Trans Alaska Pipeline Rate Cases

Background

In the 1970s large oil deposits were developed in Alaska and owners built a new, multibillion-dollar pipeline to move crude to tidewater. Seven pipeline owners filed initial tariffs in 1977 setting rates and rules for transporting oil. The State of Alaska, a regional Native corporation, the Department of Justice, and the Commission’s staff protested that the filed rates were probably excessive. The Interstate Commerce Commission suspended the new tariffs for the full suspension period allowed by law, set interim maximum rates it would allow to operate during the suspension, required carriers to keep records, and ordered refunds of any amounts later found unlawful.

Reasoning

The Court addressed three questions: whether the Commission can suspend initial rates, whether it may set interim maximum rates without a full hearing, and whether it may require refunds of overcollections. Looking to the statute’s plain words, earlier regulatory practice, and the purposes of ratemaking statutes, the Court held that “new” rates plainly includes initial rates and that suspension power extends to them. The Court also held that setting tentative interim maximum rates and imposing refund conditions are lawful ancillary tools closely related to the Commission’s duty to protect the public while it investigates and to strike a fair balance between carriers and users.

Real world impact

As affirmed, the decision lets federal regulators prevent newly filed rates from taking full effect if they appear unreasonable, impose lower temporary rates so service can continue, and require carriers to refund unlawful overcharges after full hearings. The practical result is faster protection for shippers, state royalty interests, and the public against excessive initial charges while final rate adjudications proceed, and further proceedings on the tariffs will continue before the agency.