Third Circuit Bars Claims Against Colonial Based On Filed Rate Doctrine

• Published date: 17 October 2022
• Subject Matter: Energy and Natural Resources, Energy Law, Oil, Gas & Electricity
• Law Firm: Steptoe & Johnson
• Author: Ms Jennifer Quinn-Barabanov, Shaun Boedicker and Mark C. Savignac

On October 5, the Third Circuit issued a precedential opinion in George E. Warren LLC v. Colonial Pipeline Co. affirming dismissal of a significant lawsuit against our client, Colonial Pipeline Company, based on the filed rate doctrine. The case builds upon an earlier filed rate doctrine case Steptoe litigated in the First Circuit, Breiding v. Eversource Energy, 939 F.3d 47 (1st Cir. 2019), and demonstrates the power of the filed rate doctrine as a defense in litigation for regulated energy companies.

A pipeline shipper, George E. Warren LLC (GEW), challenged the practice of blending butane into the stream of gasoline moving through the pipeline as unlawfully reducing the value of gasoline GEW received from Colonial by reducing its "blend margin." GEW asserted claims under the Carmack Amendment and state tort law against Colonial and a related joint venture, Powder Springs Logistics.

The Third Circuit affirmed the dismissal of these claims, reasoning that GEW was only entitled to receive gasoline meeting the same Federal Energy Regulatory Commission (FERC)-approved tariff specification as the gas that it tendered to the pipeline. GEW conceded that the product it received met those specifications. By claiming a right to "blend margin" not specified in the tariff, the Third Circuit concluded that GEW "seeks an enlargement of its rights under the FERC-approved tariff and therefore violates the filed-rate doctrine." The Third Circuit rejected GEW's argument that the filed rate doctrine was inapplicable because blending was a non-jurisdictional activity and the joint venture conducting the blending did not have a tariff on file. Instead, the Third Circuit emphasized that "the nature of the defendants' conduct...does not control whether the filed-rate doctrine applies," and instead investigated whether allowing the case to proceed would implicate the doctrine's non-discrimination or non-justiciability principles. The court found both were implicated: the former because GEW "seeks treatment under the tariff that differs from how Colonial could treat any other gasoline shipper," and the latter because "the claims seek an impermissible judicial interference in the rate-making process."

The Third Circuit's opinion relied heavily on Breiding, another case in which Steptoe successfully obtained...