Alaska Gasline Port Authority v. ExxonMobil Corp et al

Filing 84

Order on Motion to Dismiss

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA

THE ALASKA GASLINE PORT
AUTHORITY,
Plaintiff,
Case No. 4:05-cv-0026-RRB

vs.
EXXONMOBIL CORPORATION, et
al.,

ORDER GRANTING DEFENDANTS’
MOTIONS TO DISMISS

Defendants.

I.

INTRODUCTION
Before the Court are Defendants ExxonMobil Corporation,

a New Jersey corporation; ExxonMobil Alaska Production, Inc., a
Delaware Corporation; B.P. P.L.C., a United Kingdom corporation;
and

B.P.

Exploration

(Alaska)

Inc.,

a

Delaware

Corporation

(hereinafter collectively referred to as “Defendants”) with Motions
to Dismiss (Docket Nos. 30, 33 & 44).1

1

Defendants argue, among

Defendant B.P. P.L.C., a United Kingdom corporation,
incorporates by reference all arguments in B.P. Exploration
(Alaska) Inc.’s Motion to Dismiss and Memorandum (Docket Nos. 30 &
31), whereby the arguments made by B.P. Exploration (Alaska) Inc.
apply equally to B.P. P.L.C. See Clerk’s Docket Nos. 44 & 45.
ORDER GRANTING MOTIONS TO DISMISS - 1
4:05-CV-0026-RRB

other things, that Plaintiff lacks the requisite standing to bring
any antitrust claims.

Plaintiff Alaska Gasline Port Authority

(“Plaintiff”) opposes at Docket No. 55 and, in response to this
particular argument, contends the standing inquiry is factually
complex and/or inappropriate for resolution on a motion to dismiss.
The Court disagrees and, for reasons more carefully articulated
herein, GRANTS Defendants’ Motions to Dismiss.
In dismissing this action, the Court does not wish to
diminish the validity of Plaintiff’s proposal or to suggest that
Plaintiff’s efforts to supply North Slope gas to the Nation should
be curtailed. On the contrary, Plaintiff appears well-intentioned,
has accomplished a great deal to date, and may well have a valid
plan.

Decisions, however, regarding who, when, where, and how to

accomplish this monumental task should involve all interested
parties and are best made by the Alaska State Legislature and the
people of Alaska.
Although the foregoing presents a technical analysis of
some of the legal obstacles Plaintiff faces, the bottom line is
that: (1) no one appears to have violated the law with regard to
gasline

negotiations;

(2)

considerable

uncertainty

remains

regarding some fundamental aspects of Plaintiff’s proposal(s); and
(3) the Stranded Gas Development Act, Alaska Stat. § 43.82.010, et
seq., creates a comprehensive and detailed process for negotiating
and

approving

contractual

agreements

ORDER GRANTING MOTIONS TO DISMISS - 2
4:05-CV-0026-RRB

designed

to

make

the

development and commercialization of North Slope gas a reality,2
and expressly preempts Plaintiff’s conflicting municipal action.3
Indeed, Plaintiff, “as a creature of state law, lacks authority to
take any action that frustrates the laws and polices of Alaska.”4
II.

FACTS
Plaintiff,

a

political

subdivision

of

the

State

of

Alaska, was created in 1999, pursuant to Alaska Stat. §§ 29.35.600
- 29.35.730, to construct a gas pipeline system from Alaska’s North
Slope to the Port of Valdez, Alaska.

Pursuant to this mandate,

Plaintiff hopes to build a 48-inch buried pipeline from Prudhoe Bay
to Valdez,5 where it will construct and operate a liquefaction,
storage, and loading facility.

In furtherance of this goal,

Plaintiff alleges it has negotiated and contracted with the firms
necessary to: (1) construct the pipeline and liquified natural gas
distribution network; and (2) transport, distribute, and market the

2

Clerk’s Docket No. 63 at 3 (citation omitted).
“The
Stranded Gas Development Act establishes special procedures
involving the Executive, the public, the Legislature, and the
Judiciary directly in the process for negotiating, reviewing, and
approving contracts for qualifying stranded gas projects.” Id. at
5 n.3 (citation omitted).
3

Id. (citing Alaska Stat. § 43.82.600).
Alaska Stat.
§ 43.82.600 provides: “If a provision of this chapter conflicts
with another provision of state or municipal law, the provision of
this chapter governs.”
4

Id. at 8 (emphasis in original).

5

Plaintiff’s proposed pipeline would run parallel to the
Trans-Alaska Pipeline System (“TAPS”).
ORDER GRANTING MOTIONS TO DISMISS - 3
4:05-CV-0026-RRB

gas. Plaintiff claims, however, that the only remaining impediment
to its ability to construct the pipeline is Defendants’ joint
refusal to supply it with gas.

Indeed, Defendants have stated,

“nobody is going to build a pipeline without the producers.”6
III. STANDARDS OF REVIEW
A.

Rule 12(b)(1) of the Federal Rules of Civil Procedure.
“A plaintiff has the burden of proving that jurisdiction

does in fact exist.”7

“Standing pertains to a federal court’s

subject matter jurisdiction under Article III.”8

“This [C]ourt,

therefore, analyzes a plaintiff’s standing to assert his or her
claims

under

Rule

12(b)(1)

of

the

Federal

Rules

of

Civil

Procedure.”9
Pursuant

to

Rule

12(b)(1),

the

Court

may,

in

its

discretion,

6

Clerk’s Docket No. 55 at 3 (quoting ExxonMobil’s Chief
Executive Officer Lee Raymond). Inasmuch as the remainder of the
facts are well known to the parties, and more than substantially
briefed within the applicable pleadings, they are not repeated
herein except as necessary.
7

Samonte v. Frank, 2006 WL 1381879 at *2 (D. Haw.
2006)(citing Thornhill Pub. Co., Inc. v. General Tel. & Electronics
Corp., 594 F.2d 730, 733 (9th Cir. 1979)).
8

Reudiger v. U.S. Forest Service, --- F. Supp. 2d ---,
2005 WL 3954739 (D. Or. 2005)(citing White v. Lee, 227 F.3d 1214,
1242 (9th Cir. 2000)).
9

Samonte, 2006 WL 1381879 at *1 (citing White v. Lee, 277
F.3d 1214, 1242 (9th Cir. 2000)).
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4:05-CV-0026-RRB

[D]ismiss a complaint when its allegations are
insufficient
to
confer
subject
matter
jurisdiction. Alternatively, the [C]ourt may
dismiss a complaint under Rule 12(b)(1) when
the facts that would give rise to its subject
matter jurisdiction are disputed.10
When the allegations of a complaint are examined to
determine whether they are sufficient to confer subject matter
jurisdiction, “[a]ll allegations of material fact must be taken as
true and construed in the light most favorable to the non-moving
party.”11

In addition, “the Court limits its analysis to the

allegations of and the documents attached to the complaint,”12 and
scrutinizes the same more closely in order to make the necessary
threshold

determination

jurisdiction.13

“This

as

to

scrutiny

whether

it

[involves]

has

subject

taking

matter

preliminary

evidence, weighing that evidence, and deciding as a matter of law
whether the facts alleged support jurisdiction.”14

10

Id. (citing Thornhill Pub. Co., Inc. V. General Tel. &
Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979))(emphasis added).
11

Federation of African American Contractors v. City of
Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996).
12

Samonte, 2006 WL 1381879 at *1 (citing Samco Global Arms,
Inc. v. Arita, 395 F.3d 1212, 1214 n.4 (11th Cir. 2005); Gould
Electronics Inc. v. U.S., 220 F.3d 169, 176 (3d Cir. 2000)).
13

U.S. v. LSL Biotechnologies, 379 F.3d 672, 683 (9th Cir.

2004).
14

Id. Moreover, the Supreme Court has stated, with respect
to antitrust cases in particular, that dismissals prior to giving
the plaintiff ample opportunity for discovery should be granted
(continued...)
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4:05-CV-0026-RRB

B.

Rule 12(b)(6) of the Federal Rules of Civil Procedure.
A motion to dismiss for failure to state a claim made

pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the
legal sufficiency of the claims in the complaint.

A claim should

only be dismissed if “it appears beyond doubt that a plaintiff can
prove no set of facts in support of his claim which would entitle
him to relief.”15

A dismissal for failure to state a claim can be

based on either “the lack of a cognizable legal theory or the
absence of sufficient facts alleged under a cognizable legal
theory.”16

In reviewing a Fed. R. Civ. P. 12(b)(6) motion to

dismiss, “[a]ll allegations of material fact in the complaint are
taken as true and construed in the light most favorable to the
nonmoving party.”17

The court is not required to accept every

conclusion asserted in the complaint as true; rather, the court

14

(...continued)
very sparingly.
However, it is not proper to assume that the
plaintiff can prove facts that is has not alleged or that the
defendants have violated the antitrust laws in ways that have not
been alleged.
George Haug Co., Inc. v. Rolls Royce Motor Cars
Inc., 148 F.3d 136 (2nd Cir. 1998) (emphasis added).
15

Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997).

16

Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699
(9th Cir. 1988).
17

Vignolo, 120 F.3d at 1077.

ORDER GRANTING MOTIONS TO DISMISS - 6
4:05-CV-0026-RRB

“will

examine

whether

conclusory

allegations

follow

from

the

description of facts as alleged by the plaintiff.”18
IV.

DISCUSSION
A.

Plaintiff’s Federal Antitrust Claims Lack Standing.
Defendants first argue that the Court should dismiss

Plaintiff’s

federal

antitrust

claims

(Claims

I-IV)

because

Plaintiff lacks the requisite standing to bring the same.
particular,

Defendants

“preparedness”

standard

argue

Plaintiff

established

by

In

fails
re

to

meet

Dual-Deck

In
the

Video

Cassette Recorder Antitrust Litigation, 11 F.3d 1460, 1465 (9th
Cir. 1993).

The Court agrees.

“In the Ninth Circuit, a potential market entrant must
satisfy four ‘preparedness’ criteria to establish standing to
sue.”19
To separate those who have suffered antitrust
injury on account of alleged monopolistic
barriers to entry, from those who have not, we
consider (1) the plaintiff’s background and
experience in the prospective business, (2)
“[a]ffirmative action on the part of [the]
plaintiff to engage in the proposed business,”
(3) the plaintiff’s ability to finance entry,
and (4) consummation of contracts.20
18

Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir. 1992)
(quoting Brian Clewer, Inc. v. Pan American World Airways, Inc.,
674 F. Supp. 782, 785 (C.D. Cal. 1986)).
19

Clerk’s Docket No. 34 at 14.

20

In

re

Dual-Deck

Video

ORDER GRANTING MOTIONS TO DISMISS - 7
4:05-CV-0026-RRB

Cassette

Recorder Antitrust
(continued...)

Because

the

Court

concludes

Plaintiff’s

complaint

contains

inadequate allegations on all four accounts, e.g., Plaintiff’s
ability to finance the construction of its proposed pipeline is
speculative at best, its federal antitrust claims (Claims I-IV) are
hereby DISMISSED.21

The remainder of Plaintiff’s claims fare no

better.
B.

Plaintiff’s Fifth Claim for Relief Fails to State a Claim
Under Section 7 of the Clayton Act.
Plaintiff next challenges, as a violation of section 7 of

the

Clayton

Act,

Defendant

B.P.

Exploration

(Alaska)

Inc.’s

acquisitions of Amoco Corporation and Atlantic Richfield Company,

20

(...continued)
Litigation, 11 F.3d 1460, 1465 (9th Cir. 1993)(quoting Solinger v.
A&M Records, Inc., 586 F.2d 1304, 1310 (9th Cir. 1978)).
21

Moreover, Plaintiff’s purported “futility exception” is
misplaced. “The Ninth Circuit has expressly held that an antitrust
plaintiff cannot evade its obligation to allege and prove
preparedness by arguing that it was prevented from doing so by
defendants’ alleged wrongdoings.”
Clerk’s Docket No. 66 at 3
(citing In re Dual-Deck Video Cassette Recorder Antitrust
Litigation, 11 F.2d 1460, 1464-65 (9th Cir. 1993))(emphasis added).
Rather, the question is whether, assuming Defendants would have
been willing to supply Plaintiff with the gas, Plaintiff would have
been sufficiently prepared to engage in its intended business. In
light of the four factors enumerated in Solinger v. A&M Records,
Inc., 586 F.2d 1304 (9th Cir. 1978), the Court concludes it would
not have been. Considerable uncertainty remains regarding both
financing and permitting.
“Plaintiff’s antitrust claims also fail because they do not
satisfy the most basic element of any antitrust claim -- that the
alleged wrongful conduct injured competition in an existing and
relevant economic market.” Clerk’s Docket No. 31 at 3 (emphasis
added).
ORDER GRANTING MOTIONS TO DISMISS - 8
4:05-CV-0026-RRB

as well as Defendant ExxonMobil’s 1999 merger of the Exxon and
Mobil Corporations and Exxon’s 1996 acquisition of half of Shell’s
production interest in Prudhoe Bay (Claim V). Plaintiff has failed
to show, however, either: (1) that those acquisitions, which were
approved by the Federal Trade Commission, were illegal; or (2)
“that they possibly could have had any effect on the refusal to
sell [P]laintiff the North Slope gas that is the core of this
case.”22

Moreover, the Court concludes Plaintiff’s challenges to

the acquisitions and/or mergers, as revealed in the pleadings, are
time-barred.23
C.

Plaintiff’s State UTPA Claim Lacks Standing.
Plaintiff also lacks standing to bring its claim under

Alaska’s

Unfair

Trade

Practices

and

Consumer

Protection

Act

(“UTPA”), Alaska Stat. § 45.50.471 et seq. (Claim VI), because the
claim is based upon the same allegations of anti-competitive
conduct as Plaintiff’s federal antitrust claims, whereby it suffers
the same standing defects.24

22

Clerk’s Docket No. 31 at 5.

23

Id. “Clayton Act § 4B, 15 U.S.C. § 15b (damages claims
are “forever barred unless commenced within four years after the
cause of action accrued.”).” Id. at 29 (citing International Tel.
& Tel. Corp. v. General Telephone & Electronics Corp., 518 F.2d
913, 929 (9th Cir. 1975), overruled on other grounds, California v.
American Stores Co., 495 U.S. 271 (1990)).
24

“Under Alaska law, a plaintiff who bases a UTPA claim on
purported [anti-competitive] conduct is required to demonstrate
(continued...)
ORDER GRANTING MOTIONS TO DISMISS - 9
4:05-CV-0026-RRB

D.

Plaintiff’s State Law Claim for Tortious Interference
Fails as a Matter of Law.
In addition, “Plaintiff’s claim for tortious interference

with prospective economic advantage [(Claim VII)] fails because
each [D]efendant enjoys a privilege not to sell its North Slope gas
to [P]laintiff.”25

“Therefore, [Defendants’] refusal to sell that

gas, which is the gravamen of [Plaintiff’s state] tort claim,
cannot be tortious.”26
E.

Plaintiff’s Breach of Contract Claim Against Defendants
B.P. Exploration (Alaska) Inc. & B.P. P.L.C. Fails for
Three Independent Reasons.
Plaintiff’s breach of contract claim based on the Charter

for Development of the Alaska North Slope (the “Charter”), entered
into by the State of Alaska, B.P. P.L.C., and ARCO Alaska, Inc., on
December 2, 1999 (Claim VIII), fails for three independent reasons.
24

(...continued)
that it has standing to sue under the antitrust laws.” Id. at 30
(citing Aloha Lumber Corp. v. University of Alaska, 994 P.2d 991,
1002 (Alaska 1999)).
25

Id. at 5.
(Alaska 1991).

See RAN Corp. V. Hudesman, 823 P.2d 646

26

Id. (emphasis added). At Clerk’s Docket No. 55 at 23,
Plaintiff suggests Sempra Energy “withdrew from the proposed
project once it became evident that Defendants would never commit
to supplying [Plaintiff’s] pipeline with gas.” While this may be
true, the Court notes that it does not constitute a harm for the
purposes of establishing a prima facie case in tort.
Indeed,
Defendants are not required to sell their gas to Plaintiff merely
because Plaintiff entered into an agreement with a third-party.
Consequently, because Plaintiff must be able to demonstrate a harm
in a tort action, and has thus far been unable to do so, its tort
action must fail.
ORDER GRANTING MOTIONS TO DISMISS - 10
4:05-CV-0026-RRB

To begin, “the Charter provides explicitly that only parties to it
may enforce its provisions . . . .”27
the Charter.

Plaintiff is not a party to

Moreover, “the Charter expressly disclaims the

creation of third-party beneficiary rights.”28
“an intended beneficiary of” the Charter.

Plaintiff sues as

The Charter further

provides that its “provisions relating to North Slope gas are
enforceable only by arbitration . . . ,”29 and “may only be enforced
in an arbitration between its parties.”30

Plaintiff is not a party

to

arbitration.

the

Charter

and

this

is

not

an

Finally,

“[P]laintiff’s complaint is based on actions and inactions in and
following April 2005, but the Charter’s obligations regarding ANS
natural gas, on which Plaintiff’s claim is based, expired on
December 31, 2003.”31

Therefore, Plaintiff’s claim, under the

Charter, is not legally cognizable.
F.

Plaintiff’s Alleged Failure to Sue Indispensable Third
Parties is Not Examined in Light of Rules 19 & 12(b)(7).
Citing Fed. R. Civ. P. 19, Defendants B.P. Exploration

(Alaska) Inc. & B.P. P.L.C. also seek dismissal of Plaintiff’s
“claims for injunctive relief . . . because the Court cannot grant

27

Clerk’s Docket No. 65 at 22.

28

Clerk’s Docket No. 31 at 6.

29

Clerk’s Docket No. 65 at 22.

30

Clerk’s Docket No. 31 at 6.

31

Id. (citation omitted).

ORDER GRANTING MOTIONS TO DISMISS - 11
4:05-CV-0026-RRB

the complete relief [P]laintiff seeks in the absence of the other
owners of North Slope gas, including the State of Alaska and
ConocoPhillips.”32
Inasmuch as the Court concludes dismissal is appropriate,
in conjunction with Fed. R. Civ. P. 12(b)(1) & (6), it need not
fully address Defendants’ Rule 19 argument.
Court

would

indispensable

likely

find

parties,

that

to

the

include

Were it to do so, the

absence
the

of

State

any

and/or

all

of

Alaska

and

ConocoPhillips, would interfere with a complete resolution of this
matter.
G.

Plaintiff’s Lawsuit is Preempted by the Stranded Gas
Development Act.
Defendant “ExxonMobil challenges [Plaintiff’s] power to

bring this lawsuit, claiming that the lawsuit conflicts with the
Stranded Gas Development Act (“SGDA”).”33

Defendant is correct.

Plaintiff, “as a political subdivision of the State, is [not]
authorized to seek judicial relief that would interfere with
Alaska’s ability to develop North Slope gas resources under the
process contemplated by the [SGDA] . . . .”34

Indeed, the order

which Plaintiff seeks “would [likely] upend the [SGDA] process,

32

Id. at 36.

33

Clerk’s Docket No. 55 at 58.

34

Clerk’s Docket No. 63 at 1 (emphasis added).
Stat. § 43.82.600.
ORDER GRANTING MOTIONS TO DISMISS - 12
4:05-CV-0026-RRB

Alaska

which presumes that Alaska officials will be able to evaluate the
economics of competing pipeline projects by comparing costs and
contractual commitments.”35
Plaintiff’s
legislatively

attempt

to

prescribed

The Court concludes, therefore, that
preempt
process

the
is

outcome

of

inconsistent

the

SGDA’s

with

the

purpose(s) of the same,36 and thus precluded.

35

Clerk’s Docket No. 34 at 48.

36

The purpose of the SGDA is to:

(1) encourage new investment to develop the state’s
stranded gas resources by authorizing establishment of
fiscal terms related to that new investment without
significantly altering tax and royalty methodologies and
rates on existing oil and gas infrastructure and
production;
(2) allow the fiscal terms applicable to a qualified
sponsor or the members of a qualified sponsor group, with
respect to a qualified project, to be tailored to the
particular economic conditions of the project and to
establish those fiscal terms in advance with as much
certainty as the Constitution of the State of Alaska
allows; and
(3) maximize the benefits to the people of the state of
the development of the state’s stranded gas resources.
Alaska Stat. § 43.82.010. These objectives call “upon
the Alaska Commissioners of Revenue and Natural Resources
to negotiate tax and royalty rates with qualified project
sponsors.” Clerk’s Docket No. 34 at 46 (citing Alaska
Stat. §§ 43.82.110, 43.82.130, and 43.82.200-220).
The endpoint of the Commissioners’ work is a proposed
contract specifying state tax and royalty treatment of a
qualifying stranded gas project. No such contract can
take effect, however, until it has been subject to public
notice-and-comment, Alaska Stat. § 43.82.410, and
(continued...)
ORDER GRANTING MOTIONS TO DISMISS - 13
4:05-CV-0026-RRB

V.

CONCLUSION
Having thoroughly reviewed the relevant briefings and

having heard oral argument on the matter, Defendants’ Motions to
Dismiss (Docket Nos. 30, 33 & 44) are hereby GRANTED.

Because

Plaintiff “has not pleaded adequate facts to show that it is
authorized, and has antitrust standing, to pursue this action,”37
the matter is hereby DISMISSED.
ENTERED this 19th day of June, 2006.
/s/ RALPH R. BEISTLINE
UNITED STATES DISTRICT JUDGE

36

(...continued)
approved by the
§ 43.82.435.

state

legislature,

Id.
37

Clerk’s Docket No. 63 at 2.

ORDER GRANTING MOTIONS TO DISMISS - 14
4:05-CV-0026-RRB

Alaska

Stat.