Opinion ID: 3062110
Heading Depth: 2
Heading Rank: 1

Heading: Regulation of natural gas generally

Text: Before addressing the issues presented by these appeals, we mention briefly the manner in which natural gas production and storage is regulated. Both state and federal governments regulate the natural gas industry. See Nw. Cent. Pipeline Corp. v. State Corp. Comm’n, 489 U.S. 493, 506 (1989). Congress, through the Natural Gas Act of 1938 (“NGA”), 15 U.S.C. §§ 717-717z, vests the Federal Energy Regulatory 4 Commission (“FERC”) with exclusive jurisdiction over sales of natural gas in interstate commerce for resale and transportation of natural gas, as well as over natural gas companies engaged in those activities. See 15 U.S.C. § 717(b); see also Fuel Safe Washington v. FERC, 389 F.3d 1313, 1317 (10th Cir. 2004). See generally Cascade Natural Gas Corp. v. FERC, 955 F.2d 1412, 1421 (10th Cir. 1992) (“It is settled that if the NGA grants jurisdiction to [FERC] over a matter, . . . its jurisdiction is exclusive.”). Relevant here, FERC’s exclusive jurisdiction over interstate transportation of natural gas also includes jurisdiction over the storage of natural gas. See Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 295 n.1 (1988) (agreeing that “[u]nderground gas storage facilities are a necessary and integral part of the operation of piping gas from the area of production to the area of consumption”) (internal quotation marks omitted). “Prior to constructing or operating any natural gas pipeline and related facilities, a company subject to FERC’s jurisdiction must obtain from FERC ‘a certificate of public convenience and necessity,’ 15 U.S.C. § 717f(c)(1)(A), indicating . . . the proposed service ‘is or will be required by the present or future public convenience or necessity.’ 15 U.S.C. § 717f(e).” Fuel Safe, 389 F.3d at 1317; see also Schneidewind, 485 U.S. at 302. Once a natural gas company obtains a certificate of public convenience and necessity, the NGA gives the company eminent domain authority to condemn property it needs to provide the necessary service. See 15 U.S.C. § 717f(h). The NGA expressly leaves to states the regulation of retail sales, as well as purely intrastate wholesales and transportation of natural gas. See id. § 717(b), (c); see also 5 Gen. Motors Corp. v. Tracy, 519 U.S. 278, 292-93 (1997); Fuel Safe, 389 F.3d at 1317. In addition, the NGA reserves to states “the power to regulate the physical production and gathering of natural gas in the interests of conservation or of any other consideration of legitimate local concern.” Interstate Natural Gas Co. v. Fed. Power Comm’n, 331 U.S. 682, 690 (1947); see also Panhandle E. Pipeline Co. v. Oklahoma, 83 F.3d 1219, 1225-26 (10th Cir. 1996). For NGA purposes, production and gathering of natural gas “are terms narrowly confined to the physical acts of drawing the gas from the earth and preparing it for the first stages of distribution.” N. Natural Gas Co. v. State Corp. Comm’n, 372 U.S. 84, 90 (1963); see also Panhandle E. Pipeline, 83 F.3d at 1225-26. Kansas regulates natural gas production through the Kansas Corporation Commission (“KCC”). See Zinke & Trumbo, Ltd. v. State Corp. Comm’n, 749 P.2d 21, 24 (Kan. 1988).