Toca Producers v. F.E.R.C., 04-1135.

• Citation: 411 F.3d 262
• Decision Date: 10 June 2005
• Docket Number: No. 04-1135.,04-1135.
• Parties: THE TOCA PRODUCERS, et al., Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent Southern Company Services, Inc., et al., Intervenors.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

411 F.3d 262

THE TOCA PRODUCERS, et al., Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent

Southern Company Services, Inc., et al., Intervenors.

No. 04-1135.

United States Court of Appeals, District of Columbia Circuit.

Argued May 10, 2005.

Decided June 10, 2005.

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

Katherine B. Edwards argued the cause for petitioners. With her on the briefs were John Paul Floom, Frederick T. Kolb, and Charles J. McClees.

David H. Coffman, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With him on the brief were Cynthia A. Marlette, General Counsel, and Dennis Lane, Solicitor.

Patrick B. Pope, R. David Hendrickson, Roy R. Robertson, Jr., Jeffrey D. Komarow, and Joshua L. Menter were on the brief for intervenors Southern Natural Gas Company, et al.

Before: GINSBURG, Chief Judge, and SENTELLE and TATEL, Circuit Judges.

GINSBURG, Chief Judge.

Several natural gas producers petition for review of three orders of the Federal Energy Regulatory Commission denying their request, pursuant to §§ 4 and 5 of the Natural Gas Act, 15 U.S.C. §§ 717c, 717d(a), that Southern Natural Gas Co. be ordered to revise its tariff to include a safe harbor gas quality standard that specifies a hydrocarbon dewpoint at which Southern will guarantee the transportation of gas. Because the producers may yet secure that very relief in a proceeding now pending before the Commission, we dismiss the present petition as unripe.

I. Background

The producers operate upstream from three natural gas processing plants located near Toca, Louisiana and owned in part by affiliates of some of the producers. All the producers tender to Southern's pipeline, at receipt points also upstream of the plants, gas with a relatively high liquefiable hydrocarbon content. A natural gas stream with a high content of liquefiable hydrocarbons, however, threatens the reliable operation of a pipeline. For that reason § 3.1(b) of Southern's tariff provides that Southern will not accept gas containing more than 0.3 gallons per thousand cubic feet of isopentane and heavier hydrocarbons.

Ordinarily § 3.1(b) is of no consequence because it is in the producers' economic interest to extract hydrocarbons at the processing plants for the purpose of selling them as liquid natural gas. Accordingly, Southern typically waives enforcement of the tariff provision at the producers' receipt points, relying upon processing at the plants downstream to render the gas compliant.

In December 2000, however, the price of natural gas rose to a level at which the producers found it more profitable to leave the hydrocarbons in their gas than to extract and sell them because hydrocarbons raise the heat content, and hence the value, of the gas. The operators of the processing plants at Toca therefore informed Southern they would shut down the plants by the end of the month. Concerned about the effect upon the reliability of its pipeline, Southern notified all producers that:

In the event the processing capacity is reduced significantly... Southern may commence enforcement of Section 3.1(b) .... Individual producers that do not meet the quality specification will be ... required to reduce or shut-in their production.

On January 5, 2001 the producers petitioned the Commission for a temporary restraining order to prevent Southern from refusing their gas and requested that an emergency technical conference be held. The Commission did not issue a temporary restraining order but it did convene the requested conference. Amoco Prod. Co., 94 F.E.R.C. ¶ 61,026 (2001). Neither the conference nor subsequent settlement discussions, however, resolved the producers' concerns. In May 2003 the Commission directed the parties to identify outstanding issues and their positions thereon. Amoco Prod. Co., 103 F.E.R.C. ¶ 61,175 (2003).

The producers responded by filing a complaint before the Commission, asserting Southern's threatened refusal to accept their gas was discriminatory within the meaning of §§ 4 and 5 because, at receipt points downstream from the processing plants, it had accepted gas with a higher liquefiable hydrocarbon concentration than gas processed at the Toca plants. The producers claimed such discrimination arose because there was no safe harbor gas quality specification standard in Southern's tariff, and asked that Southern's tariff be revised accordingly. To that end they requested an evidentiary hearing.

The Commission dismissed the producers' complaint as well as their earlier petition. Toca Producers v. S. Natural Gas Co., 104 F.E.R.C. ¶ 61,300 (2003). Section 4, explained the Commission, applies only to a tariff change initiated by a pipeline. Id. at 62,130. As for § 5, the Commission held the producers had not carried their "substantial burden" of showing Southern's tariff was "unjust and unreasonable," id., and because they had adduced "no genuine issues of material fact" on that score, the Commission declined to hold an evidentiary hearing, id. at 62,129-62,130. The Commission did, however, condition its dismissal of the producers' complaint upon Southern's making a § 4 filing to include in its tariff an "aggregation methodology, including [a] flexible [gas quality specification] standard." Id. at 62,128, 62,130.

Southern duly filed a proposal to revise its tariff, see S. Natural Gas Co., 105 F.E.R.C. ¶ 61,254 (2003) (Docket No. RP04-42-00), and that proceeding, in which the producers have intervened, is still pending. Meanwhile, the Commission denied both the producers' petition for rehearing, see 106 F.E.R.C. ¶ 61,158 (2004), and their subsequent motion for clarification or rehearing, see 107 F.E.R.C. ¶ 61,009 (2004), and the producers petitioned this court for review of all three of the Commission's orders.

II. Analysis

Before addressing the merits of the producers' petition we must be satisfied it meets the requirements of a "Case" or a "Controversy" within the meaning of Article III of the Constitution of the United States, see Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998), including the requirement that their claim be ripe for judicial resolution, see Nat'l Park Hospitality Ass'n v. Dep't of Interior, 538 U.S. 803, 807-08, 123 S.Ct. 2026, 155 L.Ed.2d 1017 (2003). To that end, we must "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). "In applying the ripeness doctrine to agency action we balance the interests of the court and the agency in delaying review against the petitioner's interest in prompt consideration of allegedly unlawful agency action." Fed. Express Corp. v. Mineta, 373 F.3d 112, 118 (D.C.Cir.2004); Friends of Keeseville, Inc. v. FERC, 859 F.2d 230, 235 (D.C.Cir.1988). Balancing those interests here, we conclude the producers' petition is not ripe for review.^*

The interests of the court and of the agency in withholding judicial review ordinarily depend upon "the fitness of the issues for judicial decision," Abbott Labs., 387 U.S. at 149, 87 S.Ct. 1507, which, in turn, depends upon whether the issues are "purely legal," whether their consideration "would benefit from a more concrete setting, and whether the agency's action is sufficiently final." Atl. States Legal Found. v. EPA, 325 F.3d 281, 284 (D.C.Cir.2003). Here the gravamen of the producers' petition — that Southern's tariff is unjust and unreasonable — presents a "purely legal" issue, and it arises from a "concrete setting." The challenged orders also appear to present a "final agency action" within the meaning of the Administrative Procedure Act, 5 U.S.C. § 704, but in the peculiar circumstances of this case we do not think the agency's action is "sufficiently final."

The Commission has yet to pass conclusively upon whether the producers are entitled to the only relief they now seek, namely, that Southern's tariff be revised to include an objective gas quality specification standard. As the Commission portrays the situation in its brief — and the producers do not disagree — "[t]he proceeding in FERC Docket No. RP04-02 could result in a tariff modification that [the producers] seek, thus resolving the issues raised in this appeal." There is therefore a substantial "judicial interest in deferring resolution" of the petition because, if the producers' entitlement to such a standard is not...