United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 20, 2006 Decided December 19, 2006

No. 05-1342

WILLIAMS GAS PROCESSING-GULF COAST 

COMPANY, L.P., ET AL.,

PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

PRODUCER COALITION, ET AL.,

INTERVENORS

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

James T. McManus argued the cause for petitioners. With

him on the briefs were Joseph S. Koury, Mari M. Ramsey, and

David A. Glenn.

Carol J. Banta, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. On the brief

were John S. Moot, General Counsel, and Robert H. Solomon,

Solicitor.

Thomas J. Eastment argued the cause for intervenors

Dominion Exploration & Production, Inc., et al. With him on
2

the brief were Adam J. White, James M. Costan, Charles J.

McClees, Douglas W. Rasch, Bruce A. Connell, and Frederick

T. Kolb.

Before: SENTELLE and TATEL, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: Williams Gas ProcessingGulf Coast Co. (“WGP”) and Transcontinental Gas Pipe Line

Corp. (“Transco”) petition for review of two Federal Energy

Regulatory Commission (“FERC” or “the Commission”) orders

asserting jurisdiction over a natural gas pipeline off the coast of

Louisiana. See Transcontinental Gas Pipe Line Corp., 111

F.E.R.C. ¶ 61,498 (2005) (“2005 Transco Rehearing Order”);

Transcontinental Gas Pipe Line Corp., 111 F.E.R.C. ¶ 61,090

(2005) (“2005 Transco Jurisdictional Order”). Under the

Natural Gas Act (“NGA” or “the Act”), 15 U.S.C. §§ 717-717z,

FERC has jurisdiction over pipelines that “transport” natural

gas, but not over those that “gather” it. But the Act does not

define these terms, leaving FERC to create a test that will

rationally and reliably distinguish between the two types of

pipeline. FERC’s efforts to properly classify Transco’s pipeline

are emblematic of its struggle to complete this task.

In 2001, FERC disclaimed jurisdiction over a 12.43 mile,

24-inch diameter pipeline in Transco’s Central Louisiana system

lying downstream of the pipeline facilities of Jupiter Energy

Corp. (“Jupiter”). Transcontinental Gas Pipe Line Corp., 96

F.E.R.C. ¶ 61,246 (2001) (“2001 Transco Jurisdictional

Order”), reh’g denied in relevant part, Transcontinental Gas

Pipe Line Corp., 97 F.E.R.C. ¶ 61,298 (2001) (“2001 Transco

Rehearing Order”). This court upheld FERC’s 2001 orders as

supported by substantial evidence and not arbitrary and
3

capricious. Williams Gas Processing-Gulf Coast Co. v. FERC,

331 F.3d 1011 (D.C. Cir. 2003) (“WGP-Transco I”). 

In 2003, in a separate proceeding initiated by Jupiter, FERC

determined that an 8-inch Jupiter pipeline feeding into the 24-

inch Transco lateral serves a transportation function. Jupiter

Energy Corp., 103 F.E.R.C. ¶ 61,184 (2003), reh’g denied,

Jupiter Energy Corp., 105 F.E.R.C. ¶ 61,243 (2003) (“2003

Jupiter Rehearing Order”). The consequence of this ruling was

that a jurisdictional pipeline (Jupiter) flowed into a nonjurisdictional pipeline (Transco). On review, the Fifth Circuit

vacated and remanded, holding that the Commission’s decision

was arbitrary and capricious because Jupiter’s transportation

pipeline sat upstream of a Transco gathering pipeline. Jupiter

Energy Corp. v. FERC, 407 F.3d 346, 350-51 (5th Cir. 2005)

(“Jupiter Appeal”). The Fifth Circuit noted that FERC’s Jupiter

orders produced an “anomalous scenario,” to wit: “A series of

gathering pipelines (upstream . . .) feed[ing] into a

transportation pipeline (Jupiter’s 8-inch line), . . . in turn

feed[ing] into a gathering pipeline (the Transco line).” Id. at

350. The court concluded that “this cannot be considered

consistent.” Id.

In 2004, before the Fifth Circuit’s Jupiter Appeal decision

had been handed down, FERC issued an order requiring WGP

and Transco to show cause why the agency’s 2001 Transco

Jurisdictional Order should not be reversed as “anomalous” in

light of the Jupiter orders. Transcontinental Gas Pipe Line

Corp., 107 F.E.R.C. ¶ 61,122 (2004) (“Show Cause Order”).

Shortly after the Fifth Circuit vacated the Jupiter orders, FERC

reversed its prior determination and held that the Transco lateral

directly downstream of the Jupiter facility serves a

transportation function. 2005 Transco Jurisdictional Order, 111

F.E.R.C. ¶ 61,090. 

On June 28, 2005, FERC issued two decisions. First, in the

case on remand from the Fifth Circuit, the Commission affirmed
4

its jurisdictional determination in the Jupiter orders. Jupiter

Energy Corp., 111 F.E.R.C. ¶ 61,497 (2005). Second, FERC

denied the request for rehearing of its 2005 Transco

Jurisdictional Order, on the grounds that the disputed 2001

orders were issued “on the basis of incomplete information,” and

“no gas is collected along the length of Transco’s downstream

line.” 2005 Transco Rehearing Order, 111 F.E.R.C. ¶ 61,498.

The Jupiter orders are now pending review before the Fifth

Circuit and the challenges to the Commission’s 2005 Transco

Jurisdictional Order and 2005 Transco Rehearing Order are at

the heart of the petition for review in this case.

WGP and Transco’s principal argument is that it was

unlawful for FERC to reconsider its prior conclusion regarding

Transco’s pipeline segment lying downstream of the pipeline

facilities of Jupiter. Petitioners argue, in particular, that “[t]he

Commission’s lone finding and premise . . . that the subject

pipeline facility is not a ‘gathering’ facility solely because,

purportedly, no gas was collected along that pipeline . . . is

contrary to the facts of record.” Petitioners’ Reply Br. at 2.

Petitioners also contend that, because “the Commission . . .

previously decided these same facilities to be gathering in final,

court-affirmed orders, the Commission is barred from

re-deciding these same issues.” Id. 

WGP and Transco are right in their observation that “[t]his

is a classic case of an agency, both in its orders under review

and its brief to this Court, failing to demonstrate that it has

engaged in reasoned decisionmaking.” Id. They are wrong,

however, in suggesting that FERC was without authority to

reconsider its 2001 Transco Jurisdictional Order. Indeed,

petitioners’ counsel conceded at oral argument that it is within

FERC’s authority to make jurisdictional determinations that rest

on the premises that (1) there is one point on any given route

where gathering stops and transportation begins, and (2) a

transportation pipeline cannot feed into a gathering pipeline.
5

See Recording of Oral Argument at 12:06. These two points

were highlighted by the Fifth Circuit in the Jupiter Appeal

decision. 407 F.3d at 350-51. If these two principles apply,

then FERC might be justified in finding that both the Jupiter and

Transco lines are jurisdictional facilities. The problem here is

that the agency’s rationale underlying the disputed 2005 Transco

Jurisdictional Order and 2005 Transco Rehearing Order only

hints at these principles. 

In its briefs to this court, FERC argues that it revisited its

2001 Transco Jurisdictional Order to eliminate a “fundamental

inconsistency” in its case law. Respondent’s Br. at 3, 13. The

Commission could have stated as much in its 2005 orders and

justified the policy shift, for an agency is free to change course

in a regulatory regime provided that it offers a reasoned

explanation for so doing and is not otherwise constrained by

statutory limitations. We are forced to vacate the 2005 orders,

however, because in those decisions, FERC neither explained its

action as consistent with precedent nor justified it as a reasoned

and permissible shift in policy. Although these orders ultimately

may prove to be justified on the merits, they are presently

wanting for lack of reasoned decisionmaking. 

I. BACKGROUND

The Natural Gas Act grants FERC the power to regulate

“the transportation [or ‘transmission’] of natural gas in interstate

commerce” but not “the production or gathering of natural gas.”

15 U.S.C. § 717(b). Until fairly recently, companies sold gas

under rates that encompassed both gathering and transportation

services. Lomak Petroleum, Inc. v. FERC, 206 F.3d 1193, 1195

n.2 (D.C. Cir. 2000). However, “in the wake of major

regulatory changes in the natural gas industry,” including the

unbundling of gathering and transportation services, Conoco

Inc. v. FERC, 90 F.3d 536, 539-41 (D.C. Cir. 1996), companies

primarily engaged in transporting gas “no longer need[] to

operate” gathering facilities, Lomak, 206 F.3d at 1195. As a
6

result, many natural gas transporters have sought to separate

their transportation and gathering facilities, through transfer

(otherwise known as “spindown”) of the latter to gathering

affiliates. See WGP-Transco I, 331 F.3d at 1015. 

Because the NGA does not define gathering and

transportation, FERC is responsible for drawing the “not always

clear” line between the two. See ExxonMobil Gas Mktg. Co. v.

FERC, 297 F.3d 1071, 1076-77 (D.C. Cir. 2002) (quoting

Conoco, 90 F.3d at 542). Gathering facilities are generally

understood to be pipelines that collect gas from wells (where gas

originates) and deliver it into pipelines which will transport it in

interstate commerce. Id. at 1076; Conoco, 90 F.3d at 539 n.2.

However, since on any given route between the wells (upstream)

and the final destination (downstream), various pipeline

segments may be owned by different companies, it is no mean

feat for the agency to determine which segments serve a

gathering function and which do not. Faced with this reality and

inundated with requests for jurisdictional clarification, see Gas

Pipeline Facilities & Servs. on the Outer Cont’l Shelf, 74

F.E.R.C. ¶ 61,222, at 61,751-52 (1996), FERC has had trouble

finding its footing. See ExxonMobil, 297 F.3d at 1087 (“FERC

has been struggling with the reclassification of facilities . . . .”);

Shell Gas Pipeline Co., 74 F.E.R.C. ¶ 61,277, at 61,895 (1996)

(“[T]he development of an appropriate methodology has been an

ongoing task . . . .”). 

In Farmland Industries, Inc., 23 F.E.R.C. ¶ 61,063 (1983),

FERC announced the “primary function test,” under which it

considers six factors to determine the jurisdictional status of a

pipeline: “(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[, i.e.

upstream of,] the [processing] plant; (5) the location of wells

along all or part of the facilities; and (6) the line[s’] operating
7

pressure.” WGP-Transco I, 331 F.3d at 1014. Only six years

later, however, the Fifth Circuit found fault with the test,

because it ignored the geographical realities of offshore gas

collection (where pipelines serving a gathering function often

need to be larger and longer) and focused instead on purely

physical criteria. EP Operating Co. v. FERC, 876 F.2d 46, 48-

49 (5th Cir. 1989). The primary function test was seen by the

court as failing to classify facilities with “marked similarities in

operational characteristics” the same way. Id. at 50. 

In response, FERC modified its primary function test to

include “a sliding scale which will 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 Corp., 52 F.E.R.C. ¶ 61,268,

at 61,988 (1990). It also announced that it would consider

“nonphysical criteria such as the purpose, location and operation

of the facility, the general business activity of the owner of the

facility, and whether the jurisdictional determination is

consistent with the objectives of the NGA . . . .” Id. at 61,987;

see Sea Robin Pipeline Co. v. FERC, 127 F.3d 365, 369 (5th Cir.

1997) (“Sea Robin I”). After several years, however, the Fifth

Circuit concluded that FERC had once again failed to create a

viable test. According to the court, FERC had “reverted,”

committing exactly the same error criticized in EP Operating:

it treated the physical size of the pipeline as presumptive. Id. at

370. The court also found that the Commission was relying too

much on nonphysical factors, which, while “relevant, . . . are

only part of the mix” and should be treated as “secondary to the

physical factors.” Id. at 371. Because, in the court’s view,

FERC seemed unable to consistently resolve when gathering

ceases and transportation commences, the Fifth Circuit invited

FERC to “reformulate” its primary function test another time.

Id. 
8

On remand, FERC revised the test. First, FERC concluded

that the “behind-the-plant” factor should be given less weight in

the offshore context, because almost all offshore facilities are

situated upstream of processing plants. Sea Robin Pipeline Co.,

87 F.E.R.C. ¶ 61,384, at 62,425 (1999) (“Sea Robin II”), reh’g

denied, Sea Robin Pipeline Co., 92 F.E.R.C. ¶ 61,072 (2000)

(“Sea Robin II Rehearing Order”). FERC then replaced the

“central point in the field” factor used in the onshore context

with a “centralized aggregation” inquiry into whether “there

exists a central location where gas is aggregated for further

transportation to shore.” Id. FERC stated that its revised test

would enable it to consistently discern the “point at which the

collection or gathering of gas ends, and interstate transmission

begins.” Id. at 62,427. 

In its order denying rehearing of Sea Robin II, FERC stated,

“[T]he Commission does not agree that the fact of Sea Robin’s

upstream interconnection with [a jurisdictional facility], by

itself, compels a finding that the east leg of Sea Robin’s system

is jurisdictional.” Sea Robin II Rehearing Order, 92 F.E.R.C. ¶

61,072, at 61,295. ExxonMobil sought review before this court

arguing, inter alia, that “FERC’s jurisdictional ruling has

created an utterly illogical situation, wherein gas is transported

on a jurisdictional pipeline . . . into a non-jurisdictional

gathering leg of Sea Robin’s pipeline.” ExxonMobil, 297 F.3d

at 1087 (internal quotation marks omitted). After canvassing

FERC’s case law, we held that “the presence of an

interconnection with an upstream jurisdictional facility [does not

compel] a finding that the downstream facility is likewise

jurisdictional.” Id. Based on the historical treatment of the lines

in question, we explained that, “[i]f anything,” the jurisdictional

line upstream of the Sea Robin facility “ha[d] been erroneously

classified.” Id. We accepted FERC’s argument that the

“inconsistent treatment of the [upstream] pipeline and the Sea

Robin pipeline” did not necessarily render the decision arbitrary

and capricious and upheld the classification. Id. at 1087, 1089.
9

Such was the state of FERC’s primary function test when

Transco asked FERC to authorize the spindown of its Central

Louisiana system to WGP, and WGP in turn petitioned FERC

for a declaratory order disclaiming jurisdiction over the

facilities. After considering each factor of the revised primary

function test, FERC found that a large central pipeline, “the

spine,” serves a transportation function, while “6 to 24-inch

offshore lateral lines connect at various locations into the spine

and serve to collect gas from the surrounding production areas.”

2001 Transco Jurisdictional Order, 96 F.E.R.C. ¶ 61,246, at

61,976. FERC concluded that these lateral lines “serve to gather

gas from production located in their vicinity.” Id. FERC denied

rehearing with respect to the laterals’ classification, see 2001

Transco Rehearing Order, 97 F.E.R.C. ¶ 61,298, and we upheld

the 2001 orders as supported by substantial evidence and not

arbitrary and capricious, see WGP-Transco I, 331 F.3d 1011. 

Before this court’s decision had issued in WGP-Transco I,

FERC conducted a separate jurisdictional status proceeding

covering Jupiter’s 8-inch line upstream of and feeding into one

of the 24-inch Transco laterals. Jupiter Energy Corp., 103

F.E.R.C. ¶ 61,184. Focusing heavily on the centralized

aggregation point factor, FERC concluded that the Jupiter

pipeline performs a transportation function. Id. at 61,713.

Jupiter sought rehearing, arguing that the presence of Transco’s

gathering lateral downstream of the Jupiter pipeline foreclosed

a finding that the facility engages in transportation. 2003

Jupiter Rehearing Order, 105 F.E.R.C. ¶ 61,243. FERC

concluded that its 2001 orders “cannot now be the basis for

claiming that Jupiter’s facilities should also be declared to be

gathering.” Id. at 62,286. In a footnote, FERC reversed the

position it had taken in its Sea Robin II Rehearing Order and

declared that “[t]he presence of upstream transmission facilities

determines the classification of downstream facilities, not the

opposite.” Id. at n.8. 
10

Seemingly uncomfortable with the muddle it had created –

“[a] series of gathering pipelines” feeding into “a transportation

pipeline (Jupiter’s 8-inch line), . . . in turn feed[ing] into a

gathering pipeline (the Transco line),” Jupiter Appeal, 407 F.3d

at 350 – FERC issued an order requiring WGP and Transco to

show cause why the 2001 Transco Jurisdictional Order should

not be reversed as “anomalous” in light of the Jupiter orders.

Show Cause Order, 107 F.E.R.C. ¶ 61,122, at 61,411. FERC

also repeated the declaration contained in its Jupiter footnote

that upstream transportation facilities determine the

classification of downstream facilities. Id. 

Before FERC could address the Show Cause Order, the

Fifth Circuit vacated FERC’s Jupiter orders. Jupiter Appeal,

407 F.3d 346. The Fifth Circuit highlighted that FERC’s Sea

Robin II decision endorsed the principle that “there is one point

on any given route where gathering stops and transportation

begins.” Id. at 350. The Fifth Circuit therefore reasoned that,

because FERC had “already set the jurisdictional boundary

downstream from one of Jupiter’s pipelines,” it was “arbitrary

for the Commission now to set a jurisdictional dividing point

[further upstream].” Id. at 351. The court vacated the Jupiter

orders as anomalous and inconsistent. Id. at 350-51.

Just a week after the Fifth Circuit vacated the Jupiter orders,

FERC decided that WGP and Transco had failed to show cause

sufficient to prevent reclassification of the 24-inch lateral. 2005

Transco Jurisdictional Order, 111 F.E.R.C. ¶ 61,090. In the

“Background” section of its decision, FERC stated: (1) since it

had not been aware that a transportation facility stood upstream

of the lateral when it disclaimed jurisdiction over it in 2001, its

determination “was made on the basis of incomplete

information”; and (2) “[t]he presence of upstream transmission

facilities determines the classification of downstream facilities,

not the opposite.” Id. at 61,411. In the “Discussion” section of

its decision, FERC based its conclusion that Transco’s 24-inch
11

lateral actually serves a transportation function on one fact:

unlike the gathering arms of the Sea Robin pipeline, “[n]o gas

is collected along the Jupiter pipeline.” Id. at 61,413. 

On June 28, 2005, FERC issued two decisions. First, FERC

affirmed its jurisdictional determination in the Jupiter orders. In

so doing, FERC noted that, because Transco’s pipeline was

being reclassified from gathering to transportation, “the

inconsistency identified by the [Fifth Circuit] no longer exists.”

Jupiter Energy Corp., 111 F.E.R.C. ¶ 61,497. Second, FERC

denied Transco’s request for rehearing, offering two rationales

in a five-paragraph decision: (1) the 2001 orders were issued

“on the basis of incomplete information”; and (2) “no gas is

collected along the length of Transco’s downstream line.” 2005

Transco Rehearing Order, 111 F.E.R.C. ¶ 61,498. FERC

provided no other reasoning or factual support for its conclusion.

WGP and Transco now seek review in this court. 

II. ANALYSIS

A. Standard of Review

We must vacate FERC’s 2005 orders if they are arbitrary

and capricious. 5 U.S.C. § 706(2)(A); see ExxonMobil, 297

F.3d at 1083. We therefore look to whether FERC “articulated

a rational explanation for its action.” AT&T Inc. v. FCC, 452

F.3d 830, 837 (D.C. Cir. 2006) (quoting Eagle-Picher Indus.,

Inc. v. EPA, 759 F.2d 905, 921 (D.C. Cir. 1985)). Reasoned

decisionmaking necessarily requires consideration of relevant

precedent. See Brusco Tug & Barge Co. v. NLRB, 247 F.3d 273,

278 (D.C. Cir. 2001) (“[I]t is ‘axiomatic that [agency action]

must either be consistent with prior [action] or offer a reasoned

basis for its departure from precedent . . . .’” (quoting ConAgra,

Inc. v. NLRB, 117 F.3d 1435, 1443 (D.C. Cir. 1997))).

However, it is well understood that 

[a]n agency is free to discard precedents or practices it no

longer believes correct. Indeed we expect that an[] agency
12

may well change its past practices with advances in

knowledge in its given field or as its relevant experience

and expertise expands. If an agency decides to change

course, however, we require it to supply a reasoned analysis

indicating that prior policies and standards are being

deliberately changed, not casually ignored. 

Nuclear Energy Inst., Inc. v. EPA, 373 F.3d 1251, 1296 (D.C.

Cir. 2004) (per curiam) (internal citations and quotation marks

omitted); see Motor Vehicle Mfrs. Ass’n v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 57 (1983) (“An agency’s view of

what is in the public interest may change, either with or without

a change in circumstances. But an agency changing its course

must supply a reasoned analysis . . . .”) (internal quotation marks

omitted); see, e.g., Office of Commc’n, Inc. of the United Church

of Christ v. FCC, 327 F.3d 1222, 1228-29 (D.C. Cir. 2003)

(upholding policy-shift where agency adequately explained its

departure); ANR Pipeline Co. v. FERC, 205 F.3d 403, 407 (D.C.

Cir. 2000) (“An agency may not of course depart from prior

policy without explanation. But FERC explained how changed

circumstances justified a new policy.”); Busse Broad. Corp. v.

FCC, 87 F.3d 1456, 1458 (D.C. Cir. 1996) (upholding agency

action where “to the extent the agency departed from precedent,

it offered a reasonable explanation for doing so”). 

Arbitrary and capricious review “demands evidence of

reasoned decisionmaking at the agency level; agency rationales

developed for the first time during litigation do not serve as

adequate substitutes.” Kansas City v. HUD, 923 F.2d 188, 192

(D.C. Cir. 1991); see Point Park Univ. v. NLRB, 457 F.3d 42, 50

(D.C. Cir. 2006) (“Nor can our Court fill in critical gaps in [an

agency’s] reasoning. We can only look to the [agency’s] stated

rationale. We cannot sustain its action on some other basis the

[agency] did not mention.”); Williams Gas Processing-Gulf

Coast Co. v. FERC, 373 F.3d 1335, 1345 (D.C. Cir. 2004) (“It

is axiomatic that we may uphold agency orders based only on
13

reasoning that is fairly stated by the agency in the order under

review . . . .”). 

WGP and Transco point out that in 2001 FERC applied

each factor of its primary function test and concluded that

Transco’s 24-inch lateral performs a gathering function; yet, in

2005, FERC reached the opposite conclusion, Petitioners’ Br. at

19-20, but without the requisite support for such a drastic

change in course, id. at 18, 25. The simple question here is

whether FERC’s reclassification of the Transco lateral is

justified either as consistent with precedent or as a considered

departure therefrom. In other words, are the contested 2005

orders supported by reasoned decisionmaking?

B. FERC’s “Incomplete Information” Rationale Is

Inadequate

FERC justified its 2005 orders in part by stating that its

original decision was based on incomplete information. On this

point, the Commission claims that it did not become aware that

the Transco lateral sat downstream of a line properly classified

as jurisdictional until after the 2001 proceedings. See 2005

Transco Rehearing Order, 111 F.E.R.C. ¶ 61,498, at 63,113;

2005 Transco Jurisdictional Order, 111 F.E.R.C. ¶ 61,090, at

61,411. But FERC never explained why the classification of the

Jupiter facility is relevant to the jurisdictional status of the

Transco lateral under existing precedent. The only statement

approximating a clarification of the “incomplete information”

rationale can be found in a blanket assertion contained in the

“Background” section of the earlier of the two 2005 orders:

FERC declared, “The presence of upstream transmission

facilities determines the classification of downstream facilities,

not the opposite.” 2005 Transco Jurisdictional Order, 111

F.E.R.C. ¶ 61,090, at 61,411. 

But FERC simply cited the Jupiter footnote (where it had

first stated the proposition without explanation). FERC made no
14

attempt to square this new policy statement with its directly

contradictory stance in Sea Robin II Rehearing Order and this

court’s decision in ExxonMobil. In Sea Robin II Rehearing

Order, FERC stated, “[T]he Commission does not agree that the

fact of Sea Robin’s upstream interconnection with [a

jurisdictional facility], by itself, compels a finding that the east

leg of Sea Robin’s system is jurisdictional.” 92 F.E.R.C.

¶ 61,072, at 61,295. And in ExxonMobil, FERC convinced this

court to conclude that “the presence of an interconnection with

an upstream jurisdictional facility [does not compel] a finding

that the downstream facility is likewise jurisdictional.” 297 F.3d

at 1087. Now FERC asserts that it must reclassify a downstream

line because “[t]he presence of upstream transmission facilities

determines the classification of downstream facilities.” 2005

Transco Jurisdictional Order, 111 F.E.R.C. ¶ 61,090, at 61,411.

FERC’s rationale could hardly be more inconsistent with

precedent. And “FERC’s attempts to distinguish its precedents

. . . [are] nonexistent.” PG&E Gas Transmission, Nw. Corp. v.

FERC, 315 F.3d 383, 389 (D.C. Cir. 2003).

C. FERC’s Inconsistent Precedents and Changing Policy

FERC’s new assertion that a facility downstream of a

jurisdictional pipeline must also be jurisdictional finds support

in two interrelated principles which FERC once embraced but

recently rejected: (1) there is one point along every route at

which gathering ceases and transportation begins, and (2) a

transportation facility cannot feed into a gathering facility.

In a 1996 Policy Statement, FERC announced, “[W]here

gas is destined for interstate commerce, there is necessarily a

point at which the gathering or collection of the gas ends, and

interstate transportation begins.” Gas Pipeline Facilities, 74

F.E.R.C. ¶ 61,222, at 61,757. In Sea Robin I, the Fifth Circuit

treated this principle as a settled component of FERC policy:

“The determinative question is when did gathering cease and

transportation commence.” 127 F.3d at 371. And indeed, on
15

remand FERC apparently endorsed that notion. Sea Robin II, 87

F.E.R.C. ¶ 61,384, at 62,427 (“[T]here is necessarily a point at

which the collection or gathering of gas ends, and interstate

transmission begins.”); see also Dauphin Island Gathering Sys.,

93 F.E.R.C. ¶ 61,198, at 61,653 (2000) (same). Yet, in Sea

Robin II, Sea Robin II Rehearing Order, and ExxonMobil, FERC

issued and defended an order which resulted in a route changing

from jurisdictional to non-jurisdictional and back to

jurisdictional. FERC thus recently eschewed the first principle

and persuaded this court to do so as well. 

FERC’s treatment of the second principle follows a similar

course. In 1983, FERC stated, “[B]ecause the movement of gas

through the Coronado system can be classified as intrastate

pipeline ‘transportation,’ we cannot find the subsequent

downstream movement of gas from that system to be exempt

‘gathering.’” Galaxy Energies, Inc., 24 F.E.R.C. ¶ 61,121, at

61,304 (1983). More recently, FERC declared, “[A] facility

functionalized as gathering may not be located downstream of

facilities functionalized as transmission.” Trunkline Gas Co., 70

F.E.R.C. ¶ 61,163, at 61,503 (1995); see also Dauphin Island,

93 F.E.R.C. ¶ 61,198, at 61,652 (“[I]t would be incongruous for

gas flowing on an upstream transportation line to be delivered

into a downstream gathering line.”). But in 2002, FERC

convinced this court to distinguish Trunkline as a case in which

“the classification of the upstream system was in dispute,” and

reject the “proposition that the presence of an interconnection

with an upstream jurisdictional facility compels a finding that

the downstream facility is likewise jurisdictional.” ExxonMobil,

297 F.3d at 1087. 

In Jupiter Appeal, the Fifth Circuit assumed that the first

principle constituted FERC’s own tenet, and that the second

principle necessarily flows from the first. 407 F.3d at 350-51.

Indeed, the pull of the principles provides a logical explanation

for FERC’s 2005 orders. If there can only be one point along
16

any given route at which the function of facilities changes, then

the situation FERC created – where a transportation pipeline fed

into a gathering pipeline which, in turn, fed into a transportation

pipeline – was in fact anomalous and required reconsideration.

Likewise, if a gathering facility cannot sit downstream of a

transportation facility, FERC was required – as a matter of

reason – to change either the classification of the Jupiter pipeline

or the Transco lateral. Moreover, if the two principles demand

corrective action where a transportation facility sits upstream of

a gathering facility, FERC’s apparent new statement of policy

can be seen to proffer a third principle guiding resolution: “[t]he

presence of upstream transmission facilities determines the

classification of downstream facilities, not the opposite.” 2005

Transco Jurisdictional Order, 111 F.E.R.C. ¶ 61,090, at 61,411.

It would thus appear that FERC’s “incomplete information”

rationale rests on its tacit adoption of these two principles and

application of a new policy derived from them. Only if FERC

views the principles as inviolate, does FERC’s “incomplete

information” rationale begin to make sense. 

D. The 2005 Orders Lack Reasoned Decisionmaking

The problem with FERC’s “incomplete information”

rationale is that it is not supported by any reasoned analysis in

the orders themselves. Although we suspect that the orders may

reflect an unstated endorsement of the two principles discussed

above, we have no good basis upon which to rest this

supposition. Arbitrary and capricious review strictly prohibits

us from upholding agency action based only on our best guess

as to what reasoning truly motivated it. Columbia Gas

Transmission Corp. v. FERC, 448 F.3d 382, 387 (D.C. Cir.

2006) (“It will not do for a court to be compelled to guess at the

theory underlying the agency’s action; nor can a court be

expected to chisel that which must be precise from what the

agency has left vague and indecisive.” (quoting SEC v. Chenery

Corp., 332 U.S. 194, 196-97 (1947))); PDK Labs. Inc. v. DEA,
17

362 F.3d 786, 798 (D.C. Cir. 2004) (“[I]t is important to

remember that if we find that an agency’s stated rationale for its

decision is erroneous, we cannot sustain its action on some other

basis the agency did not mention.”); AT&T Corp. v. FCC, 236

F.3d 729, 734-35 (D.C. Cir. 2001) (“[W]e may not supply a

reasoned basis for the agency’s action that the agency itself has

not given.” (quoting State Farm, 463 U.S. at 43)).

In order to rely on the two principles, FERC had to

acknowledge the need to reconsider its precedent, announce its

definitive adoption of the principles, and explain their impact on

the existing primary function test. If FERC intended to adopt a

new policy specifying that the classification of the downstream

facility must yield where the principles demand corrective

action, FERC was obliged to explain that extension of its case

law as well. See PG&E Gas, 315 F.3d at 390 (“FERC has given

no explanation whatsoever for this apparent shift in Commission

policy. FERC’s failure to come to terms with its own precedent

reflects the absence of a reasoned decisionmaking process.”);

Mo. Pub. Serv. Comm’n v. FERC, 234 F.3d 36, 41 (D.C. Cir.

2000) (“A passing reference . . . is not sufficient to satisfy the

Commission’s obligation to carry out reasoned and principled

decisionmaking. We have repeatedly required the Commission

to fully articulate the basis for its decision.”) (internal quotation

marks omitted). But instead of openly acknowledging its

intention to reverse course to bring order to its case law, FERC

attempted to “gloss[] over” its prior holding in Sea Robin II

Rehearing Order and its position in ExxonMobil, and, in so

doing, “cross[ed] the line from the tolerably terse to the

intolerably mute.” PG&E Gas, 315 F.3d at 390 (internal

quotation marks omitted). 

In its briefs, FERC attempts to make the required showing,

explaining that the Commission reversed the Transco lateral’s

classification in order to eliminate a “fundamental

inconsistency” in its case law. Respondent’s Br. at 3, 13. But
18

counsel’s explanation to this court cannot substitute for

“reasoned decisionmaking at the agency level.” Kansas City,

923 F.2d at 192; see Chamber of Commerce of U.S. v. SEC, 412

F.3d 133, 145 (D.C. Cir. 2005) (“[The agency] – not its counsel

and not this court – is charged by the Congress with bringing its

expertise and its best judgment to bear upon [an issue of

policy].”); Village of Bensenville v. FAA, 376 F.3d 1114, 1121

(D.C. Cir. 2004) (“We do not ordinarily consider agency

reasoning that ‘appears nowhere in the [agency’s] order.’”

(quoting PanAmSat Corp. v. FCC, 198 F.3d 890, 897 (D.C. Cir.

1999))). Since we conclude that FERC neither explained how

the “incomplete information” finding fit within its muddled case

law nor rehabilitated that morass by clearly charting a new

course, we find that the rationale cannot support the 2005 orders.

This conclusion is dispositive. Although FERC rested its

decision on both the “incomplete information” rationale and its

finding that no gas is collected along either the Jupiter pipeline

or the Transco lateral, it did so without according the two

conclusions individual weight. “[W]hen an agency relies on

multiple grounds for its decision, some of which are invalid,” we

may only “sustain the decision [where] one is valid and the

agency would clearly have acted on that ground even if the other

were unavailable.” Casino Airlines, Inc. v. Nat’l Transp. Safety

Bd., 439 F.3d 715, 717-18 (D.C. Cir. 2006) (internal quotation

marks omitted); see Int’l Union, United Mine Workers v. Dep’t

of Labor, 358 F.3d 40, 44-45 (D.C. Cir. 2004) (finding that an

agency “failed to provide an adequate explanation for its

decision” where “[t]wo of the three reasons it gave . . . would

not support its decision,” and the court did “not know – nor [was

it] free to guess – what the agency would have done had it

realized that it could not justify its decision [based on the two

invalid grounds]”). Here, the 2005 orders do not reveal whether

FERC would have reclassified the Transco lateral on the basis

of its lack of gas collection finding alone. See Recording of

Oral Argument at 24:33 (admitting that the 2005 orders do not
19

indicate the relative weight accorded to the two bases). The

assurance of FERC’s counsel, see id. at 25:03 (urging the court

to uphold the decision based on the lack of gas collection

rationale alone), does not provide an acceptable substitute.

Allegheny Power v. FERC, 437 F.3d 1215, 1226 (D.C. Cir.

2006) (refusing to consider counsel’s clarification of a standard

where “counsel ha[d] pointed to nothing said by FERC itself

establishing such a concept”); KeySpan-Ravenswood, LLC v.

FERC, 348 F.3d 1053, 1059 (D.C. Cir. 2003) (“[P]ost hoc

salvage operations of counsel cannot overcome the inadequacy

of the Commission’s explanation.”) (internal quotation marks

omitted). We thus need not inquire into the validity of FERC’s

lack of gas collection rationale. See Petitioners’ Br. at 19-25

(arguing that FERC’s lack of gas collection justification is

inconsistent with FERC precedent); Respondent’s Br. at 15-19

(contending that the lack of gas collection rationale is consistent

with precedent); Intervenors’ Br. at 11-13 (same). Because

FERC rested its determination, at least in part, on its infirm

“incomplete information” ground, we must find the 2005 orders

devoid of reasoned decisionmaking and set them aside as

arbitrary and capricious. 

III. CONCLUSION

For the reasons stated above, we vacate FERC’s 2005

orders and remand to the agency for further proceedings

consistent with this opinion. We offer no judgment on the

merits of FERC’s choice to reverse the Transco lateral’s

jurisdictional determination. The decision on the merits must

await reasoned decisionmaking from the Commission.