Transwestern Pipeline Co. v. F.E.R.C.
| Decision Date | 23 March 1990 |
| Docket Number | Nos. 88-1046,88-1555,88-1559 and 88-1573,88-1371,88-1484,s. 88-1046 |
| Citation | 897 F.2d 570,283 U.S.App.D.C. 116 |
| Parties | TRANSWESTERN PIPELINE COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, The Public Utilities Commission of the State of California, Process Gas Consumers Group, Southern California Gas Company, El Paso Natural Gas Company, Pacific Gas and Electric Company, Texas Eastern Transmission Corporation, The Kansas Power and Light Company, Southwest Gas Corporation, Williams Natural Gas Company, Intervenors. TRANSWESTERN PIPELINE COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Southern California Gas Company, Southwest Gas Corporation, Pacific Gas and Electric Company, Williams Natural Gas Company, Public Utilities Commission of the State of California, El Paso Natural Gas Company, Citizens Energy Corporation, et al., Intervenors. TRANSWESTERN PIPELINE COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Williams Natural Gas Company, Southern California Gas Company, Public Utilities Commission of the State of California, Intervenors. TRANSWESTERN PIPELINE COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Kansas Power & Light Company, Natural Gas Clearinghouse, Inc., Williams Natural Gas Company, Southern California Gas Company, Public Utilities Commission of the State of California, Pacific Gas & Electric Company, PSI, Inc., Texas Eastern Transmission Corp., Southwest Gas Corp., Intervenors. PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Kansas Power & Light Company, Natural Gas Clearinghouse, Inc., Williams Natural Gas Company, Southern California Gas Company, Pacific Gas & Electric Company, PSI, Inc., Southwest Gas Corp., Transwestern Pipeline Company, Intervenors. KANSAS POWER & LIGHT COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Natural Gas Clearinghouse, Inc., Williams Natural Gas Company, Pacific Gas & Electric Company, Public Utilities Commission of the State of California, |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of an Order of the Federal Energy Regulatory Commission.
Harvey Y. Morris and Martin J. Bregman, Topeka, Kan., with whom Janice E. Kerr, San Francisco, Cal., J. Calvin Simpson, for Public Utilities Com'n of the State of Cal., John K. Rosenberg, Topeka, Kan., William I. Harkaway and Harvey L. Reiter, Washington, D.C., for the Kansas Power and Light Co., were on the joint brief, for Public Utilities Com'n of the State of Cal., et al., petitioners in Nos. 88-1559, 88-1573 and intervenors in Nos. 88-1046, 88-1371, 88-1484 and 88-1555.
William J. Grealis, with whom Jeffrey G. DiSciullo, Frederick W. Peters, Dana B. Ott, Washington, D.C., Sherrie N. Rutherford, Cheryl M. Foley, Houston, Tex., Charles A. Moore, Marilyn L. Doria and Robert W. Gee, Houston, Tex., were on the brief, for Transwestern Pipeline Co., petitioner in Nos. 88-1046, 88-1371, 88-1484, 88-1555, and intervenor in Nos. 88-1559 and 88-1573.
Dwight C. Alpern, Atty., F.E.R.C., with whom Catherine C. Cook, Gen. Counsel, and Jerome M. Feit, Sol., F.E.R.C., were on the brief, for respondent in all cases. Hanford O'Hara, Atty., F.E.R.C., Washington, D.C., also entered an appearance, for respondent.
Douglas Kent Porter and E.R. Island, Los Angeles, Cal., entered appearances, for intervenor Southern Cal. Gas Co. in Nos. 88-1046, 88-1371, 88-1484, 88-1555, 88-1559, and 88-1573.
Joshua Bar-Lev, San Francisco, Steven F. Greenwald and Lindsey How-Downing, San Francisco, entered appearances, for intervenor Pacific Gas and Elec. Co. in Nos. 88-1046, 88-1371, 88-1555, 88-1559 and 88-1573.
Gregory Grady and Douglas O. Waikart, Washington, D.C., entered appearances, for intervenor Williams Natural Gas Co. in Nos. 88-1046, 88-1371, 88-1484, 88-1555, 88-1559 and 88-1573.
Edward J. Grenier, Jr., William H. Penniman, and James M. Bushee, Washington, D.C., entered appearances, for intervenor Process Gas Consumers Group in No. 88-1046.
William I. Harkaway, Washington, D.C., Douglas M. Canter and Steven J. Kalish, Washington, D.C., also entered appearances, for intervenor Southwest Gas Corp. in Nos. 88-1046, 88-1371, 88-1555 and 88-1559.
Judy M. Johnson and John S. Carr entered appearances, for intervenor Texas Eastern Transmission Corp., in Nos. 88-1046 and 88-1555.
Richard C. Green, Donald J. MacIver, Jr., El Paso, Tex., Richard Owen Baish and Michael D. Ferguson, El Paso, Tex., entered appearances for intervenor El Paso Natural Gas Co. in Nos. 88-1046 and 88-1371.
Peter G. Esposito, Washington, D.C., entered an appearance, for intervenor Natural Gas Clearinghouse, Inc., in Nos. 88-1555, 88-1559 and 88-1573.
Daniel C. Kaufman and James U. Hamersley, Washington, D.C., entered appearances, for intervenor PSI, Inc., in Nos. 88-1555 and 88-1559.
Before WILLIAMS, D.H. GINSBURG and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.
This appeal grows out of the Federal Energy Regulatory Commission's attempt to afford natural gas consumers the benefits of increased competition. Its basic stratagem was to "unbundle" the sale of gas from its transportation, enabling local distribution companies and end-users to buy gas in the field and to use interstate pipelines simply for transportation. See Order No. 436, Regulation of Natural Gas Pipelines after Partial Wellhead Decontrol, 50 Fed.Reg. 42,408 (1985). In Associated Gas Distributors v. FERC, 824 F.2d 981 (D.C.Cir.1987), this court upheld the substance of the Commission's new approach, but vacated and remanded Order No. 436 because the Commission had failed to address adequately the effect of its new regulations on the interstate pipelines' take-or-pay liability. Because Order No. 436 put pressure on pipelines to allow shipments of gas in competition with their own supplies, it increased their difficulties in selling (without loss) quantities of gas that they were obligated to either take or pay for. On remand, the Commission sought to offset these difficulties by shifting some of the costs onto producers and customers. See Order No. 500, Regulation of Natural Gas Pipelines after Partial Wellhead Decontrol, 52 Fed.Reg. 30,334 (1987). Challenges to the order were consolidated into one complex case, the first phase of which addressed a facial challenge to the entire order, and the second phase of which considered the application of the Commission's "equitable sharing" policy to a particular pipeline. See American Gas Association v. FERC, 888 F.2d 136 (D.C.Cir.1989) (Phase I); Associated Gas Distributors v. FERC, 893 F.2d 349 (D.C.Cir.1989) (Phase II).
This segment of the case was intended to address issues raised by a so-called gas inventory charge, also known by the acronym GIC. Here the Commission's object was to define the limits on pipelines' ability to charge their customers for the costs of maintaining an inventory of contract rights to purchase gas (including one form those costs may take, namely liability under contracts requiring a pipeline to take gas or pay for it anyway), and thereby to prevent recurrence of the recent take-or-pay pass-through issues. 1 The Commission originally discussed the charge as a policy statement within Order No. 500 and later implemented it in a number of specific decisions, including the one now before us.
Although a large number of cases were filed challenging FERC implementation of the gas inventory charge, the present case was jointly selected by the parties as the most suitable one for its review; the remainder were held in abeyance. As will be developed below, most of the key issues in this case have been rendered moot. The only customers of Transwestern potentially affected by Transwestern's gas inventory charge proposals have ceased to purchase gas from that pipeline, and nothing before us suggests that any judicial correction of FERC's asserted errors would restore gas sales transactions. A number of peripheral issues survive mootness, but the upshot is that this case has failed as the selected vehicle for review of the Commission's actions on gas inventory charges.
Before turning to the Commission's disposition of Transwestern's gas inventory charge proposal, we must first clear out of the way Transwestern's attack on the Commission's rejection of its earlier filing, in June 1986, of a proposal for a somewhat similar charge, then called a "supply reservation charge." 2 The Commission rejected the filing and set it down for a hearing. 36 FERC p 61,048 at 61,104 (1986). After hearing, the ALJ rejected the proposal, 39 FERC p 63,025 (1987), and the Commission affirmed. 40 FERC p 61,324 at 61,994-95 (1987). The Commission found the proposed charge too vague since crucial terms--such as the amount of the charge and its relation to Transwestern's actual cost of reserving supplies--depended on the outcome of negotiations with Transwestern's producers, which it had not then completed. Transwestern, 40 FERC at 61,995.
Transwestern tells us that the Commission's objection, the proposal's lack of specific figures, is of no weight: Transwestern offered the supply reservation charge only as a "mechanism." We do not believe that as an ordinary matter a pipeline's attachment of the "mechanism" label requires the Commission to dispense with insistence on specific figures. Of course that may be so where a pipeline offers to establish that market forces will hold charges to just and reasonable levels and submits adequate support for the claim. But in the absence of some such special circumstance the Commission's position seems entirely reasonable. Here, although the proposed charge was designed to cover Transwestern's...
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