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Public Utils. Comm'n of Cal. v. Federal Energy Regulatory Comm'n

ELR Citation: 31 ELR 20366
Nos. No. 99-1390, 236 F.3d 708/(D.C. Cir., 01/12/2001)

The court holds moot utilities' petition to review four Federal Energy Regulatory Commission (FERC) orders approving three pipeline capacity sales contracts between two natural gas companies. In 1995, a customer of one gas company terminated its contract, leaving a large amount of unsubscribed capacity. To address the excess capacity, the company negotiated a settlement in 1996 with its direct customers that reduced the company's reservation charges, delayed general rate increases, and divided the capacity into three blocks. In 1997, the company then sold the three excess blocks to a second gas company through three separate two-year contracts. Each contract included a revenue reduction mechanism (RRM) that reduced the second company's minimum pay obligation if the first company sold capacity in competition with the second company's resale of the block capacity. The first company then filed for and received FERC approval of the contracts' terms. Several utilities protested claiming that the contracts, particularly the RRM, were anticompetitive and inconsistent with the 1996 settlement. Nevertheless, three subsequent separate FERC orders authorized the contracts. After the two-year contracts expired in 1999, the first company entered into a second series of FERC-approved contracts with another customer. The utilities appealed to federal court contesting the four FERC orders approving the first set of contracts.

The court first holds that the utilities' appeal is moot. The contracts at issue expired in 1999, and the utilities' petition does not fall into the mootness exception for cases that are capable of repetition yet evading review. The utilities met their burden as to the "evading review" requirement because FERC's review of the two-year contracts at issue did not provide enough time to allow their validity to be fully litigated. Nevertheless, the utilities did not satisfy the exception's "capable of repetition" element. The utilities alleged that FERC's approval of the second series of contracts demonstrates that they will be subjected to the same anticompetitive activity. FERC, however, stated that its approval of the RRMs did not represent continuing FERC policy. Further, FERC's method of balancing anticompetitive harm may yield different results in the future. The utilities, therefore, failed to establish a reasonable expectation that FERC's method of balancing will yield anticompetitive harm to them in the future.

The full text of this decision is available from ELR (10 pp., ELR Order No. L-320).

Counsel for Petitioners
Harvey Y. Morris
Public Utilities Commission
505 Van Ness Ave., Rm. 2003, San Francisco CA 94102
(415) 703-4973

Counsel for Respondent
Laura J. Vallance
Federal Energy Regulatory Commission
825 N. Capitol St. NE, Washington DC 20426
(202) 208-0200