Petco Petroleum Corp, et al v. Natural Gas Pipeline
Filing
148
MEMORANDUM AND ORDER Denying 124 MOTION for Reconsideration and Memorandum in Support filed by Petco Petroleum Corporation.Signed by Judge J. Phil Gilbert on 5/10/11. (bkl)
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
PETCO PETROLEUM CORPORATION and
BERGMAN PETROLEUM CORPORATION,
Plaintiffs,
Case No. 03-cv-4086-JPG
v.
NATURAL GAS PIPELINE COMPANY OF
AMERICA,
Defendant.
MEMORANDUM AND ORDER
This matter comes before the Court on the motion of plaintiffs Petco Petroleum
Corporation and Bergman Petroleum Corporation (by its successor Loudon Energy Corporation)
for reconsideration (Doc. 124) of the Court’s January 18, 2006, order (Doc. 110) dismissing
Count I, a claim under the Natural Gas Pipeline Safety Act (“NGPSA”), 49 U.S.C. § 60101, et
seq., for lack of jurisdiction. See Petco Petroleum Corp. v. Natural Gas Pipeline Co. of Am.,
410 F. Supp. 2d 715 (S.D. Ill. 2006). Natural Gas Pipeline Company of America (“NGPL”) has
responded to the motion (Doc. 127), and the plaintiffs have replied to that response (Doc. 130).
I.
Background
This case centers on the various parties’ respective rights to and activities in subterranean
geological formations beneath a parcel of land in Fayette and Effingham Counties called Loudon
Field. NGPL has rights to the lower two layers (Grand Tower Dolomite and Cedar Valley
Limestone, both in the Devonian Reservoir), and uses those formations to store natural gas. BPC
has rights to the higher-up Carper Sand, but the parties dispute who has what rights in the New
Albany Shale, the layer between the Cedar Valley Limestone and the Carper Sand. The
plaintiffs allege NGPL’s gas storage practices have cause the reservoir to fracture and leak gas
into the New Albany Shale and the Carper Sand and onto the land surface. They also allege
NGPL’s improperly capped wells are leaking gas into those layers. NGPL counters that it was
the plaintiffs’ drilling in the Carper Sand that caused the reservoir fracture and the migration of
NGPL’s gas. Specifically, in Count I, the plaintiffs allege that NGPL violated regulations
promulgated under the NGPSA requiring segments of pipelines that become unsafe to be
replaced, repaired or removed from service, 49 C.F.R. § 192.703 (b), and requiring hazardous
leaks to be repaired promptly, 49 C.F.R. § 192.703(c).
In its January 18, 2006, order, the Court found that the underground natural gas storage
reservoirs and their associated wells are not governed by the cited regulations because those
reservoirs are not “pipeline facilities,” the only places to which those regulations applied. See 49
C.F.R. § 192.701. In drawing this conclusion, the Court gave persuasive weight to a letter from
Elaine E. Joost, Chief Counsel of Research and Special Programs Administration at the United
States Department of Transportation (“DOT”), the federal agency charged with promulgating
regulations to implement the NGPSA. The letter states, “The pipeline safety regulations
contained in Title 49 C.F.R. Part 192 do not regulate underground storage formations.”
Additionally, the Court further held that the specific regulations in issue do not by their terms
apply to underground natural gas storage reservoirs.
The plaintiffs ask the Court to reconsider the January 18, 2006, order in light of Colorado
Interstate Gas Company v. Wright (“CIG”), 707 F. Supp. 2d 1169 (D. Kan. 2010).
Independently of CIG, the plaintiffs ask the Court to reconsider its conclusion that an
underground natural gas storage reservoir is not a “segment of pipeline” as that phrase is used in
49 C.F.R. § 192.703 (b).
NGPL notes that CIG is a district court decision that is not binding precedent for this
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Court and, accordingly, represents no change in law warranting reconsideration of the January
18, 2006 order. It also argues that CIG is inapplicable because it dealt with the issue of federal
preemption, not whether a citizen can bring a suit under the NGPSA alleging noncompliance
with federal pipeline safety standards.
II.
Analysis
“A court has the power to revisit prior decisions of its own . . . in any circumstance,
although as a rule courts should be loathe to do so in the absence of extraordinary circumstances
such as where the initial decision was ‘clearly erroneous and would work a manifest injustice.’”
Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988) (quoting Arizona v.
California, 460 U.S. 605, 618 n. 8 (1983)); Fed. R. Civ. P. 54(b) (providing an order “may be
revised at any time before the entry of a judgment adjudicating all the claims and all the parties’
rights and liabilities”). The decision whether to reconsider a previous ruling in the same case is
governed by the law of the case doctrine. Santamarina v. Sears, Roebuck & Co., 466 F.3d 570,
571-72 (7th Cir. 2006). The law of the case is a discretionary doctrine that creates a presumption
against reopening matters already decided in the same litigation and authorizes reconsideration
only for a compelling reason such as a manifest error or a change in the law that reveals the prior
ruling was erroneous. United States v. Harris, 531 F.3d 507, 513 (7th Cir. 2008); Minch v. City
of Chicago, 486 F.3d 294, 301 (7th Cir. 2007).
The plaintiffs ask the Court to reconsider its opinion in light of Colorado Interstate Gas
Company v. Wright (“CIG”), 707 F. Supp. 2d 1169 (D. Kan. 2010), presumably because it
believes the Court made a manifest error of law in concluding underground natural gas storage
reservoirs are not “pipeline facilities.” In CIG, a federal district court struck down state laws
requiring underground natural gas storage reservoir operators to perform certain monitoring and
3
reporting relating to those reservoirs. Id. at 1189. It reasoned that Congress preempted state
regulation of underground natural gas storage reservoir safety when it passed the Natural Gas
Act (“NGA”), 15 U.S.C. § 717 et seq., giving the Federal Energy Regulatory Commission
(“FERC,” or its predecessor the Federal Power Commission) exclusive jurisdiction over the sale
and transportation of natural gas in interstate commerce and the facilities natural gas companies
used to accomplish those functions. Id. at 1177. It noted that “transportation” included
“storage” of natural gas in underground reservoirs and that FERC, accordingly, exercised its
jurisdiction to regulate such reservoirs via its certification and authorization process. Id. at 1178.
The CIG court rejected the argument that Congress did not intend to preempt state
regulation of underground natural gas storage reservoir safety by giving exclusive jurisdiction to
FERC because Congress also delegated safety issues to the DOT in the NGPSA. Id. at 1181.
The court found Congress intended to create a “comprehensive federal regulatory scheme
governing safety standards on interstate transportation of natural gas,” in which DOT assisted
FERC in creating and enforcing safety standards applicable once a facility is operational. Id.
1181-84.
The plaintiffs in the case at bar point to the CIG court’s discussion of the NGPSA
provision expressly preempting state regulation of “interstate pipeline facilities.” Id. at 1184.
There, the court determined that underground natural gas storage reservoirs were “interstate
pipeline facilities” because they were facilities used to store gas, one of the functions involved in
“transporting gas” in interstate commerce. Id. at 1184-85 (citing 49 U.S.C. §§ 60101(a)(3), (6),
(18), (19) & (21)). The CIG court found untenable the notion that Congress did not intend the
NGPSA to cover underground natural gas storage reservoirs, common at the time the law was
enacted. Id. at 1186. The CIG court’s discussion is inconsistent with this Court’s conclusion
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that underground natural gas storage reservoirs are not “pipeline facilities.”
While CIG may call into question this Court’s determination that underground natural
gas storage reservoirs are not covered by Subpart M of 49 C.F.R. Part 192 because that part
applies only to “pipeline facilities,” it does not undermine the Court’s ultimate conclusion that
the plaintiffs have failed to plead a violation of 49 C.F.R. § 192.703 (b) or (c). CIG closely
examines the relationship between the NGA and the NGPSA and makes a persuasive argument
that “pipeline facilities” include underground natural gas storage reservoirs. However, it does
not speak at all to whether regulations relating to underground natural gas storage reservoirs are
contained within Subpart M of 49 C.F.R. Part 192. The Court has explained in its earlier order
that Subpart M simply does not contain the types of regulations that would apply to underground
storage reservoirs. The Joost letter, which states, “The pipeline safety regulations contained in
Title 49 C.F.R. Part 192 do not regulate underground storage formations,” continues to support
this holding. The most CIG holds is that the DOT may regulate underground natural gas storage
reservoir safety under the NGPSA, not that it has done so in Subpart M.
More importantly, CIG is not inconsistent with the Court’s conclusion that the plaintiffs
have failed to specifically plead violations of 49 C.F.R. § 192.703 (b) (“Each segment of
pipeline that becomes unsafe must be replaced, repaired, or removed from service.”) or (c)
(“Hazardous leaks must be repaired promptly.”). CIG therefore presents no occasion to revisit
that conclusion.
Nevertheless, the plaintiffs ask the Court to reconsider its conclusion that an underground
natural gas storage reservoir is not a “segment of pipeline” as that phrase is used in 49 C.F.R. §
192.703 (b). It notes that the Supreme Court has stated, “Underground gas storage facilities are
a necessary and integral part of the operation of piping gas from the area of production to the
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area of consumption.” Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 295 n. 1 (1988)
(internal quotations omitted). While this may be true, it does not convert an underground natural
gas storage reservoir, which may under CIG be a pipeline facility, into a pipeline itself or a
“segment of pipeline.”
One final matter is worthy of mention. In their reply, the plaintiffs argue that they need
not point to a specific regulation violated by NGPL in order to state a claim. They note the
statutory provision empowering the DOT Secretary to determine that a pipeline facility is
hazardous, see 49 U.S.C. § 60112(a), and argue that since the Secretary has declined to
investigate certain allegedly hazardous activities in Loudon Field, they may sue without pointing
to a specific violation. This argument has no merit. Wholly unlike the common law negligence
claim at issue in the case the plaintiffs cite, Bausch v. Stryker Corp., 630 F.3d 546 (7th Cir.
2010), a citizen suit claim under the NGPSA can only be brought “for a violation of this chapter
or a regulation prescribed or order issued under this chapter.” 49 U.S.C. § 60121(a)(1).1 If the
plaintiffs can point to no specific portion of the chapter, a regulation or an order they believe the
defendant has violated, they have not alleged a cause of action. The mere allegation that
“something smells fishy” will not do.
III.
Conclusion
For the foregoing reasons, the Court DENIES the plaintiffs’ motion for reconsideration
(Doc. 124) of the Court’s January 18, 2006, order. While some of the Court’s reasoning
1
In Bausch, the Court of Appeals held that an injured plaintiff did not have to cite
violation of “concrete or product-specific” regulations regarding a medical product in
order to state a common law negligence claim. It did not hold the plaintiff did not have
to cite any regulation in order to state a claim; it merely held that allegation of violation
of a general regulation was sufficient. Bausch, 630 F.3d at 555.
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supporting its ultimate conclusion may be questionable, the final result remains sound.
IT IS SO ORDERED.
DATED: May 10, 2011
s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE
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