Opinion ID: 392942
Heading Depth: 2
Heading Rank: 3

Heading: FERC's Jurisdictional Argument

Text: 61 FERC's argument that it has jurisdiction to order this ratepayer financing scheme, along with its regulatory features, is based on two premises. First, the Commission contends that although it 62 has no jurisdiction under the Natural Gas Act over the project facilities in North Dakota, ... (o)nce the output of the gasification plant has been commingled with natural gas, however, the Commission would possess full and complete jurisdiction to regulate any subsequent transportation of the gas in interstate commerce and its sale in interstate commerce for resale for ultimate public consumption .... The Commission's involvement arises by virtue of several Section 7 applications for certificates to transport commingled coal gas and natural gas and to make sales thereof for resale to the Customer Pipeline Companies. 63 Opinion No. 69, at 12 (emphasis supplied). This assertion of jurisdiction, however, proves too little. No one in this litigation has questioned FERC's authority to assert full regulatory authority including the power of rate and tariff setting over the transportation and sale of Great Plains synthetic gas subsequent to its creation and commingling with natural gas. FERC goes on to assert, however, that 64 the Commission's jurisdiction over the transportation and sale for resale of the commingled gas gives it a corollary authority and responsibility to look into 'all factors bearing on the public interest'  .... Henry v. FPC, 513 F.2d at p. 405. 65 Id. (emphasis partially supplied). FERC would have us treat the construction and financing of the Great Plains plant as factors which the Commission may look into when it considers certificating sales of commingled gas from the plant. This corollary authority claim, relying on this court's opinion in Henry, warrants our close scrutiny. The issue is whether FERC has any so-called corollary authority to use its rate setting and certification tools for the purpose of arranging financing for, and regulating the construction of, commercial-size coal gasification plants. 66 In Henry we stated that, when considering certification for jurisdictional facilities, FERC has corollary authority to consider ... 'all factors bearing on the public interest.'  31 The all factors language was used to describe the breadth of considerations which the Commission may take into account when reviewing applications for certification under § 7 for, say, tap and valve facilities to introduce gas from coal into natural gas pipelines, i. e., for facilities over which Commission jurisdiction is unquestioned. 513 F.2d at 403. Absent those jurisdictional facilities or acts, the court in no way suggested that any corollary authority would exist at all. In this case, by contrast, the very existence of a relevant jurisdictional act upon which to predicate the corollary authority is in doubt. See pp. 1143-1144 supra. Furthermore, even assuming arguendo that a relevant jurisdictional act exists in this case, then the corollary authority spoken of in Henry would permit FERC simply to consider all factors in reaching its decision, not to establish and regulate the factors themselves. 513 F.2d at 403. 67 But there is a second answer to FERC's corollary authority argument in this case. Any such authority to consider all factors bearing on the public interest must take into account what the public interest means in the context of the Natural Gas Act. FERC's authority to consider all factors bearing on the public interest when issuing certificates means authority to look into those factors which reasonably relate to the purposes for which FERC was given certification authority. It does not imply authority to issue orders regarding any circumstance in which FERC's regulatory tools might be useful. In carrying out its statutory certification task FERC must recognize that a need for federal regulation does not establish FPC jurisdiction that Congress has not granted. FPC v. Louisiana Power & Light Co., 406 U.S. 621, 635-36, 92 S.Ct. 1827, 1836, 32 L.Ed.2d 369 (1972) (original emphasis). 68 A similar issue was presented to the Supreme Court in NAACP v. FPC, 425 U.S. 662, 664-65, 96 S.Ct. 1806, 1808-1809, 48 L.Ed.2d 284 (1976), which concerned the Commission's authority to prohibit discriminatory employment practices on the part of its regulatees. Regarding petitioners' assertion that references in the Natural Gas Act to the Commission's authority to regulate in the public interest implied authority to prohibit racial discrimination, the Court declared: 69 This Court's cases have consistently held that the use of the words public interest in a regulatory statute is not a broad license to promote the general public welfare. Rather, the words take meaning from the purposes of the regulatory legislation. 70 .... 71 Thus, in order to give content and meaning to the words public interest as used in the Power and Gas Acts, it is necessary to look to the purposes for which the Acts were adopted. In the case of the Power and Gas Acts it is clear that the principal purpose of those Acts was to encourage the orderly development of plentiful supplies of electricity and natural gas at reasonable prices. While there are undoubtedly other subsidiary purposes contained in these Acts, the parties point to nothing in the Acts or their legislative histories to indicate that the elimination of employment discrimination was one of the purposes that Congress had in mind when it enacted this legislation. 72 Id. at 669-70, 96 S.Ct. at 1811. (emphasis supplied). See also Henry, supra, 513 F.2d at 402; Mobil Oil Corp. v. FPC, 463 F.2d 256, 263 (D.C.Cir.1971), cert. denied, 406 U.S. 976, 92 S.Ct. 2409, 32 L.Ed.2d 676 (1972). 73 Our own review, Section B supra, of the purposes reasonably attributable to Congress in authorizing FERC's certification and rate setting powers reveals that it did not intend to vest FERC with those powers for the purpose of regulating and arranging financing for facilities, like Great Plains, devoted exclusively to manufacturing synthetic gas. We therefore hold that Opinion No. 69 exceeded the Commission's statutory authority because it attempted to create a ratepayer-based financing package for the construction of a commercial-size coal gasification plant despite the fact that its rate setting and certificating powers were not granted to it for that purpose; and because it purported to regulate the construction and operation of such plant despite the fact that FERC has no regulatory jurisdiction over any aspect of synthetic gas development prior to its commingling with natural gas. 74 Nothing in this holding denies FERC any authority it may have to consider the costs of production of synthetic gas in the course of considering jurisdictional sales rate filings and petitions under Section 4 of the Natural Gas Act, 15 U.S.C. § 717c, or to give advance notification that it will do so pursuant to its Order No. 566. However, FERC may not overstep the limits of its jurisdiction by claiming that Order No. 566 or any cases purportedly decided under it can serve as authority for charging ratepayers for the construction of non-jurisdictional facilities before those facilities participate in activities properly regulated by the Commission. 32 Nor may FERC use its Section 7 authority to order a financing package such as the one involved here, which imposes financing surcharges and debt guarantees upon natural gas pipeline customers for the construction of facilities which, it is hoped, will some day in the future produce synthetic gas. 75