Opinion ID: 724852
Heading Depth: 2
Heading Rank: 1

Heading: The Applicability of the Hinshaw Amendment to Affiliated Companies

Text: 20 According to the Expansion Shippers, the PGT-PG&E pipeline is a single, integrated interstate transmission facility owned in part directly and in part indirectly by PG&E. When the CPUC required interstate shippers to use PG&E's expansion facilities before crossing over to its pre-existing facilities, PGT and PG&E (with the help of the CPUC) were able to bifurcate their expansion project into an interstate component subject to regulation by the Commission and an intrastate component which evaded federal supervision. This duality sheltered PG&E from the competition of the interstate shippers notwithstanding that the Congress did not intend the [Hinshaw Amendment] to relieve the Commission of jurisdiction over local branches of integrated interstate systems. Louisiana Power & Light Co. v. FPC, 483 F.2d 623, 633 (5th Cir.1973). 21 Altamont takes the position that, on the facts of this case, the Hinshaw Amendment does not even apply to PG&E. Because PGT and PG&E are effectively one and the same company (according to Altamont) their transfer of gas at the Oregon-California border does not satisfy the threshold requirement of § 717(c) that gas be received by one person from another person. 22 The Commission, however, found that although the PGT-PG&E expansion was coordinated as to management, financing, and contracting, their integration in these areas did not make the two companies into one for the purpose of the NGA. In its August order, the Commission concluded that without proof of undue discrimination there is nothing inappropriate about such coordinated activities, and Altamont did not demonstrate that the areas of coordinated activity were the source of such undue discrimination as the agency had identified. 23 In past decisions the Commission has arguably taken a harder look at nonjurisdictional services provided by the affiliate of an interstate pipeline. See, e.g., Arkla Gathering Servs. Co., 69 FERC p 61,280 at 62,087 (1994) (Commission may treat jurisdictional pipeline and nonjurisdictional gatherer as single entity where services are tied), aff'd in relevant part, Conoco Inc. v. FERC, 90 F.3d 536 (D.C.Cir.1996). In the recent case of KansOk Partnership, 73 FERC p 61,160 (1995), the Commission held that it would treat three affiliated pipelines as a single interstate system because their corporate structure was designed specifically to avoid federal regulation. Id. at 61,486. [W]here it is necessary to protect the public interest, the Commission said, it will disregard the separate corporate status of entities that would otherwise be considered nonjurisdictional. Id. at 61,484. Closer in point is another decision issued the same day as KansOk, in which the Commission found that three affiliates--including a Hinshaw pipeline--that had coordinated their construction proposals constituted an interstate pipeline subject to the NGA. Louisiana Gas Sys. Inc., 73 FERC p 61,161 (1995). The Commission indicated that the jurisdictional status of any one of the pipelines might not have been an issue, but because the actual effect of the construction project contemplated here will be to give pipeline affiliates a competitive advantage in the transportation of gas ... this would subvert the purposes of the NGA. Id. at 61,502. The Commission determined not to allow the companies to balkanize [320 U.S.App.D.C. 105] into a chain of affiliates subject to the regulations of various states. Id. at 61,503. 24 Given a proper evidentiary record, the Commission might have avoided any Hinshaw constraint upon its jurisdiction by concluding that PGT and PG&E undertook this project as a single company. The Commission did not reach this conclusion, however, and the court cannot on this record hold that the Commission was unreasonable--that is, that PGT and PG&E unduly discriminated against interstate shippers by coordinating their activities. We are of course mindful that the Commission's choice not to pursue a given line of inquiry often involves a complicated balancing of a number of factors which are peculiarly within [the agency's] expertise. Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 1655-56, 84 L.Ed.2d 714 (1985). We therefore treat PGT and PG&E as distinct companies, as did the Commission, for purposes of the Hinshaw analysis. 25