United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 13, 2005 Decided October 28, 2005
Reissued December 23, 2005
No. 04-1094
AMERICAN GAS ASSOCIATION,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
PIEDMONT NATURAL GAS COMPANY, INC., ET AL.,
INTERVENORS
Consolidated with
04-1096, 04-1097, 04-1098, 04-1099, 04-1100, 04-1101,
04-1108
On Petitions for Review of Orders of the
Federal Energy Regulatory Commission
Jonathan D. Schneider and Howard L. Nelson argued the
cause for petitioners/intervenors. With them on the briefs were
M. Denyse Zosa, Jeffrey M. Petrash, Frank R. Lindh, Anne K.
Kyzmir, Kelly A. Daly, William T. Miller, Joshua L. Menter,
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Thomas C. Gorak, Grace Delos Reyes, Gary E. Guy, William H.
Roberts, Thomas P. Thackston, Kenneth T. Maloney, James H.
Jeffries, IV, and Dena E. Wiggins. Jay V. Allen, Stephen J.
Keene, Kirstin E. Gibbs, and Susan P. Grymes entered
appearances.
Lona T. Perry, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief were Cynthia A. Marlette, General Counsel, and Dennis
Lane, Solicitor.
Henry S. May, Jr. argued the cause for intervenors Interstate
Natural Gas Association of America, et al., in support of
respondent. With him on the brief were Catherine O’Harra,
Susan S. Lindberg, Joan Dreskin, and Timm L. Abendroth. Paul
M. Teague, Christopher J. Barr, and Patrick J. Hester entered
appearances.
James H. Jeffries, IV, was on the brief for intervenor
Piedmont Natural Gas Company.
Before: GINSBURG, Chief Judge, and EDWARDS and TATEL,
Circuit Judges.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: Three years ago, in Interstate
Natural Gas Ass’n of America v. FERC, 285 F.3d 18, 29 (D.C.
Cir. 2002) (INGAA), we resolved several matters relating to the
Federal Energy Regulatory Commission’s efforts to “increase
flexibility and competition in the natural gas industry,” but
remanded two issues to the Commission for further
consideration. The first issue is whether FERC’s pre-granted
abandonment scheme “appropriately balance[s] the protection
of captive customers with the furtherance of market values.” Id.
3
at 52. Twice the Commission imposed caps on the contract
length existing customers must bid to retain service rights in the
face of competing bids from new customers. Twice we rejected
FERC’s justification for the cap length selected and remanded
the issue for further explanation. In the order now before us the
Commission removed the cap altogether. The second issue
involves FERC’s decision to allow shippers to make what are
known as “forwardhaul” and “backhaul” deliveries of gas “to a
single point in an amount greater than the shipper’s contracted
for capacity at” that point. Id. at 40. On remand, FERC again
defended, though in greater detail, its decision to allow these
transactions.
Various petitioners now challenge the new order. Finding
that the Commission engaged in reasoned decision making with
respect to both issues, we deny the petitions for review.
I.
We begin with the matching-term cap. In INGAA we held
that section 7(b) of the Natural Gas Act (NGA), 15 U.S.C.
§ 717f(b), protects long-term pipeline capacity holders by
prohibiting “‘natural gas compan[ies]’ from ceasing to provide
service to their existing customers” when their contracts expire
“unless, after ‘due hearing,’ FERC finds ‘that the present or
future public convenience or necessity permit such
abandonment.’” INGAA, 285 F.3d at 51 (quoting 15 U.S.C.
§ 717f(b)). For twenty years the Commission has struggled to
streamline the regulatory process for contract termination by
allowing pre-approved abandonment while meeting its
obligations under § 7(b) to protect customers from pipeline
market power. See id. at 50-51.
In United Distribution Cos. v. FERC, 88 F.3d 1105 (D.C.
Cir. 1996) (UDC), we reviewed FERC’s regulation providing
4
captive shippers with a right of first refusal (ROFR) which
allowed such shippers to avoid pre-approved abandonment and
extend their contracts if they matched the rate and duration—up
to a twenty-year cap—offered by competing bidders. We
approved “the basic structure of the right-of-first-refusal
mechanism,” finding that it “provides the protections from
pipeline market power required for pre-granted abandonment
under § 7.” Id. at 1140. At the same time, we remanded the
twenty-year cap, in part because we saw no reasoned
explanation of how it would adequately meet the Commission’s
§ 7(b) obligation to protect captive customers from the exercise
of pipeline market power. Id. at 1140-41.
On remand, FERC adopted a five-year cap. Pipeline
Service Obligations and Revisions to Regulations Governing
Self-Implementing Transportation Under Part 284 of the
Commission’s Regulations, 78 F.E.R.C. ¶ 61,186, at 61,774
(1997). We vacated and again remanded, citing (1) FERC’s
unsupported decision to rely on the median contract length; (2)
FERC’s concerns that the cap would “result[] in a bias toward
short-term contracts,” fostering an “imbalance of risks between
pipelines and existing shippers” and raising “the overall cost of
pipeline transportation”; and (3) FERC’s earlier suggestion that
“elimination of the cap would foster efficient competition.”
INGAA, 285 F.3d at 52-53 (internal quotations marks omitted).
We also noted that the Commission provided neither “an
affirmative explanation for the selection of five years, nor a
response to its own or the pipelines’ objections.” Id. at 53.
“[W]hether a term-matching cap must be required as part of
the ROFR,” FERC explained, “turns on whether [it] is necessary
to protect the existing long-term shipper from the pipeline’s
exercise of market power.” Regulation of Short-Term Natural
Gas Transportation Services, and Regulation of Interstate
Natural Gas Transportation Services, 101 F.E.R.C. ¶ 61,127, at
5
61,522 (2002) (“Order on Remand”) (citing UDC, 88 F.3d at
1140), aff’d, 106 F.E.R.C. ¶ 61,088 (2004) (“Order on
Rehearing”). According to the Commission, “[m]arket power
is exercised through the withholding of capacity to create an
artificial scarcity, thereby raising prices.” Id. at 61,521. Finding
that existing regulations adequately control the exercise of
market power, FERC abolished the cap altogether. Id. at 61,519.
In finding the term cap unnecessary, FERC employed the
reasoning we sustained in Process Gas Consumers Group v.
FERC, 292 F.3d 831 (D.C. Cir. 2002) (“PGC II”), a recent
decision in a parallel line of cases addressing term-matching
caps for new, rather than existing, customers. In PGC II, we
rejected challenges to FERC’s removal of a twenty-year cap for
new shippers, accepting the Commission’s determination that
“existing regulatory controls already limit [pipelines’] market
power, thereby minimiz[ing any] danger that the pipeline will
withhold . . . capacity from the market to create [the] artificial
scarcity necessary to force shippers to bid for supercompetitive
contract terms.” Id. at 836 (alteration and omission in original)
(internal quotation marks omitted). In the order at issue here,
the Commission cited several “existing controls” it believed
would protect existing shippers from any pipeline exercise of
market power: (1) traditional cost-of-service rate regulation; (2)
pipelines’ obligation to offer to sell all existing capacity; (3) the
Commission’s complaint process, Order on Remand, 101
F.E.R.C. at 61,521; Order on Rehearing, 106 F.E.R.C. at 61,298;
(4) the opportunity customers have to offset the cost of
unwanted capacity through capacity release, Order on
Rehearing, 106 F.E.R.C. at 61,304; and (5) the constraints on
contract conditions imposed by the pro forma tariff reviewed by
FERC, id. at 61,303. Given these regulatory controls, FERC
concluded that pipelines could exert market power only by
refusing to “build additional capacity when demand requires it.”
Order on Remand, 101 F.E.R.C. at 61,521. According to the
6
Commission, however, “pipelines would have a greater
incentive to build new capacity” since pipelines could only
increase profits by investing “in additional facilities to serve the
increased demand. Moreover, if [pipelines] did refuse to build
new capacity, the shippers could file a complaint.” Id.
FERC acknowledged that unlike the new customers at issue
in PGC II, existing shippers enjoy statutory protection from
pipeline market power. Id. at 61,522. The Commission
explained, however, that the ROFR adequately protects existing
customers by “ensur[ing] that, if the existing customer is willing
to pay the maximum approved rate and match the contract term
of a rival bidder, the pipeline may not abandon service to that
customer.” Id.
Represented by petitioner American Gas Association, a
collection of existing shippers now challenge FERC’s
elimination of the matching-term cap, charging that the
Commission reversed “ten years of practice” and failed to
provide “coherent support for the conclusion that the
Commission need no longer concern itself with the exercise of
pipeline monopoly power upon contract expiration.” Pet’rs’
Opening Br. 24. For such claims, our standard of review is both
well established and highly deferential. We will “uphold
FERC’s factual findings if supported by substantial evidence
and . . . endorse its orders so long as they are based on reasoned
decision making.” Texaco, Inc. v. FERC, 148 F.3d 1091, 1095
(D.C. Cir. 1998). In addition, we must ensure that FERC has
adequately responded to our concerns in INGAA. PGC II, 292
F.3d at 836. As we have already recognized, however, because
selection of the matching cap duration must be “somewhat
arbitrary,” we “defer to the Commission’s expertise if it
provides substantial evidence to support its choice and responds
to substantial criticisms of that figure.” UDC, 88 F.3d at 1141
n.45.
7
In INGAA, we evaluated the evidence upon which FERC
relied to determine appropriate term caps, examining the data it
used as well as its explanation linking those data to the cap
length selected. See 285 F.3d at 51-53; see also Process Gas
Consumers Group v. FERC, 177 F.3d 995, 1003 (D.C. Cir.
1999) (“PGC I”) (asking the same questions). We do the same
here.
As to the first inquiry, petitioners argue that FERC ignored
available evidence—indeed, that it failed to look at any data at
all. FERC responds that the only existing evidence came from
regulated markets and that such evidence reveals nothing at all
about the duration of pipeline contracts in competitive markets.
Order on Rehearing, 106 F.E.R.C. at 61,305. FERC is correct.
As we explained in PGC I, the relevant question for assessing a
term cap is “whether it will prevent the [pipelines] from
compelling shippers to offer the pipeline longer contracts than
they would in a competitive market.” PGC I, 177 F.3d at 1003
(emphasis added).
Even were we to find the available data useful, under our
second inquiry—the linkage between the evidence before the
Commission and the cap length selected—FERC’s analysis of
the evidence is reasonable. First, FERC found that the evidence
gathered both before and after the imposition of the five-year
cap demonstrates that “the five-year term-matching cap has not
led to shorter contract terms than would otherwise occur,” and
that “customers have generally been able to negotiate contract
terms of less than five years and do not desire longer contracts
because of the risk that their needs will change.” Order on
Remand, 101 F.E.R.C. at 61,523. Second, FERC explained that
the evidence of stable contract duration indicates that regulation
without a term cap fulfills its obligations to the natural gas
market. With this market-based distributive policy, FERC
effectively responded to its own concern, cited in INGAA, “that
8
the cap would foster an imbalance of risks between pipelines
and existing shippers,” adversely affecting allocation of both
cost and capacity. INGAA, 285 F.3d at 53 (internal quotation
marks omitted); Order on Remand, 101 F.E.R.C. at 61,522. We
therefore agree with FERC that since the “matching cap is not
necessary to limit the exercise of market power by the
pipelines,” there is “no justification for distorting the bidding
process and not allocating scarce pipeline capacity to the shipper
placing the highest value on obtaining” it. Order on Rehearing,
106 F.E.R.C. at 61,300.
Having satisfied INGAA’s evidentiary requirements, FERC
must still demonstrate it has adequately responded to
petitioners’ “substantial criticisms.” INGAA, 285 F.3d at 52
(quoting UDC, 88 F.3d at 1141 n.45). Petitioners assert that
PGC II’s holding that existing regulations are sufficient to
protect against abuses of market power has no applicability here
because pipelines can exercise greater market power over
existing customers than over new customers. While in the
context of new shippers “market power can be exercised only by
withholding capacity in order to create artificial scarcity,”
petitioners argue, “the exercise of pipeline monopoly power vis-
à-vis existing customers lies in a pipeline’s ability to threaten
termination of service to customers who require essential
pipeline services.” Pet’rs’ Opening Br. 34-35. Where shippers
have no viable alternatives for service, contract term becomes a
substitute for price, undermining rate regulation established
under NGA sections 4 and 5. Id. at 44.
Although we decided PGC II in a context where the
Commission owed no extra duty to protect shippers from
pipeline market power, PGC II, 292 F.3d at 838 (noting the
difference), our reasoning there applies equally to existing
customers. As repeatedly quoted by the Commission, PGC II
found that “shippers may at times bid up contract length” but
9
that such bidding “likely reflects not an exercise of [pipelines’]
market power, but rather competition for scarce capacity.” 292
F.3d at 837. Petitioners are therefore incorrect when they assert
that pipelines inevitably exercise market power merely because
scarcity deprives existing customers of alternatives or forces
them to bid higher terms than they desire. See Pet’rs’ Opening
Br. 41-45; see also PGC I, 177 F.3d at 1003 (noting pipelines
should be prevented “from compelling shippers to offer the
pipeline longer contracts than they would in a competitive
market”). Rather, to demonstrate that pipelines exercise market
power, petitioners must show that the pipelines manipulate that
scarcity by intentionally withholding capacity to drive up the
value of bids or to extract special advantages or concessions.
Order on Rehearing, 106 F.E.R.C. at 61,301-03. Having found
captive shippers fully protected from such manipulation by
existing regulatory controls, see supra at 5, FERC concluded not
only that retaining the cap was unnecessary, but also that it
would interfere with allocation of capacity to shippers who
value it most and simply protect captive customers “from actual
competition.” Opp’n Br. 40.
Petitioners next argue that FERC failed to address the
impact of scarcity on historical captive customers either (1)
forced to compete with new electric generation customers for
capacity or (2) held captive by virtue of retail access programs.
As to the first point, petitioners contend that removal of the term
cap, which allows new customers to bid up contract term,
conflicts with FERC’s policy requiring new shippers to pay
higher rates reflecting the cost of new construction. Pet’rs’
Opening Br. 48-49. This argument is without merit. Petitioners
presented no evidence that existing ROFR shippers competing
to renew capacity on a fully subscribed pipeline with different
vintages in capacity are not also subject to incremental pricing.
See Regulation of Short-Term Natural Gas Transportation
Services and Regulation of Interstate Natural Gas
10
Transportation Services, F.E.R.C. Stats. & Regs. [Reg.
Preambles 1996-2000] (CCH) ¶ 31,099, at 31,635-36 (“Order
No. 637-A”), reh’g, F.E.R.C. Stats. & Regs. [Reg. Preambles
1996-2000] (CCH) ¶ 31,091 (“Order No. 637”), order den.
reh’g, 92 F.E.R.C. ¶ 61,602 (2000) (“Order No. 637-B”).
For their second point, petitioners argue that in balancing
consumer and pipeline risks, the Commission failed to account
for the greater risks faced by local distribution companies
(LDCs) bound by retail access programs that threaten their
market share while simultaneously obligating them to serve as
suppliers of last resort. Pet’rs’ Opening Br. 50-54. Given this
predicament and the lack of alternative sources of capacity,
petitioners contend that the Commission’s rule will allow
customers “with greater buying power to bid up the pipeline’s
firm, long-term services.” Id. at 53. As a result, LDCs will be
forced to “enter into long-term pipeline contracts now to serve
markets they may or may not serve in the future.” Id. at 54.
This argument depends on two false assumptions: (1) that
existing regulations without a term cap leave pipeline market
power unregulated and (2) that § 7(b) obligates FERC to
guarantee shippers the ability to renew their contracts
indefinitely rather than simply provide them the opportunity to
do so. PGC II makes clear that a market is not unregulated just
because shippers have no alternative sources of service. 292
F.3d at 837. In INGAA, moreover, we accepted as valid FERC’s
concern about creating “an imbalance of risks between pipelines
and existing shippers, allowing shippers indefinite control over
pipelines’ capacity, but giving the pipelines no corresponding
protection.” 285 F.3d at 53 (internal quotation marks omitted).
As for petitioners’ concern that uncertainties about future
markets require extra protection, we have made clear that
“LDCs are no different from other industry participants in that
11
they will have to evaluate future risks in determining how much
capacity to reserve.” UDC, 88 F.3d at 1140-41 n.44. The costs
versus the benefits of renewal are, we explained, financial
determinations all companies, including LDCs, must make. Id.
Having considered these risks, FERC concluded that the
possibility that LDCs may end up with unneeded capacity does
not outweigh the benefit of allocating scarce capacity to parties
valuing it the most. Order on Rehearing, 106 F.E.R.C. at
61,300. Moreover, because FERC’s capacity release program
allows LDCs to market capacity they retain but cannot use,
LDCs may “mitigate any business harm that might occur . . .
from elimination of the term matching cap.” Id.
In sum, since FERC must protect existing shippers from
market power, not from competition, and given its conclusion
that existing regulations protect against the exercise of market
power, the Commission reasonably concluded that the ROFR
gives existing shippers the competitive advantage that § 7(b)
requires while allowing for the most efficient allocation of
capacity. We will therefore deny the petitions for review on this
issue.
II.
The second issue before us has its origins in Order No. 636,
in which FERC adopted a segmentation policy and expanded
flexible point rights for shippers with firm service. Pipeline
Service Obligations and Revision to Regulations Governing
Self-Implementing Transportation Under Part 284 of the
Commission’s Regulations, F.E.R.C. Stats. & Regs. [Reg.
Preambles 1991-1996] (CCH) ¶ 30,939, reh’g granted & denied
in part, F.E.R.C. Stats. Regs. [Reg. Preambles 1991-1996]
(CCH) ¶ 30,950 (“Order No. 636-A”), order on reh’g, 61
F.E.R.C. ¶ 61,272 (1992) (“Order No. 636-B”). These changes
allowed shippers to segment their capacity and use any receipt
12
and delivery point within the zone for which they pay
reservation charges. Through shipper ability to release excess
firm capacity, FERC also created a secondary market for firm
capacity in competition with pipeline interruptible service. With
this new market, shippers acquired increased control over the
capacity for which they pay. In addition to allowing
segmentation, the Commission allowed shippers to engage in
“backhaul/forwardhaul transactions” to the same delivery point.
In INGAA, we upheld segmentation and flexible point rights as
a general matter, 285 F.3d at 38-40, but remanded for further
explanation FERC’s decision to allow backhaul/forwardhaul
segmented transactions. Id. at 41.
INGAA describes backhaul/forwardhaul transactions as
follows:
Suppose a pipeline runs from A to B to C,
and has 10,000 dekatherms of daily
capacity, all of which is contracted for
from A to C and of which X holds 1000.
X’s market at C declines, and X would
like to ship only to B and to release the
1000 in B-C capacity. X learns of . . . Y,
who has a right to 1000 dekatherms at C
and would like to sell it at B.
Id. at 40. X then forwardhauls 1000 dekatherms to B and
releases the B-C portion to Y, who backhauls 1000 dekatherms
to B. The result is 2000 dekatherms at point B, 1000
dekatherms in excess of the amount X contracted to have pass
through that point.
On remand, FERC defended its decision to allow
backhaul/forwardhaul transactions. Order on Remand, 101
F.E.R.C. ¶ 61,127. Various pipelines, represented by
13
Tennessee Gas Pipeline Company, now challenge that decision.
They argue that FERC’s policy effectuated an increase in
shippers’ delivery point entitlements and the services pipelines
are required to provide, thereby modifying existing contracts.
Those contract modifications cannot stand, they argue, because
FERC failed to make findings under either the Mobile-Sierra
heightened public interest standard or NGA § 7. See generally
MCI Telecomms. Corp. v. FCC, 822 F.2d 80, 87 (D.C. Cir.
1987) (describing the Mobile-Sierra standard); 15 U.S.C. §
717f(a). We disagree.
To begin with, contrary to petitioners’ argument, nothing
in INGAA “found that the Commission’s policy will modify
contracts.” Pet’rs’ Opening Br. 61. Noting the difference
between contract modification and operational feasibility,
INGAA remanded the backhaul/forwardhaul issue to the
Commission “so that it can more clearly confront the question
of whether this aspect of the orders can stand without additional
findings.” INGAA, 285 F.3d at 41. This language does not
direct FERC to make Mobile-Sierra or § 7 findings. Instead, it
directs the Commission to “more clearly confront the question
of whether” additional findings are necessary. Id. (emphasis
added). This left FERC free to determine “whether” its
backhaul/forwardhaul policy modified pipeline contracts, and
if so to make the necessary Mobile-Sierra or § 7 findings.
Examining the issue, FERC concluded that the policy did not
modify the contracts, and we agree.
FERC’s conclusion rests on the difference between firm
and guaranteed service. As the Commission explained, its
flexible point policy distinguishes
between primary points and secondary
points. Firm contracts between pipelines
and their shippers typically provide that
14
the pipeline will transport up to a
specified contract demand from a primary
receipt point or points listed in the
contract to a primary delivery point or
points listed in the contract. This
provision specifies a shipper’s guaranteed
right to firm service.
Order on Rehearing, 106 F.E.R.C. at 61,305 (emphasis added)
(footnotes omitted). In contrast to primary firm service, “an out-
of-path, secondary firm transaction”—the usual categorization
of a backhaul—“receives a lower scheduling priority than
primary firm service.” Id. at 61,308. Since backhauls are
secondary transactions rather than guaranteed service,
backhauling shippers utilize the delivery point on a secondary
basis—a basis not covered by the contract. Id.
Even if it is true, as petitioners contend, that the contract
specifies the maximum daily quantity of gas parties agree to
transport on a firm basis and that released capacity delivered on
a secondary basis constitutes firm service, see Order No. 636-A,
F.E.R.C. Stats. & Regs. at 30,583 (noting that secondary rights
are firm rights that are subordinate to primary rights but superior
to interruptible rights for scheduling and curtailment purposes),
petitioners have not challenged FERC’s contention that given its
segmentation and flexible point policy, shippers make use of
two types of firm service, primary and secondary, with only the
former amounting to guaranteed service. See Order on
Rehearing, 106 F.E.R.C. at 61,308. Therefore, secondary
transactions—firm but not guaranteed—are not covered by the
contracts. Id. Because the terms of primary service for which
the parties have bargained remain unchanged, FERC’s decision
does not modify contracts, even if it affects them.
Petitioners also contend that the backhaul/forwardhaul
15
policy allows shippers to get “more service than they are paying
for.” Id. at 61,309. As FERC explained, however,
it is the Commission’s policy that a
shipper may use all of the points in a
zone for which it is paying on a
secondary basis precisely because the
shipper must pay the costs of the entire
zone. . . . The shipper is getting no more
than what it pays for. The pipeline, for
its part, has fully allocated its costs and is
collecting those costs from its shippers.
Id. at 61,310 (footnotes omitted). The Commission further
explained that since backhaul/forwardhaul transactions do not
alter pipelines’ certificated service levels or specified service
entitlements by changing the quantity provisions of their
transportation contracts, the policy merely changes the terms of
an existing service. Id. at 61,313. Finally, FERC pointed out
that should a backhaul/forwardhaul transaction cause the
pipeline to lose significant revenue, “then a pipeline is permitted
to file a new rate case in which more of its costs would be
allocated to firm service.” Id. at 61,310.
Because FERC’s backhaul/forwardhaul policy does not
abrogate pipeline contracts, the Commission had no obligation
to make either Mobile-Sierra or § 7 findings. Instead, to justify
its new policy, the Commission needed to comply only with
NGA § 5, 15 U.S.C. § 717d. Under NGA § 5, before replacing
an existing rate or tariff with a new one, the Commission must
demonstrate by substantial evidence that the existing rate or
tariff has become unjust or unreasonable, and that the proposed
rate is both just and reasonable. 15 U.S.C. § 717d; W. Res., Inc.
v. FERC, 9 F.3d 1568, 1579-80 (D.C. Cir. 1993).
16
FERC found that since backhaul/forwardhauls represent a
type of segmented transaction, failure to permit them is unjust
and unreasonable for the same reasons the Commission gave in
Order No. 637 and that we accepted in INGAA, i.e., “it restricts
efficient use of capacity without adequate justification.” Order
on Remand, 101 F.E.R.C. at 61,529; INGAA, 285 F.3d at 38
(citing Order No. 637, at 31,304). At the same time, FERC
found that permitting these transactions is “just and reasonable
because it creates additional supply alternatives for shippers and
enhances competition on the pipeline’s system . . .[,] because it
provides the kind of flexibility that pipelines enjoyed prior to
Order No. 636 and because it will assist in creating more
competition in the transportation market.” Order on Rehearing,
106 F.E.R.C. at 61,307.
“[I]t is within the scope of the agency’s expertise to
make . . . a prediction about the market it regulates, and a
reasonable prediction deserves our deference . . . .” Envtl.
Action, Inc. v. FERC, 939 F.2d 1057, 1064 (D.C. Cir. 1991).
Petitioners have given us no reason to second guess FERC’s
conclusion that the benefits of segmentation and flexible point
policy apply equally to backhaul/forwardhaul transactions.
III.
On remand from INGAA, FERC reevaluated both the term
cap and the backhaul/forwardhaul issues and gave satisfactory
explanations for its decisions. The petitions for review are
denied.
So ordered.