198 F.3d 960 (D.C. Cir. 2000)
Midcoast Interstate Transmission, Inc.,Petitionerv.Federal Energy Regulatory Commission, RespondentHuntsville Utilities Gas System, City of Huntsville, Alabama, et al., Intervenors
No. 98-1603 Consolidated with98-1604, 99-1047, 99-1090
United States Court of AppealsFOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 24, 1999Decided January 18, 2000

[Copyrighted Material Omitted][Copyrighted Material Omitted]
Petitions for Review of Orders of the Federal Energy Regulatory Commission
Bernard A. Foster III, with whom Marvin T. Griff was on  the briefs, argued the cause for petitioner Midcoast Interstate  Transmission, Inc.
Marvin T. Griff argued the cause and filed the briefs for  petitioners GASP Coalition and Citizens Opposing North  Alabama Pipeline Project.
Monique Penn-Jenkins, Attorney, Federal Energy Regulatory Commission, with whom Jay L. Witkin, Solicitor, and  Susan J. Court, Special Counsel, FERC, were on the briefs,  argued the cause for respondent.
Knox Bemis, with whom R. David Hendrickson, James J.  Cleary, Glenn W. Letham, James R. Choukas-Bradley, Joshua Menter, Edward J. Grenier, and Gregory K. Lawrence  were on the briefs, argued the cause for intervenors.  Wendell B. Hunt, Channing D. Strother, Jr., Jeffrey D. Komarow,  John T. Stough, Jr., Kevin M. Downey, and Joseph M.  Marcoux entered appearances.
Before Ginsburg and Randolph, Circuit Judges, and  Buckley, Senior Circuit Judge.
Opinion filed by Senior Judge Buckley.
Buckley, Senior Judge:


1
Midcoast Interstate Transmission,  Inc., and two unincorporated associations have filed petitions  for review of Federal Energy Regulatory Commission orders  granting Southern Natural Gas Company's application to  construct a natural gas pipeline and denying Midcoast's alternative proposals for serving the same markets.  Petitioners  claim that the Commission failed to make a reasoned evaluation of the competing environmental and economic factors and  that its approval of "rolled-in" rates for Southern's project  ignored the agency's own policy and precedent.  Because we  conclude that the Commission neither abused its discretion  nor acted contrary to law, we deny the petitions.

I. Background
A. Statutory and Regulatory Framework

2
Under section 7 of the Natural Gas Act ("NGA"), 15 U.S.C.  §§ 717-717z (1997), a company seeking to construct and operate any portion of an interstate gas pipeline must apply  to the Federal Energy Regulatory Commission ("FERC") for  a certificate of public convenience and necessity.  15 U.S.C.   717f(c)(1)(A).  Such a certificate


3
shall be issued to any qualified applicant therefor ... if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed ... and that the proposed service ... is or will be required by the present or future public convenience and necessity .


4
Id.  717f(e).  In evaluating certificate applications, FERC  employs "a flexible balancing process, in the course of which  all the factors are weighed prior to final determination."FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 23  (1961).  Congress and the Commission have both stated that  the promotion of competition in the natural gas industry is  one of the Commission's regulatory goals.  See General Motors Corp. v. Tracy, 519 U.S. 278, 283-84 (1997).


5
Section 4 of the NGA provides that "[a]ll rates and  charges" of a natural gas pipeline must be "just and reasonable."  15 U.S.C.  717c(a).  A pipeline may not change its  rates "except after thirty days' notice to the Commission and  to the public."  Id.  717c(d).  When a pipeline files a new  rate, FERC may, upon receiving a complaint or on its own  initiative, "enter upon a hearing concerning the lawfulness of  such rate ...;  and, pending such hearing and the decision  thereon, the Commission ... may ... defer the use of such  rate" for up to five months.  Id.  717c(e).


6
When an interstate pipeline proposes to expand its business  through the construction of new facilities ("expansion facilities"), FERC has the authority to establish the initial rates  that will be charged customers who will be served by those  facilities.  See United Gas Improvement Co. v. Callery Properties, Inc., 382 U.S. 223, 227 (1965) (holding that Commission  may establish initial rates as condition to issuing certificate  "pending determination of a just and reasonable rate"  through a section 4 proceeding).  In May 1995, the Commission issued a policy statement governing how the cost of new  pipeline construction should be "priced," i.e., reflected in the pipeline's rate structure.  See generally Pricing Policy For  New and Existing Facilities Constructed By Interstate Natural Gas Pipelines, 71 FERC p 61,241 (1995) ("Pricing Policy").  The cost of construction may be recovered in either of  two ways:  through "incremental" pricing, which imposes an  additional charge payable solely by customers who are directly served by the expansion facilities ("expansion customers");or "rolled-in" pricing, in which the cost of the new facilities  are added to the pipeline's total rate base and reflected in  rates charged to all customers system-wide.  See Trans Canada Pipelines Ltd. v. FERC, 24 F.3d 305, 307 n.1 (D.C. Cir.  1994).


7
Under the Pricing Policy, when FERC grants a certificate  of public convenience and necessity, it either sets an incremental rate to be paid by consumers served by the new  facilities or establishes a presumption that the facilities will  be of sufficient benefit to existing customers to permit the  pipeline to roll their cost into its system-wide rates.  See  Pricing Policy, 71 FERC at 61,915.  If the Commission issues  a certificate with a presumption of rolled-in pricing, the  expansion customers will initially pay the pipeline's existing  system-wide rates.  Otherwise, they will be required to pay  an incremental rate fixed by the Commission at the time the  certificate issues.  Id. at 61,918 n.12.  Those rates will remain  in place until superceded by new ones established in accordance with section 4 of the NGA.


8
To determine whether a pipeline qualifies for rolled-in  pricing, FERC "look[s] to the extent to which the new  facilities are integrated with the existing facilities and to the  specific system benefits produced by the project."  Id. at  61,915-16.  Where the pipeline can establish that the new  facilities will provide system-wide benefits and that the rolledin rate would constitute an increase of five percent or less to  existing customers, a rebuttable presumption is created in  favor of rolled-in rates.  Id. at 61,916-17.  In such instances,  the Pricing Policy requires the Commission to approve rolledin rates in the next section 4 proceeding absent evidence of a  "significant change in circumstance."  Id. at 61,918.


9
While this case was pending, FERC issued a new policy  statement on the certification of pipeline projects that arguably would have required incremental pricing for the expansion facilities that are the subject of this case.  See generally  Certification of New Interstate Natural Gas Pipeline Facilities, 88 FERC p 61,227 (1999).  The new policy, however, has  no bearing on these proceedings because it does not apply  retroactively.  See id. at 61,750;  Southeastern Michigan Gas  Co. v. FERC, 133 F.3d 34, 37 n. 1 (D.C. Cir. 1998) ("Because  FERC issued its [new pricing] rule after this case had begun  and did not rely on it in this proceeding, we do not consider  what effect its application would have had.").

B.Facts

10
On January 11, 1996, the municipalities of Huntsville and  Decatur, Alabama, (collectively, "the Cities") entered into  twenty-year gas supply contracts with Southern Natural Gas  Company ("Southern") to become effective following completion of a proposed North Alabama Pipeline and ancillary  facilities ("North Alabama Pipeline Project").  At the time,  the Cities were being served by Midcoast Interstate Transmission's predecessor, Alabama-Tennessee Natural Gas Company (collectively, "Midcoast").  Shortly thereafter, Southern  filed an application with FERC, under section 7 of the NGA,  for a certificate of public convenience and necessity to construct and operate these facilities.  Southern's proposed pipeline would extend northward 118 miles from Southern's existing west-to-east natural gas pipeline to the Cities.  To reach  those markets, the new pipeline would have to cross the  Tennessee River and Wheeler National Wildlife Refuge.


11
In July 1996, FERC made a preliminary determination,  contingent on the outcome of an ongoing environmental review, that Southern's proposed pipeline was required by the  public convenience and necessity.  Southern Natural Gas Co.,  76 FERC p 61,122, 61,628, 61,647-48 (1996) ("Preliminary  Determination").  In it, FERC found that "absent significant  changes, [Southern would be allowed] to roll-in the costs of  the facilities in its next rate case."  Id. at 61,637.


12
During the course of the environmental review of Southern's proposal, FERC considered various system and route  options, including the Alabama-Tennessee System Alternative ("Alabama-Tennessee Alternative") for which Midcoast  had filed a certificate application. Southern Natural Gas Co.,  79 FERC p 61,280, 62,200, 62,205 (1997) ("Certificate Order");Alabama-Tennessee Natural Gas Co., 79 FERC p 61,283,  62,237 (1997) ("Order on Application").  This alternative consisted, essentially, of improving the capacity and efficiency of  Midcoast's existing system through the addition of two compressors and related facilities.  These would enable Midcoast  to increase delivery pressures, lower rates, and meet the  Cities' increasing demands for gas.  Approval of the  Alabama-Tennessee Alternative would render the Southern  project superfluous.


13
The Final Environmental Impact Statement ("FEIS") for  Southern's proposal was released on May 23, 1997.  Although  it noted that FERC, the Environmental Protection Agency,  and the Department of the Interior all agreed that the  Alabama-Tennessee Alternative was environmentally preferable to Southern's proposed pipeline, it nevertheless found the  adverse impact of Southern's proposed pipeline to be limited,  and that, with the adoption of the recommended mitigation  measures, the project would be environmentally acceptable. FEIS at S-1.  In an order citing this conclusion, FERC  approved the construction of the North Alabama Pipeline  Project subject to certain conditions, including compliance  with specified environmental requirements.  Certificate Order, 79 FERC at 62,208, 62,222-23.  While it acknowledged  the environmental superiority of the Alabama-Tennessee Alternative, the Commission declared that it was approving  Southern's project "for countervailing policy reasons."  Id. at  62,205.  It described its decision as "providing for the first  time in forty-seven years a competitive alternative for  Alabama-Tennessee's current captive customers," id. at  62,208, and noted that the Cities had taken advantage of this  option by deciding to enter into long-term contracts with  Southern rather than having to rely on Midcoast for their  natural gas.  Id. at 62,209.  Following the issuance of the certificate, and despite the petition for review of the Commission's decision then pending before this court, Southern proceeded with construction of the pipeline.  By September 1999,  Southern had spent approximately $60 million on the project.


14
The Certificate Order incorporated the Preliminary Determination's "findings with respect to the nonenvironmental  issues," id. at 62,222, which included those relating to rolled in pricing.  As a consequence, the Cities initially will be  charged Southern's system-wide rates until such time as new  rates are established in a section 4 proceeding.  A statement  made by Southern's counsel at oral argument and subsequent  submissions by the Cities to the court suggest a disagreement  as to the Cities' obligation to continue to use Southern's  facilities in the event the Commission should order the payment of incremental rates.  Southern contends that the Cities  are under a twenty-year obligation to utilize the North Alabama Pipeline irrespective of the rates they are required to  pay;  the Cities maintain that their contracts do not require  them to pay other than rolled-in rates.


15
FERC denied Midcoast's application for the Alabama Tennessee Alternative.  In doing so, the Commission cited  Midcoast's failure to determine the correct sizing of the  proposed project by conducting an "open season" during  which prospective shippers submit their capacity requests, as  well as its failure to demonstrate market support in the form  of contracts or other understandings with the local distribution companies it proposed to supply.  See Order on Application, 79 FERC at 62,240-41 (deferring action on application);Midcoast Interstate Transmission, Inc., 83 FERC p 61,195,  61,831 (1998) ("Order Dismissing Application").


16
Midcoast filed a second certificate application seeking to  serve the Cities through a proposed Hartselle System Alternative ("Hartselle Alternative").  This alternative would permit Southern to construct the first 98 miles of its proposed  pipeline, at which point the line would be connected with  Midcoast's existing system.  In this manner, gas originating  in the Southern system could be delivered to the Cities without the need for a new crossing of the environmentally sensitive Tennessee River and Wheeler National Wildlife  Refuge.  FERC dismissed this application because of Midcoast's failure to provide a complete response to a request for  certain environmental information and because, unlike Southern, it had no contracts or other evidence of market support  for the project.  See Order Dismissing Application, 83 FERC  at 61,831.

II. Discussion

17
Petitioners maintain that FERC's decisions to grant a  certificate of public convenience and necessity to Southern  and to deny certificates to Midcoast were arbitrary and  capricious.  They also challenge the Commission's application  of its Pricing Policy to establish a presumption that Southern  will be able to roll the construction costs of the North  Alabama Pipeline Project into its system-wide rates.  Finally,  GASP Coalition ("GASP"), an unincorporated association of  individuals and groups concerned with the environmental  aspects of natural gas pipeline regulation, and Citizens Opposing North Alabama Pipeline Project ("CONAPP"), an  unincorporated association formed to challenge Southern's  expansion project, argue that FERC authorized Southern to  exercise the power of eminent domain in violation of the Fifth  Amendment to the United States Constitution.  We have  jurisdiction to hear these consolidated cases pursuant to 15  U.S.C.  717r(b).

A. Standard of Review

18
A reviewing court "must uphold the Commission's decision  unless it is 'arbitrary, capricious, an abuse of discretion, or  otherwise not in accordance with law.' "  Michigan Consol.  Gas Co. v. FERC, 883 F.2d 117, 120 (D.C. Cir. 1989) (quoting  5 U.S.C.  706(2)(A) (1982)).  The Commission, however,  must "articulate a satisfactory explanation for its action including a 'rational connection between the facts found and the  choice made.' "  Motor Vehicle Mfrs. Ass'n of the United  States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43  (1983) (quoting Burlington Truck Lines, Inc. v. United  States, 371 U.S. 156, 168 (1962)).


19
B. FERC's Decision to Grant Southern's Certificate


20
Midcoast asserts that FERC's decision to grant Southern's  certificate for the North Alabama Pipeline Project was arbitrary and capricious for two reasons:  first, the agency failed  adequately to evaluate project alternatives that were environmentally and economically preferable to Southern's proposal ;and second, the record does not support FERC's conclusion  that Southern's proposal would promote competition in the  natural gas market.


21
Under the National Environmental Policy Act ("NEPA"),  FERC is required to evaluate the environmental impact of  each proposed project and issue an Environmental Impact  Statement ("EIS").  See 42 U.S.C.  4332 (1994).  The EIS  must provide "a detailed statement ... on ... alternatives to  the proposed action" and their environmental consequences .Id.  4332(C)(iii).  As the Supreme Court has observed,  however,


22
it is now well settled that NEPA itself does not mandate particular results, but simply prescribes the necessary process.  If the adverse environmental effects of the proposed action are adequately identified and evaluated, the agency is not constrained by NEPA from deciding that other values outweigh the environmental costs.


23
Robertson v. Methow Valley Citizens Council, 490 U.S. 332,  350 (1989) (citations omitted).  All that is required is that the  agency "identify the reasonable alternatives to the contemplated action" and "look hard at the environmental effects of  [its] decision[ ]." Corridor H Alternatives, Inc. v. Slater, 166  F.3d 368, 374 (D.C. Cir. 1999) (internal quotation marks and  citation omitted).


24
FERC concedes the environmental superiority of the  Alabama-Tennessee Alternative, but it has given both the  environmental issues and the alternatives to the North Alabama Pipeline Project careful consideration.  See Certificate  Order, 79 FERC at 62,202-05.  Having taken the required  "hard look," the Commission concluded that other values  outweighed what the FEIS described as the project's limited but nonetheless acceptable environmental costs if specified  mitigation measures were taken.  It then conditioned the  certificate on Southern's compliance with those measures. This strikes us as responsible agency decision making.


25
Nor can we fault the Commission's rejection of Midcoast's  claims of economic superiority for its own alternatives, given  the Cities' decisions to enter into long-term contracts with  Southern.  We have "consistently required the Commission to  give weight to the contracts and settlements of the parties  before it," provided that its authorization of a proposed  service represents the agency's "independent judgment [that]  the new service 'is or will be required by the present or  future public convenience and necessity.' "  Tejas Power  Corp. v. FERC, 908 F.2d 998, 1003 (D.C. Cir. 1990) (quoting  NGA  7(e), 15 U.S.C.  717f(e)).  FERC made such a  determination here.  In its Certificate Order, it considered  Southern's ability to provide the desired service, its own  policy of introducing pipeline competition to a market where  none had previously existed, the Cities' expressed desire to  have an alternate source of natural gas, and the benefits that  Southern's proposed pipeline would offer the Cities in terms  of increased delivery pressure, better service, and the elimination of scheduling complexities.  Certificate Order, 79  FERC at 62,208-10.


26
FERC was entitled to take competition into consideration  in determining whether to approve Southern's certificate  application.  The agency had developed a long-standing policy  of favoring competition in natural gas markets, and it had  "identified the benefits that it believed competition throughout that market would afford consumers, and adopted  industry-transforming rules aimed at securing them."  See,  e.g., Kansas Power and Light Co. v. FERC, 891 F.2d 939, 942  (D.C. Cir. 1989).  FERC was entitled to rely on the general  economic theory that the introduction of competition to the  market will benefit consumers.  See Associated Gas Distribs.  v. FERC, 824 F.2d 981, 1008-09 (D.C. Cir. 1987) ("Agencies  do not need to conduct experiments in order to rely on ...  predictions that competition will normally lead to lower  prices.").


27
Although the Commission has since adopted a new pricing  policy that constitutes a distinct departure from its previous  approach in situations comparable to the one now before us,  that fact is irrelevant to the question of whether it acted  arbitrarily or capriciously at the time it issued the orders now  being challenged.  We are not impressed by Midcoast's arguments that the economic advantages of its alternatives were  so self-evident at the time FERC issued the certificate to  Southern that its reliance on its existing policy was unreasonable.  Nor are we impressed by Midcoast's charge that the  Commission has effectively substituted one monopoly for  another.  The ability of the Cities to contract with Southern  on a long-term basis for the shipment of their natural gas  reflects the fact that, for the first time, they had a choice of  providers.  Their choice of one pipeline over another does not  evidence a lack of competition.  To the contrary, "[u]nsuccessful bidders are no less competitors than the successful  one.  The presence of two or more suppliers gives buyers a  choice."  United States v. El Paso Natural Gas Co., 376 U.S.  651, 661 (1964).

C. Rolled-In Rate Presumption
1.Jurisdiction

28
The Commission argues that we should dismiss the petitions for review of the rolled-in pricing determination for two  reasons.  It asserts, first, that the parties are not aggrieved  by the order, as required by section 19(b) of the NGA as a  precondition to seeking judicial review, 15 U.S.C.  717r(b)  ("Any party ... aggrieved by an order of the Commission ...  may obtain a review of such order in [a U.S.] court of  appeals"),  and second, that the issue is not ripe for review.


29
While FERC's statement of the law is correct, it ignores  the fact that its rolled-in pricing determination can have  consequences more immediate than the establishment of a  presumption for a future rate proceeding.  Midcoast contends, in effect, that but for that determination, it would not  be faced with the loss of the Cities' business upon the  completion of the North Alabama Pipeline.  If that claim  survives analysis, there can be no question that Midcoast has suffered a certain, concrete injury that satisfies both the  statutory and constitutional requirements for judicial review.


30
Whether Midcoast is aggrieved is a question of fact;  and  where they are in dispute, a court must assume the correctness of the challenging party's version of the facts.  See City  of New Orleans, LA v. FERC, 67 F.3d 947, 952 (D.C. Cir.  1995).  Furthermore, in determining whether an injury exists, a court may go beyond the reasons advanced by the  challenger in support of its standing.  See American Trucking Ass'ns, Inc. v. United States Dep't of Transp., 166 F.3d  374, 385 (D.C. Cir. 1999) (inferring an argument in support of  standing);  see also United States Int'l Trade Comm'n v.  Tenneco West, 822 F.2d 73, 75 (D.C. Cir. 1987) (finding  standing for reason other than those offered by Commission).


31
Midcoast's response to FERC's aggrievement argument  reflects more astonishment than coherence.  Nevertheless, in  its briefs and in the administrative proceedings, Midcoast has  presented facts which, if correct, fully support a finding that  it has been aggrieved by the pricing determination.  Midcoast  has calculated that if the Commission had required incremental pricing, Southern would have to charge users of the North  Alabama Pipeline an incremental rate of $10.00 in addition to  its system-wide rate of $8.80, for a total of $18.80 per  decatherm per month, as compared with the $8.60 that Midcoast proposed to charge.  Midcoast contends that given this  disparity, FERC could not have found that the North Alabama Pipeline would be a "competitive alternative" to Midcoast, Certificate Order, 79 FERC at 62,208;  therefore, it  would not have authorized its construction.


32
Accepting, as we must for purposes of our analysis, the  accuracy of Midcoast's calculation of the incremental rate  Southern would be required to charge, we are satisfied that  Midcoast has been aggrieved.  As a direct consequence of the  agency's action and irrespective of the outcome of a future  rate proceeding, Midcoast will have lost the Cities' business  from the moment the North Alabama Pipeline begins deliveries of natural gas until the time that the Cities are released  from their obligations under the Southern contracts--whether that be at the expiration of twenty years (as Southern contends), or at an earlier date (in the Cities' view) if FERC  should subsequently order the payment of other than rolled in rates.


33
It is for this reason that we also find the issue ripe for  review.  FERC argues that the challenge to rolled-in pricing  is not ripe because the Preliminary Determination did no  more than establish a rebuttable presumption in Southern's  favor;  therefore, the matter should be deferred until it can be  determined whether rolled-in rates will in fact be applied.  As  we have pointed out, however, Midcoast's injury is based not  on the likelihood that such rates will be imposed in the future  but on the inescapable fact that, following the Southern  project's completion, Midcoast will lose the Cities' business  for an indeterminate period.  It is this that distinguishes the  present case from New York State Electric & Gas Corp. v.  FERC, 177 F.3d 1037, 1041 (D.C. Cir. 1999), in which we held  unripe a challenge to FERC's establishment of a presumption  in favor of rolled-in rates in a certificate proceeding.  That  case was brought not by a competitor, but by a ratepayer who  would continue to pay existing rates until it was determined,  in the course of the pipeline's next section 4 filing, whether  system-wide customers would be required to absorb the cost  of new construction through the imposition of rolled-in rates .Id. at 1040.  Because Midcoast faces an imminent loss irrespective of the outcome of a future rate proceeding, there can  be no question that the Commission's pricing determination is  ripe for review under the classic test established in Abbott  Laboratories v. Gardner, 387 U.S. 136, 149 (1967):  the legality of the rolled-in pricing determination is fit for immediate  judicial decision, and the hardship faced by Midcoast is  indisputable.

2.The merits

34
Having found Midcoast's challenge to be properly before  us, we now turn to the merits of its claim.  Midcoast alleges  that the Commission's decision to establish a presumption of  rolled-in rates was erroneous for two reasons:  first, the  Pricing Policy is not applicable to cases, such as this, that involve questions of fair competition;  and second, even if the  policy does apply to this case, Southern's project did not meet  the policy's criteria for rolled-in pricing.


35
Petitioners' first argument presents a general challenge to  the Commission's use of its Pricing Policy in a situation where  pipelines of disparate sizes are competing to serve a particular market.  Midcoast maintains that, in such instances, application of the policy will distort market realities because large  pipeline systems, such as Southern's, can readily absorb the  rolled-in cost of new projects without experiencing a rise in  system-wide rates that will exceed the policy's five percent  limit.  As a result, the cost of the expansion facilities is  subsidized by the larger pipeline's existing system-wide customers to the detriment of the smaller competitor.  Midcoast  argues that to apply the Pricing Policy in a manner that  favors one pipeline over another makes a mockery of FERC's  contention that its certificate order serves the interest of  competition.


36
While it is true that the Commission emphasized the desirability of providing the Cities with a choice between pipelines,  Midcoast's argument ignores the independent purpose of the  Pricing Policy, which was to "provide parties with greater  certainty about the rate design that will be applied" to new  pipelines, thereby allowing them to make better decisions as  to such matters as the amount of capacity to develop.  Pricing  Policy, 71 FERC at 61,915.  The Commission, and all those  who offered comments during the development of the Pricing  Policy, felt that such certainty was needed to encourage  efficient growth in the natural gas industry as a whole  following the Commission's restructuring of the industry to  convert pipelines into common carriers.  Id. at 61,914-15  (discussing orders providing for open-access transportation  service and unbundling the sale of gas from related transportation service).  In deciding to encourage efficient pipeline  expansion by offering greater rate certainty at the outset in  circumstances that could affect the balance of market forces,  FERC exercised the kind of judgment on matters of policy  that Congress has entrusted to it.  As the Supreme Court has  reminded us, "[t]he scope of review under the 'arbitrary and capricious' standard is narrow and a court is not to substitute  its judgment for that of the agency."  Motor Vehicle Mfrs.  Ass'n, 463 U.S. at 43. Because the Commission fully addressed Midcoast's argument, we cannot fault its decision to  apply its policy to the facts of this case.


37
We now address Midcoast's contention that FERC misapplied the Pricing Policy.  In reaching a pricing decision, the  Commission will evaluate two factors:  "the system-wide benefits of the project and the rate impact on existing customers."Pricing Policy, 71 FERC at 61,915.  In assessing the first of  these, the Commission will "look to the extent to which the  new facilities are integrated with the existing facilities and to  the specific system benefits conferred by the project."  Id. at  61,915-16.  If the proposed facilities are sufficiently integrated and the impact on existing customers is an increase of five  percent or less, the Commission will generally apply the  presumption in favor of rolled-in rates.  Id. at 61,916.


38
The "question of how to allocate costs among a pipeline's  customers is a difficult issue of fact, and one on which the  Commission enjoys broad discretion."  Algonquin Gas Transmission Co. v. FERC, 948 F.2d 1305, 1313 (D.C. Cir. 1991)  (internal quotation marks and citation omitted).  As always,  its conclusions must be supported by substantial evidence; and when FERC determines that rolled-in pricing is warranted, it must "outline[ ] with reasonable particularity the system-wide benefits which each new facility produces."  Id.  (discussing standard of review of Commission's decision in  rate case).


39
In addition to finding that the system would realize a long term economic benefit of $25 million, the Commission identified four operational benefits that the Southern project would  provide existing customers:  enhancement of system reliability, increase in the availability of interruptible transportation  service, the availability of new opportunities for marketers  and shippers, and the provision of firm service for increased  shipments to the Cities by two Southern system shippers. Preliminary Determination, 76 FERC at 61,638.  These benefits are comparable to the examples cited in the Pricing Policy as justifying rolled-in rates, Pricing Policy, 71 FERC at  61,916 ("increased access, reliability, flexibility, or new services");  and FERC has presented sufficient evidence to support its conclusion that these benefits satisfy the first prong  of its two-factor test.


40
In addressing the second, "five percent" prong, the Commission provided a detailed explanation of how it determined  that rolling in the project's construction costs would result in  a rate increase of only 1.8 percent.  See Southern Natural  Gas Co., 85 FERC p 61,134, 61,526 (1998) ("Order Amending  Certificate").  Although the cost of the project has reportedly  increased from $66.6 million at the time the Commission  made its computation to $103.5 million, this cost overrun  would result in a rate increase of only 2.8 percent, well within  the limits of the Pricing Policy.  In its Preliminary Determination, the Commission described in detail why it chose a  particular depreciation rate and rate of return, why it included or did not include certain portions of Southern's claimed  contract demand, and how it calculated the return Southern  would receive from the new facility over time.  Preliminary  Determination, 76 FERC at 61,637-38.  Furthermore, the  Commission did not blindly accept the numbers provided by  Southern, finding, for example, that the long-term system  benefit would be some $10 million less than the figure submitted by the pipeline.  Id. at 61,638.  Finally, the Commission  specifically addressed the issues Midcoast raised in subsequent motions to reconsider and again explained in some  detail how and why it arrived at its conclusions.  See, e.g.,  Certificate Order, 79 FERC at 62,214-15.


41
Midcoast repeatedly argued that Southern's proposed pipeline was "a downstream lateral for the benefit of one or only a  small number of customers" (quoting the Pricing Policy, 71  FERC at 61,917) and, therefore, should not receive rolled-in  pricing under the Pricing Policy.  The Commission failed to  address this argument in any meaningful way.  Instead, it  dismissed the issue with the following comment:


42
[Midcoast's] assertion that the proposed project is a lateral and thus does not qualify for rolled-in treatment under the policy statement is without merit.  As South-ern notes, its system generally consists of two parallel mainlines with 15 mainline extensions totaling nearly1350 miles and serving 66 firm shippers at 196 delivery points.  The proposed facilities are similar to Southern' sother mainline extensions that have been granted rolled-in rate treatment.


43
Preliminary Determination, 76 FERC at 61,638-39.  In responding to Midcoast's argument in later petitions for rehearing, the Commission simply referred back to this conclusory  "determination" that the proposal was a mainline extension  rather than a lateral.  See, e.g., Order Amending Certificate,  85 FERC at 61,526;  Southern Natural Gas Co., 86 FERC  p 61,129, 61,437 (1999).


44
As unsatisfactory as these responses are, we will not remand the issue for further explanation because the reason  that downstream laterals built for the sole benefit of a few  customers do not qualify for rolled-in pricing is that they  cannot meet the first criterion set forth in the Pricing Policy: they do not provide system-wide benefits.  This is made clear  in the balance of the sentence quoted by Midcoast:  in such  cases, "the Commission generally will presume that the project should be priced incrementally, because other shippers  will not share in the benefits."  Pricing Policy, 71 FERC at  61,917 (emphasis added).


45
Furthermore, the Commission explained that it


46
did not rely on th[e] fact [that the proposed facilities aresimilar to Southern's other mainline expansions] to ap-prove Southern's rolled-in rate proposal....  [T]he Com-mission based its approval of rolled-in rate treatment on its determination that the proposal met the pricing poli-cy's two pronged test....


47
Southern Natural Gas Co., 86 FERC at 61,438.  Because the  agency's findings of system-wide benefits and a minimal rate  impact are supported by substantial evidence, we reject this  challenge to its rolled-in pricing determination.


48
D. The Decision to Deny Midcoast's Petitions


49
Midcoast argues that the Commission's dismissals of its  petitions to construct and operate the Alabama-Tennessee  and Hartselle alternatives were unreasonable and an abuse of  discretion.  We disagree.


50
The application for the Alabama-Tennessee Alternative  was rejected because of Midcoast's failure to hold an open  season, to solicit permanent capacity release offers, to allocate  some existing capacity in a non-discriminatory way through a  bidding process, and to demonstrate market support for its  proposal.  Order Dismissing Application, 83 FERC at 61,82930.  The Hartselle Alternative application was rejected for  failure to file an appropriate environmental report and to  demonstrate market support.  Id. at 61,831.


51
Certain types of market data "must accompany each application when tendered for filing."  18 C.F.R.  157.14(a) (1999)  (emphasis added).  The data to be submitted include a "[c]onformed copy of each contract, letter of intent or other agreement for sale or transportation of natural gas."  Id.   157.14(a)(11)(v).  If no agreements exist, the applicant must  explain its "basis for assuming that contracts will be consummated and that service will be rendered under the terms  contemplated in the application."  Id.  Midcoast failed or was  unable to provide this information for either of its proposals. That the latter may be the case is suggested by the statement, in the Commission's order dismissing the applications,  that "the shippers responding to Southern's open season  adamantly do not want the service from Midcoast."  Order  Dismissing Application, 83 FERC at 61,830.  Be that as it  may, in light of Midcoast's failure to comply with the regulations, FERC's dismissal of the applications is hardly surprising and certainly not unreasonable, arbitrary, or capricious.

E. Fifth Amendment Claim

52
The Fifth Amendment to the United States Constitution  provides that private property may not be taken for public  use without just compensation.  U.S. Const. amend. V. GASP and CONAPP argue that the promotion of competition in natural gas markets is not a legitimate public interest  sufficient to justify the condemnation of the land required for  the pipeline's right-of-way.  Furthermore, even assuming that  the enhancement of competition is a permissible public interest, GASP and CONAPP claim that Southern's taking of  private property for its project is not constitutional because  competition will not actually be achieved by the Commission's  substitution of one natural gas pipeline monopoly for another.


53
Our role in reviewing the use of the condemnation power is  extremely narrow.


54
[A]s long as the condemning authorities were rational in their positions that some public purpose was served ...[t]hat suffices to satisfy the Constitution, and we need not make a specific factual determination whether the condemnation will accomplish its objectives.


55
National R.R. Passenger Corp. v. Boston & Maine Corp., 503  U.S. 407, 422-23 (1992).  Furthermore, the NGA explicitly  provides that


56
[n]othing contained in this section shall be construed as a limitation upon the power of the Commission to grant certificates of public convenience and necessity for service of an area already being served by another natural-gas company.


57
15 U.S.C.  717f(g).


58
Once a certificate has been granted, the statute allows the  certificate holder to obtain needed private property by eminent domain.  Id.  717f(h).  The Commission does not have  the discretion to deny a certificate holder the power of  eminent domain.  As we have already discussed, it was not  improper for FERC to consider the desirability of competition when it decided to grant Southern's application, and its  action did not result in the substitution of one monopoly for  another.  In light of the above, and because, in issuing the  certificate to Southern, the Commission has explicitly declared that the North Alabama Pipeline will serve the public  convenience and necessity, we hold that the takings complained of served a public purpose.

III. Conclusion

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For the foregoing reasons, the petitions for review are


60
Denied.

