10514 Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Notices 

1 112 FERC ¶ 61,292 (2005). 

2Arkla Gathering Service Co., 67 FERC ¶ 61,257, 

at 61,871 (1994), order on reh’g, 69 FERC ¶ 61,280 

(1994), reh’g denied, 70 FERC ¶ 61,079 (1995), 

reconsideration denied, 71 FERC ¶ 61,297 (1995) 

(collectively, Arkla), aff’d in part and reversed in 

part, Conoco Inc. v. FERC, 90 F.3d 536 (D.C. Cir. 

1996) (Conoco). 

3Arkla, 67 FERC at 61,871. 

4Williams Gas Processing-Gulf Coast Co., L.P. v. 

FERC, 373 F.3d 1335 (D.C. Cir. 2004) (Williams Gas 

Processing). 

5The Wellhead Decontrol Act of 1989 removed 

all first sales from Commission jurisdiction. 

6Section 2(6) of the NGA defines ‘‘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.’’

7The Commission first articulated the primary 

function test in Farmland Industries, Inc., 23 FERC 

¶ 61,063 (1983). The Commission subsequently 

modified the test in Amerada Hess Corp., 52 FERC 

¶ 61,268 (1990). 

8Regulation of Natural Gas Pipelines After Partial 

Wellhead Decontrol, Order No. 436, 50 Fed. Reg. 

42,408 (Oct. 18, 1985), FERC Stats. & Regs. ¶ 30,665 

at 31,554 (1985), vacated and remanded, 

Associated Gas Distributors v. FERC, 824 F.2d 981 

(D.C. Cir. 1987), cert. denied, 485 U.S. 1006 (1988), 

readopted on an interim basis, Order No. 500, 52 

FR 30,334 (Aug. 14, 1987), FERC Stats. & Regs. 

¶ 30,761 (1987), remanded, American Gas Ass’n v. 

FERC, 888 F.2d 136 (D.C. Cir. 1989), readopted, 

Order No. 500–H, 54 FR 52,344 (Dec. 21, 1989), 

FERC Stats. & Regs. ¶ 30,867 (1989), reh’g granted 

in part and denied in part, Order No. 500–I, 55 FR 

6,605 (Feb. 26, 1990), FERC Stats. & Regs. ¶ 30,880 

(1990), aff’d in part and remanded in part, 

American Gas Ass’n v. FERC, 912 F.2d 1496 (D.C. 

Cir. 1990), cert. denied, 498 U.S. 1084 (1991). 

or prescriptions should relate to project 

works which are the subject of the 

license amendment. Agencies may 

obtain copies of the application directly 

from the applicant. A copy of any 

protest or motion to intervene must be 

served upon each representative of the 

applicant specified in the particular 

application. A copy of all other filings 

in reference to this application must be 

accompanied by proof of service on all 

persons listed in the service list 

prepared by the Commission in this 

proceeding, in accordance with 18 CFR 

4.34(b) and 385.2010. 

n. An applicant must file no later than 

60 days following the date of issuance 

of this notice of acceptance and ready 

for environmental analysis provided for 

in § 4.34(b)(5)(i): (1) A copy of the water 

quality certification; (2) a copy of the 

request for certification, including proof 

of the date on which the certifying 

agency received the request; or (3) 

evidence of waiver of water quality 

certification. 

Magalie R. Salas, 

Secretary. 

[FR Doc. E7–4122 Filed 3–7–07; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

[Docket No. PL05–10–000] 

Criteria for Reassertion of Jurisdiction 

Over the Gathering Services of Natural 

Gas Company Affiliates 

February 15, 2007. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Order Terminating Proceeding 

and Clarifying Policy. 

SUMMARY: The Federal Energy 

Regulatory Commission is terminating 

the instant proceeding. The Commission 

also finds that it may only assert 

jurisdiction over a gathering provider 

affiliated with an interstate pipeline 

when the gatherer has used its market 

power over gathering to benefit the 

pipeline in its performance of 

jurisdictional transportation or sales 

service and that benefit is contrary to 

the Commission’s policies concerning 

jurisdictional service adopted pursuant 

to the NGA. Further, the order clarifies 

that, where the gathering affiliate has 

engaged in the type of conduct 

described above as justifying an 

assertion of jurisdiction, the 

Commission need not also find 

‘‘concerned action’’ between the 

pipeline and its gathering affiliate. 

FOR FURTHER INFORMATION CONTACT: 

Richard Howe, Office of the General 

Counsel, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426. (202) 502–8389. 

SUPPLEMENTARY INFORMATION: 

Before Commissioners: Joseph T. Kelliher, 

Chairman; Suedeen G. Kelly, Marc Spitzer, 

Philip D. Moeller, and Jon Wellinghoff. 

Order Terminating Proceeding and 

Clarifying Policy 

1. In September 2005, the 

Commission issued a Notice of Inquiry 

(NOI) 1 to evaluate possible changes in 

the criteria set forth in Arkla Gathering 

Service Co.2 for determining when the 

Commission may assert Natural Gas Act 

(NGA) jurisdiction over the gathering 

activities of a gathering affiliate of a 

natural gas pipeline to guard against 

abusive practices by the affiliated 

companies. In Arkla, the Commission 

held that gathering affiliates of interstate 

pipelines are generally exempt from the 

Commission’s NGA jurisdiction. 

However, the Commission also held that 

‘‘if an affiliated gatherer acts in concert 

with its pipeline affiliate in connection 

with the transportation of gas in 

interstate commerce and in a manner 

that frustrates the Commission’s 

effective regulation of the interstate 

pipeline, then the Commission may look 

through, or disregard, the separate 

corporate structures and treat the 

pipeline and gatherer as a single 

entity.’’ 3

2. In Williams Gas Processing—Gulf 

Coast Company, L.P. v. FERC,4 the 

United States Court of Appeals for the 

District of Columbia Circuit vacated and 

remanded Commission orders, in which 

the Commission had sought to reassert 

jurisdiction over certain affiliated 

gathering activities under the criteria set 

forth in Arkla. The court held that the 

Commission had not met its own test 

under Arkla for reassertion of 

jurisdiction. In light of the court’s 

holding that the circumstances 

presented by the Williams Gas 

Processing case did not satisfy the Arkla 

test, the Commission determined to 

explore whether that test should be 

modified. To assist this reevaluation of 

the Arkla test, the Commission issued 

the NOI, asking parties to submit 

comments and respond to a number of 

specific questions. After carefully 

reviewing the comments, the 

Commission has determined not to 

change its current policies with respect 

to affiliated gatherers, although we do 

clarify the existing Arkla test. 

I. Statutory and Regulatory Backdrop 

3. Section 1(b) of the NGA gives the 

Commission jurisdiction over (1) 

transportation of natural gas in 

interstate commerce, (2) sales in 

interstate commerce of natural gas for 

resale,5 and ‘‘natural gas companies’’ 6

engaged in such transportation or sales. 

However, section 1(b) exempts 

‘‘gathering of natural gas’’ from 

Commission jurisdiction. The 

Commission uses the ‘‘primary 

function’’ test to determine whether a 

facility is devoted to jurisdictional 

interstate transportation or nonjurisdictional gathering of natural gas.7

Under that test, the Commission relies 

on various physical characteristics of 

the facilities to determine their 

jurisdictional status. 

4. Before Order No. 436,8 interstate 

natural gas pipelines generally did not 

perform transportation-only or 

gathering-only services. Rather, they 

used all their facilities, including any 

gathering facilities they owned, to 

provide a bundled transportation and 

sale for resale service, for which they 

charged a single bundled rate. The 

United States Supreme Court held that 

the gathering exemption did not 

foreclose the Commission from 

reflecting ‘‘the production and gathering 


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9 18 CFR 284.8 (d)(1) (1986). That regulation is 

now found at 18 CFR 284.10(c)(1) (2006). 

10 43 FERC ¶ 61,473 (1988), order on reh’g, 44 

FERC ¶ 61,384 (1988). 

11Northern Natural Gas Co., 43 FERC at 62,160. 

12Northern Natural Gas Co. v. FERC, 929 F.2d 

1261 (8th Cir. 1991). 

13 Interstate Natural Gas Pipeline Rate Design, 47 

FERC ¶ 61,295, at 62,059 (1989). 

14See also Panhandle Eastern Pipeline Co., 57 

FERC ¶ 61,264, at 61,840 (1991) (Opinion No. 369), 

order on reh’g, 59 FERC ¶ 61,244, at 61,853 (1992) 

(Opinion No. 369–A). 

15Pipeline Service Obligations and Revisions to 

Regulations Governing Self-Implementing 

Transportation, and Regulation of Natural Gas 

Pipelines After Partial Wellhead Decontrol, Order 

No. 636, 57 FR 13,267 (Apr. 16, 1992), FERC Stats. 

and Regs. Regulations Preambles (January 1991–

June 1996) ¶ 30,939 (Apr. 8, 1992), order on reh’g, 

Order No. 636–A., 57 FR 36,128 (Aug. 12, 1992), 

FERC Stats. and Regs. Regulations Preambles 

(January 1991–June 1996) ¶ 30,950 (Aug. 3, 1992), 

order on reh’g, Order No. 636–B, 57 FR 57,911 (Dec. 

8, 1992), 61 FERC ¶ 61,272 (1992), notice of denial 

of reh’g, 62 FERC ¶ 61,007 (1993), aff’d in part, 

vacated and remanded in part, United Dist. Cos. v. 

FERC, 88 F.3d 1105 (D.C. Cir. 1996), order on 

remand, Order No. 636–C, 78 FERC ¶ 61,186 (1997). 

16 16 Order No. 636–A, at 30,609. See also El Paso 

Natural Gas Co., 60 FERC ¶ 61,109, at 61,353, 

61,355 (1992), order on reh’g, 61 FERC ¶ 61,173, at 

61,633–5 (1992). 

17See, e.g., Opinion No. 369, 57 FERC at 61,841; 

Opinion No. 369–A, 59 FERC at 61,853; Columbia 

Gas Transmission Corp., 64 FERC ¶ 61,060, at 

61,517 (1993); National Fuel Gas Supply Corp., 62 

FERC ¶ 61,200, at 62,445 (1993). 

18Natural Gas Gathering Services Performed by 

Interstate Pipelines and Interstate Pipeline 

Affiliates—Issues Related to Rates and Terms and 

Conditions of Service, 65 FERC ¶ 61,136, at 61,689 

(1993); Williams Natural Gas Co., 64 FERC 

¶ 61,165, at 62,432 (1993). 

19Natural Gas Gathering Services Performed by 

Interstate Pipelines and Interstate Pipeline 

Affiliates—Issues Related to Rates and Terms and 

Conditions of Service, 65 FERC ¶ 61,136 (1993). 

20 67 FERC ¶ 61,257, order on reh’g, 69 FERC 

¶ 61,280, reh’g denied, 70 FERC ¶ 61,079, 

reconsideration denied, 71 FERC ¶ 61,297, aff’d in 

part and reversed in part, Conoco, 90 F.3d 536. 

facilities of a natural gas company in the 

rate base and determining the expenses 

incident thereto for the purpose of 

determining the reasonableness of the 

[bundled] rates subject to its 

jurisdiction.’’ Colorado Interstate 

Natural Gas Co. v. FPC, 324 U.S. 581, 

603 (1954). See Conoco, Inc. v. FERC, 90 

F.3d 536, 545 (D.C. Cir. 1996). 

A. Order Nos. 436 and 636 

5. In Order No. 436, the Commission 

initiated its open access transportation 

program, under which shippers can 

obtain a transportation-only service 

from the pipeline, and purchase their 

gas from third parties. As part of Order 

No. 436, the Commission adopted a 

regulation requiring that the rates for 

open access transportation service 

‘‘separately identify cost components 

attributable to transportation, storage, 

and gathering costs.’’ 9 In Northern 

Natural Gas Co.,10 a pipeline seeking 

authorization to perform open access 

transportation service stated that it 

intended to charge its customers 

separate rates for any gathering services 

it provided in connection with open 

access transportation service. However, 

the pipeline contended that NGA 

section 1(b) prevented the Commission 

from requiring those rates to be set forth 

in its tariff or determining the 

lawfulness of those rates. The 

Commission rejected this contention. 

6. The Commission pointed out that 

NGA section 4(a) provides: All rates and 

charges made, demanded, or received by 

any natural gas company for or in 

connection with the transportation or 

sale of natural gas subject to the 

jurisdiction of the Commission, and all 

rules and regulations affecting or 

pertaining to such rates or charges, shall 

be just and reasonable [emphasis 

added]. 

7. In addition, section 5(a) similarly 

provides that when the Commission 

finds that any rate charged by a natural 

gas company ‘‘in connection with’’

jurisdictional transportation or sales is 

unjust and unreasonable, or finds that 

any rule, regulation, or practice affecting 

such rate is unjust and unreasonable, 

the Commission may modify it. The 

Commission concluded that these 

provisions ‘‘require the Commission to 

determine the rates, rules, and 

regulations not only for the actual 

transportation or sales subject to the 

Commission’s jurisdiction, but also for 

other services performed in connection 

with or ancillary to such transportation 

and sales,’’ 11 including gathering. The 

United States Court of Appeals for the 

Eighth Circuit affirmed this decision.12

8. When pipelines first implemented 

Order No. 436, they generally continued 

to bundle gathering service within their 

stand-alone open access transportation 

service. Thus, even though the pipelines 

separately identified their gathering 

costs in their rates for open access 

transportation service, shippers still had 

to purchase a bundled gathering/ 

transportation service. However, in the 

1989 Rate Design Policy Statement,13

the Commission stated its preference for 

a full unbundling of gathering services 

from transportation, so that shippers 

would only pay for the services they 

actually used.14 While Order No. 636 15

only mandated pipelines to unbundle 

their sales service from their 

transportation service, Order No. 636–A 

restated the Commission’s strong 

preference for fully unbundled 

gathering services with separately 

charged rates, consistent with the Rate 

Design Policy Statement.16 Ultimately, 

most pipelines with gathering facilities 

did unbundle their gathering services, 

either in their Order No. 636 

restructuring proceedings or in rate 

cases.17

9. In the Order No. 636 restructuring 

proceedings, the Commission continued 

to require pipelines performing 

gathering services to include a statement 

of their gathering rates in their tariff. 

The Commission also required that the 

pipeline’s tariff include a statement that 

its gathering service is nondiscriminatory, not unduly preferential, 

and not inconsistent with the terms and 

conditions applicable to its Part 284 

open access service. However, the 

Commission did not further exercise its 

authority over the terms and conditions 

of gathering services by requiring such 

pipelines to include a full gathering rate 

schedule in their tariffs, similar to the 

separate rate schedules required for 

jurisdictional service such as firm and 

interruptible transportation service.18

B. The Arkla Policy and Conoco Inc. v. 

FERC

10. In the aftermath of Order No. 636, 

a number of pipelines determined that 

it would be advantageous in the new 

regulatory environment either to ‘‘spin 

down’’ their gathering facilities to 

corporate affiliates or ‘‘spin off’’ the 

facilities to unrelated third parties. In 

February 1994, the Commission held a 

public conference to explore the issues 

raised by these filings.19 After receiving 

written comments following the 

conference, the Commission determined 

to establish its policy concerning the 

spin down of gathering facilities to an 

affiliate of a natural gas company in the 

individual pending cases, including 

Arkla 20 and several companion orders 

issued the same day. 

11. First, the Commission addressed 

the issue of the extent of its jurisdiction 

to regulate the rates, terms, and 

conditions of gathering services 

performed by affiliates of natural gas 

companies. The Commission held that it 

generally lacks jurisdiction over 

affiliates that perform only a gathering 

service. The Commission recognized 

that the Eighth Circuit had confirmed in 

Northern Natural v. FERC, that under 

NGA sections 4 and 5 the Commission 

may regulate gathering services 

provided by ‘‘natural gas companies’’

‘‘in connection with’’ their 

jurisdictional transportation services. 

However, the Commission pointed out 

that NGA section 2(6) defines a 

jurisdictional ‘‘natural gas company’’ as 

a person engaged in the transportation 

or natural gas in interstate commerce or 

the sales of such gas in interstate 

commerce for resale. Interstate pipelines 


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21 67 FERC at 61,871. The Commission also 

observed that, ‘‘although the Eighth Circuit’s 

decision contained a footnote that might be 

construed to the contrary, the issue of whether the 

Commission has similar jurisdiction over pipelineaffiliated gatherers was not before that Court. We do 

not believe that sections 4 and 5 of the NGA nor 

the holding in Northern support the view that the 

Commission has jurisdiction over rates for gathering 

services that are ‘in connection with’ interstate gas 

transportation if those services are not provided by 

a natural gas company.’’ Id. 

22 Id. 

23 Id. 

24Arkla, 69 FERC at 62,082–3. 

25The required tariff provisions state that the 

pipeline: (1) Will provide nondiscriminatory access 

to all sources of supply, (2) will not give shippers 

of its gathering affiliate undue preferences over 

shippers of non affiliated gatherers, and (3) will not 

condition or tie its agreement to provide 

transportation service to an agreement by the 

producer, customer, end-use or shipper relating to 

any service in which its gathering affiliate is 

involved. 

26Arkla, 69 FERC at 62,081–5. 

27 Mid Louisiana Gas Co., 67 FERC ¶ 61,255, at 

61,850–1 (1994), order on reh’g, 69 FERC ¶ 61,303, 

at 62,168–9 (1994). 28 Id. at 61,851. 29The Commission gave the example of gathering 

customers threatening to build bypass facilities. 

are, of course, such natural gas 

companies. The Commission then held: 

However, companies that perform only a 

gathering function, whether they are 

independent or affiliated with an interstate 

pipeline, are not natural gas companies 

because they neither transport natural gas in 

interstate commerce, nor sell such gas in 

interstate commerce for resale. Therefore, the 

Commission does not have jurisdiction over 

such companies whether they are 

independent or affiliated with an interstate 

pipeline.21

12. Despite concluding that it 

generally lacked jurisdiction over 

affiliates performing only a gathering 

function, the Commission stated that it 

‘‘can exert control over the gathering 

activities of affiliated gatherers in 

particular circumstances where such 

action is necessary to accomplish the 

Commission’s policies for the 

transportation of natural gas in 

interstate commerce.’’ The Commission 

then set forth the following standard for 

asserting jurisdiction over an affiliated 

gatherer: 

If an affiliated gatherer acts in concert with 

its pipeline affiliate in connection with the 

transportation of gas in interstate commerce 

and in a manner that frustrates the 

Commission’s effective regulation of the 

interstate pipeline, then the Commission may 

look through, or disregard, the separate 

corporate structures and treat the pipeline 

and gatherer as a single entity, i.e., a single 

natural gas company. In so doing, the 

Commission would regulate the gathering 

activities as it would if the gathering facilities 

were owned directly by an interstate 

pipeline.22

13. The Commission then further 

explained its standard for asserting 

jurisdiction as follows: 

The types of affiliate abuses which would 

trigger the Commission’s authority to 

disregard the corporate form would be 

limited to abuses arising specifically from the 

interrelationship between the pipeline and 

its affiliate. That is, a complainant would 

have to allege that the pipeline would benefit 

by certain actions taken by the affiliate in 

conjunction with its affiliated pipeline. Such 

actions might include the affiliate’s giving 

preferences to market affiliate gas or tying 

gathering service to the pipeline’s 

jurisdictional transmission service; the 

pipeline’s giving transportation discounts 

only to those utilizing the affiliate’s gathering 

service; and actions resulting in crosssubsidization between the affiliate’s 

gathering rates and the pipeline’s 

transportation rates. Although an affiliate 

could undertake other types of anticompetitive activities, the Commission’s 

jurisdiction would be implicated only where 

the abuse is directly related to the affiliate’s 

unique relationship with an interstate 

pipeline. Except where the Commission finds 

that a pipeline and its gathering affiliate 

should be treated together as a single 

‘‘natural gas company,’’ the affiliated gatherer 

would be subject to state, not Federal 

jurisdiction.23

14. In Arkla, the Commission held 

that, in order to implement a proposal 

to spin down gathering facilities to an 

affiliate, the pipeline must file an 

application under NGA section 7(b) to 

abandon any of the gathering facilities 

for which it had received a certificate. 

In addition, the Commission held that, 

because the pipeline’s termination of its 

gathering services was a change of 

service subject to the Commission’s 

jurisdiction under NGA section 4, the 

pipeline must make a section 4 filing to 

terminate its gathering services for both 

the certificated and uncertificated 

facilities.24 The Commission held that 

these filings would give it an 

opportunity to take several actions to 

protect shippers, in addition to its 

reservation of the right to assert 

jurisdiction over an affiliated gatherer in 

the circumstances discussed above. 

15. First, the Commission stated it 

would require the pipeline to include 

non-discriminatory and equal access 

provisions in its tariff.25 Second, as 

clarified on rehearing, the Commission 

required the pipeline to file a default 

gathering contract continuing existing 

rates for two years, which its affiliate 

had to offer to the pipeline’s existing 

gathering customers. The Commission 

held that such a default contract was 

necessary to ensure continuity of service 

for the existing customers who had a 

reasonable expectation of a continuation 

of regulated service. Accordingly, 

without the default contract, the 

Commission could not find any section 

7 abandonment or section 4 termination 

of service to be in the public interest 

and just and reasonable.26

16. In addition to the pipeline’s filings 

to implement the spin-down, the entity 

acquiring the assets typically files a 

request for a declaratory order declaring 

that the facilities are non-jurisdictional 

gathering facilities. The Commission 

evaluates both those requests for 

declaratory orders and pipeline requests 

to abandon certificated gathering 

facilities pursuant to its primary 

function test. 

17. In one of the companion orders to 

Arkla, the Commission held that, in 

determining whether to approve a spin 

down proposal, it would not consider 

whether the customers of spun down 

facilities would have competitive 

alternatives.27 Rather, the Commission 

would approve spin down proposals, 

where application of the primary 

function test showed that the facilities 

were gathering, and the pipeline 

complied with the tariff language and 

default contract conditions. The 

Commission stated that, because the 

NGA does not give it jurisdiction to 

regulate affiliated gatherers, the 

existence or absence of competition is 

irrelevant to whether or not the 

Commission will regulate affiliated 

gatherers. The Commission pointed out 

that the comments filed in response to 

its notice revealed that ‘‘a significant 

part of the gathering industry, perhaps 

as much as 70 percent, is performed by 

unregulated independent gatherers,’’

and ‘‘many customers of such gatherers 

are captive to a single gatherer, i.e., 

there is no competition for gathering 

services.’’ 28 Nevertheless, the NGA only 

authorizes the Commission to regulate 

gathering performed by natural gas 

companies, i.e. pipelines, in connection 

with jurisdictional transportation 

service. The Commission also found 

that the comments suggested that abuse 

of market power was not a significant 

problem, because customers of 

unregulated independent gatherers had 

found ways to prevent excessive rates 29

and there are various state and federal 

antitrust laws that could be invoked. 

The Commission concluded that the 

existence of competition is not 

particularly relevant to a decision to 

allow a pipeline to abandon its 

gathering facilities and, to the extent it 

was relevant, the excessive effort to 

assess it would be unwarranted where 

customers have recourse to other 

remedies. 

18. The United States Court of 

Appeals for the District of Columbia 


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30Conoco, 90 F.3d at 547. 

31 Id. at 549. 

32 Id. at 553. 

33Regulations under the Outer Continental Shelf 

Lands Act Governing the Movement of Natural Gas 

on Facilities on the Outer Continental Shelf, Order 

No. 639, 65 FR 20,354 (Apr. 17, 2000), III FERC 

Stats. & Regs. ¶ 31,097 (2000), order on reh’g, Order 

No. 639–A, 65 FR 47,294 (Aug. 2, 2000), III FERC 

Stats. & Regs. ¶ 31,103 (2000), order denying 

clarification, 93 FERC ¶ 61,274 (2000). 

34Transcontinental Gas Pipe Line Corp., 96 FERC 

¶ 61,115 (2001), reh’g denied, 103 FERC ¶ 61,177 

(2003). 

Circuit reviewed the Commission’s 

Arkla orders in Conoco, Inc. v. FERC, 90 

F.3d 536 (D.C. Cir. 1996). The court 

affirmed the Commission’s holding that 

it generally lacks jurisdiction over 

affiliates that perform only a gathering 

service and thus are not natural gas 

companies as defined in NGA section 

2(6). The court stated, ‘‘Section 1(b) 

contemplates that some measure of 

authority over gathering should be 

reserved to the states, and jurisdiction 

over companies whose sole business is 

gathering is a permissible place to 

start.’’ 30 With regard to the 

Commission’s reservation of the right to 

reassert jurisdiction in certain 

circumstances, the court stated: 

As an abstract matter, we have no reason 

to doubt the Commission’s conclusion that a 

non-jurisdictional entity could act in a 

manner that would change its status by 

enabling an affiliated interstate pipeline to 

manipulate access and costs of gathering.31

19. However, the court stated that, 

because the Commission had not yet 

sought to exercise such authority, it 

could not speculate as the specific 

circumstances under which such a 

reassertion of authority would be 

justified. 

20. The court reversed the 

Commission’s requirement that the 

pipeline file a default contract as a 

condition for approval of a spin-down, 

finding that the Commission had not 

identified any source of authority to 

impose that condition. The court 

explained, 

Where an activity or entity falls within 

NGA § 1(b)’s exemption for gathering, the 

provisions of NGA §§ 4, 5, and 7, including 

the ‘‘in connection with’’ language of §§ 4 

and 5, neither expand the Commission’s 

jurisdiction nor override § 1(b)’s gathering 

exemption * * * Because the Commission 

concluded that the facilities to be transferred 

by NorAm Gas were exempt under § 1(b) as 

gathering facilities, and that NorAm Gas’

independently operated affiliate gatherer was 

not a ‘‘natural gas company’’ subject to the 

NGA, the Commission cannot simply assert 

authority over the facilities and the affiliate 

by invoking other sections of the Act.32

C. OCSLA 

21. Section 5(e) of the Outer 

Continental Shelf Lands Act (OCSLA) 

authorizes the Secretary of Interior to 

grant rights of way through submerged 

lands on the Outer Continental Shelf 

(OCS) for purposes of transporting 

natural gas, upon the condition that the 

pipeline will transport natural gas 

produced in the vicinity of the pipelines 

in such proportionate amounts as the 

Commission, in consultation with the 

Secretary of Energy, may determine to 

be reasonable. Section 6(e)(1) provides 

that every permit, right-of-way, or other 

grant of transportation authority must 

require that the pipeline be operated in 

accordance with various competitive 

principles. These include that the 

pipeline must provide open and 

nondiscriminatory access to both owner 

and non-owner shippers. Section 6(e)(2) 

provides that the Commission may 

exempt pipelines that feed into a facility 

where gas is first collected from the 

required competitive principles of 

subparagraph 1. 

22. In 2002, the Commission issued 

Order No. 639,33 adopting regulations 

requiring companies providing natural 

gas transportation services, including 

gathering, on the OCS to periodically 

file information with the Commission 

concerning their pricing and service 

structures. The Commission relied on 

the OCSLA as providing the necessary 

authority for these regulations, and 

stated that the required information 

would assist it in determining whether 

OCS transportation services conform to 

the open access requirements of the 

OCSLA. In Order No. 639-A, the 

Commission recognized that it had 

generally relied only on the NGA to 

regulate offshore natural gas facilities 

and services. However, the Commission 

stated that, as offshore exploration and 

development had evolved, it had grown 

beyond our ability to regulate by relying 

exclusively on the NGA. The 

Commission further stated that 

approximately half of offshore gas 

infrastructure was now considered 

gathering and thus excluded from its 

NGA jurisdiction. In these 

circumstances, the new OCSLA 

reporting requirements were needed to 

ensure compliance with the OCSLA’s 

competitive principles. 

23. In Williams Companies v. FERC, 

345 F.3d 910 (D.C. Cir. 2003) (Williams 

Companies), the D.C. Circuit affirmed a 

District Court decision vacating the 

rules adopted by Order No. 639 as 

exceeding the Commission’s authority 

under the OCSLA. The court held that 

the OCSLA does not provide the 

Commission a general power to enforce 

the OCSLA open access provisions, but 

only assigns the Commission a few welldefined tasks. When the Commission 

issues certificates pursuant to NGA 

section 7, it must include the open 

access conditions required by OCSLA 

section 6(f)(1). However, the court held 

that the OCSLA provided for the 

Secretary of Interior to enforce those 

conditions, not the Commission. 

D. Shell Offshore Inc. v. Transco and the 

Williams Gas Processing Remand 

24. Transco filed an application for 

abandonment in which it proposed to 

spin-down roughly 22 miles of its North 

Padre Island pipeline facilities on the 

OCS, which were originally 

functionalized as transmission, to its 

affiliate, Williams Field Services (WFS). 

The application was accompanied by 

WFS’s petition to declare the facilities 

gathering upon their acquisition by 

WFS. Over protests, the Commission 

approved the abandonment and granted 

the petition, declaring the facilities to be 

gathering upon completion of the sale, 

which occurred on December 1, 2001.34

25. Prior to the spin-down Transco 

had charged Shell Offshore Inc. (Shell) 

$0.08/Dth to transport Shell’s gas the 

230-mile distance from the interconnect 

with Shell’s production facilities to one 

of Transco’s mainline pooling points. 

After the spin-down, Shell not only paid 

Transco the $0.08 transportation rate, 

WFS also demanded that it pay WFS an 

additional $0.08/Dth for transporting 

Shell’s gas 3.08 miles from the 

connection with Shell’s production 

facilities on what had become WFS’s 

facilities to the interconnection with 

Transco’s transmission facilities. Shell 

chose to shut in its production rather 

than pay double the rate it had been 

paying Transco alone for the same 

transportation service. 

26. Shell filed a complaint against 

Transco and its affiliates, and the 

Commission set the complaint for 

hearing before an ALJ. In affirming the 

ALJ’s Initial Decision, the Commission 

adopted the ALJ’s finding that Transco 

and WFS, in effectuating the spin-down, 

met the Arkla test. Treating Transco and 

WFS as a single entity because of their 

concerted actions, the Commission 

found that their behavior frustrated the 

Commission’s regulation of Transco by 

requiring Shell to execute a gathering 

agreement that included an exorbitant 

gathering rate and anticompetitive 

conditions, such as a life-of-reserves 

commitment tying Shell’s production to 

the Transco facilities for the life of the 

reserves. The Commission also found 

that WFS’s actions violated the OCSLA. 

The Commission then imposed a just 

and reasonable rate of $0.0169/Dth for 


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35 Id. at P 7. 

36 103 FERC ¶ 61,177 at P 7. 

37 100 FERC ¶ 61,254 (2002), reh’g denied, 103 

FERC ¶ 61,177 (2003). 

38Williams Gas Processing, 373 F.3d 1335. 

39 Id. at 1342. 

40 Id. (citing Arkla, 67 FERC at 61,871). 

41 Id. at 1342. 

42 Id. 

43 Id. at 1343. 

44 Id. 

45 Id. (citing Arkla, 67 FERC at 61,871). 

46 Id. at 1345. 

47Shell Offshore Inc. v. Transcontinental Gas 

Pipe Line Corp., 110 FERC ¶ 61,254, order on reh’g, 

112 FERC ¶ 61,293 (2005). 

48The following producers submitted comments: 

Natural Gas Supply Association (NGSA); 

Independent Petroleum Association of America 

(IPAA); Producer Coalition (Producer Coalition); 

Shell Offshore, Inc. (Shell Offshore); and Indicated 

Shippers (Indicated Shippers). Indicated Shippers 

include: BPAmerica Production Company, BP 

Energy Company, ExxonMobil Gas & Power 

Marketing Company, Chevron U.S.A. Inc., 

Marathon Oil Company and Shell Offshore Inc). 

49The following gathering providers and/or 

pipelines submitted comments: Williams 

Midstream Gas and Liquids (Williams); ONEOK 

Field Services Company (ONEOK); Western Gas 

Resources, Inc. (Western); Duke Energy Field 

Services, Inc. (Duke); Enterprise Products Partners, 

L.P. (Enterprise); Enbridge Energy Partners, L.P. and 

Enbridge, Inc. (Enbridge); Williston Basin Interstate 

Pipeline Company (Williston); and Interstate 

Natural Gas Association of America (INGAA). 

50Shell Offshore and Indicated Shippers. 

gathering services on the spun-down 

North Padre facilities. 

27. On rehearing, in attempting to 

rebuff arguments that the Commission 

did not properly apply the Arkla test, 

the Commission clarified that it viewed 

the Arkla test as being simply a 

circumvention test. That is, the 

Commission could reassert jurisdiction 

based on its finding that Transco created 

the ‘‘illusion of a separate gathering 

entity to evade the Commission’s 

regulations,’’ thus permitting ‘‘WFS to 

extract money that Transco, as a natural 

gas company, providing both services 

alone, could not.’’ 35 The Commission 

denied requests for rehearing, 

describing the spin-down as ‘‘a sham 

* * * designed to circumvent the 

Commission’s regulation.’’ 36

28. WFS filed a petition for review of 

the Commission’s orders 37 with the U.S. 

Court of Appeals for the District of 

Columbia. On July 13, 2004, the court 

vacated and remanded the 

Commission’s orders in Williams Gas 

Processing—Gulf Coast Company, L.P. 

v. FERC.38 The court rejected both of the 

Commission’s statutory bases for 

reasserting jurisdiction—the NGA and 

the OCSLA. At the heart of the court’s 

findings with respect to the 

Commission’s NGA jurisdiction is its 

determination that the Commission 

misapplied the Arkla test. First, the 

court found that the Commission failed 

to show that the narrow kinds of abuses 

that would trigger a reassertion of 

jurisdiction had occurred. The court 

stated that Arkla permits a reassertion of 

jurisdiction in circumstances ‘‘limited 

to’’ abuses ‘‘directly related to the 

affiliate’s unique relationship with an 

interstate pipeline,’’ such as ‘‘tying 

gathering service to the pipeline’s 

jurisdictional transmission service,’’ or 

‘‘cross-subsidization between the 

affiliate’s gathering rates and the 

pipeline’s transmission rates.’’ 39 Thus, 

under Arkla, the court found that 

‘‘[o]nly those types of activities—where 

the affiliate is leveraging its relationship 

with the pipeline to enhance its market 

power—would ‘trigger the 

Commission’s authority to disregard the 

corporate form and treat the pipeline 

and its affiliate as a single entity.’ ’’ 40

The court found that WFS’s actions fell 

outside this category. The court found 

that the gathering affiliate’s affiliation 

with the pipeline was ‘‘utterly irrelevant 

to its ability to charge high rates, or to 

impose onerous conditions for gathering 

service.’’ 41 Instead, the affiliate ‘‘could 

do these things for one reason only—

because it was a recently deregulated 

monopolist in the North Padre gathering 

market.’’ 42 It observed that WFS was 

charging the same rates and service 

conditions that any non-affiliate 

gatherer could demand in the OCS and, 

thus, was not ‘‘leveraging’’ its unique 

relationship with Transco. 

29. Second, the court found that the 

Commission, in piercing the corporate 

veil to treat WFS and Transco as a single 

entity in a ‘‘sham’’ transaction (the spindown), analyzed the elements of the 

Arkla test out of sequence: ‘‘it adopts as 

its first premise (WFS is Transco) the 

Arkla Gathering test’s ultimate 

conclusion—that corporate form may be 

set aside.’’ 43 Under Arkla, the rationale 

for reasserting ‘‘in connection with’’

jurisdiction is that the concerted 

behavior between the two entities (i.e., 

the regulated pipeline and the affiliated 

non-jurisdictional gathering affiliate) 

has frustrated the Commission’s ability 

to regulate the pipeline (not the 

gatherer). By treating WFS and Transco 

as a single entity, the Commission 

‘‘could thus attribute the gatherer’s 

alleged malfeasance to the pipeline, and 

apply the pipeline’s regulatory 

requirements to the gatherer.’’ 44 The 

court found error, because ‘‘Only when 

the Commission finds both concerted 

action between a jurisdictional pipeline 

and its gathering affiliate and that the 

concerted action frustrates the 

Commission’s effective regulation of the 

pipeline, may it then pierce the 

corporate veil and treat the legally 

distinct entities as one.’’ 45

30. The court also rejected the 

Commission’s finding that WFS’ actions 

warranted application of the OCSLA’s 

open access and nondiscrimination 

prohibitions to set a just and reasonable 

gathering rate. Describing an argument 

made on appeal that the Commission 

simply was enforcing the open access 

and non-discrimination conditions in 

Transco’s tariff as post hoc 

rationalization, the court observed that 

the Commission’s assertion of OCSLA 

jurisdiction over WFS based on the 

Arkla test ‘‘is nowhere present in either 

the Order or the Order on Rehearing.’’ 46

It left open for another day the broader 

question of whether the Commission 

may ever assert jurisdiction over gas 

gatherers, whether affiliated with a 

pipeline or not. 

31. On remand, the Commission 

found that, based on the record in the 

proceeding and the court’s 

interpretation of the Commission’s 

precedent, the Commission lacked 

sufficient basis to reassert NGA 

jurisdiction or to assert OCSLA 

jurisdiction over the gathering rates and 

services of WFS’s North Padre Island 

gathering facilities.47 On rehearing, 

Shell contended that the Commission 

should modify the Arkla test, and grant 

relief based on the revised test. The 

Commission denied rehearing on the 

ground that the case had been fully 

litigated based on the existing test. 

However, the Commission concurrently 

issued a notice of inquiry to evaluate 

possible changes in the Arkla test. 

Thirteen comments have been filed. The 

commenters include (1) producers,48 (2) 

providers of gathering services, and (3) 

interstate pipelines.49 No local 

distribution companies, state regulatory 

Commissions, or other representatives 

of natural gas consumers filed 

comments. 

II. Comments 

32. Several of the producer 

commenters 50 contend that the 

Commission should modify the Arkla 

test so that the Commission can reassert 

jurisdiction when: (a) the gatherer’s 

facilities are connected to an affiliate’s 

transportation facilities, and (b) the 

gatherer frustrates the Commission’s 

effective regulation of interstate 

transportation. They contend that such 

frustration may occur when the 

gathering affiliate charges an excessive 

price for gathering, since that effectively 

allows the corporate family to charge 

excessive rates for the entire 

transportation path, including over the 

pipeline itself. These producers further 


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51Producer Coalition comments at 2–3, 10–11; 

IPAA comments at 2–3. 

52Arkla, 69 FERC at 62,087. 

53Capital Tel. Co. v. FCC, 498 F.2d 734, 738, n.10 

(D.C. Cir. 1974) (‘‘[w]here the statutory purpose 

could be easily frustrated through the use of 

separate corporate entities a regulatory commission 

is entitled to look through the corporate entities and 

treat the separate entities as one for purposes of 

regulation.’’). 

54 998 F.2d 1313 (5th Cir. 1993). 

55 Id. at 1321. 

56 FPC v. Hope Natural Gas Co., 320 U.S. 591, 610 

(1944). 

57Excluding ‘‘first sales’’ deregulated by the 

Wellhead Decontrol Act of 1989. 

58Conoco, 90 F.3d at 549. 

59Colorado Interstate Gas Co., 324 U.S. 581, 603 

(1945). 

contend that there is a problem with 

offshore gathering notwithstanding the 

limited number of complaints to date. 

They assert that pipelines are waiting 

for final resolution of the Commission’s 

jurisdiction. Spin-downs and spin-offs 

create the potential for abuse because 

they involve existing facilities; the 

customer does not have meaningful 

alternatives. 

33. Other producer commenters 

recognize that the Commission has 

limited legal authority to reassert 

jurisdiction over gathering facilities that 

have been spun down to an affiliate or 

spun off to an independent company.51

These commenters accordingly request 

that the Commission should review the 

potential for an abuse of market power 

when it considers a pipeline’s request 

for abandonment of gathering facilities, 

rather than only considering whether 

the facilities are gathering facilities. 

These commenters also request that the 

Commission should redefine gathering 

so that fewer facilities qualify for the 

gathering exemption from Commission 

regulation. 

34. Gathering providers and pipelines 

contend that the Commission should 

retain the current Arkla test for 

reasserting jurisdiction. They argue that, 

as a legal matter, the Commission lacks 

jurisdiction to assert jurisdiction over 

gathering performed by non-natural gas 

companies except in the situation 

allowed by the current Arkla test. These 

commenters also state that there is no 

regulatory gap with respect to gathering. 

The states regulate gathering onshore 

and in state waters. OCS gathering is 

governed by the OCSLA and antitrust 

laws. In any event, they state that there 

is no industry-wide problem requiring a 

solution, since only a few complaints 

have been filed with the Commission. 

Moreover, they argue the current policy 

appropriately permits affiliated and 

non-affiliated gatherers to compete 

under the same regulatory structure. 

Also current commercial arrangements 

have been entered into based on the 

Arkla policy as it now stands. Reregulation by the Commission would 

introduce regulatory risk and adversely 

affect investment in new infrastructure. 

The potential chilling of long-term 

commitments in gathering is not 

warranted given the relatively small 

number of spin-downs and the 

effectiveness of current regulation. 

III. Discussion 

35. After carefully reviewing the 

comments, the Commission has 

determined to clarify the existing Arkla 

test in certain respects. However, 

consistent with the court’s decision in 

Williams Gas Processing, an assertion 

that the gathering affiliate has charged 

too high a rate, by itself, would be 

insufficient to justify a reassertion of 

jurisdiction over the affiliate’s gathering 

activities. 

A. The Arkla Test for Reasserting 

Jurisdiction 

36. As the Commission held in Arkla, 

and the court affirmed in Conoco, the 

Commission generally lacks jurisdiction 

over affiliates of interstate pipelines that 

perform only a gathering service. 

However, the Commission has reserved 

the right to ‘‘exert jurisdiction over the 

[affiliate’s] gathering service to the 

extent needed to preserve the 

Commission’s statutory mandates under 

the NGA.’’ 52 The Commission has no 

doubt as to its authority to disregard 

corporate structures, including those 

created when a pipeline spins down its 

gathering facilities to a corporate 

affiliate, where necessary to prevent 

frustration of the statutory purpose of 

the NGA.53 For example, in 

Transcontinental Gas Pipe Line Corp. v. 

FERC (Transco),54 the court upheld the 

Commission’s order that found Transco 

had used affiliates to engage in a 

complicated scheme to (1) make 

jurisdictional sales to non-captive 

customers at less than its filed rate, 

while (2) passing through losses in those 

sales to its jurisdictional captive 

customers: ‘‘For the Commission not to 

have investigated further would 

frustrate a statutory purpose by allowing 

Transco to set up subsidiaries to sell gas 

at prices at which the company could 

not legally sell.’’ 55

37. The issue here is what 

circumstances would require the 

Commission to exert jurisdiction over 

an affiliate’s gathering activities in order 

to avoid frustration of the purposes of 

the NGA. In order to answer that 

question, it is first necessary to 

understand the relevant statutory 

purposes of the NGA, particularly what 

activities the Congress intended the 

Commission to regulate when it enacted 

the NGA. Therefore, the first section 

below discusses the extent to which the 

regulation of gathering may be 

considered to be within the statutory 

purposes of the NGA. We then clarify, 

in the next section, the type of conduct 

that would frustrate the NGA’s statutory 

purposes, and thus justify a reassertion 

of jurisdiction. Finally, we consider the 

issues of whether a finding of 

‘‘concerted action’’ between the affiliate 

and the pipeline is necessary to justify 

a reassertion of jurisdiction, and 

whether the affiliate’s gathering 

activities must be conducted by separate 

personnel. 

1. Statutory Purpose of the NGA 

38. The statutory purpose of the NGA 

is, of course, ‘‘to protect consumers 

against exploitation at the hands of 

natural gas companies.’’ 56 In order to 

carry out that purpose, NGA section 1(b) 

gives the Commission jurisdiction to 

regulate: (1) Transportation of natural 

gas in interstate commerce, (2) sales for 

resale of natural gas in interstate 

commerce,57 and (3) ‘‘natural gas 

companies’’ engaged in such 

transportation and sales. This gives the 

Commission full authority to regulate 

the rates, terms, and conditions of 

jurisdictional transportation service 

performed by natural gas companies, i.e. 

interstate pipelines. If a natural gas 

company provides gathering service in 

addition to jurisdictional transportation 

service, the Commission’s regulation of 

the jurisdictional transportation service 

‘‘may necessarily impinge on’’ the 

gathering service if ‘‘gathering is 

intertwined with jurisdictional 

activities.’’ 58 For example, the Supreme 

Court has held that the Commission 

may consider a natural gas company’s 

gathering costs ‘‘for the purpose of 

determining the reasonableness of rates 

subject to its jurisdiction.’’ 59

39. However, the statutory purpose of 

the NGA does not include the regulation 

of gathering service, particularly by 

companies who are not natural gas 

companies. This follows from the fact 

that NGA section 1(b) expressly exempts 

‘‘gathering of natural gas’’ from the 

Commission’s jurisdiction. As the 

Supreme Court stated in Northwest 

Central Pipeline v. State Corp. 

Commission, 489 U.S. 493, 509–14 

(1989), Congress in the NGA ‘‘carefully 

divided up regulatory power over the 

natural gas industry’’ so as to ‘‘expressly 

reserve to the States the power to 

regulate * * * gathering.’’

40. Several of the producer 

commenters nevertheless argue that the 


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60 FPC v. Transcontinental Gas Pipe Line Corp., 

365 U.S. 1, 28 (1961). 

61 FPC v. Louisiana Power & Light Co., 406 U.S. 

621, 631 (1972). In Conoco, 90 F.3d at 553, the court 

found that the Commission had not supported its 

contention that a default contract was necessary to 

avoid a regulatory gap, finding that the Commission 

had not explained why the states would be unable 

to protect NorAm Gas Transmission Company’s 

customers. 

62Question 11 asked, ‘‘Is there a gap between 

state regulation of gathering services and the 

Commission’s regulation of natural gas companies, 

and, if so, what is the nature of that gap?’’ Question 

12 asked, ‘‘Should the Commission view the 

conduct of offshore affiliated gatherers differently 

from onshore affiliated gatherers due to this lack of 

state regulation offshore?’’

63 90 F.3d at 547. 

64See Enbridge comments at 26–30, summarizing 

how Texas, Louisiana, New Mexico, Wyoming, and 

Oklahoma regulate gathering. See also Enterprise 

comments at 16 and Williams comments at 24–25. 

65Under the OCSLA, 43 U.S.C. 1331 et seq. 

(2000), it is ‘‘the policy of the United States that 

* * * the subsoil and seabed of the outer 

Continental Shelf appertain to the United States 

and are subject to its jurisdiction, control, and 

power of disposition * * * ’’ 43 U.S.C. 1332 (2000). 

However, while ‘‘ ‘[a]ll law applicable to the Outer 

Continental Shelf is federal law, [] to fill the 

substantial ‘gaps’ in the coverage of federal law, 

OCSLA borrows the ‘applicable and not 

inconsistent’ laws of the adjacent States as surrogate 

federal law.’ ’’ Ten Taxpayer Citizens Group v. Cape 

Wind Associates, 373 F.3d 183, 192 (1st Cir. 2004) 

(quoting Gulf Offshore Co. v. Mobil Oil Corp., 453 

U.S. 473, 480 (1981)). 

provisions of NGA sections 4 and 5 

permitting the Commission to determine 

rates for a natural gas company’s 

services performed ‘‘in connection 

with’’ jurisdictional transportation and 

sales support a holding that the 

statutory purpose of the NGA includes 

ensuring that natural gas companies and 

their affiliates do not charge excessive 

rates for gathering. These commenters 

rely on the Eighth Circuit’s holding in 

Northern Natural that the Commission 

‘‘may * * * under the NGA’s §§ 4 and 

5 regulate rates charged for gathering on 

the pipeline’s own gathering facilities in 

connection with jurisdictional interstate 

transportation, notwithstanding the 

explicit § 1(b) exclusion of gathering 

from the act.’’ 929 F.2d at 1269. In 

addition, they point out that the court 

defined the phrase ‘‘ ‘gathering facilities 

owned by the pipeline’ and all 

subsequently similar expressions [used 

in its opinion] * * * to include such 

facilities owned or operated directly or 

indirectly by a pipeline or its parent, 

affiliate, subsidiary or lessors.’’ Id., at 

1263 n. 2. 

41. However, in both Arkla and 

Conoco, the Commission and the D.C. 

Circuit rejected similar contentions that 

the Eighth Circuit’s decision should be 

relied upon to find that the Commission 

has NGA sections 4 and 5 ‘‘in 

connection with’’ jurisdiction over 

gathering affiliates. For example, in 

Conoco, the D.C. Circuit pointed out 

that the gathering service at issue in 

Northern Natural was provided by the 

pipeline itself, not an affiliate, and thus 

the Eighth Circuit ‘‘did not have to 

consider the full ramifications of its 

footnote. It did not discuss the issue of 

the jurisdictional status of affiliate-run 

gathering services, and it thus provides 

little persuasive authority on that 

issue.’’ 90 F.3d, at 546. 

42. While the Commission’s 

regulation of a natural gas company’s 

jurisdictional transportation services 

may necessarily impinge on any 

gathering services that company 

performs which are intertwined with its 

jurisdictional activities, the ‘‘in 

connection with’’ language of sections 4 

and 5 does not constitute a grant of 

authority to the Commission to regulate 

gathering independent of its effect on 

jurisdictional transportation. The D.C. 

Circuit made this clear in Conoco, when 

it reversed Arkla’s default contract 

condition. Arkla had required a pipeline 

spinning down gathering facilities to an 

affiliate to file a default contract offering 

the existing gathering customers service 

at existing rates for two years. The court 

rejected the Commission’s argument 

that it could impose this condition 

pursuant to its section 4 authority to 

regulate non-jurisdictional activities 

performed ‘‘in connection with’’

jurisdictional service. The Commission 

had argued that permitting a pipeline to 

terminate its gathering services without 

adequate protection for its existing 

gathering customers would frustrate the 

Commission’s policy, in its regulation of 

jurisdictional transportation service, to 

promote a competitive market. The 

court held that the statute forecloses 

interpreting the phrase ‘‘in connection 

with’’ in section 4 as permitting the 

Commission to regulate facilities which 

the Commission has expressly found to 

be outside its section 1(b) jurisdiction. 

43. The court explained its decision 

as follows: 

Where an activity or entity falls within 

NGA section 1(b)’s exemption for gathering, 

the provisions of NGA §§ 4, 5, and 7, 

including the ‘‘in connection with’’ language 

of §§ 4 and 5, neither expand the 

Commission’s jurisdiction nor override 

§ 1(b)’s gathering exemption. In language no 

less applicable here, the Supreme Court held 

in Panhandle III, 337 U.S. at 508–09, that 

‘‘sections 4, 5, and 7 do not concern the 

production or gathering, of natural gas; 

rather, they have reference to the interstate 

sale and transportation of gas and are so 

limited by their express terms. * * * 

Nothing in the sections indicates that the 

power given to the Commission over naturalgas companies by § 1(b) could have been 

intended to swallow all the exemptions of 

the same section, and thus extend the power 

of the Commission to the constitutional limit 

of congressional authority over commerce.’’

Because the Commission concluded that the 

facilities to be transferred by NorAm Gas 

were exempt under § 1(b) as gathering 

facilities, and that NorAm Gas’

independently operated affiliated gatherer 

was not a ‘‘natural gas company’’ subject to 

the NGA, the Commission cannot simply 

assert authority over the facilities and the 

affiliate by invoking other sections of the act. 

44. We recognize that Congress 

intended the NGA to be a 

comprehensive regulatory scheme, 

without any ‘‘attractive gaps.’’ 60 Given 

this purpose of the NGA, the Supreme 

Court has held that, in borderline cases, 

Commission jurisdiction may be found 

where necessary to avoid a regulatory 

gap.61 In light of this rule of statutory 

construction, the Commission included 

in the NOI several questions designed to 

enable it to further review the extent to 

which regulation of gatherers affiliated 

with interstate pipelines may be 

justified as necessary to prevent a 

regulatory gap.62 Upon review of those 

comments, we continue to find that the 

regulatory gap argument does not justify 

a finding that a purpose of the NGA is 

to enable the Commission to regulate 

gathering, particularly by non-natural 

gas companies, whether onshore or on 

the OCS. 

45. Onshore and in state waters, there 

is no regulatory gap, because the states 

have full authority to regulate gathering 

within their borders, including the rates 

charged by non-natural gas company 

gathering providers. As the court stated 

in Conoco, ‘‘Section 1(b) contemplates 

that some measure of authority over 

gathering should be reserved to the 

States, and jurisdiction over companies 

whose sole business is gathering is a 

permissible place to start.’’ 63 And, 

while states have not imposed acrossthe-board, cost-based rate regulations on 

local gatherers, they have imposed antidiscrimination requirements and 

permitted the filing of complaints by 

producers.64

46. We recognize that states cannot 

regulate gathering on the OCS, since 

only the federal government has 

regulatory authority with respect to the 

OCS.65 However, this does not justify a 

finding that a purpose of the NGA is to 

fill any regulatory gap with respect to 

the regulation of gathering on the OCS. 

NGA section 1(b) makes no distinction 

between the Commission’s jurisdiction 

onshore and its jurisdiction on the OCS. 

Thus, given our holding that the 

purposes of the NGA do not include the 

regulation of gathering by non-natural 

gas companies onshore, there is no basis 

in the language of the NGA to make a 

different finding with respect to 


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66For example, the House Committee on the 

Judiciary, which reported on H.R. 5134, the bill 

which was enacted in 1953 as the OCSLA, found 

that ‘‘no law [] exists whereby the Federal 

Government can lease those submerged lands [in 

the Outer Continental Shelf], * * * [] [T]herefore, 

[it is] the duty of the Congress to enact promptly 

a leasing policy for the purpose of encouraging the 

discovery and development of the oil potential of 

the Continental Shelf.’’ H.R. Rep. No. 413 (1953). 

67S. Rep. No. 95–284, at 48 (1977). 

68 Id. 

69OCSLA section 3(3). 

70 345 F.3d 910 (D.C. Cir. 2003). 

71 In addition, OCSLA section 23 authorizes 

citizens to commence civil actions to enforce any 

provision of the OCSLA. 

72 In addition, OCSLA section 5(f)(2) permits the 

Commission to exempt from section (f)(1) 

competitive principles ‘‘any pipeline or class of 

pipelines which feeds into a facility where oil and 

gas are first collected, separated, dehydrated, or 

otherwise processed.’’ However, the court held in 

Williams Companies that ‘‘a provision allowing 

FERC to exempt a subset of facilities from section 

(f)(1)’s competitive principles is plainly not an 

authorization for it to adopt and enforce principles 

over all facilities.’’ 345 F.3d at 914. 

73 In addition to the state and OCSLA regulation 

described above, gathering affiliates are also subject 

to federal and state anti-trust laws. For example, the 

Clayton Act, 15 U.S.C. 12–17 (2000), prohibits 

various anti-competitive activities. 

74Northern Border Pipeline Co., 107 FERC 

¶ 61,027, at P 11 (2004). 

gathering by non-natural gas companies 

offshore. 

47. We find that Congress determined 

how to address any regulatory gap with 

respect to gathering on the OCS in the 

OCSLA. When Congress first enacted 

the OCSLA in 1953, it recognized that 

there was no federal law applicable to 

the recovery of natural resources from 

the OCS.66 At that time, Congress 

enacted only a ‘‘ ‘bare bones’ leasing 

authority with essentially no statutory 

standards or guidelines,’’ because there 

was a ‘‘relative lack of basic knowledge 

concerning, and interest in, 

development of the resources of the 

Shelf at that time.’’ 67 However, by the 

late 1970s, it was recognized that ‘‘the 

OCS represents such a large and 

promising area for oil and gas 

exploration,’’ that ‘‘Congress must 

update the [OCSLA] * * * to provide 

adequate authority and guidelines for 

the kind of development activity that 

probably will take place in the next few 

years.’’ 68 Accordingly, Congress 

amended the OCSLA in 1978 for this 

purpose. 

48. The OCSLA, unlike the NGA, 

contains no exemption for gathering, but 

applies to the full range of gas 

exploration, development, production, 

gathering, and transportation activities. 

One purpose of the 1978 OCSLA 

amendments was to assure that 

resources on the OCS are developed ‘‘in 

a manner which is consistent with the 

maintenance of competition.’’ 69 To that 

end, section 5(e) of the OCSLA 

authorizes the Secretary of the Interior 

to grant rights of way through 

submerged lands on the OCS for 

purposes of transporting natural gas, 

upon the condition that the pipeline 

will transport natural gas produced in 

the vicinity of the pipelines in such 

proportionate amounts as the 

Commission, in consultation with the 

Secretary of Energy, may determine to 

be reasonable. Section 5(f)(1) provides 

that every permit, right-of-way, or other 

grant of transportation authority must 

require that the pipeline be operated in 

accordance with various competitive 

principles. These include that the 

pipeline must provide open and 

nondiscriminatory access to both owner 

and non-owner shippers. 

49. However, the D.C. Circuit held in 

Williams Companies v. FERC70 that 

these sections do not give the 

Commission any general power to create 

and enforce open access on the OCS. 

Rather, Congress intended that the 

Secretary of the Interior have the general 

power to enforce these provisions,71

with the Commission assigned only a 

few well-defined roles. One of those 

roles is to include in any certificates 

issued to an OCS pipeline pursuant to 

NGA section 7 the condition required by 

OCSLA section 5(f)(1). However, since 

our NGA section 7 certificate authority 

does not extend to gathering facilities, 

this provision cannot give us any 

jurisdiction with respect to OCS 

gathering.72

50. In this order, we express no 

opinion on the extent of the Secretary of 

the Interior’s authority under these 

provisions of the OCSLA to address 

assertions that a gatherer has abused its 

market power to charge unreasonably 

high prices. We hold only that Congress 

recognized in both 1953 when it first 

enacted the OCSLA and in 1978 when 

it amended that Act, that there was a 

regulatory gap on the OCS, and adopted 

the current provisions of the OCSLA for 

the express purpose of addressing that 

gap. In so doing, Congress did not 

amend the NGA to give this 

Commission any additional authority 

under that Act with respect to the OCS. 

We therefore conclude that the 

regulation of gathering on the OCS is no 

more within the purposes of the NGA 

than is the regulation of gathering 

onshore or in state waters.73

2. Conduct Frustrating the Statutory 

Purpose 

51. We now turn to the issue of the 

type of conduct that would frustrate the 

NGA’s statutory purpose, and thus 

justify the Commission’s disregarding 

the corporate form in order to exert 

jurisdiction over an affiliate’s gathering 

service. For the reasons discussed 

below, the Commission finds that it may 

assert NGA sections 4 and 5 ‘‘in 

connection with’’ jurisdiction over the 

activities of an affiliated gatherer, when 

(1) the gatherer has used its market 

power over gathering to benefit the 

pipeline in its performance of 

jurisdictional transportation or sales 

service and (2) that benefit is contrary 

to the Commission’s policies concerning 

jurisdictional services adopted pursuant 

to the NGA. However, the fact that an 

affiliated gatherer has abused its market 

power over gathering to benefit its own 

gathering service would not, by itself, 

justify an assertion of jurisdiction. 

52. Examples of the types of conduct 

by an affiliated gatherer which could 

justify an assertion of jurisdiction 

include the following. An affiliated 

gatherer could refuse to provide 

gathering service or charge higher rates, 

unless the shipper also entered into a 

contract with the affiliated pipeline for 

long-term firm service, rather than 

short-term firm or interruptible 

transportation service. This could 

enable the pipeline to obtain more 

profitable contracts for its jurisdictional 

transportation service, than it otherwise 

could. That is because the Commission 

requires pipelines to accept a maximum 

rate bid for a short-term service, absent 

a higher net present value bid for a 

longer-term service.74 Or, in situations 

where an affiliated, long-haul pipeline 

is interconnected with other interstate 

pipelines in the production area, the 

affiliated gatherer could refuse service 

or charge higher rates, unless the 

shipper also entered into a long-haul 

transportation contract with the 

affiliated pipeline for the entire haul to 

the market area, rather than using an 

unaffiliated interconnecting pipeline to 

reach the market area. This would 

similarly enable the pipeline to obtain a 

more profitable contract than it 

otherwise could, because, under the 

Commission’s open access 

requirements, pipelines must accept 

maximum rate bids for short-haul 

service, absent a higher net present 

value bid for long-haul service. Such 

circumvention would frustrate the 

Commission’s regulation of the 

pipeline’s jurisdictional transportation 

service pursuant to the NGA. 

53. The above two examples of 

conduct justifying assertion of 

jurisdiction are both anti-competitive 


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75As the court found in Williams Gas Processing, 

374 F.3d at 1342, a tying arrangement is 

‘‘conditioning the sale of a good or service on the 

purchase of another different (or tied) good or 

service.’’ In the above examples, the gathering 

affiliate would be conditioning sale of its gathering 

service on the purchase of a particular type of 

transportation service from the pipeline. 

76 67 FERC at 61,871. 

77Contrast Transco, 998 F.2d 1313, in which the 

court affirmed the Commission’s assertion of 

jurisdiction where the use of corporate affiliates had 

enabled the pipeline to make jurisdictional sales at 

unduly discriminatory prices. 

78Williams Gas Processing, 373 F.3d at 1342. 

79 Mid Louisiana Gas Co., 67 FERC at 61,851. 

80 Id. 

81Shell Offshore comments at 41 (emphasis 

supplied). 82 Id. at 43. 

tying arrangements,75 which, in the 

words of Arkla, are ‘‘directly related to 

the affiliate’s unique relationship with 

an interstate pipeline.’’ 76 That is 

because the actions benefit the pipeline 

by enabling the pipeline to obtain more 

profitable contracts for its jurisdictional 

transportation service. The actions do 

not provide any direct benefit to the 

gathering affiliate’s own business. Thus, 

absent the affiliation, a gatherer with 

market power would not appear to have 

an incentive to exercise its market 

power in such a manner. Such conduct 

would not increase the profitability of 

an independent gatherer’s business. 

54. By contrast, a gathering affiliate’s 

charging an unreasonably high rate for 

its gathering service, without more, does 

not frustrate the statutory purpose of the 

NGA and thus would not justify an 

assertion of jurisdiction.77 This is true, 

even where the gathering affiliate owns 

gathering facilities that provide the sole 

link between a production field and the 

interstate pipeline. As already 

discussed, the statutory purpose of the 

NGA does not include the regulation of 

gathering service, particularly by 

companies who are not natural gas 

companies. Rather, the NGA only 

permits the Commission to affect 

gathering service to the extent necessary 

to carry out its responsibilities under 

the NGA to regulate jurisdictional 

services. A gathering affiliate’s exercise 

of market power to charge high 

gathering prices may increase its own 

profits. But such an exercise of market 

power does not affect the Commission’s 

regulation of jurisdictional 

transportation service. It does not 

permit the pipeline to circumvent any of 

the Commission’s policies concerning 

jurisdictional transportation service or 

otherwise benefit the affiliated pipeline 

in its performance of jurisdictional 

transportation service. 

55. Thus, unlike the examples of 

conduct justifying an assertion of 

jurisdiction described above, there is 

simply no relationship between the 

gathering affiliate’s relationship with 

the pipeline and its charging of high 

prices for gathering service. As now 

Chief Justice Roberts wrote in Williams 

Gas Processing, ‘‘The fact that WFS is an 

affiliate of Transco is utterly irrelevant 

to its ability to charge high rates, or to 

impose onerous conditions for gathering 

service. This irrelevance is 

demonstrated by the fact that WFS, as 

a deregulated monopolist, could have 

(and likely would have) undertaken the 

same course of conduct had Transco 

been owned by someone else entirely. 

The fact that WFS had an affiliate 

relationship with Transco neither 

enhanced nor detracted from its ability 

to charge high rates or impose onerous 

conditions.’’ 78

56. When the Commission determined 

in Arkla that it lacks jurisdiction over 

non-natural gas companies performing 

gathering service including affiliates of 

pipelines, the Commission recognized 

that many customers of such gatherers 

are ‘‘captive * * * i.e., there is no 

competition for gathering services.’’ 79

The Commission nevertheless held that 

the NGA only authorizes it to regulate 

gathering performed by natural gas 

companies in connection with 

jurisdictional services. Therefore, the 

Commission stated that ‘‘the absence of 

competition by itself is not sufficient to 

confer upon the Commission 

jurisdiction to regulate gathering by 

non-pipelines.’’ 80 It follows that a 

gathering affiliate’s exercise of market 

power solely to charge high gathering 

prices does not violate the NGA’s 

statutory purpose. 

57. Producer commenters generally 

recognize that, in order to assert 

jurisdiction over an affiliated gatherer, 

the Commission must find that the 

gatherer has engaged in conduct that 

frustrates the statutory purpose of the 

NGA. For example, Shell Offshore 

proposes that the Commission modify 

the Arkla test ‘‘to provide that the 

Commission may assert jurisdiction 

over the gathering services on an 

affiliate of an interstate pipeline 

whenever the affiliate abuses its market 

power and the abuses frustrate the 

effective regulation of the pipeline as a 

consequence of any of the factors 

underlying the ‘in connection with’

relationship between the interstate 

transportation service and the gathering 

services.’’ 81 The producers argue that 

any abuse of market power by an 

affiliated gatherer, including simply 

charging excessive rates frustrates our 

regulation of the pipeline. That is 

because, as Shell Offshore argues, those 

excessive gathering rates ‘‘effectively 

exact monopolistic rents * * * over the 

entire combined service [of both the 

gatherer and the pipeline] nominally 

applying them solely to the gathering 

component.’’ 82

58. In order to find a frustration of 

statutory purpose in the manner 

suggested by the producer commenters, 

the Commission would have to treat a 

gathering affiliate’s charges in excess of 

a reasonable gathering rate as being 

additional charges for the pipeline 

affiliate’s jurisdictional transportation 

service, rather than additional charges 

for the gathering affiliate’s own service. 

However, this would effectively nullify 

the Commission’s holding in Arkla, 

affirmed by the D.C. Circuit in Conoco, 

that the Commission lacks jurisdiction 

to regulate the rates charged by a 

gathering affiliate that performs only a 

gathering service. That is because 

whenever the gathering affiliate charged 

more than we determined was a 

reasonable rate for gathering service, we 

would treat the excess charge as a 

charge for jurisdictional transportation 

service and disallow it. This would have 

essentially the same effect as our 

directly regulating the rates charged for 

gathering by all affiliated gatherers. 

59. Above, we have held that 

Congress reserved to the states 

jurisdiction to regulate gathering within 

their boundaries (i.e., onshore and in 

state waters) by non-natural gas 

companies, including affiliates of 

natural gas companies. Therefore, it is 

consistent with the statutory purpose of 

the NGA to allow the states to address 

any assertions that a non-natural gas 

company, whether or not affiliated with 

a pipeline, has charged excessive rates 

for gathering service within their 

boundaries. Similarly, we have held that 

Congress gave us no greater NGA 

authority with respect to OCS gathering, 

than over gathering onshore and in state 

waters, and has only provided for 

regulation of OCS gathering by nonnatural gas companies under the 

OCSLA. The court has interpreted the 

OCSLA as giving the Department of the 

Interior, and not this Commission, the 

authority to enforce the nondiscrimination and other requirements 

of the OCSLA. Therefore, we find it 

consistent with the purposes of the NGA 

and the OCSLA that a remedy, if any, 

for excess charges by non-natural gas 

companies for OCS gathering be 

provided by the Department of Interior, 

not us. 

60. Finally, we emphasize that, if an 

interstate pipeline itself engages in anticompetitive conduct that favors its 

gathering affiliate, the Commission has 


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83Colorado Interstate Gas Co., 324 U.S. 581, 603 

(1945). 

84Williams Gas Processing, 373 F.3d at 1343. 

85Question 8 asked, ‘‘Should a showing of 

‘concerted action’ by the gathering affiliate and the 

pipeline be required, or should it be sufficient for 

the gathering affiliate alone to have engaged in 

anticompetitive or otherwise objectionable behavior 

to trigger the Commission’s reassertion of 

jurisdiction?’’ Question 9 asked, ‘‘What kind of 

activities would constitute ‘concerted action’

between the gathering affiliate and its affiliated 

pipeline for purposes of circumventing the 

Commission’s effective regulation of the pipeline?’’

86Transco, 998 F.2d at 1321 (quoting Capital Tel. 

Co. v. United States, 449 F.2d 846, 855 (5th Cir. 

1971)). 

87Anderson v. Abbott, 321 U.S. 349 (1944); 

Kavanaugh v. Ford Motor Co., 353 F.2d 710 (7th 

Cir. 1965). 

full authority under the NGA to provide 

a remedy, without the need to assert 

jurisdiction over the affiliate. For 

example, if a pipeline seeks to subsidize 

its gathering affiliate by including costs 

properly allocated to the gathering 

affiliate in its interstate transportation 

rates, the Commission could order the 

removal of those costs.83 Similarly, as 

described above, the Commission has 

required pipelines spinning down 

gathering service to an affiliate to 

include in their tariffs provisions stating 

that the pipeline (1) will provide 

nondiscriminatory access to all sources 

of supply, (2) will not give shippers of 

its gathering affiliate undue preferences 

over shippers of non affiliated gatherers, 

and (3) will not condition or tie its 

agreement to provide transportation 

service to an agreement by the producer, 

customer, end-user or shipper relating 

to any service in which its gathering 

affiliate is involved. No pipeline has 

questioned our authority to impose 

these requirements. 

61. Thus, it is only when the 

gathering affiliate engages in anticompetitive conduct benefiting the 

pipeline, that the Commission must 

assert jurisdiction over the affiliate’s 

activities in order to provide a remedy. 

In this regard, we note that in Arkla one 

of the examples we gave of activity that 

could justify a reassertion of jurisdiction 

was: ‘‘the pipeline’s giving 

transportation discounts only to those 

utilizing the affiliate’s gathering 

service.’’ We clarify that there would be 

no need to assert jurisdiction over the 

affiliate in this situation, since the 

Commission has authority under the 

NGA to remedy any undue 

discrimination in the pipeline’s offering 

of discounts to its customers, without 

regard to its jurisdiction with respect to 

other companies who may benefit from 

those discounts. The appropriate 

example of activity that could justify 

exerting jurisdiction over the gathering 

affiliate in this context would be the 

reverse situation: where, as described 

above, the gathering affiliate gives 

gathering discounts only to those 

entering into particular types of 

contracts for the pipeline’s 

transportation service that are beneficial 

to the pipeline. Similarly, any improper 

shifting of costs between a natural gas 

company and its gathering affiliate 

could be remedied in a proceeding to set 

the former’s rates. 

3. Whether Concerted Action Is 

Necessary 

62. In Arkla, the Commission stated 

that it would reassert jurisdiction ‘‘if an 

affiliated gatherer acts in concert with 

its pipeline affiliate in connection with 

the transportation of gas in interstate 

commerce and in a manner that 

frustrates the Commission’s effective 

regulation of the interstate pipeline.’’

This language has been interpreted as 

creating a two-pronged test under which 

the Commission must make separate 

findings that: (1) the jurisdictional 

pipeline and its gathering affiliate have 

engaged in ‘‘concerted action’’ and (2) 

the concerted action frustrates the 

Commission’s ability to regulate the 

pipeline.84 In the NOI, the Commission 

requested the parties’ views on the need 

for the ‘‘concerted action’’ prong of the 

Arkla test.85

63. After evaluating the parties’

comments on this issue, the 

Commission concludes that, in 

determining whether to assert 

jurisdiction over the activities of a 

gathering affiliate, the focus should be 

on whether the gathering affiliate has 

engaged in the type of conduct 

described in the previous section as 

justifying such an assertion of 

jurisdiction. While a finding that the 

pipeline also participated in the 

conduct may buttress the need for an 

assertion of jurisdiction over the 

activities of the gathering affiliate, we 

find, for the reasons discussed below, 

that a finding of such ‘‘concerted 

action’’ is not a necessary prerequisite to 

an assertion of jurisdiction. 

64. The D.C. Circuit has held that 

‘‘[w]here the statutory purpose could be 

easily frustrated through the use of 

separate corporate entities, the 

Commission is entitled to look through 

the corporate form and treat the separate 

entities as one and the same for 

purposes of regulation.’’ 86 Thus, the 

fundamental test for asserting 

jurisdiction over the activities of an 

affiliate is whether such jurisdiction is 

necessary to avoid frustration of the 

statutory purpose. When this test is met, 

the Commission may look through the 

corporate form, even though the 

separate corporations were formed in 

good faith, and there has been no 

showing that the corporate form was 

adopted for the purpose of evading the 

statute.87

65. In the preceding section, the 

Commission has explained that, in order 

to justify an assertion of jurisdiction 

over the activities an affiliated gatherer, 

there must be a showing that the 

gatherer has engaged in conduct that 

frustrates the purpose of the NGA. This 

requires a showing that the gathering 

affiliate has abused its market power 

over gathering in order to benefit the 

pipeline in the pipeline’s performance 

of jurisdictional transportation or sales 

service in a manner contrary to the 

Commission’s policies concerning 

jurisdictional services. We believe that a 

showing of such conduct by the 

gathering affiliate is sufficient to show 

that Commission jurisdiction over the 

affiliate is necessary to avoid frustration 

of the NGA’s purpose, regardless of 

whether there is also evidence of 

‘‘concerted action’’ in the form of 

pipeline participation in the affiliate’s 

conduct. 

66. This conclusion may be illustrated 

by the examples the Commission gave 

in the previous section of conduct that 

would frustrate the purpose of the NGA. 

In those examples, the affiliated gatherer 

refuses to provide gathering service or 

charges higher rates, unless the shipper 

also enters into long-term or long-haul 

firm transportation contracts with the 

affiliated pipeline. Commission policy 

prohibits pipelines from demanding that 

their customers enter into such 

contracts. The ‘‘concerted action’’ prong 

of the existing Arkla test would prevent 

the Commission from asserting 

jurisdiction in this situation, unless 

there was evidence not only that the 

gathering affiliate had engaged in this 

activity, but also that the pipeline had 

participated in the activity sufficiently 

to justify a finding of ‘‘concerted 

action.’’ This would suggest that the 

Commission would have to find that the 

pipeline had requested the gathering 

affiliate to engage in the activity, or at 

least that the two affiliates had in some 

manner discussed or jointly planned the 

gathering affiliate’s actions. 

67. However, as discussed in the 

previous section, the gathering affiliate’s 

actions would not provide any direct 

benefit to the gathering affiliate’s own 

business. Rather, their sole purpose 

would appear to be to benefit the 

pipeline by enabling the pipeline to 


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88 373 F.3d at 1343. 89Question 3 asked, ‘‘What factors are relevant in 

determining whether a gathering affiliate is separate 

from its pipeline affiliate and independent from its 

pipeline affiliate in performing its gathering 

functions?’’ Question 4 asked, ‘‘Must a gathering 

affiliate be physically separate and separately 

staffed in order to be independent of its pipeline 

affiliate?’’

90Enbridge comments at 24–25; Enterprise 

comments at 13. 

91See, e.g., Producer Coalition comments at 2. 

92 Indicated Shippers comments at 32; Shell 

Offshore comments at 57. 

93Standards of Conduct for Transmission 

Providers, Order No. 2004, 68 FR 69,134 (Dec. 11, 

2003), FERC Stats. & Regs., Regulations Preambles 

¶ 31,155 (2003), order on reh’g, Order No. 2004–A, 

69 FR 23,562 (Apr. 29, 2004), FERC Stats. & Regs., 

Regulations Preambles ¶ 31,161 (2004), order on 

reh’g, Order No. 2004–B, 69 FR 48,371 (Aug. 10, 

2004), FERC Stats. & Regs., Regulations Preambles 

¶ 31,118 (2004), order on reh’g, Order No. 2004–C, 

70 FR 284 (Jan. 4, 2005), FERC Stats. & Regs., 

Regulations Preambles ¶ 31,325 (2004), order on 

reh’g, Order No. 2004–D, 110 FERC ¶ 61,320 (2005), 

vacated and remanded as it applies to natural gas 

pipelines, National Fuel Gas Supply Corporation v. 

FERC, 468 F.3d 831 (D.C. Cir. 2006). 

94 18 CFR 358.4 (2006). 

95See 18 CFR 358.3(d)(1), (2) and (6)(vi) (2006). 

96 18 CFR 358.4(d)(6)(vi) (2006). 

97Standards of Conduct for Transmission 

Providers, Order No. 690, 72 FR 2427 (Jan. 19, 

2007), III FERC Stats. & Regs. ¶ 31,237 (2007). 

98See revised 18 CFR 358.1(e) (to be codified). 

99Standards of Conduct for Transmission 

Providers, Notice of Proposed Rulemaking, 72 FR 

3,958 (Jan. 29, 2007), IV FERC Stats. & Regs. 

¶ 32,611 (2007). 

obtain more profitable contracts for its 

jurisdictional transportation service. If a 

gathering affiliate realizes on its own, 

without any consultation with the 

pipeline, that it can benefit the overall 

corporate family by requiring its 

customers to enter into contracts with 

the pipeline which the pipeline could 

not legally require, the purposes of the 

NGA have been frustrated just as much 

as if the two entities jointly planned the 

gathering affiliate’s actions. Therefore, 

while every case must be decided based 

on the actual facts of that case, we will 

not exclude the possibility that 

situations could arise in which the 

Commission may assert jurisdiction 

over a gathering affiliate without a 

finding of ‘‘concerted action.’’

68. By the same token, consistent with 

the court’s decision in Williams Gas 

Processing,88 a finding that the 

gathering affiliate and the pipeline have 

engaged in some form of ‘‘concerted 

action’’ would not, by itself, justify 

asserting jurisdiction over the activities 

of the gathering affiliate. There must be 

a finding of activity by the gathering 

affiliate that frustrates the Commission’s 

ability to regulate the pipeline’s 

jurisdictional service. Thus, concerted 

action between the two affiliates on 

matters that do not frustrate the 

purposes of the NGA, such as increasing 

the gathering affiliate’s rates simply to 

make its gathering business more 

profitable, would not justify an assertion 

of jurisdiction. 

4. Separate Operating Personnel 

69. In the NOI, the Commission 

requested the parties’ views on the 

extent to which a gathering affiliate 

must be separately staffed and otherwise 

independent of its pipeline affiliate in 

order to be considered exempt from the 

Commission’s NGA jurisdiction.89

Several gathering providers and 

pipelines assert that a requirement of 

separate staffing would increase the 

costs of providing gathering services.90

Enbridge states that its OCS gathering 

and pipeline facilities were developed 

as coordinated projects, and must be 

operated in close coordination in order 

to deliver natural gas that meets the gas 

quality provisions of the pipeline and 

downstream markets. Enbridge states 

that it currently continues to realize 

economies of scale by using a single 

group of contract administrators and 

operations, scheduling, and gas control 

staff to operate its OCS pipelines and 

affiliated gatherers. 

70. Some producers assert that the 

Commission should require that the 

gathering affiliate be separately 

staffed.91 However, other producers also 

state that the relative degree of 

independence of the gathering affiliate 

from the pipeline should not be the 

issue when considering whether to 

assert jurisdiction over a gathering 

affiliate because of its abuse of market 

power; rather the focus should be 

whether there has been market power 

abuse, regardless of the extent to which 

the gathering affiliate operates 

independently.92

71. In Order No. 2004,93 the 

Commission amended its standards of 

conduct in 18 CFR part 358 in order to 

apply them not only to marketing 

affiliates, but also to certain other 

‘‘energy affiliates.’’ Order No. 2004 

generally required natural gas pipeline 

transmission providers and their energy 

affiliates to function independently.94

Order No. 2004 defined ‘‘energy 

affiliates’’ to include affiliates which are 

involved in transmission transactions in 

U.S. energy and transmission markets or 

which manage or control transmission 

capacity of the affiliated pipeline.95

However, the Commission excluded 

gathering affiliates from the definition of 

energy affiliate if the gatherers only 

made incidental purchases or sales of de 

minimus volumes of natural gas to 

remain in balance under applicable 

pipeline tariff requirements and 

otherwise did not engage in energy 

affiliate activities such as managing the 

affiliated pipeline’s transmission 

capacity.96

72. However, in National Fuel Gas 

Supply Corp. v. FERC, 468 F.3d 831 

(D.C. Cir. 2006), the D.C. Circuit vacated 

Order No. 2004 as applied to natural gas 

pipelines and remanded the order to the 

Commission. The court stated that 

vertical integration between a pipeline 

and its affiliates should create 

efficiencies which benefit consumers, 

and therefore the Commission cannot 

impede such vertical integration 

without adequate justification. The 

court concluded that Order No. 2004 

had failed to provide such a justification 

with respect to its application of the 

Standards of Conduct to the relationship 

between natural gas pipeline 

transmission providers and their nonmarketing affiliates, i.e., energy 

affiliates. 

73. In response to the court’s decision, 

the Commission issued an interim rule 

on January 9, 2007,97 which among 

other things, provides that the standards 

of conduct will not govern the 

relationship between natural gas 

pipeline transmission providers and 

their energy affiliates.98 Subsequently, 

on January 18, 2007, the Commission 

issued a Notice of Proposed 

Rulemaking, proposing to make this 

interim rule permanent.99 Consistent 

with the interim rule, the Commission 

will not require that a gathering affiliate 

function independently of its natural 

gas pipeline affiliate in order to be 

considered exempt from the 

Commission’s NGA jurisdiction. Any 

assertion of jurisdiction over the 

gathering affiliate will turn on whether 

the affiliate has engaged in the types of 

conduct described above as justifying 

such an assertion of jurisdiction, 

without regard to the relative 

independence of its employees. This 

finding is, of course, subject to the 

outcome of the Notice of Proposed 

Rulemaking concerning the 

Commission’s Standards of Conduct. 

B. The Primary Function Test 

74. Although the NOI did not request 

comments on the Commission’s primary 

function test, which is applied to 

determine whether facilities perform 

primarily a gathering or a transmission 

function, or on the extent to which the 

Commission may utilize its 

abandonment authority under NGA 

section 7(b) to find that reclassifying 

facilities from transmission to gathering 

is not consistent with the public interest 

based on economic grounds, some 

producer commenters offered their 


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100See Notice of Public Conference, Application 

of the Primary Function Test for Gathering on the 

Outer Continental Shelf (Aug. 14, 2003) (NOI). This 

notice provides a comprehensive history of the 

development of the Commission’s primary function 

test, particularly as it applied to offshore facilities. 

See also, ExxonMobil Gas Marketing Co. v. FERC, 

297 F.3d 1071 (D.C. Cir. 2002), cert. denied, 540 

U.S. 937 (2003) (ExxonMobil) (providing a thorough 

history of the primary function test). 

101See Sea Robin Pipeline Co., 87 FERC ¶ 61,384 

(1999) (Sea Robin), order on reh’g, 92 FERC 

¶ 61,072 (2000), aff’d, ExxonMobil, 297 F.3d 1071 

(D.C. Cir. 2002) (the Commission reformulated its 

primary function test to include a central point of 

aggregation prong for the primary function test 

when applied offshore, which was intended to be 

an analogue for the central-point-in-the field prong 

of the test which is applicable onshore, but is not 

dispositive offshore). 

102Citing, ExxonMobil, 297 F.3d 1071 (D.C. Cir. 

2002) and Williams Gas Processing—Gulf Coast Co. 

v. FERC, 331 F.3d 1011 (D.C. Cir. 2003). 

103 372 U.S. 84 (1963). 

104 Id. at 90. 

105See NOI at 4. 

106 Id. 

107See, e.g., ExxonMobil, 297 F.3d at 1087; Sea 

Robin Pipeline Co. v. FERC, 127 F.3d 365, 370 (5th 

Cir. 1997); Conoco, 90 F.3d at 543. 

views on these subjects. We will briefly 

respond to these comments. 

75. Regarding the primary function 

test, the commenters note that they 

expressed the same views in 

conjunction with the September 23, 

2003 public conference in Docket No. 

AD03–13–000, convened to address 

whether the primary function test 

should be reformulated in light of 

perceived uncertainty in the application 

of the test to offshore facilities.100 They 

note that although the Commission 

compiled a substantial record in that 

proceeding, it has not taken any further 

action, and urge that the Commission 

use the instant proceeding to address 

this issue. 

76. The commenters contend that the 

Commission should redefine gathering 

so that fewer facilities will qualify for 

the gathering exemption under the 

NGA. Although most commenters 

conclude that the Commission should 

continue to employ a physical-factor 

test to determine the primary function 

of facilities, they urge the Commission 

to give more emphasis to non-physical 

factors. Such factors would include the 

purpose, location, operation and 

ownership of a facility, as well as 

whether the jurisdictional 

determination is consistent with the 

objectives of the NGA and with the 

changing technical and geographic 

nature of offshore exploration and 

production. For example, one 

commenter suggests that an assessment 

of operational function would reveal 

whether the subject pipeline facility 

will continue to provide essentially the 

same service of moving gas from the 

wellhead or platform to the same 

downstream pipeline after it is 

reclassified. If so, a change in the 

jurisdictional classification would not 

be warranted. 

77. Other commenters criticize what 

they perceive as the Commission’s 

emphasis on the central point of 

aggregation prong of its physical test, 

arguing that the Commission should 

consider all factors in an individual 

case.101 Another commenter suggests 

that when a pipeline seeks to reclassify 

a facility from transmission to gathering, 

there should be a presumption that the 

facility will continue to perform a 

transmission function unless the 

pipeline can demonstrate that the 

criteria of gathering are satisfied and 

that a change in jurisdictional status 

will not be economically detrimental to 

existing shippers on the facility who 

committed to service with the 

expectation that they could rely on 

Commission oversight. Under this view, 

the commenter opines, the Commission 

would not have to rely on its 

abandonment authority under section 

7(b) of the NGA to find that a 

reclassification of a facility is 

inconsistent with the public interest, 

because the effect of the requested 

reclassification on shippers would be 

part of the test to determine jurisdiction. 

The commenters also point out that the 

courts have found that the Commission 

has great latitude or discretion when it 

determines what constitutes gathering 

and what constitutes transmission.102

78. Another commenter offers an 

alternative to the primary function test 

which it calls the ‘‘platform test.’’ This 

approach would involve redefining 

‘‘gathering’’ as the preparation of natural 

gas for the first stages of distribution, 

consistent with the Supreme Court’s 

view in Northern Natural Gas Co. v. 

State Corporate Commission,103 that 

gathering is ‘‘narrowly confined to the 

physical acts of drawing the gas from 

the earth and preparing it for the first 

stages of distribution.’’ 104 This 

commenter suggests that for offshore 

production, gathering would cease at, or 

just downstream of, the platform where 

the natural gas is first treated or 

prepared and made ready for delivery 

into a pipeline for transportation to 

shore. 

79. In the NOI for the conference in 

Docket No. AD03–13–000, we 

acknowledged that 

[a]s with onshore facilities, the use of the 

primary function test, as modified by the 

policy statement for deepwater facilities, 

seems to be workable, and there has been 

relatively little controversy concerning its 

application in recent years. Efforts to apply 

the primary function test to offshore facilities 

in the shallow OCS, however, have been 

contentious.105

80. We solicited responses to specific 

questions from interested parties as well 

as any ideas for a new or further 

modified primary function test. We 

stated: 

[a] new test should ensure that similar 

facilities are subject to similar regulatory 

treatment. It should also provide incentives 

for investment in production, gathering, and 

transportation infrastructure offshore, 

without subjecting producers to the 

unregulated market power of third party 

transporters. Persons who appear at the 

conference should be prepared to indicate 

how the Commission’s definition of gathering 

can be changed to achieve these goals.106

81. Admittedly, that is a high 

standard for any new test to meet. 

Nevertheless, we see no point in 

disturbing the current regulatory regime 

unless doing so would result in a 

significant decrease in any inconsistent 

or uncertain results. In other words, 

replacing one test, which can be 

difficult to apply in many instances, 

with another test which would be 

equally, or perhaps more difficult to 

apply, would not achieve the desired 

goals that prompted us to issue the NOI 

in the first place. 

82. We have not been persuaded by 

the comments and proposals submitted 

in Docket No. AD03–13–000, or by the 

comments proffered in this proceeding, 

that any new test would meet the abovedescribed goals better than the current 

primary function test does. Nor are we 

convinced that we should depart from 

our practice of making jurisdictional 

findings on a case-by-case basis and 

relying, instead, on a more generic or 

‘‘bright line’’ test, as some commenters 

propose. Moreover, as noted above, 

generally the current primary function 

test as applied to facilities located 

onshore and in deep water offshore has 

satisfied most interested parties. Thus, it 

may well be that similar results will be 

achieved as the Commission continues 

to make jurisdictional determinations 

for facilities located in shallow water by 

applying the current test on a case-bycase basis, making minor adjustments to 

the test or emphasizing different factors 

as circumstances evolve. Despite the 

fact that this approach may be more 

difficult and may sometimes produce 

uneven results, it is consistent with the 

guidance given to the Commission by 

the several courts that have reviewed 

the Commission’s jurisdictional 

determinations under NGA section 

1(b).107

83. Further, some commenters offer 

suggestions for a new approach to the 


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10526 Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Notices 

108ExxonMobil, 297 F.3d at 1085. 

109 ‘‘The Fifth Circuit concluded that FERC had 

’reverted to its single factor, bright-line approach 

that it had previously rejected as unworkable for 

offshore pipelines,’ ’’ (ExxonMobil, 297 F.3d at 

1079, quoting Sea Robin Pipeline Co., 127 F.3d at 

370 (citations omitted)). 

110See ExxonMobil, 297 F.3d at 1088 (citing Sea 

Robin Pipeline Co., 127 F.3d at 371). 

111See Id. at 1080 (‘‘Congress did not intend to 

extend the FERC’s jurisdiction to all natural gas 

pipelines; * * * it demands the drawing of 

jurisdictional lines, even when the end of gathering 

is not easily located.’’ (citing Sea Robin Pipeline 

Co., 127 F.3d 365, 371 (5th Cir. 1997))). 

112See, e.g., United Gas Pipeline Co. v. McCombs, 

442 U.S. 529, 538–539 (1978). 

113See ExxonMobil, 297 F.3d at 1088. 

114The 5th Circuit held in Pacific Gas & Electric 

Co. v. FERC, 106 F.3d 1190 (5th Cir. 1997) that the 

Commission has discretion under section 7(b) to 

examine, to some extent, whether it is in the public 

interest for a natural gas pipeline to abandon 

facilities that have been classified as gathering. In 

contrast, the D.C. Circuit in Williams Gas 

Processing-Gulf Coast Co., L.P. v. FERC, 331 F.3d 

1011 (D.C. Cir. 2003), held that once the 

Commission determines that a facility is not 

dedicated to a jurisdictional function, it does not 

have authority under section 7(b) to determine 

whether a reclassification or transfer of the facilities 

is in the public interest. 

115See, e.g., Sea Robin Pipeline Co. v. FERC, 127 

F.3d 365, 370 (5th Cir. 1997) and Lomak Petroleum, 

Inc. v. FERC, 206 F.3d 1193 (D.C. Cir. 2000). 

primary function test that would run 

afoul of the courts’ various 

admonishments regarding the 

Commission’s responsibilities in making 

jurisdictional determinations. In 

addition, aspects of the Commission’s 

current test which some commenters 

criticize have been upheld as reasonable 

by the courts. For example, with regard 

to the Commission’s reliance on the 

central point of aggregation as a place 

where gathering ended and 

transportation began on some offshore 

facilities, the court in ExxonMobil stated 

that 

the central aggregation test is not a new, 

bright-line test, but rather is an amalgamation 

of physical factors, and in any event, is 

wholly consistent with past FERC precedent. 

It has long been the Commission’s view, 

upheld by this Court, among others, that 

when gas from separate wells is collected by 

several lines which converge at a single 

location in the producing field for delivery 

into a single line for transportation, the 

separate lateral lines behind the central point 

are classified as non-jurisdictional gathering 

facilities.108

84. Obviously, where there is no such 

point on facilities, this prong of the 

primary function test would not apply, 

and other factors of the test would 

dictate the jurisdictional outcome. Thus, 

the ‘‘platform test’’ suggestion would 

establish a bright line test that would 

limit our ability to look at the other 

factors that may be relevant.109

85. Further, the courts have stated 

that the Commission may not make the 

jurisdictional distinctions required 

under NGA section 1(b) simply to assure 

a desirable policy result.110 Thus we 

cannot adopt the commenter’s notion 

that we can simply create a test to 

distinguish gathering from jurisdictional 

transmission that is geared to the 

preordained result that more offshore 

pipelines will be found to perform a 

jurisdictional transportation rather than 

a gathering one. The courts have also 

held that as long as the NGA 

contemplates a distinction between 

gathering and jurisdictional 

transportation, the Commission is 

required to make those distinctions even 

when doing so is difficult.111 In other 

words, we may not devise a newly 

conceived test just because it is easier to 

apply. For all of these reasons, at this 

time the Commission is not adopting a 

new primary function test applicable to 

offshore pipelines and will continue to 

apply its current test in making 

jurisdictional determinations on a caseby-case basis. 

86. Producer commenters also 

contend that the Commission should 

modify the way it considers whether it 

is in the public interest under NGA 

section 7(b) to permit a natural gas 

pipeline to reclassify or abandon 

certificated facilities or services, 

regardless of whether they could be 

considered to be primarily gathering or 

production.112 Commenters argue that 

because a natural gas company receives 

benefits by obtaining a certificate, the 

company should not be able to avoid 

corresponding obligations by removing 

facilities or services from the 

Commission’s jurisdiction. They assert 

that the D.C. Circuit erroneously held 

that section 7(b) does not apply to a 

pipeline’s reclassification of certificated 

facilities or services to gathering or 

production.113

87. The commenters suggest that 

when the Commission has permitted 

such reclassifications or transfers, it has 

only paid lip service to the public 

interest standard that must be met 

before services or facilities may be 

abandoned under NGA section 7(b). 

They propose that the Commission 

carefully consider and require 

mitigation of any potential for abuse of 

market power when it reviews a 

proposed abandonment of certificated 

facilities or services. Among the factors 

the Commission should consider are the 

impact on existing customers, the 

market power of the company that is 

acquiring the facilities or services, the 

commercial considerations underlying 

the contracts entered into by the 

interstate pipeline and its customers, 

and the ongoing useful life of the 

facility. They urge that, if it is found 

that an acquiring company will be able 

to exercise market power or will provide 

service over facilities transferred or sold 

by a natural gas company in a spindown or spin-off, the acquiring 

company would be engaged in interstate 

transportation and, therefore, would fall 

within the Commission’s jurisdiction. 

As noted, some commenters also 

proposed changing the test to determine 

whether facilities perform a gathering or 

production function by introducing 

economic or historical factors. 

88. As some commenters assert, it is 

true that the U.S. Court of Appeals for 

the 5th Circuit and the U.S. Court of 

Appeals for the District of Columbia 

Circuit hold different views regarding 

the extent to which the NGA’s 

abandonment authority under section 

7(b) should be applied to certificated 

facilities and services that a natural gas 

company seeks to reclassify as nonjurisdictional gathering facilities and 

continue to operate.114 In any event, 

those who suggest that the Commission 

should first determine, based on market 

power issues and other public interest 

concerns, whether it is consistent with 

the public convenience or necessity to 

permit a pipeline to reclassify or 

transfer facilities or services before the 

Commission actually determines their 

proper function are putting the 

proverbial cart before the horse. 

89. When a jurisdictional natural gas 

company comes before the Commission 

to request that the function of 

certificated facilities it owns and 

operates be deemed non-jurisdictional 

gathering or production, the starting 

point for determining whether the 

subject facilities are performing 

primarily a gathering or production 

function under NGA section 1(b) is to 

consider the physical characteristics of 

the subject facilities. While the courts 

have sanctioned giving some weight to 

non-physical factors when applying the 

primary function test, non-physical 

factors are secondary, and generally 

only come into play if application of the 

physical factors results in a close call.115

The market power, economic, and 

historical considerations that some 

commenters advocate are not physical 

tests, and therefore cannot be given 

substantial weight. 

The Commission orders: 

(A) Commission policy concerning 

the assertion of jurisdiction over the 

gathering services of natural gas 

company affiliates is clarified as 

discussed above. 

(B) Docket No. PL05–10–000 is 

terminated. 


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Federal Register / Vol. 72, No. 45 / Thursday, March 8, 2007 / Notices 10527 

By the commission. 

Magalie R. Salas, 

Secretary. 

[FR Doc. E7–4074 Filed 3–7–07; 8:45 am] 

BILLING CODE 6717–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

[FRL–8285–6] 

EPA Science Advisory Board (SAB) 

Staff Office Request for Nominations 

for Clean Air Scientific Advisory 

Committee (CASAC) Particular Matter 

(PM Review Panel) 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Notice. 

SUMMARY: The U.S. Environmental 

Protection Agency (EPA or Agency) 

Science Advisory Board (SAB) Staff 

Office is announcing the formation of 

the Clean Air Scientific Advisory 

Committee (CASAC) review panel for 

Particulate Matter (PM). The SAB Staff 

Office is soliciting public nominations 

for this Panel. 

DATES: New nominations should be 

submitted by March 29, 2007. 

FOR FURTHER INFORMATION CONTACT: Any 

member of the public wishing further 

information regarding this Request for 

Nominations may contact Mr. Fred 

Butterfield, Designated Federal Officer 

(DFO), EPA Science Advisory Board 

(1400F), U.S. Environmental Protection 

Agency, 1200 Pennsylvania Avenue, 

NW., Washington, DC 20460; via 

telephone/voice mail: (202) 343–9994; 

fax: (202) 233–0643; or e-mail at: 

butterfield.fred@epa.gov. General 

information concerning the CASAC or 

the EPA Science Advisory Board can be 

found on the EPA Web site at: http:// 

www.epa.gov/sab. 

SUPPLEMENTARY INFORMATION: 

Background: The Clean Air Scientific 

Advisory Committee (CASAC) was 

established under section 109(d)(2) of 

the Clean Air Act (CAA or Act) (42 

U.S.C. 7409) as an independent 

scientific advisory committee. CASAC 

provides advice, information and 

recommendations on the scientific and 

technical aspects of air quality criteria 

and national ambient air quality 

standards (NAAQS) under sections 108 

and 109 of the Act. The CASAC is a 

Federal advisory committee chartered 

under the Federal Advisory Committee 

Act (FACA), as amended, 5 U.S.C., App. 

Section 109(d)(1) of the Clean Air Act 

(CAA) requires that EPA carry out a 

periodic review and revision, as 

appropriate, of the air quality criteria 

and the NAAQS for the six ‘‘criteria’’ air 

pollutants, including PM. This Federal 

Register notice solicitation is seeking 

nominations for additional, subjectmatter experts to augment the chartered 

CASAC. This CASAC Panel will review 

EPA’s technical and policy assessments 

that form the basis for updating the 

NAAQS for PM. The CASAC PM 

Review Panel will comply with the 

provisions of FACA and all appropriate 

SAB Staff Office procedural policies. 

Nominator’s Assessment of Expertise. 

The SAB Staff Office requests nominees 

for the CASAC PM Review Panel who 

are nationally-recognized experts in one 

or more of the following disciplines: 

(a) Atmospheric Science. Expertise in 

evaluating the physical/chemical 

properties of particulate matter 

including transport of PM on urban to 

global scales, transformation of primary 

particles in the atmosphere to secondary 

particles, and movement of PM between 

media through deposition and other 

such mechanisms. Expertise in 

evaluating natural and anthropogenic 

sources and emissions of PM and 

resulting ambient levels, pertinent 

monitoring or measurement methods for 

PM, and spatial and temporal trends in 

PM atmospheric concentrations. 

(b) Human Exposure and Risk 

Assessment/Modeling. Expertise in 

measuring general population exposure 

to PM and/or in modeling exposure to 

PM emitted from ambient and indoor 

sources. Expertise in human health risk 

analysis modeling for PM related to 

respiratory, cardiovascular, and other 

non-cancer health effects as well as 

cancer. Expertise in characterizing 

uncertainty in exposure and risk 

analyses. 

(c) Dosimetry. Expertise in evaluating 

the dosimetry of animal and human 

subjects, including identifying factors 

associated with differential patterns of 

inhalation and/or deposition/uptake in 

various respiratory tract regions that 

may contribute to differential 

susceptibility of sensitive 

subpopulations and animal-to-human 

dosimetry extrapolations. 

(d) Toxicology. Expertise in 

evaluating and interpreting 

experimental laboratory animal studies, 

including animal models simulating 

sensitive subpopulations (e.g., children, 

older adults, individuals with 

preexisting respiratory or cardiac 

disease), and in vitro studies of the 

effects of PM on pulmonary and 

extrapulmonary (e.g., cardiovascular, 

immunological) endpoints and cancer. 

(e) Controlled Human Exposure. 

Expertise in evaluating and interpreting 

controlled human exposure studies of 

the effects of PM on the general 

population and sensitive 

subpopulations (e.g., children, older 

adults, individuals with preexisting 

respiratory or cardiac disease). Experts 

would include physicians with 

experience in the clinical treatment of 

cardiopulmonary diseases, including 

asthma, chronic obstructive pulmonary 

disease (COPD), and diabetes. 

(f) Epidemiology and Biostatistics. 

Expertise in evaluating epidemiological 

evidence of the effects of exposures to 

ambient PM and other major air 

pollutants (e.g., ozone, SO2, NO2, carbon 

monoxide) on the general population 

and sensitive subpopulations (e.g., 

children, older adults, individuals with 

preexisting respiratory or cardiac 

disease). Expertise in evaluating a broad 

range of health endpoints, including 

mortality and morbidity effects (e.g., 

respiratory symptoms, lung function 

decrements, asthma medication use, 

physiological changes or biomarkers for 

cardiac changes, cardiopulmonaryrelated emergency department visits, 

cardiopulmonary-related hospital 

admissions, cancer). Expertise in using 

biostatistical models to interpret 

epidemiological evidence. 

(g) Effects on Visibility Impairment. 

Expertise in evaluating and interpreting 

studies of the effects of PM on local 

visibility impairment as well as regional 

haze. Expertise would include 

evaluating visibility trends and 

conditions in Class I, urban, and nonurban areas, studies of economic value 

of improving visual air quality, and 

approaches to assessing public 

perceptions of visibility impairment and 

judgments about the acceptability of 

varying degrees of visibility impairment. 

(h) Ecological Effects. Expertise in 

evaluating the effects of exposure to PM 

on agricultural crops and natural 

ecosystems and their components, both 

flora and fauna, ranging from 

biochemical/sub-cellular effects on 

organisms to increasingly more complex 

levels of ecosystem organization. 

Appropriate expertise disciplines 

include: Aquatic chemistry; aquatic 

ecology/biology; limnology; terrestrial 

ecology; forest ecology; grassland 

ecology; rangeland ecology; terrestrial/ 

aquatic biogeochemistry; terrestrial/ 

aquatic nutrient cycling; and terrestrial/ 

aquatic wildlife biology and soil 

chemistry. 

(i) Other Welfare Effects. Expertise in 

evaluating the effects of PM on other 

public welfare effects, including damage 

to materials, and also the atmospheric 

interactions of PM as related to global 

climate conditions. 

(j) Ecosystem Exposure and Risk 

Assessment/Modeling. Expertise in 

deposition modeling across a range of 


sroberts on PROD1PC70 with NOTICES