Administrative Law: Scope of Judicial Review Natural Gas Regulation: Refunds; Settlement Agreements

摘要

In earlier litigation, Burlington Resources Oil & Gas Co. v. Federal Energy Regulatory Commission, 396 F.3d 405, 165 O.&GR. 1051 (D.C.Cir. 2005), the D.C. Circuit remanded a FERC decision imposing additional refund obligations on Burlington in excess of the amounts paid by Burlington by virtue of a voluntary agreement with the pipeline companies. On remand, the FERC reaffirms its earlier orders and provides an explanation of why it rejected the Burlington settlement agreements while adopting many of the same principles in what the court calls omnibus settlements with other producers. Held: reversed and order vacated. The settlement agreements deal with alleged violations of Section 601 of the NGPA relating to maximum lawful prices for the first sales of natural gas. (15 U.S.C. § 3431, repealed 1993). In 1993, the FERC rules that reimbursements of the Kansas ad valorem tax could not be added to the maximum price. FERC's decision on remand did not satisfy the court's mandate to explain why the Burlington settlements are unlawful and unenforceable since they are based on the same considerations that the FERC approved in the omnibus settlements. The court finds that FERC's claim of prosecutorial discretion in determining who is entitled to the benefits of the omnibus settlement agreement terms is without merit. Private settlement agreements that allow a producer to retain funds collected pursuant to unlawfully high prices are not per se illegal or unlawful. Without a reasoned and consistent explanation the FERC order must be vacated.