Michigan Consolidated Gas Co. v. Economic Regulatory Administration

889 F.2d 1110, 281 U.S. App. D.C. 277, 1989 U.S. App. LEXIS 17319
Court of Appeals for the D.C. Circuit·Decided November 17, 1989·No. No. 88-1791·Published·Cited by 1 cases

Opinion

Opinion for the Court filed by Circuit Judge D.H. GINSBURG.

D.H. GINSBURG, Circuit Judge:

Michigan Consolidated Gas, the local distribution company (LDC) serving the Detroit area, petitions for review of an order of the Economic Regulatory Administration granting National Steel Corporation authority to import from Canada up to 25 Bcf of natural gas per year. 1 E.R.A. ¶ 70,786 (CCH) (1988). National sought the blanket import authorization under Section 3 of the Natural Gas Act, 15 U.S.C. § 717b, in connection with its plan to build under the Detroit River a pipeline that would connect its steel plant directly to Union Gas Ltd. in Canada, see National Steel Corp., 45 F.E. R.C. ¶ 61,100 (1988) (approving construction of underwater pipeline), thus enabling it to obtain gas directly from various Canadian suppliers. MichCon, which had for many years supplied National’s gas needs, originally by sales of gas and in recent years by delivering gas National purchased from others, unsuccessfully protested National’s application before ERA. On review, National has intervened in support of ERA.

I

Section 3 of the NGA conditions an importation of gas upon the Secretary of Energy’s authorization, which is not to be withheld unless he determines that the pro[278] posed importation “will not be consistent with the public interest.” 15 U.S.C. § 717b. The Secretary of Energy has delegated his § 3 authority to ERA, Delegation Order No. 0204-111, 49 Fed.Reg. 6,690 (1984), pursuant to a Policy Statement instructing ERA to give special weight, in making the public interest determination, to the competitiveness of the import, need for the natural gas, and security of supply. Id. at 6,687.

MichCon here contends that ERA failed to engage in reasoned decisionmaking under § 3 of the NGA in concluding that the proposed import arrangement is consistent with the public interest. Specifically, Mich-Con claims that (1) the agency was required but failed to consider whether National’s direct importation, by making it possible for that end user to “bypass” MichCon’s distribution facilities, shifts to the LDC's other customers that portion of its fixed costs that had previously been paid by National, and if so, whether that is not contrary to the public interest; (2) ERA should have considered the possibility that the wellhead price of the natural gas to be purchased in Canada might not be “competitive,” and that it erred as a matter of law in attending exclusively to the competitiveness of the burnertip (i.e., delivered) price of the imported gas; and (3) ERA violated § 3 of the NGA by authorizing National to import more gas than it needed. Finally, MichCon (4) challenges ERA’s order denying its request for a hearing at which to raise certain allegedly material issues of fact, including the effect of the bypass arrangement on MichCon’s other customers.

Our recent decision in Michigan Consolidated Gas Company v. Federal Energy Regulatory Commission, 883 F.2d 117 (D.C.Cir.1989), in which we upheld FERC’s order authorizing Panhandle Eastern Pipe Line Company to bypass MichCon’s distribution facilities by providing service directly to National's plant, makes it unnecessary for us to reach the merits of Mich-Con’s present arguments. National reports that since its recent connection to the Panhandle pipeline, it has discontinued taking any gas from MichCon; indeed, Mich-Con has physically disconnected National from its distribution system. National now buys gas in the open market and has it transported to its plant by Panhandle at a lower price than it would otherwise have to pay MichCon for such transportation. Unless the Supreme Court reverses our prior decision, therefore, MichCon has no realistic prospect of regaining National as a customer. In light of this development, we must conclude that National’s making provision to supply its needs through its own pipeline connecting it to Canadian sources, as an alternative to depending solely upon Panhandle, represents no cognizable injury to MichCon, and no injury at all that can be redressed by this court. We therefore find that MichCon lacks standing to seek review of ERA’s order.

II

Pursuant to § 19(b) of the NGA, only a party that is “aggrieved” by an order issued under that Act may obtain judicial review thereof. 15 U.S.C. § 717r(b). In general, a competitor that stands to lose business because of a proposed import arrangement has standing to challenge ERA’s approval of that arrangement. See Panhandle Producers v. ERA, 822 F.2d 1105 (D.C.Cir.1987) and New England Fuel Institute v. ERA, 875 F.2d 882 (D.C.Cir.1989). The interests of such a competitor-protestant are generally “congruent with a statutory purpose to restrict entry” to some degree and thus “at least ‘arguably’ within the zone of interests sought to be protected by section 3 of the NGA.” 822 F.2d at 1109. MichCon understandably, therefore, seeks to position itself as a competitor for National’s load; it has ho other hope of establishing its right to review.

In our view, however, MichCon asserts no injury that is fairly traceable to, or redressable by our reversal of, the ERA order it would challenge. That order was issued on July 11, 1988. FERC’s order authorizing Panhandle to provide direct service to National was issued on June 4, 1987. Since ERA’s decision approving the proposed import arrangement was issued only after FERC had approved, and the [279] parties had implemented, the Panhandle connection, MichCon cannot convincingly argue that the ERA order authorizing the Canadian import arrangement made it any more difficult for MichCon to compete for National’s business. National’s decision to switch from MichCon’s to Panhandle’s distribution facilities, and FERC’s 1987 order approving that decision, meant that Mich-Con had already failed in its attempt to compete for National’s load. ERA’s 1988 order approving another competitive alternative for National, the proposed import arrangement, did not deprive MichCon of a customer whose load it would otherwise have had a realistic opportunity of obtaining.

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Michigan Consolidated Gas Co. v. Economic Regulatory Administration, 889 F.2d 1110, 281 U.S. App. D.C. 277, 1989 U.S. App. LEXIS 17319 (D.C. Cir. 1989).

889 F.2d 1110 (Michigan Consolidated Gas Co. v. Economic Regulatory Administration) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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