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

Heading: Jurisdiction over municipal capacity release

Text: 141 We now turn to the claim of the municipally owned local distribution companies (municipalities) that FERC does not have jurisdiction to require them to comply with its capacity release regulations. Petitioners parse the terms of the Natural Gas Act as follows: 142 Municipalities are exempt from the Commission's jurisdiction under the NGA. The Commission's NGA jurisdiction extends only to natural gas companies. A natural gas company is defined in NGA Section 2(6) as a person engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale. NGA Section 2(1) defines a person as an individual or a corporation. NGA Section 2(2) defines a corporation as inter alia, any corporation, partnership or association, but the definition expressly excludes municipalities. 143 Small Distributors' and Municipalities' Br. at 11-12 (footnotes omitted). 144 Of course, as discussed above, see supra Part III.B.1, NGA § 1(b) extends the Commission's jurisdiction over not only natural-gas companies but also the interstate transportation of natural gas. FERC, however, has twice rejected the suggestion that it should invoke its transportation jurisdiction over municipalities. 63 See Tennessee Gas Pipeline Co., 69 F.E.R.C. p 61,239, at 61,906-07 (1994), reh'g denied, 70 F.E.R.C. p 61,329 (1995); Texas Eastern Transmission Corp., 51 F.E.R.C. p 61,170, at 61,453-54 (1990). Accordingly, FERC wholly agrees with [petitioners [319 U.S.App.D.C. 91] that municipalities are beyond [its] jurisdiction. Order No. 636-A, p 30,950, at 30,551. 64 145 That notwithstanding, FERC may, consistent with the NGA, require municipalities to comply with its capacity release regulations. As we explained above, see supra Part III.B.1, FERC's transportation jurisdiction extends as a separate matter over capacity release given the involvement of interstate gas pipelines. 65 The pipelines' role in capacity release is absolutely central, 66 and the transaction itself controls access to interstate transportation capacity, entirely independent of the jurisdictional nature of the releasing and replacement shippers. 67 146 The analogy drawn by the Commission, and the one we find most persuasive, is to the pipeline curtailment regime. As explained in Judge Rogers' opinion for the court, see supra Part II.C, pipelines at times must interrupt and redistribute their service based on shortages of both gas supply and pipeline capacity. The Supreme Court has expressly approved the Commission's authority to regulate such curtailments pursuant to its § 1(b) interstate transportation jurisdiction. See Louisiana Power & Light Co., 406 U.S. at 640-41, 92 S.Ct. at 1838-39. The Commission's capacity release program is strikingly similar to its curtailment regulations, in that both involve the pipelines' allocation of transportation capacity among their shippers in compliance with federally mandated strictures. As the municipalities are subject to the curtailment regulations, so too must they comply with FERC's standards for capacity release. 147 We also find compelling the acknowledged jurisdictional arrangement prior to the implementation of either capacity brokering or capacity release. At that time, shippers acquired firm capacity rights directly from pipelines on a first-come, first-served basis. Resales of capacity by shippers, including municipalities, simply did not occur. We therefore conclude that the Commission has jurisdiction to require open, nondiscriminatory capacity release by municipalities. 148