Michigan Gas Co. v. F.E.R.C.

• Decision Date: 10 June 1997
• Docket Number: No. 95-4280,95-4280
• Citation: 115 F.3d 1266
• Parties: Util. L. Rep. P 14,161 MICHIGAN GAS COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Board of Public Works of the City of Holland, Michigan, Intervenor.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1266

115 F.3d 1266

Util. L. Rep. P 14,161

MICHIGAN GAS COMPANY, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Board of Public Works of the City of Holland, Michigan, Intervenor.

No. 95-4280.

United States Court of Appeals, Sixth Circuit.

Argued Oct. 24, 1996.

Decided June 10, 1997.

Mary a. Walker, Neil L. Levy (argued and briefed), Winthrop, Stimson, Putnam & Roberts, Washington, DC, for Petitioner.

Joel M. Cockrell (argued and briefed), Federal Energy Regulatory Commission, Washington, DC, for Respondent.

William H. Penniman (argued and briefed), Sutherland, Asbill & Brennan, Washington, DC, for Intervenor.

Before: WELLFORD, DAUGHTREY, and MOORE, Circuit Judges.

MOORE, J., delivered the opinion of the court, in which DAUGHTREY, J., joined. WELLFORD, J. (pp. 1272-73), delivered a separate concurring opinion.

OPINION

MOORE, Circuit Judge.

Petitioner Michigan Gas Company ("MiGas") petitions for review of two orders of the Federal Energy Regulatory Commission ("FERC" or "the Commission") authorizing construction by ANR Pipeline Company ("ANR") of a new delivery point for natural gas. The Commission gave its approval over the protest of MiGas, which intervened at the agency proceeding. MiGas contends that the Commission failed to state its reasons for the authorization and failed to hold an evidentiary hearing. The Board of Public Works of the City of Holland, Michigan ("BPW"), as an intervenor, challenges MiGas's standing to bring this appeal. For the reasons stated below, we deny the petition for review.

I. BACKGROUND

MiGas is a local distribution company (LDC) that has a nonexclusive franchise to supply natural gas to consumers in Holland, Michigan. Among its customers is one of three electricity-generating plants operated by BPW, which is the exclusive provider of electricity to consumers in Holland. BPW's James DeYoung Plant is a coal-fired station that uses natural gas for ignition purposes. BPW's other two generating stations currently burn oil; one of them, the 48th Street Peaking Station, can use natural gas. MiGas has never supplied gas to the 48th Street Station.

After negotiating with several gas suppliers (and rejecting a bid from MiGas), BPW contracted with ANR, an interstate pipeline company, and with another supplier, Consumers Power, an LDC, to obtain natural gas to replace oil at the 48th Street Station. To that end, BPW planned to construct a 9.5-mile pipeline from the 48th Street Station. Consumers Power agreed to construct a delivery tap for delivery of its gas to the BPW pipeline, and obtained authorization from the Michigan Public Service Commission (the state agency that regulates LDCs, including MiGas) without an appeal by MiGas. BPW also asked ANR to construct a delivery tap connecting ANR's pipeline to the BPW pipeline; BPW would reimburse ANR for the construction.

ANR, an interstate gas company subject to the jurisdiction of the Natural Gas Act ("NGA"), applied for FERC authorization to construct the delivery tap. Under the NGA, an interstate gas company must obtain a certificate of public convenience and necessity before constructing a transportation facility (i.e.pipeline) or a connection to a local facility. NGA § 7 (15 U.S.C. § 717f). MiGas filed a protest pursuant to 18 C.F.R. § 157.205(f). BPW and Michigan Consolidated Gas Company also intervened. MiGas argued that granting authorization to ANR to construct the delivery tap would not be in the public interest, which under the NGA is the governing concern. MiGas asserted that a comparative analysis demonstrated that the cost of the proposed connection to ANR would far exceed the cost of a connection to MiGas at MiGas's proposed rate. MiGas contended that because the ANR connection would be so much more expensive, it would not serve the "public convenience and necessity." See NGA § 7(e). MiGas further argued that the construction of the BPW pipeline and the ANR connection would create wastefully duplicative facilities, and that interconnection with MiGas would be more economical and would provide greater flexibility of supply. It also contended that BPW's plan to build a pipeline and connect to ANR was "likely to be the first step in a plan to serve other high load factor customers [e.g., utilities, as opposed to residences] now served by Michigan Gas." J.A. at 36. MiGas requested that the Commission deny ANR's application, or in the alternative, conduct an evidentiary hearing to determine whether the construction would be in the public interest.

The Commission rejected all of MiGas's arguments and granted the authorization, citing its policy of allowing competition between LDCs and interstate pipelines absent evidence of "anticompetitive or unduly discriminatory behavior," as well as a policy of honoring the choice of the end-user--here, BPW. 71 F.E.R.C. p 61,289 (1995). The Commission stated that MiGas had proffered no evidence of anticompetitive or discriminatory behavior. MiGas requested a rehearing, which the Commission denied, again discussing its current policy. 73 F.E.R.C. p 61,044 (1995). MiGas filed a Petition for Review of those two orders in this court. BPW was granted leave to intervene on behalf of the respondent.

II. STANDING

BPW challenges MiGas's standing to pursue this appeal, arguing that MiGas has suffered no injury from the Commission's orders, that any alleged injury is not redressable, and that MiGas does not have an interest protected by the Natural Gas Act. MiGas responds that it is an "aggrieved" party pursuant to NGA § 19(b) (15 U.S.C. § 717r(b)) and that it has been injured as a competitor of BPW. BPW contended at oral argument that MiGas cannot rely on its alleged competitive injury because it did not allege such injury in its application for rehearing; any objection not raised in the rehearing application cannot be argued on appeal. NGA § 19(b). The limitation imposed by § 19(b) on a petitioner's arguments on the merits, however, does not delimit this court's standing inquiry. Standing "is a qualifying hurdle that plaintiffs must satisfy even if raised sua sponte by the court." Community First Bank v. National Credit Union Admin., 41 F.3d 1050, 1053 (6th Cir.1994). MiGas is not now barred from arguing, for standing purposes, that it will suffer competitive injury simply because it did not raise that argument before the Commission, where Article III requirements did not apply.

Section 19(b) states that "[a]ny 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 appropriate United States Court of Appeals. ¹ This language is similar to § 10(a) of the Administrative Procedure Act, 5 U.S.C. § 702, which the Supreme Court has interpreted as granting standing if there is an "injury in fact" to an interest that is "arguably within the zone of interests to be protected or regulated" under the applicable statute. Sierra Club v. Morton, 405 U.S. 727, 733, 92 S.Ct. 1361, 1365, 31 L.Ed.2d 636 (1972); NORTHWESTERN PUBLIC SERV. CO. V. FPC, 520 F.2D 454, 457-58 (D.C.CIR.1975)² (noting the similarity and applying the same test to NGA § 19(b)); accord Moreau v. FERC, 982 F.2d 556, 564 (D.C.Cir.1993). In addition to meeting this standard, petitioners must satisfy the requirements of constitutional standing. El Paso Natural Gas Co. v. FERC, 50 F.3d 23, 26 (D.C.Cir.1995); Shell Oil Co. v. FERC, 47 F.3d 1186, 1200 (D.C.Cir.1995). That test requires proof of injury in fact which has a causal connection to the conduct being challenged (here, the orders granting authorization for the delivery connection) and which is likely to be redressed by a decision in the petitioner's favor. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 2136-37, 119 L.Ed.2d 351 (1992); accord Bennett v. Spear, 520 U.S. 154, ----, 117 S.Ct. 1154, 1163, 137 L.Ed.2d 281 (1997); City of Detroit v. Franklin, 4 F.3d 1367, 1372 (6th Cir.1993) (citing Lujan ), cert. denied sub nom. City of Detroit v. Brown, 510 U.S. 1176, 114 S.Ct. 1217, 127 L.Ed.2d 563 (1994).

The two standards are similar but not identical; "[c]ommon to both these thresholds is the requirement that petitioners establish, at a minimum, 'injury in fact' to a protected interest." Shell Oil, 47 F.3d at 1200. The "injury in fact" must be "(a) concrete and particularized ... and (b) 'actual or imminent, not "conjectural or hypothetical" '...." Lujan, 504 U.S. at 560, 112 S.Ct. at 2136 (citations omitted).

At oral argument, MiGas conceded that it was not basing its claim of injury on the loss of the opportunity to supply the 48th Street Station, focusing instead on the alleged competitive threat posed by BPW to MiGas's ability to retain its other customers. For standing purposes, MiGas contends that its injury is that the FERC orders will result in BPW having the ability to "run amok," going beyond merely transporting gas for use at the 48th Street Station to establish itself as a competitor in supplying gas to other customers in Holland. ³ There is no evidence in the record showing that BPW in fact has any such intention. Though MiGas has contended repeatedly and emphatically that construction of the pipeline and the ANR delivery tap will inflict economic injury to MiGas by enabling BPW to become a gas distributor and to compete unfairly with MiGas, MiGas has offered nothing but its own assertions to that effect. Without evidence that the predicted result is "actual or imminent," such an injury can only be "conjectural or hypothetical." MiGas has given this court no reason to conclude that the alleged injury is anything more than a theoretical possibility. MiGas therefore has not demonstrated an injury in fact.

MiGas also cannot meet the second and third requirements for Article III standing. Even if its alleged injury meets the standard, MiGas also must be able to establish that the injury was caused by the FERC orders and...