## Facts

- Wagner & Brown, a natural gas producer, and ANR Pipeline Company, an interstate pipeline company, entered a long-term gas purchase contract in August 1981.
- The contract included a take-or-pay provision requiring ANR to take 75% of gas produced from specified wells or pay as if it had taken that amount.
- Wagner & Brown alleged that from January 1984 through April 1986 ANR failed to take required volumes and failed to satisfy the take-or-pay payment obligation.
- Wagner & Brown sued in Texas state court on July 31, 1986 for breach of contract; ANR removed the case to federal district court.
- The same day, ANR filed a complaint with FERC seeking a determination that take-or-pay “prepayments” could constitute unlawful payments exceeding NGPA maximum lawful prices.
- ANR moved to dismiss in district court, arguing that FERC had exclusive or primary jurisdiction over the embedded NGPA price-ceiling question.

## Issues

1. Whether the district court abused its discretion by invoking primary jurisdiction to defer to FERC on whether take-or-pay prepayments violate NGPA maximum lawful prices.
2. If primary jurisdiction applied, whether the proper disposition was dismissal or a stay pending FERC action.

## Decision

- The Fifth Circuit held the district court did not abuse its discretion in deferring to FERC under the primary-jurisdiction doctrine.
- The court concluded that whether take-or-pay prepayments exceed NGPA price ceilings is within FERC’s special competence.
- The judgment was affirmed as modified and remanded with instructions to stay the action for 180 days rather than dismiss it, to reduce potential prejudice to the producer’s contract-enforcement rights.

## Legal Principles

- Primary jurisdiction permits a court with jurisdiction to stay or dismiss an action when resolving the claim requires determination of issues committed, under a regulatory scheme, to an agency’s special competence.
- In deciding whether to defer, courts weigh the benefits of agency expertise and uniform regulatory administration against the costs of delay and the need for prompt judicial resolution.
- When deference is warranted but dismissal may prejudice a party’s ability to pursue judicial relief, a stay—rather than dismissal—may be required to preserve the action while the agency addresses the regulatory question.

## Conclusion

The Fifth Circuit approved primary-jurisdiction referral to FERC for NGPA price-ceiling questions embedded in a take-or-pay contract dispute, but required the district court to retain the case and impose a 180-day stay instead of dismissing it.


Wagner & Brown v. ANR Pipeline Co., 837 F.2d 199 (5th Cir. 1988)