Opinion ID: 492011
Heading Depth: 3
Heading Rank: 2

Heading: Natural Gas Policy Act.

Text: 99 In enacting the NGPA Congress endeavored to break down the regulatory barriers between the interstate and intrastate markets. Sections 311 and 602(b)(2) were added to facilitate[ ] development of a national natural gas transportation network without subjecting intrastate pipelines, already regulated by State agencies, to FPC regulation over the entirety of their operations. H.R.Rep. No. 543, 95th Cong., 1st Sess. 45 (1977). See also Public Service Comm'n v. Mid-Louisiana Gas Co., 463 U.S. 319, 342-43, 103 S.Ct. 3024, 3037-38, 77 L.Ed.2d 668 (1983). Thus, Sec. 311(a) permits the Commission to authorize transportation by an interstate pipeline on behalf of an intrastate or LDC and by an intrastate on behalf of an interstate or LDC. 15 U.S.C. Sec. 3371(a) (1982). The Commission has exercised this authority, permitting such transportation as a general matter. See 18 C.F.R., part 284, subparts B and C. It has also exercised the authority provided by Sec. 311(c), 15 U.S.C. Sec. 3371(c) (1982), to prescribe terms and conditions. 5 Order No. 436 would add to these the requirement that any interstate or intrastate pipeline offering such transportation shall do so on a nondiscriminatory basis. 18 C.F.R. Secs. 284.8(b) and 284.9(b). Petitioners challenge these open-access conditions, relying here on express statutory language. Section 602 of the NGPA, captioned Effect on State Laws, provides in subsection (b): 100 (b) Common carriers. 101 No person shall be subject to regulation as a common carrier under any provision of Federal or State law by reason of any transportation-- 102 (1) pursuant to any order under section 3362(c) or section 3363(b), (c), (d), or (i) of this title; or 103 (2) authorized by the Commission under section 3371(a) of this title [section 311(a) of the NGPA]. 104 15 U.S.C. Sec. 3432(b) (1982). 105 Petitioners read this language as stultifying any effort by the Commission to control discrimination where that effort imposes on pipelines a duty--even though it be a conditional one--equivalent to the common carrier's duty to provide nondiscriminatory service. We believe this interpretation is incorrect. 106 It seems to us that Sec. 602(b)(2) was a congressional effort to protect Sec. 311(a) from the consequences of pipeline concern that service thereunder would expose them generally to classification as common carriers, most likely by states, and thus to an unprecedented range of legal burdens. If pipelines shied away from use of Sec. 311(a), its purpose would be defeated. Section 602(b)(2) could protect against that threat by assuaging the pipelines' concern. A duty not to discriminate, imposed by the Commission on the basis of findings that the duty is necessary to assure consumers access to competitively priced gas, is utterly different. The imposition of the duty here facilitates the accomplishment of Congress's purposes. At least it will do so if the gains in enhanced access offset whatever losses may result from the disincentive effect on pipelines. The judgment balancing those consequences is for the Commission to make, and it has made it in favor of imposing the duty. 6 107 Congress had ample reason to fear that the risk of extraneous legal burdens would chill pipeline interest. Take the laws of Texas. Two years before enactment of the NGPA a Texas court ruled that [w]hether the business conducted by a pipe line company is actually that of a common carrier is a question of fact, which would depend on the court's perception of whether the line is available to all producers seeking its services. China-Nome Gas Co. v. Riddle, 541 S.W.2d 905, 908 (Tex.Civ.App.1976). A pipeline's transportation under Sec. 311(a) would expose it to the risk of such fact findings, and thus enmesh it in state regulations. In Texas, for example, such classification would subject it to the jurisdiction of the Railroad Commission, see Op.Atty.Gen. No. M-175 (1967), to certain health requirements, see Tex.Civ.Stat.Ann. art. 4477-1 Secs. 1 & 22 (Vernon 1976 & Supp.1987), and to such duties and liabilities as a court might find the common law to prescribe, see id. arts. 882-884 (Vernon 1964 & Supp.1987). Most notably, a firm declared a common carrier is required under Texas law to carry, for anyone, any goods of the type for which it is suited. Id. Sec. 884. 108 Pipeline fear of such extraneous burdens might well have rendered Sec. 311 a dead letter. Though we have not identified similar federal hazards, we believe that Congress might well have included the reference to federal law out of anxiety that some overlooked federal provision would operate to thwart Sec. 311's purposes. Viewed in this light, Sec. 602 has nothing to do with a Commission decision to impose a duty of nondiscrimination. 109 The structure of Sec. 602 favors this reading over the broader one urged by the petitioners. Section 602 also provides that no one shall be subject to regulation as a common carrier by reason of providing transportation under 15 U.S.C. Secs. 3362(c) or 3363(b), (c), (d), or (i), which involve presidential orders to transport in a natural gas supply emergency. The President's emergency powers are extremely broad, and their exercise could well impose duties quite like those of common carriage, with the President dictating detailed priorities about whom the pipelines should serve. See id. Sec. 3363. If the President determined that imposition of something like common carriage were necessary to meet such an emergency, it is hardly credible that Sec. 602 would stand in the way. By the same token, that section must not flatly bar the Commission from imposing similar conditions on gas transportation under Sec. 311. 110 Congress may conceivably have intended Sec. 602 to bar FERC from conditioning Sec. 311 transportation upon assurances of nondiscrimination. We doubt it. But apart from our independent conclusion that it has no such purpose, we regard FERC's interpretation as reasonable. The reasonableness is underscored by FERC's broad duties to assure consumers access to natural gas at prices such as would prevail in the absence of pipeline market power and its conclusion that under the present circumstances fulfillment of that duty requires such conditioning. Cf. American Trucking Ass'ns, Inc. v. Atchison, T. & S.F. Ry., 387 U.S. 397, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967). We are therefore under Chevron bound to uphold the Commission. 111 A parallel attack on Order No. 436 stresses Sec. 601(a)(2)(A) of the NGPA, 15 U.S.C. Sec. 3431(a)(2)(A) (1982), providing that transportation under Sec. 311 (or under the Presidential emergency powers discussed above) shall not constitute transportation in interstate commerce within the meaning of Sec. 1(b) of the NGA. But for this provision, a transporting intrastate pipeline would fall prey to the Commission's NGA jurisdiction. Several petitioners argue that Order No. 436 imposes burdens substantially identical to those encompassed by NGA jurisdiction. Thus, they argue, application of the open-access condition to intrastate pipelines is an impermissible interference with state regulatory authority. See Brief of the American Gas Ass'n at 42-43; Brief of Intrastate Petitioners & Intervenors at 22-29. 112 Again consideration of the purpose of the provision refutes the attack. Section 601(a)(2)(A) is clearly intended to assure that pipelines' fear of the automatic imposition of the burdens of NGA jurisdiction does not make them so chary of Sec. 311 that it languishes unused. This is altogether different from regulatory burdens imposed by the Commission in the exercise of its discretion under Sec. 311(c) in order to make sure that Sec. 311 transportation operates in harmony with the congressional purpose. Thus, even if it were true that the regulatory impact of Order No. 436 were identical to that of NGA jurisdiction, the decision to condition Sec. 311 on acceptance of those burdens would not violate Sec. 601(a)(2)(A). 113 In fact, of course, the nondiscrimination duties imposed by Order No. 436 by no means encompass all the burdens of NGA jurisdiction. (1) New service under Sec. 311 does not require Sec. 7 certification, and Order No. 436 carries that distinction forward where a pipeline brings itself under the Order: operations under a Sec. 7 blanket transportation certificate entail notice-and-protest procedures more burdensome than the reporting requirements for Sec. 311 transportation. See infra part VII.B. (2) Construction of facilities to be used exclusively for Sec. 311 transportation requires no certification or FERC review at all. See infra part VII.D. (3) Sec. 311 transportation does not subject an intrastate pipeline to the detailed accounting provisions applicable to a natural gas company under the NGA. Compare 18 C.F.R. part 201. (4) Intrastate pipelines may provide firm or interruptible service without providing both, while interstate pipelines providing one type must also provide the other. Compare 18 C.F.R. Secs. 284.8(a)(1) & 284.9(a)(1) with id. Secs. 284.8(a)(2) & 284.9(a)(2). 114