City of Clarksville v. Fed. Energy Regulatory Comm'n

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 14, 2017 Decided April 24, 2018
No. 16-1244
CITY OF CLARKSVILLE, TENNESSEE,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
TODD COUNTY, KENTUCKY,
INTERVENOR
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Jeffrey K. Janicke argued the cause for petitioner. With
him on the briefs were James R. Choukas-Bradley and Joshua
L. Menter.
John P. Gregg and Randolph Elliott were on the brief for
amicus curiae American Public Gas Association and American
Public Power Association in support of petitioner. Delia D.
Patterson entered an appearance.
Beth G. Pacella, Deputy Solicitor, Federal Energy
Regulatory Commission, argued the cause for respondent. On
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the brief were Robert H. Solomon, Solicitor, and Ross R.
Fulton, Attorney.
Jennifer N. Waters was on the brief for intervenor Todd
County, Kentucky in support of respondent.
Before: GRIFFITH and WILKINS, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge WILKINS.
WILKINS, Circuit Judge: We consider a Petition for
Review challenging the Federal Energy Regulatory
Commission’s assertion of Natural Gas Act jurisdiction over
the transportation and sale of natural gas for resale from the
City of Clarksville, Tennessee to the City of Guthrie,
Kentucky. See Order Granting Service Area Determinations,
City of Clarksville, Tennessee, 146 FERC ¶ 61,074 (2014);
Order Denying Reh’g, City of Clarksville, Tennessee, 155
FERC ¶ 61,184 (2016). Clarksville challenges the
Commission’s exercise of jurisdiction as contrary to the plain
language of the Natural Gas Act (“NGA”), 15 U.S.C. §§ 717-
717z, and contrary to longstanding FERC precedent.
For the reasons explained below, we grant the Petition for
Review and vacate FERC’s Order Granting Service Area
Determinations and Order Denying Rehearing to the extent
they are inconsistent with this opinion.
I.
Congress enacted the Natural Gas Act, ch. 556, 52 Stat.
821 (1938) (codified as amended at 15 U.S.C. §§ 717-717z),
with the principal aim of “encourag[ing] the orderly
development of plentiful supplies of . . . natural gas at
3
reasonable prices,” NAACP v. Fed. Power Comm’n, 425 U.S.
662, 669-70 (1976), and “protect[ing] consumers against
exploitation at the hands of natural gas companies,” Fed.
Power Comm’n v. Hope Nat. Gas Co., 320 U.S. 591, 610
(1944). Along with those main objectives, there are also
several “‘subsidiary purposes’. . . includ[ing] ‘conservation,
environmental, and antitrust’ issues.” Pub. Utils. Comm’n of
Cal. v. FERC, 900 F.2d 269, 281 (D.C. Cir. 1990) (quoting
NAACP, 425 U.S. at 670 & n.6).
The Act vests FERC with broad authority to regulate the
transportation and sale of natural gas in interstate commerce.
15 U.S.C. § 717c; see also Schneidewind v. ANR Pipeline Co.,
485 U.S. 293, 300 (1988) (“The NGA long has been recognized
as a comprehensive scheme of federal regulation of all
wholesales of natural gas in interstate commerce.” (citations
and internal quotation marks omitted)). To achieve this
objective, Congress equipped the Commission with a variety
of regulatory tools, one of which captures the focus of this
Court’s review.
Under Section 7(c) of the Act, a natural gas company must
obtain a certificate of public convenience and necessity from
FERC prior to “undertak[ing] the construction or extension” of
any natural gas facility for the transportation of natural gas in
interstate commerce. 15 U.S.C. § 717f(c)(1)(A). The Act
defines a “natural-gas company” as a “person engaged in the
transportation of natural gas in interstate commerce, or the sale
in interstate commerce of such gas for resale.” Id. § 717a(6).
A “person” “includes an individual or corporation.”
Id. § 717a(1). The Act specifies that a corporation “shall not
include municipalities,” which are defined as “cit[ies],
count[ies], or other political subdivision[s] or agenc[ies] of a
State.” Id. § 717a(2)-(3).
 4
Section 7(f)(1) permits FERC to make a service area
determination, by which it can authorize an entity primarily
engaged in the local sale or distribution of natural gas but
subject to the Commission’s jurisdiction because its facilities
cross state lines, to construct, enlarge, or extend its facilities to
meet market demand without prior FERC approval. 15 U.S.C.
§717f(f)(1); Intermountain Mun. Gas Agency & Questar Gas
Co., 97 FERC ¶ 61,359, ¶ 62,660 (2001); Ken-Gas of Tenn.,
Inc., 45 FERC ¶ 61,110, ¶ 61,346 (1988).
FERC regulations issued pursuant to Section 7 provide for
the automatic issuance of any necessary certificate authority for
a non-interstate pipeline to make sales for resale in interstate
commerce without being subject to other NGA filing or
reporting regulations. 18 C.F.R. § 284.402. A separate
regulation allows the Commission to issue a blanket certificate
permitting an otherwise local distribution entity to transport
natural gas that is subject to FERC’s jurisdiction under the
NGA. Id. § 284.224; see Intermountain Mun. Gas Agency v.
FERC, 326 F.3d 1281, 1283 n.4 (D.C. Cir. 2003).
II.
The City of Clarksville, Tennessee (“Clarksville”) is a
municipality that operates natural gas facilities providing
natural gas services to customers in both Tennessee and
Kentucky. Clarksville owns and operates a natural gas
distribution system that serves a “significant geographic area”
in Montgomery County, as well as smaller, discrete areas in
Cheatham and Robertson Counties, all in Tennessee. In
addition, Clarksville operates distribution facilities that service
the U.S. Army base at Fort Campbell – partly located in
Kentucky – and provides gas service to 16 commercial
customers through the “Kentucky Service Line” pipeline. The
“Kentucky Service Line” pipeline extends from Clarksville’s
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municipal system in Montgomery County 2,400 feet into
Christian County, Kentucky.
On June 26, 2013, Clarksville filed an application with
FERC, requesting a Natural Gas Act Section 7(f) service area
determination covering its services to Fort Campbell and the
Kentucky Service Line. Clarksville also requested a waiver of
reporting, accounting, and other regulatory requirements that
are primarily applicable to FERC-jurisdictional natural gas
companies. In an order issued February 7, 2014, FERC granted
these requests.
During the proceeding, the Commission learned that
Clarksville has a service agreement with the City of Guthrie,
Kentucky (“Guthrie”). Under that contract, Clarksville
transports natural gas to a meter and regulating station 20 feet
south of the Tennessee/Kentucky border, where Guthrie
receives the gas into a pipeline that crosses into Kentucky.
Though Clarksville did not know for certain, it assumed that
Guthrie sells the gas to retail customers in Kentucky. Having
learned about the agreement between Clarksville and Guthrie,
FERC stated – in a footnote in its order granting the requested
service area determination – that the sales to Guthrie were
covered under a blanket marketing certificate already granted
by 18 C.F.R. § 284.402. FERC also declared that should
Clarksville desire to transport natural gas in interstate
commerce in the same manner as an intrastate pipeline may
under section 311 of the Natural Gas Policy Act (“NGPA”), 15
U.S.C. § 3371, it would be required to obtain a different
certificate under 18 C.F.R. § 284.224. 146 FERC ¶ 61,074, at
61,311 n.15.
Clarksville sought rehearing of FERC’s determinations
regarding its agreement with Guthrie, arguing that it did not
require authorization under Section 7 of the NGA to transport
6
and sell gas to Guthrie for resale and consumption in Kentucky
because Clarksville is a municipality as defined by the NGA.
Relying on prior FERC orders, Clarksville argued that FERC
lacked jurisdiction over these transactions because the NGA
excludes municipalities from the ambit of FERC’s jurisdiction.
Although FERC acknowledged the precedent upon which
Clarksville relied, FERC explained that it had “reconsider[ed]”
this precedent. 155 FERC ¶ 61,184 at P. 11. Specifically,
FERC explained that its prior “interpretation of the municipal
exemption created by operation” of the NGA was “overly
expansive, at least to the extent it would allow municipal gas
utilities to avoid NGA jurisdiction over the transportation and
sale of gas for consumption in other states, because such an
interpretation would create a regulatory gap.” Id. (emphasis in
original). The Commission reasoned that this regulatory gap
would contravene the purpose of the NGA, which was
“intended to fill the regulatory gap left by a series of Supreme
Court decisions that interpreted the dormant Commerce Clause
to preclude state regulation of interstate transportation and of
wholesale gas sales.” Id. at P. 15 (citation omitted). FERC
largely relied on its decision in Intermountain Municipal Gas
Agency, 97 FERC ¶ 61,359 (2001), reh’g denied, 98 FERC
¶ 61,216 (2002), aff’d, 326 F.3d at 1286 (denying petition for
review on separate grounds), where FERC found that it has
jurisdiction over a municipally-owned pipeline that crosses
state lines. 155 FERC ¶ 61,184 at P. 19.
In addition to finding that it has jurisdiction over
Clarksville’s sales and transportation of natural gas to Guthrie,
FERC recognized “that Clarksville has been providing service
for Guthrie for some time and that the current arrangement
provides necessary gas supplies for Guthrie’s local distribution
system in Kentucky.” Id. at P. 20. In light of that, FERC found
that the “public convenience and necessity” required it to issue
Clarksville a “case-specific certificate of limited jurisdiction to
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authorize [Clarksville’s] existing transportation service for
Guthrie without affecting its otherwise non-jurisdictional
activities and facilities.” Id. Thus, Clarksville could continue
to transact with Guthrie under the terms of the existing
contract.
III.
A.
Before addressing the merits, we must first determine
whether Clarksville has standing to challenge the orders at
issue and whether the dispute is ripe for our review. For the
reasons discussed below, we reject FERC’s standing and
ripeness challenges to our authority to hear the Petition for
Review.
i.
Any party to a proceeding under the Act who is
“aggrieved” by a FERC order may petition for review of that
order in this court, provided that they first seek rehearing
before FERC. 15 U.S.C. § 717r(a)-(b). A party is aggrieved
only if it can establish the constitutional requirements for
standing. PNGTS Shippers’ Grp. v. FERC, 592 F.3d 132, 136
(D.C. Cir. 2010) (citation omitted). To establish constitutional
standing, a petitioner must establish that she has suffered an
injury in fact that is fairly traceable to the challenged action of
the defendant and “likely” to be redressed by a favorable
judicial decision. WildEarth Guardians v. Jewell, 738 F.3d
298, 305 (D.C. Cir. 2013) (citing Lujan v. Defs. of Wildlife, 504
U.S. 555, 560-61 (1992)).
Clarksville plainly satisfies the first requirement that it
seek rehearing before FERC. But the Commission contends
8
that the Clarksville is not “aggrieved” because,
notwithstanding the orders at issue, Clarksville can continue to
transport and make sales for resale to Guthrie in the same
manner as it could before the Commission’s orders, and thus it
has suffered no injury. Resp’t’s Br. 3. Clarksville disputes this
portrayal of the facts and provides two grounds upon which it
asserts it has standing. First, Clarksville explains that FERC’s
decision subjects it to the data retention and price reporting
requirements set forth in 18 C.F.R. § 284.403. See Pet’r’s Br.
14 & nn.39-40. Second, Clarksville states that FERC’s
exercise of jurisdiction in this situation has affected its business
decisions regarding the provision of new services to other
entities outside of Tennessee. Id. at 15; Pet’r’s Reply 4; Hickey
Affidavit, Pet’r’s Br. add. B, at B-2-B-3.
Although FERC asserted in its brief that Clarksville would
not be subject to the additional regulatory requirements found
in 18 C.F.R. §284.403, see Resp’t’s Br. 16-17, at oral argument
counsel for FERC conceded that its ruling did in fact subject
Clarksville to a “minimal” data retention requirement. This
imposition of new regulatory obligations, in and of itself, is
sufficient to establish standing. See Dominion Transmission,
Inc. v. FERC, 533 F.3d 845, 852 (D.C. Cir. 2008) (finding
standing where FERC required the petitioner to meet new
regulatory and reporting requirements, thereby changing
existing obligations and requiring the disclosure of private
operating data); cf. State Nat’l Bank of Big Spring v. Lew, 795
F.3d 48, 55 (D.C. Cir. 2015) (finding petitioner’s claim too
speculative without additional regulatory requirements).
The injury Clarksville alleges it has suffered is fairly
traceable to FERC’s actions and is likely to be redressed by a
judicial decision in Clarksville’s favor. Accordingly, we find
that Clarksville has standing to challenge the orders at issue,
9
and we need not decide the effect of FERC’s exercise of
jurisdiction on Clarksville’s business decisions.
ii.
FERC’s assertion that the controversy is not ripe for
review fares no better. Ripeness involves an inquiry into the
fitness of the issues for judicial review and the hardship to the
parties of withholding that review. Abbott Labs. v. Gardner,
387 U.S. 136, 149 (1967). But a showing of hardship is
ordinarily unnecessary where the agency “has suggested no
institutional interests in postponing review . . . , and
adjudication will not benefit from additional facts.” Pub. Serv.
Elec. & Gas Co. v. FERC, 485 F.3d 1164, 1168 (D.C. Cir.
2007).
Neither Clarksville nor FERC has suggested a need for
further factual development. Moreover, FERC does not
suggest that its interpretation of the NGA has not crystalized
enough for this Court’s review. See Burlington N. R.R. Co. v.
Surface Transp. Bd., 75 F.3d 685, 691 (D.C. Cir. 1996).
Instead, the Commission repackages its standing argument,
asserting that Clarksville does not face any hardship that
requires judicial review at this time. Our discussion of standing
dooms that contention.
B.
Turning to the merits, we review the Commission’s
interpretation of the NGA under the familiar two-step
framework of Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984). See S.C. Pub.
Serv. Auth. v. FERC, 762 F.3d 41, 54 (D.C. Cir. 2014) (per
curiam). If the Court determines that “Congress has directly
spoken to the precise question at issue,” and “the intent of
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Congress is clear, that is the end of the matter.” Chevron, 467
U.S. at 842. If, however, “the statute is silent or ambiguous
with respect to the specific issue,” then the Court must
determine “whether the agency’s answer is based on a
permissible construction of the statute.” Id. at 843. “No matter
how it is framed, the question a court faces when confronted
with an agency’s interpretation of a statute it administers is
always, simply, whether the agency has stayed within the
bounds of its statutory authority,” City of Arlington v. FCC,
569 U.S. 290, 297 (2013) (emphasis omitted), and the court
will defer to the Commission’s reasonable interpretation of
statutory ambiguities concerning both the scope of its statutory
authority and the application of that authority, see id. at 296-97.
In addressing a question of statutory interpretation, we
begin with the text. See, e.g., Engine Mfrs. Ass’n v. S. Coast
Air Quality Mgmt. Dist., 541 U.S. 246, 252 (2004). The dispute
centers around Section 7(c) of the NGA, which, in relevant
part, provides:
No natural-gas company or person which will be a
natural-gas company upon completion of any
proposed construction or extension shall engage in
the transportation or sale of natural gas, subject to
the jurisdiction of the Commission . . . , 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[.]
15 U.S.C. § 717f(c)(1)(A). Again, the NGA defines a “natural-
gas company” as a “person” “engaged in the transportation or
sale for resale of natural gas in interstate commerce.” Id.
§ 717a(6). The Act defines a “person” to include an
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“individual or corporation,” id. § 717a(1), and specifies that a
corporation “shall not include municipalities.” Id. § 717a(2).
Relying on the plain language and significant FERC
precedent, Clarksville contends that as a municipality, it is
exempt from regulation under NGA Section 7. Pet’r’s Br.
20-25, 27. We agree. The language of the statute with respect
to the definition of a “natural-gas company” and a “person” is
clear and unambiguous – a municipality is not a natural gas
company or a person. Given the plain meaning of the text, we
hold that Section 7(c) of the NGA precludes FERC from
regulating, through certificates of public convenience and
necessity, natural gas sales by municipalities acting as
municipalities. Cf. Intermountain, 97 FERC ¶ 61,359, at
62,659-60 (municipality with pipeline crossing state line
ceases to act as a municipality). Indeed, FERC has held as
much for over 50 years. See, e.g., Freebird Gas Storage, LLC,
111 FERC ¶ 61,054, P. 5 (2005) (“The Commission has
determined that District is a municipality under section 2(3) of
the NGA and therefore is not subject to the Commission’s
jurisdiction.”); Somerset Gas Serv., 59 FERC ¶ 61,012 (1992)
(disclaiming jurisdiction under the NGA and the Natural Gas
Policy Act over a municipality’s transportation service for an
interstate pipeline); Tenn. Gas Pipeline Co., 70 FERC ¶ 61,329,
¶ 62,013 (1995) (“[T]he NGA exempts municipalities as
entities from our jurisdiction[.]”); Tenn. Gas Pipeline Co., 69
FERC ¶ 61,239, ¶ 61,903 (1994) (“[S]ince a municipality is not
an individual and cannot be a corporation under NGA section
2, it cannot be a person and thus cannot be a natural-gas
company subject to the Commission’s NGA jurisdiction.”);
United Gas Pipe Line Co., 46 FERC ¶ 61,060 (1989) (holding
that municipalities are “nonjurisdictional”); Nw. Ala. Gas Dist.,
42 FERC ¶ 61,371 (1988) (disclaiming NGA jurisdiction over
an Alabama municipality’s backhaul service for an interstate
pipeline); Tex. Gas Transmission Corp., 3 FERC ¶ 61,135,
12
¶ 61,405 (1978) (“Memphis is not required to obtain certificate
authorization under the Natural Gas Act to acquire the subject
facilities since Memphis is a municipality and Section 2 of the
Act does not include municipalities within the definition of a
‘person’ within the meaning of the Act.”); Panhandle E. Pipe
Line Co. v. City of Rolla, Kan., 26 FPC 736, 737 (1961)
(dismissing for lack of jurisdiction an interstate pipeline’s
complaint against a municipality after finding that the “plain
language” of the NGA “expressly” excludes municipalities
from “the ambit of Commission jurisdiction”); Sales and
Transportation by Interstate Pipelines and Distributors;
Expansion of Categories of Activities Authorized Under
Blanket Certification, 48 Fed. Reg. 34,875-01, at 34,886 (July
20, 1983) (“[M]unicipalities cannot be issued certificates under
section 7(c) of the Natural Gas Act[.]”).
Despite its longstanding precedent to contrary, FERC
makes two arguments to support its present position, neither of
which is persuasive. First, relying on United States v. Public
Utilities Commission of California (CPUC), 345 U.S. 295
(1953), FERC contends that a municipality can be a
jurisdictional “person” and, therefore, a “natural gas company”
under the NGA. 155 FERC ¶ 61,184 at P. 13. In CPUC, the
Supreme Court considered whether the Federal Power
Commission (“FPC”) had the authority to regulate wholesale
sales of electricity from a company to a municipality in another
state pursuant to Section 201 of the Federal Power Act
(“FPA”), 16 U.S.C. § 824. Section 201(b)(1) states that the
provisions of the FPA at issue – Part II of the FPA – “apply to
the transmission of electric energy in interstate commerce and
to the sale of electric energy at wholesale in interstate
commerce,” with some exclusions not relevant here. 16 U.S.C.
§ 824(b)(1). Section 201 further defines the “sale of electric
energy at wholesale,” as the sale of such energy to “any person
for resale.” Id. § 824(d). FPA Section 3(4) states that “person
13
means an individual or corporation,” the latter of which is
defined not to include a municipality. Id. § 796(3), (4).
Acknowledging this statutory language but concluding
that the plain language would “bring about an end completely
at variance with the purpose of the statute,” the Court rejected
the contention that FPC could not exercise authority over the
sales in question. CPUC, 345 U.S. at 315-16. Specifically, the
Court stated that the use of the definitions found in Section 3
“has no support in the statutory scheme as a whole,”
particularly because other sections of Part II of the FPA rely on
the premise “that [ ] political subdivisions of the states can be
aggrieved by the failure of a public utility selling power to them
to satisfy the requirements of Part II.” Id. at 312-13. In
addition, the Court found no evidence of “conscious
coordination” between Section 3 and Section 201, and thus,
Congress could not have intended the definitions to be a
“limitation on Commission jurisdiction.” Id. at 313.
Because the NGA is modeled substantively after the FPA,
they are interpreted similarly. Tenn. Gas Pipeline Co. v.
FERC, 860 F.2d 446, 454 (D.C. Cir. 1988) (“The Supreme
Court has held that the Natural Gas Act and the Federal Power
Act are in all material respects substantially identical and
constructions of one are authoritative for the other.” (internal
citations and quotation marks omitted)). FERC argues that the
reasoning in CPUC is equally applicable here, where adopting
Clarksville’s position would result in a regulatory gap in
contravention of Congress’s purpose in enacting the NGA. See
United Distrib. Cos. v. FERC, 88 F.3d 1105, 1122 (D.C. Cir.
1996) (per curiam); H.R. Rep. No. 75-709, at 2 (1937).
It is not entirely clear, however, that a regulatory gap
would result if FERC could not exercise jurisdiction over
Clarksville’s sale of natural gas to Guthrie. At oral argument,
14
counsel for Clarksville challenged FERC’s finding that the
State could not regulate the transaction. Similarly, amici
contend that a local governing body can regulate the
transaction at issue. Brief for Am. Pub. Gas Ass’n & Am. Pub.
Power Assoc. as Amici Curiae Supporting Pet’r 14. If
Clarksville and amici are correct, there is no regulatory gap.
CPUC, 345 U.S. at 311 (“[T]he limitations established on
Commission jurisdiction [articulated in the NGA] were
designed to coordinate precisely with those constitutionally
imposed on the states.”); United Distribution Cos., 88 F.3d at
1122 (“The NGA was intended to fill the regulatory gap left by
a series of Supreme Court decisions that interpreted the
dormant Commerce Clause to preclude state regulation of
interstate transportation and of wholesale gas sales.”). We
need not decide the issue, however, because even if there were
a regulatory gap, it would not be of the sort Congress was
worried about in enacting the NGA. See Hope Nat. Gas Co.,
320 U.S. at 610 (“The primary aim of [the NGA] was to protect
consumers against exploitation at the hands of natural gas
companies.”); Hearing on H.R. 4008 Before H. Comm. on
Intrastate & Foreign Commerce, 75th Cong. 66-68 (1937)
(statement of Luke J. Scheer, National Secretary of the Cities
Alliance) (discussing the difficulties faced by municipalities
attempting to obtain access to natural gas pipelines); Hearing
on H.R. 11662 Before Subcomm. of H. Comm. on Interstate &
Foreign Commerce, 74th Cong. 16-17 (1936) (statement of
Dozier A. DeVane, Solicitor, Fed. Power Comm’n) (explaining
that the NGA was necessary to “correct the abusive practices”
of natural gas companies that were “enjoying a monopolistic
position”); id. at 12 (stating that 11 companies owned about 76
percent of the total mileage of all natural gas pipelines in the
United States). Thus, the reasoning of CPUC is inapposite
here.
15
Second, FERC asserts that even if it were to accept
Clarksville’s argument that a municipality could not be a
natural gas company, Clarksville’s interpretation of the NGA
is excessively narrow because the NGA provides the
Commission jurisdiction over three separate areas: (i) the
transportation of natural gas in interstate commerce; (ii) the
sale of natural gas in interstate commerce for resale; and (iii)
natural gas companies engaged in such transportation or sale.
155 FERC ¶ 61,184 at P. 8 (citing 15 U.S.C. § 717(b)); see also
Fed. Power Comm’n v. E. Ohio Gas Co., 338 U.S. 464, 468
(1950) (Section 1(b) “made the Natural Gas Act applicable to
three separate things,” and each has “independent and equally
important places in the Act”). Thus, because the transaction
between Clarksville and Guthrie constitutes the transportation
and sale for resale of natural gas in interstate commerce, FERC
contends that Clarksville’s identity as a municipality is
essentially irrelevant where the gas is “dedicated to the
interstate market.” 155 FERC ¶ 61,184 at P. 14 (citing Pub.
Serv. Co. of N.C. v. FERC, 587 F.2d 716 (5th Cir. 1979) and
California v. Southland Royalty Co., 436 U.S. 519 (1978)).
While FERC is correct that Section 1(b) provides for
jurisdiction over those three separate areas, the articulation of
the scope of FERC’s jurisdiction does not mean that Congress
gave FERC jurisdiction over everything within those three
areas. Indeed, Section 1(b) is not power-conferring or
jurisdiction-creating and should not be read to say that FERC
has jurisdiction over anything and everything related to the
transportation and sale for resale of natural gas in interstate
commerce. None of the cases on which FERC relies stands for
such a broad interpretation of FERC’s authority. For example,
in Public Service Company of North Carolina, Inc. v. FERC,
the Fifth Circuit emphasized “the convergence of three factors
– (1) interstate transmission by a natural gas company, (2)
Commission certification, and (3) the state’s acquiescence in
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(1) and (2)” that subjected the state to FERC regulation. 1 587
F.2d at 720. Here, by contrast, although Clarksville acceded to
FERC jurisdiction when it applied for a Section 7 service area
determination for Fort Campbell and the Kentucky Service
Line, it did so only because its pipeline crossed state lines. See
generally Intermountain, 97 FERC ¶ 61,359. There is no
similar acquiescence with respect to Clarksville’s sales to
Guthrie. Moreover, unlike Intermountain, in which we
affirmed FERC’s determination that it could regulate a
municipality where its facilities crossed state lines because “a
municipality is authorized to act as a municipality only within
its state of incorporation,” 326 F.3d at 1284, Clarksville acts
only within Tennessee, its state of incorporation, with respect
to its sales to Guthrie. See 146 FERC ¶ 61,074, at 61,310
(stating, without finding otherwise, Clarksville’s
representation that Guthrie owns and operates the pipeline that
crosses the border). Accordingly, FERC’s alternative
argument fails as well.
***
For the foregoing reasons, we see no reason to deviate
from the clear and unambiguous language of the statute and
therefore grant the Petition for Review and vacate FERC’s
Service Area Order and Rehearing Order to the extent they are
inconsistent with this opinion.
1
Similarly, the entity challenging FERC’s jurisdiction in California
v. Southland Royalty Company had acceded to FERC jurisdiction
when it applied for and received a certificate of public convenience
and necessity. 436 U.S. at 521-22.