Pub Util Cmsn CA v. FERC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 2, 1998 Decided May 22, 1998

No. 97-1028

Public Utilities Commission of the State of California,

Petitioner

v.

Federal Energy Regulatory Commission,

Respondent

Mojave Pipeline Company, et al.,

Intervenors

Consolidated with

Nos. 97-1058, 97-1059, 97-1060, 97-1061,

97-1062, 97-1078, 97-1082

----------

On Petitions for Review of Orders of the

Federal Energy Regulatory Commission

Mark Fogelman argued the cause and filed the briefs for
petitioner Public Utilities Commission of the State of Califor-
nia.

Katherine B. Edwards argued the cause for Interstate
petitioners, with whom Frederick T. Kolb, Philip D. Gettig
and Norman A. Pedersen were on the joint briefs. Jason F.
Leif entered an appearance.

Frederick Moring, Clifton S. Elgarten, Jessica R. Herrera,
David J. Gilmore, A. Karen Hill, Charles D. Gray, James
Bradford Ramsey, Mike Florio, Nicholas W. Fels, James F.
Walsh, III, and Christopher J. Barr were on the joint briefs
for petitioners Southern California Gas Co., et al.

Samuel Soopper, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent, with whom
Jay L. Witkin, Solicitor, and Susan J. Court, Special Counsel,
were on the brief.

Katherine B. Edwards, Frederick T. Kolb, Philip D. Gettig,
Norman A. Pedersen and Jason F. Leif were on the joint
brief for intervenors Amoco Energy Trading Corporation, et
al.

Mark Fogelman, David J. Gilmore, Frederick Moring,
Clifton S. Elgarten, Jessica R. Herrera, A. Karen Hill,
Charles D. Gray, James Bradford Ramsey, Mike Florio,
Nicholas W. Fels, James F. Walsh, III, and Christopher J.
Barr were on the joint brief for intervenors Public Utilities
Commission of the State of California, et al. Roberta L.
Halladay entered an appearance.

Before: Edwards, Chief Judge, Ginsburg and Tatel,
Circuit Judges.

Opinion for the Court filed by Chief Judge Edwards.

Edwards, Chief Judge: The Federal Energy Regulatory
Commission ("FERC") found that the Public Utilities Com-
mission of California ("CPUC") impermissibly infringed on
federal jurisdiction when it authorized Southern California
Gas Co. ("SoCal"), an intrastate pipeline, to charge interstate
shippers for access to local service. In reaching this conclu-
sion, FERC properly stated the boundaries of federal and
state regulatory jurisdiction under the Hinshaw Amendment
to the Natural Gas Act, 15 U.S.C. s 717(c) (1994), and reason-

ably applied the applicable law to the facts at hand. Yet,
having found the access charge illegal, FERC inexplicably
declined to order the intrastate pipeline to refund to the
interstate shippers the $800,000 collected in illegal access
fees. Instead, citing alleged comity interests, FERC pro-
posed to wait and see if the CPUC would order the refund.
This delay was arbitrary and capricious. FERC, not CPUC,
clearly had jurisdiction over the interstate shippers, and the
concept of "comity" did not apply. Because FERC had
jurisdiction to declare the access charge illegal, it could and
should have ordered the intrastate pipeline to refund the
charge.

I. BACKGROUND

On February 17, 1993, CPUC authorized SoCal to construct
facilities that would connect its intrastate pipeline to the
interstate Kern/Mojave pipeline at Wheeler Ridge, California.
See Re Southern California Gas Co., D.93-02-055, 48
C.P.U.C. 2d 251 (1993), reprinted in Joint Appendix ("J.A.")
138; see also Union Pac. Fuels, Inc. v. Southern California
Gas Co., 76 F.E.R.C. p 61,300, at 62,491 (Sept. 19, 1996). On
May 7, 1993, CPUC made a similar authorization for SoCal to
connect with the intrastate Pacific Gas and Electric Company
("PG&E") pipeline at Kern River, California. See Re South-
ern California Gas Co., D.93-05-009, 49 C.P.U.C. 2d 182
(1993), reprinted in J.A. 160; see also 76 F.E.R.C. p 61,300, at
62,491. Also on May 7, 1993, CPUC approved a tariff under
which SoCal would charge rates for interconnection applicable
to

natural gas transportation deliveries nominated by ship-
pers into [SoCal's] intrastate system at the Wheeler
Ridge and Kern River Station points of receipt ("inter-
connects") with the interstate systems of [Kern/Mojave]
and the Pacific Gas and Electric Company Expansion
project.

76 F.E.R.C. p 61,300, at 62,492. The interstate shippers

affected by the tariff 1 challenged it in petitions before FERC
and petitions for rehearing before CPUC. FERC did not act
on the petitions, but on January 19, 1994, CPUC annulled the
tariff and ordered SoCal to refund the interconnection
charges it had collected from interstate shippers between
July 13, 1993, and December 31, 1993. See id.

Had the CPUC refund order remained in place, this case
would never have reached this court. But on further rehear-
ing, after an evidentiary hearing before a California Adminis-
trative Law Judge ("ALJ"), CPUC concluded that a refund
was inappropriate because the interstate shippers had re-
ceived service and use of the interconnection facilities from
SoCal. See id. CPUC based its revised decision on the
process used to direct shipment of the gas. The interstate
shippers informed SoCal of gas deliveries to be made to the
Wheeler Ridge interchange, and of the intended end users of
such deliveries. Once received at Wheeler Ridge, the gas
was transported to local end users under contracts between
SoCal and the end users. SoCal then billed the interstate
shippers based on the volumes delivered to SoCal and billed
the local end users based on actual transportation. For their
part, the interstate shippers charged a bundled price to the
end users.

According to CPUC, no refund was appropriate because
the interstate shippers nominated deliveries into the intercon-
nection facility. CPUC reasoned:

It is obvious to us that these nominators are customers of
SoCalGas; service was provided to the interstate ship-
per. In California they nominate in writing to SoCalGas
for SoCalGas to transport gas to be delivered by the

__________
1 The interstate shippers who appear as Petitioners before this
court are: Amoco Energy Trading Corporation; Burlington Re-
sources Oil & Gas Company; CanWest Gas Supply U.S.A., Inc.;
Petro-Canada Hydrocarbons, Inc.; Southern California Utility
Power Pool/Imperial Irrigation District; and Union Pacific Fuels,
Inc.

nominator to SoCalGas at Wheeler Ridge; the destina-
tion of the gas is the facility of the end user; the
shippers agree to pay SoCalGas' access charge; SoCal-
Gas accepts the nomination; they deliver the gas to
SoCalGas in California at Wheeler Ridge; SoCalGas
accepts the gas in accordance with the terms of the
nomination and transports it to the end user in Califor-
nia; SoCalGas bills the nominator for the access charge;
the nominator pays the access charge. On these facts,
we cannot reach any conclusion other than that the
nominators are customers of SoCalGas.

Re Southern California Utility Power Pool, D.95-07-12, 60
C.P.U.C. 2d 462, 468 (1995), reprinted in J.A. 417. In
CPUC's view, the key point was that the interconnection
charge applied to deliveries "nominated" by shippers. Nomi-
nation, CPUC claimed, sufficed to make the shippers into
intrastate customers of SoCal and hence subject to the juris-
diction of CPUC.

After CPUC decided not to order a refund, the interstate
shippers asked FERC to reconsider their petitions; FERC
did so. Over CPUC's objections, FERC held that CPUC
never had authority to make the tariff applicable to interstate
shippers. FERC acknowledged that, under the Hinshaw
Amendment to the Natural Gas Act, 15 U.S.C. s 717(c),
SoCal was an intrastate shipper generally exempt from
FERC jurisdiction. See 76 F.E.R.C. p 61,300, at 62,494.
However, FERC explained, where FERC has jurisdiction, its
jurisdiction is exclusive. The interconnection charge at issue
fell within FERC's jurisdiction because it was "a charge to
interstate shippers for the act of moving gas over the [inter-
state] Kern/Mojave pipeline and delivering it to SoCal rather
than a charge for any service performed by SoCal after its
receipt of the gas." Id. at 62,495.

FERC explained that mere nomination by the interstate
shippers did not make the shippers into intrastate actors. In
FERC's view, the Hinshaw Amendment "clearly and positive-

ly" drew the line between intrastate and interstate service by
restricting the exception to "gas received ... within or at the
boundary of a State." 15 U.S.C. s 717(c). To FERC, this
meant that demarcation occurs "at the point when the intra-
state company receives the gas from an interstate shipper."
76 F.E.R.C. p 61,300, at 62,495. Because SoCal performed no
service for the interstate shippers after the point of receipt of
the gas, FERC reasoned, the Hinshaw Amendment did not
apply, and CPUC had no authority to allow SoCal to charge
the tariff.

In its first order, FERC declined to order a refund. It
held that because SoCal was an intrastate pipeline subject to
the Hinshaw Amendment, FERC lacked authority to require
SoCal to make a refund. See id. at 62,496. FERC Commis-
sioner (now Chairman) James Hoecker dissented on the issue
of the remedy, pointing out that in the past FERC had
ordered intrastate pipelines to pay refunds and had been
upheld by the courts. See id. at 62,498. Because FERC's
finding satisfied neither CPUC and SoCal (whose actions had
been held illegal) nor the interstate shippers (who received no
remedy), all parties sought rehearing.

On rehearing, FERC reaffirmed its conclusion as to the
merits, finding the tariff illegal. See Union Pac. Fuels, Inc.
v. Southern California Gas Co., 77 F.E.R.C. p 61,283 (Dec. 19,
1996). On the remedy issue, FERC withdrew its earlier
statement that it lacked jurisdiction to order the refund, and
instead was silent as to jurisdiction. "[R]egardless of the
extent of [its] legal authority," FERC now asserted, it
thought it best to let state regulatory agencies like CPUC
correct their own errors. See id. at 62,250. Citing "consider-
ations of comity," FERC decided to give CPUC an opportuni-
ty to remedy its error by ordering a refund. See id. at
62,249. The interstate shippers then returned to CPUC to
ask for a remedy; the California ALJ in charge of the case
announced his intention to defer a decision on a remedy until
after this court's ruling. All parties now petition for review.

II. ANALYSIS

A. Merits

1. Reasonableness of FERC's Determination

FERC found that the tariff which CPUC authorized SoCal
to charge to interstate shippers was not a permissible charge
for intrastate services rendered, but, rather, an access charge
for the privilege of introducing gas into SoCal's intrastate
system. FERC therefore concluded that the charge illegally
infringed on FERC's jurisdiction over interstate shipment of
gas, because the access charge was essentially a charge for
carrying gas interstate to the Wheeler Ridge interchange.
SoCal and CPUC argue that this determination by FERC
was arbitrary and capricious or otherwise not in accordance
with law. See 5 U.S.C. s 706(2)(A) (1994). Reviewing in
accordance with this standard, we hold that FERC's determi-
nation that the tariff was an access charge was reasonable,
not arbitrary, and that FERC's conclusion that the tariff was
illegal was a proper interpretation of 15 U.S.C. s 717(c).

FERC explained clearly why it rejected CPUC's theory
that the interstate shippers were customers of SoCal: SoCal
did not render any identifiable service to the interstate
shippers. See 76 F.E.R.C. p 61,300, at 62,495. The contracts
for actual transportation of gas from Wheeler Ridge to the
California end users were between the end users and SoCal.
As FERC put it on rehearing, the interstate shippers' "only
connection to SoCal [was] that they nominated deliveries to
Wheeler Ridge." 77 F.E.R.C. p 61,283, at 62,246. None of
the interstate shippers contracted with SoCal for gas deliv-
ery. Indeed, although this point is not necessary for our
holding, we note that the interstate shippers may not even
have had the option under CPUC's regulations of contracting
directly with SoCal for transportation of their gas to the end
users, at least not without obtaining special permission from
CPUC. See Independent Energy Producers Ass'n v. South-
ern California Edison Co., D.91-11-023, 42 C.P.U.C. 2d 668,
683 (1991), reprinted in J.A. 573-75 ("Only end-use customers

will be able to subscribe to intrastate delivery from the
utility.")

Furthermore, the "nomination" on which CPUC's determi-
nation focused was nothing more than a formal announcement
to SoCal of the destination of the gas. The interstate ship-
pers would never have made this nomination unless it had
been required by the tariff. The interstate shippers agreed
to the nominations and the tariff only under duress, after
SoCal warned them it would block their access if they did not
pay the fee. Their supposed "consent," therefore, cannot
serve as evidence that they were paying for a service. It is
true that in its order on rehearing, FERC acknowledged that
intrastate shippers also had to pay the access charge, and
that such a charge was a matter for CPUC and outside
FERC's jurisdiction. See 77 F.E.R.C. p 61,283, at 62,246.
This acknowledgment, however, has no bearing on whether
the tariff was indeed an access charge to interstate shippers,
because it was clearly within CPUC's jurisdiction to authorize
an access charge to intrastate shippers for intrastate trans-
port.

In sum, Petitioners never point to any service that they can
convincingly claim the interstate shippers were buying from
SoCal. FERC acted reasonably, therefore, when it concluded
that the tariff was an access charge that interstate shippers
were compelled to pay in order to deliver their gas to the
SoCal pipeline. This leads directly to the question of FERC's
jurisdiction over the charge made to interstate shippers.

2. FERC's Jurisdiction

In order to decide whether it had jurisdiction over the
access charge leveled here, FERC had to interpret the Hin-
shaw Amendment to the Natural Gas Act, 15 U.S.C. s 717(c).
The Hinshaw Amendment carves out an exception to FERC
jurisdiction for natural and legal persons engaged in the
transportation of "natural gas received by such person from
another person within or at the boundary of a State if all the
natural gas so received is ultimately consumed within such
State." 15 U.S.C. s 717(c). As all parties acknowledge,
SoCal is a so-called "Hinshaw pipeline," covered by s 717(c)
and regulated primarily by the CPUC with regard to its

intrastate activities. A Hinshaw pipeline can, however, come
under FERC authority when it engages in activities that go
beyond the intrastate transport of gas. SoCal, for example,
holds a certificate from FERC permitting it to engage in
certain non-exempt, interstate transport activities that fall
within FERC's jurisdiction. See 18 C.F.R. s 284.224 (1997).

We defer to FERC's "interpretation of its authority to
exercise jurisdiction" if it is reasonable. See Oklahoma Nat-
ural Gas Co. v. FERC, 28 F.3d 1281, 1283-84 (D.C. Cir. 1994)
(citing Chevron U.S.A., Inc. v. Natural Resources Defense
Council, 467 U.S. 837 (1984)). FERC interpreted the Hin-
shaw Amendment as "drawing the line of demarcation be-
tween Federal and State regulation at the point when the
intrastate company receives the gas from an interstate ship-
per." 76 F.E.R.C. p 61,300, at 62,495. This interpretation
certainly accords with the plain meaning of the statutory
words "received by such person from another person." See
s 717(c). It is entirely reasonable for FERC to understand
the Hinshaw Amendment to mean that when an intrastate
pipeline receives gas from an interstate pipeline within or at
the border of its state, jurisdiction switches from FERC to
the state. Indeed, this appears to be the common-sense
meaning of the statute.

Because FERC took the view that the tariff required the
interstate shippers to pay an access charge, the charge relat-
ed to something that occurred, by definition, prior to the
transfer of the gas from the interstate shippers to SoCal, the
intrastate party. It followed reasonably that the access
charge belonged within FERC's jurisdiction. In functional
terms, a charge to interstate shippers for access to intrastate
service directly and significantly affects interstate shipment
of gas by increasing its cost. The access charge thus fell
squarely within FERC's regulatory bailiwick both in legal and
policy terms.

SoCal and CPUC pose several challenges to FERC's inter-
pretation of its jurisdiction. First, they argue that because
the Hinshaw Amendment exempts from FERC jurisdiction,
"persons" who engage in certain defined intrastate activities,
rather than the activities themselves, see s 717(c), FERC
cannot regulate a "person" who engages in intrastate activity.

Because SoCal is a Hinshaw pipeline, the argument runs,
s 717(c) "precludes the FERC from regulating SoCalGas'
transportation of natural gas within California, as well as its
rates, services, and facilities." See Brief for Petitioner CPUC
at 11. This reading of s 717(c), which purports to rely on its
legislative history, would place the tariff in question within
the scope of CPUC's authority and outside that of FERC.

This conclusory argument, which might be generously con-
strued as a Chevron step one argument about the statute's
plain meaning, obviously misses the point of the Hinshaw
Amendment. On its face, the Hinshaw Amendment only
exempts from FERC jurisdiction persons "engaged in or
legally authorized to engage in" intrastate gas transport. See
s 717(c). This provision was certainly intended to exempt
such persons from FERC regulation only for the purposes of
their involvement in intrastate gas transport, not for the
purposes of their involvement in interstate or other regulated
activities. A Hinshaw pipeline can unquestionably come un-
der FERC authority when it engages in activities that go
beyond the intrastate transport of gas.

Section 717(c) cannot plausibly mean that any person who
engages in intrastate activities is exempt from FERC juris-
diction in all activities; otherwise any interstate pipeline
could free itself from all FERC regulation simply by engag-
ing in some intrastate transport. Thus when the Supreme
Court once in passing described the Hinshaw Amendment as
a provision "to exempt persons receiving natural gas within a
State and transmitting or selling it for consumption solely
within the same state," see F.P.C. v. Southern California
Edison Co., 376 U.S. 205, 216 n.9 (1964), the Court was simply
paraphrasing the language of s 717(c), and did not mean to
confer blanket freedom from FERC jurisdiction on all per-
sons who engage in intrastate gas transport.

Legislative history also provides no basis for the argument
proposed by SoCal and CPUC. The one passage from a
Senate report to which SoCal and CPUC refer merely states
that the Hinshaw Amendment will provide "that a company
shall not be subject to the Act by reason of the fact that it is
engaged in the transportation, within a State, of out-of-State
gas received within or at the state border." See S. Rep. No.

83-817, at 2 (1953). The fact that the Act is directed towards
a company--the same as the "person" mentioned in the Act
itself--does not mean that the Act excludes from FERC
jurisdiction persons who engage in interstate activities as well
as intrastate ones. There is thus no basis for CPUC's
apparent contention that the text and history of s 717(c)
somehow preclude FERC's interpretation of the Hinshaw
Amendment.

CPUC and SoCal also urge that three passages from
opinions of this court countermand FERC's interpretation of
its jurisdiction here. In Altamont Gas Transmission Co. v.
FERC, 92 F.3d 1239 (D.C. Cir. 1996), we reviewed FERC
orders that related to a CPUC tariff for the intrastate PG&G
pipeline, which CPUC authorized at the same time that it
authorized the SoCal tariff. There, we held that the FERC
exceeded its jurisdiction by promulgating orders explicitly
intended to affect CPUC's rate-setting for the intrastate
pipeline, rate-setting which undisputedly fell within CPUC's
sole jurisdiction. See id. at 1246-47. We explained that,
under the Hinshaw Amendment, FERC had no authority "to
do indirectly what it could not do directly," namely regulate
the rates for intrastate pipelines. See id. at 1248. In the
conclusion to that opinion, we used the following formulation:

Although the Commission generally has the authority to
consider a matter beyond its jurisdiction if the matter
affects jurisdictional sales--at least if there would other-
wise be a regulatory gap--here there is no such gap but,
on the contrary, an express congressional reservation of
jurisdiction to another body.

Id. CPUC and SoCal rely on this language to suggest that
here, too, FERC sought to infringe on matters beyond its
jurisdiction.

Our opinion in Altamont Gas does not control this case.
Unlike the FERC action in Altamont Gas, FERC's orders
here do not seek to affect CPUC's tariff-setting for a matter
that is undisputedly within CPUC's jurisdiction. Instead, the
dispute here focuses precisely on the question of which agen-
cy in fact had jurisdiction over a tariff charged for access to
interchange facilities. FERC did not seek to do indirectly

what it could not do directly: rather it simply acted directly
in an area in which it found that it had the right to act. In
other words, there can be no doubt over the fact that the
access charge in question did "affect[ ] jurisdictional sales."
See id. This was so, FERC found, because the tariff re-
quired interstate shippers to pay an access fee that was
unrelated to any actual provision of service. In short, our
conclusion in Altamont Gas provides no help to SoCal and
CPUC.

SoCal and CPUC next argue that, under Southwest Gas
Corp. v. FERC, 40 F.3d 464 (D.C. Cir. 1994), FERC cannot
"compel" SoCal to accept gas from interstate shippers "free
of charge." They maintain that by disallowing the access
charge, FERC is requiring SoCal to accept gas "for free." In
Southwest Gas, we rejected a petitioner's challenge to FERC
action on standing grounds. In that case, we observed that
under its contracts with an interstate shipper, a particular
intrastate pipeline had "complete control" over whether to
permit other intrastate shippers to take delivery from the
interstate shipper at certain delivery points. See id. at 467.
Because the intrastate pipeline controlled access to the deliv-
ery points under its contracts, we concluded, it could not
claim that it would suffer an injury if the other intrastate
pipelines took delivery at those points. See id.

Obviously, our holding in Southwest Gas is inapposite to
the case at bar. Our opinion in Southwest Gas says nothing
whatever about any party, private or public, compelling a
local pipeline to do anything at all. Our observation that the
intrastate pipeline had "complete control" over access was
neither more nor less than a descriptive statement about the
effect of the contracts at issue there. See id. We neither
announced nor hinted at any general rule of law regarding
access. The argument proposed by SoCal and CPUC
wrenches one phase of our opinion from its context, and is
entirely unavailing.

Finally, SoCal and CPUC advert to an amended footnote
which they claim precludes FERC's jurisdiction here. See
United Distrib. Co. v. FERC, 88 F.3d 1105, 1153 n.62 (D.C.
Cir. 1996) (footnote amended by order, Oct. 29, 1996). In

that footnote, we rejected a claim urged by intrastate pipe-
lines "given that [the local pipelines] do not suggest that
FERC has improperly exercised jurisdiction over the release
of capacity held on non-jurisdictional Hinshaw pipelines." Id.
The argument of SoCal and CPUC appears to be that if
FERC may not require release of capacity on Hinshaw
pipelines, it cannot require such pipelines to receive gas into
their systems. But this argument rests on a false premise.
The footnote by its terms clearly did not constitute a holding
that FERC may not exercise jurisdiction over capacity on
Hinshaw pipelines. Rather, the footnote merely noted the
absence of an allegation of improper exercise of jurisdiction.
In no way does this imply that a proper mode of exercising
jurisdiction over capacity on Hinshaw pipelines could not
exist. In sum, none of the cases cited by SoCal and CPUC
precludes FERC's interpretation of its jurisdiction.

B. Remedy

In its first order, FERC took the strange position that it
lacked authority to order SoCal to refund the impermissibly
collected tariff. See 76 F.E.R.C. p 61,300, at 62,496. On
remand, FERC withdrew from this misguided position, but
instead cited "comity" as a reason to await CPUC's determi-
nation of whether it would offer a refund. See 77 F.E.R.C.
p 61,283, at 62,249-50. The interstate shippers challenge
FERC's delay as arbitrary and capricious; they could as
easily call it an abuse of discretion. See Koch Gateway
Pipeline v. FERC, 136 F.3d 810, 816 n.14 (D.C. Cir. 1998)
(explaining that in FERC refund context arbitrary and capri-
cious standard and abuse of discretion standard converge).

The interstate shippers have been "aggrieved" under the
meaning of section 19(b) of the Natural Gas Act, 15 U.S.C.
s 717r (b) (1994). Aggrievement requires an injury in fact.
See Southwest Gas, 40 F.3d at 466. Under our precedent, a
party has suffered injury in fact where FERC has denied it a
refund due to it. See Tennessee Gas Transmission Co. v.
F.P.C., 322 F.2d 1006, 1008 (D.C. Cir. 1963). And there can
be no claim here that FERC's order is not "final," see Papago
Tribal Util. Auth. v. FERC, 628 F.2d 235, 239-40 (D.C. Cir.

1980), because the order here has the final effect of definitive-
ly delaying the refund which, by FERC's own lights, is due to
the interstate shippers.

FERC possesses considerable discretion in fashioning rem-
edies. See Laclede Gas Co. v. FERC, 997 F.2d 936, 944 (D.C.
Cir. 1993). Nonetheless, where FERC "fail[s] to establish
that its decision represents a 'reasonable accommodation of
the relevant factors' and that the [remedy] is 'equitable under
the circumstances,' we must vacate FERC's action and re-
mand for reconsideration." See Koch Gateway Pipeline, 136
F.3d at 816 (citing Laclede Gas Co., 997 F.2d at 944). Here,
FERC failed to provide a logically coherent, reasonable ex-
planation for delaying the refund; furthermore, the delay
itself was clearly inequitable.

The doctrine of comity typically applies in circumstances of
overlapping jurisdiction. In this case, however, there was no
question of overlapping jurisdiction between FERC and
CPUC. The tariff was illegal precisely because CPUC in-
truded into FERC's jurisdiction over the interstate transport
of gas. There is also no question that FERC had jurisdiction
to order SoCal to refund the tariff to the interstate shippers.
We have in the past upheld FERC authority to direct refund
orders at intrastate Hinshaw pipelines normally outside
FERC's jurisdiction. See Panhandle E. Pipeline Co. v.
FERC, 95 F.3d 62, 73-74 (D.C. Cir. 1996). It therefore
makes no sense to argue, as FERC did in its order, that
comity permits FERC to make the interstate shippers suffer
delay until CPUC orders a refund. Similarly, the interstate
shippers were not required to "exhaust" state remedies be-
fore seeking relief from FERC with respect to a matter solely
within FERC's jurisdiction.

Finally, FERC's decision does not appear to accord with
equity. The interstate shippers paid a tariff which FERC
found to be illegal. SoCal therefore collected a windfall
profit. It is not obvious how delaying the refund actually
serves any interests of FERC: we find it difficult to imagine
that having found the CPUC's tariff illegal, FERC really
expects that CPUC will be mollified by FERC's supposed

deference on the refund issue. But the delay certainly seems
unfair to the interstate shippers, whose only interest is recov-
ering the money they were illegally compelled to pay. We
therefore remand the delay of remedy to FERC for proper
resolution of this issue.

III. CONCLUSION

FERC reasonably found that the tariff was an access
charge for interstate petitioners, and properly found it illegal.
However, FERC acted arbitrarily in deferring a remedy, and
we remand to FERC on the remedy issue. The petition for
review is therefore denied in part and granted in part.

So ordered.