Ecee, Inc. v. Federal Energy Regulatory Commission

• Citation: 611 F.2d 554
• Decision Date: 07 February 1980
• Docket Number: No. 79-1171,79-1171
• Parties: ECEE, INC., et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 554

611 F.2d 554

ECEE, INC., et al., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

No. 79-1171.

United States Court of Appeals, Fifth Circuit.

Feb. 7, 1980.

Neal Powers, Jr., Byron A. Thomas, Butler, Binion, Rice, Cook & Knapp, Houston, Tex., for Ecee, Inc., et al.

Gordon Gooch, Bruce F. Kiely, Charles M. Darling, IV, Washington, D. C., for Tenneco Oil Co., General American Oil Co. of Texas, Texasgulf, Inc., Pennzoil Co., et al.

Bruce F. Kiely, Washington, D. C., Michael B. Silva, Phyllis Rainey, Houston, Tex., for Tenneco Oil Co.

R. Gordon Gooch, Robert C. Murray, Dallas, Tex., for General American Oil Co. of Texas.

George W. Hugo, Houston, Tex., for Texasgulf, Inc.

Charles M. Darling, IV, Washington, D. C., for Pennzoil Co., et al.

David M. Whitney, Houston, Tex., for Aminoil U.S.A., Inc., et al.

John A. Ramsey, Paul J. Broyles, Karen A. Berndt, Houston, Tex., for Texaco, Inc.

Richard G. Harris, Oklahoma City, Okl., for Kerr-McGee Corp.

Nancy J. Hubbard, Washington, D. C., Martin N. Erck, C. Roger Hoffman, Houston, Tex., for Exxon Corp.

Roger L. Brandt, Houston, Tex., for Houston Oil & Minerals Corp.

William A. Sackmann, Findlay, Ohio, for Marathon Oil Co.

Kenneth L. Riedman, Jr., Los Angeles, Cal., for Union Oil Co. of California.

Edward J. Kremer, Dallas, Tex., for Atlantic Richfield Co.

Cloy D. Monzingo, David C. Henri, Houston, Tex., for Getty Oil Co.

Lauren L. Eaton, A. Paul Brandimarte, Jr., Houston, Tex., Jeffrey G. Shrader, Midland, Tex., for Gulf Oil Corp.

Thomas G. Johnson, Houston, Tex., for Shell Oil Co.

Robert R. Nordhaus, Gen. Counsel, Howard E. Shapiro, Sol., J. Paul Douglas, Atty., Washington, D. C., for Federal Energy Regulatory Commission.

Justin R. Wolf, Washington, D. C., for Chevron U.S.A., Inc.

Robert D. Haworth, Houston, Tex., for Mobil Oil Corp. Harold L. Talisman, Washington, D. C., for Tennessee Gas Pipeline Co.

Arthur S. Berner, Houston, Tex., for Inexco Oil Co.

Larry Pain, Barlesville, Okl., for Phillips Petroleum Co.

Petitions for Review of an Order of the Federal Energy Regulatory Commission.

Before COLEMAN, Chief Judge, BROWN and TJOFLAT, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

On November 9, 1978, Congress enacted the Natural Gas Policy Act (NGPA), 15 U.S.C.A. §§ 3301 Et seq., a comprehensive regulatory statute governing the natural gas industry. ¹ Two months later, the Federal Energy Regulatory Commission (FERC) promulgated order No. 21, entitled "Final Regulation Providing for Rehearing of Orders and Rules Issued Under the NGPA (No. RM79-12)." That Order sets forth a rehearing requirement as a jurisdictional prerequisite to obtaining judicial review of rules issued by FERC under the NGPA. ² In this case we are asked to determine the legality of Order No. 21.

Petitioners ³ contend that the NGPA does not establish a rehearing requirement and that FERC cannot impose such a requirement without statutory authority. FERC contends that Order No. 21 merely implements a specific provision of the NGPA requiring a rehearing and is therefore valid.

In challenging the legality of Order No. 21, a procedural rule setting forth requirements for challenging substantive rules, petitioners do not simultaneously challenge any substantive rules. While FERC has not contested petitioners' right to challenge Order No. 21 in this case, we believe that the threshold question before us is whether there exists a case or controversy under Article III of the United States Constitution.

After first determining that this case presents a case or controversy under Article III, we hold that we do not have jurisdiction to review the legality of Order No. 21 for a reason unrelated to the case or controversy question. Specifically, after a lengthy discourse, we conclude that the NGPA imposes a rehearing requirement as a jurisdictional prerequisite to judicial review of rules issued by FERC under the NGPA. The petitioners, who seek a ruling on the legality of Order No. 21, which is itself a rule promulgated under the NGPA, did not comply with the rehearing requirement of the NGPA. Instead, without filing petitions for rehearing, they sought review of that rule by this Court. Consequently, we are without jurisdiction to review the legality of Order No. 21 and must therefore dismiss the petitions for review. Of course, since the basis of petitioners' case is that Order No. 21 is illegal because the NGPA does not impose a rehearing requirement, our determination that the NGPA Does impose such a requirement is as a practical matter a ruling on the merits of petitioners' case. ⁴Ecee Come . . .

Article III, Section 2 of the Constitution limits federal court jurisdiction to "cases" and "controversies." The case or controversy requirement stems both from constitutional requirements and from prudential considerations of judicial self-restraint. Warth v. Seldin, 1974, 422 U.S. 490, 498, 95 S.Ct. 2197, 2204, 45 L.Ed.2d 343, 354.

The case or controversy problem presented here is whether this case is ripe for review. Underlying the ripeness doctrine is the principle that cases should not be heard by a court before the issues have become concrete and focused in the context of a live and genuine dispute. Abbott Laboratories v. Gardner, 1967, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681, 691.

In 1967, the Supreme Court decided three related cases concerning the ripeness of challenges to administrative action. Abbott Laboratories v. Gardner, supra; Toilet Goods Association v. Gardner, 1967, 387 U.S. 158, 87 S.Ct. 1520, 18 L.Ed.2d 697; Gardner v. Toilet Goods Association, 387 U.S. 167, 87 S.Ct. 1526, 18 L.Ed.2d 704. The Supreme Court found two of the three cases, Abbott Laboratories, supra, and Gardner v. Toilet Goods, supra, ripe for review. Abbott Laboratories involved regulations by the Commissioner of Food and Drugs requiring that the generic name of a drug be printed each time the trade name was used. Gardner v. Toilet Goods involved a challenge to regulations promulgated by the Commissioner of Food and Drugs prescribing conditions for the use of color additives in foods, drugs, and cosmetics. The Court found these two cases ripe for review even though the regulations had not yet been enforced. On the other hand, in Toilet Goods Association v. Gardner, supra, the Court held not ripe a challenge to regulations authorizing the Commissioner of Food and Drugs to order under certain circumstances inspection of manufacturing facilities and to refuse to certify color additives unless and until such an inspection was allowed.

In each of the three cases, the Court reached its decision by applying precise factors set forth in the first case, Abbott Laboratories. The most important of these factors are: (1) whether the issues presented are purely legal; (2) whether the challenged agency action constitutes "final agency action;" (3) whether the challenged agency action has or will have a direct and immediate impact upon the petitioners; and (4) whether resolution of the issues will foster, rather than impede, effective enforcement and administration by the agency. Abbott Laboratories, supra, 387 U.S. at 149-54 ⁵, 87 S.Ct. at 1515-18, 18 L.Ed.2d at 691-95. See also Dresser Industries, Inc. v. United States, 5 Cir., 1979, 596 F.2d 1231, 1235. The application of these factors here reveals that this case is ripe for review.

First, the issue presented is a purely legal one: whether the NGPA imposes a rehearing requirement with respect to rules issued by FERC. No set of facts can aid this Court in determining whether the Act authorizes a rehearing requirement. Thus, " 'we will be in no better position later than we are now' to decide this question." Duke Power Co. v. Carolina Env. Study Group, 1978, 438 U.S. 59, 82, 98 S.Ct. 2620, 2635, 57 L.Ed.2d 595, 617, Quoting Regional Rail Reorganization Act Cases, 1974, 419 U.S. 102, 145, 95 S.Ct. 335, 359, 42 L.Ed.2d 320, 354. ⁶

Second, order No. 21 is clearly "final agency action" under 5 U.S.C.A. § 704. The order will not be the subject of any further proceedings at the Commission. Its finality is reflected in its very title: "Final Regulation Providing for Rehearing of Orders and Rules Issued Under the NGPA."

Third, Order No. 21 has a direct, immediate, and continuing impact upon petitioners. Petitioners are natural gas producers whose wellhead sales are subject to FERC regulation under the NGPA. Acting under the NGPA, FERC has issued and continues to issue substantive rules directly affecting petitioners. Whenever a rule is issued, petitioners are faced with a classic "Hobson's choice." If petitioners seek direct judicial review of the substantive rule and the Court determines that a rehearing was necessary, then petitioners have lost their right to challenge the substantive rule because they have failed to file for rehearing within the thirty day limitation imposed by Order No. 21 and the NGPA. Thus, petitioners must obey a rule which may in fact be unlawful. On the other hand, if petitioners seek rehearing of the substantive rule, they cannot simultaneously obtain judicial review of that rule. See Outland v. Civil Aeronautics Board, D.C.Cir., 1960, 109 U.S.App.D.C. 90, 284 F.2d 224, 227-28. During the rehearing process, petitioners must comply with rules they believe to be unlawful. And the very act of seeking rehearing of the substantive rule would only serve to leave the rehearing requirement intact and applicable to future substantive rules. The only "safe" but effective option is to attack Order No. 21 without simultaneously attacking a substantive rule. ⁷

Fourth, resolution of the case before us will clearly expedite, rather than delay, FERC enforcement of its rules. The legality of several FERC rules remains in a state of uncertainty, and this uncertainty stems in large part from the confusion surrounding the rehearing question. ⁸ FERC's implementation of rules is necessarily impeded when the review...