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Willston Basin v. an Exclusive Gas Storage Leasehold and Easement in the Cloverly Subterranean Geological Formation, 06-35660 (2008)

Court: Court of Appeals for the Ninth Circuit Number: 06-35660 Visitors: 3
Filed: May 08, 2008
Latest Update: Mar. 02, 2020
Summary: FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT WILLISTON BASIN INTERSTATE PIPELINE COMPANY, Plaintiff-Appellant, v. AN EXCLUSIVE GAS STORAGE LEASEHOLD AND EASEMENT IN THE CLOVERLY SUBTERRANEAN GEOLOGICAL FORMATION, INCLUDING No. 06-35660 BUT NOT LIMITED TO THE FORMATION BENEATH SECTION 35, T9S, R23E D.C. No. CV-06-00010-RFC CARBON COUNTY, MONTANA, AND OPINION BENEATH SECTION 19, T58N, R99W PARK COUNTY, WYOMING, AND CERTAIN OIL OR GAS WELLS LOCATED THEREIN; HOWELL PETROL
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                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

WILLISTON BASIN INTERSTATE              
PIPELINE COMPANY,
                 Plaintiff-Appellant,
                 v.
AN EXCLUSIVE GAS STORAGE
LEASEHOLD AND EASEMENT IN THE
CLOVERLY SUBTERRANEAN
GEOLOGICAL FORMATION, INCLUDING               No. 06-35660
BUT NOT LIMITED TO THE FORMATION
BENEATH SECTION 35, T9S, R23E                  D.C. No.
                                            CV-06-00010-RFC
CARBON COUNTY, MONTANA, AND
                                               OPINION
BENEATH SECTION 19, T58N, R99W
PARK COUNTY, WYOMING, AND
CERTAIN OIL OR GAS WELLS
LOCATED THEREIN; HOWELL
PETROLEUM CORPORATION;
ANADARKO PETROLEUM
CORPORATION,
             Defendants-Appellees.
                                        
        Appeal from the United States District Court
                for the District of Montana
        Richard F. Cebull, District Judge, Presiding

                   Argued and Submitted
           February 5, 2008—Seattle, Washington

                      Filed May 9, 2008

     Before: Raymond C. Fisher, Ronald M. Gould, and
              Sandra S. Ikuta, Circuit Judges.

                             5153
5154   WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
                Opinion by Judge Ikuta
5156   WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE


                      COUNSEL

Robert T. Hall, III (argued) and Andrea Wolfman, Thelen
Reid Brown Raysman & Steiner LLP, Washington, D.C., for
the plaintiff-appellant.

Jon Metropoulos and Dana L. Hupp, Gough, Shanahan, John-
son & Waterman, Helena, Montana, for the plaintiff-
appellant.

W. Scott Mitchell and Jason S. Ritchie, Holland and Hart
LLP, Billings, Montana, for the defendant-appellee.

Patrick R. Day (argued), Holland and Hart LLP, Cheyenne,
Wyoming, for the defendant-appellee.
        WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE       5157
                         OPINION

IKUTA, Circuit Judge:

   Williston Basin Interstate Pipeline Company (Williston)
claims that it has lost and is continuing to lose natural gas
stored in its Elk Basin Storage Reservoir due to the operation
of gas production wells owned by Howell Petroleum Corpora-
tion and Anadarko Petroleum Corporation (Howell/
Anadarko). Two of those wells are located within the lateral
boundaries of Williston’s storage reservoir, but are completed
in geologic formations (the Morrison and Sundance forma-
tions) below the geologic formation in which Williston stores
its natural gas (the Cloverly formation). Williston brought an
action in federal district court, seeking damages and injunc-
tive relief pursuant to its state law claims of conversion and
negligence and also seeking to condemn the two Howell/
Anadarko wells located within the lateral boundaries of the
Elk Basin Storage Reservoir. The district court dismissed
Williston’s action. In this appeal, we consider Williston’s
arguments that the district court erred in dismissing Willis-
ton’s complaint for lack of subject matter jurisdiction or for
failure to state a claim under the Natural Gas Act (NGA), 15
U.S.C. §§ 717-717z. Williston contends that the district court
erred in holding that Williston needed authorization from the
Federal Energy Regulatory Commission (FERC) before it
could condemn Howell/Anadarko’s wells, and therefore erred
in dismissing Williston’s condemnation claim. Williston also
contends that its state law claims raised a substantial federal
question because they were aimed at enforcing a duty created
by the NGA. We reject both of Williston’s arguments and
affirm the district court.

                               I

  Williston is an interstate natural gas pipeline company that
delivers gas to a variety of customers in Montana, North
Dakota, South Dakota and Wyoming. As part of its opera-
5158     WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
tions, Williston stores gas in the Elk Basin Storage Reservoir
within the Elk Basin Field, which is located in southern Mon-
tana and northern Wyoming. The Elk Basin Storage Reservoir
is located in an underground geological formation (the
Cloverly formation) from which the producible natural gas
has already been removed. Williston now uses this formation
for storage and withdrawal of its stored natural gas, and has
installed seven active injection/withdrawal wells in the reser-
voir for this purpose.

   As an interstate natural gas company, Williston is subject
to federal regulation. See 15 U.S.C. § 717(a), (b). The NGA
authorizes FERC to regulate the “transportation of natural
gas” in interstate commerce. See 
id. § 717(a);
42 U.S.C.
§ 7172(a). Williston’s gas storage facilities are regulated by
FERC “since those facilities are a critical part of the transpor-
tation of natural gas and sale for resale in interstate com-
merce.” Schneidewind v. ANR Pipeline Co., 
485 U.S. 293
,
308 (1988); see also 18 C.F.R. § 284.1(a) (providing that
“[t]ransportation includes storage”). Under the NGA, a natu-
ral gas company must obtain a certificate of public conve-
nience and necessity (CPCN) from FERC before it can
engage in the acquisition, construction, operation or extension
of any facility. 15 U.S.C. § 717f(c)(1)(A). Natural gas compa-
nies must operate their facilities in compliance with the terms
and conditions set forth in their CPCN and in FERC regula-
tions. See 
id. §§ 717(a),
717f(c)(1)(A), 717f(e).

   The Elk Basin Storage Reservoir was previously owned by
Billings Gas Company (Billings). In 1949, FERC issued Bil-
lings a CPCN to acquire and use the “Elk Basin Cloverly gas
reservoir” for purposes of underground storage. Billings Gas
Co., 8 F.P.C. 1166, 1166-67 (1949). The CPCN stated that the
reservoir was “more fully described in the application in these
proceedings and exhibits appended thereto.” 
Id. at 1167.
Montana-Dakota Utilities Co. (Montana-Dakota) then
acquired the reservoir and operated it until 1985, at which
time FERC approved Williston’s application for a CPCN to
        WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE        5159
acquire and operate natural gas facilities including the Elk
Basin Storage Reservoir. The CPCN noted again that the
facilities were “more fully described in the application.” Wil-
liston Basin Interstate Pipeline Co. & Montana-Dakota Utils.
Co., 30 F.E.R.C. ¶ 61,143, 61,253 (1985).

   Billings, Montana-Dakota, and Williston operated the Elk
Basin Storage Reservoir until 2002 without any notable inter-
ference. During this period, Howell Petroleum Corporation
owned leases and mineral interests in oil and gas producing
formations in the Elk Basin Field. Problems began in 2002
when Anadarko Petroleum Corp., a corporation engaged in
natural gas exploration and production, purchased all of How-
ell’s stock. Soon after the stock purchase, Howell/Anadarko
drilled several wells within the Elk Basin Field, including
wells 19-1 and 195. Well 19-1 was completed in the Sun-
dance formation and well 195 was completed in the Morrison
and Sundance formations. Although the Morrison and Sun-
dance formations are located below the Cloverly formation
where Williston’s natural gas is stored, both wells are located
within the lateral boundaries of the Elk Basin Storage Reser-
voir and their well bores cross through the Cloverly formation
to reach the lower geologic formations.

   On January 27, 2006, Williston filed a complaint in district
court against Howell/Anadarko, alleging that “[d]efendants
have caused and are causing the loss . . . of Williston’s stor-
age gas.” Williston claimed it conducted an analysis of Elk
Basin Storage Reservoir data which indicated that the loss of
gas in Williston’s storage reservoir was directly correlated to
increased production from Howell/Anadarko’s wells. The
complaint asserted state law conversion and negligence
claims and sought damages and injunctive relief.

   After Howell/Anadarko filed a motion to dismiss for lack
of subject matter and diversity jurisdiction, Williston filed an
amended complaint which added a claim for condemnation
5160     WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
under Rule 71A of the Federal Rules of Civil Procedure.1 This
amended complaint sought condemnation of wells 19-1 and
195 under the authority of Williston’s 1985 CPCN. Williston
did not allege that its CPCN specifically described the prop-
erty Williston sought to condemn, nor did Williston provide
the district court with a copy of the map exhibits which
accompanied its CPCN application, or with any other applica-
tion materials depicting the lateral and vertical boundaries of
the reservoir approved by FERC in the 1949 or 1985 order.
In the absence of any FERC authorization to condemn the two
wells, Howell/Anardarko argued, among other things, that
Williston’s amended complaint failed to state a condemnation
claim and that the court lacked subject matter jurisdiction
over that claim. On July 14, 2006, the district court granted
Howell/Anadarko’s motion to dismiss Williston’s federal
claims and declined to exercise supplemental jurisdiction over
the state law claims.

                                   II

   We first review Williston’s challenge to the district court’s
dismissal of Williston’s condemnation claim. Because the dis-
trict court’s order discussed only jurisdictional grounds for
dismissal, it apparently dismissed Williston’s condemnation
claim for lack of subject matter jurisdiction. However, the
parties agree that the district court may have dismissed this
claim for failure to state a claim. Because we can affirm the
district court on any basis supported by the record, see Foster
v. Wilson, 
504 F.3d 1046
, 1050 (9th Cir. 2007), we will con-
sider both bases for dismissal.
  1
   At the time Williston filed its amended complaint, Rule 71A of the
Federal Rules of Civil Procedure governed the procedure for the condem-
nation of real and personal property in federal court. The rule was
amended in 2007, and is now Rule 71.1 of the Federal Rules of Civil Pro-
cedure.
           WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE               5161
                                    A

   We first consider Williston’s argument that the district
court could not dismiss Williston’s condemnation claim for
lack of subject matter jurisdiction. As a general rule, when
“[t]he question of jurisdiction and the merits of [the] action
are intertwined,” dismissal for lack of subject matter jurisdic-
tion is improper. See Safe Air for Everyone v. Meyer, 
373 F.3d 1035
, 1039 (9th Cir. 2004). Such an intertwining of
jurisdiction and merits may occur when a party’s right to
recovery rests upon the interpretation of a federal statute that
provides both the basis for the court’s subject matter jurisdic-
tion and the plaintiff’s claim for relief. See 
id. (citing Sun
Val-
ley Gas., Inc. v. Ernst Enters., 
711 F.2d 138
, 139 (9th Cir.
1983)). As the Court explained in Steel Co. v. Citizens for a
Better Env’t, 
523 U.S. 83
(1998), “if ‘the right of the petition-
ers to recover under their complaint will be sustained if the
Constitution and laws of the United States are given one con-
struction and will be defeated if they are given another,’ ”
then the court has jurisdiction over the dispute, and cannot
dismiss on jurisdictional grounds. 
Id. at 89
(quoting Bell v.
Hood, 
327 U.S. 678
, 685 (1946)). There is an exception to
this general rule, however: “a suit may sometimes be dis-
missed for want of jurisdiction where the alleged claim under
the Constitution or federal statutes clearly appears to be
immaterial and made solely for the purpose of obtaining juris-
diction or where such a claim is wholly insubstantial and friv-
olous.” 
Bell, 327 U.S. at 682-83
; see also Steel 
Co., 523 U.S. at 89
.

   [1] Here the district court concluded that it lacked jurisdic-
tion over Williston’s condemnation claim based on the court’s
construction of two provisions of the NGA, 15 U.S.C.
§ 717f(h) and 15 U.S.C. § 717f(c)(1)(A), as read together.2
  2
   15 U.S.C. § 717f(h) states, in pertinent part:
      When any holder of a certificate of public convenience and
      necessity cannot acquire by contract, or is unable to agree with
5162      WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
Section 717f(h) states that in order to bring a condemnation
claim the natural gas company must have a CPCN and the
acquisition must be “necessary.” See § 717f(h) (permitting a
condemnation action when a holder of a CPCN cannot
acquire “the necessary right-of-way” required for its natural
gas pipe lines, or “the necessary land or other property”
required    for    pipeline    operation    facilities). Sec-
tion 717f(c)(1)(A), in turn, precludes a natural gas company
from acquiring or extending a facility without a CPCN from
FERC “authorizing such acts or operations.”

   [2] According to the district court, in seeking to condemn
wells 19-1 and 195, Williston was undertaking to extend its
facilities. Pursuant to § 717f(c)(1)(A), a natural gas company
may not extend its facilities without a CPCN authorizing the
extension. Because FERC had not issued Williston a CPCN
specifically authorizing an expansion of Williston’s facilities
to include wells 19-1 and 195, the district court concluded it

    the owner of property to the compensation to be paid for, the nec-
    essary right-of-way to construct, operate, and maintain a pipe line
    or pipe lines for the transportation of natural gas, and the neces-
    sary land or other property, in addition to right-of-way, for the
    location of compressor stations, pressure apparatus, or other sta-
    tions or equipment necessary to the proper operation of such pipe
    line or pipe lines, it may acquire the same by the exercise of the
    right of eminent domain in the district court of the United States
    for the district in which such property may be located, or in the
    State courts.
  15 U.S.C. § 717f(c)(1)(A) states, in pertinent part:
    No natural-gas company or person which will be a natural-gas
    company upon completion of any proposed construction or exten-
    sion shall engage in the transportation or sale of natural gas, sub-
    ject to the jurisdiction of the Commission, or undertake the
    construction or extension of any facilities therefor, or acquire or
    operate any such facilities or extensions thereof, unless there is
    in force with respect to such natural-gas company a certificate of
    public convenience and necessity issued by the Commission
    authorizing such acts or operations . . . .
         WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE           5163
lacked jurisdiction to entertain Williston’s condemnation
claim.

   Williston does not contest the district court’s determination
that Williston would need a CPCN specifically authorizing an
extension of its facilities before Williston could undertake any
such extension. However, Williston argues that it is not bring-
ing its condemnation claim for the purpose of extending its
facilities pursuant to § 717f(c)(1)(A). Rather, Williston con-
tends that it is bringing its condemnation claim for the pur-
pose of operating and maintaining its existing facilities. In
other words, Williston asserts that loss of natural gas from the
reservoir impairs its operations, and Williston needs to con-
demn Howell/Anadarko’s wells in order to prevent further
losses. Because Williston is not attempting to extend its stor-
age capacity or otherwise extend its operations, Williston
claims that the acquisition of the Howell/Anadarko wells
would not constitute an “extension of . . . facilities” that
would trigger the restrictions imposed by § 717f(c)(1)(A).
Therefore, Williston contends it does not need a CPCN autho-
rizing its acquisition of these wells.

   [3] Instead, Williston relies on § 717(h), which gives the
holder of a CPCN the right to acquire a “right-of-way to . . .
construct, operate, and maintain a pipe line or pipe lines for
the transportation of natural gas, and the necessary land or
other property . . . for the location of . . . stations or equipment
necessary to the proper operation of such pipe line or pipe
lines.” § 717(h) (emphasis added). This language, Williston
argues, supports Williston’s position that its existing CPCN
gives Williston the right to condemn property it needs for the
operation and maintenance of its existing facilities without
further authorization from FERC.

   [4] Williston’s argument required the district court to con-
sider § 717f(c)(1)(A) and § 717f(h) and evaluate the merits of
Williston’s proposed interpretation of these statutes. Because
Williston’s right to proceed with its condemnation claim
5164     WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
would be “sustained if the Constitution and laws of the United
States are given one construction and will be defeated if they
are given another,” Steel 
Co., 523 U.S. at 89
(internal quota-
tion marks omitted), dismissal for want of subject matter
jurisdiction is improper.

   The Bell exception to this rule is inapplicable here. While
the district court was correct to reject Williston’s interpreta-
tion of § 717f(c)(1)(A) and § 717f(h), see infra at 5170, the
interpretation itself has not been foreclosed by our precedent.
See Oneida Indian Nation of N.Y. v. County of Oneida, 
414 U.S. 661
, 666 (1974). Moreover, despite Howell/Anadarko’s
argument that Williston’s condemnation claim is facially defi-
cient under Rule 71A, we cannot say the claim is so immate-
rial, insubstantial, or frivolous on its face as to defeat federal
jurisdiction. See 
Bell, 327 U.S. at 682-83
; see also FED. R.
CIV. P. 71A (2006) (current version at FED. R. CIV. P. 71.1
(2007)).

                                B

   We nonetheless affirm the district court’s dismissal of Wil-
liston’s condemnation claim on the ground that Williston’s
complaint fails to state a claim upon which relief can be
granted. See 
Foster, 504 F.3d at 1050
; FED. R. CIV. P.
12(b)(6). To survive a motion to dismiss for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6), the
plaintiff must allege “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 
127 S. Ct. 1955
, 1974 (2007). “[W]e may generally consider only
allegations contained in the pleadings, exhibits attached to the
complaint, and matters properly subject to judicial notice. We
accept all factual allegations in the complaint as true and con-
strue the pleadings in the light most favorable to the nonmov-
ing party.” Outdoor Media Group, Inc. v. City of Beaumont,
506 F.3d 895
, 899-900 (9th Cir. 2007) (internal quotation
marks and citation omitted).
          WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE                  5165
   Williston argues that it has stated a claim for relief under
§ 717f(h) by alleging that the property it seeks to condemn is
necessary to the continued operation and maintenance of its
existing facilities. Under Williston’s interpretation of
§ 717f(h) and § 717f(c)(1)(A), see supra at 5163, Williston is
not seeking to extend its facilities, and thus can proceed with
its condemnation claim without further authorization from
FERC. Based on this interpretation, Williston contends that it
has sufficiently stated a claim for relief, and the district court
erred in dismissing its condemnation claim. Williston does
not dispute that it would lack authority to condemn Howell/
Anadarko’s wells, and thus would not be able to state a claim
for relief, if acquisition of those wells constituted an extension
of Williston’s facilities. Therefore, our determination regard-
ing whether dismissal was proper under Rule 12(b)(6) turns
on our answer to the question whether Williston is seeking an
“extension” of its facilities for purposes of § 717f(c)(1)(A).

   [5] We start with the plain language of the statute. Gwalt-
ney of Smithfield, Ltd. v. Chesapeake Bay Found., Inc., 
484 U.S. 49
, 56 (1987). Although the NGA does not define what
constitutes the “extension of any facilities,” see
§ 717f(c)(1)(A), the common usage of the word “extension”
at the time the NGA was enacted would include an expansion
of the physical boundaries of a facility by adding additional
property.3 See WEBSTER’S NEW INTERNATIONAL DICTIONARY OF
THE ENGLISH LANGUAGE 900 (2d ed. 1937) (defining “exten-
sion” as “enlargement in dimension, area, duration, or
  3
    The phrase “extension of any facilities” in § 717f(c)(1)(A) first
appeared in § 7(c) of the Natural Gas Act of 1938, Pub. L. No. 75-688,
52 Stat. 821 (1938), which provided: “No natural-gas company shall
undertake the construction or extension of any facilities for the transporta-
tion of natural gas . . . until there shall first have been obtained from the
Commission a certificate that the present or future public convenience and
necessity require or will require such new construction or operation of any
such facilities or extensions thereof . . . .” This section was amended in
1942 to its current form. See An Act to Amend Section 7 of the Natural
Gas Act, Pub. L. No. 77-444, 56 Stat. 83, 83-84 (1942).
5166    WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
scope”). Williston has not pointed to any language in the
NGA or implementing regulations supporting Williston’s
interpretation of the word “extension” as excluding the addi-
tion of property in cases where such property is useful for a
natural gas company’s operation or maintenance of its exist-
ing facilities.

   [6] Rather, the structure of the NGA and its implementing
regulations indicate that § 717(c)(1)(A) applies in every case
where a natural gas company acquires additional property,
even for operation and maintenance purposes. The NGA gives
FERC “comprehensive authority” over the control of natural
gas companies’ facilities. See 
Schneidewind, 485 U.S. at 308
.
“[A] natural gas company must obtain from FERC a ‘certifi-
cate of public convenience and necessity’ before it . . .
extends . . . any facility,” because FERC must first be assured
that the project will be carried out “in compliance with”
FERC’s rules and regulations, and that the project is “in
accordance with the public interest.” 
Id. at 302-03.
Allowing
a natural gas company to condemn property beyond the scope
of its CPCN whenever that property could be useful for the
operation or maintenance of an existing facility would create
a significant gap in FERC’s oversight of new projects and
acquisitions, one of the principal goals of § 717f(c)(1)(a). See
id. Moreover, it
is inconsistent with a key Congressional goal
in enacting the NGA, namely, to have FERC balance the com-
peting public interests involved in a proposed project through
the issuance of certificates of public convenience and neces-
sity. See § 717f(e); 
Schneidewind, 485 U.S. at 300-04
; see
also Consol. Edison Co. of N.Y., Inc. v. F.E.R.C., 
315 F.3d 316
, 319 (D.C. Cir. 2003) (“FERC may authorize or certifi-
cate any pipeline project that the agency determines is neces-
sary or desirable in the public interest.”) (internal quotation
marks omitted).

   [7] Moreover, Williston’s proposed interpretation of the
word “extension” in § 717f(c)(1)(A) as excluding acquisitions
of property useful for operation or maintenance is contrary to
        WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE      5167
FERC’s implementation of the NGA. FERC has consistently
interpreted the NGA as requiring natural gas companies to
obtain a CPCN before expanding a facility’s physical bounda-
ries to include additional property, even when the natural gas
company is undertaking such expansion for the purpose of
establishing a buffer zone to prevent gas migration from an
existing storage reservoir. In implementing the Congressional
scheme, FERC has promulgated regulations to ensure that
landowners will be informed of any proposed infringement of
their property rights, and will have an opportunity to contest
such proposed infringements, prior to condemnation proceed-
ings. Thus the applicant for a CPCN is required to submit a
complete map of the proposed project, 18 C.F.R.
§ 157.14(a)(6), and provide notification to all affected land-
owners, 
id. § 157.6(d),
including owners of property interests
whose property “[i]s within the area of proposed new storage
fields or proposed expansions of storage fields, including any
applicable buffer zone.” 
Id. § 157.6(d)(2)(iv).
The CPCN
applicant must inform the landowner of its rights “at the Com-
mission and in proceedings under the eminent domain rules of
the relevant state.” 
Id. § 157.6(d)(3)(v).
Landowners then
have an opportunity to intervene and protest the proposed
project. See 
id. § 157.10.
Even when FERC provides a mecha-
nism for giving qualifying natural gas companies advance
approval to “acquire, construct, modify, replace, and operate
facilities for the remediation and maintenance of an existing
underground storage facility,” 
id. § 157.213(a),
(b), FERC
does not allow such qualifying companies to expand their
storage facilities’ physical boundaries. Rather, natural gas
companies may undertake the specified improvements with-
out prior FERC authorization “provided the storage facility’s
certificated physical parameters—including . . . reservoir and
buffer boundaries . . . remain unchanged.” 
Id. These regula-
tions, which provide multiple layers of protection for land-
owners, are inconsistent with Williston’s proposed
interpretation of the NGA as allowing a natural gas company
5168    WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
to condemn property for operation or maintenance purposes
without having to obtain FERC approval.

   ANR Pipeline Co., 76 F.E.R.C. ¶ 61,263 (1996), further sig-
nals FERC’s rejection of an interpretation of the NGA that
would allow natural gas companies to expand their storage
facilities’ physical boundaries without FERC authorization. In
ANR Pipeline Co., FERC considered an application by ANR,
a natural gas company that sought to condemn property it
deemed necessary to prevent migration of stored gas beyond
its existing storage field boundary. 76 F.E.R.C. at ¶ 62,346.
ANR sought a “revised, larger boundary” for its storage field
in order “to acquire, through eminent domain if necessary, the
property rights it needs to protect the stored gas.” 
Id. FERC described
its role under § 7171f(c) as follows:

    Since ANR is an interstate natural gas pipeline
    engaged in the transportation of natural gas in inter-
    state commerce, it is subject to the jurisdiction of the
    Commission and to section 7(C) [15 U.S.C.
    § 717f(c)] of the NGA. Where appropriate, the Com-
    mission has granted jurisdictional storage field oper-
    ators amended certificate authority to revise their
    storage field boundaries in order to allow them to
    initiate condemnation procedures to seek storage
    easements that will allow for continued efficient
    operation of their certificated gas storage facilities.

ANR Pipeline Co., 76 F.E.R.C. at ¶ 62,346. As indicated in
ANR Pipeline Co., FERC must authorize natural gas compa-
nies to seek condemnation of additional property needed for
efficient operation, and will grant such authorization only
where “appropriate” and “required by the public convenience
and necessity.” 
Id. There would
be no need for a natural gas
company to apply to FERC for an amended authorization if
it were free to condemn property required for efficient opera-
tion or maintenance purposes without FERC approval. See id.;
see also Trunkline LNG Co., 51 F.E.R.C. ¶ 61,202 (1990)
        WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE        5169
(determining that the acquisition of property for “dispersion
exclusion zones,” constitutes an extension of the certificated
facilities and requires pre-approval from FERC).

   The Sixth Circuit reached a similar conclusion in the lead-
ing case of Columbia Gas Transmission Corp. v. An Exclusive
Gas Storage Easement, 
776 F.2d 125
(6th Cir. 1985). In that
case, a natural gas company, Columbia, sought to condemn an
easement for underground storage of natural gas in property
that was one to two miles away from Columbia’s storage
field. See 
id. at 125-26.
Columbia possessed a 1953 CPCN
which did not cover the property it sought to condemn, but
Columbia argued that it did not need an amended CPCN
because the property it sought to condemn contained gas that
had migrated from Columbia’s gas storage reservoir and the
easement was necessary to protect its certificated natural gas
storage pool. See 
id. at 126.
   The district court had disagreed. Noting that a natural gas
company’s certificated facilities were those described in the
map attached to its application for a CPCN, Columbia Gas
Transmission Corp. v. An Exclusive Gas Storage Easement,
578 F. Supp. 930
, 934-35 (N.D. Ohio 1984); see 18 C.F.R.
§ 157.14(a)(6) (requiring the attachment of a detailed geo-
graphical map to an application for a CPCN), the district court
held that a CPCN holder’s power of eminent domain “extends
only to the property located within the geographical area des-
ignated on the map or maps attached to the application for the
certificate of public convenience and necessity” as required
by the FERC 
regulations. 578 F. Supp. at 932
. The Sixth Cir-
cuit affirmed the district court, ruling that § 717f(h) allowed
Columbia to condemn the additional property, but only if it
first “secure[d] a valid certificate of public convenience and
necessity” encompassing that 
property. 776 F.2d at 128-29
.
See also B&J Oil & Gas v. Fed. Energy Reg. Comm’n, 
353 F.3d 71
, 73-74 (D.C. Cir. 2004) (noting FERC’s authority to
enlarge a storage field boundary when expansion is necessary
to preserve the integrity of the storage field); Tenn. Gas Pipe-
5170     WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
line Co. v. 104 Acres of Land, 
749 F. Supp. 427
, 432 (D.R.I.
1990) (holding that a natural gas company was not entitled to
expand the scope of an easement authorized by its CPCN
without further authorization).

   Williston’s efforts to distinguish Columbia Gas are
unavailing. Williston notes that Howell/Anadarko’s wells are
drilled through the Elk Basin Storage Reservoir and are
within the lateral boundaries of Williston’s storage facility,
while in Columbia Gas the wells were drilled in areas beyond
the lateral boundaries of the natural gas company’s facility.
However, § 717f(c) and 717f(h) make no distinction between
extensions to property interests outside the lateral boundaries
of a certificated facility and those outside the vertical bounda-
ries of a certificated facility. Columbia, like Williston, was
attempting to use a condemnation action to stop a third party
from engaging in gas production operations that were alleg-
edly capturing gas from Columbia’s storage pool, and the
Sixth Circuit held that the NGA required Columbia to first
obtain an amended CPCN. The fact that Williston’s condem-
nation action is aimed at stopping the production of gas in a
lower geologic formation is not material. Williston is seeking
to acquire property that belongs to another party, the acquisi-
tion of which has not been specifically authorized by FERC.

   [8] Because Williston’s strained interpretation of the word
“extension” is inconsistent with the structure and logic of the
NGA and with FERC regulations, we agree with the Sixth
Circuit that a natural gas company may not condemn addi-
tional property that is not specifically described in its existing
CPCN, even if the natural gas company seeks to acquire such
property in order to operate and maintain an existing storage
facility. In the typical case, the property covered by the exist-
ing CPCN will be specifically designated in the map exhibits
attached to the application for the CPCN pursuant to 18
C.F.R. § 157.14(a)(6). Williston does not dispute that the
facility described in Williston’s application for a CPCN does
not include Howell/Anadarko’s leasehold interests in the two
         WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE          5171
wells completed in the Sundance and Morrison formations.
Therefore, Williston’s CPCN provided no basis for a condem-
nation order under § 717f(h). Accordingly, Williston’s
amended complaint failed to “state a claim to relief that is
plausible on its face,” 
Twombly, 127 S. Ct. at 1974
, and the
district court did not err in dismissing the complaint.

   The district court also acted well within its discretion in
declining to exercise supplemental jurisdiction over the
remaining state law claims. See 28 U.S.C. § 1367(c) (“The
district court may decline to exercise supplemental jurisdic-
tion over a claim . . . if . . . the district court has dismissed
all claims over which it has original jurisdiction . . . .”); see
also 
Foster, 504 F.3d at 1051-52
(holding that the “decision
whether to continue to exercise supplemental jurisdiction over
state law claims after all federal claims have been dismissed
lies within the district court’s discretion”).

                               III

   We next turn to Williston’s argument that the district court
erred in holding that it lacked federal subject matter jurisdic-
tion over Williston’s state law claims. Williston argues that it
does not need to rely on supplemental federal jurisdiction
over its state law claims, because the state law claims them-
selves invoke federal subject matter jurisdiction under 28
U.S.C. § 1331 and 15 U.S.C. § 717u. See Grable & Sons
Metal Prods., Inc. v. Darue Eng’g & Mfg., 
545 U.S. 308
(2005). Section 1331 provides: “The district courts shall have
original jurisdiction of all civil actions arising under the Con-
stitution, laws, or treaties of the United States.” Section 717u
provides, in relevant part:

    The District Courts of the United States and the
    United States courts of any Territory or other place
    subject to the jurisdiction of the United States shall
    have exclusive jurisdiction of violations of this chap-
    ter or the rules, regulations, and orders thereunder,
5172       WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
       and of all suits in equity and actions at law brought
       to enforce any liability or duty created by, or to
       enjoin any violation of, this chapter or any rule, reg-
       ulation, or order thereunder.

  [9] While § 717u does not expressly limit its jurisdictional
grant to cases “arising under the Natural Gas Act,” thereby
paralleling the statutory language in § 1331, the Court has
held that “[s]uch limitation is clearly implied.” See Pan Am.
Petroleum Corp. v. Superior Court, 
366 U.S. 656
, 665 n.2
(1961).

   The Court has consistently interpreted jurisdictional stat-
utes with an “arising under” qualification, like 28 U.S.C.
§ 1331 and 15 U.S.C. § 717u, as “giv[ing] the lower federal
courts jurisdiction to hear, originally or by removal from a
state court, only those cases in which a well-pleaded com-
plaint establishes either that [1] federal law creates the cause
of action or that [2] the plaintiff’s right to relief necessarily
depends on resolution of a substantial question of federal
law.” Franchise Tax Bd. v. Constr. Laborers Vacation Trust,
463 U.S. 1
, 27-28 (1983). The second basis for jurisdiction
arises when a federal court determines that “a state-law claim
necessarily raise[s] a stated federal issue, actually disputed
and substantial, which a federal forum may entertain without
disturbing any congressionally approved balance of federal
and state judicial responsibilities.” 
Grable, 545 U.S. at 314
.

   We first consider the argument that the district court had
jurisdiction over Williston’s state law claims under § 717u.
Our cases have interpreted jurisdictional provisions substan-
tially identical to § 717u, namely 15 U.S.C. § 78aa and 16
U.S.C. § 825p,4 as giving federal courts jurisdiction over state
  4
   15 U.S.C. § 78aa provides, in pertinent part:
      The district courts of the United States and the United States
      courts of any Territory or other place subject to the jurisdiction
         WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE                  5173
law claims brought to enforce federal obligations. See Cal. ex
rel. Lockyer v. Dynegy, Inc., 
375 F.3d 831
, 838-43 (9th Cir.
2004) (holding that 16 U.S.C. § 825p provided a basis for
subject matter jurisdiction over a state common law claim
predicated on a violation of a FERC tariff); Sparta Surgical
Corp. v. Nat’l Ass’n of Sec. Dealers, 
159 F.3d 1209
, 1211-12
(9th Cir. 1998) (holding that 15 U.S.C. § 78aa provided a
basis for subject matter jurisdiction over a state common law
claim predicated on a violation of federal securities law).

   Williston argues that Lockyer and Sparta are controlling in
this case and require us to hold that § 717u gave the district
court jurisdiction over Williston’s state law claims to enforce
a duty created by the NGA. Williston characterizes its claims
as follows: Williston has a duty to operate the Elk Basin Stor-
age reservoir pursuant to its CPCN, and in accordance with
the Natural Gas Act and FERC regulations. Williston’s con-
version and trespass claims, and its associated request for
injunctive relief, are intended to prevent Howell/Anadarko
from taking actions that interfere with Williston’s compliance
with these federal legal requirements. Because § 717u gives
a district court jurisdiction over any action “to enforce any lia-
bility or duty created by” the NGA and associated rules and
regulations, Williston contends that the district court had

   of the United States shall have exclusive jurisdiction of violations
   of this chapter or the rules and regulations thereunder, and of all
   suits in equity and actions at law brought to enforce any liability
   or duty created by this chapter or the rules and regulations there-
   under.
  16 U.S.C. § 825p provides, in pertinent part:
   The District Courts of the United States, and the United States
   courts of any Territory or other place subject to the jurisdiction
   of the United States shall have exclusive jurisdiction of violations
   of this chapter or the rules, regulations, and orders thereunder,
   and of all suits in equity and actions at law brought to enforce
   any liability or duty created by, or to enjoin any violation of, this
   chapter or any rule, regulation, or order thereunder.
5174    WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
jurisdiction to grant an injunction to prevent Howell/
Anadarko from taking actions that could threaten Williston’s
ability to perform its duties under the NGA.

   [10] This argument is meritless. Unlike the state law claims
at issue in Lockyer and Sparta, Williston’s state law claims do
not fall within the relevant exclusive jurisdiction provision.
Section 717u does not provide federal jurisdiction for a state
law claim against a party whose obligations or duties under
the NGA are not at issue. See § 717u (giving a court jurisdic-
tion “to enforce any liability or duty created by, or to enjoin
any violation of, this chapter [NGA] or any rule, regulation,
or order thereunder.”). Williston has not identified any obliga-
tion imposed on Howell/Anadarko by the NGA. Indeed, Con-
gress has excluded natural gas production and gathering
operations, the very operations Howell/Anadarko is undertak-
ing in the Elk Basin field, from the scope of the NGA. See 15
U.S.C. § 717(b) (the provisions of the NGA are not applicable
to “the production or gathering of natural gas”); see also Fed.
Power Comm’n v. Panhandle E. Pipe Line Co., 
337 U.S. 498
,
509-13 (1949) (holding that § 717(b) precluded FERC from
regulating an activity excluded from the NGA under that pro-
vision, even when the activity would negatively impact a nat-
ural gas company’s ability to fulfill its duties and obligations
under the NGA). By contrast, the plaintiffs in Lockyer and
Sparta were attempting to enforce the defendants’ obligations
under federal law. See 
Lockyer, 375 F.3d at 841
(holding that
federal jurisdiction existed under 16 U.S.C. § 825p when
“[t]he state lawsuit turns, entirely, upon the defendant’s com-
pliance with a federal regulation”); 
Sparta, 159 F.3d at 1212
(holding that federal jurisdiction existed under 15 U.S.C.
§ 78aa where plaintiff’s state law claims were founded on the
propriety of defendants’ federally regulated conduct).
Because resolution of plaintiffs’ state law claims in both
Lockyer and Sparta required us to determine whether defen-
dants had complied with rules that had the effect and force of
federal law, we determined that we had jurisdiction under
§ 825p and § 78aa, respectively.
         WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE        5175
   Williston argues that federal courts have jurisdiction to
ensure compliance with the NGA in the face of third party
threats, even when those threats are excluded from regulation
under § 717(b) of the NGA. To support this theory, Williston
cites Columbia Gas Transmission Corp. v. Burke, 768 F.
Supp. 1167, 1170-71 (N.D. W. Va. 1990), in which a district
court held it had subject matter jurisdiction over a natural gas
company’s state law trespass action based in part on the
impact the trespass would have on the company’s ability to
comply with the NGA. We disagree with this conclusion to
the extent the district court’s assertion of federal jurisdiction
was based on the natural gas company’s own duty to comply
with the NGA, rather than on enforcing the defendant’s obli-
gations under the NGA. The NGA does not authorize a fed-
eral court to enjoin non-regulated activities that interfere with
a regulated company’s operations. See 15 U.S.C. § 717u.
Therefore, Williston’s reliance on Burke is unavailing.

  [11] Because Williston is not trying to enforce the
defendants-appellees’ obligations under the NGA, its claims
do not fall within § 717u and do not invoke the federal courts’
exclusive jurisdiction. Therefore, we reject Williston’s argu-
ment that Lockyer and Sparta are controlling.

   [12] Finally, we consider whether Williston has otherwise
established that its state law claims arise under federal law.
As noted in Grable, in order for a state law claim to provide
a basis for federal jurisdiction, the state claim must “turn on
substantial questions of federal law,” and “really and substan-
tially involv[e] a dispute or controversy respecting the valid-
ity, construction or effect of [federal] 
law.” 545 U.S. at 312
-
313 (internal quotation marks omitted; alterations in original).
In Grable, the Court determined it had federal jurisdiction
over a state claim where “the meaning of the federal statute”
was an essential element of a state quiet title action, “and the
meaning of the federal statute [wa]s actually in dispute.” 
Id. at 315.
Here, we cannot say that a court would need to resolve
a disputed provision of the NGA in order to resolve Willis-
5176     WILLISTON BASIN v. AN EXCLUSIVE GAS STORAGE
ton’s state law conversion or negligence claims, because no
provision of the NGA constitutes an essential element of
those claims. In sum, Williston has not identified a “substan-
tial question[ ] of federal law” upon which its state law negli-
gence and conversion claims would turn. 
Id. at 312.
Therefore, the federal courts have no jurisdiction over such
claims.

                               IV

   In conclusion, we affirm the district court’s dismissal of
Williston’s condemnation claim on the ground that it failed to
state a claim, and hold that the district court did not abuse its
discretion in declining to exercise supplemental jurisdiction
over the state law claims. We also affirm the district court’s
dismissal of Williston’s state law claims for lack of subject
matter jurisdiction.

  AFFIRMED.

Source:  CourtListener

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