United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 1, 2002 Decided December 17, 2002
No. 01-1299
Alabama Municipal Distributors Group, et al.,
Petitioners
v.
Federal Energy Regulatory Commission,
Respondent
Southern Natural Gas Company, et al.,
Intervenors
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Joshua L. Menter argued the cause for petitioners and
supporting intervenors. With him on the briefs were Wil-
liam T. Miller and James R. Choukas-Bradley. L. Clifford
Adams Jr. entered an appearance.
Beth G. Pacella, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on
the brief were Cynthia A. Marlette, General Counsel, and
Dennis Lane, Solicitor. Lona T. Perry and Monique L.
Watson, Attorneys, entered appearances.
Patrick B. Pope, R. David Hendrickson, Howard L. Nel-
son, Roy R. Robertson, Jr., Lyle D. Larson and Bridget E.
Shahan were on the brief for intervenors Southern Natural
Gas Company, et al., in support of respondent. Daniel F.
Collins and Donna J. Bailey entered appearances.
Before: Randolph and Rogers, Circuit Judges, and
Williams, Senior Circuit Judge.
Opinion for the Court filed By Senior Circuit Judge
Williams.
Williams, Senior Circuit Judge: Petitioners either are
purchasers or represent purchasers of gas transported on
Southern Natural Gas Company's pipeline system. They
protest the Federal Energy Regulatory Commission's grant
to Southern of a certificate of public convenience and necessi-
ty for construction and operation of pipeline facilities intended
to provide fuel to Southern Company Services ("SCS") for
some new gas-fired power facilities planned by SCS for
Alabama. See s 7(c)(1)(A) of the Natural Gas Act, 15 U.S.C.
s 717f(c)(1)(A) (requiring certification for new service).
Their specific objection is to FERC's having certificated the
transaction at discount rates, lower than those paid by peti-
tioners. We dismiss the petitions for want of jurisdiction.
* * *
In deciding exactly where to locate new gas-fired electric
generation facilities, SCS sought to have the gas delivered as
economically as possible. At least two potential carriers were
available, Southern and Transcontinental Gas Pipe Line Cor-
poration. Competition between the two carriers evidently
ensued--or so FERC concluded, over objections by petition-
ers that the appearance of competition was illusory. Hence
in seeking certification Southern claimed that it could not
have won the SCS business without offering discounted rates.
The Commission was persuaded, and approved Southern's
application for a certificate embodying the proposed initial
rates. Southern Natural Gas Co., 94 FERC p 61,297, order
on reh'g, 95 FERC p 61,220 (2001).
At the outset FERC and a group of intervenors (SCS,
Southern and another pipeline) raise jurisdictional issues.
FERC questions petitioners' standing, specifically whether
they have suffered or are in imminent peril of suffering injury
in fact--"invasion of a legally protected interest which is (a)
concrete and particularized ... and (b) 'actual and imminent,
not conjectural or hypothetical.' " Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992) (citations omitted). And the
intervenors argue that petitioners' claims are unripe, a claim
that the court could in fact raise on its own. Reno v. Catholic
Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993). The ripeness
inquiry is familiar: we must evaluate the "fitness of the issues
for judicial decision and the hardship to the parties of with-
holding court consideration." Abbott Laboratories v. Gard-
ner, 387 U.S. 136, 149 (1967). The two issues overlap signifi-
cantly, as we shall see. The contingencies that stand between
the orders here and any injury to petitioners tend both to
show the injury's lack of imminence and to render their claim
unripe.
As one basis for standing, petitioners claim that FERC's
allegedly improper certification will raise demand for gas in
the region, and thus the prices they will pay for gas. But
they are unable to demonstrate any connection between the
allegedly improper FERC action and higher prices. It is
likely true that construction and operation of the SCS facility
will increase the regional demand for gas. But petitioners
nowhere suggest that SCS was contemplating use of any
other fuel for its new facilities; indeed, the assumption that
SCS had already settled on gas was the basis for petitioners'
proclaiming that the case raised fundamental issues of gas-on-
gas competition. See Petitioners' Initial Br. at 3-4. Nor do
petitioners suggest that without a discount SCS might have
completely abandoned any plan for new generation facilities.
So the only way Southern's transportation discount could
raise demand would be if it were to cause SCS's delivered gas
costs to be lower than they would otherwise have been, and
thus its electricity prices to be ever so slightly lower than
they would have been, thereby driving up electricity con-
sumption, and with it gas consumption, compared to what
they would have been without the discount. But petitioners
have not even mentioned this possibility, much less offered
supporting empirical analysis. So we need not decide wheth-
er the possible effect is sufficiently non-speculative to support
standing. See Florida Audubon Soc'y v. Bentsen, 94 F.3d
658, 667-68 (D.C. Cir. 1996) (en banc).
At oral argument petitioners hinted at a related theory of
standing based on direct competitive injury--specifically, that
the lower electricity costs that might result from this discount
could prompt consumers to choose electricity over gas for
their energy needs. But petitioners never made such an
argument in their briefs, and have given us no evidence of
such competitive injury. Their mere invocation of the con-
cept in response to a question from the bench is not an
adequate basis for standing.
Petitioners also assert that the Commission's action here
will adversely affect them as users of Southern's transporta-
tion services. Here an initial hurdle to their claim of injury is
their acknowledgement that they will ultimately benefit from
Southern's service to SCS. Because a carrier's unit rate is
normally determined by dividing its total throughput into its
"revenue requirements" (i.e., total cost), see Interstate Natu-
ral Gas Ass'n of America v. FERC, 285 F.3d 18, 56 (D.C. Cir.
2002) ("INGAA"), an increase in throughput will decrease the
unit rate, unless there is a more-than-offsetting rise in aver-
age costs. As there is no evidence of such a rise in average
costs, it appears undisputed that once Southern adopts sys-
tem rates reflecting the new service, the effect will be to
reduce petitioners' rates.
Thus petitioners' claim is not that they will be worse off
under the Commission orders than if there were no SCS-
Southern transaction, but that they will be worse off than
under a Commission decision by which Southern carried the
SCS gas but at a lower discount or none at all. This
argument draws on the Commission's practice of making
"discount adjustments." In dividing throughput into cost to
yield a unit rate, the Commission makes a downward adjust-
ment to the volume of throughput expected under a discount,
to reflect the reality that its contribution to revenue will be
lower than that of a similar volume carried under undiscount-
ed rates. INGAA, 285 F.3d at 56. But the Commission
grants these adjustments only if it finds the discount to have
been required by competitive conditions. See Williston Ba-
sin Interstate Pipeline Co., 67 FERC p 61,137 at 61,378-80
(1994), order on reh'g, 71 FERC p 61,019 (1995). Some critics
of the Commission contend that where the only competition is
from another gas pipeline--as is evidently true here--this
constraint on discounts and discount adjustments is not
enough. For gas-on-gas competition, they say, discounts and
discount adjustments do not increase overall gas transporta-
tion but merely shift it among pipelines, giving competitive
customers a lower rate but forcing the non-competitive cus-
tomers to shoulder a higher proportion of fixed costs. See
INGAA, 285 F.3d at 57. The Commission has promised to
review this issue more fully. Id.
The orders that petitioners challenge here do not resolve or
even tackle the issue of what discount adjustment, if any, the
Commission should allow. The effect that the SCS transac-
tion will have on petitioners' rates will be decided in South-
ern's next rate case under s 4 of the Natural Gas Act, 15
U.S.C. s 717c (or conceivably in a Commission-initiated rate
proceeding under s 5, 15 U.S.C. s 717d). What that precise
effect will be, no one can now say. The injury has not yet
materialized nor has the factual record related to that injury
been established. The case closely parallels Mississippi Val-
ley Gas Co. v. FERC, 68 F.3d 503 (D.C. Cir. 1995), where "the
future impact of the FERC orders [embodying its discount
adjustment policy was] uncertain ..., and [would] likely be
more clear once [the] actual rates ... have been finalized" in
the then pending s 4 rate cases, and we accordingly found
attacks on the policy not fit for judicial review. Id. at 509.
As there was no showing that delay of adjudication would
inflict hardship, we found the claim unripe. Id. at 509-10.
Because the petitioners' theory of an immediate impact on the
price of gas has failed, and no rate change (of whatever
degree) will take effect independently of Southern's next rate
case, here too delay will cause them no harm. See also New
York State Elec. & Gas Corp. v. FERC, 177 F.3d 1037, 1040-
41 (D.C. Cir. 1999) (finding a rate-related claim unripe before
completion of the actual rate proceeding under s 4).
Petitioners argue, however, that in a future s 4 proceeding
their claims will be compromised by the Commission's deter-
minations here. They say that the test for allowing a dis-
count adjustment in a rate proceeding is essentially the same
as for allowing a discount in a s 7 certification, and that the
current ruling will be binding on them when that issue is
resolved in the s 4 rate case. The Commission is somewhat
obscure on the relationship between the two proceedings,
stressing only that the burden will be on the pipeline to
justify any discount adjustment. Commission Br. at 31-32.
Although petitioners present the argument in the context of
standing, it would--if correct--tend to supply ripeness as
well: if failure to obtain judicial review now would lead to
dispositive issue preclusion, petitioners' hardship would be
severe indeed.
In so far as petitioners rely on precedential effect within
the Commission, they assert a type of "injury" that is clearly
insufficient to satisfy our Article III jurisdictional require-
ments. Sea-Land Serv., Inc. v. Dep't of Transp., 137 F.3d
640, 648 (D.C. Cir. 1998). Obviously the Commission's deci-
sion here will not be a binding precedent for any reviewing
court. But petitioners suggest that the adverse administra-
tive determination here might bind them, via collateral estop-
pel, in a later judicial review of the s 4 rate setting. They
argue that this possible effect might confer Article III stand-
ing, citing our dictum in International Brotherhood of Elec-
trical Workers v. ICC ("IBEW"), 862 F.2d 330, 334 (D.C. Cir.
1988).
In Sea-Land we discussed but did not resolve whether the
possibility of a collateral estoppel effect could afford standing.
As we noted, neither IBEW nor any decision of the Supreme
Court had actually found standing on the basis of collateral
estoppel. Sea-Land, 137 F.3d at 648. We thought the issue
complicated and possibly circular, in that if there were ap-
pealability, and if the other prerequisites of collateral estop-
pel were present, then collateral estoppel would follow;
whereas absent appealability there would be no basis for
collateral estoppel under standard doctrine. Id. at 648-49.
But in fact it seems inescapable that neither standing nor
ripeness could properly grow out of a harm predicated on a
potential collateral estoppel effect. The argument for stand-
ing would necessarily have a bootstrap quality: it would infer
standing in an initial case from the possibility of collateral
estoppel in a later one--a possibility that of course could only
materialize if standing were found in the first case. To
create standing out of the preclusive effect that would flow
from granting standing is to create it ex nihilo. In contrast,
our denial of standing here necessarily implies that petition-
ers may not be estopped from challenging these findings in a
later court case. Sea-Land, 137 F.3d at 648. Whatever
weight the present orders may have in the Commission, in
court petitioners will be able to point to any errors in the
present agency action that prove to affect their interests
adversely in the rate case. For the same reasons, collateral
estoppel possibilities could not ripen an otherwise unripe
claim.
As we lack jurisdiction to hear petitioners' claims, we
dismiss their petition. That dismissal moots FERC's conten-
tion that the interventions on petitioners' behalf must be
dismissed because of those intervenors' failure to seek re-
hearing as required by s 19(b) of the Natural Gas Act, 15
U.S.C. s 717r(b).
So ordered.