Rate Regulation: Pipelines; Public Interest Standard Administrative Law: Scope of Judicial Review

摘要

Prior to November 1995, Kansas Pipeline Partnership was regulated as an intrastate pipeline by the Kansas Corporation Commission. Two other entities, KansOk Partnership and Riverside Pipeline Co. were regulated by the FERC. In November 1995, FERC determined that the three entities constitute a single pipeline system subject to FERC jurisdiction. Because Kansas Pipeline Partnership did not have a certificate of public convenience and necessity the FERC order the three entities to apply for one under Section 7 of the Natural Gas Act. Kansas Pipeline Co., the parent entity, challenges the FERC's assertion of jurisdiction. Simultaneously, FERC reviews the initially-proposed rates and in 1997 issues an order amending the proposed rates. After a rehearing, the FERC changes its positions and finds that the company's proposed rates are within the public interest. The challenge to the jurisdiction of the FERC is dropped. An intervenor, the Missouri Public Service Commission, challenges the conclusion that the approved rates meet the public interest standard. Held: petition granted and case remanded. Judicial review of a FERC rate order is deferential under the Administrative Procedures Act. Nonetheless, FERC must articulate a rational connection between the facts found and the choice made. In reviewing the record, the court finds little, if any, support for the FERC's change in position to support the initially proposed higher rates. Likewise, the court finds a lack of support in the record for the four stated rationales given by the FERC for approving the higher rates.