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Petco Petroleum Corp. v. Natural Gas Pipeline Co. of America

January 18, 2006

PETCO PETROLEUM CORPORATION AND BERGMAN PETROLEUM CORPORATION, PLAINTIFFS,
v.
NATURAL GAS PIPELINE COMPANY OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: J. Phil Gilbert District Judge

MEMORANDUM AND ORDER

This matter comes before the Court on defendant Natural Gas Pipeline Company of America's ("NGPL") motion to dismiss the Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction (Doc. 91). Plaintiffs Petco Petroleum Corporation ("Petco") and Bergman Petroleum Corporation ("BPC") have responded to the motion (Doc. 104), and NGPL has replied to that response (Doc. 109). The Court also considers the remaining portions of NGPL's motion to dismiss pursuant to Rule 12(b)(6) (Doc. 49), to which Petco and BPC have responded (Doc. 59), and to which NGPL has replied (Doc. 60).

I. Motion to Dismiss for Lack of Jurisdiction (Doc. 91)

A. Standard for Dismissal

A defendant can challenge a court's subject matter jurisdiction under Rule 12(b)(1) in two ways. It may make a facial challenge to the sufficiency of the complaint's jurisdictional allegations as a matter of law, in which case, as with a Rule 12(b)(6) motion, all well-pleaded factual allegations are accepted as true and construed in the light most favorable to the plaintiff. Garcia v. Copenhaver, Bell & Assocs., 104 F.3d 1256, 1261 (11th Cir. 1997); United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994); 2 James Wm. Moore et al., Moore's Federal Practice, § 12.30[4], at 12-38 to 12-39 (3d ed.).

A defendant may also challenge the facts on which the complaint relies to allege jurisdiction, in which case the plaintiff is not entitled to have his allegations taken as true or to have any inferences drawn in his favor. Sapperstein v. Hager, 188 F.3d 852, 855-56 (7th Cir. 1999); 2 James Wm. Moore et al., Moore's Federal Practice, § 12.30[4], at 12-38 to 12-40 (3d ed. 2000). To resolve a challenge to the facts, a court may receive and weigh evidence outside the allegations in the complaint to determine if it has subject matter jurisdiction over the case. Sapperstein, 188 F.3d at 855-56. In any case, the plaintiff has the burden of proving that subject matter jurisdiction exists. Kontos v. United States Dep't of Labor, 826 F.2d 573, 576 (7th Cir. 1987).

In the case at bar, the defendant challenges the facts on which the plaintiff relies to establish subject matter jurisdiction. Specifically, NGPL argues that the claim in Count I either does not amount to a case or controversy or, alternatively, is a case or controversy that is now moot. Thus, Petco and Bergman must present evidence sufficient to establish that the claim in Count I presents a case or controversy that is not now moot.

B. Summary of Arguments

Count I attempts to assert a claim under the Natural Gas Pipeline Safety Act ("NGPSA"), 49 U.S.C. § 60101, et seq. The facts alleged in support of Count I are set forth generally in an order dated August 17, 2005, and need not be repeated in this order. Essentially, Count I alleges that NGPL's failure to contain the gas in the Devonian Reservoir renders the reservoir "unsafe" and constitutes a "hazardous leak." It claims that NGPL's failure to repair, replace or remove the "unsafe" Devonian Reservoir from service or to repair the "hazardous leak" is a violation of regulations promulgated under the NGPSA. 2d Am. Compl. ¶ 44.

NGPL argues that the Court does not have jurisdiction over Count I for two reasons. The first is that the Department of Transportation ("DOT"), the agency charged with implementing the NGPSA, does not have jurisdiction to regulate underground storage reservoirs and its associated wells, so the plaintiffs have no legal basis to file a citizens suit under the NGPSA. In support of this argument, NGPL points to a May 20, 2003, letter from Elaine E. Joost, Chief Counsel of Research and Special Programs Administration at the DOT, ("Joost letter"), stating, "The pipeline safety regulations contained in Title 49 C.F.R. Part 192 do not regulate underground storage formations." Alternatively, NGPL argues that even if Petco and BPC could file a citizen suit under the NGPSA, such a claim would be moot because the DOT has determined that NGPL has not violated any NGPSA regulation. In support of this argument, NGPL points to a March 24, 2005, DOT report ("McMaster report") finding the Loudon gas storage field pipelines "to be well-maintained and identif[ying] no serious concerns."

The plaintiffs argue that the NGPSA, by its plain terms, governs underground storage as a component of "transportation of gas" and that the DOT's failure to acknowledge its authority over the subject matter cannot deprive the Court of jurisdiction to hear a citizen suit under the NGPSA. They also argue that the DOT's inspection cannot render this dispute moot because the inspection did not address the items of concern set forth in Count I.

C. Analysis

The Court finds that the plaintiffs have failed as a matter of law to allege a violation of the NGPSA and that, because such a violation is a jurisdictional prerequisite for a citizen suit under the act, ...


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