91 F.3d 1478
320 U.S.App.D.C. 17
PUBLIC SERVICE COMPANY OF COLORADO, et al., Petitioners,v.FEDERAL ENERGY REGULATORY COMMISSION, Respondent,OXY USA Inc., et al., Intervenors.
Nos.  94-1418, 94-1481, 94-1489 and 95-1138.
United States Court of Appeals,District of Columbia Circuit.Argued Jan. 12, 1996.
Decided Aug. 2, 1996.

[320 U.S.App.D.C. 18] On Petitions for Review of an Order of the Federal Energy Regulatory Commission.
Mark L. Evans argued the cause for petitioner Anadarko Petroleum Corporation, et al.  (Producer Petitioners), with whom John S. Martin was on the briefs.  Thomas R. Schwarz, Jr., Jefferson City, MO, argued the cause for petitioner Missouri Public Service Commission, with whom David W. D'Alessandro and Kelly A. Daly, Washington, DC, were on the briefs.  Karol L. Newman, Washington, DC, argued the cause for petitioners Public Service Company of Colorado and Cheyenne Light, Fuel and Power Company, with whom James D. Albright, Denver, CO, was on the briefs.
[320 U.S.App.D.C. 19] Eric L. Christensen, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent, with whom Jerome M. Feit, Solicitor, was on the brief.
Thomas R. Schwarz, Jr., Jefferson City, MO, and David W. D'Alessandro, Washington, DC, were on the brief for intervenor Missouri Public Service Commission.  Penny G. Baker, Jefferson City, MO, entered an appearance.  Emery J. Biro, III, Houston, TX, Jay G. Martin, Douglas F. John, Washington, DC, Kevin M. Sweeney, Kerry R. Brittain and Norma J. Rosner were on the brief for intervenors in support of respondent.  Mark L. Evans, Jay G. Martin, Washington, DC, Marge O'Connor, J. Stephen Martin, Houston, TX, and Kerry R. Brittain were on the brief for the Producer Intervenors.  Gary W. Boyle, Tulsa, OK, was on the brief for intervenor Williams Natural Gas Company.  Martin J. Bregman, Topeka, KS, entered an appearance for intervenor Western Resources, Inc.  Donald C. Shepler, Jr., Washington, DC, and James Howard entered appearances for intervenor Colorado Interstate Gas Company.  Bruce A. Connell, Houston, TX, entered an appearance for intervenor Conoco, Inc.  Michael L. Pate entered an appearance for intervenor OXY USA, Inc.  Frank X. Kelly, George J. Meiburger, Mark C. Schroeder and Steve Stojic, Washington, DC, entered appearances for intervenor Northern Natural Gas Company.  Kathy L. Cox, Fort Worth, TX, entered an appearance for intervenor Union Pacific Resources Company.  Andra B. Greene, Newport Beach, CA, and Buddy J. Becker, Lakewood, CO, entered appearances for intervenor K N Energy, Inc.  Thomas R. O'Donnell, Denver, CO, entered an appearance for intervenor Public Service Company of Colorado and Cheyenne Light, Fuel and Power Company.  Andrew N. Greene, Washington, DC, and Elisabeth Y. Pendley, Arglington, VA, entered appearances for intervenor K N Interstate Gas Transmission Co.  James F. Moriarty, Washington, DC, entered an appearance for intervenor Missouri Gas Energy.
Before:  WILLIAMS, GINSBURG and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge GINSBURG.
Concurring Opinion filed by Circuit Judge SENTELLE.
GINSBURG, Circuit Judge:

1
Until 1993 the Natural Gas Policy Act (NGPA) established the maximum lawful price that a producer could charge its pipeline customers for natural gas;  under § 110 of the Act, the producer could adjust that price upward in order to recover its payment of a state severance tax.  The Federal Energy Regulatory Commission, on remand from our decision in Colorado Interstate Gas Co. v. FERC, 850 F.2d 769 (1988), held that ad valorem taxes levied by Wyoming and Colorado are, but the ad valorem tax levied by Kansas is not, a severance tax within the meaning of § 110.  The Commission then ordered producers to refund payments received from pipelines in recovery of the Kansas tax with respect to production occurring after the Colorado Interstate decision.  The Commission directed the pipelines in turn to channel those refunds to their customers, but decided not to make the pipelines liable for any amounts not received from producers.

2
Petitioner Public Service Company of Colorado and a subsidiary (jointly PSCC), supported by the Missouri Public Service Commission (MPSC) as an intervenor, challenge the Commission's authority to limit the retroactivity of the producers' liability for refunds of the Kansas tax.  As a petitioner the MPSC also objects to the Commission's order relieving Williams Natural Gas Company of any obligation to guarantee the refund of the Kansas taxes that Williams collected from its customers, as to which Williams intervenes in support of the FERC, and to the Commission's decision that the Wyoming and Colorado taxes are severance taxes.

3
Four producers petition for review of the Commission's decision that the Kansas tax is not a severance tax.  These Producer Petitioners also maintain that the FERC's decision worked a change in the law that should be applied prospectively only.  As Producer Intervenors the same group argues in the alternative that the Commission properly limited their liability for the refunds of the [320 U.S.App.D.C. 20] Kansas tax to the date of the Colorado Interstate decision.  Joined by another producer, the five so-called Indicated Producers intervene in support of the Commission regarding the Wyoming and Colorado taxes.

4
We conclude that the Commission could properly determine that the Kansas ad valorem tax was not, and that the Colorado and Wyoming ad valorem taxes were, sufficiently similar to a severance or production tax to qualify for recovery under § 110 of the NGPA.  Contrary to the Commission, however, we hold that the producers must refund all the Kansas taxes they collected since October 1983 when all interested parties were first put on notice that the taxes might not be recoverable under § 110.  On the question whether Williams should be required to guarantee the refunds due from its producers to its customers, we find no ground upon which to require that the FERC hold the pipeline liable.

I. Background

5
From 1978 until 1993 producer prices for natural gas were subject to maximum lawful levels specified in the NGPA.  15 U.S.C. §§ 3311-19.  Section 110 of the NGPA permitted a producer to charge an amount in excess of those ceilings to the extent necessary to recover its payment of "State severance taxes attributable to the production of such natural gas," 15 U.S.C. § 3320(a)(1).  For this purpose, a severance tax was defined as "any severance, production, or similar tax, fee, or other levy imposed on the production of natural gas" by a state or Indian tribe, 15 U.S.C. § 3320(c).

6
In Sun Exploration and Production Co., 36 FERC p 61,093 (1986), the Commission determined that the Kansas ad valorem tax qualified as a severance tax under § 110 because it was based upon production factors.  In Colorado Interstate we concluded that the Commission's analysis in Sun Exploration "fell short of reasoned decision-making," and we remanded the matter for a more "cogent theory of what makes a tax 'similar' to a production or severance tax under § 110."  850 F.2d at 770, 773.   Reflecting our indulgent standard of review for a question so bound up in administrative policy-making, we noted that while the court "cannot defer to a vacuum," we would defer to "any Commission interpretation of § 110 that is not precluded by the statutory language and traditional methods of statutory construction, and that is reasonable."  Id. at 774.

7
We also offered the Commission some guidance.  A severance tax is a cost imposed upon producing, while a property tax is a cost imposed upon holding, a resource;  the non-recoverability of a severance tax is a disincentive to produce, while the non-recovery of a property tax is not a disincentive and, to the extent that extraction reduces the value of the reserves to which the property tax is applied, might even be an incentive to produce.  Id. at 771.   On the other hand, if in computing the value of a property for the purpose of levying a property tax "a state sought to capitalize the annual production (or revenue) enjoyed by each producer by multiplying it by a single fixed figure, the [property] tax would plainly be similar enough to a production tax to qualify under § 110."  Id. at 772.

8
Upon remand, the Commission identified two essential differences between a severance tax and a property tax:

9
First, a ... severance tax is on the volume or value of the commodity removed, as assessed at the time of removal.  A property tax ... is on the value of the gas remaining in the ground as well as on the value of wells and other production assets on the lease, at the time of the tax assessment.

10
Second, ... once the unit of gas is produced and the severance tax is applied to it, that unit of gas is never again subject to the severance tax.  On the other hand, a property tax ... is applied to a unit of gas reserves each year--year after year--until that unit of gas finally is produced and removed from the property being valued.

11
Colorado Interstate Gas Co., 65 FERC p 61,292 at 62,370-71 (1993) (emphases in original) (hereinafter Colorado Interstate Remand Order), reh'g denied, 67 FERC p 61,209 (1994) (hereinafter Colorado Interstate Rehearing Order).  Applying these distinctions, the Commission concluded that the Kansas tax [320 U.S.App.D.C. 21] did not qualify as a severance tax for three principal reasons:  (1) it was based upon the value of the gas property rather than upon its current production;  (2) the volume of production was relevant principally for determining the present value of the gas reserves;  and (3) the reserves were taxed year after year until removed from the ground and sold.  Id. at 62,371-72.

12
The Commission ordered producers to refund the Kansas taxes they had collected since June 1988, the date of our Colorado Interstate decision which, in the FERC's view, first put producers on notice that the tax might not be recoverable under § 110.  Id. at 62,373.   The Commission also ordered pipelines to flow-through the refunds to customers as lump sum payments, but the pipelines were not held responsible for guaranteeing payment if a producer failed to meet its refund obligation.  Id. at 62,374.

13
Williams, one of the pipelines ordered to refund the Kansas tax, had also collected Wyoming and Colorado ad valorem taxes from its customers.  In Williams Natural Gas Co., 69 FERC p 61,373 (hereinafter Williams Order), reh'g denied, 70 FERC p 61,202 (1994) (hereinafter Williams Rehearing Order), the Commission held that the Wyoming and Colorado taxes qualified as severance taxes under § 110.  The Wyoming tax "is assessed on the volume or value of the gas which is produced" and "varies directly, and exclusively, with actual production."  Id. at 62,408.   The Colorado tax is "assessed only against gas that is severed from the ground."  Id. at 62,410.   Therefore, Williams was not required to refund these taxes to its customers.

II. Analysis

14
We turn first to the question whether the Commission was reasonable in holding that the Kansas tax was not recoverable under § 110.  Next we undertake a similar inquiry with respect to the Colorado and Wyoming taxes.  Then we examine the date to which refund liability for the Kansas tax extends;  and finally we review the FERC's decision not to hold Williams responsible as a guarantor in the event that a producer does not meet its refund obligation.

A. The Kansas Tax

15
Our review of the Commission's interpretation of § 110 of the NGPA is governed by the familiar analysis of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984):  if the Congress has "directly spoken to the precise question at issue," the court "must give effect to the unambiguously expressed intent of Congress";  otherwise the court will defer to the administering agency's interpretation if it is reasonable in light of the structure and purpose of the statute.  Id. at 842-43, 104 S.Ct. at 2781-82.   In this instance, recall that § 110 of the NGPA permits a producer to "recover ... State severance taxes attributable to the production of ... natural gas and borne by the seller," 15 U.S.C. § 3320(a)(1), and that a severance tax is defined as "any severance, production, or similar tax, fee, or other levy imposed on the production of natural gas."  15 U.S.C. § 3320(c).  In their application to a particular state tax, any or all of the terms "attributable to the production," "similar," "other levy," and "imposed on the production" may be ambiguous.  Plainly, as the Producer Petitioners acknowledge, our standard of review is that of Chevron step two.

16
The Kansas tax is levied primarily upon the value of recoverable reserves and secondarily upon the value of gas well equipment and materials.  In estimating the volume of reserves, the volume of current production is an important factor;  therefore, because the tax is partly dependent upon production, the Producer Petitioners allege that it is similar to a production tax.

17
In remanding Colorado Interstate we instructed the Commission to come up with a "cogent theory of what makes a tax 'similar' to a production or severance tax under § 110."  850 F.2d at 773.   The agency's determination was to hinge upon "how the specific rules of the tax actually function."  Id. at 774.   According to the Producer Petitioners, however, the Commission responded largely by ignoring the practical application of the Kansas tax and its actual effect upon production incentives, and focused instead upon mere labels.

18
[320 U.S.App.D.C. 22] The principle advanced by the Producer Petitioners is that "a tax whose assessment is measurably affected by a change in the level of production is at least in part attributable to, and effectively imposed on, the production itself."   The Petitioners remind us that the Federal Power Commission held that the Kansas tax was recoverable under the Natural Gas Act, Opinion No. 699-D,  52 FPC 915, 915-16 (1974), and that the Congress incorporated into § 110 of the NGPA terms virtually identical to those it had used in the prior statute, see Opinion No. 699, 51 FPC 2212, 2301, 4 P.U.R.4th 401, reh'g denied in relevant part, 52 FPC 1604 (1974), aff'd sub nom.  Shell Oil Co. v. FPC, 520 F.2d 1061 (5th Cir.1975)--which suggests that the Congress intended no significant contraction in the range of severance taxes that could be recovered.  Indeed, the Conference Committee Report on § 110 states that the term "severance tax" should be "construed broadly" and may extend to "any tax imposed upon mineral or natural resource production including an ad valorem tax or a gross receipts tax."   H.R. C  ONF. R  EP. N  O. 95-1752, 95th Cong., 2d Sess. 91 (1978), U.S.Code Cong. & Admin.News 1978, pp. 8800, 8861.

19
The two characteristics of a tax recoverable under § 110, in the view of the Producer Petitioners, are that its calculation is directly related to the rate of current production and that its non-recovery would operate as a disincentive to produce.  It is not necessary that the tax be attributable exclusively to production, nor that it be computed in the same manner as a severance or production tax;  it is enough that the assessed liability be to some extent "attributable to the production of ... natural gas."   The Producer Petitioners claim that the FERC's interpretation--under which the tax must be (1) laid upon "the act of severing," (2) "each Mcf or MMBtu of gas production," and (3) assessed "at the time of removal," Colorado Interstate Remand Order, 65 FERC at 62,370, 62,371--effectively reads the term "similar tax" out of the statute.

20
Applying their more liberal construction of § 110, the Producer Petitioners contend that the Kansas tax fully satisfies the criteria for recoverability.  First, while the tax is also affected by variables other than production, the amount of the tax increases or decreases as production increases or decreases.  For example, as between two wells with the same reserves, the one expected to produce more gas will be taxed at a higher level.  This argument, however, does little to dispel our understanding that the Kansas tax is by its terms a tax upon property.  The value of a depletable asset is a function of its physical and its temporal dimensions;  in the case of a gas well, these are respectively the volume of recoverable reserves and the timing of their recovery, which progressively depletes the reserve.  The greater the volume of gas produced in a given tax year, the shorter the time over which all the proceeds will be realized and, consequently, the higher the present value of the asset.

21
The relevant question, therefore, is the obverse of the one suggested by the Producer Petitioners.  We do not ask whether two wells with the same reserves would be taxed differently based upon their different anticipated rates of production;  obviously they would be, whether the tax is imposed ad valorem upon property or upon production.  The value of the reserves would be higher for the well with more rapid production because faster production reduces the time over which the flow of gas is turned into a stream of cash.  Instead, we must inquire whether the same tax would be levied upon two wells with different reserves but the same level of production.  If the tax is based upon production, then the amount of the tax would be the same;  if the tax is based upon property, then the amounts would be different.  By this criterion, as we shall see, the Kansas tax is laid upon property, not upon production.

22
In Colorado Interstate we posited that the high initial level of production caused by the pressure in a new well could, when annualized in accordance with Kansas's method of appraisal, yield a higher tax upon a property that started operation late in the year than upon an equally productive property that was in operation for the full year.  850 F.2d at 773.   Prompted by that observation, the Producer Petitioners now attempt to explain that the State's use of an annualized figure for production when a new well operates for only [320 U.S.App.D.C. 23] part of its first tax year does not relax the relationship between the amount of the Kansas tax and the volume of production.  To the contrary, they point out that a 1980 amendment to the Kansas tax law was designed to offset the disproportionately high levy on a well in operation less than six months during the tax year by reducing its appraised value by 40 percent.

23
Again, the Producer Petitioners' argument supports not their position but the Commission's.  As the agency properly observes, an adjustment for the exaggerated level of initial production caused by the high pressure in a new well would be unnecessary if the Kansas tax were indeed based upon production.  Any gas produced would be taxed;  any gas left in the ground would not be taxed.  Kansas authorized an adjustment precisely because its tax is based not upon production but upon gas in the ground;  i.e., the State needed a reliable estimate of "annual" production to use in calculating the present value of recoverable reserves.  Otherwise there would have been no need to annualize the partial year's output from a new well.

24
The Commission gave three reasons for rejecting the "measurably attributable to production" standard suggested by the Petitioners.  First, it is just the type of murky standard that this court had criticized in Colorado Interstate.   Colorado Interstate Rehearing Order, 67 FERC at 61,654.   Second, the standard is cumbersome to administer;  it requires "virtually well-by-well analysis to ascertain exactly how much weight the state property appraiser gave to current production."  Id. at 61,654-55.   Third, simply providing that a tax be measurably related to production does not distinguish between a severance tax and an array of other taxes--income, personal property, real estate--that could vary "in a more-or-less direct manner with production."  Id.

25
What is required, contends the Commission, is that the tax vary "directly" with production on "essentially" a one-to-one basis.  Colorado Interstate Rehearing Order, 67 FERC at 61,655.   Indeed there is some support for that proposition in the history of § 110.  In 1974 the Federal Power Commission interpreted the Natural Gas Act to allow recovery of the Kansas tax.  Opinion No. 699-D, 52 FPC at 915-16.   As we observed in Colorado Interstate, however, when the Congress enacted § 110 it supplemented the FPC's formula for recovery ("all ... production, severance, or similar taxes," Opinion No. 699, 51 FPC at 2301) with the added requirement that the tax be "imposed on the production of natural gas."  850 F.2d at 772.   That new qualification is the basis upon which the Commission argues for a one-to-one relationship between the volume of production and the amount of the tax.

26
The Kansas tax, according to the FERC, is a property tax levied upon the value of recoverable reserves, gas well equipment, and materials, id. at 62,374;  current production is only a "yardstick by which the value of the leasehold is measured," id. at 62,371-72.   The appraised value of the reserves depends upon the estimated future production of the well (as determined in part by actual production over the most recent three- or five-year period) and market prices, reduced by operating costs, all forecasted over the probable period of production and discounted to present value.  See Colorado Interstate, 850 F.2d at 771.   Because of differences in the anticipated rate of production and in the estimated quantity of reserves, the tax upon two wells producing the same volume of gas may "vary nearly by a factor of ten."  Id.

27
At oral argument, we asked counsel for the Producer Petitioners whether in practice the tax on a well varies over time in direct relation to the well's production.  If not, the tax could not properly be characterized as being based upon production.  Because the answer to this question has important implications, we take a moment to examine the mechanics of the tax calculation in somewhat greater detail.

28
The value of recoverable reserves, for the purpose of the Kansas tax, is based predominantly upon the value of the well's average production multiplied by a "present worth factor."   The present worth factor, in turn, depends upon the estimated quantity of the reserves, the time value of money, the expected rate of change in the price of gas, and the expected rate of change in production.  The Kansas Department of Revenue promulgates [320 U.S.App.D.C. 24] a present worth factor for use in valuing all properties in a major proven gas field.  Assuming that the Department determines present worth factors ex ante and does not revise them periodically, then the only variable affecting the annual appraisal of a well is the value of the well's production.  Under these circumstances, the Kansas tax would, in our view, be sufficiently like a tax "imposed on the production of natural gas" to be recoverable under § 110.  Although the tax is called an ad valorem tax and calculation of the tax is based upon the present value of recoverable reserves, any change in the amount of the tax due would depend in practice entirely upon a change in the value of production from year-to-year.

29
The question, therefore, becomes whether there is a change over time in the present worth factor for a particular well or field.  If so, then the tax will depend upon the magnitude of that change (and upon any variation in production, of course).  In fact, because increased production diminishes the remaining recoverable reserves, and thus typically reduces the anticipated life of a well, periodically updating the present worth factor could yield a tax that is completely unrelated to, or even negatively correlated with, production.  Counsel for the Producer Petitioners was not able to refer us to any evidence in the record indicating that the present worth factor for a single field remains constant over time.  Therefore, the Petitioners could not show that the Kansas tax necessarily varied in direct relation to production.

30
Because the Producer Petitioners bear the burden of showing that the Commission's analysis of the Kansas tax is unreasonable, their inability to demonstrate that the present worth factors are invariant over time could have been an end to the matter.  Nonetheless, we searched the record independently--but the result was only to increase our confidence that variables other than production can have a material impact upon the tax assessed.  Tables captioned "Major Proven Gas Areas and Fields" show a substantial change in the present worth factor for certain fields over the three years from 1986 to 1989.  Indeed, the prevailing pattern is for the present worth factor to decline with the passage of time, which is what we would expect.  As the anticipated life of a well declines, the present value of the recoverable reserves decreases correspondingly;  that is consistent with our hypothesis that higher production foreshadows a diminished remaining life, which in turn can result in not a higher but a lower tax.

31
There is more.  One appraiser for the Kansas Department of Revenue has identified seven factors other than current production that he considers in determining the present value of reserves:  age of the well;  quality of the oil and gas;  nearness to market;  operating costs;  character, extent, and permanency of the market;  probable life of the well;  and the number of other wells being operated.  Furthermore, Kansas assesses the tax upon each physical unit of reserves, year after year until the unit is produced.  In order to qualify as a severance or production tax under § 110, however, a physical unit must be taxed only once--at the time of production.  Colorado Interstate Remand Order, 65 FERC at 62,371.   The Commission also observes that a typical well in the Permian Basin, roughly 2800 feet deep, will be appraised at a value that includes $56,000 for equipment alone, i.e., exclusive of the value of any gas reserves.  Even after a well has been shut-in for two years the equipment on a "normal" well is valued at $4,200.  If the Kansas tax were based upon production, then there would be no tax on a non-producing well.

32
Singly and cumulatively, the Commission's arguments are convincing and neither of the Producer Petitioners' two principal contentions persuade us otherwise.  First, the Producer Petitioners contend, mistakenly, that non-recovery of a property tax based in part upon production operates as a disincentive to produce and thus defeats a primary objective of the NGPA.  If the present value of reserves is computed by the Kansas formula, then (other things being equal) the higher the tax rate the greater the incentive to produce.  Although higher production is a factor tending to increase the Kansas tax this year, it reduces the expected future production from the well, a factor tending to decrease the Kansas tax in all future years. [320 U.S.App.D.C. 25] The tax-reducing effect of decreased life expectancy will almost always exceed the tax-increasing effect of higher production.1  In short, if demand is inelastic (as it would be when the ceiling is well below market price), a recoverable tax would have little effect upon production at the margin;  but a non-recoverable tax would be an incentive to extract gas more rapidly in order to minimize the impact of the tax.

33
Second, the Petitioners advance the theory (in their Reply Brief) that "a tax qualifies for reimbursement under § 110 ... if production is a factor in the calculation."   By that standard, an ordinary property tax would qualify as a tax on production;  the value of any asset is, after all, the present worth of the benefits that the asset is expected to produce--whether impounded in an established market price or estimated by an appraiser.  The Commission reasonably declined to adopt a standard--overbroad, administratively cumbersome, and almost infinitely elastic--with so little to recommend it.

34
Weighing the various arguments--and mindful that as we said in Colorado Interstate, "any Commission interpretation of § 110 that is not precluded by the statutory language and traditional methods of statutory construction, and that is reasonable, will control," 850 F.2d at 774--we conclude that the FERC's interpretation of § 110 of the NGPA is reasonable.  Furthermore, applying that interpretation, the Commission reasonably determined that the Kansas ad valorem tax is not a severance tax within the meaning of that section.

B. The Colorado and Wyoming Taxes2

35
The MPSC, while agreeing with the Commission's interpretation of § 110, urges that the FERC incorrectly applied its own criteria when it allowed recovery of the Colorado and Wyoming taxes.  In the Williams Order, the Commission stated that "the Wyoming ad valorem tax qualifies for recovery ... in that it is assessed on the volume or the value of the gas which is produced rather than upon the value of gas reserves or lease-hold property.  Hence, the tax varies directly, and exclusively, with actual production."  69 FERC at 62,408.   The Commission adopted the same rationale in deciding that the Colorado tax could be recovered under § 110.  Id. at 62,410.   The MPSC asserts that this rationale conflates a production-based tax with a property tax.

36
According to the MPSC, the Wyoming and Colorado taxes are based upon proceeds, not upon production.  Taxing authorities administer a proceeds tax as they do a property tax:  the underlying property is placed on both state and local tax rolls and aggregated with other property to determine the appropriate state and local ad valorem tax rates.  A production tax, by contrast, is a state-wide levy subject to a single state-wide rate, administered by and for the benefit of the state and not of the locality.  The MPSC contends that the Wyoming and Colorado taxes differ from a typical property tax only in that they [320 U.S.App.D.C. 26] grant a preference to natural gas property over other types of property.  In Wyoming, the preference arises by taxing gas property only once, which is to say when the gas is extracted.  In Colorado, gas reserves are taxed annually but their value is assumed to equal a specified percentage of the value of the prior year's production.  Otherwise, according to the MPSC, the Wyoming, Colorado, and Kansas taxes are similar and ought to be treated similarly under § 110;  the Wyoming and Colorado legislatures may be free to favor gas producers over other property owners, but the Congress did not intend to favor gas producers in states with a tax based upon proceeds over gas producers in states that impose upon them a traditional property tax.

37
The Commission responds, first, that the Wyoming ad valorem tax meets the criteria set forth in the Colorado Interstate Remand Order and applied in the Williams Order, 69 FERC at 62,408.   The tax is assessed upon the volume of gas removed from the well, Wyo.  Stats. § 39-2-208;  payable "one time only ... as a result of production," Union Pac.  Resources Co. v. State, 839 P.2d 356, 372 (Wyo.1992);  and based upon the "full value" of the gas when produced, id. at 372 n. 7.   Second, that the tax may benefit local taxing units is not pertinent;  a tax imposed "by any political subdivision of a State" is recoverable under § 110.  15 U.S.C. § 3320(c)(2).  Third, as this court has recognized, "a tax nominally on property may be functionally identical to a production tax," Colorado Interstate, 850 F.2d at 772.   Fourth, a tax need not be labeled a "severance tax" in order to be "recoverable" within the meaning of § 110;  the term "severance tax" is to be "construed broadly," and may include an ad valorem tax, H.R. CONF.  REP. NO. 95-1752 at 91, U.S.Code Cong. & Admin.News 1978 at 8861, as well as any "similar tax, fee, or other levy imposed on the production of natural gas," 15 U.S.C. 3320(c).

38
Finally, the Commission argues that administrative differences between a tax based upon production and an ad valorem tax are irrelevant to the question whether the tax may be recovered under § 110.  Indeed, Wyoming has a separate severance tax, which no one here doubts is recoverable within the meaning of § 110.  In distinguishing that tax from the state's ad valorem tax based upon proceeds, the Wyoming Supreme Court observed:  "[T]he severance tax is an excise tax upon the current and continuing privilege of extracting minerals....  An ad valorem tax is a property tax which taxes the value of the minerals produced."  Wyoming State Tax Comm'n v. BHP Petroleum Co., Inc., 856 P.2d 428, 434 (1993).  This characterization of the Wyoming ad valorem tax supports the Commission's conclusion that it is based upon production.

39
Colorado, too, imposes a severance tax in addition to an ad valorem tax.  The Indicated Producers point out, however, that 87.5% of the ad valorem tax may be taken as a credit against the severance tax.  This, say the Indicated Producers, proves that the two taxes are "directed at the same activity and intended to accomplish the same purpose, i.e., to tax production as it occurs."   Moreover, as the Tenth Circuit noted--albeit in the course of determining whether the Colorado tax is a real estate or a personal property tax, not whether it is sufficiently similar to either a severance or other production-related tax to be recovered under § 110--"[p]ast production is used in the Colorado ad valorem tax system only as a gauge for the valuation of the mineral interest.  Use of this admittedly imperfect gauge does not rule out the conclusion that the mineral interest itself is being taxed."  Federal Land Bank of Wichita v. Board of County Comm'rs, 788 F.2d 1440, 1442 (1986).

40
The Commission nonetheless argues persuasively that the Colorado ad valorem tax "varies directly with production" and is "assessed only against gas that is severed from the ground."  Williams Order, 69 FERC at 62,410.   The irreducible fact is that the tax is computed as a set percentage of the market value of the gas removed from a well during the tax year.  Colo.Rev.Stat. §§ 39-7-101 and 39-7-102.  As we stated in Colorado Interstate:  When computing the value of property, "[i]f a state sought to capitalize the annual production (or revenue) enjoyed by each producer by multiplying it by a single fixed figure, the [property] tax [320 U.S.App.D.C. 27] would plainly be similar enough to a production tax to qualify under § 110."  850 F.2d at 772.   That is precisely how the Colorado tax is computed.

41
In sum, the clear weight of the arguments supports the Commission's determination.  Both the Colorado and Wyoming ad valorem taxes are based upon production and as such may be recovered under § 110 of the NGPA.

C. Retroactivity

42
Next we take up the question whether the Commission properly ordered producers to refund Kansas taxes recovered since, and only since, our Colorado Interstate decision in June 1988.  The governing principle is that when there is a "substitution of new law for old law that was reasonably clear," the new rule may justifiably be given prospectively-only effect in order to "protect the settled expectations of those who had relied on the preexisting rule."  Williams Natural Gas Co. v. FERC, 3 F.3d 1544, 1554 (D.C.Cir.1993).  By contrast, retroactive effect is appropriate for "new applications of [existing] law, clarifications, and additions."  Id.  The Commission concluded that "[t]he 'settled expectations of those who had relied on the preexisting rule' ... were changed by the [court's June 1988] Colorado Interstate decision, not really [by the FERC's] own decision" in the 1993 Colorado Interstate Remand Order, 65 FERC at 62,373.

43
The Producer Petitioners maintain that the Commission did indeed substitute a new rule for a reasonably clear old rule when, in the Remand Order, it first refused to let them recover the Kansas tax.  Our decision in Colorado Interstate, the Petitioners point out, was a remand, not a reversal, of the Commission's decision in Sun Exploration allowing producers to recover the tax.  The court directed the Commission only "to exercise its interpretive authority, to identify the features of the Kansas tax that point toward one classification or another, and to offer sensible distinctions between taxes that it chooses to treat differently."  850 F.2d at 775.   We did not indicate that we expected a particular result, and consequently we did not disturb the settled expectations of producers who were relying upon the old rule.  Upon this view of the matter, it was precisely the Commission's ruling in the Remand Order that did change the governing law;  prior to that decision, the Petitioners contend, they did not have reason to anticipate that the Commission would change the rule.  As they point out, that the agency had not previously engaged in reasoned decisionmaking did not mean that it could not reasonably reach the same result upon remand.  Accordingly, the Producer Petitioners argue that their refund liability should extend back not to June 1988 but only to December 1993.

44
PSCC, on the other hand, argues that regardless of when the Commission first determined that recovery of the Kansas tax was unlawful, it necessarily had been unlawful since the NGPA was enacted in 1978.  After first arguing before the Commission for full retroactivity back to 1978, however, PSCC conceded that "fundamental fairness ... [dictates] that the date on which interested parties were put on notice of the dispute should control the date of retroactivity."   Requestfor Rehearing, Colorado Interstate Gas Co., Dkt. Nos.  GP83-11-003 and RI83-9-004, at 6 (FERC Jan. 3, 1994).  Therefore, suggested PSCC, liability for refunds should extend back at most to August 1983, when Northern Natural petitioned the Commission for a determination that the Kansas tax was not recoverable under § 110, or at least to October 1983, when all interested parties received notice of the petition by publication in the Federal Register.  Id. at 4.3  As between the two, the later date is obviously the correct one.  See Associated Gas Distribs. v. FERC, 899 F.2d 1250, 1256 (D.C.Cir.1990) (FERC gives notice of petition by publication in Federal Register).

45
[320 U.S.App.D.C. 28] To recapitulate, the various parties now urge that when the Commission issued its Colorado Interstate Remand Order in December 1993, it should have made liability for refunds (per the Producer Petitioners) prospective-only;  (per the Commission) retroactive to June 1988, when we issued our decision in Colorado Interstate;  or (per PSCC) retroactive to October 1983, when notice of Northern Natural's petition to disallow recovery of the Kansas tax was published in the Federal Register.

46
PSCC, the MPSC, and the Commission all argue against prospective-only application.  By December 1993 gas at the wellhead was no longer subject to a maximum lawful price;  deregulation had rendered § 110 moot almost a year before.  See Natural Gas Wellhead Decontrol Act of 1989, Pub.L. No. 101-60, 103 Stat. 157.   Accordingly, producers would have no liability under a rule that limited refunds to taxes paid on post-December 1993 production.  Their point seems to be that customers should not lose their entitlement to refunds merely because the Commission took five years after our decision in Colorado Interstate to issue the Remand Order.

47
The FERC makes a more convincing argument against prospective-only application of its 1993 decision based upon this court's criticism in Colorado Interstate of both the logical and the factual bases for the agency's prior policy;  that sent a "clear signal" to producers that their recovery of the Kansas tax under § 110 might not be lawful.  After that "the parties no longer would have been justified in relying on the Commission's earlier rulings with any assurance that they would not later be required to make refunds."   Colorado Interstate Remand Order, 65 FERC at 62,373.

48
The Commission marshals the events leading up to the Colorado Interstate remand in further support of this compromise view.  As we have seen, under the Natural Gas Act, the Federal Power Commission had held in 1974 that the Kansas tax could be added to the maximum lawful rate.  Opinion No. 699-D, 52 FPC at 915-16.   Four years later the Congress carried forward into the new NGPA a provision nearly identical to the provision of the NGA that the FPC had earlier applied to the Kansas tax.  See Opinion No. 699, 51 FPC at 2301.   Furthermore, in the legislative history of the NGPA the Congress specifically anticipated that producers might recover an ad valorem tax under § 110.  H.R. C ONF.  REP.  NO. 95-1752 at 91, U.S.Code Cong. & Admin.News 1978, at p. 8861.   In 1986 the Commission reaffirmed that the Kansas tax was recoverable under that section.  See Sun Exploration, 36 FERC p 61,093.   Not until our 1988 decision in Colorado Interstate, remanding Sun Exploration, was there any official suggestion that the law might be otherwise.  Finally, in 1993 the Commission effectuated a change in the law by developing new standards for determining whether a tax may be recovered under § 110.  Thus, according to the Commission, the producers had no indication that the rule might be any different until our Colorado Interstate decision in 1988, and requiring them to refund taxes recovered with respect to gas produced prior to that date is not justified.

49
The agency also concludes that requiring refunds back to the date of our decision in June 1988 properly balances the producers' equitable claim to notice against the consumers' legal right to receive a refund of all unlawfully collected charges.  On the one hand, prospective-only application of the law would permit producers to retain sums collected from June 1988 to December 1993 in excess of the maximum lawful prices prescribed in the NGPA--without any supporting rationale.  On the other hand, a fully retroactive remedy would penalize producers by requiring disgorgement of sums they innocently collected prior to June 1988--even though our 1988 Colorado Interstate decision was the first authoritative indication that the Kansas tax might not be recoverable after all.

50
In support of making the Commission's decision retroactive to 1983, PSCC offers a different account, or at least one with a different emphasis, of the transition from the NGA to the NGPA.  In this version the key point is that the Commission does not have the expansive remedial powers under the NGPA that it wielded under the NGA, 15 [320 U.S.App.D.C. 29] U.S.C. § 717c(e).  Specifically, whereas the NGA gave the Commission discretion to order refunds if it determined that a rate was not just and reasonable, the NGPA established maximum lawful prices and gave the customer a right to a refund if it was overcharged.

51
PSCC also points out that when it issued the Remand Order the Commission was not engaged in rulemaking but in adjudicating the rights of the parties before it;  therefore the agency was necessarily articulating and giving retroactive effect to existing law.  When it is clarifying existing law, rather than substituting new law for old, the agency need not be as attentive "to protect[ing] the settled expectations of those who had relied on the preexisting rule."  Williams, 3 F.3d at 1554.   Indeed, as PSCC points out, the producers never explain how their "settled expectations" led them into detrimental reliance upon being able to recover the Kansas tax.

52
As we see the issue, the apparent lack of detrimental reliance on the part of the producers is the crucial point.  What would they have done differently if they had known in 1983 that they were not entitled to recover the Kansas tax?   They could not have raised their prices above the maximum lawful level regardless whether the traffic would have borne such an increase.  Nor do they contend that existing prices were below the lawful limit;  and if they were, price increases might still have been foreclosed by competitive constraints.  The producers may have shut in some wells or refrained from exploring for new wells if their inability to recover the tax would have rendered the wells unprofitable, but neither the producers nor the Commission has even suggested these possibilities.  All the producers do suggest is that "[a] prudent producer would have cut back on production to the extent that non-recovery of the tax increased [the] current marginal cost of production," Petition of Producer Petitioners for Rehearing of Order on Court Remand, Colorado Interstate Gas Co., Dkt. Nos.  GP83-11-003 and RI83-9-004, at 23 (FERC Jan. 3, 1994), but in this they are mistaken;  as noted above, the more slowly a well is depleted, the greater the remaining reserves and the higher the tax thereon.  Moreover, neither party has even roughly quantified the harm (e.g., the expenditures made and lost in detrimental reliance upon being able to recover the Kansas tax) that the producers might suffer should they have to refund the full amount that they unlawfully collected.  In these circumstances, we are hard pressed to see how the producers would be harmed in any cognizable way even if they were required to disgorge every dollar they received in recovery of the tax (assuming any party were seeking such extensive relief).

53
Not only is the producers' "detrimental reliance" purely notional;  if it were real it would not have been reasonable.  The enactment of a substantially new regulatory regime in 1978 undermined any assurance that the FPC's treatment of the Kansas tax under the NGA would withstand scrutiny under the NGPA;  reliance would have been foolhardy.  If that were not enough, the status of the Kansas tax was expressly drawn into question in 1983 when Northern Natural first petitioned the Commission for a ruling that producers could not lawfully recover the tax under § 110.  Once the recoverability of the tax was in dispute, we do not see how the Commission could possibly find that producers reasonably relied upon continuing to recover it.

54
Because no seller of natural gas could justifiably be confident that it was entitled to recover the tax until the legal question was settled anew under the new statute, we hold that the producers' liability for refunds extends back to October 1983, the date when all interested parties were given notice in the Federal Register that the recoverability of the Kansas tax under § 110 of the NGPA was at issue, and the earliest date advocated by any party before this court.  Absent detrimental and reasonable reliance, anything short of full retroactivity (i.e., to 1978) allows the producers to keep some unlawful overcharges without any justification at all.  The court strongly resists the Commission's implication that the Congress intended to grant the agency the discretion to allow so capricious a thing.  Still, we do not require refunds of taxes recovered with respect to production [320 U.S.App.D.C. 30] before October 1983 because there is before us no controversy over those monies.

D. The Pipeline as Guarantor

55
In the Colorado Interstate Remand Order the Commission required interstate pipelines to "pass through any ad valorem tax refunds they receive from first sellers," 65 FERC at 62,374, but made it clear that "pipelines will not be required to be guarantors of refunds."  Id.  The MPSC, on behalf of the customers of the Williams pipeline, was the only party to challenge that decision.  The FERC adhered to its position, however, adding that Williams should not be treated differently than other similarly situated pipelines.  Williams Natural Gas Co., Dkt. Nos.  TA89-1-43-004 and RP89-39-005, slip op. at 5 (FERC order June 2, 1994), clarification denied, Williams Order, 69 FERC p 61,373.   The MPSC properly dispatches the FERC's afterthought with the observation that it is routine for one pipeline to be required to make refunds while others are not--because the one is challenged and the others are not.

56
In its petition for review, the MPSC raises three objections to this aspect of the Commission's decision.  First, it observes that under § 4 of the NGA the Commission is authorized to order refunds of any amounts collected from consumers in excess of what is just and reasonable.  15 U.S.C. § 717.  Second, the MPSC contends that until the Colorado Interstate Remand Order was issued in December 1993, Williams should have understood that when it was allowed to continue collecting from its customers the amount of the Kansas tax "subject to refund," it became conditionally obligated to refund any amount later determined to be unlawful.  Indeed, Williams received explicit notice in 1989 that the Commission was considering whether monies collected in recovery of the Kansas tax would have to be refunded.  Williams Natural Gas Co., 47 FERC p 61,114 at 61,341.   According to the MPSC, this notice should have prompted Williams to take reasonable steps to assure that it could in turn obtain refunds from its suppliers.  Third, the MPSC asserts that the Commission should have required Williams to put the monies it received for the Kansas tax into escrow (or post a bond or obtain a letter of credit) in order to assure their return if need be.  Escrow arrangements are commonly used when a rate increase is conditionally allowed to take effect until the agency determines whether it is lawful.  See, e.g., Transcontinental Gas Pipe Line Corp. v. FERC, 866 F.2d 477, 479 (D.C.Cir.1989).

57
The Commission responds, first, that there is well-established precedent for treating pipelines as mere conduits for the flow of refunds from producers to consumers.  See, e.g., Public Utils.  Comm'n of Cal. v. FERC, 24 F.3d 275, 278 (D.C.Cir.1994).  Second, the FERC explains that accepting Williams' rates "subject to refund" means simply that the agency would order refunds if appropriate after the remand proceedings in Colorado Interstate, not that Williams was expected to pay the tax monies into escrow (or take equivalent steps) in order to assure that they would be available if refunds were ordered.  Third, the Commission maintains that it could not have directed Williams to set up an escrow arrangement because the pipeline was obligated by contract to pay producers the amount of the Kansas tax.  The Commission points to § 601(c) of the NGPA, 15 U.S.C. § 3431(c), which guarantees a pipeline full recovery of its gas purchase costs.

58
The Commission's arguments are not convincing.  Surely Williams' contractual obligation does not extend to paying to producers sums unlawfully recovered.  While § 601(c) requires that a pipeline be allowed fully to recover its gas purchase costs, that provision also authorizes the Commission to deny recovery of costs that are unjust or unreasonable.  Moreover, the Commission would not have violated § 601(c) by requiring that the taxes be placed in escrow while the agency determined whether they could indeed be recovered under § 110.  An escrow arrangement would have preserved the rights of all parties.  If the Commission ultimately decided that the taxes were recoverable under § 110, then the producers would be entitled to the amount in escrow, including any accrued interest.  If, as happened, the Commission decided that the taxes were not recoverable, then the amount in escrow could have been refunded to the ratepayers (again, [320 U.S.App.D.C. 31] with interest).  In either event, the pipelines would have recovered their full gas purchase costs.

59
Regardless whether the Commission abused its discretion by failing to require an escrow or its equivalent--a matter we need not decide today--the MPSC's petition for review must be denied.  Insofar as it seeks prospective relief, the issue is moot:  Wellhead prices have been totally deregulated since 1993, there are no longer any maximum lawful prices for producer sales, and whether a producer recovers severance taxes is a matter of negotiation between buyer and seller.  As for monetary relief, it is too late now for the Commission to require that Williams pay the severance taxes into escrow;  the pipeline has long since paid the monies to the producers.

60
Nor does the MPSC make out any legal or equitable principle that would suggest holding Williams accountable for the Commission's failure to protect consumers.  The pipelines were, as the Commission has reminded us, mere conduits;  they had no financial interest in this dispute.  The Commission's failure to impose an escrow or other arrangement did not benefit the pipelines, and it is not clear why they should be at risk because the FERC may have been remiss.  Nor was Williams obliged either by contract or by regulation to take any precaution against the possibility that a producer would fail to refund monies due to consumers.  Therefore, there is no ground upon which the court can say that the Commission was required to hold the pipeline--which was charged first with the task of collecting tax payments and then of distributing tax refunds--liable if the responsible producer defaults on its refund obligation.

III. Conclusion

61
The Commission's interpretation of § 110 of the NGPA is in all respects reasonable.  The Commission properly rejected the Producer Petitioners' proposal that it allow recovery of any tax that was "measurably attributable" to production.  That standard is overbroad and unwieldy, and we criticized it as ambiguous in Colorado Interstate.   The agency reasonably determined that the Kansas ad valorem tax is not a severance tax within the meaning of § 110.  The Kansas tax is a function of numerous factors other than production, with the result that producers of equal volumes of gas may be taxed very different amounts;  and the tax falls upon each unit of reserves each year, rather than once at the time of extraction.  Further, the Producer Petitioners are mistaken in their assertion that non-recovery of a property tax based in part upon production is a disincentive to produce.

62
The Commission reasonably determined that both the Wyoming and the Colorado ad valorem taxes were recoverable as severance taxes under § 110 of the NGPA.  The Wyoming tax is assessed upon the volume of gas removed from the well;  it is a "one time only" tax, based upon the value of the gas when produced.  That the state treats the tax as a property tax is of no moment if, in the terms of § 110, it is "imposed on the production of natural gas."  15 U.S.C. 3320(c).  The Colorado tax, also administered as a property tax under state law, is computed as a set percentage of the market value of the gas removed from a well during the tax year.  That is "plainly ... similar enough to a production tax to qualify under § 110."  Colorado Interstate, 850 F.2d at 772.

63
Producers are liable to refund all Kansas ad valorem taxes collected with respect to production since October 1983.  An agency adjudication should be applied retroactively unless new law is replacing clearly defined old law and reasonable reliance interests must therefore be protected.  Here the agency did not change the law--rather, the Congress did when it enacted the NGPA in 1978--nor was there any showing that the producers had relied, let alone detrimentally or reasonably relied, upon the continuing validity of the agency's interpretation of the NGA.  There is no substantive reason, therefore, to deny customers all the relief to which they are entitled.  The customers are limited, however, to recovery of taxes paid with respect to production since October 1983 because that is the earliest date for which any argument has been preserved in this proceeding for review.

64
[320 U.S.App.D.C. 32] Finally, the court will not require the Commission to make the Williams pipeline a guarantor of the producers' obligation to refund the Kansas tax.  Although an escrow arrangement would likely have preserved the rights of all parties, the Commission did not impose one, and no party has pointed to any legal or equitable principle by which the agency can be required to hold a pipeline accountable for the agency's own oversight.

65
For these reasons, we deny the petitions for review filed by the Missouri Public Service Commission and the Producer Petitioners, and we grant the petition for review filed by the Public Service Company of Colorado.

66
So ordered.

SENTELLE, Circuit Judge, concurring:

67
I join without reservation in the holding of the court.  I write separately only to place a little distance between myself and what I deem to be an overstated dictum.  After describing a hypothetical tax, the majority states that with the majority's proposed variations "the Kansas tax would, in our view, be sufficiently like a tax 'imposed on the production of natural gas' to be recoverable under § 110."   Maj. op. at 24.  As no such tax is before us, for us to authoritatively render an opinion on what it would be constitutes nothing less than the advisory opinion that Article III courts have held ourselves unable to render since the earliest days of constitutional jurisprudence.  See, e.g., Flast v. Cohen, 392 U.S. 83, 96, 88 S.Ct. 1942, 1950, 20 L.Ed.2d 947 (1968) ("[T]he oldest and most consistent thread in the federal law of justiciability is that the federal courts will not give advisory opinions."  (Internal quotations and citations omitted));  WRIGHT, MILLER & COOPER, 13 FEDERAL PRACTICE AND PROCEDURE § 3529.1 (1984) (detailing the long history of the rule forbidding advisory opinions).  We have already, in my view, crossed the line of appropriate Article III jurisprudence in dealing with § 110 tax treatment when the prior panel stated "[i]f a state sought to capitalize the annual production (or revenue) enjoyed by each producer by multiplying it by a single fixed figure, the [property] tax would plainly be similar enough to a production tax to qualify under § 110."  Colorado Interstate Gas Co. v. FERC, 850 F.2d 769, 772 (D.C.Cir.1988).  I think it time we quit advising state legislatures on how to draft their tax statutes and confined ourselves to construing the statutes actually before us.

1
 Suppose, for example, a well with 1,000 Mcf of reserves at year end 1995 is taxed at the rate of $1 per Mcf remaining on December 31 of each year.  The producer would have an incentive to deplete the well as quickly as possible.  Production of 500 Mcf on January 1 of both 1996 and 1997 would mean tax assessments of $1,000 and $500 on December 31 of 1995 and 1996 respectively.  By comparison, production of 250 Mcf on January 1 of each year from 1996 through 1999 would mean tax assessments of $1,000, $750, $500, and $250 on December 31 of each year from 1995 through 1998--and a much higher total tax.  (This assumes of course that the estimated volume of reserves does not change from year to year except to account for the previous year's production.)

2
 The Indicated Producers claim that the MPSC is barred from contesting the Colorado and Wyoming taxes because the MPSC was some hours late in filing its request for rehearing the Williams Order.   The FERC, however, waived the 30-day limit in the NGPA, 15 U.S.C. § 3416(a)(2), and accepted the MPSC request as timely filed, Williams Rehearing Order, 70 FERC at 61,633.   The Indicated Producers argue that the FERC had until then consistently treated the 30-day limit as a jurisdictional requirement that it could not waive.  The MPSC replies that the Indicated Producers failed to request rehearing of the Commission's decision to waive the time limit, and thereby failed to preserve the issue for judicial review.  We agree.  See 15 U.S.C. § 3416(a)(4) (no judicial review unless issue raised before agency in application for rehearing).  We proceed therefore to address the question whether the Colorado and Wyoming taxes were recoverable under § 110

3
 The MPSC argues for full retroactivity back to 1978, but we agree with the Producer Intervenors that it is precluded from raising that argument before us.  The MPSC did not make a retroactivity argument in its request for rehearing before the FERC, and it does so here only as an intervenor, not as a petitioner.  See Illinois Bell Tel. Co. v. FCC, 911 F.2d 776, 786 (D.C.Cir.1990) ("An intervening party may join issue only on a matter that has been brought before the court by another party")


100 A.2d 219 (1953)
ELSTER et al.
v.
AMERICAN AIRLINES, Inc.
Court of Chancery of Delaware, New Castle.
October 14, 1953.
Robert C. Barab, of Wilmington, for plaintiffs.
Richard F. Corroon, of the firm of Berl, Potter & Anderson, of Wilmington, and Malcolm A. MacIntyre and Harold M. Childers, of the firm of Debevoise, Plimpton & McLean, of New York City, for defendant.
*220 BRAMHALL, Vice-Chancellor.
The amended complaint filed by plaintiffs alleges that plaintiff William Elster was the owner and holder of shares of common stock of defendant since June of 1951, and that plaintiff Anna F. Cohen was the holder of shares of defendant since February of 1950. It is further averred in the complaint that on or about September 12, 1950, defendant granted options to 30 of its executive employees to purchase a total of 143,000 shares of its common stock at a price of $11.70 per share, and that on or about May 21, 1952, the defendant granted further options to 289 of its executive and supervisory employees to purchase a total of 105,000 shares of its common stock at a price of $12.50 per share.
According to the complaint, plaintiffs' action is based upon the following facts: All of said options are exercisable immediately upon their issuance, with no requirement that the respective options remain in the employ of defendant for any specified time. The option plans and the issuance of the options, as adopted by the board of directors of defendant, were in each instance made subject to the approval of the stockholders. At the meeting of the stockholders at which the option plans were presented for approval a substantial minority thereof voted against the plan, the stock of plaintiffs not being voted in favor thereof.
It is also alleged in the complaint that the granting of these options constitutes a gift of valuable corporate assets in that the corporation did not receive from the respective optionees any valid or sufficient consideration in exchange therefor; that the market price of defendant's common stock at the time of the exercise of portions of these options substantially exceeded the option price; and, that no demand has been made upon the managing directors of defendant to rescind the outstanding options because such demand would have been futile, inasmuch as some of the options were issued to directors of defendant and said directors would not take action which might result in a declaration that their own earlier acts *221 were illegal. It is also averred in the complaint that failure to enjoin defendant will result in irreparable injury to defendant and its stockholders.
This court is asked to enjoin defendant from honoring the exercise of the option rights, to direct defendant to take appropriate steps or institute appropriate proceedings to cancel or reacquire such shares of stock as have been issued pursuant to said options or to recover for defendant such profits as may have been made by any resale of stock acquired by the exercise of said options.
Defendant prays for an order, pursuant to Rules of Court of Chancery, Rule 56, Del.C.Ann., directing this court to order the dismissal of the complaint with respect to plaintiff Anna F. Cohen, on the ground that she has ratified the granting of the options of which she complains. Defendant further prays for an order pursuant to Rule 56 for summary judgment, determining that the options, even if granted without consideration, are valid and binding as between the defendant and the optionees under the laws of the State of New York, which defendant contends, are applicable to the enforcibility and validity of stock options as between defendant and the optionees.
Defendant under Rule 12(b)(6) of this court has moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted upon the ground that the prayer of the complaint is solely for injunctive relief, whereas, any injury resulting from the exercise of these options can properly be the subject only of a claim for monetary damages from the directors authorizing the issuance of the options or from the optionees. Defendant further prays for an order pursuant to Rule 23(b), dismissing so much of the complaint on the part of the plaintiff William Elster as concerns the alleged grant of options by defendant on September 12, 1950, prior to the time plaintiff Elster became a stockholder.
I shall first consider the motion for summary judgment as to plaintiff Anna F. Cohen. It is now conceded by both plaintiffs that the stock of Anna F. Cohen was voted in favor of the option plans which she now seeks to attack.
It is well established that a stockholder cannot complain of corporate action in which, with full knowledge of all the facts, he or she has concurred. Finch v. Warrior Cement Corporation, 16 Del.Ch. 44, 141 A. 54. There is no averment in the complaint of any failure on the part of defendant, or of any of those charged with its management, to make full disclosure of all the facts relating to the option plans sought to be attacked. According to the affidavit offered by defendant, which is not disputed, all facts pertinent to the option plans had been placed upon the public records of the New York Stock Exchange and had been forwarded to every stockholder of record of defendant, as required by the regulations of the Securities and Exchange Commission. She therefore had ample notice of all pertinent facts surrounding the adoption of the option plans at the time the shares which she held were voted in favor thereof. Goldboss v. Reimann, D.C.S.D.N.Y., 55 F. Supp. 811.
I therefore conclude that plaintiff Anna F. Cohen has no standing to attack the options issued according to the stock option plan and that summary judgment must be entered against her. Hereafter in this opinion references to "plaintiff" will refer solely to plaintiff William Elster.
I next consider the question of whether or not the present action is a stockholders' derivative action or an action for the protection of the individual rights of plaintiff. Defendant contends that as to the options granted in September of 1950 the complaint is insufficient on the ground that this is a derivative action and since plaintiff acquired his stock subsequent to September, 1950, plaintiff is prevented under Rule 23 (b) of this court from pressing this action as to that option plan. Plaintiff contends that the action is not a derivative action and that therefore Rule 23(b) does not apply. He further states that even if this court should decide that the action is derivative, he would not be prevented from proceeding *222 with his action as to the first option plan because, as he alleges, the wrong to plaintiff is a continuing one.
Certain aspects of the complaint will first be noted. The action is solely against the defendant and does not include the directors and officers of defendant. The injuries of which plaintiff complains, unless we except plaintiff's claim as to the dilution of his stock, consist entirely of injuries to the corporation and its stockholders as a class. Any injury which plaintiff may receive by reason of the dilution of his stock would be equally applicable to all the stockholders of defendant, since plaintiff holds such a small amount of stock in proportion to the amount of stock outstanding that the control or management of defendant would not be affected by the granting of these options, and, further, since there is no averment that the pre-emptive rights of plaintiff as a stockholder are affected by their issuance.
Rule 23(b) of this court provides, in substance, that in any action which may be brought by a stockholder to enforce a secondary right in a corporation it shall be averred in the complaint that the plaintiff was a stockholder at the time of the transaction of which he complains or that his stock thereafter devolved upon him by operation of law. It is further provided therein that the complaint shall set forth with particularity the efforts of plaintiff to secure from the managing directors, and, if necessary, from the shareholders, such action as he desires and his reasons for his failure to obtain such action or for not making such effort.
Plaintiff claims that the value of his stock will deteriorate and that his proportionate share of the stock will be decreased as a result of the granting and exercise of the stock options. Assuming plaintiff's contention is correct, this would apply to the stock of all other stockholders as well. There are cases, of course, in which there is injury to the corporation and also special injury to the individual stockholder. In such case a stockholder, if he should so desire, may proceed on his claim for the protection of his individual rights rather than in the right of the corporation. The action would then not constitute a derivative action. Witherbee v. Bowles, 201 N.Y. 427, 95 N.E. 27; Stinnett v. Paramount-Famous Lasky Corp., Tex.Com.App., 37 S.W.2d 145; Hammer v. Werner, 239 App.Div. 38, 265 N.Y.S. 172, 179. See Fletcher, Cyclopedia Corporations, (Perm.Ed.) Vol. 13, § 5921, p. 281. Under such circumstances, Rule 23(b) would not apply. Here the wrong of which plaintiff complains is not a wrong inflicted upon him alone or a wrong affecting any particular right which he is asserting,  such as his pre-emptive rights as a stockholder, rights involving the control of the corporation, or a wrong affecting the stockholders and not the corporation,  but is an indirect injury as a result of the wrong done to the corporation. Bennett v. Breuil Petroleum Corp., Del.Ch., 99 A.2d 236, opinion of Chancellor Seitz dated August 11, 1953; Ainscow v. Sanitary Co. of America, 21 Del.Ch. 35, 180 A. 614; Miller v. Loft, Inc., 17 Del.Ch. 301, 153 A. 861; Sohland v. Baker, 15 Del.Ch. 431, 141 A. 277, 58 A.L.R. 693; Fleer v. Frank H. Fleer Corporation, 14 Del.Ch. 277, 125 A. 411; Wyles v. Campbell, D.C.Del.1948, 77 F. Supp. 343.
Plaintiff distinguishes the cases above cited from the present case on the ground that they are actions for the cancellation of stock which has already been issued, whereas in the present case the prayer is to enjoin the defendant from issuing stock under the option plan as well as to compel the defendant to take proper action relative to the stock which has already been issued under these options. I fail to see that there is any difference between the type of action in a suit to cancel shares of stock already issued and one where the prayer is to enjoin the issuance of stock under a contract made by the corporation. In each case the wrong for which complaint is made is the action of the corporation in entering into the contract. See Gottlieb v. Heyden Chemical Corp., Del., 90 A.2d 660; Levitan v. Stout, D.C.W.D.Ky., 97 F.Supp. 105; Pergament v. Frazer, D.C.E.D.Mich., 93 F.Supp. 9. While it is true that in the cases *223 cited the prayer is for the cancellation of stock already issued and in the present case the prayer is for the cancellation of the option contract, the purpose is the same. Plaintiff claims that the options granted under the option contract have substantial value; there is no contention, as I understand plaintiff's complaint, that there is waste as far as the value of the stock as set forth in the option contracts relates to the actual value thereof. The loss in each instance is a loss to the corporation and to the stockholders as a whole. The fact that plaintiff has chosen to sue the corporation alone and not to include as parties defendant the managing directors and optionees does not in any manner change the nature of the cause of action or the substance of plaintiff's claim. See Selman v. Allen, Sup., 121 N.Y.S.2d 142.
The case of Rosenthal v. Burry Biscuit Corporation, 30 Del.Ch. 299, 60 A.2d 106, in which the action was brought for a declaration that stock options issued under an option contract were invalid, is very similar to the present case. While it is true that in that case the question was not specifically discussed, it is at least significant that Chancellor Seitz in his opinion denoted the action as a derivative one.
Plaintiff relies upon the case of Horwitz v. Balaban, D.C.S.D.N.Y., 112 F.Supp. 99, and other New York cases. In that case the court held that the charter of the corporation purported to take away stockholders' pre-emptive rights as recognized in the New York cases. The Balaban case and the other New York cases upon which plaintiff relies is distinguished in the case of Selman v. Allen, supra [121 N.Y.S.2d 146]. In the latter case a stockholder alleged that the corporation, without consideration and solely by way of gift, granted to certain of the directors an option to purchase a large number of shares of the common stock of the corporation. The prayer was that the individual defendants be enjoined from issuing stock of the corporation to the optionees. The court held that this was an action "in the right of the corporation", saying that the wrong complained of was clearly a claim of waste and mismanagement of corporation assets, to be redressed by means of a suit by or on behalf of the corporation. That court went on to distinguish the cases relied upon by plaintiff by saying that those actions were brought to vindicate purely personal rights of stockholders to maintain their relative positions by being accorded their personal rights to acquire new stock to be issued. The court distinguished the Balaban case in particular by saying that in the latter case the shares involved were unissued shares, whereas in the Selman case the stock was stock of the corporation. Noting that plaintiff had made a studied attempt to show that her action was not instituted or maintained in the right of the corporation, the court said:
"I think it obvious, however, that if plaintiff be in truth complaining of and seeking to enjoin a wrong to the corporation, she can neither change the nature of the wrong nor avoid the operation and effect of § 61(b) by asserting in her complaint that she is not suing in the right of the corporation. The nature of the wrong alleged is what controls, not the pleader's assertion of an intention to sue as representative of the stockholders rather than in the right of the corporation; and as I find that the wrong here claimed is a wrong to the corporation, and not a wrong to the stockholders personally or individually, I conclude that this action is brought in the right of the corporation * * *."
It is true that in the present case the stock involved is unissued shares. Under the law of the State of New York, as set forth in the cases cited by plaintiff, the issuance of such shares under such conditions would be a violation of the stockholders' pre-emptive rights. In this case, there is no contention that the pre-emptive rights of stockholders are violated. Disregarding the question of pre-emptive rights, the law, as laid down in the Selman case, is that the action is a derivative one.
Plaintiff says that, even if the court should hold that the action is a derivative *224 action, he is entitled to proceed because the wrong complained of is a continuing one. This contention is based upon the assertion that many of the options outstanding have not been exercised and that the damage or injury to plaintiff will not be suffered until the exercise of those options.
The wrong of which plaintiff complains is the option contract, not the purchase price and sale of stock pursuant thereto. See Gottlieb v. Heyden Chemical Corp., supra; Kerbs v. California Eastern Airways, Del., 90 A.2d 652, 656; Rosenthal v. Burry Biscuit Corporation, supra. Plaintiff does not complain that the sale of the stock at the option prices would constitute a waste of corporate assets; his complaint is lack of consideration in the granting of the options. This question was considered in the case of Levitan v. Stout, supra [97 F.Supp. 119], a stockholder's derivative action, in which mismanagement of the corporation on the part of the individual defendants was charged. On a motion of the individual defendants to strike certain allegations from the amended complaint on the ground that the allegedly wrongful acts were committed prior to the earliest sale on which any of the plaintiffs had acquired stock in the corporation, the court, in holding that the wrong was not a continuing one, said:
"Assuming that the individual defendants did wrong to the Corporation by entering into the contract it does not follow that they committed any wrong in carrying out the contract once it had been made. Indeed, had they not done so, the Corporation would presumably have been subject to liability for breach of contract."
See also Pergament v. Frazer, supra.
The wrong or injury of which plaintiff complains is the granting of the options, not the exercise thereof. The action is therefore not a continuing one.
I conclude that as to the options granted in September of 1950, defendant's motion for summary judgment under Rule 56 must be granted.
I next consider the applicability of New York statutory law as that law may apply to the stock option plans of defendant.
Defendant contends that since the options were granted and will be exercised, if they should be exercised, in the State of New York, their legality must be determined by the laws of that state. Defendant relies on Subdivision 5 of Section 33, Article 3, Personal Property Law, Chapter 41, McKinney's Consolidated Laws of New York, which provides as follows:
"5. When hereafter an offer to enter into a contract is made in a writing signed by the offeror, or by his agent, which states that the offer is irrevocable during a period set forth or until a time fixed, the offer shall not be recovable during such period or until such time because of the absence of consideration for the assurance of irrevocability. When such a writing states that the offer is irrevocable but does not state any period or time of irrevocability, it shall be construed to state that the offer is irrevocable for a reasonable time."
The New York statute quoted above was passed for the purpose of affording recognition of an existing and growing custom of business men to make so-called "firm" offers, which are assumed to be binding against the offeror even though he should receive no consideration for his offer. Jarka Corporation v. Hellenic Lines, 2 Cir., 1950, 182 F.2d 916, 919.
This action was instituted by plaintiff as one of the shareholders of the defendant. It relates to stock options granted to certain officers and personnel of defendant. It is not therefore an ordinary transaction for the sale of stock on the open market, but involves a matter lying entirely within the corporate structure of defendant. The stock certificate of plaintiff was issued in conformity with the laws of the State of Delaware. When the plaintiff became the owner of the corporate stock of defendant, the rights which he obtained by virtue thereof were rights granted to him under *225 the laws of this state. The issuance of the stock option plans by defendant arises out of their approval by its board of directors and its stockholders and the controversy resulting therefrom involves the internal affairs of defendant and is therefore controlled by the laws of the state of its origin, namely, the State of Delaware. Rogers v. Guaranty Trust Co. of New York, 288 U.S. 123, 53 S.Ct. 295, 77 L.Ed. 652, 89 A.L.R. 720; Boyette v. Preston Motors Corporation, 206 Ala. 240, 89 So. 746, 18 A.L.R. 1376.
The case of Rogers v. Guaranty Trust Co. of New York, supra [288 U.S. 123, 53 S.Ct. 296], is in point. In that case The American Tobacco Co., a corporation of the State of New Jersey, doing business in the State of New York, by resolution of its board of directors, advised approval of its stockholders of a plan for the issuance and sale of its common stock B to certain employees and others actively engaged in the conduct of its business "by way of additional compensation for services to be rendered" and allotted for subscription shares of its unissued stock. The plan was duly adopted by the stockholders and the board of directors authorized the sale of the stock. A stockholder's suit to enjoin defendants from carrying out the plan and to cancel the stock was instituted in the District Court for the Southern District of New York. That court, 60 F.2d 106, dismissed the complaint without prejudice to the enforcement of the rights of the plaintiff, if any, in the courts of New Jersey. The Circuit Court of Appeals, 2 Cir., 60 F. 2d 114 held that the stock was lawfully issued under New Jersey statutes. Upon certiorari to the United States Supreme Court, that court remanded the case to the District Court with directions to reinstate its earlier judgment. 287 U.S. 586, 53 S.Ct. 80, 77 L. Ed. 512. In holding that the law of the State of New Jersey applied, the Supreme Court, Mr. Justice Butler, said:
"The authorization, allotment, and sale of the shares in question involved the proportionate ownership of stockholders and their rights inter sese. Unquestionably the steps taken and proposed to formulate and carry out the plan constitute the conduct and management of the internal affairs of the tobacco company. The controversy is solely between the plaintiff and other stockholders not participating in the distribution on one side and the purchasers of the new stock, the corporation, its directors and officers on the other. When, by acquisition of his stock, plaintiff became a member of the corporation he, like every other shareholder, impliedly agreed that, in respect of its internal affairs, the company was to be governed by the laws of the state in which it was organized. His rights, whatever the tribunal chosen for their vindication, are to be determined upon the ascertainment and proper application of New Jersey law."
Even assuming that the stock options issued in this case are to be determined under the laws of the State of New York, I find nothing in that statute, or in any other law or decision of that state which has come to my attention, permitting a corporation to give away its assets, or any substantial portion thereof, without the consent of all its stockholders. See Holst v. New York Stock Exchange, 252 App.Div. 233, 299 N.Y.S. 255; Selman v. Allen, supra.
The New York statute cited by defendant relates to the revocability of an otherwise valid offer; it cannot possibly validate an option which would be otherwise illegal. It is charged in plaintiff's complaint that the defendant, by the granting of the options, is giving away a substantial portion of its assets without receiving proper consideration therefor and without the unanimous approval of all its stockholders. This it cannot do, either in New York or in this state. As the record now stands, there is an allegation in the complaint alleging waste of corporate assets by reason of the issuance of these options. The question of the sufficiency of this allegation must necessarily *226 be determined by the trier of the facts as well as the law.
I conclude that defendant's motion for summary judgment, pursuant to Rule 56, as far as that motion has any applicability to the New York law, should be dismissed.
It is asserted on behalf of defendant that the facts alleged in the complaint do not show irreparable injury to the plaintiff and that the only loss which plaintiff has sustained is a monetary one, for which he can secure full and complete relief in a court of law.
Equity generally has jurisdiction in a suit for injunction to restrain a threatened injury. In this case the remedy at law, if there should be one, would undoubtedly be less complete and less effective than in a court of equity. The stock option plans of defendant apply to several hundred of its officers and employees, and involve 248,000 shares of its stock. Few, if any, of these officers and employees reside in this state. The amount of damages would be difficult, if not impossible, of ascertainment. The complaint alleges that the options have substantial value. Nevertheless, that value cannot be intelligently determined in dollars and cents from the point of view of either the defendant or the optionees. See Kaufman v. Shoenberg, Del.Ch., 91 A.2d 786; Gottlieb v. Heyden Chemical Corp., Del.Ch., 99 A.2d 507 opinion of Chancellor Seitz dated October 8, 1953. A remedy at law must be as practical to the ends of justice and to its prompt administration as the remedy in equity. City of Walla Walla v. Walla Walla Water Co., 172 U.S. 1, 19 S.Ct. 77, 43 L.Ed. 341. Injunctions relative to option contracts under similar circumstances have been granted by this court in a number of instances. I therefore conclude that plaintiff has shown such evidence of irrevocable injury as will prevent judgment against him on motions to dismiss and for summary judgment.
An order will be signed, on notice, in accordance with this opinion.


599 F.2d 181
5 Bankr.Ct.Dec. 243, Bankr. L. Rep.  P 67,111
In the Matter of LICEK POTATO CHIP CO., an IllinoisCorporation, Debtor.Appeal of Wayne H. FAIR and Bettie A. Fair.
No. 78-1811.
United States Court of Appeals,Seventh Circuit.
Argued April 9, 1979.Decided May 21, 1979.

Terry L. Fields, Springfield, Ill., for appellants.
Richard C. McDonald, J. Christopher Jackson, Decatur, Ill., for appellees.
Before TONE and BAUER, Circuit Judges, and BONSAL, Senior District Judge.*
TONE, Circuit Judge.

1
This is an appeal from an order of the district court affirming the bankruptcy judge's dismissal of a third-party complaint for lack of jurisdiction.  We do not reach the issue of the correctness of the order appealed from, because we are without jurisdiction to hear the appeal.

2
Appellants, Wayne and Bettie Fair, and Licek Potato Chip Company entered into an agreement, the terms of which are not clear from the record but which seems to have provided for distribution of potato chips by the Fairs.  Soon thereafter Licek filed a petition under Chapter XI of the Bankruptcy Act, 11 U.S.C. § 701, et seq.  At the first meeting of creditors, Licek presented a proposed plan of arrangement.  The Fairs filed an acceptance and a proof of claim for $35,000, based on a note Licek had executed and delivered to them.  The bankruptcy judge then entered an order confirming the plan.

3
Subsequently Licek and the receiver filed a complaint in the bankruptcy proceeding seeking a declaration that the transaction between Licek and the Fairs was a loan transaction and that the Fairs' claim was unsecured and subject to the provisions of the plan of arrangement, and asking that the Fairs be required to deliver to Licek and the receiver certain vehicle titles involved in the Licek-Fairs transaction.  The Fairs answered, alleging that the transaction "was for the purchase of routes and equipment from the debtor and was not a loan transaction."  The bankruptcy judge allowed the Fairs' claim as an unsecured claim and later entered an order approving the final report of the receiver and closing the case as to all matters except "the claim of Wayne H. Fair and Bettie A. Fair against the debtor."

4
The Fairs then filed a "cross-complaint and third-party complaint" naming Licek as cross-defendant and the appellees herein as third-party defendants and alleging as follows: Appellees First National Bank of Decatur and Jonann, Robert, and Charles Lyon wrongfully induced the Fairs to purchase a Licek distributorship from the Lyons using $35,000 borrowed from the bank for that purpose without informing the Fairs of the precarious financial position of Licek and its obligation to the bank in excess of $200,000.  Appellees William Walker and Patrick Nolan, who subsequently purchased Licek in the course of the Chapter XI proceedings, promised to make the Fairs whole in the transaction.  Appellee Acton Company purchased Licek from Walker and Nolan subject to the claim of the Fairs.  The relief sought was the return of the $35,000 to the Fairs.

5
On motion of appellees, the bankruptcy judge dismissed for lack of jurisdiction "the third-party complaint," meaning that part of the Fairs' pleading that sought relief against appellees.  The record before us contains no ruling on the claim which the pleading asserted against Licek.  The district court affirmed the bankruptcy judge's order.  Although no determination and direction under Rule 54(b), Fed.R.Civ.P., was entered, the Fairs filed a notice of appeal from the order.

6
Appellant's argument in support of our jurisdiction is based primarily on § 24(a), 11 U.S.C. § 47(a), which is made applicable to Chapter XI by § 316, 11 U.S.C. § 716.  8 Collier on Bankruptcy, P 3.30(2.1) at 276 & n.5 (14th ed. 1978); 9 Moore's Federal Practice, P 206.02 at 1205 & n.9 (2d ed. 1975).  Section 24(a) grants the courts of appeals jurisdiction over both final and interlocutory orders in "proceedings in bankruptcy" but over only final orders in "controversies arising in proceedings in bankruptcy."  2 Collier on Bankruptcy, P 24.04(2) at 715 (14th ed. 1976); 9 Moore's Federal Practice, supra, P 110.19(5) at 222; 16 Wright, Miller, Cooper & Gressman, Federal Practice and Procedure, § 3926 at 103 & n.6 (1977).  For the distinction between the quoted terms, See In re Durensky, 519 F.2d 1024, 1027 (5th Cir. 1975); See generally 2 Collier on Bankruptcy, supra, PP 24.12-24.36.

7
However difficult it may sometimes be to apply this often criticized distinction,1 the days of which are now numbered,2 it is readily determinable that, at the very least, the dispute here is not a proceeding in bankruptcy; for it concerns the jurisdiction of the bankruptcy court over a claim by an adverse claimant against third-parties and is not an administrative matter presented in the ordinary course of the administration of the bankrupt's estate.  Accord, United Kingdom Mutual Steamship Assurance Association v. Liman, 418 F.2d 9 (2d Cir. 1969); In re Christ's Church of the Golden Rule, 172 F.2d 523 (9th Cir. 1949).  We need not decide whether the dispute is a controversy arising in a proceeding in bankruptcy, as were those in the United Kingdom and Christ's Church cases,3 because even if it is we have no jurisdiction unless the order appealed from is final.  Whether the dispute is a "controversy" under § 24(a) or is neither a "proceeding" nor a "controversy" under that section and hence outside its purview and subject to 28 U.S.C. § 1291,4 the order is appealable only if it is final.  See 9 Moore's Federal Practice, supra, P 110.19(5) at 222 & n.3.

8
We turn therefore to the question of whether the order appealed from, in which the district court affirmed the bankruptcy judge's order dismissing the third-party claim for lack of jurisdiction, is final.  An order dismissing a third-party complaint but leaving another claim pending is a paradigm of an interlocutory order subject to Rule 54(b), Fed.R.Civ.P.  E. g., Courembis v. Independence Avenue Drug Fair, Inc., 115 U.S.App.D.C. 7, 8, 316 F.2d 658, 659 (1963).  Rule 54(b) is made applicable in Chapter XI proceedings by Bankruptcy Rules 11-61(a) and 754.  The Fairs contend, however, that the dismissal of their third-party claim was a final order because it adjudicated the rights of all the parties before the district judge on the appeal from the bankruptcy judge.

9
This argument rests on a misconception of the jurisdictional scheme in bankruptcy cases.  We note initially that orders of the bankruptcy judge need not be final to be appealable to the district judge.5  This does not mean, however, that the latter's ruling on an interlocutory appeal is appealable to the court of appeals,6 for our jurisdiction is, with exceptions not applicable here, limited to review of final orders of the district court in bankruptcy cases, as it is in other cases.7

10
The district judge's order in the case at bar did not finally decide all the issues between all the parties.  Undecided issues remained before the bankruptcy judge and hence before the district court.  In the absence, therefore, of an appropriate determination and direction under Rule 54(b), the order was not appealable.

11
The Fairs argue that the district court's entry of a stay pending disposition on appeal implied a determination that no just reason for delaying appeal existed.  Rule 54(b), however, requires that the "determination that there is no just reason for delay" and the "direction for the entry of judgment" both be "express."  These requirements not having been satisfied, we are without jurisdiction to hear this appeal.

12
The appeal is dismissed for want of jurisdiction.  Appellants are, of course, free to seek an appropriate determination and direction from the district court, in compliance with Rule 54(b), that would make the ruling appealable.  If the district court sees fit to grant such a request and to enter judgment accordingly, and a notice of appeal from that judgment is filed, the new appeal will be considered by this panel on the briefs and oral arguments already presented.

*
 The Honorable Dudley B. Bonsal, Senior District Judge of the Southern District of New York, is sitting by designation

1
 E. g., In re Brissette, 561 F.2d 779, 781 (9th Cir. 1977); 9 Moore's Federal Practice, supra, P 110.19(5)

2
 The distinction is eliminated by the Bankruptcy Reform Act, Pub.L. No. 95-598, 92 Stat. 2549, 2667 (1978), adding § 1293 to Title 28.  Under that provision only final orders of the trial court in bankruptcy matters are appealable to the courts of appeals

3
 Here the dispute over jurisdiction arose between adverse claimants and third-parties who the claimants allege fraudulently induced them to enter into the original transaction.  This does "present distinct and separable issues" but not "between the trustee and adverse claimants" and not "concerning the right and title to the bankrupt's estate."

4
 The parties do not contend that jurisdiction exists under 28 U.S.C. § 1292.  The order appealed from does not fall within any of the categories of § 1292(a).  28 U.S.C. § 1292(a)(2) refers only to the "ordinary equity receiver," 7B Moore's Federal Practice, P 1292(a)(2) (2d ed. 1978), and not to bankruptcy receiverships, 2 Collier on Bankruptcy, supra, P 24.27(2.1) at 726.1 n.7.  Section 1292(b) does not apply because the district judge did not state in writing that his order satisfied the criteria listed therein

5
 Section 2(a)(10) of the Bankruptcy Act, 11 U.S.C. § 11(a)(10), gives the district court jurisdiction to "consider records, findings, and orders certified to the judges by referees, and confirm, modify, or reverse such findings and orders, or return such records with instructions for further proceedings . . . ."  Neither this section, nor § 39, 11 U.S.C. § 67, which prescribes the procedure for review of a bankruptcy judge's order and allows review as of right, nor the bankruptcy rules governing appeal to the district court, See Bankruptcy Rules 801-814, nor any other applicable provision contain a finality requirement.  The Act and Rules place no limit on the jurisdiction of the district court to review interlocutory orders of the bankruptcy judge.  Willyerd v. Buildex Co., 463 F.2d 996, 1001 (6th Cir. 1972); Sulmeyer v. Pfohlman, 329 F.2d 915, 917 (9th Cir. 1964); 2A Collier on Bankruptcy, P 39.21 (14th ed. 1978)
Interlocutory orders of the bankruptcy judge will also be reviewable at the trial court level under the Bankruptcy Reform Act, Pub.L. No. 95-598, 92 Stat. 2549 (1978).  Under § 201 of that Act, 92 Stat. 2659 (1978), which will become 28 U.S.C. § 160, appellate panels consisting of three bankruptcy judges may be designated "to hear appeals from judgments, orders, and decrees of the bankruptcy court (created in the new 28 U.S.C. § 151, Pub.L. No. 95-598 § 201, 92 Stat. 2657 (1978)) . . . ."  The new 28 U.S.C. § 1482(b), Pub.L. No. 95-598 § 241(a), 92 Stat. 2671 (1978), gives these panels "jurisdiction of appeals from interlocutory judgments, orders, and decrees of bankruptcy courts . . . ."  In districts which will not have appellate panels, appeal may be taken to the district court under the new 28 U.S.C. § 1334, Pub.L. No. 95-598 § 238, 92 Stat. 2668 (1978), which gives district courts jurisdiction over interlocutory orders of the bankruptcy courts.

6
 The bankruptcy judge does not stand in the same relationship to the district court that the district court does to this court.  He is an officer of the district court, appointed by that court, 11 U.S.C. § 62(a), and deriving his jurisdiction and powers from that court, 11 U.S.C. § 66.  Heiser v. Woodruff, 150 F.2d 867, 868 (10th Cir.), Cert. denied, 326 U.S. 778, 66 S.Ct. 271, 90 L.Ed. 471 (1945).  Parties before the bankruptcy judge are before the district court

7
 The same will be true under the Bankruptcy Reform Act.  92 Stat. 2667 (1978), adding 28 U.S.C. § 1293