Toca Producers v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 10, 2005 Decided June 10, 2005

No. 04-1135

THE TOCA PRODUCERS, ET AL.,
PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT

SOUTHERN COMPANY SERVICES, INC., ET AL.,
INTERVENORS

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

Katherine B. Edwards argued the cause for petitioners.
With her on the briefs were John Paul Floom, Frederick T.
Kolb, and Charles J. McClees.

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.

Patrick B. Pope, R. David Hendrickson, Roy R. Robertson,
Jr., Jeffrey D. Komarow, and Joshua L. Menter were on the brief
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for intervenors Southern Natural Gas Company, et al.

Before: GINSBURG, Chief Judge, and SENTELLE and TATEL,
Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge: Several natural gas producers
petition for review of three orders of the Federal Energy
Regulatory Commission denying their request, pursuant to §§ 4
and 5 of the Natural Gas Act, 15 U.S.C. §§ 717c, 717d(a), that
Southern Natural Gas Co. be ordered to revise its tariff to
include a safe harbor gas quality standard that specifies a
hydrocarbon dewpoint at which Southern will guarantee the
transportation of gas. Because the producers may yet secure that
very relief in a proceeding now pending before the Commission,
we dismiss the present petition as unripe.

I. Background

The producers operate upstream from three natural gas
processing plants located near Toca, Louisiana and owned in
part by affiliates of some of the producers. All the producers
tender to Southern’s pipeline, at receipt points also upstream of
the plants, gas with a relatively high liquefiable hydrocarbon
content. A natural gas stream with a high content of liquefiable
hydrocarbons, however, threatens the reliable operation of a
pipeline. For that reason § 3.1(b) of Southern’s tariff provides
that Southern will not accept gas containing more than 0.3
gallons per thousand cubic feet of isopentane and heavier
hydrocarbons.

Ordinarily § 3.1(b) is of no consequence because it is in the
producers’ economic interest to extract hydrocarbons at the
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processing plants for the purpose of selling them as liquid
natural gas. Accordingly, Southern typically waives
enforcement of the tariff provision at the producers’ receipt
points, relying upon processing at the plants downstream to
render the gas compliant.

In December 2000, however, the price of natural gas rose to
a level at which the producers found it more profitable to leave
the hydrocarbons in their gas than to extract and sell them
because hydrocarbons raise the heat content, and hence the
value, of the gas. The operators of the processing plants at Toca
therefore informed Southern they would shut down the plants by
the end of the month. Concerned about the effect upon the
reliability of its pipeline, Southern notified all producers that:

In the event the processing capacity is reduced significantly
... Southern may commence enforcement of Section 3.1(b)
.... Individual producers that do not meet the quality
specification will be ... required to reduce or shut-in their
production.

On January 5, 2001 the producers petitioned the
Commission for a temporary restraining order to prevent
Southern from refusing their gas and requested that an
emergency technical conference be held. The Commission did
not issue a temporary restraining order but it did convene the
requested conference. Amoco Prod. Co., 94 F.E.R.C. ¶ 61,026
(2001). Neither the conference nor subsequent settlement
discussions, however, resolved the producers’ concerns. In May
2003 the Commission directed the parties to identify outstanding
issues and their positions thereon. Amoco Prod. Co., 103
F.E.R.C. ¶ 61,175 (2003).
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The producers responded by filing a complaint before the
Commission, asserting Southern’s threatened refusal to accept
their gas was discriminatory within the meaning of §§ 4 and 5
because, at receipt points downstream from the processing
plants, it had accepted gas with a higher liquefiable hydrocarbon
concentration than gas processed at the Toca plants. The
producers claimed such discrimination arose because there was
no safe harbor gas quality specification standard in Southern’s
tariff, and asked that Southern’s tariff be revised accordingly.
To that end they requested an evidentiary hearing.

The Commission dismissed the producers’ complaint as
well as their earlier petition. Toca Producers v. S. Natural Gas
Co., 104 F.E.R.C. ¶ 61,300 (2003). Section 4, explained the
Commission, applies only to a tariff change initiated by a
pipeline. Id. at 62,130. As for § 5, the Commission held the
producers had not carried their “substantial burden” of showing
Southern’s tariff was “unjust and unreasonable,” id., and
because they had adduced “no genuine issues of material fact”
on that score, the Commission declined to hold an evidentiary
hearing, id. at 62,129-62,130. The Commission did, however,
condition its dismissal of the producers’ complaint upon
Southern’s making a § 4 filing to include in its tariff an
“aggregation methodology, including [a] flexible [gas quality
specification] standard.” Id. at 62,128, 62,130.

Southern duly filed a proposal to revise its tariff, see S.
Natural Gas Co., 105 F.E.R.C. ¶ 61,254 (2003) (Docket No.
RP04-42-00), and that proceeding, in which the producers have
intervened, is still pending. Meanwhile, the Commission denied
both the producers’ petition for rehearing, see 106 F.E.R.C. ¶
61,158 (2004), and their subsequent motion for clarification or
rehearing, see 107 F.E.R.C. ¶ 61,009 (2004), and the producers
petitioned this court for review of all three of the Commission’s
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orders.

II. Analysis

Before addressing the merits of the producers’ petition we
must be satisfied it meets the requirements of a “Case” or a
“Controversy” within the meaning of Article III of the
Constitution of the United States, see Steel Co. v. Citizens for a
Better Env’t, 523 U.S. 83 (1998), including the requirement that
their claim be ripe for judicial resolution, see Nat’l Park
Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803, 807-08
(2003). To that end, we must “evaluate both the fitness of the
issues for judicial decision and the hardship to the parties of
withholding court consideration.” Abbott Labs. v. Gardner, 387
U.S. 136, 149 (1967). “In applying the ripeness doctrine to
agency action we balance the interests of the court and the
agency in delaying review against the petitioner’s interest in
prompt consideration of allegedly unlawful agency action.”
Fed. Express Corp. v. Mineta, 373 F.3d 112, 118 (D.C. Cir.
2004); Friends of Keeseville, Inc. v. FERC, 859 F.2d 230, 235
(D.C. Cir. 1988). Balancing those interests here, we conclude
the producers’ petition is not ripe for review. *

*
We note the “[r]ipeness doctrine is responsive to
constitutional as well as prudential considerations,” Action Alliance of
Senior Citizens of Greater Phila. v. Heckler, 789 F.2d 931, 940 n.12
(D.C. Cir. 1986), but we need not decide which type of consideration
predominates here. The Supreme Court has said the prudential
standing doctrine, like the abstention doctrine, “represents the sort of
‘threshold question’ [that] may be resolved before addressing
jurisdiction,” Tenet v. Doe, 125 S. Ct. 1230, 1234 n.4 (2005), and we
infer that, because the ripeness requirement, even in its prudential
aspect, likewise calls for a threshold inquiry that does not involve an
adjudication on the merits, it likewise may be resolved without first
addressing whether the producers have Article III standing. See
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The interests of the court and of the agency in withholding
judicial review ordinarily depend upon “the fitness of the issues
for judicial decision,” Abbott Labs., 387 U.S. at 149, which, in
turn, depends upon whether the issues are “purely legal,”
whether their consideration “would benefit from a more concrete
setting, and whether the agency’s action is sufficiently final.”
Atl. States Legal Found. v. EPA, 325 F.3d 281, 284 (D.C. Cir.
2003). Here the gravamen of the producers’ petition – that
Southern’s tariff is unjust and unreasonable – presents a “purely
legal” issue, and it arises from a “concrete setting.” The
challenged orders also appear to present a “final agency action”
within the meaning of the Administrative Procedure Act, 5
U.S.C. § 704, but in the peculiar circumstances of this case we
do not think the agency’s action is “sufficiently final.”

The Commission has yet to pass conclusively upon whether
the producers are entitled to the only relief they now seek,
namely, that Southern’s tariff be revised to include an objective
gas quality specification standard. As the Commission portrays
the situation in its brief – and the producers do not disagree –
“[t]he proceeding in FERC Docket No. RP04-02 could result in
a tariff modification that [the producers] seek, thus resolving the
issues raised in this appeal.” There is therefore a substantial
“judicial interest in deferring resolution” of the petition because,
if the producers’ entitlement to such a standard is not presently
adjudicated, then it “may not require adjudication at all.”
Friends of Keeseville, 859 F.2d at 235; see also Wyo. Outdoor
Council v. U.S. Forest Serv., 165 F.3d 43, 50 (D.C. Cir. 1999)
(“Prudence ... restrains courts from hastily intervening into
matters that may best be reviewed at another time or another

Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999) (“It is
hardly novel for a federal court to choose among threshold grounds for
denying audience to a case on the merits”).
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setting”). If the producers do not get the relief they seek in the
proceeding now before the Commission, then they may, of
course, seek judicial review of the final order issued in that
docket. See Friends of Keeseville, 859 F.2d at 236-37 (“In
determining whether a controversy is ripe, one relevant factor is
the availability of judicial review at a later stage”). Staying our
hand until the conclusion of the ongoing administrative
proceeding could therefore avoid a “piecemeal, duplicative,
tactical and unnecessary appeal[] which [is] costly to the parties
and consume[s] limited judicial resources.” Mount Wilson FM
Broad., Inc. v. FCC, 884 F.2d 1462, 1467 (D.C. Cir. 1989); see
also Friends of Keeseville, 859 F.2d at 236 (court “may properly
give weight to the interests in judicial economy that are
furthered by the avoidance of unnecessary adjudication”).

The institutional interest in deferring a judicial resolution
must, of course, be weighed against “the hardship to the parties
of withholding court consideration” at this time. Abbott Labs.,
387 U.S. at 149. The producers, however, have not shown they
will endure any cognizable hardship at all. They do say they
“will continue to be injured because there is no certainty with
regard to ... their processing obligations” under Southern’s tariff,
but the Supreme Court has squarely rejected the proposition that
“uncertainty as to the validity of a legal rule constitutes a
hardship for purposes of the ripeness analysis”; were it
otherwise “courts would soon be overwhelmed with requests for
what essentially would be advisory opinions because most
business transactions could be priced more accurately if even a
small portion of existing legal uncertainties were resolved.”
Nat’l Park Hospitality Ass’n, 538 U.S. at 811.

The producers belatedly (that is, in their reply brief) claim
“[t]here is a significant risk that FERC will rely on its findings
in the [orders under review] to deny [the producers’] arguments
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in the [pending] case or other future cases.” We do not
ordinarily notice an argument first raised in a reply brief because
the other side had no opportunity to respond in its brief, see
Amgen, Inc. v. Smith, 357 F.3d 103, 117 (D.C. Cir. 2004), and
we have no cause to make an exception here. In any event, we
doubt the producers’ bald assertion regarding the possibility the
orders will be given preclusive effect would carry their burden
of showing the issue in this case is ripe. See Friends of
Keeseville, 859 F.2d at 235 (“It is not this court’s job ... to
speculate as to possible impacts of possible outcomes of existing
lawsuits upon future litigation; it is the petitioner’s
responsibility to show the specifics of the aggrievement
alleged”).

In sum, because the public interest in judicial economy
counsels against our now considering the producers’ petition,
and because the producers have pointed to no hardship from
waiting until the administrative process has run its course, we
hold their petition is not ripe for review.

III. Conclusion

For the foregoing reasons, the producers’ petition for review
is

Dismissed.