Opinion ID: 721438
Heading Depth: 3
Heading Rank: 2

Heading: Jurisdiction over LDCs' capacity sales to their own end-users

Text: 138 Several petitioners make more limited claims that specific classes of entities and [319 U.S.App.D.C. 90] transactions must be exempted from the Commission's control over capacity resales. First, the PUCs and LDCs together argue that FERC lacks jurisdiction over capacity sales by LDCs to their own end-users. Such transactions, they maintain, fall within the NGA's local distribution exemption. Specifically, according to petitioners, the Commission has always recognized that the states have jurisdiction to regulate bundled sales of natural gas by LDCs to their end-users, which necessarily involves some indirect influence over the interstate transportation element of the sale. State authority remains intact for LDCs' rebundled sales of gas and transportation even after the implementation of Order No. 636. They contend that there is no functional difference between that jurisdictional arrangement and state regulation of LDCs' sales of unbundled gas and--more relevant here--transportation to local end-users. In particular, petitioners contend that state regulatory commissions need the freedom to control LDCs' assignment of capacity so that local end-users will be ensured of access to pipeline service. 139 But, as we have already explained, petitioners' reading of NGA § 1(b)'s reference to local distribution is flawed; the proviso does not withdraw from FERC's jurisdiction any aspect of the interstate transportation of natural gas. In this regard, we find the Commission's explanation of the regulatory environment far more convincing. States have been--and are still--permitted to regulate LDCs' bundled sales of natural gas to end-users because those transactions include transportation over local mains and the retail sale of gas. In contrast, states have never regulated the terms and conditions of interstate pipeline transportation. When the gas sales element is severed-- i.e., unbundled--from the transaction, FERC retains jurisdiction over the interstate transportation component. 62 140