Energy Transfer Partners, L.P. v. F.E.R.C.

• Decision Date: 28 April 2009
• Docket Number: No. 08-60730.,08-60730.
• Citation: 567 F.3d 134
• Parties: ENERGY TRANSFER PARTNERS, L.P.; Energy Transfer Company; ETC Marketing Ltd.; Houston Pipe Line Company, L.P.; Oasis Pipeline L.P.; Oasis Pipeline Company Texas L.P.; ETC Texas Pipeline Ltd., Oasis Division, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

567 F.3d 134

ENERGY TRANSFER PARTNERS, L.P.; Energy Transfer Company; ETC Marketing Ltd.; Houston Pipe Line Company, L.P.; Oasis Pipeline L.P.; Oasis Pipeline Company Texas L.P.; ETC Texas Pipeline Ltd., Oasis Division, Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

No. 08-60730.

United States Court of Appeals, Fifth Circuit.

April 28, 2009.

William Scott Scherman, Donna Francescani Byrne, John Nowell Estes, III (argued), David J. Hill, John Lee Shepherd, Skadden, Arps, Slate, Meagher & Flom, Robert Stephen Fleishman, William Lloyd Massey, Covington & Burling, Washington, DC, Charles W. Schwartz, Skadden, Arps, Slate, Meagher & Flom, Houston, TX, for Petitioners.

Robert Harris Solomon (argued), Carol Jayne Banta, FERC, Washington, DC, for Respondent.

Petition for Review of Orders of the Federal Energy Regulatory Commission.

Before JOLLY, SMITH and OWEN, Circuit Judges.

OWEN, Circuit Judge:

Energy Transfer Partners, L.P. and related entities (to which we will refer individually and collectively as ETP) petition for review of an order of the Federal Energy Regulatory Commission (FERC or Commission) denying rehearing of an order that alleges ETP violated the Natural Gas Act (NGA), the Natural Gas Policy Act (NGPA), and FERC's implementing regulations and in which FERC proposed substantial penalties. ETP also petitions for review of a FERC order requiring an adversary hearing on these issues before an administrative law judge (ALJ). Because the issues presented are not ripe for review, we dismiss the petition.

I

After two years of investigation, FERC issued a Show Cause Order that included its preliminary determinations that: (1) ETP had manipulated wholesale natural-gas prices, in violation of FERC's regulations under the NGA, and (2) ETP's pipeline companies had unduly discriminated against nonaffiliated natural-gas pipeline shippers, unduly preferred affiliated natural-gas pipeline shippers, and charged rates for pipeline transportation service in excess of the maximum lawful rate, in violation of FERC's regulations under the NGPA.¹ As the consequence for the alleged NGA violations, FERC proposed a civil penalty of $82,000,000, disgorgement of unjust profits in the amount of $69,866,966 plus interest, and revocation of ETP's blanket certificate to sell natural gas.² Additional penalties were proposed for the alleged NGPA violations, and FERC directed ETP to respond to the specific allegations detailed in the Show Cause Order.³

ETP filed an expedited request for rehearing and for a stay of the Show Cause Order, contending that adjudication of civil penalties under the NGA or NGPA should proceed in a de novo trial before a federal district court rather than in administrative proceedings. ETP also asserted that FERC's statements in the Show Cause Order gave the appearance of prejudgment, depriving ETP of due process of law. In an order denying rehearing, FERC rejected ETP's arguments and denied the request to stay the Show Cause Order.⁴

ETP subsequently filed a petition for review of the Show Cause Order and Order Denying Rehearing in this court. FERC moved to dismiss the petition, contending that the orders were not final because the FERC proceedings initiated therein were ongoing. We granted FERC's motion and dismissed ETP's first petition for lack of jurisdiction.⁵

Meanwhile, in response to the Show Cause Order, ETP filed its answer to the Commission's allegations, asserting that it had not violated the NGA or the NGPA, and requested summary disposition. The Commission thereafter issued an Order Establishing Hearing in which it found "that there are genuine issues of fact material to the decision of this proceeding [that] require a hearing before an ALJ" and accordingly denied ETP's motion for summary disposition.⁶ That order initiated what FERC described as "a trial-type evidentiary hearing before an administrative law judge," specifying that an ALJ should determine whether ETP violated FERC's market-behavior rule and whether ETP unjustly profited from its activities, and, if so, the level of unjust profits. FERC "reserved to itself" the issue of whether civil penalties, other remedies, or both should be imposed. ETP again filed a request for rehearing and a stay on the same grounds as in its earlier request for rehearing of the Show Cause Order.

FERC denied ETP's request for rehearing and a stay.⁷ ETP then filed a second petition for review before this court, now challenging the Order Establishing Hearing,⁸ and subsequently filed an amended petition adding the Show Cause Order⁹ to its petition. ETP voluntarily withdrew its challenge of NGPA-related issues after a settlement of those issues was reached.

II

In order to determine whether the issues presented are ripe for review, it is necessary to understand the parties' respective positions. ETP contends that it has the "statutory right to have its civil penalty liability determined, in the first instance, by a federal district court." ETP relies on language in § 24 of the NGA, which states that federal district courts "shall have exclusive jurisdiction of violations of this chapter or the rules, regulations, and orders thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by, or to enjoin any violation of, this chapter or any rule, regulation, or order thereunder."¹⁰ ETP contends that federal district courts have "exclusive jurisdiction" to determine if it has violated the NGA and is liable for civil penalties. ETP apparently concedes that FERC is empowered by § 22 of the NGA¹¹ to propose and assess a civil penalty for violations of the NGA or regulations promulgated under the NGA's authority. ETP asserts, however, that it is entitled to a de novo proceeding in a federal district court by virtue of § 24 of the Act, 15 U.S.C. § 717u, quoted above, to challenge the assessment of a penalty, and ETP maintains that FERC does not have the authority to require trial-type proceedings before an ALJ to resolve whether violations of the NGA occurred.

FERC has taken the position in its motion to dismiss this petition and in its underlying "Order Denying Expedited Request for Rehearing and Stay and Addressing Future Civil Penalty Procedures"¹² that there is no de novo review of civil penalties in a federal district court. FERC points out that unlike the NGPA¹³ and the Federal Power Act,¹⁴ the NGA does not provide for de novo review of a penalty in a federal district court and that the absence of de novo review language in the NGA evinces congressional intent. FERC takes the position that it is authorized by 15 U.S.C. § 717t-1 to require a public hearing, including an adversarial proceeding before an ALJ, and that upon finding that the NGA has been violated, FERC may assess a civil penalty. The Commission maintains that ETP would then be entitled to petition for review by a court of appeals pursuant to § 19(b) of the NGA, 15 U.S.C. § 717r(b), and that the standard of review would be for substantial evidence. FERC argues that it is only in a collection action, once penalty proceedings are final, following appellate review in a court of appeals if review is sought, that a federal district court would have "exclusive jurisdiction." The standard of review in a collection action before a district court would be substantial evidence, according to FERC.

ETP contends in this court that FERC's construction of the NGA is incorrect and that being compelled to participate in an invalid administrative process is an injury that confers "standing" for it to pursue the present petition for review. The crux of ETP's argument is that FERC has ordered an unlawful hearing before an ALJ and that there is no adequate remedy for being required to participate in that hearing. Only a petition for review at this juncture, ETP asserts, will provide meaningful relief.

The parties agree that the statute governing this court's jurisdiction to consider ETP's petition is § 19(b) of the NGA.¹⁵ No party contends that a federal district court has jurisdiction to review FERC's order requiring a hearing in this case, and we are aware of no authority to that effect. Accordingly, we will analyze whether this petition for review should proceed under § 19(b) of the NGA and the precedents construing and applying that statute.

III

Section 19(b) of the NGA provides in pertinent part: "Any party to a proceeding under this chapter aggrieved by an order issued by the Commission in such proceeding may obtain a review of such order in the court of appeals of the United States...."¹⁶ Our court has long recognized that this section of the NGA does not require that an order be a "final" one;¹⁷ rather, the inquiry is whether a party has been "aggrieved" by an order of the Commission. We have, however, "declined to review non-final orders that are not `definitive' in their impact upon the rights of the parties and do not threaten the petitioner with `irreparable harm'."¹⁸ We have said that this "is a requirement that the order have some substantial effect on the parties which cannot be altered by subsequent administrative action."¹⁹ We have reasoned that "[a] party has not been `aggrieved' by a FERC decision unless its injury is `present and immediate,'"²⁰ and that "[r]elatedly, the dispute must be ripe for review."²¹

In determining whether a FERC order is ripe for review, our court has utilized the factors set forth by the Supreme Court in Abbott Laboratories v. Gardner.²² In that case a regulation promulgated by the Secretary of Health, Education, and Welfare pursuant to the Food, Drug, and Cosmetic Act was challenged, and the Supreme Court concluded that the issue of ripeness of agency action for judicial review "is best seen in a twofold aspect, requiring us to evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration."²³ From Abbott Laboratories, this...