505 F.Supp.3d 653
S.D. Tex.2020Background
- In 2013 Kinetica purchased ~1,300 miles of Tennessee Gas offshore pipeline system after FERC approved abandonment-by-sale; Kinetica expected assignment of the appurtenant Outer Continental Shelf (OCS) rights-of-way (ROWs).
- In 2014 BSEE rejected twelve ROW-assignment requests, concluding the associated pipeline segments had ceased operations and the ROW grants had expired; BSEE issued expiration notices and a 2015 Final Order declining to reestablish the ROWs.
- Tennessee Gas appealed to the Interior Board of Land Appeals (IBLA); IBLA initially affirmed but later granted a joint reconsideration petition (Tennessee Gas and BSEE), vacated the Final Order, and remanded to BSEE in 2018.
- Kinder Morgan (Tennessee Gas’s parent) lobbied the Assistant Secretary of Land and Mineral Management (ASLM) ex parte; on June 27, 2019 the ASLM issued an Order rescinding BSEE’s Assignment Rejection Orders and retroactively approved assignments of the twelve ROWs to Kinetica.
- Kinetica sued under the APA and the Fifth Amendment, arguing the ASLM’s unilateral, ex parte reassignment imposed significant administrative rent and decommissioning liabilities and deprived it of the statutory right to be heard. The court granted summary judgment to Kinetica on its due-process claim, vacated the ASLM Order, and denied the parties’ other summary-judgment requests as moot or denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing — pecuniary injuries (administrative rent and decommissioning costs) | Kinetica said it has concrete, actual and imminent monetary injuries: nearly $2M already spent and $7–8M threatened, all traceable to the ASLM Order that made Kinetica the ROW holder. | DOI argued Kinetica lacked injury-in-fact or that any injury was self-inflicted (e.g., by entering the purchase or by earlier statements to FERC/BSEE). | Court: Kinetica has Article III standing; monetary harms are concrete and the threatened liabilities present a substantial risk of injury. |
| Traceability / self-inflicted argument | Kinetica: liabilities flow directly from the ASLM Order; earlier BSEE denials had been final and Kinetica reasonably relied on them. | DOI/Tennessee Gas: Kinetica could have avoided harm (by declining the deal, not accepting assignments, or appealing earlier orders); decommissioning costs were voluntarily incurred. | Court: The ASLM Order reanimated final prior decisions and caused the injuries; the costs were not purely self-inflicted and are fairly traceable to the Order. |
| Procedural-rights standing under 5 U.S.C. § 555(b) — right to be heard | Kinetica: it was an “interested person” because assignment would impose liabilities on it; ASLM acted ex parte and denied Kinetica the opportunity to appear. | DOI: Kinetica voluntarily forewent participation in IBLA and had notice the expiration issue was under review; procedural claim insufficient without independent substantive injury. | Court: Kinetica was an interested person entitled to notice and opportunity to be heard; the ex parte process caused a concrete procedural injury and satisfies standing. |
| Due process — deprivation of property without notice/hearing; Mathews balancing and remedy | Kinetica: ASLM deprived it of a protected property interest (avoidance of liabilities) by imposing liabilities without notice or chance to be heard; Mathews favors more process. | DOI: Assignment approvals are discretionary; no protected property interest in an assignment application; Kinetica effectively waived or had notice. | Court: Kinetica had a legitimate claim of entitlement to rely on BSEE’s final rejections; ASLM’s ex parte assignment without notice violated procedural due process under Mathews; the proper remedy is vacatur of the Order. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires injury, causation, redressability)
- Susan B. Anthony List v. Driehaus, 573 U.S. 149 (procedural injury: substantial risk of future harm can suffice)
- Clapper v. Amnesty Int'l USA, 568 U.S. 398 (threatened injury must not be purely speculative; distinguished here)
- Mathews v. Eldridge, 424 U.S. 319 (balancing test for what process is due)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (fundamental right to notice and opportunity to be heard)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (concreteness requirement for injury-in-fact in procedural-rights context)
- Central Arizona Water Conservation Dist. v. EPA, 990 F.2d 1531 (economic liability traceable to agency rule despite contractual allocation)
- Wells Fargo Armored Serv. Corp. v. Ga. Pub. Serv. Comm'n, 547 F.2d 938 (no protected entitlement to freedom from competition; contrasted here)
- Center for Biological Diversity v. EPA, 937 F.3d 533 (procedural-rights standing requires causation from the challenged action)
- Pennzoil Co. v. FERC, 645 F.2d 360 (scope of "interested person" under agency participation statutes)