limits................................................47
                       B.  Attacks on revenue-crediting provisions.......................................49
                   V.  THE RIGHT OF FIRST REFUSAL........................................................50
                       A.  Five-year matching cap and "regulatory" right of first refusal................51
                           1.  Five-year cap.............................................................52
                           2.  Right of first refusal trumping tariff provisions.........................53
                       B.  Narrowing of the right of first refusal.......................................54
                  VI.  DISCOUNT ADJUSTMENTS..............................................................56
                 VII.  PEAK/OFF-PEAK RATES...............................................................58
                VIII.  LIMITATIONS ON PRE-ARRANGED RELEASES..............................................61
                

STEPHEN F. WILLIAMS, Senior Circuit Judge:

The petitioners challenge the Federal Energy Regulatory Commission's Orders Nos. 637, 637-A, and 637-B, in which the Commission extended its prior efforts to increase flexibility and competition in the natural gas industry. See Order No. 637, Regulation of Short-Term Natural Gas Transportation Services And Regulation of Interstate Natural Gas Transportation Services, FERC Stats. & Regs. [Reg. Preambles 1996-2000] (CCH) ¶ 31,091 (2000) ("Order No. 637"); Order No. 637-A, Order on Rehearing, Regulation of Short-Term Natural Gas Transportation Services And Regulation of Interstate Natural Gas Transportation Services, FERC Stats. & Regs. [Reg. Preambles 1996-2000] (CCH) ¶ 31,099 (2000) ("Order No. 637-A"); Order No. 637-B; Order Denying Rehearing, Regulation of Short-Term Natural Gas Transportation Services And Regulation of Interstate Natural Gas Transportation Services, 92 FERC ¶ 61,602 (2000) ("Order No. 637-B").

We deny the petitions for the most part, with the following exceptions: we reverse and remand with respect to the five-year cap on the mandatory right of first refusal and in part with respect to the limitations on pre-arranged releases (issues V.A.1 and VIII in the Table of Contents); we remand without reversing on forwardhauls and backwardhauls to the same delivery point (issue II.B.2) and on the relation between the right of first refusal and tariff...

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