TOTAL Gas & Power North America, Inc. et al v. Federal Energy Regulatory Commission et al

Filing 68

MEMORANDUM AND ORDER. It is therefore ORDERED that Defendants Federal Energy Regulatory Commission, Chairman Norman C. Bay, Commissioners Cheryl A. LaFleur, Tony Clark, and Colette D. Honorable, and Acting Chief Administrative Law Judge Carmen A. Cin trons Motion to Dismiss the Amended Complaint [Doc. # 27] is GRANTED. It is further ORDERED that Plaintiffs Total Gas & Power North America, Inc., Aaron Trent Hall, and Therese Nguyen Trans Motion for Summary Judgment [Doc. # 49] is DENIED as moot. A separate final order will be entered. (Signed by Judge Nancy F Atlas) Parties notified. (wbostic, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

§
§
§
§
§
§
v.
§
§
FEDERAL ENERGY REGULATORY §
COMMISSION, and CHAIRMAN
§
NORMAN C. BAY, COMMISSIONER §
CHERYL A. LAFLEUR,
§
COMMISSIONER TONY CLARK,
§
COMMISSIONER COLETTE D.
§
HONORABLE, and ACTING CHIEF §
ADMINISTRATIVE LAW JUDGE
§
CARMEN A. CINTRON, in their
§
official capacities,
§
Defendants.
§

July 15, 2016
David J. Bradley, Clerk

TOTAL GAS & POWER NORTH
AMERICA, INC., AARON TRENT
HALL, and THERESE NGUYEN
TRAN,
Plaintiffs,

CIVIL ACTION NO. 4:16-1250

MEMORANDUM AND ORDER
This declaratory judgment action is before the Court on the Motion to
Dismiss [Doc. # 27] filed by Defendants Federal Energy Regulatory Commission
(“FERC”), its Commissioners, and its Acting Chief Administrative Law Judge

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(collectively, “Defendants”).1 Plaintiffs Total Gas & Power North America, Inc.
(“Total”), Aaron Trent Hall (“Hall”), and Therese Nguyen Tran (“Tran”)
(collectively, “Plaintiffs”) have filed a Motion for Summary Judgment [Doc.
# 49].2 Essentially, Plaintiffs seek an immediate court ruling that Defendants lack
authority to impose a civil penalty for violations of the Natural Gas Act or FERC’s
rules, regulations, or orders thereunder, and that such penalties must be determined
after a jury trial in federal district court. Plaintiffs also ask for declarations on
several constitutional claims. Plaintiffs do not seek injunctive relief. Defendants
argue that this controversy is not ripe, this Court lacks jurisdiction, and Plaintiffs
must litigate the merits before the agency, with a right to judicial review in the
court of appeals.
The motions are ripe for determination. After carefully considering the
parties’ briefing, oral argument, all matters of record, and the applicable legal
authorities, the Court grants Defendants’ Motion to Dismiss and denies Plaintiffs’
Motion for Summary Judgment as moot.
I.

BACKGROUND
This declaratory judgment action relates to an ongoing FERC administrative

process in which Plaintiffs are respondents. The following factual and procedural
background is undisputed.3 FERC alleges that Plaintiffs engaged in an illegal
scheme to manipulate natural gas markets from 2009 to 2012. Plaintiff Total, a
1

Chairman Norman C. Bay, Commissioners Cheryl A. LaFleur, Tony Clark, and
Colette D. Honorable, and Acting Chief Administrative Law Judge Carmen A.
Cintron, in their official capacities.

2

The Court heard oral argument on the motions on June 24, 2016. See Hearing
Minutes and Order [Doc. # 64].

3

This background is drawn from Plaintiffs’ Amended Complaint [Doc. # 25] and
the Order to Show Cause issued by Defendant FERC, Total Gas & Power North
America, Inc., et al., 155 FERC ¶ 61,105 (2016) (“Order to Show Cause”).
2

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Delaware corporation headquartered in Houston, Texas, is a subsidiary of Total
S.A., a French oil and gas company. Plaintiff Total trades and markets Total
S.A.’s production assets in the United States.

Plaintiffs Hall and Tran were

employed by Plaintiff Total in Houston as traders between 2009 and 2012. They
are alleged to have engaged “in a cross-market manipulation scheme involving
physical trading in one market for the purpose of benefiting related positions in
another market” on at least 38 separate occasions.4 The exact details of this
scheme are not pertinent to the suit before this Court and no party requests a ruling
on the veracity of the allegations against Plaintiffs.
Following an investigation from 2012 to 2015, FERC Commissioners issued
an Order to Show Cause alleging that civil monetary penalties should be imposed
on Plaintiffs for the civil violations alleged in the pending administrative
proceedings.5 While different units within FERC were evaluating the results of the
investigation, Plaintiffs filed this declaratory action through which they challenge
the legitimacy of the administrative proceeding on various constitutional and
statutory grounds. Defendants moved to dismiss this action for lack of jurisdiction.
Shortly thereafter, Plaintiffs moved for summary judgment on all claims.6 For the
alternative reasons below, the Court concludes Defendants’ Motion should be
granted and will dismiss this case without prejudice to Plaintiffs’ claims.

4

Order to Show Cause, supra note 3, Appendix A, Enforcement Staff Report and
Recommendation, at 1–2.

5

The FERC administrative process is described in detail in Section III.A.1, infra.

6

No discovery has taken place and no factual record has been developed in this
case. Plaintiffs contend that their Motion for Summary Judgment presents legal
questions susceptible of resolution without a record. See Motion for Summary
Judgment [Doc. # 49], at 1 (“This case presents no material factual dispute.”).
3

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II.

LEGAL STANDARD
A.

Motion to Dismiss

Defendants move to dismiss the Amended Complaint pursuant to Federal
Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. “A case is
properly dismissed for lack of subject matter jurisdiction when the court lacks the
statutory or constitutional power to adjudicate the case.”7

When there is a

challenge to the court’s subject matter jurisdiction, the party asserting jurisdiction
bears the burden of establishing that jurisdiction exists.8
B.

Declaratory Judgment

Plaintiffs bear the burden of establishing that the Court has jurisdiction to
render declaratory judgment on their constitutional and statutory claims. The
Declaratory Judgment Act, 28 U.S.C. § 2201, permits a district court “upon the
filing of an appropriate pleading, [to] declare the rights and other legal relations of
any interested party seeking such declaration, whether or not further relief is or
could be sought.” In determining whether to handle a declaratory judgment action,
a federal district court must determine (1) whether the declaratory action is
justiciable, (2) whether the court has jurisdiction over the case, and (3) whether to
exercise its discretion to entertain the action.9
7

Smith v. Reg’l Transit Auth., 756 F.3d 340, 347 (5th Cir. 2014) (quoting Krim v.
pcOrder.com, Inc., 402 F.3d 489, 494 (5th Cir. 2005)).

8

Alabama-Coushatta Tribe of Tex. v. United States, 757 F.3d 484, 487 (5th Cir.
2014); Gilbert v. Donahoe, 751 F.3d 303, 307 (5th Cir. 2014).

9

See Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000); see
generally 10B WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 2766 (3d
ed. 2016). Many declaratory actions require the district court to determine
whether a pending action in state court deprives it of “authority” because any
declaratory relief would “be tantamount to issuing an injunction—providing the
declaratory plaintiff an end run around the requirements of the Anti-Injunction
Act.” See, e.g., Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc., 996 F.2d 774,
(continued…)
4

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A declaratory judgment action is justiciable where “the facts alleged, under
all the circumstances, show that there is a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.”10 The declaratory relief requested should
“completely resolve” the controversy.11 A “declaratory judgment action, like any
other action, must be ripe in order to be justiciable.”12 “Whether particular facts
are sufficiently immediate to establish an actual controversy is a question that must
be addressed on a case-by-case basis.”13
The Declaratory Judgment Act does not enlarge the district courts’ original
jurisdiction; the Act is “procedural only.”14 There must be an independent basis of
jurisdiction for the Court to render declaratory judgment.15
If the declaratory judgment dispute is justiciable, the Court has discretion
whether to exercise its jurisdiction over the action.16 In St. Paul Insurance Co. v.
Trejo, the Fifth Circuit articulated seven non-exclusive factors to assess whether to

(continued…)
776 (5th Cir. 1993). That inquiry is unnecessary here because the dispute at bar
does not concern competing state and federal forums.
10

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).

11

Calderon v. Ashmus, 523 U.S. 740, 747 (1998).

12

Orix Credit Alliance, 212 F.3d at 896.

13

Id.

14

Skelly Oil Co. v. Phillips Petrol. Co., 339 U.S. 667, 671 (1950); Medtronic, Inc. v.
Mirowski Family Ventures, LLC, 134 S. Ct. 843, 848 (2014) (“[T]he Declaratory
Judgment Act does not ‘extend’ the ‘jurisdiction’ of the federal courts.”).

15

Skelly Oil, 339 U.S. at 671; Harris County Texas v. MERSCORP Inc., 791 F.3d
545, 552 (5th Cir. 2015).

16

See Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995).
5

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retain and resolve the action or to decline jurisdiction.17 These factors serve three
core values: proper allocation of decision-making, fairness of forum selection, and
efficiency.18
III.

ANALYSIS
Plaintiffs request a declaratory judgment that certain aspects of FERC’s

procedures for the imposition of civil penalties are unauthorized by statute, violate
the Appointments Clause of Article II of the United States Constitution,19 violate
the Fifth and the Seventh Amendments to the United States Constitution, and do
not comport with the Administrative Procedure Act (“APA”).20 The Court holds,
first, that this dispute is not justiciable and, second, that this Court’s jurisdiction
over the case is precluded by the comprehensive statutory scheme for
administrative decision-making and judicial review specified by the Natural Gas
Act of 1938 (“NGA”), 15 U.S.C. § 717 et seq. The Court, finally, in the alternative
and in the exercise of its discretion, concludes that it will decline to entertain the
declaratory claims asserted.
A.

The NGA and Plaintiffs’ Claims

An overview of relevant provisions of the NGA provides useful context.
This section also briefly outlines the declaratory relief Plaintiffs seek.
1.

Overview of the NGA

This case requires interpretation of several provisions of the NGA as
amended by §§ 311–318 of the Energy Policy Act of 2005 (“EPAct”), Pub. L. No.

17

39 F.3d 585, 590–91 (5th Cir. 1994); see infra Section III.D, at 49.

18

Sherwin-Williams Co. v. Holmes County, 343 F.3d 383, 390–91 (5th Cir. 2003).

19

U.S. CONST. art. II, § 2, cl. 2.

20

5 U.S.C. § 551 et seq.
6

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109-58, 119 Stat. 594, 685–93. The NGA is administered by Defendant FERC.21
The ultimate authority within FERC is a commission comprising five
commissioners (the “Commission”) appointed by the President of the United
States.22
Plaintiffs are alleged to have violated NGA § 4A, 15 U.S.C. § 717c-1, a
provision prohibiting manipulation of natural gas markets, and the FERC rule
promulgated pursuant to this section, 18 C.F.R. § 1c.1. Section 4A was enacted in
2005 as § 315 of the EPAct, 119 Stat. at 691. Section 4A provides:
It shall be unlawful for any entity, directly or indirectly, to use or
employ, in connection with the purchase or sale of natural gas or the
purchase or sale of transportation services subject to the jurisdiction of
the Commission, any manipulative or deceptive device or contrivance
(as those terms are used in [15 U.S.C. § 78j(b)]) in contravention of
such rules and regulations as the Commission may prescribe as
necessary in the public interest or for the protection of natural gas
ratepayers. Nothing in this section shall be construed to create a
private right of action.
A focus of Plaintiffs’ claims is § 22 of the NGA, 15 U.S.C. § 717t-1, which
also was enacted in 2005. See EPAct, § 314(b)(1)(B), 119 Stat. at 691. Section 22
provides for civil penalties for violations of the NGA itself or any Commission
“rule, regulation, restriction, condition, or order” issued thereunder:
(a)

In general

Any person that violates [the NGA], or any rule, regulation,
restriction, condition, or order made or imposed by the Commission
under authority of [the NGA], shall be subject to a civil penalty of not

21

FERC was previously known as the Federal Power Commission (“FPC”).

22

See 42 U.S.C. § 7171. The four sitting Commissioners, Chairman Norman C.
Bay, and Commissioners Cheryl A. LaFleur, Tony Clark, and Colette D.
Honorable, are named in their official capacities as Defendants .
7

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more than $1,000,000 per day per violation for as long as the violation
continues.
(b)

Notice

The penalty shall be assessed by the Commission after notice
and opportunity for public hearing.
(c)

Amount

In determining the amount of a proposed penalty, the
Commission shall take into consideration the nature and seriousness
of the violation and the efforts to remedy the violation.
The Commission has established an administrative process for proceedings
that may result in imposition of civil penalties.23

The process potentially

comprises several stages: a pre-investigation stage; an investigatory phase;
adversarial enforcement proceedings, which may include a hearing; and a final
determination of whether civil penalties should be assessed. FERC may settle with
a respondent or terminate a proceeding at any time. These stages are handled by
different offices and personnel at FERC.
More specifically, FERC’s Office of Enforcement staff (“Enforcement
staff”), in the pre-investigation stage, may commence the administrative process
based on referrals from other FERC divisions, referrals from the Commission, selfreporting by an entity or person, or tips from third parties.24 Enforcement staff
apparently initiated the pre-investigation in this case based on a tip received from a
former Total employee.25
23

FERC’s regulations include a helpful flowchart of the current process. See
Statement of Administrative Policy Regarding the Process for Assessing Civil
Penalties, 117 FERC ¶ 61,317, Appendix, at 2 (2006) (“2006 Policy Statement”).

24

Revised Policy Statement on Enforcement, 123 FERC ¶ 61,156, at 7 (2008) (“2008
Policy Statement”).

25

Order to Show Cause, supra note 3, Appendix A, Enforcement Staff Report and
Recommendation, at 11–12.
8

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After reviewing available information, Enforcement staff may either
terminate the matter or open an investigation.26

The investigation includes

traditional discovery methods, such as document production and depositions.27
Enforcement staff may terminate the investigation unilaterally at any time, or may
request settlement authority from the Commission.28 In the case at bar, settlement
discussions between Enforcement staff and Plaintiffs proved unsuccessful.29
If the case is not resolved during the investigation stage, Enforcement staff
may recommend that the Commission institute enforcement proceedings. The
Enforcement staff first provides its recommended findings of fact and conclusions
of law to the respondent, who may submit a response.30 The recommendations and
any response are submitted to the Commission.31 If the Commission determines
the matter should be pursued, the Commission issues an “order to show cause and
26

The Commission has provided Enforcement staff with a list of eleven factors to
“determine whether there is a substantial basis for opening an investigation.” See
2008 Policy Statement, supra note 24, at 9.

27

Id., at 10–11; see also 18 C.F.R. §§ 1b.2–1b.6.

28

2008 Policy Statement, supra note 24, at 11–12.

29

Order to Show Cause, supra note 3, Appendix A, Enforcement Staff Report and
Recommendation, at 18.

30

See 18 C.F.R. § 1b.19; see also Submissions to the Commission upon Staff
Intention to Seek an Order to Show Cause, Docket No. RM08-10-000, 123 FERC
¶ 61,159 (2008). In this case, Enforcement staff provided Plaintiffs with the
preliminary findings on February 10, 2015, to which Plaintiffs responded on June
5, 2015. Following the unsuccessful settlement discussions, Enforcement staff
provided notice to Plaintiffs of its intention to recommend that the Commission
institute enforcement proceedings on November 25, 2015, to which Plaintiffs
responded on December 29, 2015. See Order to Show Cause, supra note 3,
Appendix A, Enforcement Staff Report and Recommendation, at 18. Shortly
thereafter, on January 27, 2016, Plaintiffs filed this declaratory action.

31

Enforcement staff submitted its recommendations in this case to the Commission
on April 1, 2016. See Order to Show Cause, supra note 3, at 2.
9

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notice of proposed penalty,” which order gives the respondent an opportunity to
explain why it did not violate the NGA or FERC’s regulations, rules, or orders, as
the Enforcement staff contends, and why proposed civil penalties should not be
assessed.32 In this case, the Order to Show Cause directed that Plaintiffs “should
address any matter, legal, factual, or procedural, that they would urge the
Commission to consider in this matter.”33 The Enforcement staff may then submit
a reply for the Commission and respondent’s consideration. Upon the issuance of
an order to show cause, involved Enforcement staff members are designated as
“non-decisional” and may not advise the Commission on the disposition of the
matter.34 The Commission issued the Order to Show Cause in this case on April
28, 2016. Plaintiffs filed a response on July 12, 2016.35 Plaintiffs’ Answer in the
FERC proceeding asserts jurisdictional, constitutional, and APA claims identical to

32

See 18 C.F.R. § 385.209(a)(1). The statement of issues in an order to show cause
is “tentative.” See id., § 385.209(b).

33

Order to Show Cause, supra note 3, at 4. The opportunity to address in the
response procedural deficiencies of an order to show cause appears to be common
FERC practice. See, e.g., BP America Inc., 144 FERC ¶ 61,100 at 4 (2013) (“In
its answer, Respondent should address any matter, legal, factual or procedural, that
it would urge the Commission to consider in this matter.”); Amaranth Advisors
L.L.C., 120 FERC ¶ 61,085 at 76 (2007) (“In any answer, Respondents [are
ordered] to address any matter, legal, factual or procedural, that they would urge in
the Commission’s consideration of this matter.”); see generally 18 C.F.R.
§ 385.213(c)(2)(ii) (directing respondent to “[s]et forth every defense relied on” in
its response to an order to show cause).

34

See 2008 Policy Statement, supra note 24, at 11–12; see also 18 C.F.R.
§§ 385.2201–.2202.

35

Answer in Opposition to Order to Show Cause and Notice of Proposed Penalty,
Docket No. IN12-17-000 (July 12, 2016).
10

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the prayers for relief in the Amended Complaint.36 To date, Enforcement staff has
not filed a reply.37
If the Commission is unpersuaded by the submissions to terminate the
matter, the Commission will decide what form of hearing is necessary to determine
whether the respondent violated the NGA and the amount of civil penalties, if any,
to be assessed. The Commission may receive evidence by conducting a hearing
based on written submissions38 or may direct that a live evidentiary hearing be held
before an administrative law judge (“ALJ”).39 Alternatively, the Commission may
conclude that the existing record is sufficient and proceed directly to assessment of
a penalty.40
If the matter is referred to an ALJ, the ALJ determines whether any
violations occurred, sets forth reasoning in an “initial decision,” and, if appropriate,
recommends a civil penalty.41 The Commission has not yet decided what form of
hearing will be ordered in this case.
If a hearing is held, the Commission considers the entire record and
determines what remedies, including possibly a civil penalty, are warranted.
Possible remedies include disgorgement of profits, compliance plans, and other

36

Compare id., at 144–59, with Amended Complaint [Doc. # 25], at 48–50; see also
infra note 51.

37

See Errata to Notice of Extension of Time, Docket No. IN12-17-000 (May 10,
2016) (granting Enforcement staff up to 75 days to reply to Plaintiffs’ response to
the Order to Show Cause).

38

2006 Policy Statement, supra note 23, at 9.

39

The powers and duties of the ALJ are described in 18 C.F.R. § 385.504.

40

2006 Policy Statement, supra note 23, at 9.

41

See 18 C.F.R. § 385.708 (describing the contents of and procedures associated
with an “initial decision” by an ALJ presiding over a FERC proceeding).
11

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non-monetary measures.42 If warranted, the Commission issues an order assessing
a penalty.43
The FERC administrative process permits a respondent to seek rehearing
before the Commission.44 If the respondent does so and is dissatisfied with the
result, the respondent may seek review of the issues on which it sought rehearing
in the appropriate United States court of appeals.45
If the respondent fails to pay the civil penalty after the assessment order has
become final, FERC may institute an action in a United States district court to
collect the penalty.46 FERC also may seek enforcement of its orders or remedies in
a United States district court if the respondent fails to comply.47
42

2008 Policy Statement, supra note 24, at 14–17.

43

2006 Policy Statement, supra note 23, at 9; see 18 C.F.R. §§ 385.711–.713.

44

See NGA § 19(a), 15 U.S.C. § 717r(a) (“Any person . . . aggrieved by an order
issued by the Commission in a proceeding under this chapter to which such person
. . . is a party may apply for rehearing within thirty days after the issuance of such
order.”).

45

NGA § 19(b), 15 U.S.C. § 717r(b), provides in pertinent part:
Any party to a proceeding under this chapter aggrieved by an order
issued by the Commission in such proceeding may obtain a review
of such order in [a specified] court of appeals of the United
States . . . . Upon the filing of such petition such court shall have
jurisdiction, which upon the filing of the record with it shall be
exclusive, to affirm, modify, or set aside such order in whole or in
part. No objection to the order of the Commission shall be
considered by the court unless such objection shall have been urged
before the Commission in the application for rehearing unless there
is reasonable ground for failure so to do. The finding of the
Commission as to the facts, if supported by substantial evidence,
shall be conclusive.

46

2006 Policy Statement, supra note 23, at 9.

47

See NGA § 24, 15 U.S.C. § 717u; see also, e.g., NGA § 14, 15 U.S.C. § 717m(d)
(To enforce a subpoena issued by the Commission against a person, “the
(continued…)
12

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2.

The Amended Complaint

Plaintiffs contend that the Commission will overstep its statutory authority
by issuing any order that determines that Plaintiffs violated the NGA or any rules,
regulations, or orders thereunder. Plaintiffs rely primarily on a jurisdiction and
venue provision, § 24 of the NGA, 15 U.S.C. § 717u,48 that has remained
unchanged since it was enacted in 1938 as part of the original NGA.
Plaintiffs argue that the Commission lacks authority to issue a final order
adjudicating whether they violated the anti-manipulation law, NGA § 4A, because
this Court has “exclusive jurisdiction of violations” of that statute pursuant to NGA
§ 24. Plaintiffs contend that nothing in the civil penalties provision, NGA § 22,
enacted in 2005, explicitly authorizes the Commission to proceed further than
(continued…)
Commission may invoke the aid of any court of the United States within the
jurisdiction of which such investigation or proceeding is carried on, or where such
person resides or carries on business . . . .”).
48

Section 24 of the NGA provides in its entirety:
The District Courts of the United States and the United States courts
of any Territory or other place subject to the jurisdiction of the
United States shall have exclusive jurisdiction of violations of this
chapter or the rules, regulations, and orders thereunder, and of all
suits in equity and actions at law brought to enforce any liability or
duty created by, or to enjoin any violation of, this chapter or any
rule, regulation, or order thereunder. Any criminal proceeding shall
be brought in the district court wherein any act or transaction
constituting the violation occurred. Any suit or action to enforce any
liability or duty created by, or to enjoin any violation of, this chapter
or any rule, regulation, or order thereunder may be brought in any
such district or in the district wherein the defendant is an inhabitant,
and process in such cases may be served wherever the defendant
may be found. Judgments and decrees so rendered shall be subject
to review as provided in sections 1254, 1291, and 1292 of title 28.
No costs shall be assessed against the Commission in any judicial
proceeding by or against the Commission under this chapter.
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“assessing” a penalty, which, Plaintiffs contend, means proposing a penalty, but
not issuing a final order reviewable in the court of appeals under NGA § 19(b), 15
U.S.C. § 717r(b). According to Plaintiffs, the Commission must institute an action
in a United States district court to obtain a final decision on whether a violation
occurred, and only that district court can authorize the Commission to impose an
enforceable penalty. Plaintiffs accordingly request in the Amended Complaint that
this Court issue a declaratory judgment “that NGA Section 24 requires that any
proceeding by FERC alleging that Plaintiffs violated the NGA or any rule,
regulation, or order thereunder must be adjudicated in the appropriate federal
district court, not before the agency.”49
In their most recently filed memorandum of law and at oral argument,
however, Plaintiffs have adjusted that position. They now concede that FERC has
authority to hold some form of hearing before an ALJ,50 but claim that the
Commission lacks the authority under NGA § 22 to issue a final order assessing
any penalties that may be proposed in their case. At oral argument, Plaintiffs noted
that, as a practical matter, if the requested declaratory judgment were granted in
their favor on their NGA § 24 jurisdictional argument, FERC would have incentive
to streamline or truncate the existing administrative processes because many
elements of that process would duplicate an eventual de novo trial in district court.
Plaintiffs also request a declaration that the current FERC administrative
process violates the Appointments Clause, the Fifth and Seventh Amendments, and
the APA.51 At oral argument, Plaintiffs asserted that their constitutional and APA
49

Amended Complaint [Doc. # 25], at 48, ¶ 117.

50

See Reply in Support of Motion for Summary Judgment [Doc. # 60], at 1; see
NGA § 22(b), 15 U.S.C. § 717t-1(b).

51

Plaintiffs’ prayers for relief in the Amended Complaint [Doc. # 25] are:
(continued…)
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claims are “moot” if the Court grants the declaratory relief sought regarding
interpretation of NGA § 24.52 Plaintiffs seek no injunctive relief.
There are three threshold questions before the Court: (1) whether the action
presents a justiciable controversy ripe for declaratory judgment; (2) whether the

(continued…)
(1)
A declaration that “FERC’s procedure for appointing its ALJs violates the
Appointments Clause” and that “any proceeding by FERC alleging that
Plaintiffs violated the NGA . . . must be adjudicated in the appropriate
federal district court.” Id., at 48–49, ¶¶ 119–20.
(2)

(3)

A declaration that “the Commission’s track record since 2005 shows an
apparent bias against entities similarly situated with Plaintiffs, and in light
of the massive penalties that the Commission claims the power to impose,
allowing the Commission to set this matter for an administrative hearing
before an ALJ would deprive Plaintiffs of a fair trial before an impartial
adjudicator in violation of Plaintiffs’ Fifth Amendment right to due
process.” Id., at 49, ¶ 125.

(4)

52

A declaration that, by “setting the matter for an administrative hearing
before an ALJ, subject to de novo Commission review with only deferential
review by a court of appeals, FERC’s procedures violate Article III and
deprive Plaintiffs of their Seventh Amendment right to a civil jury,” so
“any attempt by FERC to establish that Plaintiffs violated the NGA . . .
must be adjudicated in federal district court where Plaintiffs are free to
exercise their right to a jury trial.” Id., at 49, ¶¶ 122–23.

A declaration that, to cure any improper ex parte communications within
FERC, the proceeding be “adjudicated in a federal district court where the
right to a jury trial is preserved, or, in the alternative, that under Section
5(d) [of the APA], the Commission must prohibit Commission staff
members who engaged in ex parte communications with the Enforcement
Staff at the investigation stage from participating or advising in the
Commission’s review of ALJ findings or its assessment of a penalty.” Id.,
at 50, ¶¶ 128–29.

See also Motion for Summary Judgment [Doc. # 49], at 23 (“To the extent the
Court wishes to avoid these constitutional issues, Plaintiffs submit that this case
can be decided in their favor on statutory grounds . . . .”).
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NGA establishes a comprehensive scheme for administrative adjudication and
judicial review that precludes this Court from exercising jurisdiction over this
action; and (3) whether the Court should exercise its discretion to entertain this
declaratory judgment action. For the reasons explained below, the Court holds that
the dispute is not justiciable, that jurisdiction is lacking under the NGA, and that,
in any event, in its discretion, the Court declines to entertain this action.
B.

Justiciability

Plaintiffs bear the burden of establishing justiciability.53 They have failed to
carry that burden because their claims would not completely resolve the
controversy and because their claims are not ripe.
1.

The ETP Decision

The parties dispute whether the Fifth Circuit’s decision in Energy Transfer
Partners, L.P. v. FERC (“ETP”),54 controls this case.

In ETP, the entities

subjected to a FERC market manipulation investigation sought Fifth Circuit review
after the Commission issued an order to show cause alleging violations of the
NGA.55 The Fifth Circuit concluded that the agency action was not final for the
purposes of appellate jurisdiction.56 Defendants contend that the petitioners in
ETP, the respondents in the agency proceeding, raised arguments substantively

53

See Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 95 (1993) (“[A] party
seeking a declaratory judgment has the burden of establishing the existence of an
actual case or controversy.”).

54

567 F.3d 134 (5th Cir. 2009)

55

Id., at 136.

56

Id., at 139–44 (applying test derived from Abbott Labs. v. Gardner, 387 U.S. 136
(1967), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99, 105
(1977)). The Fifth Circuit also held that the challenge to FERC’s jurisdiction was
not an issue within the collateral order doctrine. Id., at 144–45 (applying Cohen v.
Beneficial Indus. Loan Corp, 337 U.S. 541 (1949)).
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identical to the NGA § 24 argument Plaintiffs assert here and thus ETP mandates
the conclusion that this declaratory action is unripe.57 Plaintiffs counter that ETP is
distinguishable because that case involved an “appeal” from a FERC order to show
cause.
The Court agrees with Plaintiffs that the ETP ripeness analysis under Abbott
Laboratories is not dispositive here. The respective procedural postures of the
court proceedings are materially different. The question of a court of appeals’
jurisdiction over a petition for review of an agency’s administrative action is
materially different from the issue of whether a district court has exclusive original
jurisdiction over a declaratory judgment claim challenging the agency’s authority
to issue orders finding an NGA violation and assessing civil penalties.
The Court next addresses the issue of the jurisprudential effect of the
inability of the requested declaratory relief to resolve completely the parties’
disputes and then examines whether Plaintiffs’ claims meet basic Article III
ripeness requirements. As discussed below, Plaintiffs’ claims fail in both respects.
2.

Lack of Complete Resolution

Plaintiffs’ request for a declaration adopting their interpretation of NGA
§ 24 prematurely raises an affirmative jurisdictional defense that does not resolve
the entire controversy between the parties and thus the claim is not justiciable.
Plaintiffs’ other bases for declaratory relief similarly amount to non-justiciable
anticipatory defenses that may be raised in the administrative process if
applicable.58

Success on Plaintiffs’ arguments might affect the process for

57

See id., at 138 (“ETP asserts . . . that it is entitled to a de novo proceeding in a
federal district court by virtue of [NGA] § 24 . . . .”).

58

For instance, Plaintiffs challenge the appointment process for ALJs, the alleged
lack of an impartial adjudicator, and the existence of alleged improper
communications within FERC.
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evaluating FERC’s allegations, but would not resolve the merits of those
allegations.
In Calderon v. Ashmus, the Supreme Court held that a declaratory judgment
action was not justiciable in federal court because the claim asserted did not
“completely resolve” the parties’ dispute.59 The Calderon court explained that
Article III’s “case or controversy” requirement was not met because the plaintiff’s
suit
does not merely allow the resolution of a ‘case or controversy’ in an
alternative format, . . . but rather attempts to gain a litigation
advantage by obtaining an advance ruling on an affirmative
defense. . . . Any judgment in this action thus would not resolve the
entire case or controversy as to any [class member], but would merely
determine a collateral legal issue governing certain aspects of their
pending or future suits.60
Complete resolution of the parties’ dispute at bar requires adjudication of
issues not before this Court, namely, whether civil penalties should be assessed
against Plaintiffs for alleged violations of the NGA’s prohibition on market

59

523 U.S. 740 (1998). The plaintiff, on behalf of a class of inmates, sought a
declaratory judgment on the length of the filing period applicable in his state for a
federal habeas action. The plaintiff had neither exhausted remedies available in
state court nor filed a federal habeas action. Id., at 746.

60

Id., at 747; see also MedImmune, 549 U.S. at 127 n.4 (“Calderon . . . holds that a
litigant may not use a declaratory-judgment action to obtain piecemeal
adjudication of defenses that would not finally and conclusively resolve the
underlying controversy.” (emphasis in original)); Columbian Fin. Corp. v.
BancInsure, Inc., 650 F.3d 1372, 1381–82 (10th Cir. 2011); Jenkins v. United
States, 386 F.3d 415, 418 (2d Cir. 2004); see generally Pub. Serv. Comm’n of
Utah v. Wycoff Co., 344 U.S. 237, 246 (1952) (“[W]hen the request is not for
ultimate determination of rights but for preliminary findings and conclusions
intended to fortify the litigant against future regulation, it would be a rare case in
which the relief should be granted.”).
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manipulation.61 Even if the Court were to grant the full extent of the declaratory
relief Plaintiffs seek here, the question of whether Plaintiffs violated NGA § 4A
would remain.62 Calderon requires dismissal of all of Plaintiffs’ claims.
3.

Ripeness

“A court should dismiss a case for lack of ‘ripeness’ when the case is
abstract or hypothetical.”63 While the parties at bar are in an adversarial posture,
the issues Plaintiffs seek to address through their claims are largely anticipatory.
Indeed, the Amended Complaint is nearly devoid of allegations specific to the
parties’ dispute and focuses instead on FERC’s procedures in the abstract.
Plaintiffs raise hypothetical challenges based on an alleged pattern of past FERC
practices in other, unrelated cases.64
Interpretation of the “Exclusivity” Language in NGA § 24.— To the extent
Plaintiffs argue that they only seek a declaration regarding the Commission’s
eventual authority—or lack thereof—to issue a final order, the dispute plainly is
not ripe. FERC may abandon the civil penalty process at any of several remaining

61

See Columbian Fin. Corp., 650 F.3d at 1381 (“It [is] not proper to limit the
declaratory-judgment action to only one issue, however important, in [the]
controversy.” (citing Calderon, 523 U.S. at 746)).

62

See Amended Complaint [Doc. # 25], at 2, ¶ 3 (“Plaintiffs do not seek to stop
FERC from conducting an investigation or otherwise exercising its lawful
authority. Plaintiffs are simply asking the Court to issue a declaratory judgment to
protect Plaintiffs’ statutory and constitutional rights to have the underlying
questions . . . adjudicated in the first instance by a federal district court . . . .”).

63

Miss. State Democratic Party v. Barbour, 529 F.3d 538, 545 (5th Cir. 2008)
(quoting Monk v. Huston, 340 F.3d 279, 282 (5th Cir. 2003)).

64

See Renne v. Geary, 501 U.S. 312, 320 (1991) (“Respondents’ generalized claim
that petitioners have deleted party endorsements from candidate statements in past
elections does not demonstrate a live controversy.”).
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steps, and the Commission might decline to issue an order of penalty assessment.65
Plaintiffs concede there is no legal basis for this Court to require FERC to alter
these intervening procedures even if FERC must eventually prosecute its case de
novo in a district court.66 Plaintiffs fundamentally seek an advisory opinion on the

65

See, e.g., ETP, 567 F.3d at 141 (“We note that after FERC’s allegations that ETP
had violated the [Natural Gas Policy Act (“NGPA”)] were heard by an ALJ, the
ALJ dismissed the primary undue-discrimination claim pending against ETP.
FERC then reached a settlement with ETP regarding the NGPA issues. ETP may
similarly prevail on the merits in the administrative action regarding the NGA,
thereby mooting its judicial challenge.”).
Generally, the courts do not
“pessimistically assume[] an adverse ruling” by the agency. Rhodes v. United
States, 574 F.2d 1179, 1181–82 (5th Cir. 1978).

66

Plaintiffs’ argument that the declaratory judgment sought here will encourage
FERC to change how it structures the remainder of the process is speculative and
outside this Court’s purview.
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validity of an order the Commission has not yet issued and may never issue.67 The
Court cannot render such an opinion.68
Constitutional and APA Claims.— Plaintiffs’ constitutional and APA
claims also are not ripe. The Seventh Amendment claim may be mooted if FERC
terminates the civil penalty proceeding at any time prior to the issuance of the final
order assessing civil penalties. An ALJ may never be appointed if the Commission
elects a hearing on written submissions or no hearing at all.69 Plaintiffs request an
advisory opinion, not on their dispute, but on the validity of an entire
administrative structure based on non-specific allegations. This remedy is beyond
the province of this Court.
67

At oral argument, counsel for Plaintiffs suggested that MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118 (2007), permits jurisdiction because the declaratory
judgment vehicle inherently contemplates that the natural plaintiff can always
elect not to bring suit. See also Response to Motion to Dismiss [Doc. # 35], at
19–20 (discussing MedImmune). MedImmune arose in the context of a patent
licensing dispute, circumstances materially different from those here. 549 U.S. at
123–24. The Supreme Court has long recognized the importance of declaratory
relief to potentially infringing manufacturers who would otherwise be paralyzed
by a patent-holder’s refusal to sue. See Cardinal Chem. Co., 508 U.S. at 95–96,
(“[A] patent owner engages in a danse macabre, brandishing a Damoclean threat
with a sheathed sword. . . . Before the [Declaratory Judgment] Act, competitors
victimized by that tactic were rendered helpless and immobile so long as the
patent owner refused to grasp the nettle and sue.” (quoting Arrowhead Indus.
Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 734–35 (Fed. Cir. 1988))).
Plaintiffs, however, have not brought the inverse of the natural action here. The
inverse of the natural action would be a declaration that they did not violate the
market manipulation statute and rules thereunder. Plaintiffs’ claims are predicated
on whether FERC’s administrative proceedings will involve certain procedures.

68

See, e.g., U.S. Nat’l Bank of Oregon v. Indep. Ins. Agents of Am., Inc., 508 U.S.
439, 446 (1993) (“[A] federal court [lacks] the power to render advisory
opinions.” (quoting Preiser v. Newkirk, 422 U.S. 395, 401 (1968))).

69

Plaintiffs do not allege that FERC to date has deprived them of due process.
Instead, the Amended Complaint engages in a general discussion of FERC
practices and procedures.
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Plaintiffs contend that lack of ripeness of the constitutional claims is
irrelevant because a favorable judgment on the interpretation of the exclusive
jurisdiction provision in NGA § 24 will moot the rest of their claims. The Court is
unpersuaded.

For example, the claim regarding interpretation of NGA § 24

requests a declaration that the violation be “adjudicated in the appropriate federal
district court,” but victory on that issue does not resolve the Seventh Amendment
request for a jury trial.70 And Plaintiffs’ request for “de novo review” of any FERC
penalty assessment raises a range of issues. It is unclear, for instance, whether the
Court would have jurisdiction to reopen the factual record developed in the agency
proceeding, an issue that may impact the outcome of Plaintiffs’ Appointments
Clause, Fifth Amendment, and APA claims. Therefore, even assuming the NGA
§ 24 statutory interpretation question were ripe, which it is not, its existence would
not cure the jurisdictional infirmities of Plaintiffs’ constitutional claims.
4.

Conclusion on Justiciability

In sum, Plaintiffs’ claims for declaratory relief are not ripe and are not
justiciable on several grounds. Plaintiffs’ jurisdictional, constitutional, and APA
claims are defenses to acts that FERC has not yet taken and depend on a factual
record that has not yet been developed. The questioned administrative actions are

70

Compare Amended Complaint [Doc. # 25], at 48, ¶ 117 (requesting solely
adjudication “in the appropriate federal district court, not before the agency”), with
id., at 49, ¶ 123 (requesting adjudication “in federal district court where Plaintiffs
are free to exercise their right to a jury trial” (emphasis added)). The right to a
jury in court under the Seventh Amendment claim may depend on whether the
market manipulation allegations fall within the “public right” exception to the
right to a jury trial, see Atlas Roofing Co. v. Occupational Safety & Health Review
Comm’n, 430 U.S. 442, 450 (1977), a completely different issue from the NGA
§ 24 statutory interpretation question. See Tull v. United States, 481 U.S. 412, 427
(1987) (rejecting Seventh Amendment challenge to provision of Clean Water Act
that assigned calculation of civil penalties to district judge).
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not inevitable. Intervening events in those administrative proceedings may resolve
the dispute without a ruling from this Court.
Because doctrines of justiciability and ripeness require case-by-case analysis
and can be fluid, and in the interests of completeness and judicial economy given
the desirability of prompt resolution of Plaintiffs’ declaratory judgment claims, the
Court next addresses its jurisdiction under Thunder Basin Coal Co. v. Reich.71 The
Court thereafter evaluates whether to exercise its discretion to decline to entertain
the declaratory judgment action under Wilton v. Seven Falls Co.72
C.

Jurisdiction

Plaintiffs invoke NGA § 24 as the jurisdictional basis for this Court to render
declaratory judgment restricting FERC’s authority. The first sentence of NGA
§ 24 grants “exclusive jurisdiction” to district courts over (1) “violations” of the
NGA and (2) actions “brought to enforce any liability or duty created by” or to
“enjoin any violation of” the NGA.73 Plaintiffs rely on the words “exclusive
jurisdiction of violations.”

Defendants counter that the FERC administrative

process coupled with judicial review in a United States court of appeals provides
the sole avenue for Plaintiffs to press their statutory and constitutional claims. The
Court concludes that it is fairly discernible that Congress intended for the claims
Plaintiffs assert to be evaluated through the administrative process with judicial
review in the court of appeals.
1.

Legal Framework

A “statutory scheme of administrative and judicial review [may] provide[]
the exclusive means of review” for statutory and constitutional challenges to that
71

510 U.S. 200 (1994).

72

515 U.S. 277, 286–87 (1995); see infra Section III.D.

73

See supra note 48.
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scheme.74 The seminal case in this context is Thunder Basin Coal Co. v. Reich,75
which sets out a two-step test for evaluating the exclusivity of a scheme for
administrative adjudication followed by judicial review in an Article III court.
“If a special statutory review scheme exists . . . ‘it is ordinarily supposed that
Congress intended that procedure to be the exclusive means of obtaining judicial
review in those cases to which it applies.’”76 The first step of the Thunder Basin
inquiry therefore examines whether “the ‘statutory scheme’ displays a ‘fairly
discernible’ intent to limit [district court] jurisdiction” over the type of case to
which statutory or constitutional challenges to an administrative process have been
made.77
In the first step of the Thunder Basin analysis, the Court must examine the
statute’s text, structure, and purpose.78 “[W]e simply ask whether Congress’s
intent to preclude district court review of the administrative proceeding is ‘fairly
discernible in the statutory scheme.’”79 In Elgin v. Department of Treasury, the
Supreme Court contrasted the “fairly discernible” intent standard applicable to a
scheme that “simply channels judicial review of a constitutional claim to a
particular court,” with a “heightened showing” required to demonstrate

74

Elgin v. Dep’t of Treasury, 132 S. Ct. 2126, 2132–33 (2012).

75

510 U.S. 200 (1994).

76

Jarkesy v. SEC, 803 F.3d 9, 15 (D.C. Cir. 2015) (quoting City of Rochester v.
Bond, 603 F.2d 927, 931 (D.C. Cir. 1979)).

77

Free Enter. Fund v. PCAOB, 561 U.S. 477, 489 (2010) (quoting Thunder Basin,
510 U.S. at 207).

78

See Elgin, 132 S. Ct. at 2133.

79

Hill v. SEC, Nos. 15-12831, 15-13738, __ F.3d __, 2016 WL 3361478, at *8 (11th
Cir. June 17, 2016) (quoting Thunder Basin, 510 U.S. at 207).
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congressional intent to preclude entirely judicial review of a constitutional claim.
In the latter case, Congress’s “intent to do so must be clear.”80
In the second step of the Thunder Basin analysis, the Court evaluates
whether the claims raised in the declaratory action are “not of the type Congress
intended to be reviewed within [the] statutory structure.”81 “To unsettle [the]
presumption of initial administrative review—made apparent by the structure of
the organic statute—requires a strong countervailing rationale.”82 District court
jurisdiction will not be precluded (1) where “a finding of preclusion could
foreclose all meaningful judicial review,” (2) “if the suit is wholly collateral to a
statute’s review provisions,” and (3) “if the claims are outside the agency’s
expertise.”83 These three considerations do not present a “strict mathematical
formula.” Instead, they provide “general guideposts” to determine whether the
particular statutory or constitutional claims at issue “fall outside an overarching
congressional design.”84
The Thunder Basin analysis applies to the NGA because it contains an
exclusive statutory scheme for administrative adjudication coupled with judicial
review. Specifically, NGA § 19(a) allows a party “aggrieved” by a Commission
order to apply for a rehearing by the Commission. To the extent the party is
unsuccessful on rehearing, NGA § 19(b) permits an appeal to the appropriate

80

132 S. Ct. at 2132 (quotation omitted).

81

Thunder Basin, 510 U.S. at 212.

82

Jarkesy, 803 F.3d at 17 (quoting E. Bridge, LLC v. Chao, 320 F.3d 84, 89 (1st Cir.
2003)).

83

Elgin, 132 S. Ct. at 2136 (quotations omitted).

84

Jarkesy, 803 F.3d at 17.
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United States court of appeals.85 Courts are unanimous that NGA § 19 precludes
district court jurisdiction over challenges to FERC proceedings.86 In general, the
NGA “does not foreclose all judicial review . . . , but merely directs that judicial
review shall occur” in the United States courts of appeals.87
2.

Applicability of the Thunder Basin Analysis

Plaintiffs do not squarely address the “fairly discernible” intent standard
under Thunder Basin.

Plaintiffs instead contend that the phrase “exclusive

jurisdiction of violations” in NGA § 24 renders FERC’s assessment of civil
penalties an exception to the structure for judicial review in NGA § 19. Noting
that a predicate to assessment of a civil penalty pursuant to NGA § 22 is the
existence of a violation of the NGA or FERC’s regulations, rules or orders,
Plaintiffs contend that the Commission lacks authority to make such findings.
85

See supra note 45 and accompanying text.

86

See, e.g., Atlanta Gas Light Co. v. FPC, 476 F.2d 142, 150 (5th Cir. 1973)
(affirming district court dismissal of declaratory action because, under NGA § 19,
“the [FPC] and, on review, the court of appeals were the proper forums”); see also
Am. Energy Corp. v. Rockies Express Pipeline LLC, 622 F.3d 602, 605 (6th Cir.
2010) (“Exclusive means exclusive, and the [NGA] nowhere permits an aggrieved
party otherwise to pursue collateral review of a FERC certificate in state court or
federal district court.”); Hunter v. FERC, 348 F. App’x 592, 593 (D.C. Cir. 2009)
(“Congress has vested exclusive jurisdiction in the courts of appeals to review
FERC’s orders, pursuant to [NGA § 19(b)] . . . .”); Williams Nat. Gas Co. v. City
of Oklahoma City, 890 F.2d 255, 261 (10th Cir. 1989) (“As the statutory language
plainly states, the special judicial review provisions of § 19 are exclusive. The
provisions of § 19 are nearly identical to the judicial review provisions of various
other federal regulatory programs. In each case, these provisions have been
interpreted to establish an exclusive scheme of review.”); Consolidated Gas
Supply Corp. v. FERC, 611 F.2d 951, 957–58 (4th Cir. 1979) (NGA § 19(b) “vests
exclusive jurisdiction to review all decisions of the Commission in the circuit
court of appeals; there is no area of review, whether relating to final or preliminary
orders, available in the district court.” (citation omitted)).

87

See Elgin, 132 S. Ct. at 2132.
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According to Plaintiffs, if Congress intended to empower the Commission to find
violations and impose civil penalties when enacting NGA § 22 in 2005, Congress
was required specifically to exclude authority to impose civil penalties from § 24’s
“exclusive jurisdiction” grant to the United States district courts.

Plaintiffs

contend Congress failed to do so and thus the district courts, and not FERC, have
ultimate civil penalty authority.

Plaintiffs conclude that the Thunder Basin

analysis is unnecessary because it is identical with the merits of their claim.
Plaintiffs miss the mark. In effect, Plaintiffs seek to read § 24 in isolation
and attempt to imbue that provision, which has been in the NGA since 1938, with
far-reaching and unprecedented new meaning. While interpreted rarely, NGA § 24
and other examples of this genre of jurisdictional statutes88 have some judicial
history.

Nothing in that precedent indicates that NGA § 24 was intended or

understood to govern the allocation of responsibilities for factfinding or
determination of remedies between the agency and the courts. In 1940, the Second
Circuit explained in Wright v. Securities and Exchange Commission that identical
“exclusive jurisdiction” language in the Securities Exchange Act of 193489 means
merely “that all criminal or civil proceedings initiated in the courts for violations of
88

Although NGA § 24 is one of ten New Deal-era regulatory statutes that include
similar language, Plaintiffs’ counsel conceded at oral argument that no case law
exists in which Plaintiffs’ proffered interpretation has been adopted. See
International Wheat Agreement Act of 1949, 7 U.S.C. § 1642(e); Securities Act of
1933, 15 U.S.C. § 77v; Trust Indenture Act of 1939, 15 U.S.C. § 77vvv(b);
Securities Exchange Act of 1934, 15 U.S.C. § 78aa(a); Investment Company Act
of 1940, 15 U.S.C. § 80a-43; Investment Advisers Act of 1940, 15 U.S.C.
§ 80b-14(a); Connally Hot Oil Act of 1935, 15 U.S.C. § 715j(c); Interstate Land
Sales Full Disclosure Act of 1968, 15 U.S.C. § 1719; Federal Power Act of 1935,
16 U.S.C. § 825p; see also Merrill Lynch, Pierce, Fenner & Smith Inc. v.
Manning, 578 U.S. __, 136 S. Ct. 1562, 1572 (2016) (explaining that these statutes
should be interpreted consistently).

89

Securities Exchange Act § 27, 15 U.S.C. § 78aa(a).
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the act must be brought in the courts designated by the section.”90 The court of
appeals added that the “exclusive jurisdiction of violations” language was “not
intended to repeal” the statutes authorizing agency proceedings followed by review
in a United States court of appeals.91 Congress is presumed to have been aware of
this interpretation of language identical to NGA § 24 when Congress amended the
NGA to add § 22 and the anti-manipulation provision in the EPAct, and did not
alter the jurisdictional language in NGA § 24.92
As further judicial background, it is noted that the only meaningful
application of the phrase “exclusive jurisdiction” in § 24 and parallel New Deal-era
statutes pertaining to other federal agencies93 has addressed the allocation of
authority between state and federal courts.94 It would therefore be extraordinary to

90

112 F.2d 89, 95 (2d Cir. 1940).

91

Id.

92

See, e.g., Silva-Trevino v. Holder, 742 F.3d 197, 202 (5th Cir. 2014) (“[W]here
there exists a longstanding judicial construction, ‘Congress is presumed to be
aware of the interpretation . . . and to adopt that interpretation [if] it re-enacts that
statute without change.’” (quoting Lorillard v. Pons, 434 U.S. 575, 580 (1978))).

93

See supra note 88.

94

See Merrill Lynch, 136 S. Ct. at 1573 (interpreting narrowly exclusive jurisdiction
granted by Securities Exchange Act § 27, 15 U.S.C. § 78a, because “when a
statute mandates, rather than permits, federal jurisdiction—thus depriving state
courts of all ability to adjudicate certain claims—our reluctance to endorse ‘broad
readings,’ if anything, grows stronger” (citation omitted)); see also Pan Am.
Petrol. Corp. v. Superior Court of Delaware, 366 U.S. 656, 662–64 (1961)
(holding that “exclusive jurisdiction” afforded by NGA § 24 only applied to cases
where “it appears from the face of the complaint that determination of the suit
depends upon a question of federal law”); Enable Miss. River Transmission, LLC
v. Nadel & Gussman, LLC, Civ. A. No. 15-1502, 2016 WL 1064640, at *2 (W.D.
La. Mar. 14, 2016) (“[T]he Supreme Court has stated that [NGA § 24] does not
create jurisdiction, but provides federal exclusivity when federal law creates a
cause of action elsewhere to enforce provisions of the NGA.” (emphasis added)
(citing Pan American, 366 U.S. at 664)). Similar jurisdictional provisions replace
(continued…)
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repurpose NGA § 24 eight decades later to govern the relationship between federal
courts and the agency.
Despite Plaintiffs’ lack of attention to Thunder Basin and its progeny, the
text of NGA § 24 is not sufficiently clear to permit the Court to skip that analysis.95
3.

First Step of Thunder Basin Analysis

Under Thunder Basin, allocation of authority between FERC and this
District Court regarding determination of violations of the NGA and FERC rulings,
as well as imposition of civil penalties, requires consideration of the statute’s text,
the statute’s structure, which includes the text’s context, and the statute’s
purpose.96

The issue is whether there are fairly discernible indications of

congressional intent in enacting the EPAct in 2005 to employ the existing scheme
of FERC’s regulatory oversight to phases involving adjudication of violations and
imposition of civil penalties.

(continued…)
exclusive jurisdiction with concurrent jurisdiction for actions “brought to enforce”
duties and liabilities created by the respective statute, which further indicates that
these provisions address federalism concerns. See, e.g., Securities Act of 1933, 15
U.S.C. § 77v (“The district courts of the United States . . . shall have jurisdiction
of offenses and violations under this subchapter . . . and, concurrent with State and
Territorial courts, . . . of all suits in equity and actions at law brought to enforce
any liability or duty . . . .” (emphasis added)). Some of these cases concern the
district courts’ jurisdiction over actions “brought to enforce” duties or liabilities
created by the respective act, but the phrase “exclusive jurisdiction” must be
interpreted consistently within the same provision. See, e.g., Gustafson v. Alloyd
Co., 513 U.S. 561, 570 (1995) (“[I]dentical words used in different parts of the
same act are intended to have the same meaning.” (citation and quotation
omitted)).
95

See also ETP, 567 F.3d at 146 (“[T]he NGA’s statutory scheme is far from
clear.”).

96

See Elgin, 132 S. Ct. at 2133.
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a.

Text and Structure

FERC’s Authority in the NGA Text and Structure Prior to the EPAct.—
The text and structure of the pre-2005 NGA support a finding of congressional
intent that FERC administer the entire process for assessment of civil penalties,
including the predicate of finding a violation of the NGA. Since 1938, section 14
of the NGA, 15 U.S.C. § 717m, has authorized FERC to undertake investigations
“in order to determine whether any person has violated or is about to violate any
provisions of this chapter” (emphasis added). Further, section 16 of the NGA, 15
U.S.C. § 717o, provides:
The Commission shall have power to perform any and all acts, and to
prescribe, issue, make, amend, and rescind such orders, rules, and
regulations as it may find necessary or appropriate to carry out the
provisions of [the NGA].
Sections 14 and 16 have been read in combination to permit FERC “to fashion
appropriate remedies for violations of its regulations.”97 The Supreme Court “has
repeatedly held that the width of administrative authority must be measured in part
by the purposes for which it was conferred” and therefore “[s]urely the
Commission’s broad responsibilities . . . demand a generous construction of its
statutory authority.”98
The NGA also authorizes FERC to hold hearings and provides the
Commission with broad authority to promulgate rules to govern those hearings, in
furtherance of its decision-making goals.99 These hearings relate to the
Commission’s authority under the NGA to make rules and issue orders or
97

In re W. States Wholesale Nat. Gas Antitrust Litig., 633 F. Supp. 2d 1151, 1166
(D. Nev. 2007).

98

In re Permian Basin Area Rate Cases, 390 U.S. 747, 776 & n.40 (1968) (citing,
inter alia, NGA § 16).

99

See NGA §§ 15, 16, 15 U.S.C. §§ 717n, 717o.
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certificates.100

The NGA provides clear and comprehensive guidance for

conducting agency hearings and providing appellate review.101
In contrast, district court involvement under the pre-2005 NGA was
narrowly tailored to assisting FERC in performance of its functions, such as
enforcement of subpoenas issued by the Commission, requests for emergency
injunctive relief by the Commission, and providing a forum for criminal
prosecutions and enforcement of duties and liabilities of regulated entities under
the NGA once those liabilities have been found by the agency.102 It was accepted
that the Commission had wide discretion whether to institute such actions.103

100

See, e.g., NGA § 3(e), 15 U.S.C. § 717b(e) (authority to approve or deny
construction of LNG terminals); NGA § 4(e), 15 U.S.C. § 717c(e) (authority to
determine lawfulness of a rate change); NGA § 5(a), 15 U.S.C. § 717d(a)
(authority to investigate and order decrease of certain rates “where existing rates
are unjust, unduly discriminatory, preferential, otherwise unlawful or are not the
lowest reasonable rates”); NGA § 14(b), 15 U.S.C. § 717m(b) (authority to
determine the “adequacy or inadequacy of the gas reserves held or controlled by
any natural-gas company”).

101

See NGA §§ 15, 16, 19, 15 U.S.C. §§ 717n, 717o, 717r.

102

See NGA § 14(d), 15 U.S.C. § 717m(d) (To enforce a subpoena against a person
issued by the Commission under NGA § 14(c), “the Commission may invoke the
aid of any court of the United States within the jurisdiction of which such
investigation or proceeding is carried on, or where such person resides or carries
on business . . . .”); NGA § 20, 15 U.S.C. § 717s(a) (“Whenever it shall appear to
the Commission that any person is engaged or about to engage in any acts or
practices which constitute or will constitute a violation of the [NGA]” the
Commission may bring an action in “the proper district court of the United States
. . . to enjoin such acts . . . .”); NGA § 24, 15 U.S.C. § 717u (“Any criminal
proceeding shall be brought in the district wherein any act or transaction
constituting the violation occurred.”); id. (“The District Courts of the United
States . . . shall have exclusive jurisdiction . . . of all suits in equity and actions at
law brought to enforce any liability or duty created by, or to enjoin any violation
of, this chapter or any rule, regulation, or order thereunder.”). Additionally,
private parties who have obtained a certificate from FERC related to the
(continued…)
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Well prior to Congress’ addition of the civil penalty provision to the NGA in
2005, it was established that the Commission had authority to find the existence of
violations of the NGA and FERC’s rules, regulations, and orders.104 For example,
the Fifth Circuit repeatedly affirmed the Commission’s power to impose various
remedies such as disgorgement of profits obtained as a result of violations,105
(continued…)
construction of natural gas pipelines may institute eminent domain proceedings in
district court. NGA § 8, 15 U.S.C. § 717g(h).
103

See Mesa Petrol. Co. v. FPC, 441 F.2d 182, 189 (5th Cir. 1971) (“[I]t is of no
consequence that there were other avenues which the Commission could have
chosen for enforcement, such as an injunction or a criminal proceeding. . . . The
Commission may resort to the courts only if in its discretion it believes the court’s
help would be necessary to achieve its purposes.”).

104

See generally, e.g., Transcont’l Gas Pipe Line Corp. v. FERC, 998 F.2d 1313 (5th
Cir. 1993); Coastal Oil & Gas Corp. v. FERC, 782 F.2d 1249 (5th Cir. 1986); Cox
v. FERC, 581 F.2d 449 (5th Cir. 1978); Mesa Petroleum, 441 F.2d 182.

105

See Transcont’l Gas Pipe Line, 998 F.2d at 1319, 1324 (affirming Commission’s
finding that natural gas company had violated NGA §§ 4(b), 4(d), and 7,
imposition of refund order, and denial of company’s request to recoup certain
losses from illegal sales via a “passthrough” to its customers); Coastal Oil & Gas,
782 F.2d at 1253 (affirming Commission finding that natural gas company had
violated NGA § 7 by diverting to intrastate market gas dedicated to interstate
market and suggesting equitable remedies, such as “stripping [company] of profits
in excess of what it would have made” by selling on interstate market); Cox, 581
F.2d at 451 (affirming order requiring company to “return diverted gas in kind to
the interstate market,” which order notably required the company, “who violated
the Act, to bear the burden of post-violation increases in the price of natural gas”).
The other courts of appeals also consistently respected FERC’s remedial authority
with respect to “violations” of the NGA. See Transcont’l Gas Pipe Line Corp. v.
FERC, 485 F.3d 1172, 1176 (D.C. Cir. 2007) (“[T]he [NGA] gives FERC broad
power to remedy violations of the Act.” (emphasis added) (citing Columbia Gas
Transmission Corp. v. FERC, 750 F.2d 105, 109 (D.C. Cir. 1984))); R.R. Comm’n
of Tex. v. FERC, 874 F.2d 1338 (10th Cir. 1989) (affirming Commission order
adopting an ALJ’s findings that certain parties had violated the NGA); Gulf Oil
Corp. v. FPC, 563 F.2d 588 (3d Cir. 1977) (affirming a “refund-recoupment
order” as “an appropriate remedy for the violation by [a natural gas company] of
(continued…)
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although, prior to the EPAct of 2005, the Commission lacked statutory authority to
impose civil penalties for these violations.106

The Court must presume that

Congress was aware of these historical administrative practices.107
Text of the EPAct.— When read in context of the other NGA sections that
had been interpreted to authorize FERC to determine violations and fashion
remedies, it is apparent that Congress likely perceived the text of NGA § 22 as
sufficient to empower the Commission to determine the existence of violations
prior to assessment of civil penalties.108 Indeed, the text of the 2005 civil penalty
(continued…)
[NGA §] 7(c) and of the terms of [the company’s] certificate” (emphasis added));
see generally 2008 Policy Statement, supra note 24, at 14–17 (discussing FERC
practice of using disgorgement of profits, compliance plans, and other nonmonetary measures as remedies for violations).
106

See, e.g., Coastal Oil & Gas, 782 F.2d at 1253 (“It is well-settled that the Natural
Gas Act does not give the Commission the authority to impose civil penalties.”).
It was recognized that the absence of a civil penalty authority was a gap in the
Commission’s enforcement powers. See S. Union Gas Co. v. FERC, 725 F.2d 99,
103 (10th Cir. 1984) (explaining that it was “understandable” that the Commission
sought “some penalty or reparation” for an action it considered a “gross violation”
of the NGA, but that it lacked statutory authority to do so).

107

See, e.g., Silva-Trevino, 742 F.3d at 202 (“[W]here there exists a longstanding
judicial construction, ‘Congress is presumed to be aware of the interpretation
. . . and to adopt that interpretation [if] it re-enacts that statute without change.’”
(quoting Lorillard, 434 U.S. at 580)).

108

See Gustafson, 513 U.S. at 570 (Acts of Congress “should not be read as a series
of unrelated and isolated provisions”); Smith v. United States, 508 U.S. 223, 233
(1993) (“A provision that may seem ambiguous in isolation is often clarified by
the remainder of the statutory scheme—because the same terminology is used
elsewhere in a context that makes its meaning clear, or because only one of the
permissible meanings produces a substantive effect that is compatible with the rest
of the law.” (quotation omitted)). For example, FERC had established authority to
impose remedies for violations of NGA §§ 4 and 7. NGA § 4 does not explicitly
reference adjudication of “violations.” Instead, key language in NGA § 4(a) is
phrased in the passive voice, similar to that of NGA § 4A. Compare 15 U.S.C.
§ 717c(a) (“[A]ny such rate or charge that is not just and reasonable is declared to
(continued…)
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enactment reflects congressional adoption of phrases common in civil penalty
provisions in other statutes. These provisions assume that the power to adjudicate
inheres in jurisdiction to “assess.”109 Section 22 is not unique in its lack of an
express reference to the authority to adjudicate.110

Further, the 2005 EPAct

(continued…)
be unlawful.” (emphasis added)), with 15 U.S.C. § 717c-1 (“It shall be unlawful
. . . to use or employ . . . any manipulative or deceptive device . . . .” (emphasis
added)). Similarly, NGA § 7 concerns the authority of the Commission to regulate
construction, extension, and abandonment of natural gas facilities through orders
and certificates of public convenience, but does not explicitly address authority to
adjudicate “violations.” See 15 U.S.C. § 717f.
109

For example, the Federal Deposit Insurance Act (“FDIA”) contains a number of
civil penalty provisions that are modeled on or cross-reference FDIA § 8(i), 12
U.S.C. § 1818(i). FDIA § 8(i)(2)(A) provides that any “insured depository
institution which, and any institution-affiliated party who” “violates” any of four
categories of laws and agreements “shall forfeit and pay a civil penalty.”
Subparagraph (E) of that section then provides, “[a]ny penalty imposed . . . may be
assessed and collected by the appropriate Federal banking agency by written
notice” (emphasis added). Agency rehearing and judicial review are similar to
NGA § 19. See FDIA § 8(h)(2), (i)(2)(H). If the agency brings a collection action
in district court, “the validity and appropriateness of the penalty shall not be
subject to review.” FDIA § 8(i)(2)(I)(ii). Nowhere in this detailed subsection is
there a specific statement that the banking agencies have authority to adjudicate
the violation.
Plaintiffs’ counsel suggested at oral argument that “assess,” as used in NGA § 22,
should be interpreted to mean “indict.” Counsel cited no other statutes or cases
employing that interpretation, and the Court is not aware of any. This contention
is unpersuasive.

110

For example, under Securities Exchange Act § 21B, 15 U.S.C. § 78u-2, the SEC is
permitted to impose civil penalties in administrative proceedings instituted
pursuant to Securities Exchange Act §§ 15(b)(4), 15(b)(6), 15D, 15B, 15C, 15E,
and 17A, 15 U.S.C. §§ 78o(b)(4), 78o(b)(6), 78o-6, 78o-4, 78o-5, 78o-7, and
78q-1. Although § 15D, 15 U.S.C. § 78o-6, explicitly grants rulemaking
authority, it does not include specific language authorizing an adjudication of a
violation. Similarly, FDIA § 7(j)(16), 12 U.S.C. § 1817(j)(16) authorizes federal
banking agencies to assess and collect civil money penalties from “[a]ny person
who violates any provision of [FDIA § 7(j)].” Although FDIA § 7(j)(15) provides
(continued…)
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included a provision that explicitly augmented the district court’s injunction
authority when the Commission seeks to address market manipulation.111 This
amendment indicates that Congress was aware in 2005 of the district courts’ role in
the NGA enforcement scheme, yet did not explicitly assign the district courts a role
in the civil penalty process.112
As the simple text of NGA § 22 provides, Congress appears to have intended
to enlarge through the EPAct amendments FERC’s options to remedy violations of
any provision of the NGA and the agency’s rules, regulations, or orders through
(continued…)
for district court jurisdiction to issue injunctive relief against ongoing or
threatened violations, there is no explicit assignment of adjudicatory authority for
past violations in the entire subsection. The Court does not rule on whether these
statutes provide an adequate basis for the respective agencies to assess civil
penalties. Their existence, however, illustrates that the language in NGA § 22
may simply be the result of common congressional drafting practice and,
therefore, should not be given the restricted meaning that Plaintiffs suggest.
111

NGA § 20(d), 15 U.S.C. § 717s(d) (“In any proceedings under subsection (a) of
this section [§ 717s(a)], the court may prohibit . . . any individual who is engaged
or has engaged in practices constituting a violation of section 717c-1 . . . from—
(1) acting as an officer . . . of a natural gas company . . . .”).

112

Plaintiffs argue that Congress impliedly assigned jurisdiction over civil penalty
actions to district courts because it did not explicitly authorize FERC to adjudicate
“violations.” Plaintiffs have conceded that no authority directly supports their
position that jurisdiction over civil penalty proceedings in connection with the
NGA necessarily defaults to the district courts. The Supreme Court’s ruling in
Lees v. United States, 150 U.S. 476 (1893), is not to the contrary. Of venerable
age, this case, commenced in 1888, relates to the relationship between “district
courts” and “circuit courts” in the judicial system that preceded the Judiciary Act
of 1891. Lees sheds no light on the allocation of civil penalty authority to
administrative agencies a century later.
In contrast, the model Defendants contend Congress adopted is common in the
modern administrative state. See, e.g., Atlas Roofing, 430 U.S. at 450–51
(“Congress has often created new statutory obligations, provided for civil penalties
for their violation, and committed exclusively to an administrative agency the
function of deciding whether a violation has in fact occurred.”).
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civil penalties. There is no indication in the EPAct that Congress intended in 2005
to alter the Commission’s role as primary factfinder and reserve to the district
courts an oversight or reviewer role.
Moreover, Congress’s omission in the EPAct and the NGA of provisions
regarding certain procedural issues that typically would arise in a civil penalty
proceeding reinforces this interpretation of the NGA’s text.
Venue.— Congress gave some indication of intent to preserve in FERC
responsibility for finding violations and determining civil penalties because the
NGA and the EPAct do not specify venue for civil penalty actions in any particular
district court. On the other hand, allocation of the civil penalty process to FERC as
part of the existing administrative process avoids the venue omission.113 Notably,
in comparison, there are in the 1938 NGA provisions for other agency proceedings
that assign venue to certain district courts. The second and third sentences of NGA
§ 24 address venue for, respectively, criminal proceedings and actions “brought to
enforce any liability or duty created by” or to “enjoin any violation of” the NGA.114
Although the criminal penalty provision, NGA § 21, 15 U.S.C. § 717t, lacks an
internal venue provision, the second sentence in NGA § 24 expressly sites venue
113

If the hearing is administrative, § 15 of the NGA, 15 U.S.C. § 717n(f), authorizes
the Commission to adopt “rules of practice and procedure” to govern hearings,
which the Commission has interpreted to include the authority to set the “date,
time, and location of [a] hearing.” 18 C.F.R. § 385.502(b)(5) (describing contents
of written notice of hearing).

114

Venue provisions in NGA § 24 are: (1) “Any criminal proceeding shall be brought
in the district court wherein any act or transaction constituting the violation
occurred”; and (2) “Any suit or action to enforce any liability or duty created by,
or to enjoin any violation of, this chapter or any rule, regulation, or order
thereunder may be brought in any such district or in the district wherein the
defendant is an inhabitant . . . .” 15 U.S.C. § 717u (emphasis added). Nowhere do
Plaintiffs contend that assessment of civil penalties falls within either of these
venue categories.
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for “criminal proceeding[s].” The third sentence controls venue for civil actions in
district court to “enforce” a “liability or duty created by,” or to enjoin violations of
the NGA, functions FERC has long performed with district courts’ assistance.115
Defendants have argued persuasively that, after issuance of a final penalty order,
FERC may seek judicial enforcement in the district courts through an action
“brought to enforce” a “liability” under the NGA,116 but no liability can exist until
after a violation has been found by the Commission.
The absence of express assignment of venue in district court for civil penalty
proceedings for violations of the NGA and FERC rules, regulations, and orders is
notable also because Congress included reference to venue in district courts in
other statutes FERC enforces involving oil and gas industries, specifically, the
Federal Power Act (“FPA”) and Natural Gas Policy Act (“NGPA”). Indeed, under
the FPA and the NGPA, Congress provided that proceedings would be filed in “the
appropriate district court” with respect to “affirming the [Commission’s]
assessment of civil penalties” and evaluation of any substantive challenges thereto
by the respondent.117 Congress’s failure to make any venue designation for civil
115

See, e.g., Miss. Power & Light Co. v. Fed. Power Comm’n, 131 F.2d 148, 150 (5th
Cir. 1942) (“The orders which the District Court is given exclusive jurisdiction to
enforce or enjoin are definitive orders, establishing rights and duties, such as may
be reviewed before the Circuit Court of Appeals or enforced under [FPA §§] 314
and 315, 16 U.S.C.A. § 825m and 825n.” (interpreting FPA § 317, 15 U.S.C.
§ 825p, which is substantively identical to NGA § 24)).

116

See Response to Motion for Summary Judgment [Doc. # 56], at 12.

117

NGPA § 504(b)(6)(F), 15 U.S.C. § 3414(b)(6)(F) (“If the civil penalty has not
been paid within 60 calendar days after the assessment order has been made under
subparagraph (E), the Commission shall institute an action in the appropriate
district court of the United States for an order affirming the assessment of the civil
penalty.” (emphasis added)); FPA § 31(d)(3), 16 U.S.C. § 823c(d)(3) (“If the civil
penalty has not been paid within 60 calendar days after the assessment order has
been made under subparagraph (A), the Commission shall institute an action in the
(continued…)
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penalty proceedings for violations of the NGA, including market manipulation,
indicates Congress did not anticipate district court involvement beyond the task of
enforcement.
Type of Proceeding.— Congress notably did not include in the EPAct
guidance for district courts regarding the procedures applicable in civil penalty
proceedings. On the other hand, Congress’ addition of civil penalty authority in
§ 22 to FERC’s toolbox was a simple way to augment the agency’s prior
jurisdiction over violations and resulted in a cohesive administrative and judicial
partnership entailing administrative assessment of these penalties. Moreover, in
this manner, Congress ensured appellate judicial review through NGA § 19.
A comparison of the NGA to the FPA and NGPA also supports Defendants’
position. These latter statutes grant the district court the authority to review the
law and facts and to “enter a judgment enforcing, modifying, and enforcing as so
modified, or setting aside in whole or in part” the assessment of civil penalties.118
The lack of any similar statutory language in the NGA as amended suggests that
Congress intended in 2005 that FERC rely on the established administrative
process.119

(continued…)
appropriate district court of the United States for an order affirming the
assessment of the civil penalty.” (emphasis added)). The respondent can then
challenge the civil penalty order in that proceeding and thereby obtain review by
the district court. See infra note 118 and accompanying text (discussing district
courts’ authority to enforce, modify, or set aside civil penalty order after review).
118

NGPA § 504(b)(6)(F), 15 U.S.C. § 3414(b)(6)(F); FPA § 31(d)(3), 16 U.S.C.
§ 823c(d)(3). This language authorizing review parallels NGA § 19, not NGA
§ 24. See 15 U.S.C. § 717r(b) (granting court of appeals exclusive jurisdiction “to
affirm, modify, or set aside” a Commission order “in whole or in part”).

119

At oral argument, Plaintiffs’ counsel clarified that Plaintiffs believe a declaratory
judgment adopting their interpretation of NGA § 24 would lead FERC to adopt
(continued…)
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Standard of Review.— It is undisputed that NGA § 22 authorizes the
Commission to conduct a hearing regarding the propriety and amount of civil
penalties.

Under existing FERC procedures, it cannot be doubted that the

Commission may issue an order based on a hearing record. Any such order is
channeled into the long-established rehearing and review procedures of NGA
§ 19(b), pursuant to which the court of appeals applies the “substantial evidence”
standard to the Commission’s order.
In contrast, attempting to implement Plaintiffs’ proposed interpretation of
§ 24 and § 22 leads to a quandary. The NGA provides no guidance on how a
district court is to evaluate the results of the agency hearing or conclusions
concerning civil penalty proceedings.

Congress provided no guidance as to

whether it intended the district court to conduct de novo review as sought by
Plaintiffs, adopt the substantial evidence standard, or deem the Commission’s
rulings prima facie evidence.120
(continued…)
procedures similar to those for assessment of civil penalties under FPA § 31(d), 16
U.S.C. § 823c(d), which procedures permit a party to elect de novo review by a
district court in lieu of agency adjudication. The civil penalty process in the FPA
predates the EPAct by almost two decades. If Congress had intended for the
FPA’s process to apply to NGA § 22, it could have simply copied and pasted the
FPA’s language into the EPAct. Indeed, as Plaintiffs noted, FPA § 31(c) is
substantively identical to NGA § 22. Congress’ decision not to include in the
NGA the guidance to the district courts provided by FPA § 31c(d) is further
evidence that Congress intended that the agency retain the authority to adjudicate
civil penalties for violations. See Turtle Island Restoration Network v. Evans, 284
F.3d 1282, 1296 (Fed. Cir. 2002) (“When Congress omits from a statute a
provision found in similar statutes, the omission is typically thought deliberate.”
(citing I.N.S. v. Phinpathya, 464 U.S. 183, 190 (1984))).
120

See, e.g., 47 U.S.C. § 407 (“If a carrier does not comply with an order for the
payment of money within the time limit in such order, the complainant, or any
person for whose benefit such order was made, may file [a suit] in the
[appropriate] district court of the United States . . . . [O]n the trial of such suits the
(continued…)
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Plaintiffs’ request for de novo district court review would be legally
remarkable and logistically inefficient after a full administrative hearing.121 The
absence of specific statutory directives regarding the results of the agency hearing
required by NGA § 22 is a fair indication of congressional intent in 2005 to
integrate the civil penalty process into the existing FERC administrative
procedures with judicial review by a court of appeals.
Conclusion on Text and Structure.— Plaintiffs’ requests for declarations
require this Court to imply procedures, some based on civil penalty provisions in
other statutes,122 to resolve the legislative gaps. Those requests violate the canon
of statutory interpretation that courts do not imply into statutes provisions
Congress chose not to include.123

The absence of statutory guidance for civil

(continued…)
findings and order of the Commission shall be prima facie evidence of the facts
therein stated . . . .” (emphasis added)).
121

The FPA and the NGPA each provide for de novo review of the facts and law
involved, but the civil penalty process does not include an agency hearing. See
NGPA § 504(b)(6)(E)–(F), 15 U.S.C. § 3414(b)(6)(E)–(F) (directing Commission
to assess penalty without a hearing and, if respondent does not pay, to institute an
action in United States district court in which de novo review is available); FPA
§ 31(d)(3)(A), 16 U.S.C. § 823c(d)(3)(A) (directing that, if respondent elects the
FPA procedure involving district court review, “the Commission shall [first]
promptly assess such penalty” without a hearing before bringing an action in
district court). If a respondent elects an agency hearing under the FPA, then
judicial review comprises only an appeal to a court of appeals, which court applies
the substantial evidence standard. See FPA § 31(d)(2).

122

For instance, regarding venue, Plaintiffs’ statutory interpretation claims requests a
declaration that the proceeding “must be adjudicated in the appropriate federal
district court,” see Amended Complaint [Doc. # 25], at 48, ¶ 117. This language
tracks the venue provisions in the FPA and NGPA. See supra note 117.

123

Cox v. City of Dallas, Tex., 256 F.3d 281, 310 (5th Cir. 2001) (“Plaintiffs would,
in essence, have us read another provision into the RCRA that compels Saitas to
act beyond these statutory requirements. We cannot adopt their interpretation of
the statute.”); see also Turtle Island Restoration Network, 284 F.3d at 1296
(continued…)
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penalty proceedings in district court, particularly where the NGA carefully
delineates all other judicial involvement in the statutory scheme, makes it “fairly
discernible” that Congress likely intended the EPAct to strengthen the
Commission’s civil enforcement powers within the administrative process.
b.

Purpose

Legislative history for the 2005 anti-manipulation and civil penalty
provisions, NGA §§ 4A and 22, is virtually non-existent.124

Nor is there any

reference to NGA § 24’s “exclusive jurisdiction” language in the text or legislative
history of the EPAct.125 Historical context, however, sheds some light on the new
provisions’ purposes. Criminal and civil proceedings involving manipulative trade
practices in the oil and gas industries in the late 1990s and early 2000s revealed the
absence of certain effective law enforcement tools.126 Although the Commission
(continued…)
(“When Congress omits from a statute a provision found in similar statutes, the
omission is typically thought deliberate.” (citing Phinpathya, 464 U.S. at 190)).
124

The EPAct of 2005 comprised 530 sections that amended 19 different public laws.
The vast legislative history is devoted exclusively to other issues. Plaintiffs rely
on a single post-enactment statement by a senator. That statement is entitled to
negligible weight. See Barber v. Thomas, 560 U.S. 474, 486 (2010) (“[T]he Court
normally gives little weight to statements, such as those of the individual
legislators, made after the bill in question has become law.”).

125

The only reference to NGA § 24 is a directive to renumber it following the
insertion of the civil penalty provision. See EPAct § 314(b)(1)(A), 119 Stat. at
691.

126

There grew “concern that the FERC lacked adequate tools to deal with
manipulation and deception in the energy markets. . . . Congress sought to meet
this challenge by including provisions in the . . . EPAct . . . that granted additional
enforcement power to the FERC and added to the array of and increased the
existing civil and criminal penalties for manipulative and deceptive conduct.”
Allan Horwich, Warnings to the Unwary: Multi-Jurisdictional Federal
Enforcement of Manipulation and Deception in the Energy Markets After the
Energy Policy Act of 2005, 27 ENERGY L. J. 363, 367–69 (2006).
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had authority to obtain certain monetary remedies prior to 2005, such as
disgorgement of profits and refund orders,127 it was “well-settled that the Natural
Gas Act [prior to the EPAct of 2005 did] not give the Commission the authority to
impose civil penalties.”128 Congress’ enactment of NGA § 22 appears intended to
address the omission of civil penalty authority from FERC’s otherwise broad
remedial powers to strengthen FERC’s regulation of the energy markets that had
proved susceptible to abuse.129
c.

Conclusion on “Fairly Discernible” Intent

The first step of the Thunder Basin jurisdictional analysis, an examination of
the text, structure, and purpose of the NGA as amended by the EPAct, reveals a
fairly discernible congressional intent to build on existing FERC administrative
procedures to implement the new civil penalty provisions.

The Court is

unpersuaded by Plaintiffs’ novel effort to imbue NGA § 24 with meaning
untethered to its longstanding purposes evidenced by appellate decisions or
meaningful legislative indicators.
4.

Second Step of Thunder Basin Analysis

The Court turns, in its Thunder Basin analysis, to the issue of whether the
claims Plaintiffs assert are “of the type Congress intended to be reviewed within
the statutory structure.”130 The Supreme Court instructs courts “to ‘presume’ that a
claim is not confined to administrative channels ‘if a finding of preclusion could
127

See supra Section III.C.3.a.

128

See Coastal Oil & Gas, 782 F.2d at 1253; S. Union Gas Co., 725 F.2d at 103
(holding that Commission lacked authority to impose civil penalty for “gross
violation” of the NGA).

129

Cf. S. Union Gas, 725 F.2d at 103 (“[I]t is for Congress to provide civil penalties
not for the Commission to create them.”).

130

Free Enterprise Fund, 561 U.S. at 489.
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foreclose all meaningful judicial review; if the suit is wholly collateral to a
statute’s review provisions; and if the claims are outside the agency’s
expertise.’”131 Plaintiffs have offered no meaningful argument addressing these
three factors specifically.

In the interests of a complete record, the Court

nevertheless addresses them.
None of these three Thunder Basin factors weighs in favor of district court
jurisdiction over this declaratory action. The Court finds instructive the rulings by
four courts of appeals that applied these factors to similar challenges regarding
Securities Exchange Act § 21B, 15 U.S.C. § 78u-2, the statute that empowers the
SEC to impose civil penalties in administrative proceedings.132 All four courts of
appeals found district court jurisdiction precluded by the statutory scheme of SEC
administrative adjudication followed by court of appeals’ review.133 As explained
hereafter, the Court concludes that (1) “meaningful judicial review” is available for
the claims under NGA § 19, (2) the claims are not “wholly collateral” to the NGA

131

Tilton v. SEC, No. 15-2103, __ F.3d __, 2016 WL 3084795, at *3 (2d Cir. June 1,
2016) (quoting Free Enterprise Fund, 561 U.S. at 489).

132

Hill, 2016 WL 3361478, at *3 (Appointments Clause and Seventh Amendment),
Tilton, 2016 WL 3084795, at *2 (Appointments Clause); Jarkesy, 803 F.3d at 14
(Fifth Amendment, Seventh Amendment, and improper ex parte communications);
Bebo v. SEC, 799 F.3d 765, 768 (7th Cir. 2015) (Fifth Amendment and Article II),
cert. denied 136 S. Ct. 1500 (2016). Plaintiffs sought to distinguish the SEC
scheme in the first step of Thunder Basin on the ground that the SEC’s power to
adjudicate violations was explicit in the statute. Because the Court concludes
there is a “fairly discernible” intent in the NGA to assess civil penalties via FERC
administrative procedures, see supra Section III.C.3.c, this quartet of cases
constitutes highly persuasive authority for the second step of Thunder Basin
analysis.

133

See Securities Exchange Act § 25, 15 U.S.C. § 78y.
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statutory review scheme, and (3) FERC’s expertise may assist in resolution of
Plaintiffs’ claims.134
a.

Meaningful Judicial Review

The availability of meaningful judicial review is the most important Thunder
Basin factor.135 There is no contention that any of the issues raised by Plaintiffs
cannot be addressed eventually by a United States court of appeals pursuant to
NGA § 19.136 This is sufficient under Elgin, where the Supreme Court “[saw]
134

See Elgin, 132 S. Ct. at 2136.

135

See Hill, 2016 WL 3361478, at *8 (“We agree with the Second and Seventh
Circuits that the first factor . . . is ‘the most critical thread in the case law.’”
(quoting Bebo, 799 F.3d at 774, and citing Tilton, 2016 WL 3084795, at *4)).

136

The “substantial evidence” standard, as applied under the NGA, is not a rubber
stamp of Commission decisions. The court of appeals must examine:
(1) whether the Commission abused or exceeded its authority;
(2) whether each of the essential elements of the order is supported
by substantial evidence; and (3) whether the Commission has given
reasoned consideration to each of the pertinent factors in balancing
the needs of the industry with the relevant public interests.
Transcont’l Gas Pipe Line, 998 F.2d at 1320 (citing Permian Basin Area Rate
Cases, 390 U.S. at 790–92). All of Plaintiffs’ challenges appear cognizable
through an NGA § 19 appeal under the first prong of this test. For example, in
Hunter v. FERC, 348 F. App’x 592 (D.C. Cir. 2009), the D.C. Circuit held that the
district court did not have subject matter jurisdiction over a declaratory judgment
action by the respondent in the agency proceeding challenging FERC’s
jurisdiction. The respondent contended in his request for declaratory relief that
FERC’s assertion of jurisdiction impermissibly encroached on the CFTC’s
statutory exclusive jurisdiction over the alleged acts. Id., at 592. Rejecting this
use of declaratory judgment procedure, the D.C. Circuit held this jurisdictional
question was only reviewable on a petition for review of a final order pursuant to
NGA § 19. See id., at 593. The respondent successfully pressed his challenge to
FERC’s jurisdiction in a subsequent NGA § 19 petition. See Hunter v. FERC, 711
F.3d 155 (D.C. Cir. 2013) (holding that “manipulation of natural gas futures
contracts falls within the CFTC’s exclusive jurisdiction” and nothing in the EPAct
permits FERC to regulate this particular futures market). Precedent therefore
demonstrates that NGA § 19 will provide “meaningful judicial review” for
(continued…)
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nothing extraordinary in a statutory scheme that vests reviewable factfinding
authority in a non-Article III entity that has jurisdiction over an action but cannot
finally decide the legal question to which the facts pertain.”137 This factor strongly
disfavors jurisdiction over this declaratory action.138

(continued…)
Plaintiffs’ claims. Indeed, Plaintiffs have asserted identical jurisdictional,
constitutional, and APA challenges in their response to the Order to Show Cause
in the administrative proceedings. See supra note 36 and accompanying text.
137

See 132 S. Ct. at 2138. Free Enterprise Fund is distinguishable from this case.
The plaintiffs in that dispute challenged the very existence and structure of the
Public Company Accounting Oversight Board (“PCAOB”), a federal government
entity subsidiary to the SEC. The Supreme Court held jurisdiction existed for this
challenge, recognizing that not every PCAOB action would result in a “final
order.” To obtain judicial review of their claims pursuant to 15 U.S.C. § 78y,
which is substantively identical NGA § 19, the Supreme Court concluded that the
plaintiffs would have had to violate a PCAOB rule voluntarily so that the SEC
eventually would issue a final order. 561 U.S. at 490. That Court rejected the
contention that plaintiffs should have to “bet the farm” to challenge the authority
of the agency. Id. At bar, however, a civil penalty proceeding that may culminate
in a final, appealable order already is underway. See, e.g., Hill, 2016 WL
3361478, at *10 (“Unlike the petitioners in Free Enterprise Fund, however, the
respondents here need not bet the farm to test the constitutionality of the ALJs’
appointment process. On the contrary, the respondents have already taken the
actions that allegedly violated securities laws.”).

138

Plaintiffs discuss the expense of following the FERC procedures, including the
potential deprivations of their constitutional and statutory rights.
Those
difficulties do not make subsequent judicial review less “meaningful.” See, e.g.,
Hill, 2016 WL 3361478, at *8 (“Enduring an unwanted administrative process,
even at great cost, does not amount to an irreparable injury.” (citing FTC v.
Standard Oil Co. of Cal., 449 U.S. 232, 244 (1980)). Plaintiffs may seek a stay of
any order imposing penalties pending judicial review pursuant to NGA § 19(b).
See Hill, 2016 WL 3361478, at *9 (noting that either SEC or court of appeals
could stay pending appeal any SEC order assessing civil penalties).
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b.

Wholly Collateral

Plaintiffs’ claims are not “wholly collateral” to the NGA statutory scheme
for administrative assessment of civil penalties.139 In Free Enterprise Fund v.
PCAOB, the plaintiffs challenged the agency’s “existence,” which the Supreme
Court considered a “general challenge” that was “‘collateral’ to any . . . orders or
rules from which review might be sought.”140 Here, Plaintiffs’ claims are specific
challenges to potential administrative procedures Plaintiffs fear they will face.141
Plaintiffs’ claims therefore are not collateral to those proceedings; the claims call
into question the administrative procedures.142 Plaintiffs’ counsel explained at oral
argument that a declaratory judgment adopting Plaintiffs’ interpretation of NGA
§ 24 “hopefully” would encourage the agency to alter its procedures.143 Suggesting
that an agency change its processes during a particular administrative proceeding is
not an issue “wholly collateral” for Thunder Basin purposes.144
139

See Elgin, 132 S. Ct. at 2139–40.

140

561 U.S. at 490. Specifically, the Free Enterprise Fund plaintiffs challenged the
appointment process for the entire PCAOB. See supra note 137.

141

For example, in contrast to Free Enterprise Fund, Plaintiffs merely challenge the
method of appointment of ALJs, one of whom may conduct a hearing, the results
of which are subject to review by the entire Commission.

142

See Jarkesy, 803 F.3d at 23 (explaining that the Free Enterprise Fund plaintiffs’
claim was “‘collateral’ to the SEC administrative-review scheme because [those
plaintiffs] were not in that scheme at all”).

143

Specifically, Plaintiffs appear to hope the agency will truncate its process and
defer to the district court’s trial process.

144

Some courts have suggested that the “wholly collateral” factor more narrowly
focuses on the relationship between the claims in the declaratory action and the
merits issues in the agency proceeding. See, e.g., Bebo, 790 F.3d at 774. The
Court agrees with the Jarkesy court, however, that challenges to the agency’s
procedures are not wholly collateral because they are “inextricably intertwined
with the conduct of the very enforcement proceeding the statute grants the
[agency] the power to institute and resolve as an initial matter.” Jarkesy, 803 F.3d
(continued…)
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c.

Agency Expertise

Finally, FERC’s expertise regarding natural gas pricing, gas market
manipulation issues, and implementation of the NGA will assist courts’ evaluation
of Plaintiffs’ claims. The NGA regulates in a highly complex business arena.145
There are various mechanisms for industry participants to voice concerns on issues
that affect them.146

The Commission, which administers the entire complex

statute, as well as related laws applicable to the oil and gas industry, is in the best
position to weigh competing interests and address contested factual matters. The
Commission should interpret its governing statute in the first instance, and do so in
light of specific facts determined after the detailed review contemplated by the
legislative scheme.147
(continued…)
at 23. Calderon is instructive here. The “wholly collateral” claim in Free
Enterprise Fund completely resolved the controversy in that case. See supra note
137. “Wholly” appears to be directed at preventing piecemeal litigation outside
the administrative process on non-substantive issues that do not resolve a case.
See supra Section III.B.2.
Even if the “wholly collateral” factor were interpreted more narrowly and
Plaintiffs’ issues met that formulation this factor, it would not outweigh the
presence of meaningful judicial review for all of Plaintiffs’ claims. See Bebo, 799
F.3d at 774 (“[T]he Supreme Court has never said that any of [the Thunder Basin
factors] are sufficient conditions to bring suit in federal district court under
§ 1331.”).
145

See, e.g., 2008 Enforcement Statement, supra note 24, at 19.

146

For example, the 2008 Policy Statement was the result of a conference with and
comments by industry stakeholders. See id., at 2.

147

Plaintiffs may raise their challenges within the administrative process without
adversely affecting other rights under FERC regulations. The Commission has
clarified that “a subject’s good faith exercise of its rights under the relevant
statutes and [FERC] regulations . . . will not cause the subject of an investigation
to forego possible credit for exemplary cooperation.” 2008 Enforcement
Statement, supra note 24, at 8.
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FERC’s expertise is particularly relevant to Plaintiffs’ Fifth Amendment and
APA claims. Plaintiffs’ Fifth Amendment claim, inter alia, accuses FERC of bias
against private parties in civil penalty proceedings. No court can evaluate such a
claim without development of a detailed factual record.

Plaintiffs’ other

procedural claims will benefit from a full record regarding highly technical and
complex matters, such as the market manipulation allegations in this case.148
Regarding Plaintiffs’ Appointments Clause and Seventh Amendment claims, these
constitutional questions may become moot if FERC abandons the charges against
Plaintiffs.149 Otherwise, Plaintiffs will have the opportunity to raise these two
challenges without interrupting the pending administrative proceeding.150
Thereafter, judicial review pursuant to NGA § 19 is available.
5.

Conclusion on Thunder Basin Analysis

The NGA contains a comprehensive scheme for administrative adjudication
followed by judicial review. The first step of the Thunder Basin analysis reveals a
fairly discernible intent in the text, structure, and purpose of the NGA to place
within that administrative process the determination of violations and, if
appropriate, assessment of civil penalties. The second step of the Thunder Basin
148

These principles apply to Plaintiffs’ arguments that FERC is acting as both
prosecutor and judge. FERC’s published procedures include mechanisms for
walling off prosecutorial staff from adjudicatory staff. Indeed, FERC has
published a Notice of Designation of Commission Staff as Non-Decisional in
Plaintiffs’ case before the Commission. See Appendix to Response to Motion for
Summary Judgment [Doc. # 56-1], at 3.

149

See, e.g., Hill, 2016 WL 3361478, at *12.

150

Therefore, even regarding these two claims, this factor does not outweigh the
“meaningful judicial review” and “wholly collateral” factors. See Bebo, 799 F.3d
at 774 (“[T]he Supreme Court has never said that any of [the Thunder Basin
factors] are sufficient conditions to bring suit in federal district court under [28
U.S.C.] § 1331.”).
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analysis establishes that Plaintiffs’ challenges to FERC’s administrative processes
for assessment of civil penalties are not of a type Congress intended to exclude
from the scheme for judicial review established by NGA § 19. The claims may be
reviewed by an Article III court through a petition for review if, as, and when
Plaintiffs are subject to an “order or action” of the Commission.151 Finally, the
claims are not collateral and the claims’ development will benefit from FERC’s
expertise.
D.

Discretionary Analysis Applicable to Action Seeking Solely
Declaratory Relief

Even if the controversy is justiciable and even if the Court has jurisdiction
over Plaintiffs’ claims, the Court has wide discretion regarding whether to decide
Plaintiffs’ declaratory judgment action.152 The Court, after careful consideration,
declines to entertain Plaintiffs’ claims.
The Fifth Circuit requires a district court to consider a non-exclusive list of
seven factors, commonly known as the Trejo factors, in evaluating whether to hear

151

This conclusion is consistent with the general principle that an erroneous
jurisdictional ruling by an agency—or district court—must await review on appeal
from a subsequent final order or judgment. See Hunter, 348 F. App’x at 594
(“The jurisdictional determination in the administrative proceeding is not
collateral but is a ‘step toward’ the decision on the merits.” (citing FTC v.
Standard Oil Co. of Cal., 449 U.S. 232, 246 (1980))); see also ETP, 567 F.3d at
146 (“The proper construction of the NGA must await resolution when and if the
Commission determines that the NGA has been violated and assesses a penalty”).

152

See, e.g., Wilton, 515 U.S. at 286–87 (“Since its inception, the Declaratory
Judgment Act has been understood to confer on federal courts unique and
substantial discretion in deciding whether to declare the rights of litigants. . . . The
statute’s textual commitment to discretion, and the breadth of leeway we have
always understood it to suggest, distinguish the declaratory judgment context from
other areas of the law in which concepts of discretion surface.”).
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a declaratory judgment suit.153 The Trejo factors, devised in the context of a
federal declaratory judgment suit and a state case, are:
(1)

whether there is a pending state action in which all of the
matters in controversy may be fully litigated;

(2)

whether the plaintiff filed suit in anticipation of a lawsuit filed
by defendant;

(3)

whether the plaintiff engaged in forum shopping in bringing
suit;

(4)

whether possible inequities in allowing the declaratory plaintiff
to gain precedence in time or to change forums exist;

(5)

whether the federal court is convenient forum for the parties
and the witnesses;

(6)

whether retaining the lawsuit would serve the purposes of
judicial economy; and

(7)

whether the federal court is being called on to construe a state
judicial decree involving the same parties and entered by the
court before whom the parallel state suit between the same
parties is pending.154

These factors are sometimes grouped into three categories: allocation of decisionmaking authority between two jurisdictions, fairness to the parties, and
efficiency.155

153

Sherwin-Williams, 343 F.3d at 388; Trejo, 39 F.3d at 590–91.

154

Trejo, 39 F.3d at 590–91.

155

Sherwin-Williams, 343 F.3d at 390–91. Plaintiffs forego analysis of the Trejo
factors in favor of addressing the three broad categories outlined in SherwinWilliams. See Response to Motion to Dismiss [Doc. # 35], at 22–24. Under the
first and second categories, Plaintiffs refer to their statutory interpretation
argument as grounds for finding that decision-making authority was properly
allocated to this Court and that FERC has unfairly engaged in forum-shopping by
ignoring NGA § 24. The Court will review each factor in light of Plaintiffs’
contentions.
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The case at bar involves the weighing of factors as applied to a proceeding
before an administrative agency and a federal court, rather than the traditional
pairing of a state and federal court. The Trejo factors therefore require adaptation.
Rather than concerns of federal comity vis-à-vis state decision-making, the
balancing here focuses on the important goal of judicial deference to agency
proceedings.156
In summary, the Court finds that the first, second, third, fourth, and sixth
Trejo factors weigh in favor of abstention, the fifth factor weighs modestly against
abstention, and the seventh factor is inapplicable.
1. Pending Parallel Proceeding.— The principle that a declaratory action
should not interfere with parallel proceedings applies to the relationship between
federal administrative agencies and district courts. In Public Service Commission
of Utah v. Wycoff Co., the Supreme Court refused the plaintiff’s request for a
declaration that it was engaged in interstate commerce and therefore beyond the
jurisdiction of the state agency.157 The Supreme Court explained:
Even when there is no incipient federal-state conflict, the declaratory
judgment procedure will not be used to preempt and prejudge issues
that are committed for initial decision to an administrative body or
special tribunal any more than it will be used as a substitute for
statutory methods of review. It would not be tolerable, for example,
that declaratory judgments establish that an enterprise is not in
interstate commerce in order to forestall proceedings by the National
Labor Relations Board, the Interstate Commerce Commission or
156

It is noted that, generally, public policy and deference to agency processes counsel
in favor of permitting FERC to address its own jurisdiction in the first instance,
and to address the merits of other claims, as needed. See generally, e.g., Distrigas
of Mass. Corp. v. Boston Gas Co., 693 F.2d 1113 (1st Cir. 1982) (Breyer, J.)
(invoking doctrine of primary jurisdiction to permit FERC to rule on the meaning
of natural gas tariffs that were the subject of a private dispute).

157

344 U.S. 237, 244 (1952).
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many agencies that are authorized to try and decide such an issue in
the first instance.158
Plaintiffs’ threshold issue, pursuant to NGA § 24, is whether only a district court
may make the final findings of a violation of the NGA and appropriateness of any
civil penalties. On this statutory interpretation question, Plaintiffs may obtain
judicial review after completion of the administrative process. This request for
preemptive judicial consideration of the agency’s jurisdiction contravenes Wycoff.
The same reasoning applies to Plaintiffs’ attempt to invalidate the Commission’s
procedures on constitutional bases or under the APA before any adverse findings
have been made.
2. Anticipatory Lawsuit.— This declaratory action has some features of
anticipatory litigation. Plaintiffs filed this case on January 27, 2016, shortly after
FERC’s Enforcement staff informed them of its decision to recommend that the
Commission pursue civil penalties.159 FERC has not yet commenced adjudicatory
administrative proceedings, such as an ALJ hearing or a hearing on written
submissions. Plaintiffs seek to avoid these administrative steps by coming to
district court. Plaintiffs’ claims are premature. Not only is there a possibility that
Plaintiffs’ response to the Order to Show Cause may persuade the agency to
abandon the civil penalty process, but Plaintiffs’ jurisdictional, constitutional, and
APA claims can be addressed by a court of appeals on review of any final agency
action.

158

Id., at 246; see also id., at 248 (“Respondent here has sought to ward off possible
action of the petitioners by seeking a declaratory judgment to the effect that he
will have a good defense . . . .”).

159

The suit was filed two months prior to the official communication of that
recommendation to the Commission and three months before the Commission
issued the Order to Show Cause. See supra notes 30–31.
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3. Forum Shopping.— The essence of Plaintiffs’ claims is that a district
court forum would be more favorable than the agency process.160 Plaintiffs express
preferences for a jury and for other procedural and evidentiary rules that apply in
district court. These preferences are tell-tale signs of forum shopping.161
4. Possible Inequities.— It would be inequitable for Plaintiffs to “gain
precedence” in time and forum here by bypassing the established processes for
consideration of the claims asserted. FERC’s administrative adjudicatory process
is not yet underway because FERC’s procedures have afforded Plaintiffs repeated
opportunities to respond to Enforcement staff findings and, now, the Commission’s
Order to Show Cause.162 Plaintiffs have used the time intended for a response to
the administrative charge to file a preemptive strike in district court requesting
adjudication of jurisdictional and procedural issues prior to the Commission fully
considering these matters or assessing the merits of highly technical and complex
charges and Plaintiffs’ defenses.163

160

See generally Amended Complaint [Doc. # 25], at 1–6, ¶¶ 1–12.

161

See, e.g., Sherwin-Williams, 343 F.3d at 397 (discussing Mission Ins. Co. v.
Puritan Fashions Corp., 706 F.2d 599 (5th Cir. 1983), as an example of
impermissible “procedural fencing” because the declaratory plaintiff filed his
action in Texas to obtain more favorable choice of law rules and substantive law).

162

Cf. Sherwin-Williams, 343 F.3d at 397 n.7 (“Courts have found impermissible
‘procedural fencing’ when the declaratory judgment plaintiff brings the
declaratory judgment action before the declaratory defendant is legally able to
bring a state action.”); see also 909 Corp. v. Vill. of Bolingbrook Police Pension
Fund, 741 F. Supp. 1290, 1293 (S.D. Tex. 1990) (Hittner, J.) (“Application of the
first-filed rule could penalize the [declaratory judgment defendant] for its attempt
to make a good faith effort to settle out of court.”).

163

Plaintiffs were directed to “address any matter, legal, factual, or procedural, that
they would urge the Commission to consider in this matter” in their response to
the April 28, 2016 Order to Show Cause, supra note 3, at 4. That response, filed
on July 12, 2016, which includes identical jurisdictional, constitutional and APA
(continued…)
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5. Convenience of the Forum.— There is no contention that this Court is
an inconvenient forum for either party regarding the declaratory judgment rulings.
This factor arguably weighs in favor of the Court’s retention of this declaratory
action.
6. Judicial Economy.— Judicial economy favors declining to entertain this
case. At this juncture in this declaratory judgment action, the parties primarily
dispute the Commission’s authority to issue orders finding violations and assessing
penalties. Plaintiffs do not challenge the agency’s authority to hold some form of
hearing and to propose penalties if warranted. It is possible that the dispute will be
resolved before the Commission issues any final order. Further, there is no dispute
that Plaintiffs’ issues could be addressed by the court of appeals on review of a
Commission final order pursuant to NGA § 19. If Plaintiffs were to prevail in this
declaratory judgment action, an as yet undefined judicial proceeding would be
required, possibly with factfinding by a jury.

Not only would this Court’s

involvement at this time not save the parties expense, it likely would involve
duplicative proceedings that increase the financial burden on all concerned.
7. State Judicial Decree.— There is no state law issue in the current case.
This factor is neutral in the Trejo analysis and the Court does not give it weight.
Conclusion on the Trejo Factors.— The Trejo factors weigh against this
Court’s entertaining this declaratory judgment action.
IV.

CONCLUSION
Based on the foregoing analysis, the Court concludes that it cannot and

should not entertain Plaintiffs’ action for a declaratory judgment. At least three

(continued…)
claims, will not be ripe for review until the Enforcement staff files a reply. See
supra notes 35–37 and accompanying text.
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different justiciability or jurisdictional doctrines support dismissal of this action.
Each of these doctrines revolves around the central theme that, absent
extraordinary circumstances, Article III courts should not interfere with ongoing
administrative proceedings.

This principle is particularly relevant where the

challenge is to agency processes still in their early stages.
The Court neither endorses nor criticizes FERC’s current procedures.
Plaintiffs’ prayer to halt or change those procedures prior to the review available in
the administrative scheme after issuance of a final agency order must be addressed
to Congress.164 It is therefore
ORDERED that Defendants Federal Energy Regulatory Commission,
Chairman Norman C. Bay, Commissioners Cheryl A. LaFleur, Tony Clark, and
Colette D. Honorable, and Acting Chief Administrative Law Judge Carmen A.
Cintron’s Motion to Dismiss the Amended Complaint [Doc. # 27] is GRANTED.
It is further
ORDERED that Plaintiffs Total Gas & Power North America, Inc., Aaron
Trent Hall, and Therese Nguyen Tran’s Motion for Summary Judgment [Doc.
# 49] is DENIED as moot.
A separate final order will be entered.
SIGNED at Houston, Texas, this 15th day of July, 2016.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE
164

See ETP, 567 F.3d at 146 (“Congressional action to chart with clarity the desired
course of proceedings [under the NGA] would not be unwelcome.”).
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