United Airlines, Inc. v. FERC

SFPP and several shippers challenged aspects of three of FERC's orders related to filings by SFPP for cost-of-service tariffs on its pipelines. SFPP disputes FERC’s choice of data for calculating SFPP’s return on equity and the Commission’s decision to grant only a partial indexed rate for the 2009 index year. Shippers claim that FERC’s tax allowance policy for partnership pipelines, such as SFPP, is arbitrary or capricious and results in unjust and unreasonable rates. The court concluded that FERC's choice of data for assessing SFPP's real return on equity was arbitrary or capricious under the Administrative Procedure Act (APA), 5 U.S.C. 706(2)(A), because the Commission provided no reasoned basis to justify its decision to rely on the September 2008 data. Therefore, the court granted SFPP's petition on this issue. The court concluded that FERC's indexing analysis was not arbitrary or capricious where FERC complied with the plain text of its regulations when it found that granting SFPP a full indexed rate adjustment would result in unjust and unreasonable rates. Finally, the court also concluded that FERC must demonstrate that there is no double recovery of taxes for partnership pipelines. Accordingly, the court granted SFPP's petition in part and denied the petition in part. The court granted Shippers' petition and vacated FERC's orders with respect to the double recovery issue, and remanded to FERC. View "United Airlines, Inc. v. FERC" on Justia Law