IN RE: Natural Gas Liquids Regulation Litigation

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BEFORE THE JUDICIAL PANEL Po }
: ON wy OICIAL PANEL On EoMULTIDISTRICT LITIGATION LTIEISTRICT LITIGATION AE
FILED
IN RE NATURAL GAS LIQUIDS REGULATION) DOCKET NOME Ig ALITIGATION ) mn SE.
PATRICIA D. HOWART a =
OPINION AND ORDER CLERK oF The pad oo
BEFORE JOHN MINOR WISDOM, CHAIRMAN AND EDWARD WEINFELD, EDWIN :
A. ROBSON, WILLIAM H. BECKER, JOSEPH S. LORD, III, STANLEY A.
WEIGEL*, AND ANDREW A CAFFREY**, JUDGES OF THE PANEL
PER CURIAM aE
I. BACKGROUND : oT
This litigation consists of eleven actions pending in
four districts -- six in the Eastern District of Michigan, Co
two in the Northern District of Texas, two in the Northern 279 ; :
District of Illinois, and one in the Northern District of ea
Oklahoma, The actions involve challenges to the statutory ol
authority of the Federal Energy Administration (FEA) to ;
regulate natural gas liquids and/or requests for judicial Co
review of certain FEA orders relating to the allocation or
pricing of natural gas liquids. The defendants in all actions oe
are the FEA and its director.
"Natural gas liquids” is a term that is not uniformly :
defined. Generally,	the term refers to a variety of heavier
hydrocarbons that are found along with lighter hydrocarbons
such as natural gas in reservoirs. Upon removal from the ground,
the natural gas liquids can be separated from the lighter h Pmt
*Judge Weigel was unable to attend the Panel hearing and,
therefore, took no part in the consideration or decision of no
this matter. }
** Judge Caffrey recused himself and took no part in the con-
sideration or decision of this matter.

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® hydrocarbons. Natural gas liquids can be used as a feedstock
for the manufacture of synthetic natural gas or
as a feedstock for the manufacture of petrochemicals, such as
plastics, synthetic fibers and paints. Natural gas liquids
can also be separated into constituent products, which include
propane and butane. Propane and butane, as well as other
products derived from natural gas liquids, can also be
produced by refining crude oil. A particular product refined
from crude oil is identical to and is often commingled with
a particular product derived from natural gas liquids.
Manufacturers of synthetic natural gas and manufacturers of
petrochemicals are sometimes competitors for supplies of these
® products.
A. Eastern District of Michigan Actions
The plaintiffs in five of the six Michigan actions are
purchasers of natural gas liquids or products derived
therefrom. Plaintiff in the other action is a Michigan state
agency having regulatory authority over the state's utilities.
Plaintiffs in the six Michigan actions seek review of certain
orders of the FEA that relate to the allocation of natural
gas liquids to Consumers Power Co. for use as a feedstock
in the production of synthetic natural gas. Plaintiffs in five
of the six Michigan actions originally sought, inter alia, a
declaratory judgment that the FEA lacked the statutory authority to
regulate natural gas liquids and that the FEA orders regulating
® the availability of natural gas liquids to Consumers Power

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® were therefore null and void. The Michigan court, however,
has ruled that the FEA does have the statutory authority ’
to regulate natural gas liquids. Plaintiffs in the sixth
Michigan action (Celanese) are petrochemical manufacturers
which challenge the same orders of the FEA that are
involved in the other five Michigan actions on the
grounds that the allocation granted to Consumers Power
denies plaintiffs in Celanese an equitable distribution
of allocated products. Several of the Michigan actions
also contain allegations that the FEA's conduct constitutes
a taking of Consumers Power's property in violation of the
fifth amendment; that the FEA failed to give proper notice
® of the proceedings leading up to the decisions and orders
in question and that those proceedings were conducted in an
improper manner; that the FEA's conduct constitutes an
infringement of vested contractual rights; and that the FEA
failed to prepare an environmental impact statement or an
economic impact analysis in connection with the orders.
B. Northern District of Illinois Actions
Plaintiffs in the two Illinois actions seek review of
certain orders of the FEA that relate to the allocation of
natural gas liquids to Northern Illinois Gas Co. for use
as a feedstock in the production of synthetic natural gas.
Northern Illinois Gas, plaintiff in one of the Illinois
actions, seeks a declaratory judgment that the FEA lacks
@ statutory authority to allocate or otherwise regulate
Northern Illinois Gas' use of natural gas liquids. Northern

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® Illinois Gas also alleges that the FEA's orders interfere
with the jurisdiction of the Illinois Commerce Commission
to regulate intrastate sales of natural gas; that the FEA
failed to prepare an environmental impact statement in
connection with the orders; and that the orders are arbitrary,
capricious, and unsupported by substantial evidence. The
plaintiffs in the other Illinois action are petrochemical
manufacturers which challenge the FEA orders on the grounds
that the allocation granted to Northern Illinois Gas denies
these plaintiffs an equitable distribution of allocated
products.
C. Northern District of Texas Actions
C Plaintiffs in the two Texas actions are producers of
natural gas liquids. These plaintiffs seek a declaratory
: judgment that the FEA lacks statutory authority to regulate
the pricing of natural gas liquids. Phillips Petroleum Co.,
plaintiff in one of these two actions, further challenges
the statutory authority of the FEA to regulate the pricing
of products derived from natural gas liquids. In the event
the FEA is found to have authority to regulate pricing of
natural gas liquids, Phillips then challenges the valuation
~ procedures used by the FEA to determine base period prices
and current prices, which are used in calculating what
costs can be passed through to customers. Phillips asks
that the FEA's valuation procedure be invalidated and
@ that the cost justification method used by Phillips -be
approved.

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® D. Northern District of Oklahoma Action
The plaintiff in this action, Cities Service Co., is
a producer of natural gas liquids. Plaintiff challenges
the statutory authority of the FEA to regulate pricing
of natural gas liquids and products derived therefrom.
II. DECISION OF THE PANEL
Pursuant to 28 U.S.C. §1407(c)	(i) and Rule 8, R.P.J.P.M.L.,
65 F.R.D. 253, 258-59 (1975), the Panel issued an order to
show cause why these eleven actions should not be transferred
to a single district for coordinated or consolidated pretrial
1/
proceedings. All responding parties oppose transfer, except
one party which does not express a position on the question
@ of transfer. We find that these actions share few if any
common questions of fact and that their transfer under
Section 1407 would not serve the convenience of the parties
and witnesses or promote the just and efficient conduct of
the actions. Accordingly, we deny transfer.
Although the Panel has the power to order transfer in
multidistrict litigation even if no party favors transfer,
In re Asbestos and Asbestos Insulation Material Products
Liability Litigation, F. Supp. , (J.P.M.L.,
1/ An additional action, iobil Oil Corp. v. Federal Energy
Administration, et al., N. D. Texas, Civil Action No. CA3-75-0527,
was included in the show cause order but has since been dismissed
on a motion by defendants for summary judgment. The sole
issue in that action was whether the FEA had the statutory
authority to regulate the pricing and allocation of natural gas
® liquids, and the court ruled that the FEA did have that authority.
Also, defendants informed the Panel of other actions too
late for possible inclusion in the Panel's hearing on this
matter. See Rule 10(d), R.P.J.P.M.L., 65 F.R.D. 253, 260 (1975).

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e
[ filed April 7, 1977), we are persuaded by the parties’
arguments that transfer is inappropriate here. The principal
aspect which these actions have in common is the legal
question of the FEA's statutory authority to regulate natural
gas liquids. That issue has already been resolved
regarding the Michigan actions. The Oklahoma action and
one of the two Texas actions (Dorchester) involve no
other issues and the remaining issues involved in the
other actions before us are predominantly unique to the
actions pending within each district. The remaining issues
in the Michigan actions compared to those in the Illinois
actions involve review of different FEA orders that
allocated natural gas liquids to two different utilities
® for use as feedstocks in the manufacture of synthetic
natural gas. Distinct agency records and other documents
will therefore be relevant to each of those groups of actions.
The remaining issues in the second Texas action (Phillips)
involve the rationality of specific FEA pricing procedures
which are not involved in any of the other actions. Hence,
since these actions raise a common question of law and share
few, if any, common questions of fact, transfer under Section
1407 is unwarranted. See In re U.S. Navy Variable Reenlist-
ment Bonus Litigation, 407 F. Supp. 1405, 1407 (J.P.M.L.
1976); In re Eastern Airlines, Inc. Flight Attendant Weight
Program Litigation, 391 F. Supp. 763, 764 (J.P.M.L. 1975).
®

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° N
Furthermore, we note that all appeals, if any, in
these actions would fall within the exclusive jurisdiction
of the Temporary Emergency Court of Appeals. Economic
Stabilization Act of 1970, §211 (b) (2), set out as a note
under 12 U.S.C. §1904; Emergency Petroleum Allocation Act
of 1973, 15 U.S.C. §754(a) (1); Federal Energy Administration
Act of 1974, 15 U.S.C. §766(i)	(2) (A). Thus, there is no
danger of conflicting appellate determinations on the
common legal question.
IT IS THEREFORE ORDERED that the order to show cause
regarding the actions listed on the following Schedule A
PY be, and the same hereby is, VACATED.
®

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PY SCHEDULE ADocket No. 278
EASTERN DISTRICT OF MICHIGAN Civil Action No.
Celanese Corp., et al. v. Federal Energy 76-70499
Administration, et al.
Consumers Power Co. v. Federal Energy 75-72000
Administration, et al.
Lowell Light & Power Board, v. Federal 75-72030
Energy Administration,	et al.
The Dow Chemical Co. v. Federal Energy 75~72093
Administration,	et al.
Owens-Illinois, Inc. v. Federal Energy 75-72104
Administration,	et al.
Michigan Public Service Commission v. 75-72171
Federal Energy Administration, et al.
NORTHERN DISTRICT OF OKLAHOMA
® Cities Service Co. v. Federal Energy 76-C=-237Administration,	et al.
NORTHERN DISTRICT OF ILLINOIS
Northern Illinois Gas Co. v. Federal 75C3813
Energy Administration,et al.
Celanese Corp., et al. v. Federal Energy 76Cl116
Administration, et al.
NORTHERN DISTRICT OF TEXAS
Dorchester Gas Producing Co. et al. v. CA2-75-134
Federal Energy Administration, et al.
Phillips Petroleum Co. v. Federal Energy CA2-76-74
Administration, et al.