Brooklyn Union Gas Co. v. Federal E.R.C.

• Decision Date: 17 September 1999
• Docket Number: No. 98-60057,98-60057
• Citation: 190 F.3d 369
• Parties: (5th Cir. 1999) THE BROOKLYN UNION GAS COMPANY; CONSOLIDATED EDISON COMPANY OF NEW YORK, INC; PECO ENERGY COMPANY; SOUTHERN NATURAL GAS COMPANY; AMOCO PRODUCTION COMPANY AND AMOCO ENERGY TRADING CORPORATION; DESTIN PIPELINE COMPANY, LLC; SOUTH CAROLINA PIPELINE CORPORATION; Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION; Respondent
• Court: U.S. Court of Appeals — Fifth Circuit

Page 369

190 F.3d 369 (5th Cir. 1999)

THE BROOKLYN UNION GAS COMPANY; CONSOLIDATED EDISON COMPANY OF NEW YORK, INC; PECO ENERGY COMPANY; SOUTHERN NATURAL GAS COMPANY; AMOCO PRODUCTION COMPANY AND AMOCO ENERGY TRADING CORPORATION; DESTIN PIPELINE COMPANY, LLC; SOUTH CAROLINA PIPELINE CORPORATION; Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION; Respondent

No. 98-60057

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

September 17, 1999

[Copyrighted Material Omitted] Petition for Review of an Order of the Federal Energy Regulatory Commission

Before REYNALDO G. GARZA, HIGGINBOTHAM, and DAVIS, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

We are asked today to decide whether the Federal Energy Regulatory Commission had jurisdiction over pipeline facilities newly constructed by Transcontinental Gas Pipe Line Corporation for transporting gas from the Gulf of Mexico to the shore and questions of how the expense of constructing the new pipeline should be distributed. The case before us arose from an Application filed with the Commission in 1996 by Transco under Section 7(c) of the Natural Gas Act, 15 U.S.C. 717(f), seeking a certificate of public convenience and necessity to extend its existing system by building and operating new offshore natural gas facilities in the Gulf of Mexico, called the Mobile Bay Project.

In turn we will address questions of standing, regulatory reach of the Commission, cost and pricing. The latter includes the related question of whether Transco included the full costs of its expansion or segmented a larger project to gain advantage from rules that favor roll-in rates over incremental pricing when doing so would not increase prices more than five percent.

I

After applying for a certificate of public convenience and necessity, Transco conducted an "open season," soliciting transportation customers for the planned service addition. There was little customer interest. Transco and WESCO, an affiliate gas marketing company, executed a 15-year "Precedent Agreement" that WESCO would take prescribed levels of service over the new facilities. Transco also received some offers to relinquish capacity from some of its existing Mobile Bay lateral shippers. In April 1997 Transco amended its application, reducing the size of the proposed addition to fit the WESCO commitment and the relinquishments. It then proposed to build the facilities and place them in service in two phases. Phase I would consist of 57 miles of 24-inch diameter pipeline extending from the East Main Pass, Block 261, to a proposed new junction platform in the Mobile Bay area, Block 822; 19 miles of 30-inch diameter pipe would extend from the platform at Block 822 to a non-jurisdictional gas processing plant in Mobile County, together with 36-inch pipe from the processing plant to Transco's Compressor Station 82, together with a 15,000 horsepower compression addition at Transco's existing Station 82. In Phase II Transco would build a new Compressor Station 83 with a 15,000 hp unit on the Mobile Bay Lateral, downstream of Station 82.

Under the amended proposal the initial rates to be charged WESCO for service on the expanded facility would conform to the existing maximum rate under Transco's generally applicable rate Schedule FT for firm transportation within its rate Zone 4A, encompassing the Mobile Bay Lateral.

Transco estimated the costs of the project at approximately $120.2 million and submitted that its rate impact would be under five percent and hence it was entitled to a presumption of rolled-in-rate treatment. Responding to the requirement that it demonstrate that the expansion brought system benefits, Transco urged that there were both operational and financial benefits to its existing system customers. These benefits, it urged, included increased access to additional sources of gas supply, enhanced reliability of peak service based on the increased supply and compression, greater flexibility, and reduced costs of future expansions.

FERC first concluded that the proposed facilities were gas transmission facilities subject to the regulatory reach of NGA 1(b) rather than exempt gas gathering facilities. In this first order the Commission also preliminarily determined that the requested certificate was required by the public convenience and necessity under NGA 7(c), subject to specified conditions; that absent changed circumstances, Transco should be permitted to roll the costs of the facilities into its system rates when Transco filed a generally applicable rate case under 4 of the NGA. See Pricing Policy for New and Existing Facilities Constructed by Interstate Natural Gas Pipelines, 71 F.E.R.C. 61,241, reh'g denied, 75 F.E.R.C. 61,105 (1996).

Brooklyn Union and numerous other companies, some gas transportation customers of Transco, challenged the Commission's assertion of jurisdiction and its order allowing roll-in rates. Amoco Production Company also challenged the ruling on roll-in pricing and urged the Commission to put Transco at risk should the facilities be underutilized. Amoco is a gas producer shipping on Transco's system and competing with WESCO in the sale of gas. Petitioners Destin Pipeline Company and Southern Natural Gas Company compete with Transco, and they challenged the orders allowing roll-in pricing. Completing the array of challengers, South Carolina Pipeline Corporation, a Transco pipeline customer who also competed with WESCO in the sale of gas in South Carolina, challenged as discriminatory the order allowing Transco to charge WESCO the existing rate until the next rate case. The Commission rejected all these contentions and the petitions for review now before this court followed.

II

Transco and the Commission challenge the standing of petitioners, urging that none was aggrieved within the meaning of 19(b) of the NGA by the orders they contest. The principles are well developed. We have refused to review Commission orders that are not "definitive" in their impact upon the rights of the parties and that do not threaten the petitioner with irreparable harm. Pacific Gas & Elec. Co. v. FERC, 106 F.3d 1190, 1194 (5th Cir. 1997) (citing Transcontinental Gas Pipe Line Corp. v. FERC, 589 F.2d 186, 189 (5th Cir.), cert. denied, 445 U.S. 915 (1979)).

"A party has not been 'aggrieved' by a FERC decision unless its injury is 'present and immediate.'" Pacific Gas & Elec. Co. v. FERC, 106 F.3d 1190, 1194 (5th Cir. 1997)(quoting Tenneco, Inc. v. FERC, 688 F.2d 1018, 1022 (5th Cir. 1982)). Relatedly, the dispute must be ripe for review. This kindred doctrine shifts to a temporal focus, timing review to secure a fit of controversy and judicial resolution. Ripeness considers the fluidity of the events defining the dispute, such as...