Energy Transfer Partners, L.P. v. Federal Energy Regulatory Commission

567 F.3d 134, 2009 WL 1139286
CourtCourt of Appeals for the Fifth Circuit
DecidedApril 29, 2009
Docket08-60730
StatusPublished
Cited by12 cases

This text of 567 F.3d 134 (Energy Transfer Partners, L.P. v. Federal Energy Regulatory Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Energy Transfer Partners, L.P. v. Federal Energy Regulatory Commission, 567 F.3d 134, 2009 WL 1139286 (5th Cir. 2009).

Opinion

OWEN, Circuit Judge:

Energy Transfer Partners, L.P. and related entities (to which we will refer individually and collectively as ETP) petition for review of an order of the Federal Energy Regulatory Commission (FERC or Commission) denying rehearing of an order that alleges ETP violated the Natural Gas Act (NGA), the Natural Gas Policy Act (NGPA), and FERC’s implementing regulations and in which FERC proposed substantial penalties. ETP also petitions for review of a FERC order requiring an adversary hearing on these issues before an administrative law judge (ALJ). Because the issues presented are not ripe for review, we dismiss the petition.

I

After two years of investigation, FERC issued a Show Cause Order that included its preliminary determinations that: (1) ETP had manipulated wholesale natural-gas prices, in violation of FERC’s regulations under the NGA, and (2) ETP’s pipeline companies had unduly discriminated against nonaffiliated natural-gas pipeline shippers, unduly preferred affiliated natural-gas pipeline shippers, and charged rates for pipeline transportation service in excess of the maximum lawful rate, in violation of FERC’s regulations under the NGPA. 1 As the consequence for the alleged NGA violations, FERC proposed a civil penalty of $82,000,000, disgorgement of unjust profits in the amount of $69,866,966 plus interest, and revocation of ETP’s blanket certificate to sell natural gas. 2 Additional penalties were proposed for the alleged NGPA violations, and FERC directed ETP to respond to the specific allegations detailed in the Show Cause Order. 3

ETP filed an expedited request for rehearing and for a stay of the Show Cause Order, contending that adjudication of civil penalties under the NGA or NGPA should proceed in a de novo trial before a federal district court rather than in administrative proceedings. ETP also asserted that FERC’s statements in the Show Cause Order gave the appearance of prejudgment, depriving ETP of due process of law. In an order denying rehearing, FERC rejected ETP’s arguments and denied the request to stay the Show Cause Order. 4

*137 ETP subsequently filed a petition for review of the Show Cause Order and Order Denying Rehearing in this court. FERC moved to dismiss the petition, contending that the orders were not final because the FERC proceedings initiated therein were ongoing. We granted FERC’s motion and dismissed ETP’s first petition for lack of jurisdiction. 5

Meanwhile, in response to the Show Cause Order, ETP filed its answer to the Commission’s allegations, asserting that it had not violated the NGA or the NGPA, and requested summary disposition. The Commission thereafter issued an Order Establishing Hearing in which it found “that there are genuine issues of fact material to the decision of this proceeding [that] require a hearing before an ALJ” and accordingly denied ETP’s motion for summary disposition. 6 That order initiated what FERC described as “a trial-type evidentiary hearing before an administrative law judge,” specifying that an ALJ should determine whether ETP violated FERC’s market-behavior rule and whether ETP unjustly profited from its activities, and, if so, the level of unjust profits. FERC “reserved to itself’ the issue of whether civil penalties, other remedies, or both should be imposed. ETP again filed a request for rehearing and a stay on the same grounds as in its earlier request for rehearing of the Show Cause Order.

FERC denied ETP’s request for rehearing and a stay. 7 ETP then filed a second petition for review before this court, now challenging the Order Establishing Hearing, 8 and subsequently filed an amended petition adding the Show Cause Order 9 to its petition. ETP voluntarily withdrew its challenge of NGPA-related issues after a settlement of those issues was reached.

II

In order to determine whether the issues presented are ripe for review, it is necessary to understand the parties’ respective positions. ETP contends that it has the “statutory right to have its civil penalty liability determined, in the first instance, by a- federal district court.” ETP relies on language in § 24 of the NGA, which states that federal district courts “shall have exclusive jurisdiction of violations of this chapter or the rules, regulations, and orders thereunder, and of all suits in equity and actions at law brought to- enforce any liability or duty created by, or to enjoin any violation of, this chapter or any rule, regulation, or order thereunder.” 10 ETP contends that federal district *138 courts have “exclusive jurisdiction” to determine if it has violated the NGA and is liable for civil penalties. ETP apparently concedes that FERC is empowered by § 22 of the NGA 11 to propose and assess a civil penalty for violations of the NGA or regulations promulgated under the NGA’s authority. ETP asserts, however, that it is entitled to a de novo proceeding in a federal district court by virtue of § 24 of the Act, 15 U.S.C. § 717u, quoted above, to challenge the assessment of a penalty, and ETP maintains that FERC does not have the authority to require trial-type proceedings before an ALJ to resolve whether violations of the NGA occurred.

FERC has taken the position in its motion to dismiss this petition and in its underlying “Order Denying Expedited Request for Rehearing and Stay and Addressing Future Civil Penalty Procedures” 12 that there is no de novo review of civil penalties in a federal district court. FERC points out that unlike the NGPA 13 and the Federal Power Act, 14 the NGA does not provide for de novo review of a penalty in a federal district court and that the absence of de novo review language in the NGA evinces congressional intent. FERC takes the position that it is authorized by 15 U.S.C. § 717t-l to require a public hearing, including an adversarial proceeding before an ALJ, and that upon finding that the NGA has been violated, FERC may assess a civil penalty. The Commission maintains that ETP would then be entitled to petition for review by a court of appeals pursuant to § 19(b) of the NGA, 15 U.S.C. § 717r(b), and that the standard of review would be for substantial evidence.

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Bluebook (online)
567 F.3d 134, 2009 WL 1139286, Counsel Stack Legal Research, https://law.counselstack.com/opinion/energy-transfer-partners-lp-v-federal-energy-regulatory-commission-ca5-2009.