Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-02-01072/USCOURTS-caDC-02-01072-0/pdf.json

Parties Involved:
Federal Energy Regulatory Commission
Respondent
Transcontinental Gas Pipe Line Corporation
Petitioner

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 12, 2003 Decided June 20, 2003

No. 01-1327

WILLIAMS GAS PROCESSING—GULF COAST COMPANY, L.P. AND

TRANSCONTINENTAL GAS PIPE LINE CORPORATION,

PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

DYNEGY MARKETING AND TRADE, ET AL.,

INTERVENORS

Consolidated with

02–1006, 02–1007, 02–1051, 02–1052, 02–1053, 02–1072,

02–1073, 02–1074, 02–1075, 02–1076

On Petitions for Review of Orders of the

Federal Energy Regulatory Commission

Thomas J. Eastment argued the cause for petitioners/intervenors Producer. With him on the briefs were Joshua B.

 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 #02-1072 Document #755590 Filed: 06/20/2003 Page 1 of 18
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Frank, James M. Costan, T. Alana Deere, Timothy J. Jacquet, Joseph E. Mixon, Frederick T. Kolb, Douglas W. Rasch,

and Charles J. McClees, Jr. Linda L. Geoghegan entered an

appearance.

Joseph S. Koury argued the cause for petitioners/intervenors Williams Gas Processing – Gulf Coast Company, L.P., et

al. With him on the briefs were James T. McManus, Mari

M. Ramsey, Gisela B. Cherches and David A. Glenn.

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.

Before: GINSBURG, Chief Judge, and ROGERS and TATEL,

Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: Transcontinental Gas Pipe Line

Corp. (‘‘Transco’’) petitioned the Federal Energy Regulatory

Commission (‘‘FERC’’) for approval to transfer some of its

pipeline facilities to its affiliate, Williams Gas Processing –

Gulf Coast Co. (‘‘WGP’’), and to certify that the facilities

serve gathering rather than transmission functions. FERC

approved the applications in part and denied them in part,

and Transco and WGP now challenge the portions of the

orders that denied the requests, contending that FERC’s

assertion of jurisdiction is contrary to precedent regarding

the exemption of gathering facilities under the Natural Gas

Act (‘‘NGA’’), 15 U.S.C. § 717(b) (2000). A coalition of natural gas producers (‘‘the Producers’’) also petitions the court

for review, objecting to those portions of FERC’s orders that

granted the abandonment and reclassification of facilities as

gathering for lack of a reasoned determination and as contrary to the public interest. Our review of these petitions is

instructed by ExxonMobil Gas Marketing Co. v. FERC, 297

F.3d 1071, 1084 (D.C. Cir. 2002), where the court stated that

it will defer to FERC’s reasonable determinations regarding

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gathering status under NGA section 1(b), 15 U.S.C. § 717(b).

We hold that petitioners fail to demonstrate that FERC’s

choices are ‘‘unreasonable and its chosen line[s] of demarcation [are] not within a ‘zone of reasonableness’ as distinct

from the question of whether the line[s] [are] ‘precisely

right.’ ’’ ExxonMobil, 297 F.3d at 1084; see Conoco Inc. v.

FERC, 90 F.3d 536, 544 (D.C. Cir. 1996). Accordingly, we

deny the petitions inasmuch as FERC considered the appropriate factors under the primary function test and sufficiently

explained its reasoning.

I.

Section 1(b) of the NGA distinguishes between facilities

that are used for ‘‘the transportation of natural gas in interstate commerce,’’ which are subject to FERC’s jurisdiction,

and those used for ‘‘gathering,’’ which are not. 15 U.S.C.

§ 717(b). ‘‘Gathering’’ is generally defined as ‘‘the process of

taking natural gas from the wells and moving it to a collection

point for further movement through a pipeline’s principal

transmission system.’’ Conoco, 90 F.3d at 539 n.2 (citing

Northwest Pipeline Corp. v. FERC, 905 F.2d 1403, 1404 n.1

(10th Cir. 1990)). Although ‘‘[t]he line between jurisdictional

transportation and nonjurisdictional gathering is not always

clear,’’ Conoco, 90 F.3d at 542, it is central to this case.

Since 1983, FERC has used a multi-factor ‘‘primary function test’’ to determine ‘‘whether a facility is devoted to the

collection of gas from wells — gathering — or to the further

(‘downstream’) long-distance movement of gas after it has

been collected — interstate transportation.’’ Conoco, 90 F.3d

at 543 (citing Farmland Indus., Inc., 23 F.E.R.C. ¶ 61,063, at

61,143 (1983); Amerada Hess Corp., 52 F.E.R.C. ¶ 61,268, at

61,987–88 (1990)). Under the primary function test, FERC

considers six physical criteria: (1) the pipelines’ length and

diameter; (2) the central point in the field; (3) the facility’s

geographic configuration or pattern; (4) the location of compressors and processing plants, particularly where the pipelines are located behind the plant; (5) the location of wells

along all or part of the facilities; and (6) the line’s operating

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pressure. ExxonMobil, 297 F.3d at 1077 (citing Lomak

Petroleum, Inc. v. FERC, 206 F.3d 1193, 1196 (D.C. Cir.

2000)). FERC also accounts for certain nonphysical factors,

including: (1) the facility’s purpose, location, and operation;

(2) the pipeline owner’s general business activity; (3) the

objectives of the NGA and other pertinent legislation; and (4)

the changing technical and geographic nature of exploration

and production activities. ExxonMobil, 297 F.3d at 1077.

No single criterion is dispositive, and not all of the factors

apply in all situations. Id. (citing Williams Field Servs.

Group, Inc. v. FERC, 194 F.3d 110, 116 (D.C. Cir. 1999);

Conoco, 90 F.3d at 543).

FERC initially developed the primary function test for

classifying onshore facilities, and it later modified the test in

considering the increasing number of pipelines that were

being constructed offshore on the Gulf of Mexico’s Outer

Continental Shelf (‘‘OCS’’), where gathering and distribution

patterns are somewhat different. ExxonMobil, 297 F.3d at

1077 (citing EP Operating Co. v. FERC, 876 F.2d 46 (5th Cir.

1989)). Because offshore pipelines often must transport raw

gas over longer distances, FERC adopted a ‘‘sliding scale’’

approach that permitted gathering pipelines of greater length

and diameter in correlation with distance from shore and

water depth. ExxonMobil, 297 F.3d at 1078 (citing Amerada

Hess, 52 F.E.R.C. at 61,988). When FERC applied this

modified approach in determining that the Sea Robin Pipeline

Company’s pipelines were jurisdictional transmission facilities, the Fifth Circuit reversed, questioning FERC’s heavy

emphasis on the facilities’ size and on nonphysical factors and

inviting FERC to reformulate its primary function test in

light of the ‘‘physical, geographical and operational characteristics of pipelines in the OCS.’’ Sea Robin Pipeline Co. v.

FERC, 127 F.3d 365, 369–71 (5th Cir. 1997). On remand,

FERC determined that the ‘‘behind-the-plant’’ test is not

determinative of the gathering question offshore, and that

instead it would look at the offshore system’s configuration to

locate a central point where gas is aggregated for transportation onshore. Sea Robin Pipeline Co., 87 F.E.R.C. ¶ 61,384,

at 62,425 (1999) (Sea Robin II). FERC explained that this

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central aggregation point is analogous to the ‘‘central-pointin-the-field’’ criterion for onshore systems and should be

‘‘given weight in identifying the demarcation point between

gathering and transportation on OCS pipeline systems.’’ Id.

at 62,426. FERC also emphasized that it would focus primarily on physical factors, according only secondary importance

to nonphysical factors. Sea Robin Pipeline Co., 92 F.E.R.C.

¶ 61,072, at 61,284 (2000). This court subsequently held that

FERC reasonably applied its reformulated primary function

test to the Sea Robin system. ExxonMobil, 297 F.3d at 1087.

It was against the backdrop of the evolving primary function test and the distinction between jurisdictional transmission and exempt gathering facilities that Transco and WGP

filed the applications at issue. In the parlance of the oil and

gas industry, a ‘‘spindown’’ occurs when a natural gas transporter transfers operation of its facilities to a gathering

affiliate. See Conoco, 90 F.3d at 541. In 1996, Transco

sought FERC’s authorization, pursuant to NGA section 7(b),

15 U.S.C. § 717f(b), to spin down a number of its facilities to

WGP as part of a comprehensive corporate restructuring

plan. Transco’s application covered a large number of its

facilities on seven different pipeline systems in Texas and

Louisiana and offshore on the OCS. On the same day, WGP

petitioned FERC for an order declaring that the facilities it

intended to acquire from Transco — most of which FERC

had previously certificated as transmission facilities under

section 7(c) of the NGA — were gathering facilities exempt

from its jurisdiction under section 1(b).

FERC dismissed the comprehensive application without

prejudice. Transcon. Gas Pipeline Corp., 76 F.E.R.C. ¶ 61,-

317, at 62,543 (1996) (‘‘Comprehensive Order’’). FERC observed that ‘‘[t]he physical parameters of the subject facilities

are massive and complex, involving over 3,100 miles of pipeline,’’ and that the number of facilities included in Transco’s

application ‘‘is without precedent in prior ‘spin-down’ cases.’’

Id. (footnote omitted). Explaining that important differences

existed among the many pipelines that Transco included in its

application, and that, ‘‘[a]t the very minimum, large portions

of the facilities are clearly properly classified as jurisdictional

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transmission facilities,’’ id. at 62,543, FERC also noted that ‘‘a

decision to grant the requested abandonment in this case

could set a precedent for ending NGA jurisdiction on the

OCS, as it is likely that virtually every similar interstate

pipeline on the OCS then would file a similar application.’’

Id. at 62,542. Because ‘‘[n]either Transco nor WGP included

in [its] pleadings an alternative request that [FERC] find

specific parts of the facilities to be TTT nonjurisdictional,’’

FERC dismissed the comprehensive application while stating

that Transco and WGP could still file ‘‘another proposal

requesting that [FERC] consider discrete portions of the

facilities TTT to be gathering.’’ Id. at 62,543. FERC denied

the request for rehearing, noting that ‘‘the parties [did] not

seek to parse the Transco facilities; rather, they continue[d]

to insist that [FERC] should find all the facilities at issue to

be gathering.’’ Transcon. Gas Pipe Line Corp., 95 F.E.R.C.

¶ 61,396, at 62,475–76 & n.3 (2001) (‘‘Comprehensive Rehearing Order’’).

Transco and WGP then filed three sub-spindown applications seeking permission to abandon and to reclassify discrete

portions of the Transco systems. FERC approved the spindown of the North Padre Island and Central Texas Systems.

Transcon. Gas Pipe Line Corp., 96 F.E.R.C. ¶ 61,115, at

61,429 (2001) (‘‘North Padre/Central Texas Order’’). Relying

on the reformulated primary function test set forth in Sea

Robin II, 87 F.E.R.C. ¶ 61,384 (1999), FERC determined that

each system featured a central aggregation point demarcating gathering and transmission functions. North Padre/Central Texas Order, 96 F.E.R.C. at 61,440–41 (2001). FERC

applied similar reasoning in approving Transco’s abandonment of portions of the North High Island and West Cameron systems, again pinpointing central aggregation points and

identifying some, but not all, of the pipelines as serving

gathering functions. Transcon. Gas Pipe Line Corp., 96

F.E.R.C. ¶ 61,118, at 61,449, 61,458–60 (2001) (‘‘North High

Island/West Cameron Order’’). Finally, FERC approved

Transco’s requested abandonment of the Central Louisiana

facilities and, upon locating a central aggregation point at

Vermilion Block 67, designated part of the system as gatherUSCA Case #02-1072 Document #755590 Filed: 06/20/2003 Page 6 of 18
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ing. Transcon. Gas Pipe Line Corp., 96 F.E.R.C. ¶ 61,246, at

61,966 (2001) (‘‘Central Louisiana Order’’). Transco and

WGP sought rehearing of those portions of the orders that

designated parts of the systems as transmission facilities, and

the Producers sought rehearing of the gathering determinations. FERC denied the rehearing requests. Transcon. Gas

Pipe Line Corp., 97 F.E.R.C. ¶ 61,296 (2001), order on reh’g,

North Padre/Central Texas Order; Transcon. Gas Pipe Line

Corp., 97 F.E.R.C. ¶ 61,298 (2001), order on reh’g, Central

Louisiana Order; Transcon. Gas Pipe Line Corp., 97

F.E.R.C. ¶ 61,300 (2001), order on reh’g, North High Island/West Cameron Order.

II.

Transco and WGP contend that FERC erred in rejecting

their initial comprehensive application and improperly determined in the sub-spindown proposals that portions of the

facilities were transmission rather than gathering. In considering these objections, the court will sustain FERC’s factual

findings if they are supported by ‘‘substantial evidence,’’ 15

U.S.C. § 717r(b); Louisiana Ass’n of Indep. Producers &

Royalty Owners v. FERC, 958 F.2d 1101, 1115 (D.C. Cir.

1992) (per curiam), and will set aside FERC’s actions if they

are arbitrary and capricious, Motor Vehicle Mfrs. Ass’n v.

State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). The

court also applies Chevron’s familiar two-step framework to

FERC’s interpretation of section 1(b) of the NGA. ExxonMobil, 297 F.3d at 1083 (citing Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984)). Moreover, the

court is mindful that in ‘‘evaluating and balancing the several

factors under the primary function test, [FERC] brings to

bear its considerable expertise about the natural gas industry.’’ Conoco, 90 F.3d at 544 (citations omitted). Consequently, ‘‘[t]he burden is on the petitioners to show that

[FERC’s] choices are unreasonable and its chosen line of

demarcation is not within a ‘zone of reasonableness’ as distinct from the question of whether the line drawn by [FERC]

is ‘precisely right.’ ’’ ExxonMobil, 297 F.3d at 1084 (citations

omitted).

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A.

According to Transco and WGP, FERC misconstrued the

comprehensive application as an ‘‘all or nothing’’ request — in

other words, FERC misunderstood Transco and WGP as

requesting that FERC allow them to abandon and reclassify

all of their facilities or none at all. Transco and WGP

maintain that their filings contained no such ‘‘all-or-nothing’’

contingency. Because Transco and WGP failed to object to

FERC’s all-or-nothing characterization in seeking rehearing,

they are precluded from raising this argument here. Section

19(b) of the NGA, 15 U.S.C. § 717r(b), bars the court from

considering on review any objection that was not raised on

rehearing, without good cause shown. Fed. Power Comm’n

v. Colorado Interstate Gas Co., 348 U.S. 492, 497–99 (1955);

ASARCO v. FERC, 777 F.2d 764, 774–75 (D.C. Cir. 1985).

Transco and WGP sought rehearing, challenging FERC’s

denial of the comprehensive application on a number of

grounds, but, despite FERC’s invitation to clarify that they

were making an alternative request that FERC find that

some parts of the facilities perform a gathering function,

Transco and WGP nowhere requested that FERC sever the

comprehensive application. Having filed a rehearing request

that implicitly accepted the Comprehensive Order’s all-ornothing understanding, and not having shown good cause for

failing to raise their severance argument before the agency,

Transco and WGP are barred from challenging that understanding before the court. See ASARCO, 777 F.2d at 775.

FERC therefore was forced either to declare that all of the

facilities at issue performed a gathering function or to deny

the comprehensive application altogether. In this posture,

jurisdiction and merits overlap, for the court must consider

the merits of FERC’s decision that at least one of the

facilities performed a transmission function, thereby precluding approval of the all-or-nothing petition. FERC’s decision

in the Comprehensive Order was driven by the primary

function analysis: FERC considered the relevant factors —

including pipeline size and length, volume of gas, and water

depth — and relied on no irrelevant factors. Comprehensive

Order, 76 F.E.R.C. at 62,542–43 & nn.9–12. Transco and

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WGP contend that FERC was preoccupied with size, without

regard to the ‘‘sliding scale’’ analysis required by EP Operating, 876 F.2d at 48–49. On the contrary, FERC’s orders

demonstrate that FERC was concerned with the transmission

function of the pipelines located closest to shore, in the

shallowest waters, id. at 62,543 — precisely the type of

analysis contemplated by the sliding scale approach, ExxonMobil, 297 F.3d at 1078 (citing Amerada Hess, 52 F.E.R.C. at

61,988). Specifically, FERC found that Transco and WGP

had ‘‘not adequately explained how TTT existing interstate

pipeline facilities that are not located in deep OCS waters,

i.e., waters in excess of 200 meters, can properly be reclassified as gathering lines under the ‘primary function’ test.’’

Comprehensive Order, 76 F.E.R.C. at 62,543. In light of this

analysis, it was reasonable for FERC to conclude that, ‘‘[a]t

the very minimum, large portions of the facilities are clearly

properly classified as jurisdictional transmission facilities.’’

Id.

B.

Regarding two of the three sub-spindown proposals, Transco and WGP contend that FERC erred by failing to recognize the physical realities of gathering exhibited by all of the

pipelines addressed in the Central Louisiana Order and the

North High Island/West Cameron Order, and thus failed

properly to apply the modified primary function test for

offshore gathering systems. See EP Operating Co., 876 F.2d

at 48–49; Amerada Hess, 52 F.E.R.C. ¶ 61,268 (1990).

Transco and WGP contend that the Central Louisiana

Order was in error for two primary reasons. First, they

claim that FERC neglected to apply Amerada Hess’s slidingscale approach, which was designed to ‘‘allow the use of

gathering pipelines of increasing lengths and diameters in

correlation to the distance from shore and the water depth of

the offshore production area.’’ Amerada Hess, 52 F.E.R.C.

at 61,988. Transco and WGP maintain that FERC failed to

recognize that the Central Louisiana system’s spine-andlateral configuration is characteristic of a gathering function,

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regardless of whether the system is on- or offshore, and that

the offshore pipelines are longer and larger only because of

the distances involved, not because their function is different.

Second, Transco and WGP contend that in concluding that

Vermilion Block 67 marks the central aggregation point at

which the offshore lines convert from gathering to transmission, FERC ignored the fact that the offshore pipelines are

part of the spine-and-lateral gathering system, and that the

Cow Island Junction is the proper point of central aggregation.

Because ‘‘[i]t is for [FERC], in the first instance, to determine the patterns of gathering and transportation in the

offshore context,’’ the court is ‘‘generally ‘unwilling to review

line-drawing performed by [FERC] unless a petitioner can

demonstrate that lines drawn TTT are patently unreasonable,

having no relationship to the underlying regulatory problem.’ ’’ ExxonMobil, 297 F.3d at 1085 (quoting Cassell v.

FCC, 154 F.3d 478, 485 (D.C. Cir. 1998)). The Central

Louisiana Order makes clear that FERC properly considered the facilities’ diameter (sixteen and twenty inches),

length (forty-two miles), and the source of the pipelines’

pressure (from the wellhead), as well as the absence of

processing plants (which, FERC explained, means little offshore). 96 F.E.R.C. at 61,976. Transco and WGP have not

carried their burden of showing that FERC’s determination

falls outside of a ‘‘zone of reasonableness.’’ ExxonMobil, 297

F.3d at 1084. The court in ExxonMobil affirmed FERC’s

use of the central-aggregation-point test for offshore systems,

id. at 1087, and a map of the Central Louisiana system shows

that FERC reasonably concluded that the entire system

features two aggregation points — one at Vermilion Block 67

and the other at Cow Island Junction. Given the system’s

configuration — a spine-and-lateral system in which many

smaller pipelines branch off of a central ‘‘spine’’ — it was

permissible for the Commission to find that some of the

pipelines assume a transmission function when they converge

at Vermilion Block 67, while others serve a gathering purpose

until they reach Cow Island. 96 F.E.R.C. at 61,977. ‘‘Reasonable people may disagree as to where gathering ends and

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transportation begins,’’ and this court will not substitute its

judgment for a FERC determination that is not ‘‘patently

unreasonable.’’ ExxonMobil, 297 F.3d at 1085; see also

Conoco, 90 F.3d at 544.

The same deference principles apply to FERC’s findings in

the North High Island/West Cameron Order. This system is

shaped like an inverted ‘‘Y’’ with two ‘‘legs’’ — the North

High Island pipelines to the west and the West Cameron

pipelines to the east — that converge onshore at the Station

44/Cameron Meadows complex. FERC determined that only

a portion of the North High Island subsystem is nonjurisdictional, locating a central aggregation point at Block 10, North

High Island/West Cameron Order, 96 F.E.R.C. at 61,458–59,

and that the entirety of the West Cameron subsystem serves

a transmission function, id. at 61,459. Transco and WGP

contend that FERC erred by evaluating the east and west

legs independently rather than treating the Station 44/Cameron Meadows complex as the central aggregation point.

According to Transco and WGP, the entire system, like the

Sea Robin system, must be evaluated as a whole, and FERC

cannot view each leg of the ‘‘Y’’ independently. But FERC

explained that the two subsystems ‘‘generally operate independently, with the North High Island facilities collecting gas

from the west in Offshore Texas and the West Cameron

facilities collecting gas from the east in Offshore Louisiana.’’

Id. at 61,458. Then, in assessing each subsystem, FERC

noted the differences between the two. FERC reasonably

concluded, in light of these differences, that the subsystems

serve transmission functions before converging at the Station

44/Cameron Meadows complex. As in ExxonMobil, it was

permissible for FERC to conclude ‘‘that different parts of the

system required different jurisdictional treatment.’’ ExxonMobil, 297 F.3d at 1085.

Transco and WGP next contend that FERC improperly

designated a central aggregation point on the North High

Island facility rather than finding the whole facility to be

gathering. FERC explained that ‘‘[t]he North High Island

subsystem consists of approximately 174 miles of 4 to 30–inch

pipeline,’’ most of which is ‘‘relatively small, with the lines

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ranging from 4 to 24–inches in diameter.’’ North High

Island/West Cameron Order, 96 F.E.R.C. at 61,458. ‘‘The

longest segment is a 63 mile, 24–inch Line C that connects all

the upstream facilities with the plant complex onshore.’’ Id.

FERC concluded that ‘‘[a]lthough the North High Island

Block 10 point does not exhibit as strong an indication of a

marked physical change in facilities as was the case in Sea

Robin,’’ the interconnection of the 24–inch Line C with a 12–

mile, 16–inch line at Block 10 nonetheless ‘‘serves as the

central point of aggregation for the subsystem, where all the

gas gathered upstream is delivered to a single point for

transportation onshore.’’ Id. at 61,458–59. In reaching this

conclusion, FERC considered the length and diameter of the

pipeline, the volume of gas transmitted, the shape of the

subsystem, and the gas pressure. Id. at 61,459. Given that

FERC considered the pertinent factors, its conclusion was

not arbitrary and capricious. See Conoco, 90 F.3d at 544.

Transco and WGP further contend that FERC erred in

concluding that all of the West Cameron facility is transmission. In assessing the West Cameron facility, FERC considered the length, diameter, and pressure of the pipeline on the

West Cameron subsystem; the location of wells and lack of

processing plants along the line; and the shape of the long,

continuous pipeline connecting production in the OCS to the

onshore processing facilities. North High Island/West Cameron Order, 96 F.E.R.C. at 61,459–60. Based on these factors, FERC found ‘‘that the West Cameron subsystem’s

primary function is that of a transmission facility, not a

gathering one.’’ Id. at 61,460. This conclusion was not

arbitrary and capricious.

Transco and WGP contend, finally, that FERC failed to

comply with its own precedent when it ignored the historical

evolution of the Central Louisiana and North High Island/West Cameron systems in determining their primary

function. In Enron Gulf Coast Gathering L.P., 95 F.E.R.C.

¶ 61,318 (2001), FERC stated that the fact that the pipelines

in question ‘‘were built in separate stages over a number of

years after’’ the original system’s construction ‘‘in order to

access new gas supplies on the OCS also speak[s] to their

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primary gathering function.’’ Id. at 62,097 (footnote omitted).

Transco and WGP contend that, consistent with that precedent, they presented FERC with detailed evidence showing

that the systems’ history and evolution suggest a primary

gathering function. But FERC did not err in according little

weight to this factor. Although FERC recognized in Enron

that the historical evolution of the pipeline system may be

relevant, it has not traditionally been a criterion in the

primary function test. See ExxonMobil, 297 F.3d at 1077.

Moreover, as FERC notes, the Fifth Circuit instructed

FERC to afford nonphysical factors, such as a system’s

historical evolution, only secondary importance. Sea Robin,

127 F.3d at 371. In any event, this court has observed that

‘‘the historical classification’’ of a system is ‘‘of limited utility’’

in ‘‘ ‘the wake of major regulatory changes in the natural gas

industry’ ’’ effected by Order No. 636, Pipeline Service Obligations and Revisions to Regulations Governing Self–Implementing Transportation and Regulation of Natural Gas

Pipelines After Wellhead Decontrol, F.E.R.C. Stats. & Regs.

¶ 30,939, reh’g granted in part, Order No. 636–A, F.E.R.C.

Stats. & Regs. ¶ 30,950, reh’g denied, Order No. 636–B, 61

F.E.R.C. ¶ 61,272 (1992), aff’d in part, rev’d in part sub nom.

United Distrib. Cos. v. FERC, 88 F.3d 1105 (1996) (per

curiam) (‘‘Order No. 636’’). ExxonMobil, 297 F.3d at 1086–87

(quoting Conoco, 90 F.3d at 539). For reasons we explain in

Part III, this analysis applies to Transco’s facilities. Thus,

FERC did not err in declining to classify the lines as gathering on the basis of their historical evolution.

III.

The Producers challenge approval of the abandonment and

reclassification of Transco’s facilities on the grounds that

FERC: (1) failed to find that a change in circumstances

justified revisiting an earlier classification of Transco’s facilities as gathering; (2) misapplied the reformulated primary

function test; and (3) neglected to conduct a sufficient public

interest analysis. Each of these contentions lacks merit.

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FERC has stated that ‘‘[e]xisting interstate pipelines and

gathering facilities [will] retain their status barring some

change in circumstancesTTTT’’ Gas Pipeline Facilities and

Services on the Outer Continental Shelf, 74 F.E.R.C. ¶ 61,222,

at 61,757 (1996) (‘‘OCS Policy Statement’’). According to the

Producers, Transco requested in 1990 that FERC certificate

its facilities as transmission when Transco was restructuring

from a merchant to a transporter. Because FERC granted

Transco’s request, the Producers maintain, the OCS Policy

Statement required FERC to find that a change in circumstances justified revisiting the certification decision.

FERC explained in the orders on review that Order No.

636, which promoted the unbundling of pipeline services,

effected significant changes in the industry, and that those

changes justified Transco’s abandonment request. E.g.,

North Padre/Central Texas Order, 96 F.E.R.C. at 61,434.

FERC noted that Transco had sought to certificate its pipelines as transmission at a time when ‘‘Transco did not have a

need to precisely distinguish between jurisdictional transmission and exempt gathering facilities,’’ because those services

could be bundled. Id. at 61,431. But ‘‘Transco, like many

interstate pipelines, found after restructuring its system consistent with Order No. 636, and moving from a bundled,

merchant function to an unbundled, transportation function,

that it no longer needed all of its existing system facilities.’’

Id. at 61,434. FERC accordingly found that Transco’s requested spindown was reasonable ‘‘because [its] facilities are

no longer necessary for the service it currently provides.’’

Id.

FERC’s explanation is consistent with the major industry

changes wrought by Order No. 636. In ExxonMobil, for

instance, the petitioners complained that FERC failed ‘‘to

give weight to the previously ‘settled status’ of the classification of [the facilities in question] as engaged in jurisdictional

transportation.’’ ExxonMobil, 297 F.3d at 1086. But the

court observed that ‘‘[w]hen interstate gas pipelines served

the multi-function role of purchasing, gathering, transporting,

and re-selling natural gas, i.e. bundled sales, the transportation/gathering jurisdictional question may have been of less

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consequence.’’ Id. (citation omitted). The court then explained that FERC ‘‘has been struggling with the reclassification of facilities in the wake of the unbundling of gas sales

and interstate transportation in Order No. 636.’’ Id. at 1087

(citing Conoco, 90 F.3d at 539–41). Because Order No. 636

took effect after Transco’s certification, the changes effected

by the Order then were sufficiently significant to justify

FERC’s revisiting of Transco’s classifications. The Producers object that if this rationale is accepted, then all prior

determinations of transmission/gathering status could potentially be reopened, thereby upsetting producers’ reliance and

repose interests. Even so, the objection confirms the understanding that Order No. 636 worked a substantial change in

the industry; it does not provide a reason for declining to

revisit Transco’s certification.

Furthermore, in light of the court’s upholding in ExxonMobil, 297 F.3d at 1087, of FERC’s modified primary function

test as reasonable, the Producers’ contention that FERC’s

orders are founded on a flawed reformulation of the primary

function test necessarily fails. Similarly, the Producers’ contention that FERC misapplied the primary function test by

according determinative weight to the central-aggregationpoint factor also fails. Although FERC maintains that the

Producers waived this challenge by failing to raise it on

rehearing, see 15 U.S.C. § 717r(b); Colorado Interstate Gas,

348 U.S. at 497–99; ASARCO, 777 F.2d at 774–75, their

argument before FERC that it erred in selecting the specific

points along Transco’s system where gathering ends and

transmission began was sufficient to preserve the objection.

While the Producers maintain that FERC erred in finding

that virtually all facilities located upstream from the central

aggregation point are gathering and in failing to reconcile its

conclusions with prior precedents, the orders demonstrate

that FERC adequately considered a range of relevant factors — the facilities’ length and diameter, the volume of gas

transmitted, the pipelines’ configuration, the location of compression facilities and processing plants, the source of pressure, and the presence of a central aggregation point. North

Padre/Central Texas Order, 96 F.E.R.C. at 61,440–42; North

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High Island/West Cameron Order, 96 F.E.R.C. at 61,458–60;

Central Louisiana Order, 96 F.E.R.C. at 61,976–77. FERC

did ‘‘not consider any one factor to be determinative,’’ North

Padre/Central Texas Order, 96 F.E.R.C. at 61,442, and its

determinations were consistent with prior precedent. Although the Producers contend that FERC’s decisions in

Seahawk Shoreline System, 93 F.E.R.C. ¶ 61,097 (2000), reh’g

denied, Seahawk Transmission Co., 95 F.E.R.C. ¶ 61,342

(2001), and Venice Gathering Co., 97 F.E.R.C. ¶ 61,045 (2001),

are dispositive because the size of those pipelines was the

same as the size of Transco’s facilities, other relevant differences remain, including the systems’ proximity to shore and

their connections to other lines. Hence, ‘‘it is entirely appropriate for FERC to proceed on a case-by-case basisTTTT’’

ExxonMobil, 297 F.3d at 1087 (citing SEC v. Chenery Corp.,

332 U.S. 194, 202–03 (1947)). FERC gave reasoned consideration to each of the pertinent factors, and its factual conclusions are supported by substantial evidence in the record.

ExxonMobil, 297 F.3d at 1084 (citations and quotations omitted).

Producers finally contend that even if the facilities are

properly classified as gathering, the NGA required FERC to

make a public interest finding before permitting Transco to

abandon the facilities by sale to a nonjurisdictional affiliate.

See 15 U.S.C. § 717f(b); Transcon. Gas Pipe Line Corp. v.

Fed. Power Comm’n, 488 F.2d 1325, 1328 (D.C. Cir. 1973)

(per curiam); Michigan Consol. Gas Co. v. Fed. Power

Comm’n, 283 F.2d 204, 214 (D.C. Cir. 1960). The Producers

explain that the facilities in question were certificated as

transmission, and the abandonment of certificated facilities is

subject to FERC’s public interest standard. In a public

interest analysis, ‘‘the burden of proof is on the applicant for

abandonment to show that the ‘public convenience and necessity’ permits abandonment, that is, that the public interest

‘will in no way be disserved’ by abandonment.’’ Transcon.

Gas, 488 F.2d at 1328 (quoting Michigan Consol., 283 F.2d at

214). The Producers contend that FERC failed adequately to

consider the anti-competitive effects of Transco’s abandonment.

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In FERC’s view, ‘‘the issue of competition’’ is not ‘‘relevant

to whether or not [FERC] will regulate an affiliated gatherer’s rates or terms and conditions of service after it acquires

abandoned facilities,’’ because FERC ‘‘has no authority under

the NGA to regulate a gatherer’s rates or its terms and

conditions of service.’’ North High Island/West Cameron

Order, 96 F.E.R.C. at 61,454 (citing Conoco, 90 F.3d 536).

Put more simply, ‘‘NGA § 7(b) does not require [FERC]

authorization for a transfer of gathering facilities.’’ Respondent’s Br. at 50. As the court has explained, ‘‘section 7(b)

only applies to jurisdictional facilities, and ‘do[es] not expand

[FERC’s] § 1(b) jurisdiction.’ ’’ ExxonMobil, 297 F.3d at

1088 (quoting Conoco, 90 F.3d at 553); accordingly, the

petitioner in ExxonMobil could not use section 7(b) to ‘‘bootstrap’’ FERC jurisdiction over a set of gathering facilities

that the petitioner sought to reclassify (but not to abandon).

Id. Although the situation here is slightly different than in

ExxonMobil, because Transco wishes to abandon its pipelines

rather than simply reclassify them, FERC properly determined that under NGA section 7(b) it had no discretion to

deny abandonment of Transco’s facilities that it found were

primarily functioning as gathering. See, e.g., North Padre/Central Texas Order, 96 F.E.R.C. at 61,435. We part

company with the Fifth Circuit’s opinion in Pacific Gas &

Electric Co. v. FERC, 106 F.3d 1190 (5th Cir. 1997), to the

extent it holds that FERC has discretion to examine whether

abandonment would be in the public interest, id. at 1197, for

once FERC determines that a facility is not dedicated to a

jurisdictional function, it has no authority to exercise jurisdiction over that facility by denying the certificate of abandonment for that facility.

As to shippers’ anti-competition concerns, FERC explained

that even though it lacked the authority to deny the abandonment, the concerns were unfounded because the abandonment

was ‘‘consistent with the unbundling policies of Order No. 636

and should, in the long run, promote competition within the

gathering industry.’’ North High Island/West Cameron Order, 96 F.E.R.C. at 61,454 (citing Northern Natural Gas Co.,

93 F.E.R.C. ¶ 61,101, at 61,273 (2000)). FERC further noted

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that ‘‘the facilities at issue here are located on the OCS and

will become subject to the [Outer Continental Shelf Lands

Act (‘‘OCSLA’’), 43 U.S.C. §§ 1331–56 (2000),] upon approval

of the spindown,’’ thereby limiting any potential anticompetitive effects. North Padre/Central Texas Order, 96

F.E.R.C. at 61,435. Under FERC’s OCSLA regulations,

WGP is required to report the terms under which it provides

service to shippers; a shipper can file a complaint if it

believes either Transco or WGP has violated its statutory

obligations and ‘‘the Commission will investigate any such

complaint in a timely manner.’’ Id. (citing 18 C.F.R. § 332.2,

332.206 (2000)). Thus, FERC has taken the long view, concluding that Order No. 636’s unbundling policies create competitive conditions and that, combined with the standards of

conduct for gathering facilities in Transco’s tariff, the OCSLA

sufficiently guards against the exercise of monopoly power.

See United Distrib. Cos., 88 F.3d at 1139.

Accordingly, because the court is ‘‘ ‘generally unwilling to

review line-drawing performed by [FERC] unless a petitioner

can demonstrate that lines drawn TTT are patently unreasonable, having no relationship to the underlying regulatory

problem,’ ’’ ExxonMobil, 297 F.3d at 1085 (quoting Cassell v.

FCC, 154 F.3d 478, 485 (D.C. Cir. 1998)), and FERC’s conclusions were reasonable, we deny the petitions for review.

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