Office of Consumers' Counsel, State of Ohio v. F.E.R.C., s. 84-1099

• Decision Date: 25 August 1987
• Docket Number: 84-1100,84-1143,84-1142,84-1135,84-1179 and 84-1444,Nos. 84-1099,84-1146,s. 84-1099
• Citation: 826 F.2d 1136
• Parties: OFFICE OF CONSUMERS' COUNSEL, STATE OF OHIO, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Public Service Commission of the State of New York, Public Service Commission of West Virginia, Process Gas Consumers Group, Columbia Gas Distribution Companies, UGI Corporation, Dayton Power and Light Company, Columbia Gas Transmission Corporation, Pennsylvania Gas and Water Company, Consumer Advocate for the Commonwealth of Pennsylvania, Washington Gas Light Company, Interstate Natural Gas Association of America, Cities of Charlottesville and Richmond, Virginia, Consumer Advocate Division of the Public Service Commission of West Virginia, Cincinnati Gas & Electric Company, et al., Baltimore Gas and Electric Company, Public Utilities Commission of Ohio, Texas Eastern Transmission Corporation, Transwestern Pipeline Company, Exxon Corporation, Maryland Office of People's Counsel, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1136

826 F.2d 1136

264 U.S.App.D.C. 120

OFFICE OF CONSUMERS' COUNSEL, STATE OF OHIO, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Public

Service Commission of the State of New York, Public Service

Commission of West Virginia, Process Gas Consumers Group,

Columbia Gas Distribution Companies, UGI Corporation, Dayton

Power and Light Company, Columbia Gas Transmission

Corporation, Pennsylvania Gas and Water Company, Consumer

Advocate for the Commonwealth of Pennsylvania, Washington

Gas Light Company, Interstate Natural Gas Association of

America, Cities of Charlottesville and Richmond, Virginia,

Consumer Advocate Division of the Public Service Commission

of West Virginia, Cincinnati Gas & Electric Company, et al.,

Baltimore Gas and Electric Company, Public Utilities

Commission of Ohio, Texas Eastern Transmission Corporation,

Transwestern Pipeline Company, Exxon Corporation, Maryland

Office of People's Counsel, Intervenors.

Nos. 84-1099, 84-1100, 84-1135, 84-1142, 84-1143, 84-1146,

84-1179 and 84-1444.

United States Court of Appeals, District of Columbia Circuit.

Aug. 25, 1987.

On Motion to Enforce the Mandate.

Frederick Moring, Jennifer N. Waters and David H. Solomon, Washington, D.C., were on the renewed motion of Associated Gas Distributors to enforce the mandate.

Margaret Ann Samuels, Columbus, Ohio, was on the response of the Office of the Consumers' Counsel, State of Ohio.

John H. Pickering, Timothy N. Black, Gary D. Wilson, Washington, D.C., Stephen J. Small, Ronald N. Carroll and Giles D.H. Snyder, Charleston, W. Va., were on the opposition of Columbia Gas Transmission Corp.

Jerome M. Feit, Sol., and Joel M. Cockrell, F.E.R.C., Washington, D.C., were on the opposition of the F.E.R.C.

Before WALD, Chief Judge, MIKVA and EDWARDS, Circuit Judges.

Opinion for the Court Per Curiam.

PER CURIAM:

On February 4, 1986, this court issued its decision in Office of Consumers' Counsel, State of Ohio v. FERC, 783 F.2d 206 (D.C.Cir.1986). In that case we affirmed in part and reversed and remanded in part a decision of the Federal Energy Regulatory Commission ("FERC" or "Commission") on whether certain purchasing and cutback practices of the Columbia Gas Transmission Corporation (Columbia) were abusive under section 601(c)(2) of the Natural Gas Policy Act of 1978 (NGPA), 15 U.S.C. Sec. 3431(c)(2) (1982), or imprudent under section 5 of the Natural Gas Act (NGA), 15 U.S.C. Sec. 717d (1982). Specifically, we held that one portion of the Commission's test of "abuse" under NGPA section 601(c)(2) was contrary to the plain meaning of the statute, and remanded this issue for further consideration by the Commission. We affirmed the Commission's finding that certain of Columbia's practices concerning marketability and take-or-pay contract clauses were imprudent under NGA section 5, but we found that the Commission had failed in its duty to impose a remedy for these violations and therefore remanded for consideration and imposition of appropriate remedies. We also reversed the Commission's findings that certain of Columbia's other practices were not imprudent.

Our mandate in this case was issued on June 25, 1986. On May 6, 1987, we granted a motion by Associated Gas Distributors (AGD), a petitioner in the original case, ordering FERC to comply with the mandate no later than June 1, 1987. On May 27, 1987, the Commission issued its Order on Remand, Denying Motions and Establishing Hearing Procedures. Columbia Gas Transmission Corp., 39 F.E.R.C. p 61,219 (1987) [hereinafter Order on Remand ]. Now before us is a renewed motion of AGD for an order directing FERC to comply with this court's mandate. For the reasons discussed below, we agree with AGD that the Commission's order of May 27 does not constitute compliance with our mandate. We therefore grant the motion.

The issue here is the prospective nature of remedies which the Commission may impose under section 5 of the NGA. That section reads in relevant part:

Whenever the Commission ... shall find that any ... practice, or contract affecting [a rate charged by a natural gas company for sale of gas subject to Commission jurisdiction] ... is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable ... practice, or contract to be thereafter observed and in force, and shall fix the same by order....

15 U.S.C. Sec. 717d(a) (emphasis added). The effect of the word "thereafter," the Commission argues correctly, is that section 5 remedies can have prospective effect only. See Atlantic Ref. Co. v. Public Serv. Comm'n, 360 U.S. 378, 389, 79 S.Ct. 1246, 1254, 3 L.Ed.2d 1312 (1959); Tennessee Gas Pipeline Co. v. FPC, 606 F.2d 1373, 1380 (D.C.Cir.1979). In other words, the Commission has no power under section 5 to make reparation orders. FPC v. Hope Natural Gas Co., 320 U.S. 591, 618, 64 S.Ct. 281, 295, 88 L.Ed. 333 (1944).

While the Commission is correct that section 5 remedies can be prospective only, it errs in its interpretation of prospectivity. The Commission maintains that, before it can comply with this court's mandate to determine what remedies to impose for Columbia's section 5 violations, it must first hold a hearing to determine whether those violations continue at the present time. If Columbia's present practices are no longer imprudent and thus violative of section 5, then the Commission will impose no remedies. Order on Remand, 39 F.E.R.C. at 61,777-78 & passim. This is FERC's position even in regard to those provisions, such as Columbia's high take-or-pay contract clauses, which the Commission determined in January 1984 to be in violation of section 5. ¹

AGD and the Office of the Consumers' Counsel of the State of Ohio (OCC) argue, on the other hand, that the prospective nature of section 5 relief means simply that the Commission has no power to order reparation for illegal rates or practices that existed prior to the date of the Commission's finding of illegality. In this case, the Commission determined on January 16, 1984, that the take-or-pay clauses in Columbia's contracts were illegal. Columbia Gas Transmission Corp., 26 F.E.R.C. p 61,034, at 61,119-20 (1984) (Opinion No. 204 ). AGD and OCC argue that a remedy imposed as of the date of that opinion is a prospective remedy within the meaning of section 5. Renewed Motion of Associated Gas Distributors at 8-9; Response of the Office of the Consumers' Counsel, State of Ohio, to Renewed Motion of Associated Gas Distributors at 3-6.

We agree with this interpretation of the statutory language. This court made clear in Tennessee Valley Mun. Gas Ass'n v. FPC, 470 F.2d 46 (D.C.Cir.1972), that when the Commission has committed legal error in a section 5 case the proper remedy is one that puts the parties in the position they would have been in had the error not been made. In Tennessee Valley the Commission had erroneously dismissed a section 5 case; some months later it reinstated the proceeding and determined the correct rate. This court held that the Commission was required to impose that rate with a measure of retroactivity in order to place the petitioner "in the same position that it would have occupied had the error not been made." 470 F.2d at 452. Such "retroactive" relief, the court held,

does not conflict with the anti-reparations language in the statute. That language was designed to protect established expectations under legally established rate schedules. It forbids belated determinations that rates charged in the past were excessive.

Id. (footnote omitted). While the court agreed that "[g]as purchasers ... have no protection from excessive charges collected during the pendency of a Sec. 5 proceeding," id. (quoting Atlantic Ref. Co., 360 U.S. at 389, 79 S.Ct. at 1254), it held that "there is no reason to extend that principle to say that gas purchasers have no protection against a legal error by the Commission which wrongfully and unfairly prolongs that pendency." Id. at 452-53. See also United Gas Improvement Co. v. Callery Properties, Inc., 382 U.S. 223, 229, 86 S.Ct. 360, 364, 15 L.Ed.2d 284 (1965) (Commission "can undo what is wrongfully done by virtue of its order").

In the present case, the Commission found in January 1984 that Columbia's take-or-pay clauses violated section 5; its legal error was in failing to remedy that violation. See Office of Consumers' Counsel, 783 F.2d at 233-36. Imposing the proper remedy "retroactively" to January 16, 1984, would merely put Columbia's customers "in the same position that [they] would have occupied had the error not been made."

Both FERC and Columbia cite Electrical Dist. No. 1 v. FERC, 774 F.2d 490 (D.C.Cir.1985), to support their position. That case, which arose under the analogous section 206 of the Federal Power Act, 16...