FERC Seeks Dismissal of Jet Fuel and Diesel Fuel Shippers’ Petition for Review in D.C. Circuit Court of Appeals

On May 1, 2017, FERC filed a brief in the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) arguing for the dismissal of United Airlines Inc. and UPS Fuel Services Inc’s (together, “Shippers”) petition for review of a 2013 FERC order in which FERC allowed Enterprise TE Products Pipeline Company LLC (“Pipeline”) to discontinue its jet fuel and diesel fuel transportation service to various shipping entities, including Shippers. Shippers’ petition for review alleged that Pipeline’s termination of this service violated a 2013 settlement agreement (“Settlement Agreement”) requiring Pipeline to provide this service through May 31, 2015. FERC’s brief argued that the petition should be dismissed for lack of justiciability, or in the alternative, for lack of standing.

The Shippers’ petition for review centers on the Settlement Agreement, which established agreed-upon rates for transportation of jet fuel and diesel fuel for a two-year term. In May 2013, just prior to finalizing the Settlement Agreement, the Pipeline filed tariff sheets with FERC indicating its intent to discontinue jet fuel and diesel fuel transportation service. A group of protesters that included the Shippers raised objections to the Pipeline’s tariff filing, including the contention that discontinuing jet fuel and diesel fuel service would violate the Settlement Agreement. In accepting the Pipeline’s filing, FERC explained that the Pipeline’s plan to entirely discontinue jet fuel and diesel fuel service constituted a “complete abandonment” of service, which FERC lacks jurisdiction to prevent.

In a subsequent complaint proceeding initiated by Shippers and other shipping entities, FERC determined that the Pipeline’s abandonment violated the Settlement Agreement. FERC awarded money damages to the injured parties, including the Shippers, but refused to impose specific performance of the Settlement Agreement terms, again citing lack of jurisdiction over abandonment. The Shippers filed a request for rehearing in which they argued that FERC mischaracterized the Pipeline’s discontinuation of jet fuel and diesel fuel service as abandonment, and erred in refusing to impose specific performance. FERC denied rehearing, and the Shippers filed the petition for review with the D.C. Circuit.

With regard to lack of justiciability, FERC argued in its brief that the Settlement Agreement has now expired, thus mooting the petition. Additionally, FERC argued that “Shippers . . . fail to demonstrate their standing on appeal.” FERC contended that the Shippers’ injury, as alleged in the petition, “is not derived from any denial of relief, but from the commission’s choice of remedy and legal rationale, and does not confer standing.” Further, FERC argued that Shippers failed to demonstrate how a favorable decision from the D.C. Circuit would redress their alleged injury.