Opposition Brief — Producer Coalition v. Federal Energy Regulatory Commission

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/ ' MAY 30 2003

No. 02-1215 and 0251265 °

“2K

—

IN THE

Supreme Court of the Gnited States

THE PRODUCER COALITION,

Petitioner,

FEDERAL ENERGY REGULATORY COMMISSION, et ai.,

Respondents.

EXXONMOBIL GAS MARKETING COMPANY,

A DIVISION OF EXXON MOBIL CORPORATION, ef ai.,

Petitioners,

FEDERAL ENERGY REGULATORY COMMISSION, ef a/.,

Respondents.

On Petitions for Writs of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF RESPONDENT

WILLIAMS GAS PROCESSING-GULF COAST

COMPANY, L.P. INOPPOSITION

MARI M. RAMSEY JAMES T. MCMANUS

Senior Attorney (Counsel of Record)

THE WILLIAMS COMPANIES JOSEPH S. KOURY

One Williams Center, 41st Floor WRIGHT & TALISMAN, P.C.

Tulsa, Oklahoma 74172 1200 G Street, N.W., Suite 600

(918) 588-2611 Washington, D.C. 20005

(202) 393-1200

Counsel for Williams Gas Processing-Gulf Coast Company, L.P.

May 30, 2003

LALLA LII OT BEE AL ARAL LACE ELLE TE ISLES ALLL LEE LOLI LE IE ALLELES LISLE SAEED BE EO IES ILL I ALE NS

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether, consistent with this Court’s Chevron principles,

the Court of Appeals for the District of Columbia Circuit

properly affirmed orders of the Federal Energy Regulatory

Commission which ruled that certain offshore natural gas

facilities are “gathering” facilities exempt from the Commis-

sion’s jurisdiction under section 1(b) of the Natural Gas Act.

(i)

RULE 29.6 STATEMENT

Pursuant to Rule 29.6 of the rules of this Court,

Respondent Williams Gas Processing-Gulf Coast Company,

L.P. (“Williams”) states that its direct and indirect parent

companies are:

The Williams Companies, Inc.

Williams Energy Services, LLC

Williams Field Services Group, Inc.

Williams Field Services Company

WGP Enterprises, Inc.

Williams states that the only publicly held company

that owns 10% or more of its stock is The Williams -

Companies, Inc.

TABLE OF CONTENTS

Page

: PRP Rie ETN BURIED cevesheccecccesscsvecensveacceseecceecoases i

| RTA Pe eS PA EIEIO cccecsscosorvecsesesasvonceccccecsveccecoes li

TABLE OF AUTHORITIES .......ssssssessssssssssssssssssessessee iv

EOE DE Raa 2

re OD gin sis csnsdesdavsdcoiassdedeseesecdecossssers 4

PE EOE CO 1 Mis CAE. ooo occ cccsceseescececccesesseoeoeeece 4

REASONS FOR DENYING THE PETITIONS ........... 6

: A. This Case Is Not Appropriate For Review

| Because The Claimed Harm To Consumers Is

| RE et ee eee ee 6

) B. Even Under Petitioners’ Hypothetical Of

| Discontinued FERC Rate Regulation, There Is

) No “Regulatory Gap” With Respect To OCS

| LS ASR OEE 8

C. ExxonMobil Is Consistent With Decisions Of

This Court And Other Circuits............ccccccccsseseee 9

D. NGA Section 7(b) Abandonment Require-

ments Do Not Apply To NGA-Exempt

SE FNCUNIIIIY crcsescisscsvnsscacneyerbesuescnsasonsivers 16

ok S| ESERIES ieee eee 17

REESE ETT BER rnp ee ae na la

(ili)

TABLE OF AUTHORITIES

CASES Page

Chevron U.S.A. Inc. v. Natural Resources

Defense Council, 467 U.S. 837 (1984).............. 2, 10

Colorado Interstate Gas Co. v. FPC, 324 U.S.

ee D sscsstaicsinscnlsesalimamianceecasisceo acini. dv anntchanaialode 4

Conoco Inc. v. FERC, 90 F.3d 536 (D.C. Cir.

PE hdaivsisichesiitebsnsihiahsaiibcideadila acai imaaticibnandia diabetes a he

EP Operating Co. v. FERC, 876 F.2d 46 (Sth Cir.

acini sisne etait eA aah cea i 15

FPC vy. Panhandle Eastern Pipe Line Co., 337

Dic, NE Ee ET sniin natecdasiacaaabinkcieeicitanhaaicitaniemantinees 12, 16, 17

Lomak Petroleum, Inc. v. FERC, 206 F.3d 1193

Eira ss ls a nctsticcabisherdialpiniaiaiclcaiintiadndetinmiantiadiiiee 13

Northern Natural Gas Co. v. State Corp.

Commission, 372 U.S. 84 (1963) .........ccccccceeeeees passim

Northwest Central Pipeline Corp. v. State Corp.

Commission, 489 U.S. 493 (1989) .........ccceceeeeeee 12, 13

Northwest Pipeline Co. v. FERC, 905 F.2d 1403

b, g* Seren eeon ene 8, 13, 15, 16

Pacific Gas & Electric Co. v. FERC, 106 F.3d

Be ee Sa Oe Bincssslisciieaiienithiniianiachdenieensiininane 13

Phillips Petroleum Co. v. Wisconsin, 347 U.S.

ie Fi icsiescsiinsanianetibitiateniiinindanaiillinniamaians 10, 13

Sea Robin Pipeline Co. v. FERC, 127 F.3d 365

te ee re ONT, passim

United Distribution Cos. v. FERC, 88 F.3d 1105

eh SE ncianienetenvitiintiiabindiieaiinaualimda 4,5

ADMINISTRATIVE DECISIONS

Natural Gas Gathering Services Performed by

Interstate Pipelines and Interstate Pipeline

Affiliates, 65 FERC 4 61,136 (1993).................. 5

OCS Policy Statement, 74 FERC 4 61,222 (1996). 9

Phillips Petroleum Co., 10 FPC 246 (1951)..........

TABLE OF AUTHORITIES—Continued

Page

Policy Statement Providing Guidance with

Respect to the Designing of Rates, 47 FERC

| FE eee (OOP cinsviiniemerinewnaiibeiabitain 5

Sea Robin Pipeline Co., 71 FERC 4 61,351

(1995), reh’g denied, 75 FERC 9 61,332

[DORI sihcassinsocebdeisiecestitebataimiseieabdaaciabbiuiiiteteadacias 6

Sea Robin Pipeline Co., 87 FERC § 61,384

(1999), reh’g denied, 92 FERC 9 61,072

(2000), reh’g denied, 94 FERC 4 61,137

(2001), on compliance filing, 95 FERC

{ 61,329, approving settlement, 98 FERC

5 6 ee Ge nites incicicetesnieaees a

Shell Gas Pipeline Co., 78 FERC § 61,192

CET Bsc ionssaneuisbisiintinianniadins Coslvcnncclagesatbieaia aadbbiaceice 12

STATUTES AND REGULATIONS

Ee kk Se ees PID vichiviciinhictssheasibeicnensevensbanenicoces 5

Natural Gas Act

Ate tM iy Sf ERR ORONO NTT passim

ROEM S ol oe 6 SEN m nie ener ee passim

EP ea FO Ie viccnoecionaeicioadincueliduonceclidiaiains 16

Natural Gas Policy Act of -1978 15 U.S.C.

Fe I astikencetie nnccds Nemcucaececneeauas 4

Natural Gas Wellhead Decontrol Act of 1989

Pub. L. No. 101-60, 103 Stat. 157 (1989).......... 4-5

Outer Continental Shelf Lands Act

a Of ef” TRE ea eee passim

FF pees WRIT sia cinsice) nssiisscevmssticmivionduidons 8

Be Ge ies 0 OE weteeinccsciscstiecntakecsbinacseninnes 9

OF Ca CPE sesceriscicnnecticcatsvinccnpiipasbannk 9

BD Ap De EI vs ckasiicscsviniaehinrvettiancacinnntanie 9

FF Rates A BENS Pid scensinsasnicicviseaciaamenicdie 9

SS UGA. D TSP HAD esssieisvcrssscctivsissosions 6,9

TABLE OF AUTHORITIES—Continued

43 U.S.C. § 1334(£)(1)(B).....ccrcccccsrccrssevescoeees 9

GS VBA. TGF vencvaceienteniverestnnsnctinnrnseminenation 9

GS UGG. 9B La bissecvsonsvcennsoccapesansonsnononnonetenses 9

BS USA § TPIT) cerasesosercrssecevecnsntvnsanionnsstss 8

GS U.S.C. 9-1 EDs cernesvessceseserecsonsesssevasie 8

Outer Continental Shelf Lands Act Amendments

of 1978, Pub. L. No. 95-372, 92 Stat. 629

(FSMD vcsasevuiiiativndiubleinvamabuendaaaeiedibadiadassiilias 6

LEGISLATIVE HISTORY

124 Cong. Rec. 2092-93 (Feb. 2, 1978).............006 8

IN THE

Supreme Court of the United States

No. 02-1215

THE PRODUCER COALITION,

Petitioner,

Vv.

FEDERAL ENERGY REGULATORY COMMISSION, et al.,

Respondents.

No. 02-1265

EXXONMOBIL GAS MARKETING COMPANY,

A DIVISION OF EXXON MOBIL CORPORATION, ef ai.,

Petitioners,

FEDERAL ENERGY REGULATORY COMMISSION, et al.,

Respondents.

On Petitions for Writs of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF RESPONDENT

WILLIAMS GAS PROCESSING-GULF COAST

COMPANY, L.P. IN OPPOSITION

Respondent Williams Gas Processing-Gulf Coast Com-

pany, L.P. (“Williams”) respectfully requests that this Court

deny the above-captioned petitions for writs of certiorari,

which seek review of ExxonMobil Gas Marketing Co. v.

FERC, 297 F.3d 1071 (D.C. Cir. 2002) (“ExxonMobil”).

Williams, an intervenor in the proceedings below, owns and

operates natural gas gathering and processing facilities on the

Outer Continental Shelf (“OCS”) of the Gulf of Mexico. In

ExxonMobil, the United States Court of Appeals for the

District of Columbia Circuit (“D.C. Circuit’) upheld orders of

the Federal Energy Regulatory Commission (“FERC” or the

“Commission” ruling that certain OCS facilities owned by

Respondent Sea Robin Pipeline Company (“Sea Robin’) are

natural gas “gathering” facilities, which are exempt from

FERC’s jurisdiction pursuant to section 1(b) of the Natural

Gas Act (“NGA”). 15 U.S.C. § 717(b). Petitioners assert that

the orders affirmed in ExxonMobil reflect an impermissible

interpretation of the NGA’s gathering exemption. Williams

respectfully submits that the D.C. Circuit properly applied the

two-step analysis prescribed by this Court in Chevron U.S.A.

Inc. v. Natural Resources Defense Council, 467 U.S. 837

(1984), in ruling that FERC’s interpretation of NGA section

1(b) is reasonable. Accordingly, review by this Court is

unwarranted.

SUMMARY

The central theme of the petitions is that the classification

of various of Sea Robin’s OCS facilities as exempt

“gathering” leaves Sea Robin as an unconstrained monopolist

on the OCS and, thus, review of ExxonMobil is warranted to

protect consumers from unregulated rates on OCS pipelines.

But Petitioners fail to mention the most important fact: in

ExxonMobil, FERC did not relinquish jurisdiction over any

rates on any OCS pipeline.

Thus, after ExxonMobil, just as before, FERC continues to

exercise plenary rate jurisdiction over Sea Robin’s entire

pipeline system, including the “gathering” facilities at issue

here, because Sea Robin remains a “natural gas company”

under the NGA. In final, nonappealable rate determinations,

FERC ordered Sea Robin to file gathering rates, found those

rates to be “unjust and unreasonable” under NGA section 5,

established procedures to set just and reasonable gathering

rates, and ultimately approved a settlement (to which the

Petitioners are parties) establishing reduced gathering rates.'

On this basis alone, the petitions should be denied.

Moreover, even under Petitioners’ hypothetical case where

NGA rate regulation over gathering would be relinquished,

there still would not be a regulatory gap. Petitioners’

contrary claims disregard the fact that Congress enacted

the Outer Continental Shelf Lands Act (“OCSLA”), 43

U.S.C. § 1331, et seq., to guarantee shippers open and

nondiscriminatory access to all OCS pipelines, including

NGA-exempt gathering lines.

Finally, ExxonMobil is consistent with the decisions of this

Court and each of the Circuits that have addressed similar

issues. In fact, in an earlier phase of this case, on the

identical facts, the Fifth Circuit vacated and remanded FERC

orders that attempted the same result Petitioners seek here,

that is, to assert jurisdiction over Sea Robin’s entire system.

Sea Robin Pipeline Co. v. FERC, 127 F.3d 365 (5th Cir.

1997) (“Sea Robin-I’).2 Petitioners would jettison the legal

basis that has governed more than fifty years of natural gas

industry regulation, including the past two decades of

industry restructuring that has increased competition and

market access through the “unbundling” of natural gas sales,

transportation, and gathering services.

' Sea Robin Pipeline Co., 87 FERC 4 61,384, at 62,432, ordering para.

FERC 4 61,137, at 61,525 (2001), on compliance filing, 95 FERC

{ 61,329, at 62,172-73, approving settlement, 98 FERC 4 61,263 (2002).

? Dissatisfied with the decision of the Fifth Circuit, Petitioners

appealed FERC’s remand orders (which divided Sea Robin’s system into

jurisdictional and nonjurisdictional segments) to the D.C. Circuit, which

again rejected Petitioners’ position.

STATUTES INVOLVED

In addition to the statutes attached to the petitions, this case

involves various provisions of the OCSLA, which are

reproduced in the Appendix to this brief.

STATEMENT OF THE CASE

The reclassification of portions of Sea Robin’s system as

exempt “gathering” is an outgrowth of congressional and

regulatory enactments that have restructured the natural gas

industry. Since the NGA’s inception in 1938, section 1(b)

has stated that the NGA “shall not apply to . . . the production

or gathering of natural gas.” 15 U.S.C. § 717(b). Consistent

with that statutory restriction, FERC has never regulated

gathering performed by “independent” gatherers, i.e., those

that do not also provide bundled NGA-jurisdictional services.

In contrast, gathering and production activities performed by

interstate pipelines have long been FERC-regulated because

those activities were “bundled” with the pipelines’ NGA-

jurisdictional sales and transportation services.

In the 1970s, the structure of the natural gas industry

changed dramatically in response to the failure of gas price

controls and resulting gas shortages. See United Distrib. Cos.

v. FERC, 88 F.3d 1105, 1123 (D.C. Cir. 1996). Those

circumstances prompted Congress to enact measures to limit

regulation and foster competition in the natural gas industry.

For example, the Natural Gas Policy Act of 1978, 15 U.S.C.

§ 3301, et seq., required the phased deregulation of wellhead

prices for certain categories of gas, and later the Natural

Gas Wellhead Decontrol Act of 1989, Pub. L. No. 101-60,

* Such authority was recognized by this Court in Colorado Interstate

Gas Co. v. FPC, 324 U.S. 581, 603 (1945) (NGA “does not preclude the

Commission from reflecting the production and gathering facilities of a

natural gas company .. . for the purposes of determining the

reasonableness of rates subject to its jurisdiction”).

2 te RR

103 Stat. 157 (1989), phased out all remaining wellhead price

controls. Following Congress’ lead, FERC established a

program of open-access and nondiscriminatory transportation,

and later mandated the unbundling of gas sales and interstate

_ transportation. Conoco Inc. v. FERC, 90 F.3d 536, 539-40

(D.C. Cir. 1996). Congress saw the Commission’s imple-

mentation of open-access transportation as “essential” to its

decision to deregulate wellhead sales. See United Distri-

bution, 88 F.3d at 1125.

This restructuring ended the interstate pipelines’ decades-

old role as merchants of bundled service (i.e., purchasing,

gathering, transporting, and reselling natural gas as a single

service) and transformed them into open-access transporters,

effectively serving as common carriers. See id. at 1122-30.

Absent their former merchant sales obligations, pipelines no

longer needed to own extensive gathering systems to secure

gas supplies (see Conoco, 90 F.3d at 539-41), and pipelines

began “unbundling” their NGA-exempt gathering facilities

from their NGA-regulated transportation facilities. To assure

implementation of these policies, FERC required pipelines to

“separately identify cost components attributable to trans-

portation, storage, and gathering costs.’* With gathering

“unbundled” as a stand-alone service, various interstate

pipelines transferred their gathering facilities to non-NGA-

regulated companies that could compete on equal footing

with non-NGA-regulated independent gatherers, such ‘as a

number of the Petitioners (or their affiliates). See Conoco, 90

F.3d at 541. Over the past two decades, onshore pipelines

4 Policy Statement Providing Guidance with Respect to the Designing

of Rates, 47 FERC § 61,295, at 62,059 (1989), (quoting regulations now

codified at 18 C.F.R. § 284.10(c)(2)). See also Natural Gas Gathering

Services Performed by Interstate Pipelines and Interstate Pipeline

Affiliates, 65 FERC § 61,136, at 61,690 (1993) (“The Commission has

required gathering rates to be separately stated and unbundled from

mainline transportation rates in a number of restructuring cases.”).

have largely completed their unbundling of gathering, and

offshore pipelines, such as Sea Robin, likewise have re-

quested FERC determinations to identify and unbundle their

NGA-exempt gathering facilities.”

In tandem with these pro-competitive restructuring

initiatives, Congress amended and strengthened the OCSLA

to ensure the expeditious and orderly development of OCS

resources consistent with certain “competitive principles” to

protect OCS shippers. See OCSLA Amendments of 1978,

Pub. L. No. 95-372, 92 Stat. 629 (1978). Among other

things, the OCSLA requires all OCS pipelines to “provide

open and nondiscriminatory access to both owner and

nonowner shippers.” 43 U.S.C. § 1334(f)(1)(A).

REASONS FOR DENYING THE PETITIONS

A. This Case Is Not Appropriate For Review Because

The Claimed Harm To Consumers Is Non-

Existent.

Petitioners claim that review is necessary to protect the

reliance interests of gas producers arising from prior NGA

regulation of OCS facilities, and to protect gas consumers

from unregulated rates on OCS pipelines. Petitioners’

contention has no merit. The harm alleged in their petitions

does not exist here because FERC has not relinquished NGA

rate jurisdiction over any of the facilities at issue.

> Originally, Sea Robin requested a declaratory order that its entire

pipeline system functions as NGA-exempt gathering. FERC denied that

request, ruling that Sea Robin’s entire system is jurisdictional. Sea Robin

Pipeline Co., 71 FERC 4 61,351 (1995), reh’g denied, 75 FERC § 61,332

(1996). On appeal in Sea Robin-l, the Fifth Circuit vacated and remanded

FERC’s orders. On remand, FERC ruled that the portion of Sea Robin’s

system upstream of the Vermilion 149 Station is NGA-exempt gathering,

while the portion downstream of that point is jurisdictional. Petitioners

appealed FERC’s remand orders in ExxonMobil.

Specifically, notwithstanding FERC’s determination that a

portion of Sea Robin’s OCS facilities constitute exempt

“gathering” under NGA section 1(b), FERC ruled that it has

full NGA rate authority over Sea Robin’s entire offshore

system, including its gathering facilities:

Sea Robin also asserts that the Commission lacks the

authority to require Sea Robin to file gathering rates

after revoking its NGA Section 7 certificate for the

gathering facilities. Sea Robin is incorrect. In Northern

Natural Gas Company, Division of Enron Corp. v.

FERC, 929 F.2d 1261, 1263 (8th Cir. 1991), cert.

denied, 502 U.S. 856 (1991), the Court ruled that the

FERC “may regulate rates charged for transportation on

the company’s own gathering facilities performed in

connection with jurisdictional interstate transportation.”

Here, Sea Robin still owns the subject gathering

facilities that are used to bring gas to the jurisdictional

portion of its system where <he gas continues on its way

in interstate commerce. As a result, Sea Robin's

gathering rates are within the Commission's rate juris-

diction under the NGA.

Sea Robin, 94 FERC at 61,525 (emphasis added) (footnote

omitted). Moreover, FERC exercised its NGA authority in

ruling that Sea Robin’s rates, including its gathering rates, are

“unjust and unreasonable” and requiring Sea Rubin to file

“separately stated, fully allocated, cost-based rates for [its]

transportation and gathering services.” Sea Robin, 95 FERC

at 61,172 (footnote omitted). It bears emphasis that the

Petitioners participated in Sea Robin’s rate proceeding and

successfully argued that FERC should require Sea Robin to

reduce its rates for gathering and other services.

In short, the lynchpin of Petitioners’ claims regarding the

necessity for this Court’s review, specifically, FERC’s

purported relinquishment of NGA rate jurisdiction, is non-

existent. For that reason alone, review by this Court cannot

be justified.

B. Even Under Petitioners’ Hypothetical Of Dis-

continued FERC Rate Regulation, There Is No

“Regulatory Gap” With Respect To OCS

Gathering Lines.

Moreover, even assuming the validity of Petitioners’

hypothetical, i.e., the absence of NGA regulation over OCS

gathering lines, no regulatory gap would result, contrary to

Petitioners’ claims.° That is because the OCSLA protects all

shippers on all OCS pipelines, including NGA-exempt

gathering lines.

When Congress amended the OCSLA in 1978 (at about the

same time that it commenced partial decontrol of wellhead gas

prices), it specifically rejected an amendment to extend NGA

jurisdiction to all OCS gas pipelines. 124 Cong. Rec. 2092-93

(Feb. 2, 1978). Moreover, Congress recognized that “the Outer

Continental Shelf is a vital national resource . . . which should

be made available for expeditious and orderly developmient

. .. In a manner which is consistent with the mairtenance of

competition and other national needs.” 43 U.S.C. § 1332(3)

(emphasis added). See also 43 U.S.C. § 1801(7) (finding that

the OCS must be managed “to preserve and maintain

competition”); 43 U.S.C. § 1802(2)(D) (a purpose of the Act

is “to preserve and maintain free enterprise competition”);

° Of course, a purported “regulatory gap” cannot support Commission

jurisdiction over facilities that otherwise qualify as exempt “gathering.”

ExxonMobil, 297 F.3d at 1088 (“We emphatically agree that ‘need for

regulation cannot alone create authority to regulate’”) (quoting Sea Robin-

I, 127 F.3d at 371); Northwest Pipeline Co. v. FERC, 905 F.2d 1403, 1412

(10th Cir. 1990) (“If, upon proper application of the primary function test,

the facilities are indeed exempt from Commission jurisdiction, whatever

‘attractive [regulatory] gap’ results was clearly created by Congress.”).

43 U.S.C. § 1334(a) (requiring consultation with the Attorney

General on “matters which may affect competition”); 43

U.S.C. § 1334(f) (mandating “competitive principles” to

govern OCS pipeline operations).

Chief among those “competitive principles” was Congress’

mandate that all OCS pipelines “must provide open and

nondiscriminatory access to both owner and nonowner

shippers.” 43 U.S.C. § 1334 (f)(1)(A). Other sections of the

OCSLA allow FERC in appropriate circumstances to allocate

pipeline capacity in “proportionate amounts” (43 U.S.C. § 1334

(e)), order pipeline expansions (43 U.S.C. § 1334 (f)(1)(B)),

and condition permits to ensure compliance with the OCSLA’s

“competitive principles.” 43 U.S.C. § 1334 (f)(1). Violators of

the OCSLA are subject to injunctions and civil and criminal

penalties (43 U.S.C. § 1350), as well as citizens suits. 43

U.S.C. § 1349. To implement these congressional mandates,

FERC policy calls for vigorous response to complaints filed

pursuant to the OCSLA by shippers on OCS -gathering

pipelines. OCS Policy Statement, 74 FERC § 61,222, at

61,758 (1996).

In short, Congress was well aware that its OCSLA

regulatory scheme would leave OCS “gathering” pipelines

exempt from NGA rate regulation, but chose instead to

regulate OCS pipelines by enhancing “competition” and

providing comprehensive mechanisms, described above, to

prevent abuse in the marketplace. Thus, Congress avoided

the purported “regulatory gap” about which Petitioners

complain.

e. ExxonMobil Is Consistent With Decisions Of This

Court And Other Circuits.

The decision below properly applied Chevron’s two-step

analysis in reviewing FERC’s interpretation of the term

“gathering” as used in NGA section 1(b). In that regard, no

party disputes that, in the NGA, Congress has not “directly

spoken to” the meaning of the term “gathering.” Chevron,

467 U.S. at 842. Thus, the reviewing court’s task is to

determine “whether the agency’s answer is based on a

permissible construction of the statute” (id. at 843), and it

must accord “deference” and “considerable weight” to the

agency’s construction of the statute. /d. at 844. Ignoring

Chevron, Petitioners argue that FERC’s interpretation of

NGA section 1(b) conflicts with Northern Natural Gas Co. v.

State Corp. Commission, 372 U.S. 84 (1963) and other

decisions of this Court and the Circuits. Petitioners’ position

is seriously flawed.

1. Northern Natural is a preemption case that concerned

orders of the Kansas State Corporation Commission

attempting to regulate the manner in which pipelines purchase

gas from production fields for resale in interstate markets.

The Corporation Commission’s orders required each pipeline

to purchase gas “ratably” from all Kansas wells to which a

given pipeline was connected. /d. at 86. This Court rejected

the argument that the NGA’s “gathering or production”

exemption allowed the state to dictate the manner in which

sales are made in interstate markets. /d. at 89-93. The Court

explained that “‘production’ and ‘gathering’ are terms

narrowly confined to the physical acts of drawing the gas

from the earth and preparing it for the first stages of

distribution.” Jd. at 90 (emphasis added). Petitioners distort

the holding of Northern Natural, which recognized the

“physical” basis for NGA-exempt gathering, as distinct from

“business” activities such as gas sales conducted from the

gathering facilities. See also Phillips Petroleum Co. v.

Wisconsin, 347 U.S. 672, 678, 681 (1954) (“the ‘production

or gathering’ exemption applies to the physical activities,

facilities, and properties used in the production and gathering

of natural gas,” but not to “the ‘business’ of production or

gathering, with the sale of the product considered an integral

part of such ‘business.””).’

The jurisdictional determination affirmed below is fully

consistent with the “physical” nature of gathering recognized

in Northern Natural and Phillips. Indeed, for over fifty years,

the Commission has distinguished non-jurisdictional gath-

ering from jurisdictional transportation based on various

“physical criteria,” and since 1983 those criteria have been

embodied in the Commission’s “primary function” test.

ExxonMobil, 297 F.3d at 1077. In this case, the Commission

considered “13 physical factors . . . in concluding that the

[Sea Robin] facilities upstream of the Vermilion 149 Station

are engaged in non-jurisdictional gathering.” Jd. at 1081

(emphasis added). Moreover, the Sea Robin system “carries

a raw stream of unpurified natural gas and_ liquid

hydrocarbons taken directly from the gas wells” (id. at 1078),

and delivers the raw gas to compressor stations and

processing plants near Erath, Louisiana, “where the gas is

separated, dehydrated, and processed . . . [in preparation] for

delivery to downstream transmission pipelines at five nearby

entry points.” Jd. Such physical factors are fully consistent

with the Court’s recognition in Northern Natural that

gathering involves “preparing [the gas] for the first stages of

distribution.”* 372 U.S. at 90.

J Additionally, while Phillips held that producer sales for resale in

interstate commerce are subject to FERC’s jurisdiction, Phillips left intact

FERC’s (then the Federal Power Commission) NGA exemption for gas

processing plants and the pipelines delivering gas to them. See Phillips

Petroleum Co., 10 FPC 246, 277-78 (1951).

* The fact that Sea Robin’s entire System moves raw, unprocessed gas

to Erath for processing indicates that Sea Robin’s entire system may serve

an NGA-exempt gathering function, as Sea Robin contended in its

original petition to FERC. See supra note 5. Indeed, the court below (297

F.3d. at 1084) stated: “Were we the Federal Energy Regulatory Com-

Ignoring the “physical” realities of gathering recognized in

Northern Natural and Phillips (as well as over fifty years of

Commission practice), Petitioners argue that “[i]n section

1(b) of the NGA, Congress adopted the ‘mechanical’ line of

this Court’s Commerce Clause cases ‘as the statutory line

dividing federal and state jurisdiction’” (Petition No. 02-1265

at 13) (internal quotes omitted), and that the scope of

gathering is limited by a purported “congressional intent to

occupy the field of interstate commerce in natural gas.” /d. at

18. Petitioners’ theory is flatly contradicted by this Court’s

reccegnition that:

When it enacted the NGA, Congress carefully divided

up regulatory power over the natural gas industry. /f

“did not envisage federal regulation of the entire

natural-gas field to the limit of constitutional power.

Rather it contemplated the exercise of federal power as

specified in the Act.”

Northwest Cent. Pipeline Corp. v. State Corp. Comm'n, 489

U.S. 493, 510 (1989) (quoting FPC v. Panhandle E. Pipe Line

Co., 337 U.S. 498, 502-03 (1949)) (emphasis added).

Recognizing Congress’ careful limitation of federal authority

under the NGA, in Northwest Central the Court explained

that section 1(b)’s gathering and production exemption,

mission, we might draw the [jurisdictional] line at Erath.” However, the

issue of whether FERC should have found Sea Robin’s entire system

nonjurisdictional was not before the court in ExxonMobil because Sea

Robin did not appeal FERC’s orders on remand in Sea Robin-l.

Additionally, despite Petitioners’ repeated references to “consumer

protection” concerns, the raw, unprocessed gas moved by Sea Robin is

not suitable for sale to consumer markets and indeed no such consumer

markets exist on the OCS. Rather, in the restructured natural gas industry,

gas prices are set by competitive forces at the market or market “hubs”

well downstream of the field, while upstream producers and transporters

(including gatherers) allocate their respective shares of the downstream

market-set price on a “netback” basis. See Shell Gas Pipeline Co., 78

FERC 4 61,192, at 61,828-29 (1997) (Santa, Comm’r dissenting).

“expressly reserv[ed] to the States the power to regulate,

among other things ‘the production or gathering of natural

gas,’ that is, ‘the physical acts of drawing gas frem the earth

and preparing it for the first stages of distribution.’”” Jd.

(quoting Northern Natural, 372 U.S. at 90). Thus, Petitioners’

theory that Congress defined the NGA gathering exemption

as narrowly as constitutionally permissible is conclusively

refuted by Northwest Central’s recognition that the NGA’s

gathering exemption is not constricted by “federal regulation

. .. to the limit of constitutional power.” Jd.

Finally, the erroneous nature of Petitioners’ restrictive

interpretation of NGA section 1(b) is also demonstrated by

the fact that gathering commonly occurs in very large

pipeline networks that extend across state borders and

undeniably operate in interstate commerce. In fact, the

gathering systems involved in Phillips consisted of “nine such

networks of pipelines” of which “five are located entirely in

Texas, one in Oklahoma, one in New Mexico, and two extend

in both Texas and Oklahoma.” Phillips, 347 U.S. at 675

(emphasis added).

2. ExxonMobil is also consistent with decisions of other

Circuits that have addressed the scope of NGA-exempt

gathering. While Petitioners strain to portray a conflict

” Likewise, a number of Circuit decisions have recognized that NGA-

exempt gathering can occur in large pipeline systems operating in

interstate commerce. See e.g., Pac. Gas & Elec. Co. v. FERC, 106 F.3d

1190, 1193 (Sth Cir. 1997) (affirming the Commission’s relinquishment

of NGA jurisdiction over twenty-nine gathering facilities in New Mexico,

Colorado, Oklahoma, and Texas); Northwest Pipeline, 905 F.2d at 1404

(overturning FERC’s assertion of jurisdiction over six gathering facilities

in Colorado and Utah); Conoco, 90 F.3d at 541-50 (affirming FERC’s

relinquishment of jurisdiction over gathering facilities located at 105 sites

in Arkansas, Louisiana, Oklahoma, and Texas); and Lomak Petroleum,

Inc. v. FERC, 206 F.3d 1193, 1195-98 (D.C. Cir. 2000) (affirming

FERC’s relinquishment of jurisdiction over a gathering system located in

New York and Pennsylvania).

among the Circuits, just the opposite is true. '° The Circuits

that have addressed this issue have unanimously endorsed a

multi-factor analysis to identify NGA-exempt gathering

facilities based on the physical criteria of the Commission’s

“primary function” test. In fact, in an earlier phase of these

proceedings, the Fifth Circuit—just like the D.C. Circuit in

ExxonMobil—specifically rejected the Petitioners’ position

on the merits. Thus, in Sea Robin-/ the Fifth Circuit vacated

and remanded the Commission’s initial orders attempting to

assert jurisdiction over Sea Robin’s entire pipeline system,

i.e., the jurisdictional result advocated by Petitioners. The

Fifth Circuit recognized that “Congress drew a distinction

based on the physical patterns of the industry, gathering

versus transporting,” and admonished the Commission for

placing too much reliance on “non-physical” factors. Sea

Robin-I, 127 F.3d at 371 (emphasis added). The Fifth Circuit

held that “[i]f the Commission is to remain tethered to statute,

as it must, that [jurisdictional] inquiry must be based

primarily on physical criteria and the realities of the field.”

Id. (emphasis added). The Fifth Circuit even suggested that

FERC might (as FERC, in fact, did) adopt the Vermilion

Compressor Station as the jurisdictional demarcation point:

Discomfort in drawing jurisdictional lines at points

internal to an overall system may be soothed with the

reminder that Congress did not intend to extend FERC’s

jurisdiction to all natural gas pipelines; indeed it

demands the drawing of jurisdictional lines, even when

the end of gathering is not easily located (consider, for

” Petitioners cite Circuit cases applying the unsurprising principle that

exceptions to a primary grant of authority should be strictly construed (see

Petition No. 02-1265 at 18), a principle with which ExxonMobil and the

subject FERC orders are fully consistent, as demonstrated by FERC’s

very conservative approach to relinquishing jurisdiction in the face of

record facts supporting a much broader nonjurisictional finding. See

supra note 8.

example, a distinction between the field south of the

Vermillion [sic] Compressor Station and the pipelines

leading north to Erath, Louisiana).

Id. In sum, ExxonMobil is fully consistent with the holding

and reasoning of the Fifth Circuit’s decision on the identical

facts in Sea Robin-I. Indeed, the instant Petitions are

effectively collateral attacks on Sea Robin-I.

Additionally, in EP Operating Co. v. FERC, 876 F.2d 46

(Sth Cir. 1989), the Fifth Circuit reversed the Commission’s

attempt to assert jurisdiction over a 51-mile OCS pipeline.

The court expressly rejected the theory (espoused by

Petitioners in the proceedings below) that exempt “gathering”

ends at the upstream floating platforms where gas is

produced. /d. at 49. The court ruled that the Commission’s

jurisdictional determination under the “primary function” test

must be based on “consideration of all the facts and

circumstances . . . rather than application of any overarching

bright line standards” (id. at 48), and found that the subject

51-mile pipeline functioned as “an integral part of the natural

gas gathering system” because it “is simply the most practical

way to move the product from the seabed to a point nearer

shore where it can be processed and introduced into a

pipeline.” /d. at 49.

Similarly, in Northwest Pipeline the Tenth Circuit over-

turned the Commission’s attempt to assert jurisdiction over

various gathering facilities owned by an interstate pipeline

and rejected the Commission’s argument that “ultimately, the

facilities are owned by and eventually connected to a

company which has as its primary function the interstate

transportation of gas.” 905 F.2d at 1410. The Tenth Circuit

emphasized that “[t]he gathering exemption was not meant to

attach only to certain owners/operators but to facilities” (id. at

1411), and found that the physical factors of the Com-

mission’s primary function analysis had been improperly

“subsumed” by the non-physical ownership consideration.

Id. at 1409-11."!

D. NGA Section 7(b) Abandonment Requirements Do

Not Apply To NGA-Exempt Gathering Facilities.

Nor is there any merit to Petitioners’ claim that FERC was

required to conduct a public interest “abandonment” analysis

under NGA section 7(b) with respect to facilities found to be

NGA-exempt gathering. Petition No. 1265 at 22-27. First, as a

practical matter, Sea Robin did not “abandon” any services (/.e.,

service was not terminated to any customers). See ExxonMobil,

297 F.3d at 1088. Second, and more fundamentally, in

Panhandle, 337 U.S. at 509, this Court, relying on the plain

words of the statute, held that the abandonment requirements of

NGA section 7(b) apply only to “facilities subject to the

jurisdiction of the Commission,” and not to “gathering”

facilities exempt from the NGA under section 1(b). The Court

rejected arguments of the Federal Power Commission (now

FERC) that otherwise exempt production or gathering facilities

would nevertheless be subject to section 7(b):

The argument here is that since natural gas is the

“lifeblood” of a pipe-line system, a company by disposing

of its gas reserves, unhampered by Commission control,

may render itself unable to continue service; consequently

abandonment of facilities and service without the consent

of the Commission will result. The argument begs the

Finally, Petitioners argue that FERC’s nonjurisdictional

determination for portions of Sea Robin’s system must be unreasonable

because a jurisdictional pipeline (the Garden Banks pipeline)

interconnects with Sea Robin’s gathering facilities. _ However, the

ExxonMobil court properly disposed of that argument noting that in prior

cases presenting such a circumstance, the jurisdictional upstream pipeline

was ultimately reclassified, which “suggests that it is the Garden Banks

pipeline, rather than Sea Robin, that has been erroneously classified.” 297

F.3d at 1087.

question. The section, like those above, covers only

“facilities subject to the jurisdiction of the Commission.”

To accept these arguments springing from power to

allow interstate service, fix rates, and control aban-

donment would establish wide control by the Federal

Power Commission over the production and gathering of

gas. It would invite expansion of power into other phases

of the forbidden area. It would be an assumption of

powers specifically denied the Commission by the words

of the Act....

Id. at 509 (footnotes omitted) (emphasis added).'”

CONCLUSION

Wherefore, Respondent Williams Gas Processing-Gulf

Coast Company respectfully submits that the Petitions for

Writs of Certiorari should be denied.

Respectfully submitted,

MARI M. RAMSEY JAMES T. MCMANUS

Senior Attorney (Counsel of Record)

THE WILLIAMS COMPANIES JOSEPH S. KOURY

One Williams Center, 41st Floor WRIGHT & TALISMAN, P.C.

Tulsa, Oklahoma 74172 1200 G Street, N.W., Suite 600

(918) 588-2611 Washington, D.C. 20005

(202) 393-1200

Counsel for Williams Gas Processing-Gulf Coast Company, L.P.

May 30, 2003

'? The abandonment cases cited by Petitioner (Petition No. 02-1265 at 22-

25) are off point. In ExxonMobil, the subject service was NGA-exempt

gathering, while the cases cited by Petitioner involved the abandonment of

NGA-jurisdictional sales or transportation services.

APPENDIX

Excerpts from Outer Continental Shelf Lands Act, 43

U.S.C. § 1331, et seq.

43 U.S.C. § 1332 (2003)

§ 1332. Congressional declaration of policy

It-is hereby declared to be the policy of the United States

that—

(1) the subsoil and seabed of the outer Continental Shelf

appertain to the United States and are subject to its

jurisdiction, control, and power of disposition as provided in

this Act;

(2) this Act shall be construed in such a manner that the

character of the waters above the outer Continental Sheif as

high seas and the right to navigation and fishing therein shall

not be affected;

(3) the outer Continental Shelf is a vital national resource

reserve held by the Federal Government for the public, which

should be made available for expeditious and orderly

development, subject to environmental safeguards, in a

manner which is consistent with the maintenance of

competition and other national needs;

(4) since exploration, development, and production of the

minerals of the outer Continental Shelf will have significant

impacts on coastal and non-coastal areas of the coastal States,

and on other affected States, and, in recognition of the

national interest in the effective management of the marine,

coastal, and human environments—

(A) such States and their affected local governments

may require assistance in protecting their coastal zones and

other affected areas from any temporary or permanent

adverse effects of such impacts;

(B) the distribution of a portion of the receipts from the

leasing of mineral resources of the outer Continental Shelf

adjacent to State lands, as provided under section 8(g) [43

U.S.C. § 1337(g)], will provide affected coastal States and

localities with funds which may be used for the mitigation of

adverse economic and environmental effects related to the

development of such resources; and

governments, are entitled to an opportunity to participate, to

the extent consistent with the national interest, in the policy

and planning decisions made by the Federal Government

relating to exploration for, and development and production

of, minerals of the outer Continental Shelf].;]

(5) the rights and responsibilities of all States and, where

appropriate, local governments, to preserve and protect their

marine, human, and coastal environments through such

means as regulation of land, air, and water uses, of safety, and

of related development and activity should be considered and

recognized; and

(6) operations in the outer Continental Shelf should be

conducted in a safe manner by well-trained personnel using

technology, precautions, and techniques sufficient to prevent

or minimize the likelihood of blowouts, loss of well control,

fires, spillages, physical obstruction to other users of the

waters or subsoil and seabed, or other occurrerices which may

cause damage to the environment or to property, or endanger

life or health.

43 U.S.C. § 1334 (2003)

§ 1334. Administration of leasing

(a) Rules and regulations; amendment; cooperation with State

agencies; subject matter and scope of regulations.

The Secretary shall administer the provisions of this Act

relating to the leasing of the outer Continental Shelf, and shall

prescribe such rules and regulations as may be necessary to

carry out such provisions. The Secretary may at any time

prescribe and amend such rules and regulations as he

determines to be necessary and proper in order to provide for

the prevention of waste and conservation of the natural

resources of the outer Continental Shelf, and the protection of

correlative rights therein, and, notwithstanding any other

provisions herein, such rules and regulations shall, as of their

effective date, apply to all operations conducted under a lease

issued or maintained under the provisions of this Act. In the

enforcement of safety, environmental, and conservation laws

and regulations, the Secretary shall cooperate with the

relevant departments and agencies of the Federal Government

and of the affected States. In the formulation and

promulgation of regulations, the Secretary shall request and

give due consideration to the views of the Attorney General

with respect to matters which may affect competition. In

considering any regulations and in preparing any such views,

the Attorney General shail consult with the Federai Trade

Commission. The regulations prescribed by the Secretary

under this subsection shall include, but not be limited to,

provisions—

(1) for the suspension or temporary prohibition of any

operation or activity, including production, pursuant to any

lease or permit (A) at the request of a lessee, in the national

interest, to facilitate proper development of a lease or to allow

for the construction or negotiation for use of transportation

facilities, or (B) if there is a threat of serious, irreparable, or

immediate harm or damage to life (including fish and other

aquatic life), to property, to any mineral deposits (in areas

leased or not leased), or to the marine, coastal, or human

environment, and for the extension of any permit or lease

affected by suspension or prohibition under clause (A) or (B)

by a period equivalent to the period of such suspension or

prohibition, except that no permit or lease shall be so

extended when such suspension or prohibition is the result of

gross negligence or willful violation of such lease or permit,

or of regulations issued with respect to such lease or permit;

(2) with respect to cancellation of any lease or permit—

(A) that such cancellation may occur at any time, if the

Secretary determines, after a hearing, that—

(i) continued activity pursuant to such lease or permit

would probably cause serious harm or damage to life

(including fish and other aquatic life), to property, to any

mineral (in areas leased or not leased), to the national security

or defense, or to the marine, coastal, or human environment;

(ii) the threat of harm or damage will not disappear or

decrease to an acceptable extent within a reasonable period of

time; and

(iii) the advantages of cancellation outweigh the

advantages of continuing such lease or permit in force;

(B) that such cancellation shall not occur unless and

until operations under such lease or permit shall have been

under suspension, or temporary prohibition, by the Secretary,

with due extension of any lease or permit term continuously

for a period of five years, or for a lesser period upon request

of the lessee;

receive such compensation as he shows to the Secretary as

being equal to the lesser of (i) the fair value of the canceled

rights as of the date of cancellation, taking account of both

anticipated revenues from the lease and anticipated costs,

including costs of compliance with all applicable regulations

and operating orders, liability for cleanup costs or damages,

or both, in the case of an oilspill, and all other costs

reasonably anticipated on the lease, or (ii) the excess, if any,

over the lessee’s revenues, from the lease (plus interest

thereon from the date of receipt to date of reimbursement) of

all consideration paid for the lease and all direct expenditures

made by the lessee after the date of issuance of such lease and

in connection with exploration or development, or both,

pursuant to the lease (plus interest on such consideration and

such expenditures from date of payment to date of

reimbursement), except that (I) with respect to leases issued

before the date of enactment of this subparagraph [enacted

Sept. 18, 1978], such compensation shall be equal to the

amount specified in clause (i) of this subparagraph; and (II) in

the case of joint leases which are canceled due to the failure

of one or more partners to exercise due diligence, the

innocent parties shall have the right to seek damages for such

loss from the responsible party or parties and the right to

acquire the interests of the negligent party or parties and be

issued the lease in question;

(3) for the assignment or relinquishment of a lease:

(4) for unitization, pooling, and drilling agreements;

(5) for the subsurface storage of oil and gas other than by

the Federal Government;

(6) for drilling or easements necessary for exploration,

development, and production;

(/)for the prompt and efficient exploration and

development of a lease area; and

(8) for compliance with the national ambient air quality

Standards pursuant to the Clean Air Act (42 U.S.C.§ 7401

et seq.), to the extent that activities authorized under this Act

significantly affect the air quality of any State.

(b) Compliance with regulations as condition for issuance,

continuation, assignment, or other transfer of leases.

The issuance and continuance in effect of any lease, or of

any assignment or other transfer of any lease, under the

provisions of this Act shall be conditioned upon compliance

with regulations issued under this Act.

Whenever the owner of a nonproducing lease fails to

comply with any of the provisions of this Act, or of the lease,

or of the regulations issued under this Act, such lease may be

canceled by the Secretary, subject to the right of judicial

review as provided in this Act, if such default continues for

the period of thirty days after mailing of notice by registered

letter to the lease owner at his record post office address.

(d) Cancellation of producing lease.

Whenever the owner of any producting lease fails to

comply with any of the provisions of this Act, of the lease, or

of the regulations issued under this Act, such lease may be

forfeited and canceled by an appropriate proceeding in any

United States district court having jurisdiction under the

provisions of this Act.

(e) Pipeline rights of way; forfeiture of grant.

Rights-of-way through the submerged lands of the outer

Continental Shelf, whether or not such lands are included in a

lease maintained or issued pursuant to this Act, maybe

granted by the Secretary for pipeline purposes for the

transportation of oil, natural gas, sulphur, or other minerals,

or under such regulations and upon such conditions as may be

prescribed by the Secretary, or where appropriate the

Secretary of Transportation, including (as provided in section

21(b) of this Act [43 U.S.C. § 1347(b)]) assuring maximum

environmental protection by utilization of the best available

and safest technologies, including the safest practices for

pipeline burial and upon the express condition that oil or gas

pipelines shall transport or purchase without discrimination,

oil or natural gas produced from submerged lands or outer

Continental Shelf lands in the vicinity of the pipelines in such

proportionate amounts as the Federal Energy Regulatory

Commission, in consultation with the Secretary of Energy,

may, after a full hearing with due notice thereof to the

interested parties, determine to be reasonable, taking into

account, among other things, conservation and the prevention

of waste. Failure to comply with the provisions of this section

or the regulations and conditions prescribed under this section

shall be ground for forfeiture of the grant in an appropriate

judicial proceeding instituted by the United States in any

United States district court having jurisdiction under the

provisions of this Act.

(f) Competitive principles governing pipeline operation.

(1) Except as provided in paragraph (2), every permit,

license, easement, right-of-way, or other grant of authority for

the transportation by pipeline on or across the outer

Continental Shelf of oil or gas shall require that the pipeline

be operated in accordance with the following competitive

principles: -

(A) The pipeline must provide open and_nondis-

criminatory access to both owner and nonowner shippers.

(B) Upon the specific request of one or more owner or

nonowner shippers able to provide a guaranteed level of

throughput, and on the condition that the shipper or shippers

requesting such expansion shall be responsible for bearing

their proportionate share of the costs and risks related thereto,

the Federal Energy Regulatory Commission may, upon

finding, after a full hearing with due notice thereof to the

interested parties, that such expansion is within technological

limits and economic feasibility, order a subsequent expansion

of throughput capacity of any pipeline for which the permit,

license, easement, right-of-way, or other grant of authority is

approved or issued after the date of enactment of this

subparagraph [enacted Sept. 18, 1978]. This subparagraph

shall not apply to any such grant of authority approved or

issued for the Gulf of Mexico or the Santa Barbara Channel.

(2) The Federal Energy Regulatory Commission may, by

order or regulation, exempt from any or all of the

requirements of paragraph (1) of this subsection any pipeline

or class of pipelines which feeds into a facility where oil and

gas are first collected or a facility where oil and gas are first

separated, dehydrated, or otherwise processed.

(3) The Secretary of Energy and the Federal Energy

Regulatory Commission shall consult with and give due

consideration to the views of the Attorney General on specific

conditions to be included in any permit, license, easement,

right-of-way, or grant of authority in order to ensure that

pipelines are operated in accordance with the competitive

principles set forth in paragraph (1) of this subsection. In

preparing any such views, the Attorney General shall consult

with the Federal Trade Commission.

(4) Nothing in this subsection shall be deemed to limit,

abridge, or modify any authority of the United States under

any other provision of law with respect to pipelines on or

across the outer Continental Shelf.

(g) Rates of production.

(1) The leasee [lessee] shall produce any oil or gas, or both,

obtained pursuant to an approved development and

production plan, at rates consistent with any rule or order

issued by the President in accordance with any provision of

law.

(2) If no rule or order referred to in paragraph (1) has been

issued, the lessee shall produce such oil or gas, or both, at

rates consistent with any regulation promulgated by the

Secretary of Energy which is to assure the maximum rate of

production which may be sustained without loss of ultimate

recovery of oil or gas, or both, under sound engineering and

economic principles, and which is safe for the duration of the

activity covered by the approved plan. The Secretary may

permit the lessee to vary such rates if he finds that such

variance is necessary.

(h) Federal action affecting outer Continental Shelf;

notification; recommended changes.

The head of any Federal department or agency who takes

any action which has a direct and significant effect on the

outer Continental Shelf or its development shall promptly

notify the Secretary of such action and the Secretary shall

thereafter notify the Governor of any affected State and the

Secretary may thereafter recommend such changes in such

action as are considered appropriate.

(i) Flaring of natural gas.

After the date of enactment of this section [enacted Sept.

18, 1978], no holder of any oil and gas lease issued or

maintained pursuant to this Act shall be permitted to flare

natural gas from any well unless the Secretary finds that there

is no practicable way to complete production of such gas, or

that such flaring is necessary to alleviate a temporary

emergency situation or to conduct testing or work-over

operations.

(j) Cooperative development of common _hydrocarbon-

bearing areas.

(1) Findings. [(A)] The Congress of the United States finds

that the unrestrained competitive production of hydrocarbons

from a common hydrocarbon-bearing geological area

underlying the Federal and State boundary may result in a

number of harmful national effects, including—

(i) the drilling of unnecessary wells, the installation of

unnecessary facilities and other imprudent operating practices

that result in economic waste, environmental damage, and

damage to life and property;

(ii) the physical waste of hydrocarbons and an

unnecessary reduction in the amounts of hydrocarbons that

can be produced from certain hydrocarbon-bearing areas; and

10a

(iii) the loss of correlative rights which can result in the

reduced value of national hydrocarbon resources and

disorders in the leasing of Federal and State resources.

(2) Prevention of harmful effects. The Secretary shall

prevent, through the cooperative development of an area, the

harmful effects of unrestrained competitive production of

hydrocarbons from a common hydrocarbon-bearing area

underlying the Federal and State boundary.

43 U.S.C. § 1349 (2003)

§ 1349. Citizens suits, jurisdiction and judicial review

(a) Persons who may bring actions; persons against whom

action may be brought; time of action; intervention by

Attorney General; costs and fees; security.

(1) Except as provided in this section, any person having a

valid legal interest which is or may be adversely affected may

commence a civil action on his own behalf to compel

compliance with this Act against any person, including the

United States, and any other government instrumentality or

agency (to the extent permitted by the eleventh amendment to

the Constitution) for any alleged violation of any provision of

this Act or any regulation promulgated under this Act, or of

the terms of any permit or lease issued by the Secretary under

this Act.

(2) Except as provided in paragraph (3) of this subsection,

no action may be comnienced under subsection (a)(1) of this

section—

(A) prior to sixty days after the plaintiff has given notice

of the alleged violation, in writing under oath, to the

Secretary and any other appropriate Federal official, to the

State in which the violation allegedly occurred or is

occurring, and to any alleged violator; or

lla

(B) if the Attorney General has commenced and is

diligently prosecuting a civil action in a court of the United

States or a State with respect to such matter, but in any such

action in a court of the United States any person having a

legal interest which is or may be adversely affected may

intervene as a matter of right.

(3) An action may be brought under this subsection

immediately after notification of the alleged violation in any

case in which the alleged violation constitutes an imminent

threat to the public health or safety or would immediately

affect a legal interest of the plaintiff.

(4) In any action commenced pursuant to this section, the

Attorney General, upon the request of the Secretary or any

other appropriate Federal official, may intervene as a matter

of right.

(5) A court, in issuing any final order in any action brought

pursuant to subsection (a)(1) or subsection (c) of this section,

may award costs of litigation, including reasonable attorney

and expert witness fees, to any party, whenever such court

determines such award is appropriate. The court may, if a

temporary restraining order or preliminary injunction is

sought, require the filing of a bond or equivalent security in a

sufficient amount to compensate for any loss or damage

suffered, in accordance with the Federal Rules of Civil

Procedure.

(6) Except as provided in subsection (c) of this section, all

suits challenging actions or decisions allegedly in violation

of, or seeking enforcement of, the provisions of this Act, or

any regulation promulgated under this Act, or the terms of

any permit or lease issued by the Secretary under this Act,

shall be undertaken in accordance with the procedures

described in this subsection. Nothing in this section shall

restrict any right which any person or class of persons may

have under any other Act or common law to seek appropriate

relief.

12a

(b) Jurisdiction and venue of actions.

(1) Except as provided in subsection (c) of this section, 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

the minerals, of the subsoil and seabed of the outer

Continental Shelf, or which involves rights to such minerals,

or (B) the cancellation, suspension, or termination of a lease

or permit under this Act. Proceedings with respect to any

such case or controversy may be instituted in the judicial

district in which any defendant resides or may be found, or in

the judicial district of the State nearest the place the cause of

action arose.

(2) Any resident of the United States who is injured in any

manner through the failure of any operator to comply with

any rule, regulation, order, or permit issued pursuant to this

Act may bring an action for damages (including reasonable

attorney and expert witness fees) only in the judicial district

having jurisdiction under paragraph (1) of this subsection.

review of approval, modification or disapproval of

exploration or production plan; persons who may seek

review; scope of review; certiorari to Supreme Court.

(1) Any action~of the Secretary to approve a leasing

program pursuant to section 18 [43 U.S.C. § 1344] of this

Act shall be subject to judicial review only in the United

States Court of Appeal [Appeals] for the District of

Columbia.

(2) Any action of the Secretary to approve, require

modification of, or disapprove any exploration plan or any

development and production plan under this Act shall be

subject to judicial review only in a United States court of

appeals for a circuit in which an affected State is located.

13a

(3) The judicial review specified in paragraphs (1) and (2)

of this subsection shall be available only to a person who (A)

participated in the administrative proceedings related to the

actions specified in such paragraphs, (B) is adversely affected

or aggrieved by such action, (C) files a petition for review of

the Secretary’s action within sixty days after the date of such

action, and (D) promptly transmits copies of the petition to

the Secretary and to the Attorney General.

(4) Any action of the Secretary specified in paragraph (1)

or (2) shall only be subject to review pursuant to the

provisions of this subsection, and shall be specifically

excluded from citizen suits which are permitted pursuant to

subsection (a) of this section. 7

(5) The Secretary shall file in the appropriate court the

record of any public hearings required by this Act and any

additional information upon which the Secretary based his

decision, as required by section 2112 of title 28, United States

Code. Specific objections to the action of the Secretary shall

be considered by the court only if the issues upon which such

objections are based have been submitted to the Secretary

during the administrative proceedings related to the actions

involved.

(6) The court of appeals conducting a proceeding pursuant

to this subsection shall consider the matter under review

solely on the record made before the Secretary. The findings

of the Secretary, if supported by substantial evidence on the

record considered as a whole, shall be conclusive. The court

may affirm, vacate, or modify any order or decision or may

remand the proceedings to the Secretary for such further

action as it may direct.

(7) Upon the filing of the record with the court, pursuant to

paragraph (5), the jurisdiction of the court shall be exclusive

and its judgment shall be final, except that such judgment

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shall be subject to review by the Supreme Court of the United

States upon writ of certiorari.

(d) [Repealed]

43 U.S.C. § 1350 (2003)

§ 1350. Remedies and procedures

(a) Injunctions, restraining orders, etc.

At the request of the Secretary, the Secretary of the Army,

or the Secretary of the Department in which the Coast Guard

is operating, the Attorney General or a United States attorney

shall institute a civil action in the district court of the United

States for the district in which the affected operation is

located for a temporary restraining order, injunction, or other

appropriate remedy to enforce any provision of this Act, any

regulation or order issued under this Act, or any term of a

lease, license, or permit issued pursuant to this Act.

(b) Civil penalties; hearing.

(1) Except as provided in paragraph (2), if any person fails

to comply with any provision of this Act, or any term of a

lease, license, or permit issued pursuant to this Act, or any

regulation or order issued under this Act, after notice of such

failure and expiration of any reasonable period allowed for

corrective action, such person shall be liable for a civil

penalty of not more than $ 20,000 for each day of the

continuance of such failure. The Secretary may assess,

collect, and compromise any such penalty. No penalty shall -

be assessed until the person charged with a violation has been

given an opportunity for a hearing. The Secretary shall, by

regulation at least every 3 years, adjust the penalty specified

in this paragraph to reflect any increases in the Consumer

Price Index (all items, United States city average) as prepared

by the Department of Labor.

1Sa

(2) If a failure described in paragraph (1) constitutes or

constituted a threat of serious, irreparable, or immediate harm

or damage to life (including fish and other aquatic life),

property, any mineral deposit, or the marine, coastal, or

human environment, a civil penalty may be assessed without

regard to the requirement of expiration of a period allowed

for corrective action.

Any person who knowingly and willfully (1) violates any

provision of this Act, any term of a lease, license, or permit

issued pursuant to this Act, or any regulation or order issued

under the authority of this Act designed to protect health,

safety, or the environment or conserve natural resources, (2)

makes any false statement, representation, or certification in

any application, record, report, or other document filed or

required to be maintained under this Act, (3) falsifies,

tampers with, or renders inaccurate any monitoring device or

method of record required to be maintained under this Act, or

(4) reveals any data or information_required to be kept

confidential by this Act shall, upon conviction, be punished

by a fine of not more than $100,000, or by imprisonment for

not more than ten years, or both. Each day that a violation

under clause (1) of this subsection continues, or each day that

any monitoring device or data recorder remains inoperative or

inaccurate because- of any activity described in clause (3) of

this subsection, shall constitute a separate violation.

(d) Liability of corporate officers and agents for violations by

corporation.

Whenever a corporation or other entity is subject to

prosecution under subsection (c) of this section, any officer or

agent ci such corporation or entity who knowingly and

willfully authorized, ordered, or carried out the proscribed

activity shall be subject to the same fines or imprisonment, or

both, as provided for under subsection (c) of this section.

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(e) Concurrent and cumulative nature of penalties.

The remedies and penalties prescribed in this Act shall be

concurrent and cumulative and the exercise of one shall not

preclude the exercise of the others. Further, the remedies and

penalties prescribed in this Act shall be in addition to any

other remedies and penalties afforded by any other law or

regulation.

43 U.S.C. § 1801 (2003)

§ 1801. Congressional findings

The Congress finds and declares that—

(1) the demand for energy in the United States is increasing

and will continue to increase for the foreseeable future;

(2) domestic production of oil and gas has declined in

recent years;

(3) the United States has become increasingly dependent

upon imports of oil from foreign nations to meet domestic

energy demand;

(4) increasing reliance on imported oil is not inevitable, but

is rather subject to significant reduction by increasing the

development of domestic sources of energy supply;

(5) consumption of natural gas in the United States has

greatly exceeded additions to domestic reserves in recent

years;

(6) technology is or can be made available which will

allow significantly increased domestic production of oil and

gas without undue harm or damage to the environment;

(7) the Outer Continental Shelf contains significant

quantities of oil and natural gas and is a vital national

resource reserve which must be carefully managed so as to

realize fair value, to preserve and maintain competition, and

to reflect the public interest;

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(8) there presently exists a variety of technological,

economic, environmental, administrative, and legal problems

which tend to retard the development of the oil and natural

gas reserves of the Outer Continental Shelf:

(9) environmental and safety regulations relating to

activities on the Outer Continental Shelf should be reviewed

in light of current technology and information;

(10) the development, processing, and distribution of the

oil and gas resources of the Outer Continental Shelf, and the

siting of related energy facilities, may cause adverse impacts

on various States and local governments;

(11) policies, plans, and programs developed by States and

local governments in response to activities on the Outer

Continental Shelf cannot anticipate and ameliorate such

adverse impacts unless such States, working in close

cooperation with affected local governments, are provided

with timely access to information regarding activities on the

Outer Continental Shelf and an opportunity to review and

comment on decisions relating to such activities;

(12) funds must be made available to pay for the prompt

removal of any oil spilled or discharged as a result of

activities on the Outer Continental Shelf and for any damages

to public or private interests caused by such spills or

discharges;

(13) because of the possible conflicts between exploitation

of the oil and gas resources in the Outer Continental Shelf

and other uses of the marine environment, including fish and

shellfish growth and recovery, and recreational activity, the

Federal Government must assume responsibility for the

minimization or elimination of any conflict associated with

such exploitation;

(14) the oil and gas resources of the Outer Continental

Shelf are limited, nonrenewable resources which must be

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developed in a manner which takes into consideration the

Nation’s long-range energy needs and also assures adequate

protection of the renewable resources of the Outer

Continental Shelf which are a continuing and increasingly

important source of food and protein to the Nation and the

world; and

(15) funds must be r :de available to pay for damage to

commercial fishing vess ‘Is and gear resulting from activities

involving oil and gas exploration, development, and

production on the Outer Continental Shelf.

43 U.S.C. § 1802 (2003)

§ 1802. Congressional declaration of purposes

The purposes of this Act are to—

(1) establish policies and procedures for managing the oil

and natural gas resources of the Outer Continental Shelf

which are intended to result in expedited exploration and

development of the Outer Continental Shelf in order to

achieve national economic and energy policy goals, assure

national security, reduce dependence on foreign sources, and

maintain a favorable balance of payments in world trade;

(2) preserve, protect, and develop oil and natural gas

resources in the Outer Continental Shelf in a manner which is

consistent with the need (A) to make such resources available

to meet the Nation’s energy needs as rapidly as possible, (B)

to balance orderly energy resource development with

protection of the human, marine, and coastal environments,

resources of the Outer Continental Shelf, and (D) to preserve

and maintain free enterprise competition;

(3) encourage development of new and improved

technology for energy resource production which will

eliminate or minimize risk of damage to the human, marine,

and coastal environments;

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(4) provide States, and through States, local governments,

which are impacted by Outer Continental Shelf oil and gas

exploration, development, and production with compre-

hensive assistance in order to anticipate and plan for such

impact, and thereby to assure adequate protection of the

human environment;

(5S) assure that States, and through States, local

governments, have timely access to information regarding

activities on the Outer Continental Shelf, and opportunity to

review and comment on decisions relating to such activities,

in order to anticipate, ameliorate, and plan for the impacts of

such activities;

(6) assure that States, and through States, local

governments, which are directly affected by exploration,

development, and production of oil and natural gas are

provided an opportunity to participate in policy and planning

decisions relating to management of the resources of the

Outer Continental Shelf;

(7) minimize or eliminate conflicts between the

exploration, development, and production of oil and natural

gas, and the recovery of other resources such as fish and

shellfish;

(8) establish an oilspill liability fund to pay for the prompt

removal of any oil spilled or discharged as a result of

activities on the Outer Continental Shelf and for any damages

to public or private interest caused by such spills or

discharges;

(9) insure that the extent of oil and natural gas resources

of the Outer Continental Shelf is assessed at the earliest

practicable time; and

(10) establish a fishermen’s contingency fund to pay for

damages to commercial fishing vessels and gear due to Outer

Continental Shelf activities.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.