Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-04-01049/USCOURTS-caDC-04-01049-0/pdf.json

Parties Involved:
Columbia Gas Transmission Corporation
Petitioner
Federal Energy Regulatory Commission
Respondent
Nicole Gas Production, Ltd
Intervenor
United States of America
Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 15, 2005 Decided April 15, 2005

No. 04-1049

COLUMBIA GAS TRANSMISSION CORPORATION,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION AND

UNITED STATES OF AMERICA,

RESPONDENTS

NICOLE GAS PRODUCTION, LTD,

INTERVENOR

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

Barbara K. Heffernan argued the cause for petitioner. With

her on the briefs were Debra Ann Palmer, Stephen R. Melton,

and Kurt L. Krieger.

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.

Robert C. Sanders was on the brief for intervenor.

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 1 of 8
2

Before: TATEL, GARLAND, and ROBERTS, Circuit Judges.

Opinion for the Court filed by Circuit Judge GARLAND.

GARLAND, Circuit Judge: Petitioner Columbia Gas

Transmission Corporation challenges orders of the Federal

Energy Regulatory Commission (FERC) that require Columbia

to install and pay for meters on certain natural gas wells.

Columbia argues that FERC’s orders exceed the Commission’s

jurisdiction, and we agree.

I

In 1999, Columbia Natural Resources, Inc., a Columbia

affiliate, sold 143 natural gas wells to Nicole Gas Production,

Ltd. The gas from the wells flows into gathering lines owned

and operated by Columbia, and from there into the transmission

lines of Columbia’s interstate pipeline system. At the time of

the sale, Columbia entered into a service agreement with Nicole

that incorporated several provisions of Columbia’s FERC tariff,

including section 26. Section 26.9(b) of the tariff stated:

“Unless otherwise agreed to in writing, . . . [Columbia] will

install, operate and maintain measuring stations and equipment

by which the volumes of natural gas or quantities of energy

received by [Columbia] are determined.” But section 26.9(m)

stated: “Nothing in this Section 26.9 shall be construed to

require [Columbia] to construct any facilities.”

Most of the 143 wells had meters to measure the amount of

gas Nicole gathered from the wells. Fifty-five of the wells,

however, had no meters, and gas production was measured

through “one-minute pickup tests.” On January 12, 2003, a

Nicole affiliate filed a petition with FERC, seeking a declaratory

order that Columbia’s tariff required Columbia to pay for and

install meters at each of Nicole’s 55 unmetered wells, pursuant

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 2 of 8
3

to the terms of section 26.9(b). Columbia opposed the petition,

contending that FERC was without jurisdiction to order the

installation of meters on Nicole’s gathering facilities. Relying

in part on section 26.9(m), Columbia also disputed that the tariff

required it to pay for and install the meters. 

In an order issued June 11, 2003, FERC determined that it

had jurisdiction over the matter and that Nicole’s interpretation

of the tariff was correct. Nicole Gas Prod., Ltd., 103 F.E.R.C.

¶ 61,328 (2003). Columbia petitioned for clarification and

rehearing. On December 24, 2003, FERC denied rehearing in

an order that affirmed and clarified the Commission’s ruling

regarding both jurisdiction and interpretation of the tariff.

Nicole Gas Prod., Ltd., 105 F.E.R.C. ¶ 61,371 (2003).

Columbia now petitions for review of FERC’s orders. It

argues that FERC cannot compel Columbia to install and pay for

the meters because FERC lacks jurisdiction over gathering

facilities. It also contends, inter alia, that FERC has

misinterpreted the tariff as requiring Columbia to pay for the

installation of meters on such facilities. Because we conclude

that FERC’s orders exceed the Commission’s jurisdiction, we do

not address the latter issue.

II

Columbia’s principal argument is that the Commission’s

order requires the company to install and pay for meters on

“gathering facilities,” which are exempt from FERC’s

jurisdiction. Section 1(b) of the Natural Gas Act (NGA) states

that FERC’s jurisdiction over the transportation and sale of

natural gas “shall not apply . . . to the production or gathering of

natural gas.” 15 U.S.C. § 717(b). As we have previously noted,

“Section 1(b) of the NGA distinguishes between facilities that

are used for ‘the transportation of natural gas in interstate

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 3 of 8
4

commerce,’ which are subject to FERC’s jurisdiction, and those

used for ‘gathering,’ which are not.” Williams Gas Processing--

Gulf Coast Co., L.P. v. FERC, 331 F.3d 1011, 1013 (D.C. Cir.

2003). FERC does not dispute that the meters are to be installed

on gathering facilities, but contends that it has jurisdiction over

them nonetheless. 

Although the deferential interpretive canon announced in

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

our review of FERC’s construction of the NGA’s jurisdictional

provisions, see Detroit Edison Co. v. FERC, 334 F.3d 48, 53

(D.C. Cir. 2003), the first step under Chevron is to ask whether

“the intent of Congress is clear,” Chevron, 467 U.S. at 842. If

it is, we “must give effect to the unambiguously expressed intent

of Congress,” regardless of the interpretation pressed by the

Commission. Id. at 843. Because Congress’ intent is clear here,

we have no occasion to proceed to Chevron’s deferential second

step. See id.

In its initial order, FERC addressed the question of its

jurisdiction in a single sentence:

The fact that the facilities on which the meters may be

located may function in a gathering capacity is not

relevant as the tariff does not limit the obligation to

install meters only to transmission facilities and, in any

event, Columbia’s gathering services are subject to our

jurisdiction as they are in connection with Columbia’s

interstate transmission services.

Nicole Gas Prod., Ltd., 103 F.E.R.C. at 62,262 (emphasis

added). As the parties understand this sentence, it rests

jurisdiction over the installation of meters on Nicole’s gathering

facilities on two rationales: (1) Columbia voluntarily submitted

to FERC’s jurisdiction by filing a tariff that covered the meters;

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 4 of 8
5

and (2) the meters fall within the Commission’s “in connection

with” jurisdiction. See 15 U.S.C. § 717c(a) (“All rates and

charges made, demanded, or received by any natural-gas

company for or in connection with the transportation or sale of

natural gas subject to the jurisdiction of the Commission . . .

shall be just and reasonable . . . .” (emphasis added)). 

In FERC’s order on rehearing, the Commission abandoned

the “in connection with” rationale, Nicole Gas Prod., Ltd., 105

F.E.R.C. at 62,653, and it expressly disclaims any desire to

resurrect that rationale here, see FERC Br. 15 n.4; Oral Arg.

Tape at 16:15-17:15. We therefore do not consider it. Instead,

we consider the only jurisdictional rationale that FERC now puts

forward: that it has jurisdiction to compel compliance with the

tariff provision regarding meters on gathering facilities solely

because the tariff was “voluntarily filed by the pipeline,” even

if FERC would not otherwise have jurisdiction over such meters.

Nicole Gas Prod., Ltd., 105 F.E.R.C. at 62,653.

We must first address FERC’s contention that we cannot

question its tariff-based rationale because Columbia did not

object to that rationale below. See 15 U.S.C. § 717r(b)

(providing that “[n]o objection to the order of the Commission

shall be considered by the court unless such objection shall have

been urged before the Commission in the application for

rehearing”). The short answer to FERC’s contention is that it is

factually incorrect. Columbia expressly argued in its petition for

rehearing that “[t]he Commission cannot extend indirectly its

jurisdictional reach by defining Columbia’s obligations under its

FERC authorized tariff to include construction of nonjurisdictional facilities.” Pet. for Reh’g at 12. And it insisted

that “incorporation by reference of certain tariff provisions

cannot expand the Commission’s jurisdictional reach.” Id. at 12

n.9. FERC’s further suggestion that Columbia’s objection to the

tariff-based rationale was too terse to put the Commission on

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 5 of 8
6

notice is particularly audacious for two reasons. First, FERC’s

own reference to the rationale in its initial decision -- the only

FERC statement to which Columbia could have objected in its

petition for rehearing -- had itself consisted of only half a

sentence. See Nicole Gas Prod., Ltd., 103 F.E.R.C. at 62,262.

Second, it is clear that Columbia’s objection “was adequately

specific to put the Commission on notice of the ground on which

rehearing was being sought -- as evidenced by the fact that

FERC responded on the merits” in its order on rehearing.

Louisiana Intrastate Gas Corp. v. FERC, 962 F.2d 37, 41-42

(D.C. Cir. 1992) (internal quotation marks omitted).

We therefore turn to FERC’s claim that Columbia’s tariff

is alone sufficient to provide the Commission with jurisdiction

to enforce all the provisions contained therein. For this claim,

FERC relies on the “filed rate doctrine,” which “forbids a

regulated entity to charge rates for its services other than those

properly filed with the appropriate federal regulatory authority.”

Arkansas La. Gas Co. v. Hall, 453 U.S. 571, 577 (1981)

(“Arkla”). According to FERC, the filed rate doctrine

“authorizes FERC to enforce tariff language requiring

installation of meters on gathering facilities, regardless of

whether FERC” would have jurisdiction “in the absence of such

language.” FERC Br. 8; see Nicole Gas Prod., Ltd., 105

F.E.R.C. at 62,653. The breathtaking scope of FERC’s claim is

made clear by its response to a hypothetical raised at oral

argument. In the Commission’s view, if a filed tariff stated that

its provisions “shall apply to the production or gathering of

natural gas,” FERC would have jurisdiction over those activities,

Oral Arg. Tape at 19:55-21:15, notwithstanding that they are

precisely the activities that the NGA excludes from FERC’s

purview, see 15 U.S.C. § 717(b).

FERC cites no case, and we cannot find one, in which a

court has permitted the Commission to use the filed rate doctrine

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 6 of 8
7

as such a jurisdictional boot-strap. An examination of the

statutory language explains the lack of precedent in support of

FERC’s view. The filed rate doctrine derives from sections 4

and 5 of the NGA. See Consolidated Edison Co. v. FERC, 958

F.2d 429, 432 (D.C. Cir. 1992). Yet NGA section 1(b) states

that “[t]he provisions of this chapter” -- of which sections 4 and

5 are two -- “shall not apply to . . . the production or gathering

of natural gas.” 15 U.S.C. § 717(b); see FPC v. Panhandle E.

Pipe Line Co., 337 U.S. 498, 508 (1949) (“Sections 4, 5 and 7

do not concern the producing or gathering of natural gas; rather

they have reference to the interstate sale and transportation of

gas and are so limited by their express terms.”). A doctrine that

rests on these sections likewise cannot apply to the gathering of

natural gas.

This conclusion is consistent with the Supreme Court’s

holding that the petitioner in the Arkla case was bound by the

filed rate doctrine only during the period in which it was

otherwise subject to FERC’s jurisdiction. 453 U.S. at 584 &

n.14. It is also consistent with this court’s ruling in Conoco Inc.

v. FERC that, “[w]here an activity or entity falls within NGA §

1(b)’s exemption for gathering, the provisions of NGA §§ 4, 5

and 7 . . . neither expand the Commission’s jurisdiction nor

override § 1(b)’s gathering exemption.” 90 F.3d 536, 552 (D.C.

Cir. 1996). And it is confirmed by our holding in Detroit Edison

that FERC may neither accept the filing of a tariff provision that

covers non-jurisdictional activity (in that case, unbundled retail

distribution service), nor assert jurisdiction over such an

activity. 334 F.3d at 54-55. 

FERC endeavors to distinguish Detroit Edison by noting

that there was an objection to the initial filing of the tariff in that

case, while there was no such objection here. But jurisdiction

cannot arise from the absence of objection, or even from

affirmative agreement. To the contrary, “as a statutory entity,

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 7 of 8
8

the Commission cannot acquire jurisdiction merely by

agreement of the parties before it.” American Mail Line Ltd. v.

FMC, 503 F.2d 157, 170 (D.C. Cir. 1974);see California Indep.

Sys. Operator Corp. v. FERC, 372 F.3d 395, 398 (D.C. Cir.

2004). As the Supreme Court has explained, “parties . . . cannot

confer jurisdiction; only Congress can.” Weinberger v. Bentex

Pharms., Inc., 412 U.S. 645, 652 (1973). In this case, Congress

has clearly declined to do so.

III

Because the Natural Gas Act unambiguously denies FERC

jurisdiction to issue the orders challenged in the petition for

review, we grant the petition and vacate the orders.

So ordered.

USCA Case #04-1049 Document #889420 Filed: 04/15/2005 Page 8 of 8