Commissioner James Danly Statement
November 16, 2023
Docket No. OR18-7-003, et al.

I dissent in full from this order.  While there are a number of findings in this order that I would have handled differently, instead of an exhaustive list, I will focus on a single, fundamental issue: jurisdiction.

It could very well be that Colonial Pipeline Company’s (Colonial) is overcharging when it comes to its cost-based transportation rates.  But these complaints, to the extent to which they concern Colonial’s grandfathered rates should never have gone as far as they have and the fact that they have gotten this far, demonstrates that the Commission has failed to take Congress at its word when it enacted the Energy Policy Act of 1992 (EPAct 1992).[1]  The intent of Congress when enacting that legislation was to establish a more predictable and routine method by which oil pipelines could seek rate adjustments and, in doing so, it also protected pre-existing rates by establishing an extraordinarily strong presumption against challenging[2] those rates.

Now, I did not vote for the Hearing Order setting these complaints for hearing.[3]  I was not yet a Commissioner.  In my view, the decision to set the complaints, and specifically the issues regarding grandfathered rates, for hearing was misguided.  I therefore disagree with the Commission’s determinations in today’s order regarding “Grandfathering.”[4] 

As today’s order recognizes, “[t]he Initial Decision argues that the Commission’s Hearing Order erred by setting Colonial’s grandfathered rates for investigation,” “[t]he Initial Decision interprets section 1803(b) of EPAct 1992 as requiring complainants to present a conclusive showing of substantially changed economic circumstances in their complaints,” and “the Initial Decision argues that the Complaints did not make a sufficient showing of changed circumstances as required by EPAct 1992.”[5]  I agree.

The complaints indeed failed to make a sufficient showing to challenge the grandfathered rates.  I therefore disagree with my colleagues’ assertion that “because no party sought rehearing of the Hearing Order, any argument challenging the Commission’s decision that the Complaints presented sufficient evidence to warrant a hearing has been waived.”[6]  Jurisdictional arguments are always relevant and cannot be waived.  If there is no jurisdiction, then the Commission has no authority to act. 

Specifically, I dissent from my colleagues’ “find[ing] that the Hearing Order properly determined that the Complaints satisfied the standard necessary to set the challenges to Colonial’s grandfathered rates for hearing” and all aspects of today’s decision regarding the grandfathered rates.  It is really simple: we do not have jurisdiction.[7] 

My colleagues state that they

continue to conclude that the Complaints presented adequate evidence of substantial change under section 1803(b).  At the complaint stage, shippers challenging grandfathered rates must provide evidence establishing a prima facie case for concluding that a substantial change has occurred.  However, the Commission can set the matter for hearing and evaluate whether the complaint satisfies the standard for challenging grandfathered rates.[8]

My colleagues’ interpretation of the standard for filing a complaint regarding grandfathered rates appears in direct tension with the language in the statute.  EPAct 1992 established that:

  • (a) RATES DEEMED JUST AND REASONABLE.—Except as provided in subsection (b)—
    • (1) any rate in effect for the 365–day period ending on the date of the enactment of this Act shall be deemed to be just and reasonable (within the meaning of section 1(5) of the Interstate Commerce Act); and
    • (2) any rate in effect on the 365th day preceding the date of such enactment shall be deemed to be just and reasonable (within the meaning of such section 1(5)) regardless of whether or not, with respect to such rate, a new rate has been filed with the Commission during such 365–day period; 
    • if the rate in effect, as described in paragraph (1) or (2), has not been subject to protest, investigation, or complaint during such 365–day period.
  • (b) CHANGED CIRCUMSTANCES.—No person may file a complaint under section 13 of the Interstate Commerce Act against a rate deemed to be just and reasonable under subsection (a) unless—
    • (1) evidence is presented to the Commission which establishes that a substantial change has occurred after the date of the enactment of this Act—
      • (A) in the economic circumstances of the oil pipeline which were a basis for the rate; or
      • (B) in the nature of the services provided which were a basis for the rate; or
    • (2) the person filing the complaint was under a contractual prohibition against the filing of a complaint which was in effect on the date of enactment of this Act and had been in effect prior to January 1, 1991, provided that a complaint by a party bound by such prohibition is brought within 30 days after the expiration of such prohibition.
    • If the Commission determines pursuant to a proceeding instituted as a result of a complaint under section 13 of the Interstate Commerce Act that the rate is not just and reasonable, the rate shall not be deemed to be just and reasonable. Any tariff reduction or refunds that may result as an outcome of such a complaint shall be prospective from the date of the filing of the complaint.
  • (c) LIMITATION REGARDING UNDULY DISCRIMINATORY OR PREFERENTIAL TARIFFS.—Nothing in this section shall prohibit any aggrieved person from filing a complaint under section 13 or section 15(l) of the Interstate Commerce Act challenging any tariff provision as unduly discriminatory or unduly preferential.[9]

The operative words, which are applicable to complaints against Colonial’s grandfathered rates (i.e., rates that have been deemed by EPAct 1992 to be just and reasonable),[10] is that “[n]o person may file a complaint under section 13 of the [ICA] . . .  unless . . .  evidence is presented to the Commission which establishes that a substantial change has occurred after the date of the enactment of this Act.”[11]  This language does not suggest, as my colleagues do, that the standard is prima facie evidence.  No, the standard established, in order to achieve the clear intent of Congress to protect pre-existing rates, is that a complainant must overcome an extraordinary burden merely to open the Commission’s doors to entertain their challenge:  they must establish that a substantial change has occurred.  Without such a showing, we do not have jurisdiction over the complaint.  So restricted are we in hearing such challenges that “no person may file” absent that showing in the first instance.  My colleagues, however, continue on the path to “make a . . .  determination whether Colonial’s indexed rates are de-grandfathered and may be reduced below the grandfathered level.”[12]

Here is what should have occurred.  Because the requisite showing has not been made, the Commission should have dismissed the complaints without prejudice.[13]  But given where we are, in today’s order—at a minimum—we should have remanded the proceeding back to the Administrative Law Judge with instructions to dismiss the complaints to the extent to which grandfathered rates are challenged absent the requisite showing, and further instructions to issue a superseding initial decision.  I say “at a minimum” because it would have been cleaner and would have sent a better signal to enforce the intent of EPAct 1992 had the Commission dismissed the complaints that intertwined arguments regarding grandfathered rates without prejudice instead of having issued the Hearing Order.[14]

Finally, I want to point out that today’s order states that “[t]he discussion in [the] order includes citations to nonpublic information, only to the extent necessary to identify where relevant nonpublic information may be found in the record.”[15]  This order is long; the record is longer.  And while it is my typical practice to check every citation in the orders to which my name is affixed in order to confirm whether privileged information has been disclosed, it was simply not possible given the amount of time available before it was brought forth for the Commission’s consideration.  To the extent to which this order may have inadvertently disclosed privileged information, I disagree with its inclusion in today’s order and, indeed, any order.  This concern of mine is not new.  While I did not avail myself of the opportunity to address this issue in a separate statement, my uncertainty as to whether privileged information was disclosed in a recent proceeding was one of the reasons that I concurred in the result in West Texas Gulf Pipe Line Co. LLC, 184 FERC ¶ 61,182 (2023)—I will take the opportunity now.  I do not support any reasoning in the Commission’s order that amounts to a disclosure of privileged information.

For these reasons, I respectfully dissent.


James P. Danly


[1] Energy Policy Act of 1992, Pub. L. 102–486, 106 Stat 2776 (Oct. 24, 1992) (EPAct 1992).

[2] Note I said challenging, which is to say, challenging them in the first instance.

[3] See Epsilon Trading, LLC v. Colonial Pipeline Co., 164 FERC ¶ 61,202 (2018) (Hearing Order).

[4] See Epsilon Trading, LLC v. Colonial Pipeline Co., 185 FERC ¶ 61,126, at PP 361-456 (2023) (Order on Initial Decision).

[5] Id. P 370 (citing Epsilon Trading, LLC v. Colonial Pipeline Co., 179 FERC ¶ 63,008, at PP 405-410 (2022) (Partial Initial Decision); id. PP 415-416).

[6] Id. P 374.

[7] Id. To be clear, when I refer to this as a jurisdictional issue, the point that I am making is that the Commission lacks jurisdiction to hear a complaint that no person can file.

[8] Order on Initial Decision, 185 FERC ¶ 61,126 at P 376.

[9] EPAct 1992 at § 1803.

[10] See id. § 1803(a).

[11] Id. § 1803(b).

[12] Order on Initial Decision, 185 FERC ¶ 61,126 at P 456.

[13] In fact, since the statute specifies that “no person” may file a complaint, were we to read the statute for all it is worth, we might well require complainants to file an ICA petition which includes all of the evidence “establish[ing] that a substantial change has occurred” to which they can attach a motion to file a complaint to which they might further attach a complaint.  Perhaps a trifle procedurally cumbersome, but certainly more in keeping with the spirit of EPAct 1992.

[14] Hearing Order, 164 FERC ¶ 61,202.  I do not dispute that “section 1803(b) only applies to challenges against the grandfathered portions of Colonial’s indexed rates.”  Order on Initial Decision, 185 FERC ¶ 61,126 at P 381.  Nor do I dispute that “the Commission retains jurisdiction to evaluate the pipeline’s indexed rates to the extent they exceed the grandfathered level.”  Id. P 381 n.968.  Therefore, I agree that “grandfathering only applies to rate levels in effect at the time of EPAct 1992’s enactment and that Congress did not intend to limit the Commission’s jurisdiction to investigate rates increased above the grandfathered level.”  Id.  My dissent, however, focuses on the Commission’s decision to continue on its chosen procedural path to “make a . . .  determination whether Colonial’s indexed rates are de-grandfathered and may be reduced below the grandfathered level” when, under EPAct 1992, the prerequisites for filing a complaint on grandfathered rates have not been satisfied.  Id. P 456.

[15] Id. P 9 n.11.

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