Opinion ID: 524250
Heading Depth: 1
Heading Rank: 3

Heading: FERC's DETERMINATION OF THE PUBLIC CONVENIENCE AND NECESSITY

Text: 50 In a separate challenge, the Independent Petroleum Association of America argues that in its determination under Sec. 7(e) of the Natural Gas Act that the proposed transportation served the public convenience and necessity, FERC failed to make an independent determination that the importation of gas, and its sale into domestic markets, served the public interest. Rather than taking a fresh look at the issue, FERC deferred to the Economic Regulatory Administration's finding on the point. 51 This problem of overlapping agency concerns arises from Congress's bifurcation of responsibilities relating to imported gas. The Department of Energy Organization Act, Pub.L. No. 95-91, 91 Stat. 565 (1977), codified in part at 42 U.S.C. Secs. 7111 et seq., split the responsibility for enforcing the Natural Gas Act between FERC and the Department of Energy. The Commission received the responsibility for issuing individual certificates under Sec. 7, see 42 U.S.C. Sec. 7172(a)(1)(D), while the Secretary of Energy was made responsible for regulating gas imports and exports under Sec. 3, see 42 U.S.C. Sec. 7151(b) (vesting in the Secretary any function of the Federal Power Commission not given to FERC); 42 U.S.C. Sec. 7172 (transfer of functions to FERC, omitting powers under Sec. 3). Soon thereafter, the Secretary delegated his Sec. 3 powers to the newly-established ERA. Department of Energy Delegation Order No. 0204-4, 42 Fed.Reg. 60,726 (1977); see 42 U.S.C. Sec. 7136 (setting up ERA); 42 U.S.C. Sec. 7136(b) (allowing delegation by Secretary to ERA). 52 The latest delegation order dealing with the regulation of imported gas was promulgated in 1984 and was accompanied by comprehensive policy guidelines. New Policy Guidelines and Delegation Orders From Secretary of Energy to Economic Regulatory Administration and Federal Energy Regulatory Commission Relating to the Regulation of Imported Natural Gas, 49 Fed.Reg. 6684 (1984). The Secretary again delegated to ERA his authority under Sec. 3 of the Act to regulate the importation of natural gas, id. at 6690 (Delegation Order No. 0204-111); in addition, he authorized FERC to exercise any of his powers under Sec. 7 with respect to imported gas, id. (Delegation Order No. 0204-112). The Commission was instructed that the delegation was made with the recognition that the Secretary maintained the policy responsibilities for gas imports, and that the FERC should exercise its authority in a manner consistent with the gas import policy determinations established by the Secretary. Id. at 6688. 53 With this directive in mind, FERC decided in its Sec. 7 proceeding not to revisit ERA's ruling that the sale of imported gas to Texas Eastern and Tennessee met the public interest standard. The Commission explained its decision as follows: 54 Jurisdiction under section 3 of the NGA to authorize the importation of natural gas ... lies not with this Commission but with the Administrator of the ERA. The Commission has jurisdiction only over the transportation of the gas under section 7 of the NGA. We do not have jurisdiction to second guess the Administrator's determinations as to whether the importation is in the public interest, and we will not do so. 55 Great Lakes Gas Transmission Co., 41 FERC p 61,094, at 61,248. The Commission explicitly found the transportation itself required by the public interest. Id. We find its interpretation of the statutory scheme and the Secretary's orders correct; they do not require FERC to redo what ERA has already done. 56 It is true that the Commission's transportation jurisdiction may reach issues beyond those directly concerned with the transportation. In FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 81 S.Ct. 435, 5 L.Ed.2d 377 (1961), the Court upheld a Commission decision to deny a gas transportation certificate where the Commission concluded that the sale, even though not within the Commission's jurisdiction, would have an adverse effect on sales that were. But in Transco, despite the sale's impact on jurisdictional sales, no federal agency had any direct voice over whether it satisfied the public interest. We think it would be a considerable stretch from there to say that, in certifying transportation that is necessary to carry out a sale, the Commission is required to reconsider the very aspects of the sale that have been assessed by an agency specifically vested by Congress with authority over the subject. 57 Moreover, we do not understand FERC to suggest that it would not independently examine any effects claimed to be due to the specific transportation proposed, as opposed to effects inherent in the importation and sale of the gas in the United States as a whole. Indeed, in this very case the Commission has shown alertness to the implications of the specific transaction, limiting the duration of the transportation certificates because of concern over their anticompetitive potential. 58 IPAA notes that approval of a gas sale does not necessarily entail approval of transportation, citing Amoco Production Co., 33 FERC p 61,173 (1985), reh'g denied, 34 FERC p 61,145 (1986). There FERC issued a certificate for the sale of natural gas while denying the accompanying transportation request. Amoco seems to us to illustrate the point made above. The applicant sought transportation authority under an experimental special marketing program that was being phased out under orders of this court because of concern over the program's anticompetitive potential. See id. at 61,368 (citing Maryland People's Counsel v. FERC, 761 F.2d 768 (D.C.Cir.1985)). Approval of the sale did not entail approval of the transportation because of factors peculiar to the transportation. The Commission's action here seems entirely consistent with that view. 59 Nothing in the statute seems to invite the sort of duplicative effort that IPAA would have us require, and the Secretary's orders clearly sought to avoid it. The Guidelines stated that they made the review process more expeditious, permitting prompter government review. New Policy Guidelines, 49 Fed.Reg. at 6685. The Secretary specifically instructed FERC that in exercising its powers over imported gas, the Commission was to act consistently with the determinations made by the [ERA] Administrator and the policy considerations reflected in the authorization. Id. at 6689. The sort of reexamination of the public interest in the importation that IPAA seeks would thus run counter both to the Guidelines' general purpose and their specific mandate. 60 Finally, IPAA claims to find an inconsistency between FERC's conduct here and its Opinion No. 256, promulgated by FERC in Natural Gas Pipeline Co. of America, 37 FERC p 61,215 (1986), reh'g granted in part and denied in part, 39 FERC p 61,218 (1987), clarified, 42 FERC p 61,080 (1988), appeal pending sub nom. Trans-Canada Pipelines Ltd. v. FERC, 878 F.2d 401 (D.C.Cir. 1989). Opinion No. 256, however, appears to address an aspect of gas importation downstream from and largely irrelevant to transportation issues of the sort at stake here. It concerned an interstate pipeline that purchased Canadian natural gas under contracts that called for a two-part demand/commodity rate. The issue before FERC was the structure of that pipeline's charges to its customers, specifically the extent to which the pipeline could include the demand charge it paid the Canadian exporter in its (the importing pipeline's) demand charges to its customers. 37 FERC p 61,215, at 61,537. FERC quite rightly responded to IPAA's invocation of Opinion No. 256 by observing that the problem was more properly an issue in a filing to comply with Opinion No. 256 or in a future [Texas Eastern] rate proceeding. Great Lakes Gas Transmission Co., 42 FERC p 61,029, at 61,158. 61 In short, we can find no basis for IPAA's dramatic claim that the Commission's handling of the Opinion No. 256 argument means the two agencies have launched a bureaucratic shell game where neither agency takes 'a hard look' at the proposed transaction. Reply Brief for Petitioner IPAA 6. FERC properly avoided the effort to insinuate into its territory issues that Congress and the Secretary located elsewhere. 62