Enable Mississippi River Transmission, L.L.C. v. Nadel & Gussman, L.L.C.
2016 U.S. App. LEXIS 23253
| 5th Cir. | 2016Background
- Enable Mississippi River Transmission, LLC operates the West Unionville interstate natural gas storage facility under a FERC certificate and filed a tariff; it discovered an unusual loss of stored (non-effective) gas and traced timing correlations to nearby well production.
- Enable sued Nadel & Gussman (operator of the Sanderlin No. 1 well) in federal district court seeking declaratory relief, an accounting/disgorgement, injunctions (plug wells), and fees, alleging Nadel was producing Enable’s storage gas.
- The district court treated Enable’s claim as essentially a Louisiana conversion/delict claim and dismissed for lack of subject-matter jurisdiction under Rule 12(b)(1), relying on analogous Ninth Circuit precedent.
- Enable appealed, arguing federal-question jurisdiction under 28 U.S.C. § 1331 and exclusive NGA jurisdiction (15 U.S.C. § 717u), and moved to disqualify Nadel’s counsel based on historical representation links.
- The Fifth Circuit reviewed jurisdiction de novo and concluded: Enable’s claim is a state-law conversion action that does not necessarily raise substantial federal issues; Nadel is not subject to duties under the Natural Gas Act (NGA); and extending NGA exclusivity to non-regulated third-party interference would upset the federal-state regulatory balance.
- Because the court found no federal jurisdiction, it affirmed dismissal and denied the disqualification motion as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction (28 U.S.C. § 1331) exists over Enable’s conversion-based claim | Enable: resolution requires interpreting NGA/regulations (ownership/possession of storage gas; applicability of the production exception; whether Nadel violated NGA by withdrawing/selling interstate gas) | Nadel: claim is state-law conversion of moveable property; resolution does not require interpreting NGA duties | Held: No federal-question jurisdiction — Louisiana law defines ownership/possession; NGA issues not necessary or substantial |
| Whether the NGA’s exclusive federal-jurisdiction clause (15 U.S.C. § 717u) requires federal forum for Enable’s claims | Enable: interference with Enable’s NGA-based rights/obligations brings this dispute within NGA exclusivity | Nadel: Operator is not subject to NGA duties; absent a statutory duty, defendant cannot violate the NGA | Held: NGA exclusivity does not apply where defendant has no duties under the NGA; state claims may proceed in state court |
| Whether producing storage gas constitutes interstate sale/transportation (placing Nadel outside production exception) | Enable: producing gas traveling in interstate commerce may remove production exception | Nadel: drawing gas from the ground is production/gathering (state-regulated) even if mistakenly taking storage gas | Held: Erroneous withdrawal is still production/gathering; not reclassified as sale/transportation subject to FERC |
| Whether court should disqualify Nadel’s counsel | Enable: historical representation by same law firm creates disqualifying conflict | Nadel: (implicit) no disqualifying conflict sufficient to affect proceedings | Held: Motion denied as moot because the court lacks subject-matter jurisdiction over the underlying suit |
Key Cases Cited
- Williston Basin Interstate Pipeline Co. v. An Exclusive Gas Storage Leasehold & Easement in the Cloverly Subterranean Geological Formation, 524 F.3d 1090 (9th Cir. 2008) (similar facts; held conversion/negligence claims did not require resolution of NGA issues)
- Gunn v. Minton, 568 U.S. 251 (2013) (test for when state-law claims present federal issues that support federal jurisdiction)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) (framework for when state-law claims "arise under" federal law)
- Oneok, Inc. v. Learjet, Inc., 135 S. Ct. 1591 (2015) (clarifies NGA covers transportation/sale in interstate commerce and leaves production/gathering to states)
- Shell Oil Co. v. Fed. Energy Regulatory Comm’n, 566 F.2d 536 (5th Cir. 1978) (distinguishes production/gathering from transportation/sale for NGA jurisdictional purposes)
- Columbia Gas Transmission, LLC v. Singh, 707 F.3d 583 (6th Cir. 2013) (refused to extend NGA violations to parties without statutory duties under the NGA)