 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued November 8, 2010           Decided January 18, 2011

                       No. 09-1236

          FLINT HILLS RESOURCES ALASKA, LLC,
                       PETITIONER

                            v.

     FEDERAL ENERGY REGULATORY COMMISSION AND
              UNITED STATES OF AMERICA,
                    RESPONDENTS

          CONOCOPHILLIPS ALASKA, INC., ET AL.,
                    INTERVENORS


                Consolidated with 09-1251


              On Petitions for Review of Orders
       of the Federal Energy Regulatory Commission


    James M. Armstrong argued the cause for petitioner.
With him on the briefs were David D'Alessandro, Richard A.
Curtin, Patricia F. Godley, Howard E. Shapiro, and Jonathan
D. Simon.      Dennis Lane and Marie D. Zosa entered
appearances.

   Kathrine L. Henry, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondents. With her on
                               2

the brief were John J. Powers III and Robert J. Wiggers,
Attorneys, U.S. Department of Justice, Thomas R. Sheets,
General Counsel, Federal Energy Regulatory Commission,
and Robert H. Solomon, Solicitor.

    Matthew W.S. Estes argued the cause for intervenors
ConocoPhillips Alaska, Inc., et al. in support of respondents.
With him on the brief were John A. Donovan and John Wyeth
Griggs.

   Before: TATEL, Circuit Judge, and WILLIAMS and
RANDOLPH, Senior Circuit Judges.

   Opinion for the court filed by Senior Circuit Judge
WILLIAMS.

   Dissenting opinion filed by Senior Circuit Judge
RANDOLPH.

     WILLIAMS, Senior Circuit Judge: Section 4412 of the
Motor Carrier Safety Reauthorization Act of 2005, Pub. L.
No. 109-59, 119 Stat. 1144, 1778-79 (2005) (“§ 4412”)
imposes a limit on the retroactivity of Federal Energy
Regulatory Commission orders changing “quality bank
adjustments” paid to oil shippers on the Trans Alaska Pipeline
System (“TAPS”).         Specifically, it provides that for
proceedings starting after the date of enactment such orders
cannot reach back more than 15 months before “the earliest
date of the first order of the Federal Energy Regulatory
Commission imposing quality bank adjustments in the
proceeding.” § 4412(b)(2) (emphasis added). In a proceeding
covered by § 4412(b)(2), the Commission identified its initial
order, allowing a carrier-filed adjustment to take effect and
setting the matter for hearing, as § 4412(b)(2)’s “first order.”
We find this interpretation inconsistent with the statute’s
                                 3

language and purpose, and vacate and                  remand the
Commission’s orders.


                               * * *

     Multiple shippers use TAPS to transport crude oil
extracted from oil fields in northern Alaska. The oil they
tender to the pipeline varies in quality, but it flows through the
pipeline in a commingled stream. In the absence of an
accounting adjustment, shippers tendering low-quality oil
would gain a windfall on their ultimate receipt of the same
quantity of oil as they shipped, while those tendering higher-
quality oil would be harmed.

     The TAPS quality bank is an accounting arrangement
designed to put the shippers in the same economic position
that they would have enjoyed absent commingling. FERC,
which regulates TAPS under the Interstate Commerce Act, 49
U.S.C. § 1 et seq. (“ICA”), 1 has been involved from the outset
in establishing the methodology for valuing different types of
oil (called “cuts”). For a general description of the process,
see Exxon Co., U.S.A. v. FERC, 182 F.3d 30, 32-36 (D.C. Cir.
1999).


    1
       In the Department of Energy Organization Act, Pub. L. No.
95-91, § 402(b), 91 Stat. 565, 584 (1977), codified as 49 U.S.C.
§ 60502 (2010), Congress transferred regulatory authority over oil
pipelines from the Interstate Commerce Commission to FERC.
FERC’s regulation of oil pipelines is governed by the ICA as it
existed on October 1, 1977. See Revised Interstate Commerce Act,
Pub. L. No. 95-473, § 4(c), 92 Stat. 1337, 1470 (1978). All
references to the ICA in this opinion are to that version of the ICA,
which can be found in 49 U.S.C. §§ 1-15 (1976), or reprinted in 49
U.S.C. §§ 1-15 (1988).
                              4

     We deal here with the valuation assigned the “heavy
distillate” cut. This had been valued on the basis of Platts’
West Coast spot price for diesel fuel of a specified sulfur
content, less an adjustment for processing costs. Effective
June 1, 2006, Platts dropped that quote in favor of a quote for
a diesel with a much lower sulfur content. Acting under a
provision of the tariff governing all the carrier firms owning
the pipeline, the carriers and the Quality Bank Administrator
(the latter being an office set up to manage the quality bank)
filed on July 28, 2006 a “Notice of Radical Alteration in Basis
for West Coast Heavy Distillate Price Quotation and
Recommended Replacement Price” (“Notice”). The Notice
proposed an alternative formula for valuation of heavy
distillate, to take effect, absent action by FERC and the
Regulatory Commission of Alaska, as of the 60th day after
filing. It is undisputed that the notice and its effective-date
provision were in accord with the tariff and with § 15(7) of
the ICA, which governs carrier-filed rate changes.

     The filing precipitated the usual Commission proceedings
and the usual stream of orders. First, the Commission on
September 26, 2006 issued its hearing order, which accepted
the proposed adjustment subject to refund, and ordered a
hearing on a disputed element (the processing cost
adjustment). BP Pipelines (Alaska), Inc., 116 FERC ¶ 61,291
(2006) (the “Hearing Order”). The administrative law judge
held a hearing and on September 7, 2007 issued an initial
decision, rejecting the filing’s provision on processing costs
and substituting another. BP Pipelines (Alaska), Inc., 120
FERC ¶ 63,018 (2007). The Commission on March 20, 2008
affirmed that decision. BP Pipelines (Alaska), Inc., 122
FERC ¶ 61,236 (“Opinion No. 500”). Besides doing so,
Opinion No. 500 directed the TAPS carriers to make a
“compliance filing,” establishing the processing cost
component of the heavy distillate valuation as prescribed by
the Commission. The carriers made such a filing on April 2,
                               5

2008, and the Commission on December 2, 2008 accepted it
and made it retroactive to June 1, 2006 (date of the cessation
of the old Platts’ quotation). BP Pipelines (Alaska), Inc., 125
FERC ¶ 61,254 (2008) (the “Compliance Order”). Petitioners
sought rehearing with respect to the effective date, which was
denied August 19, 2009. 128 FERC ¶ 61,169 (2009)
(“Rehearing Order”).

    To recapitulate key events in the sequence:

    September 26, 2006: Hearing Order.
    March 20, 2008: Opinion No. 500.
    December 2, 2008: Compliance Order.

    The parties have radically different ideas as to which of
these orders qualifies as “the first order . . . imposing quality
bank adjustments.”         In the Compliance Order, the
Commission chose its Hearing Order. Petitioners prefer the
Compliance Order itself. One of the petitioners before us
previously championed Opinion No. 500, but has since
dropped that position.


                             * * *

     Because FERC is entrusted with the administration of
§ 4412, we review its interpretation under the principles of
Chevron U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 843 (1984). These of course require us, if
the statute is ambiguous, to defer to any reasonable
Commission interpretation. Although we find the language of
§ 4412 ambiguous in the sense of permitting more than one
interpretation, the Commission’s is not among them.

    The statute limits retroactive orders as follows:
                              6

        (1) IN GENERAL. – In a proceeding commenced
    before the date of enactment of this Act, the Federal
    Energy Regulatory Commission may not order retroactive
    changes in TAPS quality bank adjustments for any period
    before February 1, 2000.

         (2) PROCEEDINGS COMMENCED AFTER THE
    DATE OF ENACTMENT. – In a proceeding commenced
    after the date of enactment of this Act, the Commission
    may not order retroactive changes in TAPS quality bank
    adjustments for any period that exceeds the 15-month
    period immediately preceding the earliest date of the first
    order of the Federal Energy Regulatory Commission
    imposing quality bank adjustments in the proceeding.

§ 4412(b).

     Congress adopted § 4412 in response to a particular
Commission decision issued in a prolonged quality bank
proceeding. In that proceeding a FERC order required quality
bank adjustment refunds, authorized by § 15(7) of the ICA,
going back to December 1, 1993, eleven years before the
order’s date. Trans Alaska Pipeline System, 108 FERC
¶ 63,030, P 2952 (2004). See also Exxon Co., U.S.A., 182
F.3d at 49 (issuing the rulings that in the end required such
refunds). Because Alaskan refiners would be among those
required to pay refunds (with interest) going back more than
ten years, Alaska’s representative and senators introduced
bills in Congress that would abolish FERC’s authority to order
any retroactive quality bank adjustments. S. 822, 109th Cong.
(2005); H.R. 2038, 109th Cong. (2005); see 151 Cong. Rec.
S3751-53 (daily ed. Apr. 15, 2005) (statements of Sen.
Murkowski and Sen. Stevens); 151 Cong. Rec. E825-26 (daily
ed. Apr. 28, 2005) (statement of Rep. Young). But the bills
were not enacted as proposed. Instead Congress imposed the
limit on “retroactive changes” quoted above.
                               7


    The parties have argued the case largely as if the Hearing
Order played only the conventional role of such an order
under § 15(7), namely, allowing the rate filed by the carriers
to go into effect as filed (potentially subject to suspension for
a maximum of seven months). There was in fact a curious
wrinkle, but we first deal with the matter as the parties have.

     Under the tariff, the carrier-proposed adjustment would
take effect of its own accord within 60 days. In a
conventional Commission exercise of its authority under
§ 15(7) and under this tariff, the Commission’s hearing order
would (apart from the possible suspension) simply allow the
carriers’ new rate to take effect in accordance with the
carriers’ filing. See ICA § 15(7) (providing that the
Commission cannot suspend the rate more than seven months
“beyond the time when it would otherwise go into effect”). A
Commission decree under which nature simply takes its
course—nature in this case being the new adjustment—
cannot, in the conventions of ordinary discourse, be described
as “imposing” the adjustment.

     The unaddressed wrinkle here is that the Commission
made the newly filed rate effective as of a date earlier than
the one specified by the carriers and Quality Bank
Administrator, namely June 1, 2006 (the date as of which the
old Platts’ quotation ceased to be effective in accordance with
the tariff). Hearing Order, 116 FERC ¶ 61,291 P 6 n.3;
Notice, at 3-4. The Hearing Order does not explain what
authorized the Commission to choose such a date. Section
15(7) does not provide any obvious support for it. And
finally, the passage of the tariff provided to us by the parties
specifies that the controlling adjustment in such an interim
period between the lapse of a relied-on price quotation and the
carriers’ proposed effective date should be “the unit value for
                                8

the last month for which a product price was available.” Id. at
2.

     Accordingly, if we were to characterize the
Commission’s footnote filling the gap between cessation of
the old and initiative of the new as “imposing” an adjustment,
it seems most unlikely to have been an adjustment, or an
imposition of an adjustment, of the sort that the drafters of
§ 4412(b)(2) might have contemplated.

     If ordinary language is somewhat against the
Commission’s theory, far more so is the usual conception that
Congress expects its legislation to accomplish something—
here, of course, to limit refunds’ retroactive reach in cases that
have dragged on interminably. In a standard proceeding
under § 15(7), an order setting a newly filed rate for hearing is
the first step in a process of reviewing the rate. And under
§ 15(7) the Commission’s refund authority is inherently
limited to reaching back to the original effective date of the
newly filed rate, for it allows refunds only of “such portions
of the increased rates or charges as by [the Commission’s]
decision shall be found not justified.”               Under the
Commission’s view, then, § 4412 would limit refunds (at least
for proceedings under § 15(7)) only in a case where the
Commission had delayed issuing any hearing order until 15
months after the filing’s effective date.

     But any such delay appears to be legally barred (at least
in the cases where it is most likely a hearing order would be
issued). 18 C.F.R. § 343.3(c) requires the Commission,
whenever a § 15(7) filing is protested, to issue a hearing order
“before the effective date of the tariff publication or within 30
days of the tariff filing, whichever is later.” Even if there
were no legal limit, FERC counsel conceded during oral
argument that the Commission ordinarily issues a hearing
order during the 60-day window contemplated by the tariff,
                               9

and could not recall a single case where it had waited 15
months. Oral Arg. Recording 22:20-24:10.

     In an effort to suggest some scope for § 4412(b)(2) under
its interpretation, FERC argues that § 4412 as a whole is
concerned solely with resolution of quality bank adjustments
prolonged by its having issued “unlawful orders.”
Compliance Order, 125 FERC ¶ 61,254 P 20; Rehearing
Order, 128 FERC ¶ 61,169 P 45. This theory evidently rests
on the fact that the very proceedings that triggered enactment
of § 4412 featured FERC orders that we vacated and
remanded, thereby undoubtedly delaying ultimate resolution
of the case. See Tesoro Alaska Petroleum Company v. FERC,
234 F.3d 1286 (D.C. Cir. 2000); Exxon Co., U.S.A., 182 F.3d
30; Oxy USA, Inc. v. FERC, 64 F.3d 679 (D.C. Cir. 1995).

    The Commission’s only suggestion of how this “unlawful
order” notion would work is a hypothetical it offers, using this
case as an example:

         On the other hand, if Opinion No. 500 were to be
    reversed on appeal, the Commission would establish a
    new proceeding to determine the processing cost
    adjustment, and the date of the first order in the new
    remand proceeding would be the date to which the
    section 4412(b)(2) 15-month limit would apply.

Rehearing Order, 128 FERC ¶ 61,169 P 45.

     The Commission’s idea that it would respond to reversal
of an order such as Opinion No. 500 by starting a “new
proceeding” leaves a mystery as to the status of the “old
proceeding.” Evidently it would just drop out of the picture,
and the carriers’ filed adjustment would prevail for that
period. But this scenario contradicts the Commission’s effort
to ground its analysis in the prolonged struggle illustrated by
                              10

the Exxon case. If Congress regarded the Commission’s
activities after our reversals as starting “new proceedings,”
one would expect the drafters to have focused rather intently
on defining or modifying “proceeding.” No such thing.
Rather, they used it without definition or other limitation,
suggesting an assumption that it would cover the full sequence
of rulings in which the Commission resolved a specific
adjustment dispute. Similarly, the Commission tells us
nothing about how it believes the line is to be drawn between
a “new . . . proceeding” and a simple continuation of an
ongoing one. What appears to be the Commission’s first
ruling after our Exxon decision, in the case that stirred the
Alaska congressional delegation into action, Trans Alaska
Pipeline System, 90 FERC ¶ 61,123 (2000), certainly says
nothing to fill this gap in the Commission’s theory. Finally,
there is not one syllable in § 4412 suggesting that Congress
had one iota more concern about delays engendered by court
reversal than about ones deriving entirely from FERC itself.

     Our observation here is not the standard claim that if
Congress preferred a particular outcome it could have
expressed the idea more clearly (a proposition that is always
true in any seriously disputed case, and therefore always
useless). Our point is that the Commission’s belief that
Congress was concerned solely with delays engendered by
trips to the courts is belied by the complete absence of
language even hinting at, much less trying to handle, the
special circumstances associated with such a trip.

    Intervenors offer another scenario in which, they say,
§ 4412(b)(2) could actually have an effect, even as interpreted
by FERC. If a shipper challenges an existing filed rate under
§ 13(1), and the Commission has not previously found that
rate to be just and reasonable, the shipper may recover
reparations for up to two years prior to filing its complaint.
See ICA § 16(3) (requiring complaint within two years of
                               11

action’s accrual). See also Arizona Grocery Co. v. Atchison,
Topeka & Santa Fe Railway Co., 284 U.S. 370, 390 (1932)
(holding that the Commission may not order reparations
where a carrier complied with the Commission’s earlier order
declaring its rate to be reasonable); BP W. Coast Products,
LLC v. FERC, 374 F.3d 1263, 1304 (D.C. Cir. 2004).
Because no parties have indicated to us whether there is, or
has recently been, a substantial realm of “cuts” not covered by
FERC-approved formulae (only unapproved ones would be
eligible for retroactive reparations in § 13(1) complaint
proceedings), we have no reason to suppose that there is in
fact any room for FERC to impose retroactive adjustments
under §§ 13(1), 16(3). In any event, given Congress’s clear
focus on a notorious proceeding under § 15(7), an
interpretation of § 4412(b)(2) that is useless in that realm can
hardly be justified by the possibility that it might function
usefully in the hypothetical arena of complaints under § 13(1).

     The Commission argued in its Rehearing Order that if the
Hearing Order does not qualify as § 4412(b)(2)’s “first
order . . . imposing . . . adjustments,” the upshot would be that
an adjustment determined to have been unjust and
unreasonable would go partially unremedied. Rehearing
Order, 128 FERC ¶ 61,169 P 43. But any fixed time limit on
correction of a rate later found unjust and unreasonable
obviously entails such a partial lack of remedy. Such a
limited remedy similarly inheres, for example, in ICA
§ 15(1)’s provision that, on a finding that an existing rate is
unjust and unreasonable, the Commission “is authorized . . . to
determine” the just and reasonable rate “to be thereafter
observed.” Congress often makes a trade-off between a goal
of fully correcting unjust or unreasonable rates and an
aversion to unduly unraveling past transactions.             The
Commission’s job, subject to our review, is to give effect to
Congress’s resolution of that trade-off.
                               12

     In an argument that seems wholly irrelevant, the
Commission notes that the Hearing Order gave all parties
notice of the prospect of a refund of the same scope as would
have applied under the law in the absence of § 4412. We
cannot see how that helps interpret § 4412. Congress’s
purpose was to alter the prior arrangements and limit
retroactive effect vis-à-vis what would previously have
prevailed.

      In sum, the Commission’s interpretation of § 4412’s
phrase, “the first order . . . imposing quality bank
adjustments,” does not readily match ordinary usage of the
terms Congress employed, and, if it fulfills Congress’s goal at
all, does so only with respect to a specialized set of delays that
no word of § 4412 singles out for special treatment, or for a
realm (that of § 13(1)) that may be irrelevant and was
obviously not central to the congressional concern.

      There are two issues that we do not resolve. First,
although invalidating the Commission’s selection of the
Hearing Order’s date as “the first order . . . imposing . . .
adjustments in the proceeding,” we do not choose among the
alternate candidates for that role. Second, we do not address
petitioners’ contention that § 4412(b)(2), in barring
“retroactive changes . . . for any period that exceeds the 15-
month period immediately preceding the earliest date of the
first order,” § 4412(b)(2) (emphasis added), limits refunds to a
maximum total period of 15 months. Resolution of that issue
should occur in an analysis integrating it with a lawful choice
of “the first order.”

     We grant the petition for review, vacate FERC’s orders
with respect to the effective date of the refund, and remand to
FERC for proceedings consistent with this opinion.

                                                     So ordered.
     RANDOLPH, Senior Circuit Judge, dissenting: I would deny
the petition.

     The Commission’s interpretation fits comfortably within the
language of § 4412(b)(2). Before the hearing order of
September 26, 2006, the carriers (through the Quality Bank
Administrator) were legally required to apply, and the quality
bank participants obligated to pay, one adjustment for the heavy
distillate cut. After that order, they were legally required to
apply another. It follows that the September 26 order
“impos[ed]” an adjustment within the meaning of § 4412(b)(2),
or at the least, the Commission reasonably thought it did so.

     The majority opinion rejects the Commission’s
interpretation on the basis that it violates “conventions of
ordinary discourse.” Maj. Op. at 7. Agency orders dealing with
quality bank adjustments on the Alaskan pipeline do not strike
me as the subject of “ordinary discourse.” The majority
explains that the Commission was not “imposing” anything
because it had no discretion to adopt a rate other than the one
the carriers proposed. I do not see why this discretionary
element is an essential ingredient of “imposing” an adjustment
within the meaning of § 4412(b)(2). Our court has spoken of a
district court “imposing” a mandatory sentence—that is, one that
it was legally required to give. See, e.g., United States v.
Gaviria, 116 F.3d 1498, 1512 (D.C. Cir. 1997). The hearing
order gave the carriers’ proposed rate legal sanction. This is all
that § 4412(b)(2) can be read to require.

    Nor do I see why the fact that the carriers’ proposed rate
would, under the tariff, automatically take effect if the
Commission took no action should affect this conclusion. As I
read the tariff, after a filing of a notice of radical alteration, the
Commission may either issue an order imposing the carrier-
proposed rate (possibly subject to hearing) or the carrier-
                               2

proposed rate will take effect after sixty days. The existence of
the second option does not make the first less of an imposition.

     The majority also believes—incorrectly in my view—that
the Commission’s interpretation rendered § 4412(b)(2)
meaningless. In the Commission’s view, Congress enacted
§ 4412(b)(2) “to prevent a recurrence of the prospect of a
lengthy refund period caused by extensive litigation over an
unlawful order.” 125 FERC ¶ 61,254 P 20. The legislative
history cited in the majority opinion, Maj. Op. at 6, indicates
that Congress was particularly concerned with the extended
periods of retroactivity made possible by litigation in the court
of appeals and intended to limit the incentives to litigate
Commission orders created by the possibility of such
retroactivity. See, e.g., 151 Cong. Rec. S3752 (daily ed. Apr.
15, 2005) (statement of Sen. Murkowski). The Commission’s
interpretation may not be plain from the text of § 4412(b), but
all indications are that Congress wanted somehow to limit
retroactive changes in quality bank proceedings.             The
Commission’s interpretation achieves this purpose, and it does
so in a rational manner. That is enough.

     The majority has this response to the Commission’s
“unlawful order” interpretation: if Congress was concerned with
this scenario, it would have addressed it more specifically in
§ 4412. This sort of argument, which is often deployed, has
very little force for reasons we have explained. “Congress
almost always could write a provision in a way more clearly
favoring one side—or the other—in a dispute over the
interpretation of a statute. Its failure to speak with clarity
signifies only that there is room for disagreement about the
statute’s meaning.” Doris Day Animal League v. Veneman, 315
F.3d 297, 299 (D.C. Cir. 2003). Under Chevron the fact that
Congress has left certain terms unspecified should count for the
agency, not against it. The Commission’s interpretation is a
                               3

reasonable reading of the text, even if we would not adopt it
under a de novo standard. See Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, 467 U.S. 837, 844 (1984).

    I therefore respectfully dissent.
