Asarco, Inc. v. Federal Energy Regulatory Commission

777 F.2d 764, 250 U.S. App. D.C. 105
CourtCourt of Appeals for the D.C. Circuit
DecidedNovember 29, 1985
DocketNos. 82-2173, 82-2204, 82-2270, 82-2311, 82-2527, 83-1409 and 83-1415
StatusPublished
Cited by1 cases

This text of 777 F.2d 764 (Asarco, Inc. v. Federal Energy Regulatory Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Asarco, Inc. v. Federal Energy Regulatory Commission, 777 F.2d 764, 250 U.S. App. D.C. 105 (D.C. Cir. 1985).

Opinion

Opinion for the Court filed by Circuit Judge SCALIA.

SCALIA, Circuit Judge.

We are required to determine whether we have jurisdiction under § 19 of the Natural Gas Act (“NGA”), 15 U.S.C. § 717r (1982), to consider five petitions for review of orders of the Federal Energy Regulatory Commission. Southern California Gas Company (“SoCal”), Pacific Gas and Electric Company (“PG&E”), the California Public Utilities Commission (“CalPUC”), and ASARCO, Inc., Inspiration Consolidated Copper Company, and Kennecott Corporation (jointly “ASARCO”) have each petitioned for review of a March 31, 1982, order of the Commission in which it accepted for filing a tariff submitted by El Paso Natural Gas Company (“El Paso”) despite demands that the filing be immediately rejected under the Mobile-Sierra doctrine as inconsistent with existing rate settlements. ASARCO also seeks review of a September 30, 1982, order of the Commission that accompanied another September 30 order in which the Commission for the first time addressed and resolved the Mobile-Sierra claims. The issues presented are whether we have jurisdiction to review an acceptance for filing as to which a Mobile-Sierra claim has been made but has not been ruled upon by the Commission; and whether a petitioner may urge before us an objection that others presented to the Commission in their petition for rehearing but that the petitioner itself did not.1

I

Both an abbreviated review of the recent history of natural gas regulation and a detailed account of the complicated procedural history of this case are necessary for an understanding of the jurisdictional issues we confront.

A

From 1938 to 1978, the NGA required that all rates charged for natural gas sold for resale in interstate commerce be “just and reasonable.” NGA, ch. 556, § 4(a), 52 Stat. 821, 822 (1938) (codified as amended at 15 U.S.C. § 717c(a) (1982)). Initially, the Commission interpreted the NGA as granting jurisdiction only over the rates charged by interstate pipelines for gas sold to their jurisdictional customers. In determining whether a rate was “just and reasonable,” the Commission used a “cost-of-service” methodology — i.e., it allowed recoupment of the costs incurred by the pipeline in acquiring (or producing) and transporting gas, plus a reasonable return on investment.

In 1954, the Supreme Court held that under the NGA, the Commission was also required to regulate the sales of gas to interstate pipelines by independent producers. Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954). Individual cost-of-service methodology could feasibly be applied to the relatively few interstate pipeline companies; but the Commission simply could not process individual rate filings by the thousands of independent producers. For'lts newly imposed responsibilities, therefore, the Commission adopted the methodology of area-wide ratemaking, determining “just and reasonable” rates for entire geographical areas based on the average cost of service of independent producers within that area. Area Rate Proceeding, 34 F.P.C. 159 (1965), upheld in Permian Ba[109]*109sin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968). The Commission later established “national rates” for independent producer sales of gas of recent vintage. Just and Reasonable National Rates for Sales of Natural Gas, 52 F.P.C. 1604 (1974), upheld in Shell Oil Co. v. FPC, 520 F.2d 1061 (5th Cir.1975), cert. denied, 426 U.S. 941, 96 S.Ct. 2660, 49 L.Ed.2d 394 (1976).

The Commission continued to regulate gas sold by interstate pipelines on an individual cost-of-service basis. In Opinion No. 568, however, it decided that for the purpose of valuing the cost-of-gas component of the cost of service, pipeline companies could value certain of their own production at the same “area rate” applied to gas sales by independent producers. Pipeline Production Area Rate Proceeding (Phase I), 42 F.P.C. 738 (1969), upheld in City of Chicago v. FPC, 458 F.2d 731 (D.C.Cir.1971), cert. denied, 405 U.S. 1074, 92 S.Ct. 1495, 31 L.Ed.2d 808 (1972). Nevertheless, under Opinion No. 568 a pipeline could request permission to continue to value its own production on a cost-of-service basis upon a showing of “special circumstances.” 42 F.P.C. at 745.

Against this regulatory background, Congress in 1978 passed the Natural Gas Policy Act (“NGPA”), Pub.L. No. 95-621, 92 Stat. 3356 (codified at 15 U.S.C. §§ 3301-3432 (1982)). Title I of this Act established ceiling prices for “first sales” of natural gas. NGPA §§ 102-109, 15 U.S.C, §§ 3312-3319. Title VI eliminated Commission ratemaking authority over the first sales of most natural gas, NGPA § 601(a)(1), 15 U.S.C. § 3431(a)(1), leaving the Title I ceiling prices as the only federal control. Moreover, for the Commission’s continuing authority over interstate pipeline rates, the NGPA provided that the Commission must deem “just and reasonable” any amount paid in a first sale of natural gas that does not exceed the appropriate ceiling price. NGPA § 601(b)(1)(A), 15 U.S.C. § 3431(b)(1)(A).

In the wake of the NGPA’s enactment, a dispute arose over whether a sale to pipeline customers of gas which that pipeline itself had produced was a “first salé” within the meaning of the NGPA and therefore the gas-cost component of the pipeline rate could be set at any level up to the applicable NGPA ceiling. The issue was hotly contested before the Commission, and in several related orders FERC ruled that most such sales did not come under the NGPA and would continue to be rate-regulated as they previously had been under the NGA. See Final Rule Governing the Maximum Lawful Price for Pipeline, Distributor or Affiliate Production, 44 Fed.Reg. 66,577 (1979); Pricing of Pipeline Production Under the Natural Gas Act, 45 Fed.Reg. 53,-091 (1980); Pricing of Pipeline and Affiliate Production Under the Natural Gas Act, 45 Fed.Reg. 67,083 (1980). A number of pipeline companies appealed the Commission’s orders. On December 23, 1981, the Fifth Circuit overturned the Commission, holding that pipeline production was included within the NGPA definition of “first sale,” NGPA § 2(21), 15 U.S.C. § 3301(21), and therefore that pipelines could value their own production at Title I ceiling prices. Mid-Louisiana Gas Co. v. FERC,

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Related

Asarco, Inc., Inspiration Consolidated Copper Company and Kennecott Corporation v. Federal Energy Regulatory Commission, Southern California Edison Company, El Paso Electric Company, Phelps Dodge Corporation, Pacific Gas & Electric Company, Salt River Project Agricultural Improvement and Power District, Governor Edmund G. Brown, Jr., Arizona Public Service Company, El Paso Natural Gas Company, Southern Union Company, Southwest Gas Corporation, Intervenors. Southern California Gas Company v. Federal Energy Regulatory Commission, El Paso Electric Company, Phelps Dodge Corporation, Pacific Gas & Electric Company, Salt River Project Agricultural Improvement and Power District, Governor Edmund G. Brown, Jr., Arizona Public Service Company, Southern Union Company, El Paso Natural Gas Company, Southwest Gas Corporation, Intervenors. Pacific Gas and Electric Company v. Federal Energy Regulatory Commission, Phelps Dodge Corporation, Salt River Project Agricultural Improvement and Power District, Governor Edmund G. Brown, Jr., Arizona Public Service Company, Southern Union Company, Southwest Gas Corporation, El Paso Natural Gas Company, El Paso Electric Company, Intervenors. Public Utilities Commission of the State of California v. Federal Energy Regulatory Commission, Arizona Public Service Company, El Paso Natural Gas Company, Southern Union Company, Southwest Gas Corporation, Governor Edmund G. Brown, Jr., Public Service Commission of West Virginia, Intervenors. Asarco, Inc., Inspiration Consolidated Copper Company and Kennecott Corporation v. Federal Energy Regulatory Commission, Arizona Public Service Company, Salt River Project Agricultural Improvement and Power District, Phelps Dodge Corporation, Southern California Gas Company, Southwest Gas Corporation, Southern Union Company, Tenneco Oil Company, Intervenors. El Paso Natural Gas Company v. Federal Energy Regulatory Commission, El Paso Electric Company, Pacific Gas and Electric Company, Phelps Dodge Corporation, Salt River Project Agricultural Improvement and Power District, Tenneco Oil Company, Southern California Edison Company, Southern California Gas Company, Southern Union Company, People of State of California, Governor Edmund G. Brown, Jr., Arizona Public Service Company, Southwest Gas Corporation, Public Service Commission of West Virginia, Intervenors. El Paso Natural Gas Company v. Federal Energy Regulatory Commission, Arizona Public Service Company, Pacific Gas and Electric Company, Southern Union Company, Southern California Gas Company, Salt River Project Agricultural Improvement and Power District, Public Utilities Commission of State of California, Southwest Gas Corporation, Governor George Deukmejian, Intervenors
777 F.2d 764 (D.C. Circuit, 1985)

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Bluebook (online)
777 F.2d 764, 250 U.S. App. D.C. 105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/asarco-inc-v-federal-energy-regulatory-commission-cadc-1985.