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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 16, 2003 Decided October 10, 2003

No. 02-5056

THE WILLIAMS COMPANIES AND

DYNEGY MIDSTREAM SERVICES, LIMITED PARTNERSHIP,

APPELLEES

v.

FEDERAL ENERGY REGULATORY COMMISSION,

APPELLANT

DEVON ENERGY CORPORATION, ET AL.,

APPELLEES

CHEVRON U.S.A. INC., ET AL.,

INTERVENORS

Consolidated with

02-5077, 02-5078, 02-5081, 02-5082, 02-5085, 02-5086

–————

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #02-5085 Document #777682 Filed: 10/10/2003 Page 1 of 11
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Appeals from the United States District Court

for the District of Columbia

(No. 01cv01580)

(No. 01cv01624)

(No. 01cv01976)

Dennis Lane, Solicitor, Federal Energy Regulatory Commission, argued the cause for appellant. With him on the

briefs were Cynthia A. Marlette, General Counsel, and Lona

T. Perry, Attorney.

John W. Wilmer, Jr., James M. Costan, and T. Alana

Deere were on the briefs for appellees Producer Coalition and

Independent Petroleum Association of America.

Henry S. May, Jr. argued the cause for appellees The

Williams Companies, et al. With him on the brief were

Charles D. Tetrault, Daniel A. Petalas, Howard L. Nelson,

Jay V. Allen, James T. McManus, Joseph S. Koury, and

Mari M. Ramsey. Jeffrey G. DiSciullo and G. Mark Cook

entered appearances.

Katherine B. Edwards, Thomas J. Eastment, Melissa E.

Maxwell, Douglas W. Rasch, Charles J. McClees, Jr., and

Frederick T. Kolb were on the briefs for intervenors Chevron

U.S.A. Inc., et al.

Before: GINSBURG, Chief Judge, ROBERTS, Circuit Judge,

and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS.

WILLIAMS, Senior Circuit Judge: On April 10, 2000 the

Federal Energy Regulatory Commission, exercising authority

it claimed under the Outer Continental Shelf Lands Act

(‘‘OCSLA’’), 43 U.S.C. §§ 1331–1356, issued regulations affecting companies providing natural gas transportation service—including ‘‘gathering’’ service—in the Outer Continental

Shelf. The regulations required the companies to periodically

file information with FERC concerning their pricing and

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service structures, thereby implementing FERC’s view that

the resulting transparency would enhance competitive and

open access to gas transportation. Order No. 639, FERC

Stats. & Regs. (CCH) ¶ 31,097, at 31,514 (April 10, 2000). On

petitions for rehearing and clarification, the Commission essentially adhered to its initial decision. Order No. 639–A,

FERC Stats. & Regs. (CCH) ¶ 31,103 (July 26, 2000). Several of the subject companies sought judicial relief from the

orders, suing in federal district court because FERC’s action

was under OCSLA rather than the Natural Gas Act. Compare 43 U.S.C. § 1349 (providing jurisdiction in district court

for most challenges to orders under OCSLA), with 15 U.S.C.

§ 717r (providing for circuit court review of FERC decisions

under the Natural Gas Act). Gas producers who ship or

expect to ship on the covered pipelines intervened.

On January 11, 2002 the district court granted the plaintiffs’ motion for summary judgment, denied FERC’s motion

for dismissal, and denied the intervenors’ motion for summary judgment. Chevron U.S.A., Inc. v. FERC, 193 F. Supp.

2d 54, 58–59 (D.D.C. 2002). It ruled among other things that

OCSLA did not give the Commission the authority it claimed

to establish a general open access regime on the Outer

Continental Shelf. Of course the Natural Gas Act gives the

Commission broad authority over pipelines transporting gas

in interstate commerce, but § 1(b) of that act, 15 U.S.C.

§ 717(b), expressly withholds jurisdiction over gathering, see,

e.g., Sea Robin Pipeline Co. v. FERC, 127 F.3d 365, 368 (5th

Cir. 1997), which the Commission’s new regulations explicitly

covered.

FERC appealed, arguing that the court had interpreted

FERC’s OCSLA authority too narrowly. We affirm.

* * *

The case turns entirely on the meaning of certain provisions of OCSLA, 43 U.S.C. §§ 1331–1356. Congress initially

adopted the statute in 1953 and amended it in 1978. Among

other changes, the 1978 amendments amplified the preexisting open access provisions and accounted for administraUSCA Case #02-5085 Document #777682 Filed: 10/10/2003 Page 3 of 11
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tive changes arising from the passage in 1977 of the Department of Energy Organization Act, 42 U.S.C. § 7171ff. In the

latter category was the transfer of OCSLA responsibilities

formerly exercised by the Interstate Commerce Commission

to the Federal Energy Regulatory Commission, a new agency

replacing the Federal Power Commission and located in the

Department of Energy. The OCSLA sections relevant to this

appeal are §§ 5(e) & (f), 43 U.S.C. §§ 1334(e) & (f), which we

reprint below in full, with the critical text highlighted:

(e) Pipeline rights-of-way; forfeiture of grant

Rights-of-way through the submerged lands of the outer

Continental Shelf, whether or not such lands are included in a lease maintained or issued pursuant to this

subchapter, may be granted by the Secretary for pipeline

purposes for the transportation of oil, natural gas, sulphur, or other minerals, [ ]1 under such regulations and

upon such conditions as may be prescribed by the Secretary, or where appropriate the Secretary of Transportation, including (as provided by section 1347(b) of this

title) assuring maximum environmental protection by

utilization of the best available and safest technologies,

including the safest practices for pipeline burial[,]2 and

upon the express condition that oil or gas pipelines shall

transport or purchase without discrimination, oil or

natural gas produced from submerged lands or outer

1 The current official text contains an ‘‘or’’ here, so that the

statute states that rights-of-way can be granted ‘‘for pipeline purposes for the transportation of oil, natural gas, sulphur, or other

minerals, or under such regulations and upon such conditions as

may be prescribed by the SecretaryTTTT’’ (emphasis added). The

underscored ‘‘or’’ is not present in the 1953 version of the statute,

67 Stat. 462 (1953). As we can imagine no plausible interpretation

with this wording, we take the insertion to have been a scrivener’s

error.

2 Without the inserted comma, the nondiscrimination provisions

appear to be a subset of the treatment of environmental practices.

Again seeing no plausible interpretation under that reading, we

suspect a scrivener’s error.

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Continental Shelf lands in the vicinity of the pipelines

in such proportionate amounts as the Federal Energy

Regulatory Commission, in consultation with the Secretary of Energy, may, after a full hearing with due notice

thereof to the interested parties, determine to be reasonable, taking into account, among other things, conservation and the prevention of waste. Failure to comply with

the provisions of this section or the regulations and

conditions prescribed under this section shall be grounds

for forfeiture of the grant in an appropriate judicial

proceeding instituted by the United States in any United

States district court having jurisdiction under the provisions of this subchapter.

(f) Competitive principles governing pipeline operation

(1) Except as provided in paragraph (2), every permit,

license, easement, right-of-way, or other grant of authority for the transportation by pipeline on or across

the outer Continental Shelf of oil or gas shall require

that the pipeline be operated in accordance with the

following competitive principles:

(A) The pipeline must provide open and nondiscriminatory access to both owner and nonowner

shippers.

(B) Upon the specific request of one or more owner

or nonowner shippers able to provide a guaranteed

level of throughput, and on the condition that the

shipper or shippers requesting such expansion shall

be responsible for bearing their proportionate share

of the costs and risks related thereto, [FERC] may,

upon finding, after a full hearing with due notice

thereof to the interested parties, that such expansion

is within technological limits and economic feasibility, order a subsequent expansion of throughput

capacity of any pipeline for which the permit, license, easement, right-of-way, or other grant of

authority is approved or issued after September 18,

1978. This subpara[g]raph shall not apply to any

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such grant of authority approved or issued for the

Gulf of Mexico or the Santa Barbara Channel.

(2) [FERC] may, by order or regulation, exempt from

any or all of the requirements of paragraph (1) of this

subsection any pipeline or class of pipelines which

feeds into a facility where oil and gas are first collected or a facility where oil and gas are first separated,

dehydrated, or otherwise processed.

(3) The Secretary of Energy and [FERC] shall consult

with and give due consideration to the views of the

Attorney General on specific conditions to be included

in any permit, license, easement, right-of-way, or

grant of authority in order to ensure that pipelines

are operated in accordance with the competitive principles set forth in paragraph (1) of this subsection. In

preparing any such views, the Attorney General shall

consult with the Federal Trade Commission.

(4) Nothing in this subsection shall be deemed to limit,

abridge, or modify any authority of the United States

under any other provision of law with respect to pipelines on or across the outer Continental Shelf.

OCSLA §§ 5(e) & (f), 43 U.S.C. §§ 1334(e) & (f).

* * *

The statutory language

The crux of § 1334(e) is to require the Secretary (of the

Interior) to impose open access conditions in his or her

issuance of rights-of-way through submerged lands of the

Outer Continental Shelf. To help achieve the open access

goal, § 1334(e) grants FERC a single power: to determine,

along with the Secretary of Energy, the proportions of oil,

gas, or other minerals that each member of any relevant

group of pipelines may be required to transport or purchase

pursuant to those conditions. The resulting orders appear to

be what in ordinary oil and gas industry parlance are called

‘‘ratable take’’ orders. See Howard Williams & Charles J.

Meyers, Manual of Oil and Gas Terms 613–14 (1981). In a

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rhetorical device that it also uses with respect to § 1334(f),

FERC likes to paraphrase subsection (e) in a way that

completely omits the means selected by Congress to achieve

non-discrimination on the Outer Continental Shelf. It argues

before us, for example, that both (e) and (f) ‘‘require that gas

service providers offer nondiscriminatory access on the OCS.’’

Appellant’s Initial Br. at 19. Not so. In fact the provision

simply requires the Secretary of Interior to condition grants

of rights-of-way on the holder’s agreeing to nondiscriminatory transportation duties. Without some explicit

provision to the contrary (as exists for quantification of the

ratable take duty), Congress presumably intended that enforcement would be at the hands of the obligee of the

conditions, the Secretary of the Interior (or possibly other

persons that the conditions might specify). Except as to

ratable take orders, the language supports no such role for

FERC.

Section 1334(f) similarly fails to provide FERC with a

general power to enforce OCSLA’s open access provisions.

Subsection (f)(1) states that permits, licenses, easements, etc.,

granted to pipelines for transportation through the OCS,

‘‘shall require’’ the firms in question to operate their pipelines

in accordance with the ‘‘following competitive principles,’’

which it then sets forth in subparts (A) and (B). Obviously

when FERC issues a license covered by § 1334(f), such as a

certificate of convenience and necessity under § 7(c) of the

Natural Gas Act for transportation of gas through the Outer

Continental Shelf, 15 U.S.C. § 717f(c), it is to include terms

meeting the requirements set out in § 1334(f)(1). Subsection

(f)(3) recognizes FERC’s role as licensor, directing FERC (as

well as the Secretary of Energy) to consult with the Attorney

General on the ‘‘specific conditions’’ to be imposed when

crafting any ‘‘license,’’ etc., governed by (f)(1). FERC, indeed, has not hesitated to impose such conditions. See

Tennessee Gas Pipeline Co. v. FERC, 972 F.2d 376, 381 (D.C.

Cir. 1992) (reviewing orders imposing conditions on pipelines

operating in the OCS in respect to services within FERC’s

jurisdiction under the Natural Gas Act).

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Section 1334(f)(1)(B) grants FERC narrow and specific

authority similar to that supplied by subsection (e). It allows

FERC, on application by shippers and after a hearing and

suitable findings, to order a pipeline to expand the capacity of

an OCS pipeline for which a permit, license, etc., ‘‘is approved

or issued after September 18, 1978,’’ the date of the 1978

amendment adding subsection (f) to OCSLA. Such a narrow

(and reactive) grant of power cannot be read as creating

general enforcement authority.

Nor is subsection (f)(2) of any use to FERC. It permits

FERC to exempt from subsection (f)(1) any facility that first

collects, separates, dehydrates, or processes gas. A provision

allowing FERC to exempt a subset of facilities from (f)(1)’s

competitive principles is plainly not an authorization for it to

impose and enforce such principles over all facilities.

Finally, as we have seen, § 1334(f)(3) simply adds a consultation procedure to the way in which FERC is to go about its

specification of open access requirements, under (f)(1), in

licenses that it issues within the scope of authority provided

elsewhere—most obviously § 7(c) of the Natural Gas Act.

Legislative history and Shell Oil Co. v. FERC

The statutory language being of no help to FERC, even to

create an ambiguity that might enable it to claim deference

under Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984),

the Commission makes the ritual turn to legislative history.

While such history can be used to clarify congressional intent

even when a statute is superficially unambiguous, the bar is

high. See U.S. Telecom Ass’n v. FBI, 276 F.3d 620, 625 (D.C.

Cir. 2002) (noting Supreme Court’s observation in Ratzlaf v.

United States, 510 U.S. 135, 147–48 (1994), that ‘‘we do not

resort to legislative history to cloud a statutory text that is

clear’’). FERC cites two items that are clearly inadequate to

the task. First, it points to a House Report stating that

§ 1334(f) ‘‘is a reaffirmation and strengthening’’ of § 1334(e).

H.R. Cong. Rep. No. 95–1474 at 87, reprinted at 1978

U.S.C.C.A.N. 1674, 1686. So? FERC lacks the authority

under either section to constitute itself a general regulator of

open access for oil and gas on the OCS, regardless of whether

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the sections are read together or individually; there is no

miraculous synergy here that can spin a sweeping power out

of the narrow ones provided.

The second item is the following colloquy between Senators

Johnston and Kennedy:

Mr. Johnston: These regulations [OCSLA] would be

promulgated and run by the Secretary of the Interior,

would they not, and not by the ICC? If so, do we not

then have bifurcation of regulatory authority here which

can only result in conflicts? Is that not true?

Mr. Kennedy: TTTT Quite frankly, what I would see

happening is that this would be boilerplate language in

the leasing arrangements and that would be the most

important part of the Interior’s involvement, and the

enforcement of that could be done by the ICCTTTT I

think the enforcement could be done by the ICC. An

arrangement could be worked out between the Energy

Department and the ICC.

Mr. Johnston: Certainly, the Secretary of the Interior is

going to enforce his own regulations under this, is he

not?

Mr. Kennedy: Yes. He would enforce it, but in terms of

working out the enforcement mechanism, it seems to me

that something could be worked out. The Secretary of

the Interior is going to insure that these provisions are

complied with. Between the Department of the Interior

and the ICC there can be an agreement on the implementation. We have a division of responsibility now

between the Federal Trade Commission and the Antitrust Division for antitrust enforcement, just as we have

other divisions of responsibilities between agencies. Obviously, these are matters that can be worked out.

123 Cong. Rec. S23,253 (daily ed. July 15, 1977) (emphasis

added). FERC argues that this exchange demonstrates Senator Kennedy’s desire that the ICC should be able to enforce

the conditions that, under subsections (e) and (f), were to be

included in OCS transportation permits, licenses, etc., by

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agencies issuing such grants. (The ICC was in the end

supplanted by FERC, an entity created after the colloquy and

then substituted for the ICC in a later amendment to the

OCSLA amendments as they worked their way through

Congress.) As we have seen, FERC does issue such licenses,

namely, certificates of convenience and necessity under § 7(c)

of the Natural Gas Act, and doubtless enforces the attached

conditions. The emphasized passage explicitly states Senator

Kennedy’s recognition that the Secretary of Interior would

enforce the conditions in licenses issued by Interior; his

suggestion about a theoretical ‘‘agreement on implementation’’ is too frail a basis for the statutory rewrite that FERC

invites. What we said in an earlier case where a litigant

invoked ‘‘bits and pieces of legislative history surrounding the

1978 Amendments to OCSLA’’ is equally true today: ‘‘[S]nippets of legislative history do not a law make.’’ ExxonMobil

Gas Marketing Co. v. FERC, 297 F.3d 1071, 1088 (D.C. Cir.

2002).

Finally, FERC argues that in Shell Oil Co. v. FERC, 47

F.3d 1186, 1199–1200 (D.C. Cir. 1995), we have already upheld its broad reading of §§ 1334(e) & (f). In fact Shell is far

narrower.

In Shell, FERC had ordered Pennzoil, operator of the

‘‘Bonito’’ pipeline in the OCS, to interconnect Bonito with

Shell’s pipeline and to carry its oil. All parties appear to

have accepted the proposition that as a general matter FERC

had authority to order such interconnections. After we rejected Pennzoil’s claim that the order was really a capacity

allocation order under subsection (e), and thus could occur

only through its procedures, id. at 1198–99, we considered its

argument that the Bonito order was really an expansion

order under subsection (f)(1)(B) and thus subject to that

provision’s geographic limits (which excluded the Gulf of

Mexico, where the Bonito lay). Id. at 1200. See also Pennzoil’s Opening Br. at 42–43 in Shell Oil Co. v. FERC. Finding that the interconnection ordered by FERC was not ‘‘an

expansion of throughput capacity,’’ we rejected the claim. 47

F.3d at 1200. There the parties had not questioned FERC’s

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general authority to order open-access enhancing conduct on

the OCS; here they have.

* * *

Sections 5(e) and (f) of OCSLA do not grant FERC general

powers to create and enforce open access rules on the OCS,

but merely assign it a few well-defined tasks. As FERC was

without authority to issue the regulations at issue here, the

judgment of the district court is

Affirmed.

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