969 F.2d 1215 | D.C. Cir. | 1992
Opinion for the court filed by Circuit Judge RANDOLPH.
Section 1(b) of the Natural Gas Act of 1938, 15 U.S.C. § 717(b), confers authority on the Federal Energy Regulatory Commission to regulate three subjects: “[1] the transportation of natural gas in interstate commerce, [2] ... the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and [3] ... natural-gas companies engaged in such transportation or sale____”
The issue arises as follows. Pipelines of petitioner Mississippi River Transmission Corporation (MRT) transport natural gas
We shall deal later with the sufficiency of FERC’s reasons for imposing the condition. The initial question is whether section 1(b) empowered FERC to act.
I
FERC is not barred from regulating a pipeline’s interstate transportation of natural gas merely because the sale of the gas being transported is not itself subject to federal regulation. FERC’s authority over such transactions is beyond dispute. See FPC v. East Ohio Gas Co., 338 U.S. 464, 468, 70 S.Ct. 266, 268, 94 L.Ed. 268 (1950). MRT therefore had to obtain from FERC a certificate of public convenience and necessity before going forward. For this reason, MRT’s objection is not that FERC was entirely precluded from regulating this transaction. It is rather that FERC’s section 1(b) authority to regulate the transaction does not extend to setting a minimum charge for transporting the gas — which MRT describes as the equivalent of FERC’s setting a rate for a direct sale, a subject outside of section 1(b).
We detect nothing in section 1(b) that would compel MRT’s characterization of FERC’s order. The agency did not so view it; FERC specifically disclaimed any intention to “fix[ ] rates for the direct sale of gas.” Mississippi River Transmission Corp., 54 F.E.R.C. ¶ 61,122, at 61,411 (1991). The order, FERC said, only mandates a “minimum rate for the transportation component” of the service; MRT still
MRT thinks the proviso in section 1(b) supports its position, but we cannot see how. After specifying the three subjects FERC may regulate, section 1(b) states that the provisions of the Act “shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.” There is nothing in this language to suggest that Congress intended to limit FERC’s ability to regulate the subjects within its jurisdiction. According to the House Report, adopted by the Senate, the proviso is
not actually necessary, as the matters specified therein could not be said fairly to be covered by the language affirmatively stating the jurisdiction of the Commission, but similar language was in previous bills, and, rather than invite the contention, however unfounded, that the elimination of the negative language would broaden the scope of the act, the committee has included it in this bill.
H.R.Rep No. 709, 75th Cong., 1st Sess. 3 (1937); see also S.Rep. No. 1162, 75th Cong., 1st Sess. 3 (1937). As applied to this case, the passage just quoted suggests that FERC has jurisdiction over the transportation in interstate commerce of natural gas and no more, which in turn suggests that FERC’s authority over transportation is not limited in the manner MRT urges.
The same conclusion follows from the Supreme Court’s pronouncements regarding section 1(b). The Court has several times considered the border between state and federal regulation. Stressing that the Natural Gas Act was “ ‘meant to create a comprehensive and effective regulatory scheme,’ ” the Court has asked “whether state authority can practicably regulate a given area.” FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 19, 81 S.Ct. 435, 445, 5 L.Ed.2d 377 (1961) [hereinafter Transco ] (quoting Panhandle Eastern Pipe Line Co., 332 U.S. at 520, 68 S.Ct. at 197); see FPC v. Louisiana Power & Light Co., 406 U.S. 621, 640-41, 92 S.Ct. 1827, 1838-39, 32 L.Ed.2d 369 (1972); East Ohio Gas Co., 338 U.S. at 471-72, 70 S.Ct. at 270-71. Here the answer is relatively clear. States cannot as effectively regulate the interstate transportation of gas bundled for direct sale to customers for the simple reason that the primary concern of state regulators is the interests of their state’s citizens, who doubtless would prefer to pay less for transportation than those outside the state. (Concerns of the same sort underlie many of the Court’s dormant commerce clause decisions. See, e.g., Missouri v. Kansas Natural Gas Co., 265 U.S. 298, 310, 44 S.Ct. 544, 546, 68 L.Ed. 1027 (1924); Pennsylvania Gas Co. v. Public Serv. Comm’n, 252 U.S. 23, 31, 40 S.Ct. 279, 281, 64 L.Ed. 434 (1920).) Thus, as in Transco, “[t]he very nature of the present problem, entailing as it does considerations that overstep the bounds of any one State, illustrates the improbability that state commissions could or would attempt to deal with it; it seems clear that considerations of this sort are uniquely fitted for federal scrutiny.” Transco, 365 U.S. at 27, 81 S.Ct. at 449.
MRT asserts that by regulating the transportation component of bundled, direct sale service, FERC will “emasculate” state authority over direct sales. We do not understand why. The condition FERC imposed here is scarcely as devastating as
Quoting from Transco, intervenors Florida Gas Transmission Company and the Interstate Natural Gas Association of America contend that, when a direct sale is involved, FERC may “only exercise a veto power over the proposed transportation.” 365 U.S. at 17, 81 S.Ct. at 444. They have taken this language, which the Court borrowed from a law review article (Koplin, Conservation and Regulation: The Natural Gas Allocation Policy of the Federal Power Commission, 64 Yale L.J. 840, 862 (1955)), out of context. The issue in Transco was whether FERC’s predecessor could consider the end use to which gas would be put. Recognizing that the agency lacked comprehensive power over conservation and that it could not ban all direct sales for use under industrial boilers, the Court nonetheless found that it could consider how end use affects the public interest and convenience. In the passage from which the intervenors quote, the Court explained that this distinction between consideration of conservation as a factor and complete allocation power reflects FERC’s limited powers under section 7 of the Act: “The Commission cannot order a natural gas company to sell gas to users it favors; it can only exercise a veto power over proposed transportation and it can only do this when a balance of all the circumstances weighs against certification.” 365 U.S. at 17, 81 S.Ct. at 444 (footnote omitted). Nothing in this passage deals with the agency’s conditioning power; the agency had not imposed any conditions in Transco. Moreover, if we were to accept intervenors’ reading, we would have to suppose that the Court meant to nullify section 7(e) of the Act, 15 U.S.C. § 717f(e), which confers upon FERC “the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.”
FERC has adopted a straightforward reading of section 1(b) amply supported by forty years of Supreme Court decisions.
II
Apart from its challenge to FERC’s interpretation of section 1(b), MRT insists that the condition FERC imposed is unreasonable. The condition requires MRT to charge its direct sale customers no less than the maximum rate in its open access transportation tariff for the transportation component of its service — ostensibly to prevent MRT from unduly preferring those customers over its regular transportation or “open access” customers. Mississippi River Transmission Corp., 51 F.E.R.C. at 61,156. In its petition for rehearing, MRT contended that many of its competitors are not subject to such restrictions. Some are intrastate pipelines, and the states regulating them may allow them to discount their transportation services freely. Others are suppliers; they can negotiate selective discounts on their transportation costs from pipelines holding open access certificates. (Pipelines holding open access certificates can offer a range of transportation rates, from a maximum of their “fully allocated” rate down to a minimum reflecting their average variable cost. 18 C.F.R. §§ 284.-7(a)(4)(ii), 284.7(d)(5)(ii); see generally ANR Pipeline Co. v. FERC, 876 F.2d 124, 127-28 (D.C.Cir.1989).) But for FERC’s condition, MRT could — subject to any state regulation — discount its transportation costs as well. As a consequence, MRT asserted, FERC’s condition places it at a competitive disadvantage and is, therefore, inconsistent with the policies implicit in recent FERC rules like Order No. 436, 50 Fed.Reg. 42,-408 (1985), vacated in part and remanded sub nom. Associated Gas Distribs. v. FERC, 824 F.2d 981 (D.C.Cir.1987), cert. denied, 485 U.S. 1006, 108 S.Ct. 1468, 99 L.Ed.2d 698 (1988).
FERC detected two flaws in MRT’s argument. First, Order No. 436’s endorsement of competition was qualified. While the Order found that the “workably competitive market” for natural gas dictated that pipelines be allowed to discount transportation services, it did not allow selective discounting of bundled services on the theory that with such services “the potential for market dominance by the pipeline is so great that more traditional utility-type regulation is required.” Mississippi River Transmission Co., 54 F.E.R.C. at 66,411 (quoting Order No. 436 at 42,413). Second, FERC concluded that its condition did not put MRT at a competitive disadvantage because, by unbundling its transportation and sale services, it could selectively discount its transportation rates. Id.
MRT has no answer to these arguments. It asserts that its direct sale customers prefer bundled service, but it fails to explain why. No legitimate explanation being apparent, we see no reason to question FERC’s implicit conclusion that bundled and unbundled service are adequate substitutes for each other. See 15 U.S.C. § 717r(b).
MRT also attacks the order on the ground that FERC imposed an unreasonably high floor on the transportation component of its bundled rate. According to MRT, the floor is higher than the competitive rate for the bundled service as a whole. Because this objection was first raised at oral argument, we may not consider it here. Id.; see also McBride v. Merrell Dow & Pharmaceuticals, Inc., 800 F.2d 1208, 1210-11 (D.C.Cir.1986).
The petition for review is denied.
. Section 1(b) of the Natural Gas Act provides:
The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.
15 U.S.C. § 717(b).
. Late on April 17, 1992, two business days before oral argument in this case, FERC filed a motion to remand. FERC did not obtain, did not even request, leave to file the motion, thereby violating our local rule requiring such leave for all potentially dispositive motions submitted more than forty-five days after the docketing of an appeal. Local Rule 7(i)(l). This is not some procedural peccadillo. Rule 7(i) is designed to facilitate resolution of such motions before the parties have sunk time, effort and expense into preparing their briefs and before the court has reviewed and analyzed the case. See Local Rule 7(i)(2). Absent unusual circumstances (and, in the case of a motion filed two days before oral argument, extraordinary ones), our concern for conserving the resources of this court and of the parties precludes consideration of a dispositive motion filed after the forty-five day period. FERC’s last-minute filing ignored this rule and the policy behind it. For that reason alone, we deny it.
Another serious defect warrants comment. Rule 27(a) of the Federal Rules of Appellate Procedure requires a movant to "state with particularity the grounds on which [the motion] is based.” Rather than particularity, FERC provided obfuscation. FERC’s motion stated only that it would like to "reconsider its ruling in this case in light of its developing policies regarding gas transportation” and cited, without explanation, a single case, National Fuel Gas Supply Corp. v. FERC, 899 F.2d 1244 (D.C.Cir.1990). No one reading this motion could tell what FERC had in mind or what it intended to do with the case if it were returned. FERC offered not a clue about what its "developing policies" were, when they began developing, how far along they had proceeded, or why they might affect the petition for review. Only at oral argument, after considerable prodding from the bench, did FERC reveal what it had in mind. We will not go into what was then said. It is enough to express our extreme displeasure over FERC’s tactics and its disregard of the governing rules. Cf. Freeport McMoran Oil & Gas Co. v. FERC, 962 F.2d 45, 46 (D.C.Cir.1992). Any repeat performance will be subject to sanctions.
. MRT also argues that FERC has exceeded its authority by attempting to do indirectly through its conditioning power that which the Act prohibits it from doing directly. See, e.g., Richmond Power & Light v. FERC, 574 F.2d 610, 620 (D.C.Cir.1978). This argument falls with MRT’s interpretation of § 1(b).
. MRT contends that FERC’s interpretation of § 1(b) departs without explanation from two earlier decisions, Florida Gas Transmission Co., 24 F.E.R.C. ¶ 61,005 (1983), and United Gas Pipe Line Co., 54 F.P.C. 1109 (1975). Because MRT did not raise this argument below, it is likely barred from doing so by § 19(b) of the Act, 15 U.S.C. § 717r(b). In any event, we find little merit in it. In those cases, the Commission refused to dictate direct sale rates. That refusal is entirely consistent with its assertion here of authority to regulate the transportation rate imbedded in a bundled, direct sale.