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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 16, 2009 Decided January 26, 2010

No. 09-1029

PNGTS SHIPPERS' GROUP, ET AL.,

PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

PORTLAND NATURAL GAS TRANSMISSION SYSTEM,

INTERVENOR

On Petition for Review of Orders

of the Federal Energy Regulatory Commission

John B. Rudolph argued the cause for petitioners. With him

on the briefs was Timothy W. Bergin.

Samuel Soopper, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. On the brief

were Thomas R. Sheets, General Counsel, Robert H. Solomon,

Solicitor, and Kathrine L. Henry, Attorney.
2

Carl M. Fink, Mark F. Sundback, Kenneth L. Wiseman,

Jennifer L. Spina, and Lisa M. Purdy were on the brief for

intervenor in support of respondent.

Before: HENDERSON, ROGERS and BROWN, Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: Shippers with long-term (twentyyear) firm contracts on the Portland Natural Gas Transmission

System (“PNGTS”) petition for review of two orders of the

Federal Energy Regulatory Commission (“FERC”) certifying

PNGTS’s capacity. The Shippers’ Group contends FERC’s

determination was arbitrary and capricious because FERC failed

to take into account the potential economic impact of a reduction

in capacity. Noting the pipeline’s historical capacity and an “atrisk” condition imposed by FERC on PNGTS, the shippers fear

that their rates will increase as a result of the reduction. In the

challenged orders, however, FERC concluded that any potential

impact on rates would be better addressed in PNGTS’s

subsequent rate case. Portland Natural Gas Transmission Sys.,

123 F.E.R.C. ¶ 61,275 (June 19, 2008) (“Declaratory Order”),

reh’g denied, 125 F.E.R.C. ¶ 61,198 (Nov. 18, 2008)

(“Rehearing Order”). Because the shippers cannot show an

actual or imminent injury as a result of the challenged orders,

they are not aggrieved pursuant to section 19(b) of the Natural

Gas Act, 15 U.S.C. § 717r(b). Accordingly, the court lacks

jurisdiction and the petition for review must be dismissed. 

I.

The Natural Gas Act provides that pipelines must obtain a

certificate of public convenience and necessity before they can

construct, acquire, or operate interstate natural gas pipeline

facilities. 15 U.S.C. § 717f(c). Facilities subject to FERC’s
3

jurisdiction or services rendered by such facilities may not be

abandoned without FERC’s prior approval, based on a finding

that the available supply of natural gas is depleted or that the

present or future public convenience and necessity permit

abandonment. § 717f(b); see 18 C.F.R. §§ 157.1–.22 (Part 157,

Subpart A). A pipeline, however, may file a petition for a

declaratory order “to terminate a controversy or remove

uncertainty.” 18 C.F.R. § 385.207(a)(2). PNGTS filed such a

petition in 2008 in view of several orders by FERC addressing

the construction of two pipelines.

In the Declaratory Order now challenged by the Shippers’

Group, FERC summarized the background to its decision. In

July 1996 FERC issued preliminary determinations in two

proceedings in which PNGTS and Maritimes & Northeastern

Pipeline, LLC (“Maritimes”) sought authorization to construct

pipeline facilities in the Northeastern United States.

Declaratory Order ¶ 3. Because the southern portion of each

proposed pipeline “would run along essentially the same route,

[FERC] urged the pipelines to consider jointly owning pipeline

where their proposed routes converged.” Id. They did and

subsequently they filed an additional application to construct

jointly a 101-mile long, thirty-inch diameter pipeline extending

from Westbrook, Maine, to Dracut, Massachusetts, as well as

various laterals (“joint facilities”). 

In July 1997 FERC made a preliminary determination,

pending favorable environmental review, authorizing PNGTS to

construct and operate an individually owned 142-mile long, 24-

inch diameter pipeline from the Canadian border near Pittsburg,

New Hampshire to Westbrook, Maine, as well as facilities

jointly owned with Maritimes from Westbrook, Maine to Wells,

Maine. At the border, PNGTS’s facilities would interconnect

with facilities of TransQuebec & Maritimes Pipeline, Inc.

(“TQM”). FERC also made a preliminary determination to
4

authorize PNGTS to provide service using its capacity on the

joint facilities from Wells, Maine and Dracut, Massachusetts,

and to construct and operate the remaining joint facilities from

Wells, Maine to Westbrook, Maine. FERC found:

In the first year of service, PNGTS will have a capacity

of 178,000 Mcf [one thousand cubic feet] per day on

its 24-inch mainline and . . . 169,400 Mcf per day on

the joint facilities. In subsequent years, the upstream

mainline and PNGTS’ share of the joint facilities’

capacity will increase to 210,000 Mcf per day.

Therefore, PNGTS must revise its initial rates to reflect

billing determinants based on [these capacities].

Id. ¶ 5 (quoting Portland Natural Gas Transmission Sys., 80

F.E.R.C. ¶ 61,134 at 61,448 (1997)). The preliminary

determination “also noted that PNGTS had not entered into

contracts for the full capacity of its system and placed PNGTS

at risk for the recovery of the costs for the unsubscribed

capacity.” Declaratory Order ¶ 5. The increased capacity after

the first year of service would result from installation of

additional compression by TQM on its Canadian facilities to

accommodate Maritimes’s proposal to construct upstream

facilities to be placed in service after a year. FERC conditioned

PNGTS’s certificate authorization on TQM receiving the

necessary approvals.

In September 1997 FERC issued final certificates to

PNGTS authorizing construction and operation of the

individually-owned pipeline facilities between Pittsburg, New

Hampshire and Westbrook, Maine, as well as construction and

operation of the joint facilities between Westbrook and Wells,

and the operation of the joint facilities between Wells and

Dracut. The 1997 final certificate order also addressed

PNGTS’s petition for rehearing on the issue of the increase in
5

capacity and the at-risk condition after the first year. Because

it was uncertain exactly when the Maritimes upstream facilities

would go on line and when TQM would install its new planned

compression, FERC concluded it was “premature to require

PNGTS to revise its rates or to be placed at risk for higher

capacity after its first year of operation,” Declaratory Order ¶

8 (quoting Portland Natural Gas Transmission Sys., 80 F.E.R.C.

¶ 61,345 at 62,146 (1997)), and stated it would “review this

matter when PNGTS makes its section 4 [rate] filing,” id. In

December 2006 PNGTS and Maritimes filed a settlement

resolving various issues involving the joint facilities, which

FERC approved in part in March 2007. 

On January 31, 2008, PNGTS filed a petition for a

declaratory order requesting a determination that physical

capacity across its system would be 168,000 Mcf per day on a

firm year-round basis once Maritimes Phase IV Expansion

facilities were placed in service on November 1, 2008. It also

requested a determination that it could lawfully deny future

requests for firm service that together with its existing contracts

would cause it to exceed 168,000 Mcf per day. According to

FERC, the 1997 final certificate orders did not establish a

certificated firm level of service and PNGTS’s most recent

section 4 rate case had resulted in a settlement without resolving

that issue. PNGTS explained that its previously available

capacity would diminish when Maritimes’s Phase IV Expansion

facilities were placed in service. Because there was no

contractual basis for obligating TQM to construct more

compression upstream, the increased pressure downstream

would reduce PNGTS’s capacity. PNGTS also requested that

the rate consequences of its petition be addressed in its

subsequent section 4 filing.

In the Declaratory Order granting PNGTS’s petition, FERC

made four determinations. First, FERC concluded that PNGTS
6

1

 In footnote 30 of the Declaratory Order, FERC stated that

its finding PNGTS will be incapable of transporting volumes in excess

of 168,000 Mcf on a firm year-round basis from Pittsburg to Dracut

after the in-service date of Maritimes’ Phase IV Expansion “does not

. . . affect PNGTS’s capacity rights of 210,000 Mcf/d in the joint

facilities between Westbrook and Dracut as defined by the Definitive

Agreements between PNGTS and Maritimes.” Id. ¶ 28 n.30. 

was not required to file an abandonment application because (A)

the 1997 final certificate order authorizing PNGTS’s facilities

did not establish a system-wide certificated capacity level after

the first year of service, due to the uncertainty involving the

timing and impact of additional compression and use of joint

facilities, and (B) PNGTS’s subsequent rate case was resolved

by uncontested settlement, which also did not establish a

certificated capacity for PNGTS. Second, FERC concluded that

it was appropriate to determine PNGTS’s certificated level of

service going forward because that would “remove uncertainty

and provide transparency to the market,” including PNGTS and

its shippers. Id. ¶ 27. Third, upon reviewing the engineering

information submitted by PNGTS, FERC found that adopting

168,000 Mcf per day as PNGTS’s annual certificated systemwide capacity was in the public convenience and necessity.

Although “PNGTS historically has been able to provide service

in excess of this level,” FERC stated its “primary focus is

whether natural gas service will be jeopardized.” Id. ¶ 29. It

found “no basis to conclude that requiring PNGTS to operate its

system at a capacity level greater than 168,000 is needed to

continue to serve current or anticipated customers.” Id.1

 No

party, FERC noted, took issue with PNGTS’s assertions that it

will have more than sufficient capacity to meet all of its

“contractual obligations for service after October 31, 2008, that

are now in effect, and that it is not aware of any interest for

additional firm service that would exceed the 168,000 Mcf/d

capacity level.” Id. Fourth, FERC stated that the “action here
7

does not prejudge the impact of our decision on PNGTS’s rates

and . . . any rate issues associated with our decision here,

including the appropriate determinants to use to design

PNGTS’s rates, are more appropriately determined in PNGTS’s

next rate proceeding.” Id. ¶ 30. 

On rehearing, FERC rejected the objections presented by

the Shippers’ Group, including that PNGTS was required to file

for abandonment. FERC explained that an abandonment

proceeding was not required because it had deferred the

determination of future capacity to PNGTS’s subsequent rate

case and the issue of capacity had never been resolved in view

of the settlement of that rate case. Rehearing Order ¶ 16.

Further, FERC explained that the record did not support

requiring PNGTS to maintain its system design at a higher level,

id. ¶ 19, and that there was no reason to inquire whether PNGTS

could contract for additional existing compression from its

affiliates, or whether cheap compression could be built, because

there were no pending requests for additional firm service, id. ¶

18. Rejecting the Shippers’ Group’s assertion that FERC had

ignored the rate impact on the shippers, FERC stated the

Declaratory Order

specifically limited our ruling to the certificated

capacity of the PNGTS system . . . [and] did not

prejudge the impact of PNGTS’ rates and any rate

issues, including the appropriate determinants to use to

design PNGTS’ rates . . . . Similarly, the [Declaratory

Order] did not address or change the at-risk condition

imposed on PNGTS by the Commission’s certificate

orders. The at-risk condition relates to the design of

PNGTS’ rates and is more appropriately addressed in

PNGTS’ next rate case.
8

Id. ¶ 20. The Shippers’ Group petitions for review of the

Declaratory Order and the Rehearing Order. 

II.

Ordinarily when a pipeline seeks to reduce its certificated

level of capacity it must seek prior approval of the abandonment

of capacity pursuant to the Natural Gas Act. 15 U.S.C.

§ 717f(b); see 18 C.F.R. § 157.5; see also Tenn. Gas Pipeline

Co. v. FERC, 972 F.2d 376, 384 (D.C. Cir. 1992). The

Shippers’ Group contends that FERC failed to provide an

adequate explanation of why PNGTS’s capacity reduction does

not constitute an abandonment. In seeking rehearing, they had

argued that the 1997 final certificate order did not reduce

PNGTS’s liability for a capacity of 210,000 Mcf per day under

the at-risk condition. Now, referencing footnote 30 of the

Declaratory Order, supra note 1, the shippers express concern

that they will be liable for the contractually determined 210,000

Mcf per day portion of the costs of the jointly owned facilities

without any corresponding benefit. In their view, FERC had a

statutory duty to consider circumstances such as rates and the

potential for future obligations on shippers, rather than deciding

certificated capacity based on whether service to current

shippers would be jeopardized. They further contend that

because PNGTS and TQM are affiliated with the same operator,

FERC erroneously took into account incapability to provide

certificated capacity when that was not a result of physical

incapability but an operational choice by PNGTS. 

As a threshold matter, however, FERC maintains that the

Shippers’ Group lacks standing because it cannot show concrete

and particularized harm as a result of the Declaratory Order and

the Rehearing Order. Because those orders were limited to

establishing PNGTS’s certificated capacity, and did not prejudge

the impact of FERC’s decision on any rate issues, including the
9

appropriate billing determinants and the at-risk condition

previously imposed on PNGTS, FERC concludes that the

Shippers’ Group is not aggrieved and the court lacks jurisdiction

over its claims. 

Section 19(b) of the Natural Gas Act allows only

“aggrieved” persons to seek judicial review of a FERC order.

15 U.S.C. § 717r(b); see Interstate Natural Gas Ass’n of Am. v.

FERC, 285 F.3d 18, 45 (D.C. Cir. 2002). A party is aggrieved

only “if it can establish both the constitutional and prudential

requirements for standing.” Exxon Mobil Corp. v. FERC, 571

F.3d 1208, 1219 (D.C. Cir. 2009) (quoting Pub. Util. Dist. No.

1 v. FERC, 272 F.3d 607, 613 (D.C. Cir. 2001)). A petitioner

must “establish, at a minimum, ‘injury in fact’ to a protected

interest.” Interstate Natural Gas Ass’n, 285 F.3d at 45 (quoting

Shell Oil Co. v. FERC, 47 F.3d 1186, 1200 (D.C. Cir. 1995)).

“Injury in fact” requires harm that is both “concrete and

particularized,” and “actual or imminent, not conjectural or

hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555,

559–61 (1992); N.C. Util. Comm’n v. FERC, 653 F.2d 655, 662

(D.C. Cir. 1981). The petitioner also must show there is “a

causal connection between the injury and the conduct

complained of – the injury must be fairly . . . traceable to the

challenged action of the [respondent].” Lujan, 504 U.S. at

560–61. The burden is on the petitioner to show “the specifics

of the aggrievement alleged.” N.C. Util. Comm’n, 653 F.2d at

663. The Shippers’ Group has not met its burden.

Each member of the Shippers’ Group has a long-term firm

transportation agreement with PNGTS that obligates the shipper

to pay PNGTS’s firm transportation rates. Before FERC the

Shipper’s Group argued that its members would be “directly

affected by any ruling which could impact PNGTS’ cost

responsibilities imposed by the orders issued during its system

certification.” Motion to Intervene and Protest of the PNGTS
10

Shippers’ Group (“Shippers’ Protest”) at 4. It notes that

PNGTS’s rates are calculated under an at-risk condition by

apportioning system costs according to billing determinants,

factors based on the total system costs and the total capacity of

the pipeline. Id. at 10–11; see also Declaratory Order ¶¶ 5, 26;

Rehearing Order ¶¶ 11, 16. The shippers’ concern is that by

setting PNGTS’s certificated capacity at a level at least 20%

below that recognized in the 1997 preliminary certificate order,

without a corresponding reduction in system costs or facilities,

the shippers’ costs may increase if the billing determinants are

based on the certificated capacity. Reducing capacity under an

at-risk condition reduces PNGTS’s incentive to pay for system

costs by seeking contracts for interruptible service rather than by

shifting costs to shippers with long-term firm service contracts;

it also will relieve PNGTS of the burden of having to obtain

extra compression facilities. The Shippers’ Group therefore

maintains that “FERC has set the stage for capacity-based

billing determinants that could increase rates by over 22%, an

increase that is not merely speculative but readily quantifiable.”

Pet’r’s Br. 29. In its view, the challenged orders “undermine

any likelihood that PNGTS’ original at-risk condition will

govern its rates and provide the same shipper protections in the

future, and accordingly inhibit negotiation of long-term contract

and rate issues, forcing further administrative litigation.” Id.

The potential for “future economic injury,” even assuming

it is “readily quantifiable” into a possible rate increase in the

future, id., is not enough to show the requisite injury for Article

III standing. The Shippers’ Group does not contend that this

rate increase is inevitable once FERC established PNGTS’s

certificated capacity below the capacity stated in the 1997 final

certificate order. FERC has not yet determined PNGTS’s rates

at its certificated capacity level and FERC has stated that it will

determine the rates in PNGTS’s section 4 rate proceeding. See

Declaratory Order ¶ 30; Rehearing Order ¶ 20. Neither did
11

FERC “address or change the at-risk condition.” Rehearing

Order ¶ 20.

In Alabama Municipal Distributors Group v. FERC, 312

F.3d 470, 473 (D.C. Cir. 2002), the court held that even where

FERC had approved the initial rates for a new customer as part

of a certification order, other gas purchasers did not have

standing to challenge the certification because their rates would

not be determined until the pipeline had adopted new rates

reflecting the new service in a section 4 rate proceeding.

Similarly, in North Carolina Utilities Commission, 653 F.2d at

662–63, the court held that the projected use of an order in

future compensation proceedings did not constitute

aggrievement by that order. Instead, if the order did aggrieve

the North Carolina Utilities Commission in later proceedings,

the court explained that the order could be challenged both in

the later FERC proceedings and on appeal from those

proceedings. Id. at 662, 665. So too here. 

In the challenged orders FERC stated it was deferring any

decisions on PNGTS’s rates and billing determinants to a

subsequent section 4 rate proceeding. The Shippers’ Group

suggests that FERC’s determination of reduced capacity cannot

be “without prejudice” to future ratemaking absent assurances

to shippers that PNGTS will not rely on the Declaratory Order

in a later rate proceeding. But at this point FERC has yet to

indicate how or whether PNGTS’s certificated capacity will

affect the shippers’ rates in view of the at-risk condition. FERC

proposes to address the matter in PNGTS’s subsequent section

4 rate proceeding. The Shippers’ Group presents no persuasive

reason why the shippers’ interests cannot be adequately

addressed in this manner.

An abandonment proceeding is a forum in which FERC

should consider the potential economic impact of a capacity
12

reduction, see Transcon. Gas Pipe Line Corp. v. FPC, 488 F.2d

1325, 1330 (D.C. Cir. 1973); 18 C.F.R. § 157.18, and the

Shippers’ Group contends there was a capacity reduction for

PNGTS that FERC should have adjudicated in an abandonment

proceeding. It maintains that the upcoming section 4 rate

proceeding will “inevitably confront[]” questions such as “what

is the precise rate impact of an approved capacity reduction?”

and “do rates based on billing determinants above levels a

pipeline is ‘incapable’ of delivering satisfy due process?” that

already assume a reduction in capacity. Pet’r’s Br. 31.

However, being forced to confront questions in a future legal

proceeding does not rise to the level of injury required for

Article III standing. Shell Oil, 47 F.3d at 1202; see also Ala.

Mun. Distribs. Group, 312 F.3d at 473–74. Those questions

indicate a conceivable but not imminent effect on shippers’

rates. See Shell Oil, 47 F.3d at 1202. Even were it clear, as the

Shippers’ Group suggests, that PNGTS would argue in the rate

proceeding that retaining the same billing determinants would

violate its right to due process, how FERC would respond and

what the resulting effect on shippers’ rates would be are both

speculative. The Shippers’ Group can present its challenges to

FERC’s failure to require PNGTS to file an application for

abandonment if and when it petitions for review of the rates

established in the section 4 proceeding. See also N.C. Util.

Comm’n, 653 F.2d at 665. 

Reliance on ANR Pipeline Co. v. FERC, 771 F.2d 507 (D.C.

Cir. 1985), does not assist the Shippers’ Group. In that case, the

costs had been allocated to the pipeline, rather than leaving that

allocation for a later section 4 rate proceeding, id. at 511,

making it “unavoidable” that the pipeline’s rates would increase

and the pipeline would be bound in a later rate proceeding by

FERC’s cost allocation, id. at 515–16. Here, costs have yet to

be allocated so as to require a rate increase, and the Shippers’

Group has not claimed a rate increase for its members is
13

“unavoidable” under the challenged orders. Great Lakes Gas

Transmission Co. v. FERC, 984 F.2d 426, 431 (D.C. Cir. 1993),

on which the Shippers’ Group also relies, is likewise unhelpful.

There the court concluded that imposition of an at-risk condition

on the pipeline was immediately appealable by the pipeline

because the condition affected the pipeline’s “long-range

economic planning.” Here, FERC stated it had neither

addressed nor changed the at-risk condition in establishing

PNGTS’s certificated capacity. See Rehearing Order ¶ 20. The

Shippers’ Group’s projection of potential harm from the

challenged orders in a subsequent rate proceeding is one step

removed from the injury in Great Lakes. The capacity

certification in and of itself does not create the requisite injury

to shippers. 

Accordingly, because the Shippers’ Group fails to

demonstrate that shippers are aggrieved by the challenged

orders, the court lacks jurisdiction to address its claims and the

petition must be dismissed.