ANR Pipeline Co. v. Corporation Commission

860 F.2d 1571, 103 Oil & Gas Rep. 572, 1988 U.S. App. LEXIS 14976
CourtCourt of Appeals for the Tenth Circuit
DecidedNovember 9, 1988
DocketNo. 86-2481
StatusPublished
Cited by1 cases

This text of 860 F.2d 1571 (ANR Pipeline Co. v. Corporation Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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ANR Pipeline Co. v. Corporation Commission, 860 F.2d 1571, 103 Oil & Gas Rep. 572, 1988 U.S. App. LEXIS 14976 (10th Cir. 1988).

Opinion

BRORBY, Circuit Judge.

The plaintiffs in the district court, several interstate natural gas pipelines (Pipelines), are engaged in the business of purchasing, transporting, and reselling natural gas across state lines. They commenced this action against the defendant Corporation Commission of the State of Oklahoma and its individual members, asking for a declaratory judgment holding that federal law pre-empted Oklahoma’s ratable take statute and implementing regulation. They also sought injunctive relief, requesting the court restrain the Commission from attempting to implement or enforce the pre-empted statute and regulation. The district court permitted defendant Southern Natural Gas Company, also an interstate pipeline company, to intervene in order to support the constitutionality of the Oklahoma enactments at issue. Both defendants will be referred to jointly as the Commission.

The district court granted the Pipelines’ motion for summary judgment, holding Oklahoma’s ratable take statute, Okla.Stat. Ann. tit. 52, § 240 (1981), and the implementing rule, Rule 1-305 of the Oklahoma Corporation Commission, to be in contravention of the Supremacy Clause in Art. VI, Cl. 2 of the United States Constitution for the reason that Oklahoma’s regulation of interstate pipeline companies interferes with and is pre-empted by the federal regulatory scheme established by the Natural Gas Act, 15 U.S.C. §§ 717-717w (1976), and the Natural Gas Policy Act of 1978, 15 U.S.C. §§ 3301-3432 (1982). The district court also permanently enjoined the Commission from attempting to implement or enforce the provisions of the statute and rule against the Pipelines or any other interstate pipeline company. The decision of the district court is reported as ANR Pipeline Co. v. Corporation Comm’n of Okla., 643 F.Supp. 419 (W.D.Okl.1986).

The Commission generally asserts the district court lacked jurisdiction and the pre-emption analysis of the district court was incorrect. For the reasons set forth in [1574]*1574this opinion, we AFFIRM the decision of the district court.

I. BACKGROUND

Oklahoma, in 1915, enacted Okla.Stat. Ann. tit. 52, § 240 (1981),1 which provided that every person engaged in the business of processing and selling natural gas must purchase all of the natural gas offered for sale from a common reservoir, and if unable to purchase all of such gas, then the common purchaser must purchase natural gas from each seller ratably. This statute also gave to the Oklahoma Corporation Commission the authority to make regulations for the equitable purchasing and taking of such natural gas. Oklahoma also enacted Okla.Stat.Ann. tit. 52, § 239 (1981),2 which provides when full production of natural gas exceeds market demand, the producers of natural gas may take only their proportionate share of the natural flow of the gas. The Commission is given authority to regulate the production of natural gas.

In 1983, the Oklahoma Corporation Commission adopted its Rule 1-3053 which established a priority schedule mandating the [1575]*1575order in which various categories of natural gas are to be purchased when the supply of natural gas exceeds the demand,

In 1985, as a result of numerous filings pursuant to § 240 and Rule 1-305, the Commission held several hearings and issued its order No. 281285 wherein it determined the regulation of interstate pipelines to be an incident of the exercise of the Commission’s jurisdiction that is necessary to protect correlative rights and prevent waste. The Commission found §§ 239 and 240 of Oklahoma law attempt to adjust production of natural gas to demand in order to protect against drainage. It further held its regulatory jurisdiction does not encroach upon the jurisdiction of the Federal Energy Regulatory Commission (FERC), under either the Natural Gas Act or the Natural Gas Policy Act of 1978, because FERC is not vested with jurisdiction over the production and gathering of gas and concluded “[i]n light of the present regulatory atmosphere” the Commission’s jurisdiction can co-exist and complement that of FERC.

II. SUBJECT MATTER JURISDICTION

We must first determine whether or not the district court had jurisdiction to decide this controversy. In their complaint, the Pipelines asserted jurisdiction based upon a federal question, 28 U.S.C. § 1331. A federal district court is given “original jurisdiction of all civil actions arising under the Constitution, laws or treaties 0f the United States.” 28 U.S.C. § 1331 (Supp.1988).

. . . Commission asserts that the district court lacked subject matter jurisdiction because the Pipelines’ claim for declaratory judgment fails to raise a federal question. They contend the present controversy falls within the category of cases best illustrated by Public Serv. Comm’n of Utah v. Wycoff Co., 344 U.S. 237, 73 S.Ct. 236, 97 L.Ed. 291 (1952), where the Supreme Court expressed, by way of dicta, that a declaratory judgment plaintiff who asserts the constitutional invalidity of a state action has only a defense that probably does not provide a basis for invoking federal question jurisdiction. Id. at 248, 73 S.Ct. at 242. Stated differently, the anticipation of a possible defense to state action cannot serve as a basis for federal question jurisdiction.

The cases upon which the Commission relies to assert the district court is without [1576]*1576federal question jurisdiction involve an action for declaratory judgment that is not coupled with a request for injunctive relief. See e.g., Madsen v. Prudential Fed. Sav. & Loan Ass’n, 635 F.2d 797 (10th Cir.1980), cert. denied 451 U.S. 1018, 101 S.Ct. 3007, 69 L.Ed.2d 389 (1981); Monks v. Hetherington, 573 F.2d 1164 (10th Cir.1978). These cases stem directly from the dicta in Wycoff. A helpful discussion of the problems presented by Wycoff may be found at 10A C. Wright, A. Miller & K. Kane, Federal Practice & Procedure § 2767 (1983 & Pocket Part 1988). We express no opinion concerning the dicta in Wycoff and its progeny, because this suit is not based solely on a claim for declaratory judgment but also includes a claim for injunction.

The existence of federal question jurisdiction must appear on the face of the plaintiffs well pleaded complaint. Phillips Petroleum Co. v. Texaco Inc., 415 U.S. 125, 127-28, 94 S.Ct. 1002, 1003-04, 39 L.Ed.2d 209 (1974); Louisville & Nashville R.R. v. Mottley, 211 U.S. 149

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860 F.2d 1571, 103 Oil & Gas Rep. 572, 1988 U.S. App. LEXIS 14976, Counsel Stack Legal Research, https://law.counselstack.com/opinion/anr-pipeline-co-v-corporation-commission-ca10-1988.