GULFPORT ENERGY CORPORATION v. FEDERAL ENERGY REGULATORY COMMISSION
No. 21-60017 CONSOLIDATED WITH No. 21-60200
United States Court of Appeals for the Fifth Circuit
July 19, 2022
Before DAVIS, SMITH, and ENGELHARDT, Circuit Judges.
Pеtitions for Review of Orders of the Federal Energy Regulatory Commission. Nos. RP20-1204, RP20-1236, RP20-1206, RP20-1233. United States Court of Appeals Fifth Circuit FILED July 19, 2022 Lyle W. Cayce Clerk
JERRY E. SMITH, Circuit Judge:
The Bankruptcy Code allows debtors to breach and cease performing executory contracts if the bankruptcy court approves. We thus have held that debtors may “reject” regulated energy contracts even if the Federal Energy Regulatory Commission (“FERC“) would not like them to. Off. Comm. of Unsecured Creditors of Mirant Corp. v. Potomac Elec. Power Co. (In re Mirant Corp.), 378 F.3d 511, 515 (5th Cir. 2004). A sister circuit agrees, FERC v. FirstEnergy Sols. Corp. (In re FirstEnergy Sols., Corp.), 945 F.3d 431, 446 (6th Cir. 2019), and we confirmed our view mere months ago, FERC v. Ultra Res., Inc. (In re Ultra Petroleum Corp.), 28 F.4th 629, 634 (5th Cir. 2022).
Nevertheless, FERC persisted. Anticipating the petitioner‘s insolvency, FERC issued four orders purporting to bind the petitioner to continue performing its gas transit contracts even if it rejected them during bankruptcy. The petitioner asks us to vacate those orders. Because FERC cannot countermand a debtor‘s bankruptcy-law rights or the bankruрtcy court‘s powers, we grant the petitions for review and vacate the orders.
I.
We start with legal background. We then turn to the facts. After addressing the facts developed in the agency proceedings, we review the history of Gulfport‘s bankruptcy, which began after FERC issued the subject orders.
The parties dispute how two legal regimes—the Bankruptcy Code and the Natural Gas Act—interact. But their dispute is narrow. The question is how a bankrupt debtor‘s power to reject executory contracts interacts with FERC‘s power to decide whether a party may change or cancel filed-rate contracts, which the agency regulates. To answer that question, we must review what rejection does and then explain how it relates to the Natural Gas Act.
The Bankruptcy Code empowers debtors, “subject to the court‘s approval,” to “assume or reject аny executory contract.”
That tool might seem unhelpful. Breaching a contract does not erase that contract; it entitles the contract‘s counterparty to seek damages for the debtor‘s nonperformance. Id. at 1658. But here‘s the rub: Most debtors are broke and cannot pay in full that damages claim. Ibid. So “in a typical bankruptcy,” the counterparty to a rejected contract “may receive only cents on the dollar” for its claim against the debtor, yet the debtor will retain the benefit of having ceased performance. Ibid. In that way, “rejection can release the debtor‘s estate from burdensome obligations that can impede a successful reorganization.” Ultra, 28 F.4th at 636 (quoting Mirant, 378 F.3d at 517).
The Naturаl Gas Act (“NGA“) regulates firms that move and sell natural gas in interstate commerce.
About two decades ago, FERC tried to assert its rate-setting authority under the FPA to block Mirant, a power company, from rejecting filed-rate contracts in bankruptcy. Mirant, 378 F.3d at 514-15. Because the FPA says a power company cannot “modify” or “abrogate” its rates without FERC‘s approval, FERC declared that Mirant needed its permission to reject any filed-rate contract. Id. at 519.
This court disagreed. Id. at 515. We explained that FERC had misconstrued the effect of rejection. Rejection does not change or cancel a contract; it breaches that contract, id. at 519, giving the debtor‘s cоunterparty a damages claim for the value of the debtor‘s continued performance, id. at 520. The contract itself does not change; nor does the filed rate. No change is wrought where the counterparty‘s claim for damages is “calculated using the filed rate,” id. at 519, even if the debtor cannot pay that claim in full, id. at 521. Thus, the panel concluded, Mirant did not need FERC‘s consent to reject its filed-rate contracts, and FERC could not
At first, FERC acknowledged Mirant.3 But three years ago, FERC decided that Mirant need not be followed. FERC declared that Pacific Gas & Electric would need its approval before rejecting its filed-rate power purchase agreements in bankruptcy.4 FERC did the same in other cases, including ETC Tiger Pipeline, LLC, 171 FERC ¶ 61,248, at ¶ 20, reh‘g denied, 172 FERC ¶ 61,155 (2020), which addressed contracts filed per the NGA, like the gas transit contracts in this case.
FERC‘s decrees pressed the rationale that Mirant repudiated: namely, that rejection “modif[ies] or abrogate[s]” a filed-rate contract. ETC Tiger, 172 FERC ¶ 61,155, at ¶ 4. To justify that position, FERC claimed that the effect of rejection on filed-rate contracts is legally “unsettled,” citing a 2006 district-court opinion from New York5 and, curiously, Mission Product Holdings, Inc. v. Tempnology, LLC,6 in which the Supreme Court confirmed that “rejection is breach and has only its consequences.”7 FERC offers the same reasons to justify the orders before this court.
B.
Our petitioner, Gulfport Energy Corporation, produces natural gas. Through transportation service agreements (“TSAs“), Rover Pipeline, who intervened in this appeal, agreed to transport Gulfport‘s gas through its pipelines. The TSAs are executory contracts. They establish the “maximum daily quantity” of gas that Gulfport may push through Rover‘s pipelines, as well as the rates Rover may charge for that service.
The COVID-19 pandemic crushed demand for energy and, with it, the price of oil and natural gas. That shock strangled many energy producers, including Gulfport. By summer 2020, Gulfport‘s financial outlook was grim: In its quarterly financial filing, Gulfport warned that decreased commodity pricеs “ha[d] significantly impaired the Company‘s ability to access capital markets and to refinance its existing indebtedness.” Gulfport‘s management doubted “the Company‘s ability to continue as a going concern.”
That revelation worried Rover. If Gulfport failed, it might reject the TSAs and, being insolvent, pay Rover cents on the dollar for its due under those contracts. Preferring to get paid in full for moving Gulfport‘s gas, Rover petitioned FERC. Rover asked FERC to announce that it had exclusive jurisdiction over the TSAs, so that Gulfport would have to get FERC‘s approval before rejecting those contracts in bankruptcy. Rover also asked the agency to hold an expedited paper hearing to determine whether continued performance
In two orders, FERC gave Rover everything it wanted.
FERC first granted Rover‘s petition for a declaratory order. After noting that the TSAs are filed-rate contracts, FERC asserted “parallel, exclusive jurisdiction” over them. It then declared, contrary to Mirant, that “rejection” of a filed-rate contract “in bankruptcy court alters the essential terms and conditions” of that contract. And because “the Commission‘s approval is required to modify or abrogate [a] filed rate,” FERC continued, Gulfport would need FERC‘s approval before rejecting any TSA during bankruptcy. FERC also stated that the bankruptcy court could not confirm any reorganization plan that rejected a TSA “unless and until the Commission agrees, or the plan . . . is made contingent on Commission approval.” And FERC agreed to hold an expedited paper hearing “to determine whether the public interest presently requires that th[e] [TSAs‘] filed rates should be abrogated or modified.”
A month later, after a flurry of filings, FERC issued an order in the promised paper hearing. FERC found “that the public interest does not prеsently require the modification or abrogation of the Gulfport TSAs,” because the rates “currently on file and in effect remain just and reasonable” under the Mobile-Sierra standard.8 Again asserting exclusive jurisdiction to allow rejection of filed-rate contracts, FERC purported to require Gulfport to continue performing the TSAs.
FERC then denied rehearing of the first order. The next day, Gulfport filed for bankruptcy and moved the bankruptcy court to allow it to reject the TSAs.9 Two months later, FERC denied rehearing of the second order. Gulfport timely petitioned this court for review10 of both orders and the denials of rehearing.11 We review those four orders here.
C.
While awaiting our decision on its petitions, Gulfport continued trying to reject the TSAs in its bankruptcy proceedings. But Rover objected that the bankruptcy court “lacked exclusive subject matter jurisdiction over [Gulfport‘s] rejection request” because FERC had already asserted
In an emphatic order, the bankruptcy judge urged the district court to deny Rover‘s motion to withdraw the reference. The bankruptcy court blasted Rover for “obtaining an advisory order from FERC” to obstruct and “avoid the Court‘s proper exercise of its jurisdiction over [the] pure bankruptcy matter” of rejection. “Th[at] tactic and associated arguments,” the bankruptcy judge continued, “have been repeatedly rejected and are contrary to established Fifth Circuit precedent.”
The bankruptcy judge issued his recommendation in January 2021 and asked the district court to consider it quickly. The district court promptly withdrew the reference. The bankruptcy court then confirmed Gulfport‘s reorganization plan, subject to the ruling on Rover‘s objections.
Then Ultra, 28 F.4th 629 (5th Cir. 2022), reaffirmed our position in Mirant. Ultra‘s facts are nearly the same аs ours: An energy company, Ultra, filed for bankruptcy and moved to reject its NGA filed-rate contracts with REX, a pipeline company. REX and FERC objected to the bankruptcy court‘s jurisdiction on the ground that FERC had not approved rejection.
Declaring the jurisdictional question “settled,” this court affirmed the bankruptcy court. Id. at 639. Under Mirant, we explained, “a bankruptcy court can authorize rejection of a filed-rate contract and, post-rejection, FERC cannot require continued performance on the rejected contract.” Ibid. (cleaned up). We observed that accepting FERC‘s position would create a circuit split. Id. at 641 (citing FirstEnergy, 945 F.3d at 451). And we rejected FERC‘s claim that only “full proceedings before the Commission” could satisfy the bankruptcy court‘s duty to solicit FERC‘s views before approving rejection. Id. at 642-43. We also reiterated that rejection, being just a breach, does not change or cancel a filed-rate contract. Id. at 643.
After Ultra came two relevant developments. First, the agency now claims, for the first time, that Gulfport‘s petitions for review are nonjusticiable. Either Ultra moots Gulfport‘s petition for review, FERC says, or Gulfport lacks standing to challenge the agency‘s orders. Second, on July 13, the district court dismissed Rover‘s objections and returned Gulfport‘s rejection motions to the bankruptcy court.13 Applying Ultra and Mirant, the district court stated that “the bankruptcy court has authority to reject [Gulfport‘s] agreement[s] with Rover without conflicting with FERC‘s authority to regulate filed rates.” The court then instructed the bankruptcy court “to calculate damages resulting from [Gulfport‘s] breach of contract using the filed rates.”
II.
Gulfport challenges FERC‘s orders on two grounds. The first is that FERC lacked statutory authority to issue them. The second is that the orders are unlawful. But before we reаch those questions, we must decide whether Gulfport‘s challenge is justiciable, and we conclude that it is.
A.
Jurisdiction comes first,14 and we review it de novo.15
We first note that Congress has authorized us to review FERC orders. The Administrative Procedure Act empowers this court to review “[a]gency action made reviewable by statute.”
The aggrievement requisite all but duplicates the traditional requisites for Article III standing.16 A party is not “‘aggrieved’ by a FERC decision unless its injury is ‘present and immediate.‘” Brooklyn Union Gas, 190 F.3d at 373 (citаtion omitted). The order must “definitively” affect the petitioner‘s rights and “threaten the petitioner with irreparable harm,” ibid. (cleaned up), which is harm that “cannot be altered by subsequent administrative action,” Energy Transfer Partners, L.P. v. FERC, 567 F.3d 134, 139 (5th Cir. 2009) (citation omitted). Aggrieving orders thus include those that “command the petitioner to do or refrain from doing something,” “significantly change the petitioner‘s status or condition to his detriment, or presently deprive him of his property.” Tenneco, Inc. v. FERC, 688 F.2d 1018, 1021 (5th Cir. 1982) (cleaned up). They also include orders that “impos[e] . . . a Hobson‘s choice” by threat of “criminal and civil penalties.” Pennzoil Co. v. FERC, 645 F.2d 394, 400 (5th Cir. May 1981). But mere delay or inconvenience from having to endure or await further proceedings generally does not aggrieve a party. See, e.g., id. at 399–400; Tenneco, 688 F.2d at 1022-23.
Gulfport contends that it is “undeniably ‘aggrieved‘” in three ways. First, Gulfport has had to “defend itself” in the bankruptcy proceedings from Rover‘s contentions that FERC‘s orders prevent the court from authorizing rejection of the TSAs. Gulfport stresses that Rover presented FERC‘s orders to that court as “‘binding’ and ‘entitled to preclusive effect,’ thereby prohibiting Gulfport from rejecting the TSAs and finalizing its restructuring.” Second, Gulfport says that it has had to defend itself from orders and proceedings that FERC did not have the power to impose. Third, Gulfport protests the threatened legal consequences of FERC‘s orders—namely, the denial of its bankruptcy-law right to reject its contracts.
The first injury does not suffice. Gulfport complains that it has had to confront
A similar problem afflicts the second injury. Gulfport frames that injury as the cost of the proceedings that FERC has imposed—the “time and resources” Gulfport has expended to “defend itself” in unlawful agency proceedings. That injury is traceable to FERC‘s orders. Yet time and again, the Supreme Court and this court have said that mere “expense and annoyance” inflicted by agency proceedings does not aggrieve a party.19
Throughout its briefing, however, Gulfport asserts a third injury: the legal effects of FERC‘s orders.20 It contends that the orders purport to block it from ceasing performance of rejected filed-rate contracts, which the law entitles Gulfport to do. Gulfport also attacks FERC‘s position that “the act of filing a contract with FERC creates a separate and independent ‘filed rate’ obligation that enshrines the terms of the contract into federal law,” nullifying the effects of rejection.21 If
That injury sustains Gulfport‘s standing. FERC‘s orders left no doubt that Gulfport could not reject the TSAs or cease performing them without its approval—no matter what the bankruptcy court decided. Because the “rejection of a [filed-rate] contract in bankruptcy court alters the essential terms and conditions” of that contract, the orders explained, “the Commission‘s approval is required to modify or abrogate the filed rate.” The orders even purportеd to bind the bankruptcy court, warning that the court could not confirm a reorganization plan “that purports to authorize the . . . rejection of the Gulfport TSAs . . . unless and until the Commission agrees.”
The paper-hearing order reiterated those findings and concluded that continued performance under the TSAs would not harm Gulfport. If affirmed, those orders would confine Gulfport‘s bankruptcy-law rights and the bankruptcy court‘s power to permit their exercise. That injury to a petitioner‘s legal rights is classic aggrievement. Atlanta Gas Light Co. v. FPC, 476 F.2d 142, 147–48 (5th Cir. 1973).
That injury might not matter if FERC‘s orders suggested only how the agency might act in some later case, see, e.g., Sun Oil Co. v. FPC, 304 F.2d 290, 292 (5th Cir. 1962), or if the agency had no power to enforce its orders.22 But neither circumstance is present here.
To the first point, FERC insists that its orders have legal force. FERC even says that we must defer to the orders, see Chevron U.S.A. v. Nat. Res. Def. Council, 467 U.S. 837, 842–43 (1984), so far as they interpret FERC‘s “juris-diction and responsibilities” under the statutes the agency administers.23 And Congress doubtless expects FERC‘s formal adjudications to carry the force of law. See United States v. Mead Corp., 533 U.S. 218, 229–31 (2001);
To the second point, FERC can enforce its orders. The NGA authorizes civil penalties against “[a]ny person” who “violates . . . any . . . [Commission] order,”
Where a petitioner is himself “an object of the [government] action” he says is illegal, “there is ordinarily little question that the action . . . caused him injury, and that a judgment preventing . . . the action will redress it.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561–62 (1992). So here.
Gulfport has standing.
Likewise, the orders are ripe for review.
“Ripeness doctrine reflects Article III limitations on judicial power.” Cochran v. SEC, 20 F.4th 194, 212 (5th Cir. 2021) (en banc) (cleaned up), cert. granted, 142 S. Ct. 2707 (2022). “At its core, ripeness is a matter of timing that serves to prevent courts from entangling themselves in cases prematurely.” Walmart Inc. v. U.S. Dep‘t of Just., 21 F.4th 300, 312 (5th Cir. 2021).24 “The ripeness inquiry hinges on two factors: (1) the fitness of the issues for judicial decision; and (2) the hardship to the parties оf withholding court consideration.” Cochran, 20 F.4th at 212 (cleaned up).25 Both factors point toward justiciability here.
The orders are fit for review. A matter is fit for review when it presents pure legal questions that require no additional factual development. Ibid. That‘s true here. According to Gulfport, FERC lacked statutory jurisdiction to issue the orders and, by misapprehending the effect of rejection in bankruptcy, flouted our caselaw and the Bankruptcy Code. Those are pure legal questions that require no further factual development. The challenged orders are final, the record is complete, and FERC has stated its views. It‘s clear “exactly what obligations” FERC purports to impose on Gulfport, so the orders are fit for our review. Walmart, 21 F.4th at 311.
Gulfport also suffers hardship from the orders. To assess hardship, we examine the effect of the agency decision on the petitioner. Abbott Lab‘ys, 387 U.S. at 152. If it is “sufficiently direct and immediate,” review is appropriate. Ibid. Finality is agаin relevant. If the risk that the order poses to the petitioner will ripen into injury only after the agency takes, or does not take, some further action, then the matter “remain[s] open for contest” and thus is “not ripe for decision.” Brooklyn Union Gas, 190 F.3d at 374. But here, FERC‘s orders are final and unequivocal. No further action is necessary for those orders to bind Gulfport. That purported legal effect, plus the agency‘s allegedly wrongful assertion of jurisdiction, harms Gulfport today. If we can‘t review the orders now, they will be unreviewable.
The pendency of Gulfport‘s rejection motions before the bankruptcy court does not render this dispute unripe. Ripeness does not demand that an injury be certain. Instead, the feared injury need only be “sufficiently likely to happen to justify judicial intervention,” and not “abstract or hypothetical.” Chevron U.S.A., Inc. v. Traillour Oil Co., 987 F.2d 1138, 1153 (5th Cir. 1993) (citation omitted). That standard is met here. As the district court explained, Ultra forecloses Rover‘s objections to rejection. And the bankruptcy court‘s opinion on withdrawal of the reference leaves little doubt that the court will allow Gulfport to reject the disputed contracts.
But even if the bankruptcy court did not allow rejection, this court still would have to decide whether FERC had statutory
Both points hold true here. Only this court can review FERC‘s statutory authority to issue the orders, and only this court can vacate the orders. Though the bankruptcy court could block FERC from “negat[ing] [Gulfport‘s] rejection,” Ultra, 28 F.4th at 638 (citation omitted), it could not do more than opine on the agеncy‘s assertion of jurisdiction—lest it exceed its own jurisdiction.26 Unless we review the orders, Gulfport could not challenge them.
Cochran confirms that this dispute is ripe. There, the en banc court allowed a challenge to the “entire legitimacy” of proceedings before an administrative law judge even though the agency proceedings had yet to conclude. 20 F.4th at 209. The challenge was ripe because withholding review would have forced the petitioner to endure an unlawful proceeding, which, if resolved in her favor on the merits, would destroy her ability to contest its legality. Id. at 212-13. Surely if a challenge is ripe during the unlawful proceedings, it is ripe after they occur.
FERC‘s orders are definitive, and they injure Gulfport. They are ripe for review in this court.
C.
Mootness is our last stop. FERC contends that Ultra mooted Gulfport‘s petitions for review by clarifying that bankruptcy courts “may authorize a valid rejection of FERC-jurisdictional contracts” without the agency‘s approval. Though FERC correctly states Ultra‘s holding, it does not moot Gulfport‘s petitions.
“A case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.” Chafin v. Chafin, 568 U.S. 165, 172 (2013) (cleaned up). Thus, mootness results when a party receives complete relief in another judicial proceeding.27
But Ultra gave Gulfport no relief at all; it relieved different debtors from different filed-rate contracts. Gulfport asks us to vacate agency orders regarding its own filed-rate contracts. So long as those orders remain in force, Gulfport retains “a concrete interest . . . in the outcome of the litigation,” and that means “the case is not moot.” Chafin, 568 U.S. at 172 (citation omitted).
Nor has FERC conceded the merits of this dispute, such that no case or controversy remains. Though its supplemental briefing acknowledges that Ultra confines the agency‘s power in some respects, FERC has not disclaimed its asserted power to require continued performance of filed-rate contracts after a valid rejection. Nor does it concede that it lacked statutory
Those are not concessions. This dispute is live.
III.
Having confirmed our jurisdiction, we proceed to the merits.
Gulfport attacks FERC‘s orders on two fronts. Gulfport first says that FERC lacked authority to issue them. It then contends that the orders are unlawful because they violate the Bankruptcy Code and purport to restrain Gulfport‘s bankruptcy-law rights and the powers of the bankruptcy cоurt.
FERC did have authority to issue the orders. But because the orders rested on an inexplicable misunderstanding of rejection, we vacate them all.
A.
Gulfport‘s challenge to FERC‘s authority goes like this: The agency, “in its sound discretion, may issue a declaratory order to terminate a controversy or remove uncertainty.”
But whether FERC‘s order in fact created uncertainty is not the question. We must decide whether the agency abused its discretion. Merchs. Fast Motor Lines v. ICC, 5 F.3d 911, 915–16 (5th Cir. 1993).29 In other words, did FERC “articulate a satisfactory explanation for its decision, including a rational connection between the facts found and the choice” to issue the order? Dep‘t of Com. v. New York, 139 S. Ct. 2551, 2569 (2019) (cleaned up).30 That bar is low, and FERC clears it.
Gulfport points to some facts that suggest otherwise. When FERC issued the declaratory order, “Gulfport had not filed for bankruptcy, much less moved to reject any TSA.” Plus, FERC had stated its views on the rejection of filed-rate contracts in at least two other administrative adjudications. The declaratory order set a
True, Gulfport had not sought bankruptcy protection when the agency issued its order. And we agree that a declaratory order unmoored from any real-world controversy would exceed the agency‘s power.31 But FERC did not issue its orders because someone, someday might file for bankruptcy. Cf. Hollister Ranch Owners’ Ass‘n v. FERC, 759 F.2d 898, 903 (D.C. Cir. 1985). It issued them because Gulfport had announced to the world that it might file for bankruptcy. In a public financial filing, Gulfport had warned that market conditions had “significantly impaired its ability to access capital markets” and created “‘substantial doubt’ about [its] ability to continue” operating. That admission suggested that the legal status of Gulfport‘s filed-rate contracts might soon be disputed in bankruptcy. FERC did not abuse its discretion by trying—however clumsily—to assuage that uncertainty.
We attribute no significance to the fact that FERC had stated its views on rejection in other administrative proceedings. Those proceedings did not bind Gulfport or address Gulfport‘s filed-rate contracts. And they did not diсtate the orders here: Before issuing those orders, FERC could have changed its views or declined to extend them to Gulfport and its contracts.
FERC gave rational reasons for finding that its orders would remove uncertainty, so it had authority to issue them. We find no abuse of discretion there. Cf. Dep‘t of Com., 139 S. Ct. at 2569.
B.
But the orders are unlawful. Each rests on the premise that rejecting a filed-rate contract in bankruptcy is something more than a breach of contract. That premise is wrong, so we must vacate the orders.
Let‘s first review what the principal orders had to say.
FERC‘s declaratory order asserted “parallel, exclusive jurisdiction” over Gulfport‘s filed-rate contracts. By that oxymoron, the agency meant that only it could decide whether to effect a rejection that a bankruptcy court had authorized. “The rejection of a [filed-rate] contract in bankruptcy court,” the order explained, “alters” that contract‘s “essential terms and conditions.” And because the NGA empowers the agency to decide whether to “modify or abrogate [a] filed rate,” see
Next came the paper-hearing order. To no one‘s surprise, FERC accepted Rover‘s
Both orders thus purport to require Gulfport to continue performing contracts that it would reject in bankruptcy. They even purport to bar the bankruptcy court from allowing rejection. Those ambitious holdings assume that rejecting a contract changes or cancels the obligations under that contract. That assumption is wrong. It flouts the Bankruptcy Code, Supreme Court precedent, and the caselaw of every federal circuit.
Rejection does not change or rescind a contract. It breaches that contract, excusing thе debtor‘s future performance but converting it into a claim for damages. The Bankruptcy Code says that: “[T]he rejection of an executory contract . . . of the debtor constitutes a breach of such contract or lease.”
The hornbook law of rejection yields a clear answer. Rejection is just a breach of contract; it transforms the debtor‘s future performance into an unsecured claim for damages. Mirant, 378 F.3d at 520 (citing
FERC urges that this dispute is different because it involves filed-rate contracts. But we have twice rejected that contention, and we again reject it today. Mirant held, and Ultra reaffirmed, that “a bankruptcy court can authorize rejection of a filed-rate contract, and that, post-rejection, FERC cannot require continued performance on the rejected contract.” Ultra, 28 F.4th at 639; accord Mirant, 378 F.3d at 523. With filed-rate contracts, as with others, rejection is a breach and has only its consequences. Mission Prod., 139 S. Ct. at 1662.
Nor will we defer to FERC‘s bizarre view of rejection. We sometimes defer to an agency‘s “permissible construction” of a statute it administers. City of Arlington, 569 U.S. at 296 (quoting Chevron, 467 U.S. at 843). But FERC does not administer the Bankruptcy
Rover, the pipeline company, contends that we need not follow Mirant or Ultra here. It offers three reasons. Each is meritless.
The first is that Gulfport seeks review of FERC orders, not bankruptcy-court orders as in Mirant and Ultra. That distinction is meaningless. The posture of these petitions for review does not change the effect of rejection or the agency‘s powerlessness to require continued performance of a rejected contract.
The second is that FERC “completed its administrative process before Gulfport filed [for] bankruptcy.” There is no basis for that distinction. FERC cannot require continued performance of a filed-rate contract that is validly rejected—whether it purports to do so before, during, or after the bankruptcy proceeding. The proper forum for FERC‘s views is the bankruptcy court, which must invite those views but is free to reject them. See Ultra, 28 F.4th at 642-43.
The third reason, Rover says, is that the Supreme Court overruled Mirant and Ultra. Mirant held that rejecting a filed-rate contract just breaches that contract. Mirant premised that holding, Rover says, on a “negative inference” from the fact that no part of the statute governing rejection requires the input of regulatory commissions like FERC. But Mission Product, Rover claims, “rejected this very same negative inference in the very same statute, holding that
Rover misreads Mission Product. The rejector in Mission Product had invoked a different negative inference: that Congress had abandoned the rule that rejection is just a breach of contract by enumerating exceptions to it. Dismissing that view, the Court observed that Congress devised the statute‘s “exceptions” to “whack[]” judicial decisions that had treated rejection as something more than a breach of contract. Mission Prod., 139 S. Ct. at 1664.36 So Mission Product confirmed Ultra and Mirant; it did not overrule them.
*
FERC can decide whether actual modification or abrogation of a filed-rate contract would serve the public interest. It even may do so before a bankruptcy filing. But rejection is just a breach; it does not modify or abrogate the filed rate, which is used to calculate the counterparty‘s damage. So FERC cannot prevent rejection. It cannot bind a debtor to continue paying the filed rate after rejection. And it cannot usurp the bankruptcy court‘s power to decide Gulfport‘s rejection motions.
That leaves the question of remedy. We may “affirm, modify, or set aside” FERC orders “in whole or in part.”
The petitions for review are GRANTED. The four challenged orders are VACATED.