Exxonmobil gas marketing
The opinion of the court of appeals Pet. The judgment of the court of appeals was entered on August 6, The court of appeals denied rehearing on October 22, The petition for a writ of certiorari in No. The jurisdiction of this Court is invoked under 28 U. The provisions of the NGA apply to "the transportation of natural gas in interstate commerce, to the sale in interstate commerce for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall exxonmobil gas marketing apply to," inter alia, "the production or gathering of natural gas.
The NGA gives FERC the authority to ensure that rates and charges are "just and reasonable" and to declare as unlawful any "unjust, unreasonable, unduly discriminatory, or preferential" rate or charge for or "in connection with" any "transportation or sale of natural gas" subject to FERC's jurisdiction. The Act also requires exxonmobil gas marketing any natural gas company obtain a "[c]ertificate of public convenience and necessity" before constructing or exxonmobil gas marketing new facilities, 15 U.
This case involves FERC's reclassification of a portion of a pipeline system as "gathering" facilities for natural gas within the meaning of 15 U. Although the NGA does not define the term "gathering," this Court has stated that the terms "production and gathering" under the NGA are "narrowly confined to the physical acts of drawing the gas from the earth and preparing it for the first stages of exxonmobil gas marketing.
Consistent with that principle, FERC has long defined the term gathering as "the collecting of gas from various wells and bringing it by separate and several individual lines to a central point where it is delivered into a single line.
To differentiate jurisdictional transportation and non-jurisdictional gathering for pipelines, FERC for many years has employed two principal tests. Under the "behind-the-plant" test, facilities upstream of compressors and processing plants i. For gas that requires no processing, FERC has also employed a "central-point-in-the-field" test under which lateral lines collecting and transporting gas from separate wells that then converge into a single large line were classified as gathering facilities, while facilities downstream of the collection point in a field were classified as transportation.
SinceFERC has subsumed those two tests into a "primary function" test that focuses on a number of physical factors e. Under exxonmobil gas marketing test, no one factor is determinative, nor do all factors apply exxonmobil gas marketing every situation.
Exxonmobil gas marketing developed its primary function test in the context of onshore gathering patterns. In response to the practical and physical differences between onshore and offshore pipeline exxonmobil gas marketing, FERC modified its primary function test for the OCS to allow for the increasing length and diameter of OCS gathering lines, Amerada Hess Corp. Its system is configured roughly in the form of an inverted "Y" with the two arms reaching out into the OCS from a central point about 50 miles south of the Louisiana coast.
The entire system consists of miles of dual-phase pipelines, meaning that it carries a raw stream of unpurified natural gas and liquid exxonmobil gas marketing taken directly from the gas wells. Sea Robin's two major arms collect raw gas from 67 production platforms, or subsea taps, where Sea Robin's facilities connect to producer or other exxonmobil gas marketing laterals, and bring it to exxonmobil gas marketing Vermilion Station, located at the fork of the "Y".
There, the gas is compressed and sent north along a single mile, inch pipeline to plants exxonmobil gas marketing Erath, Louisiana, where it is processed into pipeline quality gas, and then sent for delivery to interstate pipelines. FERC's predecessor the Federal Power Commission or FPC originally certificated the Sea Robin system inexxonmobil gas marketing a combined, or "bundled," sales and transportation service that included gathering services.
Sea Robin Pipeline Co. InSea Robin ceased its sales service, and thereafter used its OCS pipeline facilities solely to ship gas for producers and marketers for delivery to connecting interstate pipelines. InSea Robin petitioned FERC to declare that its entire pipeline system serves a non-jurisdictional gathering function.
FERC denied the petition and found that Sea Robin's entire system was engaged in jurisdictional transportation exxonmobil gas marketing. The Fifth Circuit concluded its decision by suggesting that FERC consider whether the Vermilion compressor station, where Sea Robin's exxonmobil gas marketing major arms converge, represents the dividing line between Sea Robin's gathering and transportation functions.
FERC reasoned that "'the totality of the circumstances' demonstrates that the primary function of the Vermilion-Erath Line is to transport to shore natural gas that has been delivered from many areas through a network-like configuration of relatively smaller diameter exxonmobil gas marketing to a centralized point[, exxonmobil gas marketing Vermilion Station,] where the gas is aggregated and compressed.
Commissioners Bailey and Hebert dissented, exxonmobil gas marketing that FERC should have reclassified Sea Robin's entire system as involved in non-jurisdictional gathering activity. Commissioner Hebert observed that "due to the very nature of gas production on the OCS," one of the elements in the traditional jurisdictional test-the length of the line-"'is no more than the distance between the point of production and the nearest appropriate connection with an interstate pipeline.
FERC affirmed its findings on rehearing. FERC also identified 13 physical factors it considered in determining that the facilities upstream of the Vermilion Station are engaged in gathering activities. Commissioner Hebert dissented for the reasons stated in his prior dissent. A exxonmobil gas marketing panel of the D. Circuit denied the petitions and held that FERC acted reasonably in considering the relevant physical factors following the Fifth Circuit's remand in Sea Robin and by reclassifying a portion of the Sea Robin system as engaged in non-jurisdictional gathering exxonmobil gas marketing on those physical factors.
The court of appeals observed that "[r]easonable people may disagree as to where gathering ends and transportation begins [on Sea Robin's system]. Others might draw it at the production exxonmobil gas marketing themselves. The court concluded, however, that "after considering the inherent ambiguity in the statute and the fact that '[t]he line between jurisdictional transportation and non-jurisdictional gathering is not always clear,' as it is not clear here[it] simply [could not] conclude that the Commission's choice of the Vermilion Station exxonmobil gas marketing the dividing line was unreasonable, especially in light of the Fifth Circuit's decision on remand.
The court of appeals also rejected petitioners' contention that the reclassification of a portion of Sea Robin's system was subject to abandonment proceedings under Section 7 b of the NGA, 15 U. Exxonmobil gas marketing court reasoned that "Sea Robin does not seek to abandon any facilities or services. Rather, it merely seeks to be able to continue operating previously certificated facilities as gathering facilities, exempt from FERC's jurisdiction under the Natural Gas Act.
Judge Edwards dissented on the ground that FERC had not engaged in reasoned decision-making in reclassifying a portion of Sea Robin's system. Sea Robin did not challenge that ruling, but exxonmobil gas marketing, in response to petitioners' protests to Sea Robin's proposed rates, filed separate gathering rates that were the subject of an uncontested settlement agreement that included petitioners as parties. Following the Fifth Circuit's decision in Sea Robin, FERC determined that exxonmobil gas marketing portion of Sea Robin's system upstream of the Vermilion Station is engaged in gathering of natural gas while the remaining system is engaged in transportation.
FERC's conclusion rejected both petitioners' view that Sea Robin's entire system exxonmobil gas marketing engaged in transportation, as well Sea Robin's view before the Commission that its entire system is engaged in gathering. The court of appeals correctly held, under Chevron U. Defense Council, U. That factbound decision does not conflict with any other court of appeals decision or any decision of this Court.
Nor does this case otherwise present any issue of pressing importance regarding FERC's authority to regulate rates for offshore services on the OCS. Sea Robin's newly reclassified "gathering" service is being provided "in connection with" its transportation service under 15 U. Indeed, petitioners are parties to a settlement exxonmobil gas marketing Sea Robin that sets forth the governing rates and terms of service for gathering service set forth in Sea Robin's currently effective tariff.
Petitioners argue Exxonmobil gas marketing. In petitioner ExxonMobil's apparent view, that principle imposes a "brightline" test Pet. Petitioner ExxonMobil accordingly believes Pet. Those contentions ignore the physical reality that Sea Robin's system is offshore, where pipelines typically carry raw natural gas over their systems for the purpose of gathering the gas so that it may be processed for distribution.
Petitioners cite to no decision of any court accepting their view that the function of gathering ceases at the wellhead or production platform operating offshore, and we are aware of none. Indeed, the only courts of appeals to address the contention that all pipeline activity offshore is transportation have rejected it.
The decision in Exxonmobil gas marketing Robin, F. The decision of the D. Circuit in this case concurred in that view, and explained that "on the OCS, relatively long lines are constructed to carry the raw gas from offshore platforms, where '[o]nly the most rudimentary separation and dehydration operations' are conducted, to the shore or a point closer to shore, where it can be processed into 'pipeline quality' gas.
In short, although the terms "production" and "gathering" are "narrowly confined to the physical acts of drawing the gas from the earth and preparing it for the first stages of distribution," Northern Natural Gas Co. As the court of appeals observed:. The court found that standard "aptly describes the Sea Robin system. As the court explained:. FERC relied on the smaller dimensions of the upstream lines in contrast to the inch Vermilion-Erath line; the 45 laterals feeding into the two upstream arms; the 67 production platforms connected to the upstream facilities compared with only four downstream; the network configuration of the upstream facilities, and the need for added compression at the Vermilion Station to move gas to shore.
All exxonmobil gas marketing these physical factors show a meaningful distinction between the facilities upstream and downstream of Vermilion and make it reasonable to define it as the central aggregation point. Petitioners therefore improperly rely Pet. Thus, FERC permissibly reasoned that "the forks of the 'Y' gathered gas from production platforms at 67 receipt exxonmobil gas marketing.
Petitioner ExxonMobil also errs in arguing Pet. As the court of appeals explained, "this suggests that it is the Garden Banks pipeline, rather than Sea Robin, that has been erroneously classified. Indeed, to hold that FERC was required exxonmobil gas marketing classify Sea Robin's entire system as jurisdictional "would create exxonmobil gas marketing classic example of circular reasoning," especially given that Garden Banks was originally classified as jurisdictional due to its proximity to the exxonmobil gas marketing jurisdictionally classified Sea Robin system.
Finally, the court of appeals properly concluded that FERC could appropriately "proceed on a case-by-case basis" in determining "how FERC might apply its reformulated primary function test to Garden Banks," as well to other pipelines. Nothing in the court of appeals' exxonmobil gas marketing conflicts with Interstate Natural Gas Co.
Neither of those decisions defined what activity constitutes the "gathering" of natural gas, much less suggested how that inquiry should be conducted for facilities and pipelines operating offshore. Rather, the Court in Interstate Natural Gas held that sales of gas for resale were not exempt from federal regulation as part of "production and gathering," but rather fell within the NGA's grant of jurisdiction over interstate sales for resale.
Phillips likewise did not involve what pipeline activity constitutes gathering, but rather whether the FPC had jurisdiction "over the rate charged by a natural-gas producer and gatherer in the sale in interstate commerce of such gas for resale. Petitioner ExxonMobil argues Pet. That is not correct, and reflects a misunderstanding of the court of appeals' decision.
The court of appeals did not hold that unbundled services are not subject to a rule of strict construction. Rather, the court of appeals made the unremarkable statement that "we now live in an unbundled world" in which pipelines like Sea Robin no longer sell gas, but rather provide unbundled services. As the court noted, unbundling the pipelines' sales service has afforded pipeline customers access to a competitive wellhead market, ibid.
The court of appeals therefore properly stated that "the Supreme Court's exxonmobil gas marketing definition of 'gathering,' while clearly relevant, must be considered in context. Moreover, the court of appeals explained that in the context of "unbundled, off-shore pipeline systems, 'the physical acts of drawing the gas from the exxonmobil gas marketing and preparing it for the first stages of distribution,' cannot be as narrowly construed as on-shore.
None of the lower court decisions exxonmobil gas marketing by ExxonMobil Pet. That is not correct. By contrast, Sea Robin continues to provide not only the same gathering services but also continues to provide those services under FERC's jurisdiction over its rates.
As explained above see p. Similarly, because Sea Robin has exxonmobil gas marketing ceased performing any services subject to FERC's rate regulation, this case is not an appropriate vehicle to determine whether Section 7 b is triggered when a pipeline ceases performing services that FERC has reclassified.
Petitioner ExxonMobil suggests Pet. Petitioners finally argue Pet. That contention is without merit. FERC's orders in this case have no effect on FERC's jurisdiction to regulate pricing for services provided by Sea Robin's system, and petitioners have entered into a settlement agreement that approves the current gathering rates of Sea Robin that remain within FERC's jurisdiction. Moreover, other than the pipeline system at issue in this case and the one in the Fifth Circuit's EP Operating decision inno other court of appeals has passed upon FERC's reclassification of an offshore pipeline as involved in gathering activities.
Nor is petitioner ExxonMobil correct in characterizing Pet. Under OCSLA, "every permit, license, easement, right-of-way, or other grant of authority for transportation by pipeline on or across the [OCS] of oil or gas exxonmobil gas marketing require that the pipeline be operated in accordance with [certain] competitive principles," including that "[t]he pipeline must provide open and nondiscriminatory access to both owner and nonowner exxonmobil gas marketing.
Transcontinental Gas Pipe Line Corp. Nothing in that decision purports to speak to what pipeline activity constitutes "gathering" under the NGA. Moreover, the concern in Louisiana was that individual state curtailment programs would inevitably conflict with the federal and other state programs id.
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