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City of Clarksville v. Federal Energy Regulatory Commission

United States Court of Appeals, District of Columbia Circuit

April 24, 2018

City of Clarksville, Tennessee, Petitioner
v.
Federal Energy Regulatory Commission, Respondent Todd County, Kentucky, intervenor

          Argued November 14, 2017

          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 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

          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 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).

         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., ...


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