Court Opinion

ID: 9919440
Source: CourtListenerOpinion
Date Created: 2024-01-18 16:01:58.481523+00
Date Added: 2024-06-11T08:06:44.103641
License: Public Domain

United States Court of Appeals
                            FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 22-1278                                                  September Term, 2023
                                                             FILED ON: JANUARY 18, 2024

ANTERO RESOURCES CORPORATION AND MU MARKETING LLC,
                  PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,
                  RESPONDENT

PROJECT CANARY AND TENNESSEE GAS PIPELINE COMPANY, L.L.C.,
                  INTERVENORS

Consolidated with 22-1280

                                On Petitions for Review of Orders
                          of the Federal Energy Regulatory Commission

       Before: SRINIVASAN, Chief Judge, WALKER, and PAN, Circuit Judges.

                                        JUDGMENT

     These consolidated cases were considered on the record from the Federal Energy Regulatory
Commission and on the briefs and arguments of the parties. The Court has accorded the issues
full consideration and has determined that they do not warrant a published opinion. See
D.C. Cir. R. 36(d). It is:

       ORDERED AND ADJUDGED that the petitions for review be DISMISSED.

                                            *   *    *

       Tennessee Gas Pipeline Company, L.L.C. (“Tennessee”) is a pipeline company that sought
and received approval from the Federal Energy Regulatory Commission (“FERC”) to implement
a “pooling service” for buyers and sellers of responsibly sourced gas that is “producer certified.”
Tenn. Gas Pipeline Co., LLC, 179 FERC ¶ 61,233 (2022) (Tariff Order), modified on denial of
reh’g, 181 FERC ¶ 61,063 (2022) (Rehearing Order). Petitioners Antero Resources Corporation
and MU Marketing LLC (together, “Antero”) and EQT Energy, LLC are producers of responsibly
sourced gas that have used Tennessee’s gas transportation services. Petitioners challenge FERC’s
approval of the new pooling service, asserting that they are harmed by Tennessee’s unsupervised
control over the environmental standards delineating what gas can be bought and sold within the
producer-certified pool. Because petitioners fail to establish standing, we dismiss their petitions
for review.

                                                  I.

         Under the Natural Gas Act (“NGA”), FERC has jurisdiction over the interstate
transportation and wholesale sale of natural gas. See 15 U.S.C. § 717(a)–(b). To ensure that gas
pipelines charge “just and reasonable rates” for transportation, the NGA requires pipelines to file
“all rates and charges for any transportation or sale subject to the jurisdiction of the Commission,
and the classifications, practices, and regulations affecting such rates and charges” in public tariffs
overseen by FERC. 15 U.S.C. § 717c(c); see also 18 C.F.R. § 154.1(b).

         As part of this mandate, FERC regulates pooling services operated by pipelines. “Pooling
refers to the aggregation of gas from multiple physical or logical points to a single physical or
logical point.” 184 CFR Part 284: Standards for Bus. Pracs. of Interstate Nat. Gas Pipelines, 83
FERC ¶ 61,029, at P 4 (1998). Pooling brings buyers and sellers together at certain points, thereby
facilitating their transactions. Pooling can be achieved physically or virtually — “paper pooling”
combines an accounting fiction and a scheduling service to enable sales to occur. See Transcon.
Gas Pipe Line Corp., 130 FERC ¶ 61,109, at P 5 n.7 (2010) (“Paper pooling refers to the
establishment of a paper or virtual pool into which gas supplies may be injected without charge
from anywhere within [a geographical] zone.”).

        Tennessee has offered paper pooling for years as a free and voluntary option within its gas
transportation services; it files the terms of this existing service in its FERC-approved tariff. Tenn.
Gas Pipeline Co., LLC, 73 FERC ¶ 61,278, 61,764–65 (1995). In 2021, Tennessee proposed
adding a new service option to its pipeline system — a paper pooling option exclusively for
responsibly sourced gas (“RSG”). RSG refers to gas produced in a more environmentally
conscious way, often with lower methane emissions. To use the new pooling option, gas producers
must certify that their gas meets certain environmental criteria. Such “producer-certified gas” is
known as “PCG.” The PCG pooling service is free and offers the same services as Tennessee’s
existing paper pooling service. Because there is no industry-wide standard for defining RSG,
Tennessee sets its own “PCG criteria,” which are posted on its website.

        Petitioners allege that FERC’s approval of the new pooling service was arbitrary and
capricious because the Commission declined to exercise any oversight over the PCG criteria that
governs access to the service. Tennessee’s tariff incorporating the new service option went into
effect on July 1, 2022. FERC denied petitioners’ requests for rehearing on October 25, 2022, and
petitioners timely petitioned for review before this court.

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                                                  II.

        Under the Natural Gas Act, “[a]ny party to a proceeding . . . aggrieved by an order issued
by the Commission in such proceeding” can seek judicial review. 15 U.S.C. § 717r(b). Parties
are aggrieved under the Natural Gas Act if they satisfy the constitutional and prudential
requirements for standing. See PNGTS Shippers’ Grp. v. FERC, 592 F.3d 132, 136 (D.C. Cir.
2010). Petitioners bear the burden of proving the elements of constitutional standing: (i) a concrete
and particularized injury, (ii) a causal link between that injury and the FERC order being
challenged, and (iii) that the injury will likely be redressed by a favorable decision. See Lujan v.
Defs. of Wildlife, 504 U.S. 555, 560–61 (1992).

        Petitioners in cases involving direct review of administrative actions must set forth their
basis for standing in a separate section of their opening brief; and must provide both arguments
and evidence of standing where standing is not apparent from the administrative record. See D.C.
Cir. R. 28(a)(7). 1 Evidence that is lengthy and not contained in the administrative record should
be submitted along with the opening brief. Id.; see also Sierra Club, 292 F.3d at 900. Standing
arguments raised in a reply brief are ordinarily forfeited. Scenic Am., Inc. v. DOT, 836 F.3d 42,
53 n.4 (D.C. Cir. 2016) (“Although a party cannot forfeit a claim that we lack jurisdiction, it can
forfeit a claim that we possess jurisdiction.”). Importantly, to establish standing in an agency
appeal, a petitioner must rely on evidence — rather than on factual allegations — because “a
petitioner seeking review in the court of appeals does not ask the court merely to assess the
sufficiency of its legal theory. Rather, like a plaintiff moving the district court for summary
judgment, the petitioner is asking the court of appeals for a final judgment on the merits.” Sierra
Club, 292 F.3d at 899.

        This court enforces Rule 28(a)(7) less stringently only where it excuses petitioners’
omissions in their opening briefs for good cause. This court has previously found good cause in
two circumstances: (1) where “the parties reasonably, but mistakenly, believed that the initial
filings before the court had sufficiently demonstrated standing”; and (2) “where the parties
reasonably assumed that their standing was self-evident from the administrative record.” Twin
Rivers Paper Co. LLC v. SEC, 934 F.3d 607, 614 (D.C. Cir. 2019) (cleaned up). Neither exception
applies here, and neither petitioner has asserted that this case falls under an exception.

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     The rule states, in relevant part: “In cases involving direct review in this court of
administrative actions, the brief of the appellant or petitioner must set forth the basis for the claim
of standing. This section, entitled ‘Standing,’ must follow the summary of argument and
immediately precede the argument. When the appellant’s or petitioner’s standing is not apparent
from the administrative record, the brief must include arguments and evidence establishing the
claim of standing. See Sierra Club v. EPA, 292 F.3d 895, 900–01 (D.C. Cir. 2002). If the evidence
is lengthy, and not contained in the administrative record, it may be presented in a separate
addendum to the brief.” D.C. Cir. R. 28(a)(7).
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                                                 III.

        Petitioners were required to establish standing in their opening brief, but they did not do
so. Their standing is not obvious from the administrative record. FERC’s order does not directly
regulate petitioners; and it does not affect the rates or terms of the existing transportation service
that petitioners receive from Tennessee. Instead, petitioners allege that FERC’s refusal to assert
jurisdiction over the PCG criteria will affect the price that petitioners can charge for selling their
RSG. Petitioners must explain and support the causal connection between FERC’s order and those
alleged effects, but as explained below, they do not do so. The PCG pooling service option has
been in effect for over a year, but neither petitioner has provided evidence of a concrete or
imminent harm to their economic interests.

                                                 A.

       Antero’s allegation of harm in the standing section of its opening brief states only this:

          Pipeline customers like Antero have standing to challenge FERC orders
          approving changes to pipeline “rates” and “polic[ies]”. See [Miss. Valley Gas
          Co. v. FERC, 68 F.3d 503, 507 (D.C. Cir. 1995)]; ANR Pipeline Co. v. FERC,
          771 F.2d 507, 516 (D.C. Cir. 1985). The Commission’s orders in this case
          affect Antero and other shippers’ access to the liquidity and any premiums
          associated with PCG pools.

Antero Opening Br. 17 (first alteration in Antero’s brief).

        Antero neither explains nor cites any authority for the broad proposition that all pipeline
customers have standing to challenge all FERC orders pertaining to pipeline “policies.” The
instant rule does not affect “rates” because the new pooling service is free, just like the existing
pooling service. Both cases cited by Antero involved increased rates and therefore are inapposite.
See Miss. Valley Gas, 68 F.3d at 508 (“[Petitioner] has clearly demonstrated ‘injury in fact’
because the FERC orders it challenges affect the rates it will pay [the natural gas company].”);
ANR Pipeline, 771 F.2d at 516 (FERC order would lead pipeline to “file for an increase in the rates
it charges to [the petitioner].”). Moreover, Antero does not explain how FERC’s order affects its
“access to the liquidity and any premiums associated with PCG pools.” Antero Opening Br. 17.
Thus, Antero’s standing argument is plainly inadequate.

         At oral argument, Antero relied on a procedural-standing theory, which it raised for the
first time in its reply brief. Oral Argument at 13:38, Antero Res. Co. v. FERC (No. 22-1278)
(describing Antero’s procedural injury); Antero Reply Br. 3–8. That argument has been forfeited.
Antero does not assert that it had good cause for introducing a procedural-standing argument —
which is an independent, non-obvious legal theory — in its reply brief. Cf. Twin Rivers, 934 F.3d
at 614 (petitioners need good cause to introduce new standing arguments on reply).

                                                  4
                                                 B.

        EQT also failed to properly present arguments and evidence about standing in its opening
brief. EQT’s allegation of harm in the standing section of its brief merely states:

            FERC’s determinations in the underlying orders in this proceeding grant
            improper discretion over methane intensity to a single pipeline, thereby
            harming producers and marketers of low-methane-intensity natural gas,
            including EQT Energy and its affiliates—which are active participants and
            leaders in producing and marketing certified natural gas and lowering the
            methane intensity of their natural gas.

EQT Opening Br. 21.

        EQT does not explain why giving Tennessee “discretion over methane intensity” will
“harm” all “producers and marketers of low-methane-intensity natural gas.” Nor does it cite any
evidence of this alleged future “harm.” This is a clear violation of Rule 28(a)(7). At oral argument,
EQT said that it is harmed by a world in which responsibly-sourced gas is sold through pooling
rather than through a “bilateral transaction.” Oral Argument at 33:50, Antero Res. Co. v. FERC
(No. 22-1278). The word “bilateral” does not appear in EQT’s opening brief, and there is no
evidence that the PCG pooling option will cause EQT to suffer concrete, imminent harm. The
PCG pooling option has now been available for over a year, but no one has used it and no harm
has occurred.

        EQT’s asserted injury in its briefing and at oral argument is based upon a hypothetical
chain of events. It posits that other pipelines might follow Tennessee’s lead and create pooling
services of their own. EQT further speculated at oral argument that its customers might shift to
lower-quality products in the PCG pool, which ultimately might cause the premiums that EQT
charges for its RSG to fall. Oral Argument at 51:55, Antero Res. Co. v. FERC (No. 22-1278)
(describing the potential effects of Tennessee’s PCG pooling service on EQT’s sales). EQT also
relies on statements like the following: “In blessing the problematic proposal of one pipeline,
however, FERC sent a signal that it is attempting to regulate beyond its authority, jurisdiction, or
expertise regarding the methane intensity of gas, thereby affecting all current and prospective
producers of the same.” EQT Reply Br. 7–8 (emphasis added). None of those arguments is
supported by evidence.

                                                IV.

        Perhaps in an earlier era our FERC precedents did not always make clear that an injury
must be imminent when a petitioner alleges a future economic injury. But our more recent
precedents require a searching inquiry. They hold that a party’s injury must be “concrete,
particularized, actual and imminent,” and “[a] harm that will not occur unless a series of
contingencies occurs at some unknown future time is not” a sufficient injury to sustain standing.
Kan. Corp. Comm’n v. FERC, 881 F.3d 924, 926 (D.C. Cir. 2018). While injury can be established
based on arguments “firmly rooted in the basic laws of economics” — and in such instances, there

                                                 5
is no need for a “complex chain of reasoning” — petitioners fall short of demonstrating such an
injury here. Growth Energy v. EPA, 5 F.4th 1, 33 (D.C. Cir. 2021) (internal quotations omitted).
Neither of the petitioners’ opening briefs provide any details of when or how the harms they
describe will occur. Instead, they posit that a decrease in the price of their RSG may occur at some
indefinite point in the future. Their arguments are inadequate and unsupported by evidence. We
accordingly dismiss their petitions for review.

                                             *   *    *

        Pursuant to D.C. Circuit Rule 36, this disposition will not be published. The Clerk is
directed to withhold issuance of the mandate until seven days after resolution of any timely petition
for rehearing or rehearing en banc. See Fed. R. App. P. 41(b); D.C. Cir. R. 41.

                                           Per Curiam

                                                              FOR THE COURT:
                                                              Mark J. Langer, Clerk

                                                      BY:     /s/
                                                              Daniel J. Reidy
                                                              Deputy Clerk

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