Summary
The D.C. Circuit reviewed a Federal Energy Regulatory Commission order concerning refunds of ad valorem taxes and whether two natural gas pipelines could recover those refunds from their customers. The court held that its prior decision did not resolve the recoupment issue, vacated the challenged portion of FERC's order, and declined to express a view on the issue because it had not yet been presented to the Commission.
Topics
Practice areas
Questions Presented
- Whether the court's prior decision in Burlington Resources Oil & Gas Co. v. FERC, 513 F.3d 242 (D.C. Cir. 2008), necessarily resolved whether the pipelines could recoup the refunds from their customers.
- Whether FERC could decide the pipelines' recoupment rights when that issue had not yet been presented to FERC in a section 4 proceeding.
Holdings
- Burlington II decided only that the settlement agreement was enforceable as a defense to Burlington's liability for the ad valorem taxes; it did not decide whether the pipelines were liable for the refunds or could pass the refund costs to their customers.
- The court vacated FERC's determination that the pipelines could not seek recovery of the refunds from their customers because the recoupment issue had not yet been presented to FERC, much less to the court.
Key quotations
“We did not address — because we did not have before us — the issue whether the pipelines themselves were liable for the refund, or whether they could pass to their customers the cost of the refund.” (403 F. App'x at 523)
“Because that issue has not yet been presented to FERC, let alone to us, rather than remand, we vacate FERC’s order.” (403 F. App'x at 523)
Factual background
Burlington Resources had entered settlement agreements with Northern Natural Gas and Panhandle Eastern Pipe Line that addressed ad valorem taxes collected as part of long-past gas sales. After prior litigation, FERC ordered the pipelines to refund the disputed taxes to Burlington and stated that the pipelines could not recover the refund amounts from their customers. Northern challenged only the latter determination because the prior appellate decision had not addressed whether the pipelines were themselves liable for the refunds or could pass the cost to their customers.
Procedural history
Burlington Resources previously challenged FERC orders requiring the return of ad valorem taxes collected in connection with past gas sales. In Burlington I, the court remanded for a more adequate explanation; in Burlington II, it vacated the Commission's renewed orders and remanded for proceedings consistent with the opinion. FERC subsequently ordered refunds to Burlington and additionally stated that the pipelines could not recoup those refunds from their customers. Northern did not challenge the refund decision but sought review of the recoupment determination. The court granted the petition and vacated that portion of FERC's order.
Remand instructions
None. The court vacated FERC's recoupment determination rather than remanding.