Shell Oil Co. v. Federal Energy Regulatory Commission

United States Court of Appeals for the District of Columbia Circuit · Administrative Law

Administrative LawJudicial ReviewStandingOuter Continental Shelf Lands ActAgency JurisdictionChevron deferenceAPA arbitrary and capricious reviewOCSLA § 5(e)

Facts

The Bonito pipeline runs entirely on the Outer Continental Shelf and connects offshore to the Ship Shoal pipeline, whose commingled stream had historically qualified as sweet crude. Shell built a pipeline from its Auger production facility to interconnect with Bonito, but Pennzoil refused access, arguing that Auger crude's sulfur content would degrade the value of oil transported through Bonito and downstream on Ship Shoal. FERC ordered Bonito to provide Shell access under OCSLA § 5(f), finding Bonito's own stream was already sour and that it had previously accepted similarly sulfurous crude, while also ruling that the ICA did not apply to wholly intra-OCS pipelines. Pennzoil challenged the access order, and Shell challenged the ICA-jurisdiction ruling despite having obtained access.

Issue

Whether Pennzoil's challenge to FERC's OCSLA access order was properly filed in district court and could be retained by the court of appeals after transfer, whether FERC lawfully required Bonito to provide Shell access under the OCSLA, and whether Shell had standing to challenge FERC's disclaimer of ICA jurisdiction after prevailing on access under the OCSLA.

Rule

Challenges to FERC orders issued under the OCSLA are reviewed under the OCSLA's own judicial review provisions, which place original jurisdiction in district court except where the statute expressly provides otherwise. Under OCSLA § 5(f), FERC may require an OCS pipeline with excess capacity to provide open and nondiscriminatory access to a similarly situated shipper, and § 5(e)'s allocation procedures are not triggered absent a capacity shortage on the individual pipeline. A prevailing party may not obtain review of an agency's unfavorable legal reasoning unless it shows actual or imminent injury in fact rather than speculative future harm.

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FERC issued a single order concerning the Pelican Offshore pipeline, a crude-oil line located entirely on the Outer Continental Shelf off Louisiana. In the order, FERC required Pelican to provide transportation service to a new producer under OCSLA § 5(f), and separately stated that the Interstate Commerce Act does not apply to the line because the line lies wholly offshore.

If Pelican wants to challenge only the access requirement imposed under OCSLA § 5(f), where was Pelican required to file its initial judicial challenge?

Explanation. The governing rule is that when FERC acts under OCSLA, judicial review follows OCSLA’s own review provisions rather than the Hobbs Act. The majority emphasized that DOE Act § 502(a) directs courts to use the manner of review specified in the substantive law under which the agency acted. So a challenge to the OCSLA access ruling belongs initially in district court, even if another part of the same order implicates a statute reviewed in the court of appeals. (Derived from Shell Oil Co. v. Federal Energy Regulatory Commission (n.d.).)