Flint Hills Resources Alaska, LLC v. Federal Energy Regulatory Commission , 627 F.3d 881 ( 2010 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 7, 2010 Decided December 3, 2010
No. 08-1270
FLINT HILLS RESOURCES ALASKA, LLC,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS
ANADARKO PETROLEUM CORPORATION, ET AL.,
INTERVENORS
Consolidated with 08-1271, 09-1025, 09-1026, 09-1030, 09-
1031, 09-1033, 09-1215, 09-1222, 09-1223, 09-1229, 09-1232
On Petitions for Review of Orders
of the Federal Energy Regulatory Commission
Steven Reed argued the cause for petitioners Flint Hills
Resources Alaska, LLC, et al. With him on the briefs were
Steven H. Brose, Daniel J. Poynor, Eugene R. Elrod,
Christopher M. Lyons, David D'Alessandro, M. Denyse Zosa,
Patricia F. Godley, Jonathan D. Simon, Albert S. Tabor, Jr.,
John E. Kennedy, Dean H. Lefler, J. Patrick Nevins, and
2
Edward D. Greenberg. Dennis Lane, James F. Bendernagel,
Jr., David K. Monroe, Travis A. Pearson, Howard E. Shapiro,
and Richard A. Curtin entered appearances.
Bradley S. Lui argued the cause for petitioner State of
Alaska. With him on the briefs were Deanne E. Maynard,
Seth M. Galanter, and Daniel S. Sullivan, Attorney General,
Attorney General’s Office of the State of Alaska. Bruce J.
Barnard and Robert H. Loeffler entered appearances.
Judith A. Albert, Senior Attorney, and Carol J. Banta,
Attorney, Federal Energy Regulatory Commission, argued the
cause for respondent. With them on the brief were Thomas R.
Sheets, General Counsel, and Robert H. Solomon, Solicitor.
Robert J. Wiggers and John J. Powers III, Attorneys, U.S.
Department of Justice, entered appearances.
Robin O. Brena argued the cause for intervenors
Anadarko Petroleum Corporation, et al. in support of
respondent. With him on the brief were David W. Wensel,
Anthony S. Guerriero, Joseph S. Koury, Jeffrey G. DiSciullo,
Andrew T. Swers, Albert S. Tabor, Jr., John E. Kennedy, and
Dean H. Lefler.
Albert S. Tabor, Jr., John E. Kennedy, Dean H. Lefler, J.
Patrick Nevins, Edward D. Greenberg, Steven H. Brose,
Steven Reed, Daniel J. Poynor, Eugene R. Elrod, Christopher
M. Lyons, David D’Alessandro, M. Denyse Zosa, Patricia F.
Godley, and Jonathan D. Simon were on the brief for
intervenors Flint Hill Resources Alaska, LLC, et al. in support
of respondents. James M. Armstrong entered an appearance.
Bradley S. Lui, Deanne E. Maynard, Seth M. Galanter,
and Daniel S. Sullivan, Attorney General, Attorney General’s
Office of the State of Alaska, were on the brief for intervenor
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State of Alaska. Bruce J. Barnard and Robert H. Loeffler
entered appearances.
Before: GARLAND, Circuit Judge, and WILLIAMS and
RANDOLPH, Senior Circuit Judges.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: This case arises
primarily out of the stresses involved in a shift from one
system of regulatory ratemaking to another.
For many years the oil pipeline companies owning and
operating the Trans Alaska Pipeline System (“TAPS”)
charged shippers rates based on a 1985 settlement agreement
between them (initially six of the carriers, but ultimately all
eight) and the state of Alaska. (Alaska’s anticipation of
royalties and tax receipts gave it a stake in the matter; the
shippers in the early years, by contrast, were largely affiliates
of the pipeline companies, and so had little adversity of
interest.) The TAPS Settlement Agreement (“TSA”)
established the TAPS Settlement Methodology or “TSM,” a
ratemaking methodology to be used for computing interstate
rates until 2011, the end of the pipeline’s then projected useful
life. Although no shippers joined the agreement, the Federal
Energy Regulatory Commission, by this time the agency with
authority to regulate oil pipeline rates under the Interstate
Commerce Act, 49 U.S.C. §§ 1 et seq. (“ICA”), 1 approved it
1
In the Department of Energy Organization Act, Pub. L. No. 95-91,
§ 402(b), 91 Stat. 565, 584 (1977), codified as 49 U.S.C. § 60502(2010), Congress transferred regulatory authority over oil pipelines
from the Interstate Commerce Commission to FERC. FERC’s
regulation of oil pipelines is governed by the ICA as it existed on
October 1, 1977. See Revised Interstate Commerce Act, Pub. L.
No. 95-473, § 4(c), 92 Stat. 1337, 1470 (1978). All references to
4
as “fair and reasonable and in the public interest.” 18 C.F.R.
§ 385.602(g); see Trans Alaska Pipeline System, 33 FERC
¶ 61,064, 61,138 (1985) (“TAPS I”); Trans-Alaska Pipeline
System, 35 FERC ¶ 61,425, 61,977 (1986) (“TAPS II”). The
Commission’s order left shippers free to later protest rates as
unjust or unreasonable. TAPS II, 35 FERC at 61,977. In
practice, the TSM governed the pipeline’s interstate rates
through 2004.
But when the carriers filed rates for 2005 and 2006,
Alaska and two shippers (Anadarko Petroleum for both years,
Tesoro Corporation for 2006) protested. Alaska, exercising
rights it preserved in the TSA, alleged that the proposed rates
violated the non-discrimination and anti-preference provisions
of the ICA, as they were higher than the intrastate rates set by
the Regulatory Commission of Alaska (“RCA”). The shippers
argued that the rates were unjust, unreasonable, and otherwise
unlawful. The Commission responded by scuttling the TSM.
Instead it applied a methodology that it had developed for oil
pipeline ratemaking generally in Williams Pipe Line Co., 31
FERC ¶ 61,377 (1985) (“Opinion No. 154-B”).
Stated in very general terms, the Commission’s orders
found the rates filed for 2005 and 2006 to be unjust and
unreasonable, but not discriminatory or unduly preferential.
Though deciding that the just and reasonable rates would be
below the 2004 rates, it limited refunds, in accordance with
§ 15(7) of the ICA, to the difference between the 2005 and
2006 filed rates and the prior unchallenged (2004) rate. BP
Pipelines (Alaska) Inc., 123 FERC ¶ 61,287 (2008) (“Opinion
No. 502”); BP Pipelines (Alaska) Inc., 125 FERC ¶ 61,215the ICA in this opinion are to that version of the ICA, which can be
found in 49 U.S.C. §§ 1-15 (1976), or reprinted in 49 U.S.C. §§ 1-
15 (1988).
5
(2008) (“First Rehearing Order”); BP Pipelines (Alaska) Inc.,
127 FERC ¶ 61,317 (2009) (“Second Rehearing Order”).
The carriers assert a host of methodological errors in
these decisions; we are unpersuaded. Alaska seeks relief
against the Commission’s refusal to provide remedies for the
alleged price discrimination; we find that even if there was
discrimination, Alaska has not made the showing necessary to
justify reparations. The Commission also issued a number of
orders that either have not jelled in clear enough form for
judicial review or present an undue likelihood of piecemeal
review; we find these unripe.
We review FERC’s orders under the familiar standard for
agency actions: we must set them aside if they are not
supported by substantial evidence or are “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with
law.” 5 U.S.C. § 706(2)(A).
* * *
Commission use of rate base balances from the TSM era.
In calculating the maximum just and reasonable rate for
service after 2004, it is obviously important to know how
much of the rate base (essentially the pipeline’s initial capital
cost) the carriers had recovered as of December 31, 2004. A
just and reasonable rate would allow it to recover thereafter
only such sums as it had not recovered before. The carriers
had recovered accelerated depreciation under the TSM, and
the Commission found that they should use the amounts so
calculated to determine the unrecovered balance as of the end
of 2004. The Commission rejected their contrary proposal—
to use straight-line depreciation figures shown in their filings
of FERC Form 6, the carriers’ annual financial reports—on
the simple ground that it would enable them “to receive
6
benefits related to accumulated depreciation more than one
time.” Opinion No. 502, P 76. See also id. P 82. The carriers
assert before us that there “is also no double-recovery when
Opinion No. 154-B is consistently applied, as the Carriers’
presentation did,” Joint Pet. Br. at 21. While their submission,
see Prepared Rebuttal Testimony of Robert G. Van Hoecke,
J.A.852, indicates that revenues received under the TSM were
less than the hypothetical revenue flow under Opinion No.
154-B, it does not show why this required the Commission to
recharacterize TSM return of capital as something different
for purposes of estimating the post-TSM rate base balance.
Instead, they claim that FERC’s ruling violates their right
not to have the TSA used as precedent against them—a right
enshrined, as we just saw, in the Commission’s approval of
the TSA and in our Arctic Slope decision affirming that
approval. See Arctic Slope Regional Corporation v. FERC,
832 F.2d 158, 163 (D.C. Cir. 1987). In a slightly different
variant of the same point, they say that the shippers, because
they were not parties to the TSA, cannot benefit from it.
But FERC’s use of the rate balances created by the TSA’s
operation is not a “precedential” use of the TSA. Since 1985,
the carriers have justified the rates that they charged shippers
based on an accelerated depreciation schedule. It makes no
difference what the cause of the carriers’ having characterized
a portion of their rates in this manner may have been—the
TSA, the tax implications, rolling dice, arm-wrestling, etc.
The past is what it was. For the Commission to rely on those
justifications to determine how much of the rate base has been
recovered is not arbitrary and capricious.
Our rejection of the carriers’ claims here encompasses not
only those claims related to accelerated depreciation but two
additional categories that appear to be functionally equivalent.
One of these is $450 million in previously disputed costs that
7
the carriers amortized under the TSA. The second is
“deferred return.” This is a sum (1) annually extracted from
the inflation component of the nominal rate of return on
equity and added to a capital account and then (2) amortized
over the capital item’s remaining life. Opinion No. 154-B
explains the method and provides a helpful mathematical
example. See Williams Pipe Line Co., 31 FERC ¶ 61,377 at
61,834; Opinion No. 502 PP 95-102. The carriers do not
claim that the Commission has in any way removed from the
rate base amounts added thereto (and not amortized by the end
of 2004) under the TSM’s deferred return system. Rather, at
least judging from their briefs before the Commission (which
are clearer than the ones filed with us), the claim is that the
Commission should have assumed a recovery of deferred
return altogether different from what actually happened under
the TSM. See Initial Brief of the TAPS Carriers before the
Commission at 56-59; Reply Brief of the TAPS Carriers
before the Commission at 44-46. We see nothing arbitrary in
the Commission’s rejection of these claims.
Starting rate base write-up. The carriers contend that as
part of using Opinion No. 154-B methodology, they are
entitled to a one-time “write-up” of their rate base. The claim
arises out of the transition from FERC’s pre-Opinion No. 154-
B regulatory approach and the methodology it adopted in that
opinion. In the pre-154-B era, the Commission had used a so-
called “valuation rate base,” an “arcane” formula representing
primarily a weighted average of original and reproduction
costs. See Farmers Union Central Exchange v. FERC, 734
F.2d 1486, 1495 (D.C. Cir. 1984). Opinion No. 154-B
replaced the “valuation” system with a “trended original cost”
methodology (“TOC”), which was to apply to all pipelines,
new and old. To enable pipelines that had previously used the
valuation method to make a smooth transition and to protect
the reasonable expectations of their investors, Opinion No.
154-B provided that such pipelines would be entitled to a one-
8
time increase of their rate base. 31 FERC ¶ 61,377, 61,835-
36. See also Lakehead Pipe Line Company, L.P., 71 FERC
¶ 61,338, 62,309 (1995). In the current proceeding FERC
refused to allow the TAPS carriers any comparable write-up.
FERC never approved valuation-based rates for the TAPS
pipeline. Opinion No. 502, P 114. To be sure, the carriers
filed rates between 1977 and 1985 using valuation
methodology, see Trans Alaska Pipeline System, 355 ICC 80,
84-86 (1977) (establishing interim rates for TAPS using
valuation methodology), but in fact, as the carriers’ own
expert witness Dr. Joseph Kalt acknowledged, the rates finally
adopted were based on the TSM, which called for a TOC
methodology akin to that specified by Opinion No. 154-B.
See Opinion No. 502, P 114. Accordingly, by the time of the
TSA any reasonable investor would have abandoned any
hopes in the valuation methodology. Thus, neither the
transition theory nor the interest in protecting investor
expectations called for a rate base write up. The
Commission’s rejection of the claim was anything but
arbitrary and capricious.
Treatment of 2005 depreciation in rate base calculation
for 2006. Although FERC’s rulings for 2005 implied a
different calculation of unrecovered rate base than would have
occurred had FERC continued with the TSM, the Commission
nonetheless computed a starting rate base balance for 2006 as
if the 2005 rates had been calculated under the TSM. The
carriers claim that this renders the Commission’s calculation
of unrecovered rate base for 2006 inaccurate and arbitrary.
The Commission’s primary response is that any such
miscalculation had no impact. The just and reasonable rates
calculated for 2006 were well below the 2004 rate, but the
Commission had no authority to provide a remedy for
shippers that would reduce the net unrefunded charges below
9
the 2004 level. As a result, the miscalculation alleged had no
impact on the rates and refunds at issue here. First Rehearing
Order, P 83. The carriers acknowledge the absence of any
impact on the 2006 refunds, Pet. Reply Br. at 14, and the
Commission in this proceeding made no final ruling on rates
to be in effect thereafter.
Use of a “new” methodology as a basis for ordering
refunds under ICA § 15(7). The carriers invoke our decision
in Sea Robin Pipeline Co. v. FERC, 795 F.2d 182 (D.C. Cir.
1986), for the proposition that in a proceeding under ICA
§ 15(7) the Commission cannot order refunds when its
calculation of the just and reasonable rates depends on a
methodology different from the one employed for the pre-
existing pipeline-filed rate. The carriers are quite wrong, but
it is a little complicated to explain why.
First, we note that the carriers’ reliance, in an ICA
proceeding, on a Natural Gas Act (“NGA”) case such as Sea
Robin is orthodox and presumptively permissible. We have
recognized the similarity between the operative language of
§§ 15(7) and 15(1) of the ICA and of §§ 4 and 5 of the NGA,
and have relied on cases interpreting one act to decide cases
under the other. See Association of Oil Pipe Lines v. FERC,
83 F.3d 1424, 1440-41 (D.C. Cir. 1996) (analogizing §§ 15(7)
and 15(1) of the ICA to §§ 4 and 5 of the NGA). We say
“presumptively permissible” because the statutes are not exact
carbon copies; the assumption of similarity is not absolute.
Here, however, we assume in the carriers’ favor that the
message of Sea Robin is fully applicable. The carriers’
problem is that they have misread the message.
Sea Robin involved the often critical issue of the burden
of proof under different sections of the NGA. Under § 4, a
carrier can file an increase in rates, and, if the rates are
challenged, can sustain the increase only if it meets the burden
10
of showing that the new rates are just and reasonable. If it
fails, then refunds are ordered that have the effect of limiting
the carrier’s charges to those prevailing before the filing. See
Amoco Production Co. v. FERC, 271 F.3d 1119, 1122 (D.C.
Cir. 2001) (holding that “the pre-existing lawful rate” set a
floor beneath which FERC could not order refunds, despite its
conclusion that the just and reasonable rate for that period was
lower); Distrigas of Massachusetts Corp. v. FERC., 737 F.2d
1208, 1222-24 (1st Cir. 1984). This parallels ICA § 15(7);
our immediately preceding discussion of the rates and refunds
for 2006 reflects this understanding.
By contrast, in a proceeding under § 5 of the NGA the
Commission evaluates a pre-existing rate. Before setting it
aside, the Commission must carry the burden of showing that
that rate is unjust and unreasonable. If it succeeds, it can limit
rates to a newly determined just and reasonable level, but can
do so only prospectively. This parallels action under ICA
§ 15(1).
Sea Robin involved a complex interaction of carrier
filings and Commission initiatives. Although the precise
moves and countermoves at issue aren’t altogether clear, the
carriers fix on the following passage:
The rate methodology FERC imposed on Sea Robin was
not proposed by the pipeline; thus, the order cannot
represent an approval, in whole or part, of changes
suggested by Sea Robin. Nor was the Commission’s
methodology a return to Sea Robin’s pre-filing rates; the
order, in other words, also does not represent a rejection
of proposed new rates and a reinstatement of old,
established rates. The Commission’s action, therefore,
does not fall into the narrow section 4 range of
acceptance.
11
795 F.2d at 187 (quoted in Pet. Br. at 35-36). The carriers
propose to extend Sea Robin’s message about NGA § 4 to
ICA § 15(7)—itself a perfectly permissible move. And they
contend that, as the Commission dropped the TSM and
adopted the Opinion No. 154-B methodology, the first quoted
sentence bars the Commission, in this § 15(7) proceeding,
from limiting the carriers’ 2005 and 2006 rates to those
previously in place.
But the next quoted sentence destroys that claim. All the
Commission has done here is to limit the 2005 and 2006
charges to those prevailing in 2004—in the words of Sea
Robin, to the carriers’ “pre-filing rates.” Id. See also East
Tennessee Natural Gas Co. v. FERC, 863 F.2d 932, 942 (D.C.
Cir. 1988).
Consider briefly the effect of the carriers’ extravagant
reading of the first sentence. If the Commission cannot test
the newly filed rates by a new methodology, any rate increase
running afoul of a new Commission methodology would not
be subject to § 15(7) refund obligations. Carriers would have
an incentive to shout “new methodology!” whenever they
could detect the slightest change in the Commission’s
ratemaking principles or policy, and the Commission and
courts would have to parse the newness of any such principle
or policy. We see nothing in Sea Robin imposing such an
unwieldy and elusive burden on the Commission.
Alaska’s claim for refunds for alleged discriminatory
rates. In June 2004, the Regulatory Commission of Alaska
ordered the TAPS carriers to use a new ratemaking
methodology for setting intrastate rates, and, applying the
methodology, lowered the intrastate rate from $3.00 to $3.20
per barrel to $1.96 per barrel. Alaska Pet. Br. at 9. This left
the carriers’ filed interstate rates for 2005 and 2006
substantially higher than the intrastate rates. Seeing the
12
interstate rates as having an adverse effect on its royalty and
tax income, Alaska (but not any of the shippers) claimed that
the interstate rates filed by the carriers for 2005 and 2006
were unduly discriminatory in violation of §§ 2 and 3(1) of
the ICA and § II-11(e) of the TSA; it asked FERC to order
refunds of the full amount of the difference between the
carriers’ proposed 2005 and 2006 interstate rates and their
RCA-limited intrastate rates. See Opinion No. 502, PP 252,
257, 265.
If rates are discriminatory within the meaning of the ICA,
§§ 2 and 3(1) allow even a shipper paying only a just and
reasonable rate nevertheless to recover damages from the
discrimination. ICC v. United States ex rel. Campbell, 289
U.S. 385, 390 (1933). The amount of damages may be more
or less than the disparity in rates, and “is something to be
proved and not presumed.” Id. The relevant question is not
“how much better off the complainant would be today if it had
paid a lower rate. The question is how much worse off it is
because others have paid less.” Id. As that formulation of the
“question” makes clear, the nub of the issue is competitive
injury. See also, e.g., Harborlite Corp. v. ICC, 613 F.2d
1088, 1091-92 (D.C. Cir. 1979).
It is perhaps a metaphysical question whether a rate that
causes no competitive injury could be considered
discriminatory. But assuming arguendo that the disparate
inter- and intrastate rates were discriminatory, Alaska could
“recover only the actual damages it has suffered in the
marketplace as a result of the discriminatory rate.” Council of
Forest Industries v. ICC, 570 F.2d 1056, 1060 & n.10 (D.C.
Cir. 1978); Opinion No. 502, P 267. Alaska has shown no
competitive injury. We are not sure how a non-shipper
complainant, with interests such as those of the state of
Alaska, would show competitive injury; after all, it is not in
the business of making sales of oil transported on the pipeline.
13
In any event, the difficulties confronting a non-shipper don’t
excuse it from the need to offer such proof.
Alaska suggests that a casual remark by the Commission
in Cook Inlet Pipe Line Co., 47 FERC ¶ 61,057, reh’g denied,
47 FERC ¶ 61,393 (1989), represents a holding that a
disparity between interstate and intrastate rates gives rise, ipso
facto, to a remedy under ICA § 2. Whatever FERC may have
meant, it had no power to sweep aside a century of Supreme
Court cases construing the ICA.
In its petition for review Alaska argues that § II-11(e) of
the TSA may be construed to afford Alaska a remedy not
available under the ICA. Alaska Pet. Br. at 31. This seems
unlikely, as the language of § II-11(e) appears merely to
preserve Alaska’s anti-discrimination rights under the ICA.
But in any event, Alaska never raised this point before the
Commission in its Brief on Exceptions, arguing instead that
the TSA did not limit its statutory rights in the event of
discrimination. Alaska Br. on Exceptions, July 9, 2007, at 27-
28.
Finally, we see nothing in FERC’s authority to award
refunds on shippers’ complaint under ICA §§ 13, 16, see BP
W. Coast Prods., LLC v. FERC, 374 F.3d 1263, 1305 (D.C.
Cir. 2004), that would encompass claims to reparations for
discrimination without a showing of competitive harm.
* * *
Besides the claims discussed above, petitioners object to
several rulings by the Commission relating to the expected
costs of dismantlement and removal of the pipeline, and of
restoration of the land (the “DR&R” costs), and to rates to be
collected after 2006. With a trivial exception we find these
unripe.
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DR&R costs. The Commission ruled that if the
accumulated prepayments made by shippers to fund these
costs, plus the earnings imputed to them, proved to exceed the
actual DR&R costs, the carriers would have to refund the
surplus (the Commission does not say how such a refund is to
be allocated among shippers over the pipeline’s long history).
It also stated the principles that would govern the imputation
of earnings to these accumulated prepayments, namely
Moody’s Aa bond rate for the years 1977 through 2005 and
the TAPS carriers’ weighted cost of capital for 2006 on.
Finally, it ordered the carriers to compile records to account
for the potential DR&R refund liability.
When considering ripeness, the court must balance “the
fitness of the issues for judicial decision” against the
“hardship to the parties of withholding court consideration.”
Abbott Laboratories v. Gardner, 387 U.S. 136, 149 (1967);
Nat’l Treasury Employees Union v. United States, 101 F.3d
1423, 1431 (D.C. Cir. 1996). An agency decision may be fit
for judicial review when the disputed issue is purely legal, and
when no institutional interests favor the postponement of
review. Public Service Electric & Gas Co., v. FERC, 485
F.3d 1164, 1168 (D.C. Cir. 2007). Even though the legal
issues may be clear, a case may not be ripe for review when it
would be inappropriate for a court to spend scarce resources
on claims that, “though predominantly legal in character,
depend[] on future events that may never come to pass, or that
may not occur in the form forecasted.” Devia v. NRC, 492
F.3d 421, 425 (D.C. Cir. 2007) (citing McInnis-Misenor v.
Maine Medical Center, 319 F.3d 63, 72 (1st Cir. 2003)).
The carriers contend that FERC’s refundability order
poses a purely legal issue, one that is thus “presumptively
reviewable.” Sabre, Inc. v. DOT, 429 F.3d 1113, 1119 (D.C.
Cir. 2005). Moreover, they assert that FERC’s rulings cause
15
them significant and immediate hardship because the resulting
uncertainty will injure the value of the firms’ stock.
Though the case is close, we think the challenge unripe
(with an exception to be addressed shortly). First, it is unclear
whether the refund obligation will ever materialize. That
depends on whether the costs of whatever dismantlement,
removal and restoration duties may be imposed prove to be
greater than, less than or about equal to the prepayments and
the imputed earnings thereon. While there is uncertainty as to
whether any refunds will be ordered, there is no evidence that
they will be significant; so the effect of the uncertainty on
investor assessment of the carriers’ financial position seems
likely to be minor. Finally, any ultimate order of refunds
seems likely to encounter a host of additional issues (such as
which shippers the refunds would go to), all of which are
better resolved in one case rather than piecemeal. Thus the
case is one where adjudication now would lead to “piecemeal
review which at the least is inefficient and upon completion of
the agency process might prove to have been unnecessary.”
See FTC v. Standard Oil Co., 449 U.S. 232, 242 (1980).
The Commission’s order that the carriers account for
these prepayments on their Form 6 filings of course involves
an immediate change in conduct. The Commission itself does
not seriously assert unripeness. The carriers’ objection here is
the same as their objection to the Commission’s order that
sums unused for DR&R must be refunded to the shippers—
namely, that this involves retroactive ratemaking. Indeed, to
the extent that the Form 6 accounting were seen as prejudging
the issue of a duty to pay over the hypothetical surplus, the
two issues would seem to merge. But insofar as the
Commission’s accounting order merely requires a segregated
account, its ultimate disposition being unresolved, the order
does not appear equivalent to retroactive ratemaking.
Accordingly, on the understanding that our decision on the
16
accounting mandate in no way forecloses the carriers’ claims
as to the status and disposition of the funds, we reject their
objection to the accounting order.
Future “uniform rates” and “pooling.” Another carrier
challenge is to FERC’s instructions to them to file “uniform
rates” and to employ a “pooling” mechanism (the latter a
response to the fact that the carriers vary in the relationship
between their ownership shares and the amounts they ship).
Both issues are currently being litigated before the
Commission. See BP Pipelines (Alaska) Inc., 127 FERC
¶ 61,316 (2009); Unocal Pipeline Co., 129 FERC ¶ 61,275(2009). All parties recognize that the ultimate form of pooling
(if any) is completely unknown. Despite FERC’s seemingly
unequivocal instructions to the carriers to file uniform rates,
FERC does not seem to contemplate sanctioning them for
failure to agree. Oral Arg. Tr. at 25-26. Delaying review will
not only avoid our becoming entangled in the meaning and
validity of as yet inchoate rules, see Abbott Laboratories, 387
U.S. at 148-49, but will give FERC “an opportunity to correct
its own mistakes and to apply its expertise,” FTC v. Standard
Oil, 449 U.S. at 242.
* * *
We have examined all the petitioners’ contentions and,
except for those found unripe, reject all; to the extent that we
have not discussed particular ones, it is only because of the
obviousness of the grounds for rejection. Thus, except as to
the claims found unripe, we affirm FERC’s orders in all
respects.
So ordered.