The opinion
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
ENERGY TRANSFER GC NGLS LLC CASE NO. 6:24-CV-01527
ET AL
VERSUS JUDGE DAVID C. JOSEPH
ENTERPRISE GAS PROCESSING MAGISTRATE JUDGE CAROL B.
LLC ET AL WHITEHURST
REPORT AND RECOMMENDATION
Before the Court is Plaintiffs’ Emergency Motion to Remand and Application
for Just Costs and Actual Expenses. (Rec. Doc. 6). Defendants opposed the Motion.
(Rec. Doc. 18) and Plaintiffs replied (Rec. Doc. 20). The Motion was referred to the
undersigned magistrate judge for review, report, and recommendation in accordance
with the provisions of 28 U.S.C. §636 and the standing orders of this Court.
Considering the evidence, the law, and the arguments of the parties, and for the
reasons explained below, the Court recommends that Plaintiffs’ motion be
GRANTED in part and DENIED in part.
Factual Background
On November 4, 2024, Plaintiffs Energy Transfer and Sea Robin Pipeline
Company (“Sea Robin”) filed a Petition for Damages and Injunctive Relief and
Request for Temporary Restraining Order and Preliminary Injunction in state court
after the Sea Robin Gas Processing Plant (“Plant”) was shutdown. (Rec. Doc. 1-2).
According to Plaintiffs, the ownership and operation of the Plant is governed by
multiple agreements which include “binding rules that govern voting procedures for
all matters concerning the operation of the Plant.” (Id. at ¶¶ 1-3). These Agreements
include a Restated and Amended Agreement for the Construction and Operation of
the Sea Robin Gas Processing Plant (“COA”), its amendments (collectively,
“COAA”), and a Restated and Amended Agreement between Sea Robin and the
Plant owners (“SA”). (Id at ¶ 1). Per Plaintiffs, any proposal to temporarily shut
down the Plant requires the affirmative majority vote of four of the seven Plant
owners. (Id. at ¶ 3). Plaintiffs maintain that Enterprise unilaterally executed a
shutdown of the Plant without complying with the plain terms and purpose of the
voting procedures by orchestrating “a sham transaction where it unlawfully inflated
Enterprise’s voting power and usurped the decision-making rights of the other Plant
owners.” (Id. at ¶¶ 4-5).
In the first Notice of Removal, Defendants allege that this Court has subject-
matter jurisdiction pursuant to 28 U.S.C. § 1331 because “Plaintiffs’ claims are
based on federal law and the Court will need to interpret and apply federal law in
deciding Plaintiffs’ claims.” (Rec. Doc. 1). Specifically, Defendants point to
Paragraph 47 of Plaintiffs’ Petition to support this contention which alleges:
Sea Robin has a federally imposed duty under the National [sic] 1 Gas
Act, 15 U.S.C. §§ 717 et seq., to provide open and nondiscriminatory
access to Plaintiff’s pipelines. Defendants’ breach of contract and
attempt to shut down the Plant threaten to force Plaintiff to violate its
duty because it will no longer be able to provide pipeline access to its
customers.
On November 11, 2024, Defendants filed a First Amended Notice of Removal
wherein they maintain that this dispute also “falls within the express grant of federal
jurisdiction in 43 U.S.C. § 1349(b)(1)” because the “case involves an operation
conducted on the Outer Continental Shelf (“OCS”) related to development and
production of minerals.” (Rec. Doc. 17)(citing the Outer Continental Shelf Lands
Act (“OCSLA”)).
Plaintiffs filed the instant Emergency Motion to Remand asserting that they
only raised state claims. (Rec. Doc. 6). Plaintiffs contend that they “assert four
causes of action: (1) two breach of contract claims, (2) a request for declaratory
judgment, and (3) a request for temporary restraining order and injunctive relief.”
(Id. at p. 4). Per Plaintiffs, “[a]ll of these claims are exclusively based in contracts
governed by Louisiana law, namely the COAA and SA, and solely implicate
Louisiana law.” (Id.). Plaintiffs also maintain that Defendants “baselessly filed their
motion for removal in a flagrant effort to impede Plaintiffs’ request for immediate
1 Plaintiffs cite to the Natural Gas Act.
relief and further inflict irreparable harm on Plaintiffs” and request just costs and
actual expenses, including attorney fees. (Id. at p. 6).
Law and Analysis
“Federal courts are courts of limited jurisdiction. Absent jurisdiction
conferred by statute, district courts lack power to consider claims.” Veldhoen v. U.S.
Coast Guard, 35 F.3d 222, 225 (5th Cir. 1994); see also, Kokkonen v. Guardian Life
Ins. Co. of Am., 511 U.S. 375, 377 (1994) and Howery v. Allstate Ins. Co., 243 F.3d
912, 916 (5th Cir. 2001). Federal district courts have original jurisdiction over cases
involving a federal question, pursuant to 28 U.S.C. §1331, and those in which the
parties are diverse in citizenship and the amount in controversy exceeds $75,000,
pursuant to 28 U.S.C. §1332. Courts may also exercise, or decline to exercise,
supplemental jurisdiction over certain cases. 28 U.S.C. §1367; Preston v. Tenet
Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 804, 810 (5th Cir. 2007).
A suit is presumed to lie beyond the scope of federal-court jurisdiction until
the party invoking federal-court jurisdiction establishes otherwise. Kokkonen v.
Guardian Life, 511 U.S. at 377; Howery v. Allstate, 243 F.3d at 916. Any doubts
regarding whether removal jurisdiction is proper should be resolved against federal-
court jurisdiction. Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir. 2000).
The party invoking the court’s subject-matter jurisdiction has the burden of
establishing the court’s jurisdiction. St. Paul Reinsurance Co., Ltd. v. Greenberg,
134 F.3d 1250, 1253 (5th Cir. 1998); Gaitor v. Peninsular & Occidental S. S. Co.,
287 F.2d 252, 253 (5th Cir. 1961).
Whether a claim arises under federal law so as to confer federal question
jurisdiction is governed by the well-pleaded complaint rule, which provides that
“federal jurisdiction exists only when a federal question is presented on the face of
the plaintiff’s properly pleaded complaint.” Caterpillar, Inc. v. Williams, 482 U.S.
386, 392 (1987); Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475 (1998).
Under the well-pleaded complaint rule, “there is generally no federal jurisdiction if
the plaintiff properly pleads only a state law cause of action.” MSOF Corp. v. Exxon
Corp., 295 F.3d 485, 490 (5th Cir.2002); see also Saadat v. Landsafe Flood
Determination, Inc., 253 Fed.Appx. 343, 344 (5th Cir.2007). However, federal
question jurisdiction may also exist where “the vindication of [the subject state law
cause of action] necessarily turn[s] on some construction of federal law.” Franchise
Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27–28 (1983); see also
Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804, 808–09 (1986); Metro. Life
Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987).
“[T]he mere presence of a federal issue in a state cause of action does not
automatically confer federal-question jurisdiction” over a case. Merrell Dow v.
Thompson, 478 U.S. at 813; Willy v. Coastal Corp., 855 F.2d 1160, 1168 (5th
Cir.1988); see also, MSOF, 295 F.3d at 491–92 (finding no federal question
jurisdiction where “[t]he vindication of ... plaintiffs’ rights does not turn on
resolution of a federal question.”). Furthermore, “the existence of a private cause of
action is not a litmus test for the existence of a federal question, as many federal
courts had previously held.” Zahora v. Precision Airmotive Corp., 2007 WL 765024,
1 (E.D.Pa.2007). Instead, in Grable & Sons Metal Products v. Darue Engineering,
the United States Supreme Court formulated the relevant inquiry as follows: “does
a state-law claim necessarily raise a stated federal issue, actually disputed and
substantial, which a federal forum may entertain without disturbing any
congressionally approved balance of federal and state judicial responsibilities.”
Grable & Sons Metal Products v. Darue Engineering, 545 U.S. 308, 314 (2005).
The Fifth Circuit has articulated four requirements for the determination of
whether a federal issue embedded in a state law cause of action will confer federal
question jurisdiction. Federal question jurisdiction is appropriate when: (1)
resolving the federal issue is necessary to resolution of the state-law claim; (2) the
federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal
jurisdiction will not disturb the balance of federal and state judicial responsibilities.
Singh v. Duane Morris LLP, 538 F.3d 334, 338 (5th Cir. 2008).
Here, Plaintiffs assert two breach of contract claims, a request for declaratory
judgment, and a request for temporary restraining order and injunctive relief. (Rec.
Doc. 1-2, ¶¶ 50-76). The Court interprets Plaintiffs’ Petition to assert purely state
law claims for damages and equitable relief. Nonetheless, the Court must determine
whether a federal issue is embedded in Plaintiffs’ state law claims by virtue of their
reference to the Natural Gas Act (“NGA”) and/or if the dispute confers jurisdiction
on this Court pursuant to OCSLA.
A. The Natural Gas Act
The only reference Plaintiffs make to the NGA is in Paragraph 47 of their
Petition wherein they note that Plaintiff Sea Robin has a federally imposed duty
under the NGA to provide open and nondiscriminatory access to Plaintiffs’
pipelines. (Id. at ¶ 47). Plaintiffs assert that “Defendants’ breach of contract and
attempt to shut down the Plant threaten to force Plaintiff to violate its duty because
it will no longer be able to provide pipeline access to its customers.” (Id.). Plaintiffs
include this paragraph as an example of alleged harm caused by Defendants’ breach
of contract, i.e. that Plaintiff Sea Lion may be liable to third parties under the NGA
as a result of Defendants’ conduct. (Id.).
Defendants argue that Plaintiffs’ request for a preliminary injunction depends
on the interpretation of the NGA because irreparable injury is a necessary element
of said request for a preliminary injunction. (Rec. Doc. 18). This Court disagrees.
First, the Court agrees with Plaintiffs that they “have pleaded numerous other
grounds for irreparable harm, any one of which obviates the need to independently
establish irreparable harm via Plaintiffs’ NGA obligations.” (Rec. Doc. 20, p. 2, fn.
2). Further, the Court finds that vindication of Plaintiffs’ rights does not turn on
resolution of a federal question, namely interpretation or application of the NGA.
See MSOF Corp., 295 F.3d at 491. Plaintiffs do not challenge the promulgation or
enforceability of the NGA or the adequacy of any of its provisions. A determination
of whether Defendants breached a duty to Plaintiffs does not require resort to the
NGA or any other federal law. Plaintiffs did not ask the Court to interpret a federal
statute, to declare any party’s rights or obligations under any federal statute, or to
remedy a violation of any federal statute. In other words, there is no substantial
question of federal law, and Defendants have failed to meet their burden to establish
otherwise. See St. Paul Reinsurance Co., Ltd., 134 F.3d at 1253. Accordingly, the
Court finds that subject matter jurisdiction does not exist under 28 U.S.C. § 1331.
B. OCSLA
OCSLA declares the OCS to be an area of “exclusive federal jurisdiction.”
Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 479 (1981) (citing 43 U.S.C.
§1333(a)(1)). OCSLA extends the “Constitution and laws and civil and political
jurisdiction of the United States” to the subsoil and seabed of the Outer Continental
Shelf and to “artificial islands and fixed structures” built for discovery, extraction,
and transportation of minerals. Id. at 480 (citing 43 U.S.C. § 1333(a)(1)).
Accordingly, OCSLA provides that: “the district courts of the United States shall
have jurisdiction of cases and controversies arising out of, or in connection with (A)
any operation conducted on the outer Continental Shelf which involves exploration,
development, or production of minerals . . . .” 43 U.S.C. § 1349(b)(1). “Courts
typically assess jurisdiction under this provision in terms of whether (1) the activities
that caused the injury constituted an “operation” “conducted on the outer Continental
Shelf” that involved the exploration and production of minerals, and (2) the case
“arises out of, or in connection with” the operation.” In re Deepwater Horizon, 745
F.3d 157, 163 (5th Cir. 2014)
Defendants maintain that this dispute “falls within the express grant of federal
jurisdiction in 43 U.S.C. § 1349(b)(1)” because the “case involves an operation
conducted on the [OSC] related to development and production of minerals.” (Rec.
Doc. 17). Specifically, Defendants point to Paragraph 46 of Plaintiffs’ Petition
which alleges:
…the wells that produce gas transported on the Sea Robin Pipeline
depend on the operations of the Plant for continued production. The
cessation of operations at the Plant will force producers and well
operators to shut-in those gas producing wells for the span of the Plant’s
shutdown. Certain of Sea Robin’s customers have warned that shut-in
of those wells for any extended period of time may result in the
permanent cessation of production for those wells. Accordingly, the
cessation of Plant will result in the complete and permanent loss of
business and customers by Sea Robin, as well as further damage its
reputation and goodwill with customers.
(Rec. Doc. 1-2, ¶ 46).
Defendants rely on Amoco Prod. Co. v. Sea Robin Pipeline Co., 844 F.2d
1202, 1205 (5th Cir. 1988) to support their contention that this dispute implicates
OCSLA due to Plaintiffs’ mention of the dispute’s effect on non-party gas producers
and well operators. The Court finds Amoco distinguishable from the present matter.
In Amoco, the dispute concerned “take-or-pay obligations in contracts for the
sale/purchase of natural gas, made between Sea Robin Pipeline Co. (Sea Robin) as
purchaser, and Amoco Production Co. (Amoco) as seller.” Amoco Prod. Co., 844
F.2d at 1203. Notably, a party to the dispute, Amoco, produced the natural gas
subject to the contracts on the OSC. Id. The issue before the Fifth Circuit was
whether Sea Robin’s reduction in the quantities of gas it purchased from Amoco
constituted “exploration, development, or production” under OCSLA. Id. The Fifth
Circuit found that it did:
Exercise of take-or-pay rights, minimum-take rights, or both, by Sea
Robin necessarily and physically has an immediate bearing on the
production of the particular well, certainly in the sense of the volume
of gas actually produced. Dispute by the parties of their respective
rights, duties, defenses, and obligations is thus a controversy “arising
out of, or in connection with (A) any operation ... which involves
exploration, development, or production of the minerals ... §
1349(b)(1).
Id. at 1210.
Here, Plaintiffs include Paragraph 46 as an example of alleged harm caused
by Defendants’ breach of contract, i.e. that Plaintiff Sea Lion may lose customers,
the non-party gas producers and well operators, as a result of Defendants’ conduct.
(Id.). The Court agrees with Plaintiffs that this dispute has “nothing to do with the
continental shelf” and instead involves “the operation of a Plant located in Erath,
Louisiana,” (Rec. Doc. 20, p. 3) and operations on the continental shelf are certainly
not a “but-for” cause of the claims asserted. See In re Deepwater Horizon, 745 F.3d
157, 163 (5th Cir. 2014). The alleged activities that caused Plaintiffs’ injury, i.e.
breach of contract, do not constitute an operation conducted on the outer continental
shelf that involved the exploration and production of minerals, nor does the dispute
between these particular parties arise out of, or share connection with, said operation.
See In re Deepwater Horizon, 745 F.3d at 163. Accordingly, the Court finds that
subject matter jurisdiction does not exist under 43 U.S.C. § 1349(b)(1).
C. Attorneys’ Fees
Plaintiffs also seek an award of attorneys’ fees for improper removal. A
removal found to be improper does not automatically entitle the plaintiff to an award
of attorneys’ fees. Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir.
2000). In determining whether to award attorneys’ fees, the court must not consider
the removing defendant’s subjective motive, but it must instead “consider
objectively the merits of the defendant’s case at the time of removal.” Id.
The application of § 1447(c) requires consideration of the propriety of
the removing party’s actions based on an objective view of the legal
and factual elements in each particular case. We evaluate the objective
merits of removal at the time of removal, irrespective of the fact that it
might ultimately be determined that removal was improper.
Id. at 293.
The Court declines to recommend an award of attorneys’ fees in this case. The
jurisprudence discussed above illustrates that the existence of federal question
jurisdiction in such cases is not always indisputable.
Conclusion
For the reasons discussed herein, the Court recommends that Plaintiffs’
Motion to Remand (Rec. Doc. 6) be GRANTED IN PART AND DENIED IN
PART. This motion should be granted to the extent it seeks remand to state court.
The motion should be denied to the extent Plaintiffs seek attorneys’ fees for removal.
Under the provisions of 28 U.S.C. § 636(b)(1)(C) and Fed. R. Civ. P. 72(b),
parties aggrieved by this recommendation have fourteen days from service of this
report and recommendation to file specific, written objections with the Clerk of
Court. A party may respond to another party’s objections within fourteen days after
being served with of a copy of any objections or responses to the district judge at the
time of filing.
Failure to file written objections to the proposed factual findings and/or the
proposed legal conclusions reflected in the report and recommendation within
fourteen days following the date of its service, or within the time frame authorized
by Fed. R. Civ. P. 6(b), shall bar an aggrieved party from attacking either the factual
findings or the legal conclusions accepted by the district court, except upon grounds
of plain error. See Douglass v. United Services Automobile Association, 79 F.3d
1415 (5 Cir. 1996) (en banc), superseded by statute on other grounds, 28 U.S.C.
$636(b)(1).
THUS DONE in Chambers, Lafayette, Louisiana on this 13" day of
November, 2024.
CAROL B.WHITEHURST —s_—
UNITED STATES MAGISTRATE JUDGE
13