                                                                     [PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT

                      ___________________________

                      Nos. 92-9121, 94-8760, 96-9503
                      ___________________________


ATLANTA GAS LIGHT COMPANY,
                                                       Petitioner,

                                  versus


FEDERAL ENERGY REGULATORY COMMISSION,
                                                       Respondent.

                      ___________________________

                              No. 93-8056
                      ___________________________


AMERICAN GAS ASSOCIATION,
                                                       Petitioner,

                                  versus

FEDERAL ENERGY REGULATORY COMMISSION,
                                                       Respondent.


                      ___________________________

                              No. 97-8032
                      ___________________________


BOARD OF WATER, LIGHT AND SINKING FUND
COMMISSIONERS OF THE CITY OF DALTON, GEORGIA,
                                                       Petitioner,
                                             versus

FEDERAL ENERGY REGULATORY COMMISSION,
                                                                   Respondent.

                         ______________________________________

                             Petitions for Review of Orders of the
                               Federal Regulatory Commission
                         ______________________________________
                                        (May 14, 1998)

Before BARKETT, Circuit Judge, GODBOLD and GOODWIN*, Senior Circuit Judges.

BARKETT, Circuit Judge:

       In this consolidated appeal, appellants Atlanta Gas Light Co. (“Atlanta Gas”), the

American Gas Association (“AGA”), and the Board of Water, Light and Sinking Fund

Commissioners of the City of Dalton, Georgia (“Dalton”), seek judicial review of four related

orders issued by the Federal Energy Regulatory Commission (“FERC” or “the Commission”)

between 1991 and 1996. These orders involved the attempt, ultimately successful, of Arcadian

Corporation (“Arcadian”) to obtain natural gas directly from Southern Natural Gas Company,

(“Southern”), thereby obviating the need to purchase it from Atlanta Gas.

       Arcadian uses natural gas to produce anhydrous ammonia for fertilizer at a plant in

Augusta, Georgia. The plant was built by its corporate predecessor near Southern’s mainline

system in order to obtain the most direct natural gas service available. See Arcadian Corp. v.

Southern Natural Gas Co., [April-June 1991 Transfer Binder] Fed. Energy Reg. Comm’n Rep.

(CCH) ¶ 61,207, at 61,683. Southern provides service directly to end-use customers as well as to



  *
    Honorable Alfred T. Goodwin, Senior U.S. Circuit Judge for the Ninth Circuit, sitting by
designation.

                                               -2-
wholesale local distribution companies (“LDCs”) like Atlanta Gas which, in turn, sells gas at

retail. Beginning in 1963, Arcadian’s predecessor, and later Arcadian, purchased gas for the

plant from Southern’s largest LDC customer, Atlanta Gas. In 1990, however, Arcadian sought

direct service from Southern which would have necessitated the construction of approximately

140 feet of connecting pipeline to physically link Arcadian’s plant with Southern’s pipeline.

Southern refused, and Arcadian filed a complaint with FERC alleging that by refusing its request

for direct service while providing such service to other end-users (including Arcadian’s

competitors), Southern had violated the anti-discrimination provisions of the Natural Gas Act, 15

U.S.C. § 717, et seq. (1994) (“NGA” or “the Act”).

       Arcadian requested that the Commission order Southern to construct the interconnection

facilities for the direct link to the pipeline. Southern opposed this request, contending that its

decision not to provide direct service to Arcadian was a business decision that did not violate the

NGA or its tariff.1 Atlanta Gas, among others,2 intervened in the law suit and argued that § 5 of

the NGA did not authorize the Commission to compel Southern to construct facilities or to

provide transportation service to an individual end-user. The Commission ruled that although it

had the authority to grant the relief sought under § 5 of the NGA, Southern had not discriminated

against Arcadian. Arcadian Corp. v. Southern Natural Gas Co., [April-June 1991 Transfer

Binder] Fed. Energy Reg. Comm’n Rep. (CCH) ¶ 61, 207 (“1991 Order”). On rehearing, FERC


  1
    A tariff is the “contract which governs a pipeline’s service to its customers.” ANR Pipeline
Co. v. FERC, 931 F.2d 88, 90 n.1 (D.C. Cir. 1991). It contains a listing of the pipeline’s rate
schedules and the terms of its service agreements with customers. 18 C.F.R. § 154.2(b) (1994).
  2
    AGA intervened alongside Atlanta Gas. As AGA joins in almost every position advanced by
Atlanta Gas in this appeal, for simplicity’s sake, we refer throughout this opinion only to the
arguments of Atlanta Gas.

                                                 -3-
reaffirmed its authority to grant the relief sought under § 5 of the NGA, but reversed its earlier

decision that Southern had not discriminated and ordered Southern to provide direct service to

Arcadian and to submit tariff sheets which would govern future requests for direct connection by

other end-users like Arcadian. Arcadian Corp. v. Southern Natural Gas Co., [October-December

1992 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) ¶ 61, 183 (“1992 Order”).

       While Southern, Atlanta Gas and AGA sought reconsideration of the 1991 and 1992

Orders, Southern built the interconnection facility mandated by the 1992 Order, and then, in

1993, entered into a settlement in which it agreed to service Arcadian under a requirements

contract and Arcadian agreed to drop its complaint. Atlanta Gas, AGA, and Dalton opposed the

settlement, as well as the proposed tariffs Southern submitted to the Commission. Nonetheless,

the Commission approved the settlement and Southern’s proposed tariffs for end-users and

terminated Arcadian’s complaint proceeding. Arcadian Corp. v. Southern Natural Gas Co.,

[April-June 1994 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) ¶ 61, 176 (“1994

Order”). Atlanta Gas sought rehearing of the 1994 Order on the grounds that FERC had not held

an adequate hearing on the effects of the settlement, that its decision was not rational, and that

even if the settlement was approved, the 1992 Order should be vacated. Dalton challenged

FERC’s approval of the tariffs.

       While these petitions were pending, Southern submitted to the Commission, on March

15, 1995, a proposed settlement ("Global Settlement") it had entered with Atlanta Gas, among

others, to resolve numerous outstanding rate and certificate cases. Certain terms of the Global

Settlement dealt with the Southern-Arcadian bypass, including the agreement of Atlanta Gas to




                                                 -4-
withdraw its claims that the Southern-Arcadian bypass was discriminatory.3 The Commission

thus stayed the rehearing requests filed in response to its 1994 Order pending final action on the

Global Settlement. After subsequently approving the Global Settlement in Southern Natural Gas

Co., [July-September 1995 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) ¶ 61,322,

the Commission issued the fourth and final order under review here denying the petitions for

rehearing of its 1994 Order on November 26, 1996. Arcadian Corp. v. Southern Natural Gas Co.,

[October-December 1996 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) ¶ 61, 210

(“1996 Order”). This Court consolidated for appeal the multiple petitions seeking review of

these four FERC orders.

                                           DISCUSSION

       A.      Statutory and Regulatory Background

       A brief discussion of the organization of the industry and the regulatory framework

governing its participants helps set the scene for the case at bar. The Supreme Court recently

undertook such a summary of the “evolution of the structure of the natural gas industry” in

General Motors Corp. v. Tracy, ___ U.S. ___, 117 S. Ct. 811, 816 (1997). As the Court

explained:

              Traditionally, the industry was divisible into three relatively distinct
       segments: producers, interstate pipelines, and LDCs. This market structure was
       possible largely because the Natural Gas Act of 1938 failed to require interstate
       pipelines to offer transportation services to third parties wishing to ship gas. As a


  3
      The relevant portion of the settlement reads: “Atlanta ... agree[s] to withdraw, in all pending
... judicial proceedings, and to refrain from asserting in any future proceedings ..., any and all
price squeeze and discrimination claims relating to the direct service by Southern to Arcadian ...
pursuant to [their November 1993 settlement] ....” March 15, 1995 Stipulation and Agreement,
Docket Nos. RP89-224, et al., Article XII, ¶ 9, quoted in Arcadian Corp., [October-December
1996 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,856.

                                                 -5-
       result, interstate pipelines were able to use their monopoly power over gas
       transportation to create and maintain monopsony power in the market for the
       purchase of gas at the wellhead and monopoly power in the market for the sale of
       gas to LDCs. For the most part, then, producers sold their gas to the pipelines,
       which resold it to utilities, which in turn provided local distribution to consumers.

               Congress took a first step toward increasing competition in the natural gas
       market by enacting the Natural Gas Policy Act of 1978, which was designed to
       phase out regulation of wellhead prices charged by producers of natural gas, and
       to “promote gas transportation by interstate and intrastate pipelines” for third
       parties. Pipelines were reluctant to provide common carriage, however, when
       doing so would displace their own sales, and in 1985, [FERC] took the further
       step of promulgating Order No. 436, which contained an “open access” rule
       providing incentives for pipelines to offer gas transportation services. In 1992,
       this evolution culminated in FERC’s Order No. 636, which required all interstate
       pipelines to “unbundle” their transportation services from their own natural gas
       sales and to provide common carriage to buyers from other sources that wished to
       ship gas.

               Although FERC did not take the further step of requiring interstate
       pipelines to provide local transportation services to insure that gas sold by
       producers and independent marketers could get all the way to the point of
       consumption, under the system of open access to interstate pipelines that had
       emerged in the mid-1980s “larger industrial end-users” began increasingly to
       bypass utilities’ local distribution networks by “construct[ing] their own pipeline
       spurs to [interstate] pipelines ....”

Id. at 816-817 (internal citations omitted; some brackets in original).

       This case involves disputes arising from precisely this point in the deregulatory process.

The parties’ contentions implicate the regulatory structure established by the NGA. Section 1(b)

of the statute, 15 U.S.C. § 717(b), confers upon FERC comprehensive authority over “(1) the

transportation of natural gas in interstate commerce; (2) its sale in interstate commerce for resale;

and (3) natural gas companies engaged in such transportation or sale.” Panhandle Eastern

Pipeline Co. v. Public Service Comm’n of Indiana, 332 U.S. 507, 516 (1947). In the exercise of

its enumerated powers, the Commission regulates market entry of natural gas producers and

interstate pipelines through Section 7 of the NGA by issuing certificates of public convenience

                                                -6-
and necessity authorizing natural gas companies to transport or sell gas and to construct

necessary facilities. See 15 U.S.C. § 717f(c)(1)(A). In addition, under Sections 4 and 5 of the

NGA, the Commission regulates the price and other terms of sales and transportation of natural

gas to ensure that the rates and charges for such service, as well as any “rule, regulation,

practice, or contract” affecting those rates and charges, are just and reasonable and not the

product of undue discrimination. See 15 U.S.C. §§ 717c and 717d.

       B       Standard of Review

       The standard of review of FERC decisions is governed by § 19(b) of the NGA, which

makes the Commission’s findings of facts “conclusive” if supported by “substantial evidence.”

15 U.S.C. § 717r(b). This standard “is no more than a recitation of the application of the

‘arbitrary and capricious’ standard to factual findings.” Maryland People’s Counsel v. Federal

Energy Regulatory Comm’n, 761 F.2d 768, 774 (D.C. Cir. 1985) (Scalia, J.). The “arbitrary and

capricious” standard hails from the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), which

requires us to uphold the Commission’s actions, findings, and conclusions unless they are

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

       The scope of our “arbitrary and capricious” review is “narrow”; we must “not ...

substitute [our] judgment for that of the agency,” Motor Vehicle Mfrs. Ass’n v. State Farm Mut.

Auto Ins. Co., 463 U.S. 29, 43 (1983), but rather determine whether there was a “‘rational

connection between the facts found and the choice made,’” id. (quoting Burlington Truck Lines,

Inc. v. United States, 371 U.S. 156, 168 (1962)), and examine “‘whether the decision was based

on a consideration of the relevant factors and whether there has been a clear error of judgment,’”

id. (quoting Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285


                                                 -7-
(1974)); see also Florida Power & Light Co. v. FERC, 598 F.2d 370, 380 (5th Cir. 1979).4

         C. The 1994 and 1996 Orders

         There is no question that the settlement between Southern and Arcadian changed the

thrust of the litigation in this case. Thus, we first consider the validity of the 1994 and 1996

Orders approving that settlement. In order for the Commission to approve a settlement involving

the direct interconnection of an interstate pipeline and an industrial end-user, the terms of the

settlement must satisfy the “public convenience and necessity” standard of § 7(e) of the NGA.5

         Atlanta Gas challenged the Commission’s approval of the settlement, essentially

contending that (1) the Commission failed to provide a reasoned justification of the “public

convenience and necessity” of the Arcadian bypass; (2) the Commission failed to hold a full

evidentiary hearing, rendering the orders invalid; (3) the Commission’s retroactive authorization

of the construction of the bypass failed to adhere to the application procedure for the

construction of sales taps; and (4) even if the Commission appropriately approved the settlement,


  4
   Cases decided by the Fifth Circuit prior to October 1, 1981 are binding on this Court.
Bonner v. City of Pritchard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).
  5
      That provision provides in pertinent part:

         (e) Granting of certificate of public convenience and necessity
         ... a certificate shall be issued to any qualified applicant therefor, authorizing the
         whole or any part of the operation, sale, service, construction, extension, or
         acquisition covered by the application, if it is found that the applicant is able and
         willing properly to do the acts and to perform the service proposed and to
         conform to the provisions of this chapter and the requirements, rules, and
         regulations of the Commission thereunder, and that the proposed service, sale,
         operation, construction, extension, or acquisition, to the extent authorized by the
         certificate, is or will be required by the present or future public convenience or
         necessity; otherwise such application shall be denied.

15 U.S.C. § 717f(e) (emphasis added).

                                                   -8-
it should have vacated its 1991 and 1992 Orders. We address each of these contentions in turn.

               1.     Rational Decisionmaking

       In its 1994 Order, FERC concluded that the settlement was required by public

convenience and necessity because, among other things, it was “in accord with our policy

regarding bypass.” Arcadian Corp., [April-June 1994 Transfer Binder] Fed. Energy Reg.

Comm’n Rep. (CCH) at 61,535. The Commission delineated its bypass policy in the 1992

Order. It explained that “[t]he policy allows increased direct access to transportation markets,

imposes upon LDCs the need to discipline costs to maintain customers, allows pipelines to

compete for markets served inefficiently, provides leverage to parties seeking to obtain services

priced efficiently, and assures the benefits of competition to all market participants.” Arcadian

Corp., [October-December 1992 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at

61,680.

       Atlanta Gas contends that the Commission may not rely on the general assumption that

bypassing LDCs will promote competition and increase the general welfare, but that the

Commission must demonstrate that the particular bypass at issue enhances competition. The

Commission responded to this argument in its 1996 Order, where it explained that it is neither

“necessary or possible” for FERC to demonstrate that “every contract signed for pipeline service

‘enhances’ competition, as opposed to being the result of competitive processes.” Arcadian

Corp., [October-December 1996 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at

61,858. In other words, the Commission’s view is that fair competition furthers the public

interest in general terms and over time, even though a particular bypass arrangement may

contain certain undesirable costs. As the Commission explained, its “policy on bypass rests on


                                                -9-
the assumption that market forces operating in fair competition will promote the most efficient

allocation of supplies and transportation capacity and the expectation that LDCs can and will

compete for end-users’ business.” Id. This policy “is not based on an assumption that the

bypass will never result in detriment to an LDC or its ratepayers.” Arcadian Corp., [April-June

1994 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,536. The Commission is

well aware that “[i]n any competition ... someone will lose,” and that, in this case, “Atlanta has

lost the present competition for Arcadian’s business -- at least for the term of its contract with

Southern.” Id.

       The question is whether the Commission’s interpretation of its burden in demonstrating

“public convenience and necessity” for the purposes of Section 7(e) proceedings is supported by

the law. We find that it is. The Commission is an administrative agency charged by Congress

with formulating a regulatory plan for the natural gas industry. A court is “not at liberty to

replace FERC’s economic reasoning, supported by its technical expertise, with [its] own.”

Michigan Consolidated Gas Co. v. FERC, 883 F.2d 117, 123 (D.C. Cir. 1989). FERC

acknowledges that its bypass policy is based on several economic assumptions about the way the

market for natural gas as a whole will perform. It is well within the Commission’s discretion to

make such “predictions” so long as they are “‘rationally based on record evidence.’” Id. at 124

(quoting East Tennessee Natural Gas Co. v. FERC, 863 F.2d 932, 938-39 (D.C. Cir. 1988)).

       The only support Atlanta Gas provides for its assertion that the Commission must show

that each bypass produces a net gain for all parties concerned is Electricity Consumers Resource

Counsel v. FERC, 747 F.2d 1511, 1517 (D.C. Cir. 1984) (“ELCON”). In ELCON the D.C.

Circuit rejected the Commission’s approval of a power company’s marginal pricing rate design


                                                -10-
because the Court found that FERC had merely relied on an economic theory of ratemaking

which, in fact, had not been applied in that case. Id. at 1514, 1517-18. The Court held that

“mere invocation of theory is an insufficient substitute for substantial evidence and reasoned

explanations.” Id. at 1517. Atlanta Gas embraces this statement and contends that it reflects

what FERC has done in this case as well. Yet the ELCON holding is narrower than Atlanta Gas

admits, and FERC has provided a reasoned explanation of its decisions in this case.

       First, the Court in ELCON was careful to note that it was not condemning the use of

economic theory per se, but only reliance on theory where there was no “basis for its adoption in

th[e] [particular] case.” ELCON, 747 F.2d at 1518; see also Associated Gas Distribs. v. FERC,

824 F.2d 981, 1008 (D.C. Cir. 1987) (construing ELCON to apply in cases in which FERC

“‘inexplicably distorted’ the theory that it claimed to apply”) (quoting ELCON, 747 F.2d at

1514). Moreover, the D.C. Circuit has distinguished the more complex economic theory at issue

in ELCON from the “general factual prediction” that competition will lead to lower prices.

Associated Gas Distribs., 824 F.2d at 1008 (“Agencies do not need to conduct experiments in

order to rely on the prediction that an unsupported stone will fall, nor need they do so for

predictions that competition will normally lead to lower prices.”).

       Second, FERC provided reasoned rejections of Atlanta Gas’s allegations that the bypass

in this case was inconsistent with the public interest. Atlanta Gas had argued that, as a result of

this bypass, it and its remaining customers would be harmed. Through affidavits Atlanta Gas

predicted its own lost revenues and attempted to forecast the rates it would have to charge other

consumers if more industrial end-users sought bypasses. See Arcadian Corp., [April-June 1994

Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,535-36. FERC reasoned that


                                                -11-
Atlanta Gas overestimated its losses. Viewing the Atlanta Gas’s position “in context,” the

Commission noted that the Global Settlement between Southern and Atlanta Gas in the wake of

the bypass permitted Atlanta Gas to reduce its firm service from Southern by about 15% of its

requirements, enough, the Commission found, to “offset” the loss of economic rents from

Atlanta Gas’s former sales to Arcadian. Id. at 61,536.6 Further, FERC concluded that Atlanta

Gas’s predictions of future erosions in its customer base, brought about by as yet unknown

bypass cases, was “of necessity” speculative and based on an obviously worst-case scenario

which the Commission did not believe would occur, viz., that Atlanta Gas would do nothing to

compete to retain its current customers. Id. See also Arcadian Corp., [October-December 1992

Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,680-681 (1992 Order, addressing

weaknesses in Atlanta Gas’s proffered evidence).

       Atlanta Gas had also challenged the bypass on the ground that it would inhibit the

Georgia Public Service Commission’s (“PSC”) ability to regulate natural gas rates in order to

protect the interests of the captive market of residential consumers and that FERC failed to take

into consideration these local effects. The Commission discerned that, beyond general

statements that bypass results in cost shifts, Atlanta Gas had presented “little evidence to show

what the ratemaking policies of the Georgia PSC actually are where bypass is concerned, or how

these policies would be affected.” Arcadian Corp., [April-June 1994 Transfer Binder] Fed.


  6
    Atlanta Gas argues that FERC cannot rely on post-hoc events to evaluate the propriety of a
prior policy decision. While this might be true as a general matter, FERC’s decision to permit
the bypass factored into the public-interest equation Atlanta Gas’s ability to take remedial action
to mitigate the effects of any immediate losses. See Arcadian Corp., [April-June 1994 Transfer
Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,536. (noting that the bypass policy takes
into account the fact that “[t]here are competitive responses available to LDCs to avoid the worst
case results predicted by Atlanta [Gas]”).

                                               -12-
Energy Reg. Comm’n Rep. (CCH) at 61,539. It also found insufficient evidence of “an official

state policy of subsidization of residential customers with economic units secured from business,

such that approval of Southern’s request would thwart state ratemaking policies.” Id.7

Moreover, Atlanta Gas’s forecast for residential customers was likewise contingent on the

“speculative” assumption that industrial end-users would bypass Atlanta Gas en masse. Id.

Accordingly, the Commission rejected this objection to the bypass. We cannot say that FERC’s

rationales for rejecting Atlanta Gas’s challenges were arbitrary and capricious.

               2.      Inadequate Hearing

       Atlanta Gas also contends that it raised questions about certain material facts, the

resolution of which mandated that the Commission hold a trial-type evidentiary hearing. The

Commission’s regulations pertaining to settlements allow FERC to decide the merits of

contested issues only “if the record contains substantial evidence upon which to base a reasoned

decision or the Commission determines that there is no genuine issue of material fact.” 18

C.F.R. § 385.602(h)(1)(i). In considering the arguments of Atlanta Gas in its petition for

rehearing of the 1992 Order, the Commission found that the record, which included an oral

argument as well as the same affidavits that Atlanta Gas submitted for the 1991 and 1992 Orders,

was extensive and that there were no material facts in dispute requiring resolution by a trial-type



  7
    Even if the Georgia PSC had pursued such a policy, it would not necessarily derail a
proposed bypass. The Tenth Circuit approved a bypass under just such conditions, noting that
the state utility in question had various options to discourage other industrial end-users from
bypassing the LDC. Cascade, 955 F.2d at 1424-25 (concluding that though FERC’s approval of
the bypass “perhaps demonstrates insensitivity to the state’s current strategy of subsidizing
services to residential consumers, ... there is nothing in this response that would allow us to label
the Commission’s determination as devoid of a rational basis and therefore arbitrary and
capricious”).

                                                -13-
hearing. Arcadian Corp., [April-June 1994 Transfer Binder] Fed. Energy Reg. Comm’n Rep.

(CCH) at 61,539. We review FERC’s decision not to hold a hearing for an abuse of discretion,

Moreau v. FERC, 982 F.2d 556, 568 (D.C. Cir. 1993), and find no abuse of discretion.

       FERC’s conclusion that live testimony by either affiant at an evidentiary hearing would

not have efficiently furthered the inquiry was within its broad discretion to structure its own

proceedings. See Cascade, 955 F.2d at 1425 (observing that the Commission has “some

flexibility in deciding how it will use its resources to achieve the purposes of the hearing”)

(citing Southern Union Gas Co. v. FERC, 840 F.2d 964, 970-71 (D.C. Cir. 1988)); New Orleans

Pub. Serv., Inc. v. FERC, 659 F.2d 509, 515 (5th Cir. 1981) (noting that FERC’s decision not to

hold evidentiary hearing was “consistent with its authority to tailor administrative procedures to

the needs of the particular case”) (citing Vermont Yankee Nuclear Power Corp. v. NRDC, 435

U.S. 519, 544 (1978)) . Indeed, even if the affidavits had presented material factual disputes,

“FERC need not conduct such a hearing if [the disputes] may be adequately resolved on the

written record.” Moreau, 982 F.2d at 568. We cannot say that the Commission abused its

discretion in considering Atlanta Gas’s arguments based on the ample record before it.

               3.      Procedural Irregularity

       We likewise find unpersuasive Atlanta Gas’s claim that the Commission failed to follow

applicable NGA § 7 procedures in the course of authorizing Southern’s voluntary construction of

a sales tap.8 The essence of this argument is that FERC authorized Southern to construct,

operate, and service the connection to Arcadian pursuant to its blanket certificate authority,



  8
    A sales tap refers to “metering and appurtenant facilities necessary to enable the certificate
holder to deliver gas to a distribution customer or an end-user.” 18 C.F.R. § 157.202(b)(10).

                                                 -14-
Arcadian Corp., [April-June 1994 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at

61,540,9 but that Southern failed to file the application required by the governing regulations

before such actions may be taken. See 18 C.F.R. §§ 157.205 and 157.211.

       While it is true that Southern did not technically file an application under the regulation

governing the construction of sales taps, the point of that procedure is to provide notice of the

proposed action to interested parties. See 18 C.F.R. §§ 157.205(a)(1) and 157.211(a)(2). It is

absurd to suggest that Atlanta Gas was not placed on notice of the proposed construction or that

it lacked adequate opportunity to advance its position; Atlanta Gas fully participated in the

proceedings regarding the settlement, filing multiple comments with the Commission and taking

part in oral argument. To accept Atlanta Gas’s position on appeal would elevate form over

substance, something we shall not do.

               4.      The 1991 and 1992 Orders: Mootness and Vacatur

       As we noted at the outset, the 1993 stipulation of settlement between Arcadian and

Southern and the Commission’s 1994 ratification of that settlement fundamentally altered the

landscape of this litigation. The weight of the parties’ debate in anticipation of the 1991 and

1992 Orders pertained to FERC’s power pursuant to § 5 of the NGA to compel Southern to

construct a bypass to alleviate alleged undue discrimination by Southern against Arcadian. In

approving the settlement in the 1994 Order, the Commission viewed its action as mooting



  9
    A blanket certificate is a certificate of public convenience and necessity issued to interstate
pipelines in order to enable them to take certain specified, limited actions “without further
Commission approval.” 18 C.F.R. § 157.203 (1997). Southern was issued one in 1982.
Southern Natural Gas Co., [July-September 1982] Fed. Energy Reg. Comm’n Rep. (CCH) ¶
62,414 (1982) (issuing blanket certificate to Southern under 18 C.F.R. § 157.204, authorizing it
to construct certain minor facilities, including sales taps, subject to prior notice procedure).

                                                -15-
Arcadian’s complaint proceeding as well as Atlanta Gas’s challenge to the 1991 and 1992

Orders. See Arcadian Corp., [April-June 1994 Transfer Binder] Fed. Energy Reg. Comm’n Rep.

(CCH) at 61,540. Atlanta Gas disputes this conclusion. It argues that the issue of FERC’s

power under the NGA to order a pipeline to construct a bypass, which power FERC asserted for

the first time in the 1991 and 1992 Orders, remains live. In the alternative, it asks this Court to

vacate those orders if it finds the issue to be moot.

       “Mootness has been described as the doctrine of standing set in a time frame ....”

Arizonans for Official English v. Arizona, ___ U.S. ___, 117 S. Ct. 1055, 1069 n.22 (1997)

(internal quotation marks omitted). A case becomes moot “when the issues presented are no

longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” Powell v.

McCormick, 395 U.S. 486, 496 (1969). There is no live dispute between the original parties to

the suit. Whether Atlanta Gas, an intervenor under FERC’s regulations, see 18 C.F.R. § 157.10,

has a continuing injury sufficient to enliven the suit is less apparent. Atlanta Gas contends that

its injury consists of the loss of revenue that it would have received from Arcadian during the

period of time following Southern’s commencement of direct supply to Arcadian via the bypass

(January 1993), which Atlanta Gas claims was done pursuant to unlawful FERC orders, to the

date the Commission blessed Southern’s settlement and retroactively approved its construction

of the bypass (May 1994).10 It calculates this loss as approximately $ 4 million. Assuming


  10
     Under § 16 of the NGA, FERC has the “power to perform any and all acts, and to prescribe,
issue, make, amend, and rescind such orders, rules, and regulations as it may find necessary or
appropriate to carry out the provisions of this chapter.” 15 U.S.C. § 717o. This provision grants
FERC “broad authority to do equity consistent with the public interest, and to use means of
regulation not spelled out in detail, provided the agency’s action conforms with the purposes and
policies of Congress and does not convene any terms of the Act.” Northern Natural Gas Co. v.
FERC, 785 F.2d 338, 341 (D.C. Cir. 1986) (citations and quotation marks omitted). Since FERC

                                                 -16-
arguendo that Atlanta Gas’s intervenor status itself does not deprive it of the right to maintain an

interest in the otherwise defunct lawsuit between Arcadian and Southern, its interest in the action

is still insufficient to preclude mootness. Were we to address the merits of Atlanta Gas’s

arguments about the 1991 and 1992 Orders, we would still be unable to afford it any relief which

could redress its injuries. See Purcell v. BankAtlantic Fin. Corp., 85 F.3d 1508, 1511 n.3 (11th

Cir.) (“‘Central to finding of mootness is a determination by an appellate court that it cannot

grant effective judicial relief.’”) (quoting In re Club Assoc., 956 F.2d 1065, 1069 (11th Cir.

1992)), cert. denied sub nom. American Broad. Cos., Inc. v. BankAtlantic Fin. Corp., ___ U.S.

___, 117 S. Ct. 178 (1996); SunAmerica Corp. v. Sun Life Assurance Co. of Canada, 77 F.3d

1325, 1333 (11th Cir. 1996) (“ability of the appellate court to ‘effectuate a partial remedy’ is

sufficient to prevent mootness”) (quoting Church of Scientology v. United States, 506 U.S. 9, 13

(1992)), cert. denied, ___ U.S. ___, 117 S. Ct. 79 (1996). An injunction would do no good

because the pipeline has been built, and § 7 of the NGA does not provide an action for damages.

Thus, we have no difficulty in concluding that the 1991 and 1992 Orders are moot.

       In light of the mootness of Atlanta Gas’s challenges against the 1991 and 1992 Orders,

the question we must resolve is whether vacatur of those orders is proper. Atlanta Gas contends

that vacatur is appropriate under United States v. Munsingwear, 340 U.S. 36 (1950), and A. L.

Mechling Barge Lines v. United States, 368 U.S. 324 (1961). In Munsingwear, the Supreme

Court stated that its “established practice” was to vacate the opinion of a district court which has



found the terms of the Southern-Arcadian settlement, including the bypass included therein, to
be consistent with the public convenience and necessity required by § 7(e) of the NGA, and
because that provision of the statute does not preclude the retroactive approval of actions
undertaken by a pipeline pursuant to a settlement, FERC was empowered to approve a bypass
which had already been constructed.

                                                -17-
been mooted by a change in circumstances while the case is pending appeal. Id. at 39. That

practice “clears the path for future relitigation of the issues between the parties and eliminates a

judgment, review of which was prevented through happenstance. When that procedure is

followed, the rights of all parties are preserved[.]” Id. at 40. In Mechling, the Supreme Court

held that “the principle enunciated in Munsingwear [is] at least equally applicable to unreviewed

administrative orders.” 368 U.S. at 329.

       FERC does not address the question of vacatur in its brief. We conclude that under

Mechling, the 1991 and 1992 Orders should be vacated. In Mechling, several railroads filed

tariffs with the Interstate Commerce Commission (“ICC”). Over the objections of several barge

lines, the ICC granted temporary approval of the tariffs, and the barge lines filed a declaratory

judgment action in district court. While the case was pending, the railroads withdrew the portion

of the tariffs that the barge lines were contesting and filed a motion to dismiss the case on the

ground that it was moot. The district court granted the motion, and the barge lines appealed

directly to the Supreme Court, which applied “the principle enunciated in Munsingwear” and

held that “[t]he District Court should have vacated the order which it declined to review.”

Mechling, 368 U.S. at 329, 331. See, e.g., American Family Life Assurance Co. of Columbus v.

FCC, 129 F.3d 625, 630 (D.C. Cir. 1997) (noting that “[s]ince Mechling we have, as a matter of

course, vacated agency orders in cases that have become moot by the time of judicial review”).

       This result serves the policies animating Mechling and Munsingwear. See Westmoreland

v. National Transp. Safety Bd., 833 F.2d 1461, 1463 (11th Cir. 1987) (emphasizing that courts

should not apply the vacatur rule “automatically,” but instead should consider the policies

underlying Munsingwear and Mechling before deciding if vacatur is appropriate). Those cases


                                                -18-
are premised on the equitable principle that “[a] party who seeks review of the merits of an

adverse ruling, but is frustrated by the vagaries of circumstance, ought not in fairness be forced

to acquiesce in the judgment.” U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513

U.S. 18, 25 (1994). Atlanta Gas did nothing to moot the 1991 and 1992 Orders. Those rulings

were mooted by Southern’s decision to settle the complaint proceeding brought by Arcadian

against it.11 By vacating the 1991 and 1992 Orders we express no view as to the merits of

FERC’s asserted authority under § 5 of the NGA to compel a pipeline to construct a bypass to

provide direct service to an industrial end-user. FERC is not harmed by our decision to vacate,

for our decision does not foreclose FERC from asserting its view of its powers in an appropriate

future proceeding. See Mechling, 368 U.S. at 330. In accord with Mechling and Munsingwear,

we vacate the 1991 and 1992 Orders.

       D.      Dalton’s Rate Challenge



  11
     FERC asserted in the 1996 Order that Atlanta Gas’s involvement in the Global Settlement
“caused the mootness” in this case, and that, therefore, vacatur is inappropriate. See Arcadian
Corp., [October-December 1996 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,
859. FERC relied on the Supreme Court’s holding in Bancorp, supra, which reaffirmed
“Munsingwear’s dictum that mootness by happenstance provides sufficient reason to vacate,”
Bancorp, 513 U.S. at 25 n.3, but held that a party who moots a dispute through settlement and
thereby forfeits its legal right of appeal or certiorari “surrender[s] [its] claim to the equitable
remedy of vacatur.” Id. at 25. In that case, the parties to the action mooted the case through
settlement, and the losing party in the court of appeals (Bancorp) sought to vacate the court’s
opinion. The Supreme Court therefore denied Bancorp’s plea to vacate the adverse opinion of
the court of appeals. Id. at 29.
        However, Bancorp does not control this case because Atlanta Gas was not a party to the
settlement which mooted the action. FERC acknowledged as much when it found, in the 1994
Order, that the Southern-Arcadian settlement was the relevant source of mootness. See Arcadian
Corp., [April-June 1994 Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,539
(stating that the question of the Commission’s authority to compel the bypass had been rendered
“demonstrably moot since Southern no longer opposes Arcadian’s request for service, but
instead is actively seeking authority to provide it.”) (emphasis added).

                                               -19-
       Dalton contends that the pro forma bypass tariff provisions approved in the 1994 and

1996 Orders allow Southern to compete unfairly with Dalton in the provision of gas services to

industrial end-users. Specifically, Dalton focuses on a provision of the approved tariff which

requires Southern to accede to “economically feasible” bypass requests by end-users; defines

economic feasibility as an arrangement that either produces a revenue gain or is “revenue

neutral”; and deems a bypass revenue neutral if the shipper obtaining the direct connection

(presumably the end-user) pays for the construction of the direct connection. Among other

things, Dalton contends that this provision would make it impossible for it and other LDCs to

compete with Southern for the requirements of industrial end-users. The Commission found this

core contention unpersuasive. First, the Commission reiterated that it anticipated strong

competition with pipeline services from LDCs. Arcadian Corp., [October-December 1996

Transfer Binder] Fed. Energy Reg. Comm’n Rep. (CCH) at 61,860. Moreover, it announced its

intent to construe Southern’s tariff provisions on a case-by-case basis to ensure such competition

is fair. Id. Finally, FERC observed that the Global Settlement provisions regarding absorption

of discounts, the PSC-out clause, and the load loss provision, taken together, reduced the

significance of Dalton’s concerns. Id. Accordingly, the Commission rejected Dalton’s

argument.

       Dalton appeals this decision. However, its appeal is not ripe. Ripeness concerns “the

timing of the suit.” Wilderness Society v. Alcock, 83 F.3d 386, 390 (11th Cir. 1996). “A claim

is not ripe for adjudication if it rests upon contingent future events that may not occur as

anticipated, or indeed may not occur at all.” Texas v. United States, ___ U.S. ___, 118 S. Ct.

1257, 1259 (1998) (internal quotation marks omitted). The doctrine of ripeness “‘prevent[s] the


                                                -20-
courts, through avoidance of premature adjudication, from entangling themselves in abstract

disagreements over administrative policies’ as well as ‘protect[s] the agencies from judicial

interference until an administrative decision has been formalized and its effects felt in a concrete

way by the challenging parties.’” Wilderness Society, 83 F.3d at 390 (quoting Abbott

Laboratories v. Gardner, 387 U.S. 136, 148-49 (1967)). Although the NGA does not impose a

ripeness requirement on judicial review of its orders, we have long held that FERC orders must

be ripe for judicial review. Pennzoil Co. v. FERC, 645 F.2d 394, 398 (5th Cir. 1981).

       To determine whether a claim is ripe for review, a court must “evaluate both the fitness

of the issues for judicial decision and the hardship to the parties of withholding court

consideration.” Abbott Laboratories, 387 U.S. at 149. This evaluation is informed by

consideration of four factors: (1) whether the issues presented are “purely legal”; (2) whether the

challenged agency action constitutes “final agency action”; (3) whether the administrative action

has a “direct and immediate” impact on the petitioner; and (4) whether judicial resolution of the

claim will aid, rather than impede, effective administration by the agency. Id. at 149-54;

Pennzoil, 645 F.2d at 398.

       These considerations counsel against deciding the merits of Dalton’s challenge to the

tariff provisions at this juncture. First, Dalton’s challenge does not present a purely legal

question. Whether the economic feasibility provision of the Southern-Arcadian settlement

unduly discriminates against Dalton depends entirely on the specific terms involved in a future

bypass and Dalton’s relative market position at that time. Second, at the time of a proposed

bypass affecting Dalton, Southern will have to follow the notice procedures of 18 C.F.R. §

157.205, Dalton will have an opportunity to protest, and the Commission will make a


                                                -21-
determination of whether the bypass is in the public convenience and necessity. Until this

“second-stage” administrative decision is made, no relevant final agency action has been taken.

Wilderness Society, 83 F.3d at 390. Third, because no end-user customer of Dalton’s has sought

to bypass it yet, the 1994 and 1996 Orders have no “direct and immediate” impact on Dalton.12

Finally, judicial evaluation of the merits of Dalton’s challenge without sufficient factual

development of a particular bypass case is improper and risks interference with FERC’s bypass

policy, which assumes that LDCs will take steps to compete with pipelines for the business

natural gas consumers.

       Accordingly, we dismiss Dalton’s petition as unripe and affirm the Commission’s

approval of Southern’s pro forma tariff bypass provisions.

                                         CONCLUSION

       In light of the foregoing, we AFFIRM the Commission’s 1994 and 1996 Orders and

direct the Commission to VACATE the 1991 and 1992 Orders.

       AFFIRMED in part and REVERSED in part.




  12
     Dalton argues that the tariff provisions nonetheless injure it presently because (1) they
undermine Dalton’s “competitive position” with its customers even before the customers seek
direct service from Southern, (2) Dalton would bear the burden of proof in a future challenge to a
proposed bypass agreement, and (3) any Section 5 hearing is certain to be protracted and costly.
However, for the impact of a FERC order to qualify as immediate, it “must have ‘some
substantial effect on the parties which cannot be altered by subsequent administrative action.’”
Pennzoil, 645 F.2d at 399 (quoting Atlanta Gas Light Co. v. Federal Power Comm’n, 476 F.2d
142, 147 (5th Cir. 1973)). FERC’s opportunity to reject a particular future bypass on its merits
forecloses a showing of immediacy by Dalton.

                                                -22-
