High-Court Review Sought of FERC v. State's Rights
The California Public Utilities Commission (CPUC) and Southern
California Gas (SoCalGas) petitioned the Supreme Court last week to
review the nettlesome issue of where does FERC's jurisdiction end
and the states' jurisdiction begin.
The issue arises out of a FERC order that overrode a CPUC ruling
permitting SoCalGas, a Hinshaw-exempt LDC, to charge shippers a fee
to use facilities at Wheeler Ridge, CA, that connected its
distribution system to a pipeline system operated jointly by Kern
River Gas Transmission and Mojave Pipeline. The California
regulators allowed the charge to defray the costs of the new
facilities, which were built to facilitate the interstate shipments
of gas that were destined solely for in-state distribution and
in-state consumption. FERC called the SoCalGas-imposed charge
"illegal" because it placed an additional burden on interstate
shippers to California.
The 1996 Commission reversal, which was upheld by the D.C.
Circuit Court of Appeals two years later, amounted to a "power
grab" by the federal agency of the CPUC's jurisdiction, the
petitioners told the high court. In seeking a writ of certiorari,
they asked the court to "restore the states' comprehensive
authority to regulate the facilities, rates and services of local
distribution companies, and to clarify the boundaries between state
and federal authority [in] the context of the new, unbundled
natural gas industry..."
Petitioners pointed out that SoCalGas is a Hinshaw facility,
which exempts it from federal jurisdiction and puts it under the
purview of the state. A Hinshaw facility is one that receives gas
within or at the state boundary for ultimate consumption within the
state. As such, "the CPUC's determination to impose fees for the
right to deliver gas into the facility was well within the state's
authority" under the Natural Gas Act (NGA), they argued.
The petitioners cited the Supreme Court's 1997 decision in
General Motors Corp. vs. Tracy, which recognized states' authority
over Hinshaw facilities. The court said thenthat the Hinshaw
Amendment to the NGA "leave[s] jurisdiction over companies engaged
in the distribution of natural gas exclusively in the states as
always had been intended." Specifically, petitioners insisted the
amendment "creates a fence between FERC-regulated interstate
pipeline facilities and state-regulated Hinshaw facilities that
FERC cannot climb."
In light of the General Motors' decision, "FERC's effort to
preempt the authority of the CPUC...strikes at what continues as
the central authority of the states: the power to determine whether
new facilities should be constructed by local distribution
companies and, if so, to exercise their ratemaking power so that
the cost of new facilities will be borne by the appropriate users
of those facilities," SoCalGas and California regulators said.
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