On May 22, 2025, the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) addressed a dispute between ANR Pipeline Company (“ANR”) and FERC. The case centered on the interpretation of ANR’s tariff and whether it required shippers to deliver and take gas simultaneously, even for short-notice shipments. The Fifth Circuit denied ANR Pipeline Company’s petition for review, affirming FERC’s decision that ANR’s tariff did not require simultaneous delivery for short-notice shipments. The court found the tariff ambiguous and emphasized ANR’s longstanding practice of not requiring simultaneous delivery, which supported FERC’s position.
The case involved ANR’s FTS-3 tariff, which sets terms for non-interruptible gas deliveries. Generally, the tariff requires shippers to nominate and deliver gas simultaneously. However, for short-notice service, which allows gas flow on short notice, the tariff does not explicitly mention delivery requirements. Historically, ANR had not enforced simultaneous delivery for short-notice shipments, a practice that only changed during Winter Storm Elliott in 2022, when ANR required such deliveries.
ANR argued that its tariff unambiguously required simultaneous delivery, citing to a general tariff provision that states that a shipper does not have the right to receive quantities of gas that it has not simultaneously nominated and delivered to ANR. ANR argued that this implies that for general shipments, the tariff requires shippers to both nominate and deliver gas at the same time. FERC argued that the tariff was ambiguous, because unlike the general tariff provision above, the specific provision for short-notice shipments did not explicitly require delivery. FERC further argued that in the two decades of providing short-notice service, ANR never required short-notice shippers to nominate and supply gas prior to start up. The court explained that ANR had recently changed its practice during Winter Storm Elliott in 2022 when the storm stressed ANR’s operations, so ANR decided to require simultaneous delivery for short-notice shippers to flow gas.
The court ultimately held that the tariff was ambiguous regarding whether simultaneous delivery was required for short-notice shipments. Under Texas law, a contract is considered ambiguous if it can be subject to two or more reasonable interpretations. In this case, the court found that the tariff’s language was unclear about which provisions applied to short-notice shippers. While ANR argued that the tariff unambiguously required simultaneous delivery, the court disagreed, noting that the specific section covering short-notice service did not explicitly mention delivery requirements.
The court emphasized the importance of ANR’s longstanding practice, which had never required simultaneous delivery for short-notice shipments until Winter Storm Elliott. This consistent course of performance, accepted without objection, was given significant weight in interpreting the tariff. According to the court, such a course of performance is a critical factor in contract interpretation, as it reflects the parties’ understanding and implementation of the agreement over time. The court noted that ANR had no extrinsic evidence to counter the weight of its prior dealings, which consistently did not require simultaneous delivery for short-notice shipments. This lack of evidence further supported FERC’s position that simultaneous delivery was not mandated by the tariff for short-notice services.
As a result, the court denied ANR’s petitions for review, affirming FERC’s interpretation of the tariff. A copy of the opinion in ANR Pipeline Company v. FERC can be found here.
