Case: 16-60604 Document: 00516516011 Page: 1 Date Filed: 10/20/2022
`
`United States Court of Appeals
`for the Fifth Circuit
`
`
`No. 16-60604
`consolidated with
`No. 21-60083
`
`
`United States Court of Appeals
`Fifth Circuit
`
`FILED
`October 20, 2022
`
`Lyle W. Cayce
`Clerk
`
`
`BP America, Incorporated; BP Corporation North
`America, Incorporated; BP America Production
`Company; BP Energy Company,
`
`
`
`
`versus
`
`
`Federal Energy Regulatory Commission,
`
`
`Petitioners,
`
`Respondent.
`
`
`
`
`Petitions for Review of Orders of the
`Federal Energy Regulatory Commission
`Agency Nos. IN13-15-000, IN13-15-001, IN13-15-002
`
`
`
`Before Jolly, Willett, and Oldham, Circuit Judges.
`E. Grady Jolly, Circuit Judge:
`
`landfall over southeastern Texas on
`Ike made
`Hurricane
`
`September 13, 2008. Although more than a decade has elapsed since the
`hurricane’s passage, there yet remains some legal rubble for this court to
`clear.
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 2 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`The Federal Energy Regulatory Commission (FERC) has brought this
`enforcement action against BP, alleging the company capitalized on the
`hurricane-induced chaos in commodities markets by devising a scheme to
`manipulate the market for natural gas.1 Now, years later, BP seeks judicial
`review of FERC’s order finding that BP engaged in market manipulation and
`imposing a $20 million civil penalty.
`
`BP makes a bevy of arguments as to why FERC’s order should be
`overturned, but all are meritless save one. Contrary to FERC’s position, we
`hold that the Commission has jurisdiction only over transactions in interstate
`natural gas directly regulated by the Natural Gas Act (NGA). Specifically, we
`reject FERC’s broader theory that its authority to address market
`manipulation extends to any natural gas transaction which affects the price
`of a transaction under the NGA. Otherwise, however, we uphold the
`Commission’s order. Nevertheless, because FERC predicated its penalty
`assessment on its erroneous position that it had jurisdiction over all (and not
`just some) of BP’s transactions, we must remand for reassessment of the
`penalty in the light of our jurisdictional holding. Thus, we GRANT in part
`and DENY in part BP’s petition for review and REMAND to the agency
`for reassessment of the penalty.
`
`I
`
`A
`
`To understand BP’s scheme, some background on the natural gas
`
`industry is necessary. In addition to producing and selling their own oil and
`gas, participants in the natural gas market are permitted to engage in a variety
`of trades. In general, traders may make either “physical” or “financial”
`
`
`
`1 In reality, FERC brought its enforcement action against various BP-related
`entities, but we refer to these entities collectively as BP.
`
`2
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 3 Date Filed: 10/20/2022
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`No. 16-60604
`c/w No. 21-60083
`
`transactions. Physical trading involves the purchase or sale of actual natural
`gas, which must then be physically delivered from one party to another.
`Financial trades, on the other hand, are more in the nature of bets on the
`future price of gas; a financial transaction can be settled in cash without the
`need for any natural gas to actually change hands.
`
`Shortly before Hurricane Ike arrived, traders on BP’s Texas team had
`
`amassed a significant financial position known as a “spread.” The value of
`this spread position was determined by the difference in natural gas prices at
`Henry Hub, a major natural gas market in Louisiana frequently used as a
`national benchmark, and Houston Ship Channel (HSC), a gas hub in
`Houston. When gas prices at Henry Hub were higher than those at HSC,
`BP’s financial position became more valuable; the greater the difference, the
`more money BP stood to make.
`
`When the hurricane hit, natural gas prices at HSC plummeted,
`
`causing BP to realize a sizeable profit. And amidst the tumult in the market,
`BP spied an opportunity; the company would make millions more if the price
`differential between HSC and Henry Hub persisted after the hurricane
`became history. According to FERC, BP capitalized on this opportunity by
`engaging in a glut of physical gas sales at HSC, intending to depress the prices
`on which the value of its financial position depended. BP’s task was eased by
`the fact that it did not need to cause a sudden spike or dip in prices—a change
`which would have been easily detected by regulators—but only needed to
`delay the market’s return to normal following the hurricane.
`
`Central to BP’s plan was the Houston Pipeline (HPL). The HPL
`
`connects HSC to Katy, another natural gas hub approximately thirty miles
`away. BP had purchased the right to transport a certain amount of natural gas
`on the HPL per day in order to satisfy its various business needs, but the
`pipeline was generally underutilized. BP thus allowed its Texas trading desk
`
`3
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 4 Date Filed: 10/20/2022
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`No. 16-60604
`c/w No. 21-60083
`
`to engage in arbitrage using the HPL; when there was a price difference
`between Katy and HSC, traders could transport gas accordingly between the
`two to make a profit while incurring only minor transportation costs.
`According to FERC, however, BP traders effectively abandoned their
`arbitrage strategy after the hurricane, instead using the HPL to transport
`significant quantities of natural gas from Katy to HSC, thereby lowering
`prices at the latter. Although BP incurred some losses in its physical trading
`by buying at Katy and selling at HSC regardless of whether it was economical
`to do so, these losses were dwarfed by the increase in value to BP’s financial
`position. Access to transportation capacity on the HPL was therefore
`essential to the BP traders’ scheme.2
`
`The Texas trading desk’s machinations went undetected until
`
`November 5, 2008. On that day, Clayton Luskie, a junior member of the
`Texas team, was attending a BP assessment program designed to determine
`whether aspiring traders were qualified for advancement in the company.
`While there, Luskie described the team’s trading strategy to a member of
`BP’s senior management, who became concerned that what Luskie had
`described “could be perceived as market manipulation.” Alarmed, Luskie
`called Gradyn Comfort, a senior member of the Texas team and primary
`trader in charge of transactions at Katy and HSC. Because Luskie called
`Comfort at his trading desk, BP recorded the call, which is laid out in
`pertinent part below:
`
`LUSKIE: So I was telling [the senior BP executive] how we,
`you know, what we are doing at Ship Channel this month. And
`you know, he just started asking me about, you know, what,
`
`
`
`2 Although BP theoretically could have depressed prices without the HPL by
`simply buying large quantities of natural gas at HSC and then selling the same gas at lower
`prices, such a strategy would have been both easier to detect and far more costly.
`
`4
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 5 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`kind of what we do and strategy and what not. And I was telling
`him about our HPL transport. And the way I explained it was
`not very good. And I came off sounding like we either transport
`or don’t transport solely on the—kind of how we think it’s
`going to affect the index and help our paper position. Which as
`I was explaining, I realized that’s not right and that’s the exact
`same thing that we’re sort of accusing [a rival company] of
`currently. So how would you explain our dealings on HPL and
`with our paper position that don’t make it sound like we’re—
`COMFORT: [Interposing] Clayton, Clayton—
`LUSKIE: —manipulating the index.
`COMFORT: Clayton.
`LUSKIE: Yeah.
`COMFORT: I think . . .
`[Fifteen second pause]
`COMFORT: Most of the time we ship economically.
`LUSKIE: Right.
`COMFORT: And the—
`LUSKIE: [Interposing] I mean, it’s just that we’re not—
`COMFORT: [Interposing] Clayton, Clayton.
`LUSKIE: Yeah.
`[Ten second pause]
`COMFORT: You know, the—there’s times we can’t unwind
`all of our positions, but most of the time we tend to ship
`economically.
`LUSKIE: Right.
`COMFORT: Okay?
`LUSKIE: Is it just that we’re not—
`COMFORT: [Interposing] Clayton.
`
`5
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 6 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`[Fifteen second pause]
`COMFORT: And then . . . the aspects that go into cash I think
`are multiple. And . . .
`[Fifteen second pause]
`COMFORT: Just give me a second here, okay?
`LUSKIE: Yeah.
`[Pause]
`LUSKIE: Hey, I tell you what, I need to actually, I need to run.
`COMFORT: Yeah.
`LUSKIE: Can I call you back?
`COMFORT: Yeah, that would be a good idea.
`LUSKIE: Okay.
`COMFORT: Okay, thanks.
`Despite claiming that that he “need[ed] to run,” Luskie called Comfort back
`on Comfort’s unrecorded cell phone less than one minute later. Comfort did
`not answer but returned the call two minutes later. Comfort and Luskie then
`had two unrecorded cell phone conversations lasting nine and ten minutes,
`respectively. Neither party was able to recall with specificity what was
`discussed during those phone conversations. In the last such conversation,
`however, Luskie and Comfort decided to report the initial, recorded phone
`conversation to BP’s internal compliance team, which led FERC to initiate
`an investigation and which culminated in this enforcement proceeding.3
`
`
`
`3 FERC suggests that Luskie and Comfort reported the phone call because Luskie
`had already let slip revealing statements to a staff member of the independent monitor
`installed pursuant to a settlement with the Commodity Futures Trading Commission
`(CFTC), meaning that the pair knew regulatory scrutiny was imminent. The record before
`us, however, does not indicate what precisely Luskie revealed and does not unambiguously
`establish why Luskie and Comfort decided to disclose the phone call.
`
`6
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 7 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`B
`
`Following several years of discovery and administrative proceedings,
`
`FERC issued its decision. See BP Am., Inc., 156 FERC 61,031 (2016). In its
`decision, the Commission compared BP’s natural gas trades during the
`Investigative Period—from September 18 to November 30, 2008—to its
`trading during the prior portion of 2008. FERC found that, following
`Hurricane Ike, BP changed its trading behavior at HSC by selling more
`natural gas, selling earlier in the day, selling at lower prices, and transporting
`more gas from Katy to HSC even when doing so was unprofitable. Viewing
`these changes together with the phone calls already discussed, FERC
`concluded that BP had engaged in market manipulation and ordered BP to
`pay a civil penalty of approximately $20 million. BP petitioned this court for
`review of FERC’s order but agreed to stay the case pending the
`Commission’s decision on BP’s request for rehearing. In December 2020,
`FERC issued its order on rehearing, which modified portions of FERC’s
`jurisdictional holdings but otherwise upheld its previous decision and
`penalty. See BP Am., Inc., 173 FERC 61,239 (2020). BP brought another
`petition for review, which was consolidated with the previous case. These
`petitions are now properly before us and are ripe for our review.4
`
`II
`
`We review FERC’s order under the standards established by the
`
`Administrative Procedure Act, 5 U.S.C. § 706. We are required to “hold
`unlawful and set aside agency action” which is “in excess of statutory
`jurisdiction” or “arbitrary, capricious, an abuse of discretion, or otherwise
`not in accordance with law.” Id.
`
`
`
`4 We have jurisdiction under 15 U.S.C. § 717r(b), which provides for direct review
`of FERC’s orders in the circuit courts.
`
`7
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 8 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`The agency’s factual findings and conclusions will be upheld unless
`they are unsupported by substantial evidence. Id.; see also 15 U.S.C. § 717r(b).
`Substantial evidence is less than a preponderance of the evidence, but more
`than a scintilla. Masterson v. Barnhart, 309 F.3d 267, 272 (5th Cir. 2002)
`(quotation marks omitted) (citing Newton v. Apfel, 209 F.3d 448, 452 (5th Cir.
`2000)). In reviewing for substantial evidence, we do not substitute our own
`judgment for that of the agency. Id. Instead, we ask only whether the agency’s
`actions were supported by “such relevant evidence as a reasonable mind
`might accept as adequate to support [its] conclusion[s].” Consolo v. Fed. Mar.
`Comm’n, 383 U.S. 607, 620 (1966) (quoting Consol. Edison Co. of N.Y. v.
`NLRB, 305 U.S. 197, 229 (1938)).
`
`III
`
`BP raises a number of issues to challenge FERC’s order. First, BP
`argues that FERC did not have jurisdiction over its conduct because (1)
`FERC’s jurisdiction extends only to interstate activity and (2) none of the
`transactions at issue were transactions in interstate gas regulated under the
`Natural Gas Act. Second, BP asserts that it did not engage in market
`manipulation and that FERC’s conclusion to the contrary was arbitrary,
`capricious, and unsupported by substantial evidence. Third, BP contends
`that, even if it did engage in market manipulation, various errors in FERC’s
`penalty process improperly inflated the fine imposed. Fourth, BP claims that
`FERC contravened the Administrative Procedure Act by intermingling its
`investigatory and adjudicatory functions. Finally, BP argues that the
`Commission’s enforcement action is barred by the statute of limitations. We
`address these arguments seriatim.
`
`A
`
`We begin by addressing whether FERC had jurisdiction over the
`allegedly manipulative transactions.
`
`8
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 9 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`1
`
`The Natural Gas Act forms the cornerstone of FERC’s regulatory
`
`power over the natural gas market. The foundational principle limiting that
`power is found in section 1(b) of the Act, which provides that:
`
`The provisions of [the NGA] shall apply to the transportation
`of natural gas in interstate commerce, to the sale in interstate
`commerce of natural gas for resale . . . and to natural-gas
`companies engaged in such transportation or sale, and to the
`importation or exportation of natural gas in foreign commerce
`and to persons engaged in such importation or exportation, but
`shall not apply to any other transportation or sale of natural gas
`or to the local distribution of natural gas . . . or to the
`production or gathering of natural gas.
`15 U.S.C. § 717(b) (emphasis added). In enacting this provision, “Congress
`carefully divided up regulatory power over the natural gas industry” and
`declined to provide for wholesale federal regulation “to the limit of
`constitutional power.” Nw. Cent. Pipeline Corp. v. State Corp. Comm’n, 489
`U.S. 493, 510 (1989). Instead, the NGA grants FERC jurisdiction over
`transactions in interstate natural gas but denies jurisdiction over production
`and purely intrastate activity. 15 U.S.C. § 717(b).
`
`This statutory scheme, as originally enacted, eventually resulted in a
`
`fragmented natural gas market, with much gas sequestered away in disparate
`intrastate markets and unable to cross state lines without being subjected to
`NGA regulations. Associated Gas Distribs. v. FERC, 899 F.2d 1250, 1255
`(D.C. Cir. 1990). Congress responded by passing the Natural Gas Policy Act
`(NGPA). Id. The NGPA permitted interstate pipelines to transport gas “on
`behalf of” intrastate pipelines without subjecting the intrastate pipeline or
`other downstream recipients of the gas to the full ambit of NGA regulations,
`thus helping to integrate the interstate and intrastate markets. 15 U.S.C.
`§ 3371; Associated Gas, 899 F.2d at 1255–56.
`
`9
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 10 Date Filed: 10/20/2022
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`No. 16-60604
`c/w No. 21-60083
`
`Finally, in response to widespread reports of price manipulation in
`
`western energy markets, Congress passed the Energy Policy Act of 2005.
`Oneok, Inc. v. Learjet, Inc., 575 U.S. 373, 381–82 (2015). Among other
`provisions, the Act amended the NGA by adding section 4A, which contains
`the anti-manipulation provision forming the basis of this case. Energy Policy
`Act of 2005, Pub. L. No. 109–58, sec. 315, § 4A, 119 Stat. 594, 691 (codified
`at 15 U.S.C. § 717c-1). Section 4A provides:
`
`It shall be unlawful for any entity, directly or indirectly, to use
`or employ, in connection with the purchase or sale of natural gas
`or the purchase or sale of transportation services subject to the
`jurisdiction of the Commission, any manipulative or deceptive
`device or contrivance (as those terms are used in [the
`Securities Exchange Act of 1934]) in contravention of such
`rules and regulations as the Commission may prescribe as
`necessary in the public interest or for the protection of natural
`gas ratepayers.
`15 U.S.C. § 717c-1 (emphasis added). With these statutes set out as the
`backdrop, we turn to the Commission’s jurisdictional claims.
`
`2
`
`FERC does not contend that all of the transactions that were part of
`
`BP’s manipulative scheme were interstate transactions directly subject to the
`NGA. Instead, the Commission argues that the anti-manipulation provision
`creates a new and independent source of jurisdiction for FERC to spread its
`wings. Pointing out that the statute above forbids manipulation by “any
`entity” “in connection with” a jurisdictional transaction, FERC argues that
`it has jurisdiction over any natural gas transaction that is part of manipulative
`scheme, so long as that scheme affects the price of an NGA-jurisdictional
`transaction. 15 U.S.C. § 717c-1. In other words, FERC asserts that it has
`jurisdiction over otherwise non-jurisdictional intrastate transactions if those
`transactions manipulate the price of interstate gas bought and sold under the
`
`10
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`No. 16-60604
`c/w No. 21-60083
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`NGA. But as earlier set forth, the NGA clearly forbids FERC from exercising
`jurisdiction over intrastate transactions.
`
`i
`
`We first observe that, in interpreting statutes, it is seldom appropriate
`to seize on single words or phrases; instead, statutory interpretation requires
`consideration of the statutory scheme as an integrated whole. Context
`provided by surrounding language or statutory provisions can illuminate the
`meaning of an otherwise cryptic passage. See FDA v. Brown & Williamson
`Tobacco Corp., 529 U.S. 120, 132 (2000) (“[A] reviewing court should not
`confine itself to examining a particular statutory provision in isolation.”).
`Our first look is therefore to section 1(b) of the NGA, which establishes a
`basic dichotomy: FERC is given power over “the transportation [or sale] of
`natural gas in interstate commerce,” but the provisions of the NGA “shall
`not apply to any other transportation or sale of natural gas,” including
`intrastate transportation and sales. 15 U.S.C. § 717(b). The statute thus
`clearly delineates between interstate natural gas transactions, which are
`subject to the NGA, and intrastate transactions, which are not.
`
`ii
`
`Nevertheless, FERC argues that this long-established partition
`between intrastate and interstate transactions was nullified for purposes of
`the anti-manipulation rule. More specifically, FERC argues that BP’s
`scheme—even if conducted using only intrastate trades—was, in the words
`of the anti-manipulation provision, “in connection with” interstate, NGA
`transactions because it affected the price of those transactions.5 15 U.S.C.
`
`
`
`5 To reiterate, the anti-manipulation provision makes it “unlawful for any entity,
`directly or indirectly, to use or employ, in connection with the purchase or sale of natural
`gas or the purchase or sale of transportation services subject to the jurisdiction of the
`
`11
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`Case: 16-60604 Document: 00516516011 Page: 12 Date Filed: 10/20/2022
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`No. 16-60604
`c/w No. 21-60083
`
`§ 717c-1. We are not satisfied, however, that the single statutory phrase “in
`connection with” can bear the weight FERC would place upon it;
`considering the explicit division drawn by the statute between interstate and
`intrastate transactions, it is plain to us that “in connection with” does not
`mean any connection whatsoever, regardless of how indirect or tenuous. To
`hold otherwise would be to hold that Congress intended for a subtle gloss of
`these three words to entirely upend its carefully defined limitations on
`FERC’s jurisdiction. In short, such a reading is not plausible. See Whitman v.
`Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001) (citing MCI Telecomms. Corp.
`v. Am. Tele. & Tel. Co., 512 U.S. 218, 231 (1994); Brown & Williamson, 529
`U.S. at 159–60 (“Congress[] . . . does not, one might say, hide elephants in
`mouseholes.”)).
`
`iii
`
`Precedent confirms our understanding of the text. In Texas Pipeline
`
`Ass’n v. FERC, 661 F.3d 258 (5th Cir. 2011), we considered a similar
`jurisdictional issue. In that case, FERC asserted that an amendment to the
`NGA had given it a new and separate “transparency authority” not
`constrained by the jurisdictional limitations of section 1(b). Id. at 261–62. The
`Commission pointed to new statutory language empowering it to gather
`pricing information from “any market participant,” arguing that it could
`therefore demand price data not only from interstate pipelines, but also from
`wholly intrastate pipelines. Id. at 261 (quoting 15 U.S.C. § 717t-2(a)(3)(A)).
`Our court rejected this position, reasoning that the statute could only be
`interpreted as such “if [the statutory language relied on by FERC] floated
`solitary and free in the U.S. Code.” Id. But we could not read the relevant
`
`
`
`Commission, any manipulative or deceptive device or contrivance . . . in contravention of”
`FERC’s regulations. 15 U.S.C. § 717c-1.
`
`12
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`

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`No. 16-60604
`c/w No. 21-60083
`
`provision in isolation, thereby ignoring the crucial context provided by
`section 1(b) and its jurisdictional distinction between interstate and intrastate
`activity. Id. at 261–62. Thus, our review of the NGA’s text and history
`“confirm[ed] our conclusion that Congress did not intend to regulate ‘the
`entire natural-gas field to the limit of constitutional power’ but chose instead
`to leave regulation of certain entities, including intrastate transactions and
`pipelines, to the states.” Id. at 263 (footnote omitted) (quoting Nw. Cent.
`Pipeline, 489 U.S. at 510). The same reasoning directs us to the same
`conclusion in this case.
`
`Furthermore, we have previously noted that “where Congress has
`decided to expand FERC’s jurisdiction, it has done so explicitly and
`unambiguously.” Id. at 263–64. In both Texas Pipeline and this case, the new
`rule that purportedly expanded FERC’s jurisdiction was added to the NGA
`by the Energy Policy Act of 2005. Id.; § 4A, 119 Stat. at 691. In that same act,
`however, Congress explicitly expanded FERC’s jurisdiction by modifying
`section 1(b) to include importation and exportation. Tex. Pipeline, 661 F.3d at
`263–64. In sum, we join the Texas Pipeline court’s conclusion that where
`Congress seeks to modify the Commission’s jurisdiction, it does so directly
`by amending the portion of the statute explicitly addressing jurisdiction
`rather than by relying on a subtle reading of an otherwise non-jurisdictional
`provision.
`
`Finally, the Supreme Court has indicated that language similar to that
`in the anti-manipulation provision
`incorporates the NGA’s
`found
`jurisdictional provisions. In Oneok, Inc. v. Learjet, Inc., the Court examined a
`provision authorizing FERC to adjust “any rate, charge, or classification . . .
`collected by any natural-gas company in connection with any transportation
`or sale of natural gas, subject to the jurisdiction of” the Commission. Oneok,
`575 U.S. at 378 (emphasis removed) (quoting 15 U.S.C. § 717d(a)). The
`Court determined that the phrase “subject to the jurisdiction of the
`
`13
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`No. 16-60604
`c/w No. 21-60083
`
`Commission” referred to the jurisdictional distinction between interstate
`and intrastate transactions. Id. at 378–79. The anti-manipulation statute
`contains the same “subject to the jurisdiction of the Commission” phrase. 15
`U.S.C. § 717c-1. Because similar statutory language is ordinarily interpreted
`to have a similar meaning, Nijhawan v. Holder, 557 U.S. 29, 39 (2009) (citing
`IBP, Inc. v. Alvarez, 546 U.S. 21, 34 (2005)), the Court’s decision in Oneok
`supports the conclusion that the anti-manipulation rule does not depart from
`the NGA’s general jurisdictional principles.
`
`Thus, our textual analysis and relevant precedent compel the
`conclusion that the Commission cannot exercise its jurisdiction merely
`because a manipulative scheme may affect the prices of interstate natural gas
`trades.6
`
`3
`
`Although we reject its broader jurisdictional claim, FERC asserts as
`
`an alternative basis for its jurisdiction that several of BP’s natural gas sales
`made as part of its manipulative scheme were, in fact, transactions in
`interstate gas directly regulated under the NGA. Although FERC does not
`assert that any of BP’s transactions directly involved the purchase or
`transportation of natural gas across state lines, the Commission convincingly
`
`
`
`6 An agency’s interpretation of its governing statute, when ambiguous, implicates
`the two-step Chevron framework. Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467
`U.S. 837, 842 (1984) (describing the steps when reviewing an agency’s construction of a
`statute it administers as (1) determining if Congress has spoken directly on the issue and
`(2) if Congress has not spoken directly on the issue, determining the permissibility of the
`agency’s construction). But there is no need to go through such steps when a statute
`unambiguously forecloses an agency’s position. See Esquivel-Quintana v. Sessions, 137 S. Ct.
`1562, 1572 (2017) (finding “no need” to determine whether an agency was entitled to
`deference under Chevron when “the statute, read in context, unambiguously foreclose[d]
`the [agency’s] interpretation”); see also Am. Hosp. Ass’n v. Becerra, 142 S. Ct. 1896 (2022).
`That is to say, in such a case, we simply follow the statutory command.
`
`14
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`No. 16-60604
`c/w No. 21-60083
`
`points to its long-held position—which BP does not challenge here—that
`once gas is sold or transported in interstate commerce, it remains interstate
`gas thereafter. See Westar Transmission Co., 43 FERC 61,050, 61,141 n.12
`(1988). Stated differently, once gas is sold or transported in a transaction
`subject to NGA regulations, all subsequent transactions, whether interstate
`or intrastate, are controlled by the NGA. Id. FERC claims that eighteen of
`BP’s allegedly manipulative sales used natural gas that had been transported
`in interstate commerce under the NGA.7 Specifically, the Commission
`points out that, in these eighteen transactions, the gas sold by BP had
`previously been transported under a contract which stated in its title that it
`was made “UNDER SUBPART G OF PART 284 OF THE FERC’S
`REGULATIONS.”8 Subpart G of Part 284 implements section 7 of the
`NGA, meaning that a contract under the referenced regulations is subject to
`the NGA. See 18 C.F.R. § 284.221(a).
`
`BP does not dispute that the natural gas it sold had been transported
`
`under a contract with the above-quoted language. Instead, BP argues that,
`despite the language on its face, the contract was actually under section 311
`of the NGPA. As earlier discussed, the NGPA exempts from FERC’s NGA
`jurisdiction interstate transportation performed “on behalf of” an intrastate
`pipeline. 15 U.S.C. §§ 3431(a), 3371(a). Thus, if the contract was governed
`by the NGPA, FERC does not have jurisdiction. If, on the other hand, the
`
`
`7 The parties discuss only one particular transaction and treat it as representative
`of the eighteen. We will therefore do the same.
`8 We reject BP’s argument that it was an abuse of discretion for the administrative
`law judge to allow evidence of most of these transactions to be introduced for the first time
`on rebuttal. As FERC points out, the Commission’s witness gave evidence of some of the
`transactions on direct examination and specifically stated that the ongoing discovery
`process might reveal further transactions. Moreover, because testimony was given in
`written form, BP had ample time and opportunity to cross-examine FERC’s witness even
`after the rebuttal testimony.
`
`15
`
`

`

`Case: 16-60604 Document: 00516516011 Page: 16 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`contract was made pursuant to the NGA, FERC does have jurisdiction. In
`support of its claim that the NGPA controls, BP points to a spreadsheet
`produced in discovery by one of the parties to the upstream contract; this
`spreadsheet indicates that the pertinent contract is a section 311 contract
`under the NGPA. BP also claims that the disputed contracts reference NGA
`regulations simply because the pipeline which provided the contractual form
`did not have a different template for NGPA transactions.
`
`We review for substantial evidence FERC’s finding that the contracts
`
`in the eighteen disputed transactions were governed by the NGA.9 On this
`record, we can but conclude that the Commission’s finding that the NGA
`controlled was supported by substantial evidence. One after-the-fact,
`undetailed spreadsheet containing little more than an unexplained assertion
`that the contract was under the NGPA does not overcome the unambiguous
`language on the face of the contract to the contrary. And while BP asserts that
`the drafter of the contract simply did not have a template for NGPA
`transactions, BP points to no evidence of this in the record before us other
`than the company’s own assertions of the same before the Commission. Even
`assuming the accuracy of BP’s representation, FERC reasonably concluded
`that, had the parties intended an NGPA contract, they could have created a
`new template or otherwise modified the contractual language. Substantial
`
`
`9 Both BP and FERC evidently accept, without discussion, that the contractual
`parties’ identification of the governing regulations—whether in the contract’s text or in a
`spreadsheet—is relevant to whether the contract is governed by the NGA or NGPA.
`Although counsel for BP contended at oral argument that if certain statutory conditions are
`satisfied, the NGPA automatically exempts a transaction from the NGA, BP did not make
`any such argument in its initial or even in its reply brief. Issues raised only at oral argument
`are waived. Zuccarello v. Exxon Corp., 756 F.2d 402, 407–08 (5th Cir. 1985). We therefore
`assume, for purposes of this case, that the spreadsheet and contractual language are
`pertinent to whether the NGA or NGPA controls. We express no opinion, however, as to
`whether in general a contractual party’s identification of the contract’s governing
`regulations can ever be effective.
`
`16
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`

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`Case: 16-60604 Document: 00516516011 Page: 17 Date Filed: 10/20/2022
`
`No. 16-60604
`c/w No. 21-60083
`
`evidence does not require even a preponderance of the evidence, but instead
`demands that the agency produce “such relevant evidence as a reasonable
`mind might accept as adequate.” Consolo, 383 U.S. at 620 (quoting Consol.
`Edison, 305 U.S. at 229) (quotation marks omitted). FERC has carried its
`burden here. It was reasonable to take the language in the contract at face
`value. The Commission thus had substantial evidence to conclude that the
`disputed natural gas was transported under an NGA contract, meaning that
`FERC had jurisdiction over the eighteen later transactions in which BP sold
`the same gas. We therefore uphold FERC’s assertion of jurisdiction over
`those eighteen of BP’s sales.10
`
`B
`
`We move on to consider FERC’s finding that BP engaged in market
`
`manipulation. Although BP gives various reasons for us to find that FERC
`acted arbitrarily and capriciously or without the support of substantial
`evidence, we find that BP’s contentions ultimately amount to d