UNITED STATES OF AMERICA 62 FERC  61, 119 FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: Elizabeth Anne Moler, Chair; Charles A. Trabandt, Jerry J. Langdon, Martin L. Allday, and Branko Terzic. Amoco Pipeline Company ) Docket Nos. IS92-25-000 ) and IS92-25-001 ORDER ACCEPTING WITHDRAWAL OF REQUEST FOR REJECTION AND DENYING REQUEST FOR REHEARING AND MOTION TO STRIKE (Issued February 8, 1993) On April 29, 1992, the Commission's Oil Pipeline Board (Board) issued an order in Docket Nos. IS92-24-000, IS92-25-000, and IS90-30-000 accepting for filing certain tariffs and tariff supplements, suspending certain tariffs subject to investigation and refund, and consolidating proceedings (April 29 order). 1/ On May 14, 1992, Sinclair Oil Corporation (Sinclair) filed a timely request for rehearing of the April 29 order insofar as it relates to Docket No. IS92-25-000. On May 19, 1992, Amoco Pipeline Company (Amoco) filed a motion to strike Sinclair's request for rehearing. On August 5, 1992, Sinclair filed in Docket No. IS92-25-000 a notice of withdrawal of its request for rejection of certain tariffs that constituted a portion of its original protest. As discussed below, we will accept Sinclair's notice of withdrawal of its request for rejection and will deny as moot its request for rehearing of the April 29 order. We will also deny as moot Sinclair's motion to strike. Background On March 30, 1992, Amoco filed a number of proposed tariff sheets applicable to the transportation and gathering of crude petroleum from various origin points in Wyoming, Colorado, Texas, and Utah to various destination points in Indiana, Kansas, Oklahoma, Texas, Utah, Colorado, and Wyoming. Amoco also filed supplements to two other tariffs that canceled those two tariffs. 2/ Amoco requested an effective date of May 1, 1992, for the tariffs and supplements. 1/ Amoco Pipeline Co., 59 FERC  62,105 (1992). 2/ Amoco's filing consisted of FERC Tariff Nos. 1865 through 1892, inclusive, and Supplements No. 1 to FERC Tariff Nos. 1696 and 1763. Docket Nos. IS92-25-000 and IS92-25-001 - 2 - Sinclair, which is an independent refiner of crude oil and a shipper on Amoco's pipeline system, 3/ protested Amoco's filing and filed a petition for intervention, investigation, and request for rejection and/or suspension and consolidation. In its protest, Sinclair contended that proposed FERC Tariff Nos. 1877, 1879, 1880, 1884, 1885, 1886, 1890, and Supplement No. 1 to FERC Tariff No. 1696 4/ cover movements solely within the State of Wyoming and therefore are not within the Commission's jurisdiction. Sinclair requested that these be rejected by the Commission and left to common carrier regulation by the Wyoming Public Service Commission (Wyoming PSC). At a minimum, if there were any question about this jurisdictional issue, Sinclair contended that the Commission should suspend the subject tariffs for the full seven-month statutory period while it determines the jurisdictional issue. In the April 29 order, the Board, inter alia, instituted an investigation in Docket No. IS92-25-000 into the lawfulness of Amoco's FERC Tariff Nos. 1865 through 1890, accepted those tariffs for filing and suspended them for one day until May 2, 1992, when they were permitted to become effective subject to refund. The Board noted that Sinclair's allegation that the Commission lacked jurisdiction over some of these tariffs introduced a new issue not present in Amoco's ongoing proceeding in Docket No. IS90-30-000; therefore, the tariffs in question 5/ were set for separate consideration in Docket No. IS92-25-000. 6/ The Board also ordered that a presiding administrative law judge (ALJ) be designated to convene a prehearing conference in Docket No. IS92-25-000. At the same time it filed tariffs with the Commission, Amoco also filed tariffs with the Wyoming PSC requesting intrastate rate increases for transportation on the pipeline segments covered by the seven tariffs previously noted, which are solely within the State of Wyoming. The Wyoming PSC set the tariffs for hearing and suspended them for six months. Thus, the rates under 3/ In particular, Sinclair stated that it is dependent on Amoco for delivery of crude oil to Sinclair's Wyoming refineries. 4/ Supplement No. 1 to FERC Tariff No. 1696 is not at issue in this proceeding. It cancels FERC Tariff No. 1696 and was accepted for filing effective May 1, 1992, as proposed. 5/ FERC Tariff Nos. 1877, 1879, 1880, 1884, 1885, 1886, and 1890. 6/ Two other proposed tariffs, in Docket No. IS92-24-000, were determined by the Board to supersede tariffs already under investigation in Docket No. IS90-30-000 and were consolidated with that ongoing proceeding. Docket Nos. IS92-25-000 and IS92-25-001 - 3 - the two sets of tariffs, which previously were identical for interstate and intrastate movements within Wyoming, became unequal. As will be discussed below, Sinclair originally sought rehearing of the April 29 order. However, after engaging in discovery and participating in preliminary proceedings before the ALJ, Sinclair asked the ALJ to suspend the procedural schedule, and Sinclair also filed with the Commission its notice seeking to withdraw its request for rejection of the tariffs. On August 11, 1992, the ALJ issued an order suspending the procedural schedule in these proceedings pending the Commission's disposition of Sinclair's notice of withdrawal. Notice of Withdrawal of Request for Rejection Pursuant to Rule 216, Sinclair filed a notice of withdrawal of its request for rejection of certain tariff filings. Sinclair states that its original request for rejection was based on its knowledge that much of the oil it transported on Amoco's Wyoming system was both produced and consumed within that state; therefore, Sinclair believed that the transportation at issue was purely intrastate and that the Commission lacked jurisdiction over it. However, Sinclair states that information it obtained through discovery and on-site inspection of the facilities has demonstrated that both interstate and intrastate transportation occur over these routes. Sinclair states that because both commissions have jurisdiction, Amoco properly filed tariffs with both. According to Sinclair, commingling of these shipments will not change the inherent jurisdictional nature of either, and therefore, the question of whether an interstate or intrastate rate will be charged is only answerable with reference to each individual shipment. Sinclair concludes that there is no longer a basis for it to seek rejection of the subject tariffs. Amoco opposes Sinclair's notice of withdrawal, contending that it is improper because Rule 216 does not authorize withdrawal of a portion of a pleading. Amoco also argues that where withdrawal will not eliminate an actual controversy and the parties have expended considerable time and expense on the issue, the Commission's policy is to reject a notice of withdrawal. According to Amoco, even if the withdrawal is granted, a jurisdictional issue of approximately $500,000 will remain. Amoco also contends that Sinclair's notice of withdrawal should be rejected on grounds of estoppel. Amoco states that Sinclair's claim that until late July of 1992, it did not know that out-of-state oil was shipped over the pipeline segments at issue conveniently overlooks Sinclair's own out-of-state oil purchases that are transported to the Sinclair Wyoming refineries. According to Amoco, Sinclair admitted in its June 5, 1992 data request response that it ships out-of-state oil over Docket Nos. IS92-25-000 and IS92-25-001 - 4 - some of the segments. Amoco asserts that Sinclair has decided the jurisdictional issue for itself because it stands to save almost $40,000 per month by paying Amoco the lower intrastate rates, and Amoco further contends that Sinclair's unilateral decision has caused rate discrimination. Request for Rehearing and Motion to Strike In its request for rehearing of the April 29 order, Sinclair alleges that the Board's action of placing the tariffs in Docket No. IS92-25-000 into effect after a one-day suspension conflicts with an outstanding suspension order of the Wyoming PSC and wrongfully assumes that the Commission has jurisdiction under the Interstate Commerce Act (ICA) over these tariffs. Sinclair states that the parties to the proceeding agree that the jurisdictional issue is a threshold issue. 7/ Sinclair asks the Commission to suspend the filings for at least six months, consistent with the action of the Wyoming PSC and pending resolution of the jurisdictional issue. Amoco asks the Commission to strike Sinclair's request for rehearing, arguing that it is an unauthorized pleading. Amoco states that the one-day suspension order is not a final order and that Rule 713 limits requests for rehearing to final orders. Amoco also argues that Sinclair seeks relief that exceeds the Commission's authority. According to Amoco, the Commission cannot suspend a tariff that has already gone into effect. Discussion Jurisdictional Issue The only jurisdictional issue before the Commission in this rate case is whether the Commission has jurisdiction to determine the justness and reasonableness of the tariffs at issue. That, of course, depends on whether shipments over the pipeline segments covered by these tariffs are intrastate or interstate in nature. Sinclair, which originally sought rejection of these tariffs on the basis that they covered solely intrastate shipments of crude oil, now acknowledges that both intrastate and interstate transportation occur over these pipeline segments, and Amoco does not dispute this fact. According to Sinclair, because both types of transportation occur, Amoco properly filed tariffs with both this Commission and the Wyoming PSC. Amoco has sought to keep the jurisdictional issue alive, largely because it believes that Sinclair has improperly paid for 7/ According to Sinclair, all parties at the prehearing conference on May 8, 1992, agreed that the jurisdictional issue was a threshold issue. Docket Nos. IS92-25-000 and IS92-25-001 - 5 - transportation at the lower intrastate rate and because Amoco claims to have expended considerable resources in these proceedings. Neither of those concerns goes to the question stated above -- whether this Commission has the authority to determine the justness and reasonableness of the rates proposed by Amoco in the filed tariffs. In a rate proceeding under the ICA, such as we have here, we are not authorized to determine whether in a particular instance a shipper should be paying an interstate or an intrastate rate. Further, merely because a party has expended a great deal of time and effort in a proceeding, we cannot keep alive an issue that simply does not resolve the basic question of our jurisdiction to accept proposed rates. As noted above, Amoco does not deny that interstate transportation occurs over the routes in question. With this, the Commission has jurisdiction over the rates in question and Amoco's commingling arguments are irrelevant. Additionally, Amoco's arguments are just plain wrong. Amoco argues that the commingling of the crude oil from Wyoming and other states makes all of the commingled crude oil subject to the interstate rate. This argument has no merit. As the cases demonstrate, the commingling of oil streams is not a factor in fixing jurisdiction under the ICA. Rather, we look to the "fixed and persistent intent of the shipper," and to such factors as whether storage or processing interrupt the continuity of the transportation. 8/ It is not disputed that both interstate and intrastate transportation occur over the pipeline segments in question, nor is there any dispute that crude oil shipped by Sinclair over these segments, no matter where produced, is destined for Sinclair's Wyoming refineries. Therefore, the crude oil produced outside of Wyoming and transported over Amoco's Wyoming facilities to Sinclair's refineries in that state is moving in interstate commerce and is covered by the tariffs filed by Amoco with this Commission. 9/ Transportation over Amoco's 8/ See generally Northville Dock Pipe Line Corp., 14 FERC  61,111 (1981) (reviewing applicable law including Atlantic Coast Line RR Co. v. Standard Oil Co., 275 U.S. 257 (1927); see also Jet Fuel by Pipeline Within the State of Idaho, 311 I.C.C. 439 (Div. 2, 1960); Transportation of Petroleum and Petroleum Products by Motor Carriers Within A Single State, 71 MCC 17 (1957). 9/ These facts are similar to those of Humble Oil & Refining Co. v. Texas & Pacific Ry. Co., 289 S.W. 2d 547 (Tex. 1955), cited by Amoco. That case dealt with crude oil produced in (continued...) Docket Nos. IS92-25-000 and IS92-25-001 - 6 - facilities of that portion of the crude oil that is both produced and refined in Wyoming is subject to the regulation of the Wyoming PSC. Commingling does not alter the jurisdictional nature of the shipments, and as Sinclair has stated, the question of jurisdiction arises only in the context of the facts relevant to individual shipments. 10/ Amoco argues that later decisions have effectively overruled this precedent. However, the cases cited by Amoco relate to the transportation of natural gas, 11/ which is governed by the Natural Gas Act (NGA), and which do not control our determination of the effect of commingling crude oil from various sources. We also note in passing the inconsistency of Amoco's actions in this proceeding. Amoco filed the tariffs seeking a FERC rate determination, thus indicating that it believes FERC to be the correct jurisdictional forum. Further, these tariffs, or the ones they superseded, have been subject to ICC or FERC jurisdiction since 1971. As will be discussed below, Amoco is seeking to resolve a billing dispute through the vehicle of a rate proceeding, an action that we will not permit. Payment Issue Amoco contends that it would be inequitable to allow Sinclair to withdraw its request for rejection after subjecting 9/(...continued) Texas and New Mexico that was commingled in Texas and shipped by rail to various destinations within the state. The Texas court -- rejecting any commingling theory -- held that the portion of the crude oil produced in Texas was subject to the intrastate rate while that produced in New Mexico and ultimately delivered to points in Texas was subject to the intrastate rate. 10/ Although Amoco attempts to distinguish the TAPS decision, Trans Alaska Pipeline System, 23 FERC  61,352 (1983), because all of the crude oil involved in that case was produced in the state of Alaska, Amoco misses the point. In that order, the Commission clearly distinguished the effect of commingling of natural gas subject to the NGA versus the effect of the commingling of crude oil subject to the ICA. 11/ Amoco cites North Dakota v. FPC, 247 F.2d 173 (8th Cir. 1957) and Amerada Petroleum Corp. v. FPC, 334 F.2d 404 (8th Cir. 1964), both of which were reversed by the Supreme Court in FPC v. Amerada Petroleum Corp., 379 U.S. 687 (1965). Amoco also cites Lo-Vaca Gathering Co. v. FPC, 323 F.2d 190 (5th Cir. 1963), which was reversed by the Supreme Court in California v. Lo-Vaca Gathering Co., 379 U.S. 366 (1965). Docket Nos. IS92-25-000 and IS92-25-001 - 7 - Amoco to what it claims is massive discovery. Amoco argues that Sinclair knew before July that both interstate and intrastate transportation occurs over some of the same lines because it knew it was purchasing crude oil outside of Wyoming for transportation to its Wyoming refineries. Without resolution of this issue, Amoco claims that Sinclair receives a $40,000 per month windfall. Sinclair states that the issue described by Amoco is not the issue raised by the rejection request and would not be resolved by a ruling on its original request. According to Sinclair, Amoco is seeking to resolve a billing dispute. We agree with Sinclair. As discussed above, the question originally raised by Sinclair and the only jurisdictional question before us in this rate proceeding is the question of whether the Commission has the authority to determine just and reasonable rates under the tariffs in question. We will not aid Amoco in resolving its billing dispute with Sinclair in this manner. 12/ Withdrawal of Part of a Pleading Amoco argues that the Commission's rules do not allow Sinclair to withdraw part of a pleading and that the Commission is bound by its own rules. Amoco also contends that the Commission's policy is to reject a notice of withdrawal if such withdrawal would leave unresolved a significant controverted issue. Rule 216 of the Commission's Rules of Practice and Procedure 13/ allows an intervenor to file a notice of withdrawal of a pleading. If a motion in opposition is filed within 15 days, the notice is effective when the decisional authority issues an order accepting the withdrawal. Rule 216 also provides that the decisional authority may, for good cause, disallow all or part of a withdrawal. Rule 216 does not prohibit withdrawal of a portion of a pleading. The Commission has considerable latitude in interpreting its rules, and in this case, in the interest of practicality and administrative efficiency, we will permit the partial withdrawal requested by Sinclair. We have no interest in compelling a party to prosecute a claim that it no longer believes is valid. Further, because Rule 215 allows amendment of a pleading, it would be illogical to prohibit partial withdrawal 12/ See, e.g., Public Service Co. of New Hampshire v. New Hampshire Electric Cooperative, Inc., 55 FERC  61,028 at 61,078 (1991). 13/ 18 C.F.R.  385.216 (1992). Docket Nos. IS92-25-000 and IS92-25-001 - 8 - of a pleading -- an action that may have the same effect as an amendment. We have considered the arguments advanced by Amoco and have concluded that Amoco has not demonstrated good cause for us to disallow the partial withdrawal. Our acceptance of Sinclair's notice of withdrawal removes the jurisdictional issue from this case. Notwithstanding the arguments advanced by Amoco that substantial sums are involved in its rate dispute with Sinclair, we do not find that resolution of this payment dispute would be determinative of whether this Commission has jurisdiction to set rates for interstate transportation of crude oil. And the considerable time and effort expended by the parties, while unfortunate, does not constitute good cause for our denying Sinclair's notice of withdrawal, particularly where Amoco seeks resolution of an issue -- the proper rates for individual shipments -- that cannot be determined in a rate proceeding. If Amoco believes that Sinclair has not paid the proper rate for transportation over its pipeline, it should seek redress in the appropriate forum. Request for Rehearing and Motion to Strike Because we will accept Sinclair's notice of withdrawal, there is no longer a question of the Commission's jurisdiction over the subject tariff filings. Our decision on this issue renders moot this aspect of Sinclair's request for rehearing. We will also deny as moot Sinclair's request that we suspend the subject tariffs for six months, consistent with the order of the Wyoming PSC. The six-month suspension period imposed by the Wyoming PSC in its order of April 21, 1992, has now expired. Finally, having denied Sinclair's request for rehearing, we will deny as moot Amoco's motion to strike that pleading. 14/ The Commission orders: (A) Sinclair's notice of withdrawal is accepted. 14/ Although it is not essential to our decision in this matter, we note that the Commission's rules specifically allow requests for rehearing of a suspension order such as the April 29 order. 18 C.F.R.  385.1902(b) (1992). Docket Nos. IS92-25-000 and IS92-25-001 - 9 - (B) Sinclair's request for rehearing of the April 29 order and Amoco's motion to strike that pleading are denied as moot. By the Commission. ( S E A L ) Lois D. Cashell, Secretary.