City of Fort Morgan v. Fed. Energy Reg. Comm'n
| Decision Date | 25 June 1999 |
| Docket Number | No. 98-9512,98-9512 |
| Parties | (10th Cir. 1999) CITY OF FORT MORGAN, PETITIONER, v. FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT. K N WATTENBERG TRANSMISSION LIMITED LIABILITY COMPANY; LEPRINO FOODS COMPANY AND EXCEL CORPORATION, "SHIPPERS"; COLORADO INTERSTATE GAS COMPANY; PUBLIC SERVICE COMPANY OF COLORADO; PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO, INTERVENORS |
| Court | U.S. Court of Appeals — Tenth Circuit |
Dudley P. Spiller, Gorsuch Kirgis, Llp, Denver, Colorado (Harry L. Pliskin, Gorsuch Kirgis, Llp, Denver, Colorado, and Eric C. Jorgenson, Fort Morgan City Attorney, Fort Morgan, Colorado, with him on the briefs), for Petitioner.
Laura J. Vallance (Douglas W. Smith, Jay L. Witkin, and Susan J. Court with her on the brief), Federal Energy Regulatory Commission, Washington, D.C., for Respondent.
John H. Burnes, Jr., Van Ness Feldman, PC, Washington, D.C. (T. J. Carroll, Assistant General Counsel, K N Wattenberg Transmission Limited Liability Company, Lakewood, Colorado, and John R. Webb, Holme Roberts & Owen, Llp, Denver, Colorado, with him on the brief), for Intervenors K N Wattenberg Transmission Limited Liability Company, Leprino Foods Company and Excel Corporation.
Robert I. White, Squire, Sanders & Dempsey, Llp, Washington, D.C. (Nancy A. White, Squire, Sanders & Dempsey, Llp, Washington, D.C., and James D. Albright, New Century Services, Inc., Denver, Colorado, with him on the briefs), for Intervenor Public Service Company of Colorado.
Gregory E. Sopkin, Assistant Attorney General (Gale A. Norton, Attorney General, Richard A. Westfall, Solicitor General, Linda L. Siderius, Deputy Attorney General, and Raymond L. Gifford, First Assistant Attorney General, with him on the brief), for Intervenor Colorado Public Utilities Commission.
Before Seymour, Chief Judge, Anderson and Henry, Circuit Judges.
The City of Fort Morgan, Colorado, petitions for review of an order and order on rehearing by the Federal Energy Regulatory Commission ("FERC"), authorizing K N Wattenberg Limited Liability Company ("KNW") to construct and operate a new natural gas line and related facilities. The orders assert FERC jurisdiction over the facilities under section 1(b) of the Natural Gas Act ("NGA"), 15 U.S.C. §§ 717-717z. We grant the petition, reverse and remand to FERC for further proceedings.
Fort Morgan is a home-rule municipality in Morgan County, Colorado. Fort Morgan's natural gas department provides transportation and local distribution of gas to customers within the City and adjacent areas. The City's two largest natural gas customers have been Leprino Foods Company and Excel Corporation, both of which operate food processing plants in Fort Morgan. Prior to the events giving rise to this appeal, Leprino and Excel purchased their natural gas supplies from third-party marketers. The gas was then transported by Colorado Interstate Gas Company ("CIG") to Fort Morgan's local distribution system, which, in turn, delivered the gas to the Leprino and Excel plants. Together, Leprino and Excel accounted for 19% of the City's gas department revenues.
In 1995, Fort Morgan's City Council trebled the transportation rate for natural gas delivered by its natural gas department. Leprino and Excel accordingly explored less expensive alternative sources for their natural gas requirements. KNW is an interstate natural gas pipeline company. KNW and Leprino and Excel agreed that KNW would supply Leprino and Excel with natural gas by building a lateral gas pipeline from CIG's gas line directly to the Leprino and Excel plants.
On February 19, 1997, KNW filed with FERC a "Request Under Blanket Authorization" seeking authority to construct, install and operate a four-mile, 6.625 inch diameter pipeline; a one-mile, 4.5 inch pipeline; and related taps on the existing gas pipeline facilities of CIG in Morgan County. KNW's proposed pipeline would transport gas from CIG's pipeline directly to the Leprino and Excel plants, thereby bypassing Fort Morgan's local distribution system. As all parties agree, KNW's proposed new pipeline facilities (the subject of this appeal) are physically separate from the remainder of KNW's interstate pipeline facilities.1
On April 16, 1997, Fort Morgan intervened in the proceeding and filed a protest to KNW's request. The Public Service Company of Colorado ("PSCC"),2 CIG, Leprino and Excel all also intervened in the FERC proceedings. Fort Morgan asked FERC to reject KNW's request on the ground that the proposed facilities were exempt from FERC jurisdiction as local distribution facilities under section 1(b) of the NGA, 15 U.S.C. § 717(b), and as Hinshaw Amendment facilities under section 1(c) of the NGA, 15 U.S.C. § 717(c).3 Alternatively, Fort Morgan argued the KNW proposal was not in the public convenience and necessity.
On November 4, 1997, FERC granted KNW's request. See K N Wattenberg Transmission Ltd., 81 F.E.R.C. ¶ 61,167 (1997). FERC held that KNW's proposed facilities were neither local distribution facilities nor Hinshaw Amendment facilities, and were therefore subject to FERC jurisdiction. Fort Morgan filed a Request for Rehearing and a Motion for Stay of the FERC Order. CIG and PSCC subsequently filed separate requests for rehearing as well.
On December 29, FERC granted rehearing to permit further consideration and, on April 11, 1998, issued an order denying all parties' requests for rehearing. See K N Wattenberg Transmission Ltd., 83 F.E.R.C. ¶ 61,006 (1998). It repeated its Conclusion that KNW's proposed facilities were neither local distribution facilities nor Hinshaw Amendment facilities.
Fort Morgan then filed a timely Petition for Review with this court, followed by an Application for Stay of FERC Orders 81 F.E.R.C. ¶ 61,167 and 83 F.E.R.C. ¶ 61,006. Leprino and Excel together, followed by KNW and FERC separately, filed motions opposing the stay application. On June 22, 1998, this court denied the motion for a stay. KNW's proposed facilities were constructed and went into service providing gas to Leprino's and Excel's plants as of June 7, 1998. Because of the new KNW line, Fort Morgan has lost Leprino and Excel as natural gas customers, resulting in a 19% decline in its gas revenues.
Fort Morgan argues on appeal that FERC erred in asserting jurisdiction over the new KNW line because it is a Hinshaw Amendment facility under section 1(c) of the NGA. Intervenor PSCC agrees. Intervenor the Colorado Public Utilities Commission ("CPUC") has filed a brief, although not specifically in support of any party.4
FERC argues (1) neither Fort Morgan nor intervenor PSCC is aggrieved by FERC's orders, so Fort Morgan's petition for review and PSCC's motion to intervene should be dismissed for lack of jurisdiction; and, (2) alternatively, assuming jurisdiction is proper over this petition, FERC properly determined it has jurisdiction over the new KNW line. Intervenors KNW, Leprino and Excel support FERC in its exercise of jurisdiction over the new KNW line.
Section 19(b) of the NGA, 15 U.S.C. § 717r(b), allows only parties "aggrieved" by FERC orders to seek review in the court of appeals. See First Nat'l Oil, Inc. v. FERC, 102 F.3d 1094, 1096 (10th Cir. 1996). FERC argues neither Fort Morgan nor PSCC, as intervenor, have been "aggrieved" by FERC's exercise of jurisdiction over the KNW line.
We have held that, to be "aggrieved" under section 19(b), "a party must demonstrate a `present and immediate' injury in fact, or `at least... a looming unavoidable threat' of injury, as a result of the FERC order." Id. (quoting Williams Gas Processing Co. v. FERC, 17 F.3d 1320, 1322 (10th Cir. 1994)). The petitioner (Fort Morgan in this case) bears the burden of alleging sufficient facts to prove a concrete, non-speculative harm. See id.; see also Colorado Interstate Gas Co. v. FERC, 83 F.3d 1298, 1300-01 (10th Cir. 1996).
We conclude that Fort Morgan, as petitioner, is "aggrieved" by FERC's orders and may therefore challenge those orders in this appeal. FERC's assertion of jurisdiction and grant of authorization was the catalyst for KNW's building the new line to serve Leprino's and Excel's natural gas needs. That new line, in turn, directly resulted in Fort Morgan's loss of Leprino and Excel as natural gas customers, and a concomitant loss of 19% of the City's natural gas revenues. While, of course, we do not know with certainty whether Leprino and Excel would have arranged for alternative gas supplies had FERC refused KNW's request, or would have simply continued to purchase gas from Fort Morgan, the possibility that Fort Morgan would have suffered no loss, or could potentially recoup any loss from other customers, is pure speculation, while the actual loss of natural gas revenues is obvious.5
We review the Commission's assertion of jurisdiction "`to ascertain whether the decision has an adequate basis in law.'" Cascade Natural Gas Corp. v. FERC, 955 F.2d 1412, 1415 (10th Cir. 1992) (quoting Northwest Pipeline Corp. v. FERC, 905 F.2d 1403, 1407-08 (10th Cir. 1990)). "In making that determination... we `are under no obligation to defer to the agency's legal Conclusions.'" Id.6 The Commission's factual findings, "if supported by substantial evidence, shall be conclusive." 15 U.S.C. § 717r(b).
Section 1(b) of the NGA confers on FERC plenary jurisdiction over (1) the "transportation of natural gas in interstate commerce," (2) the "sale in interstate commerce of natural gas for resale," and (3) "natural-gas companies engaged in such transportation or sale." 15 U.S.C. § 717(b). The Hinshaw Amendment excludes from FERC's jurisdiction the following:
[A]ny person engaged in or legally authorized to engage in the transportation in interstate commerce or the sale in interstate commerce for resale, of natural...
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