Commissioner James Danly Statement
June 30, 2022
Docket No. RP22-921-000

The legal question in this case is whether the Producer Certified Gas (PCG) Criteria, which Tennessee Gas Pipeline Company, L.L.C. (Tennessee) established as a prerequisite for a supply aggregator to participate in the proposed PCG Pooling Service Option, are “classifications, practices, and regulations affecting” jurisdictional rates, charges, and services that must be included in Tennessee’s tariff under section 4(c) of the Natural Gas Act (NGA).[1]  The answer is yes.  I therefore dissent from today’s order.[2]

NGA section 4(c) “must be read as requiring ‘the recitation of only those practices that affect rates and service significantly, that are realistically susceptible of specification, and that are not so generally understood in any contractual arrangement as to render recitation superfluous.’”[3]  Although the Commission has “broad bounds of discretion” [4] to determine which classification, practices, and regulations have a sufficiently significant effect on jurisdictional rates and services that they must be included in the tariff, the Commission’s determination will be rejected if not based on reasoned decision making.[5]

The majority finds that the PCG Criteria is not required to be included in the tariff because the criteria will have no effect on jurisdictional rates and service.[6]  Why?  “[B]ecause nothing in Tennessee’s proposal would treat gas qualifying as PCG differently from any other gas for purposes of Rate Schedule SA.  All shippers will get the same pooling service under Rate Schedule SA, regardless of whether the gas is designated as PCG.”[7]

This argument, however, is off the mark.  It ignores the fact that the PCG Pooling Service Option is itself a jurisdictional service.  Tennessee calls it a PCG Pooling Service Option.  The option provides shippers with some kind of service.  Without the option, shippers could not aggregate PCG at proposed paper pooling points.  The fact that the service does not affect the transportation of gas is not dispositive.  Indeed, when accepting Rate Schedule SA, the Commission explained that “Rate Schedule SA, while proposed as a transportation service, does not reserve, use, or create transportation capacity” and that it is a “scheduling service that overlays individual transportation customer receipt points for delivery to designated paper pooling delivery points.”[8]  Like the broader Rate Schedule SA, the PCG Pooling Service Option is a scheduling service that overlays individual transportation customer receipt points for delivery to designated pooling points.

As the PCG Pooling Service Option is a jurisdictional service, the classifications, regulations, and practices that significantly affect that option must be included in the tariff.  And what classification, regulation, or practice could be more “significant” than the criteria to be eligible to participate in that service?[9]

I recognize that Tennessee prepared its filing based on guidance that the Commission unanimously provided.  We stated, “[e]xcept for the proposal to include the PCG Criteria in its tariff, we would otherwise find Tennessee’s tariff revisions, based upon the record in this case, to be just and reasonable”[10] and that “for Tennessee to incorporate the PCG Pooling Service Option into its Rate Schedule SA, Tennessee must do so without incorporating the PCG Criteria in its tariff.”[11]  Upon reflection, I now believe that guidance to have been provided in error.  It was not only unnecessary but legally incorrect.  This episode demonstrates that we should always exercise caution when providing guidance as parties will inevitably rely upon it.

For these reasons, I respectfully dissent.

 

[1] 15 U.S.C. § 717c(c); 18 C.F.R. § 154.1(b).

[2] Tenn. Gas Pipeline Co., L.L.C., 179 FERC ¶ 61,233 (2022).

[3] Pub. Serv. Comm’n of N.Y. v. FERC, 813 F.2d 448, 454 (D.C. Cir. 1987) (quoting City of Cleveland v. FERC, 773 F.2d 1368, 1376 (D.C. Cir. 1985)) (emphasis in original).

[4] Id.

[5] See Keyspan-Ravneswood, LLC v. FERC, 474 F.3d 804 (D.C. Cir. 2007) (rejecting Commission argument that a practice need not be included in jurisdictional tariff under section 205 of the Federal Power Act).  See Ky. Utils. Co. v. FERC, 760 F.2d 1321, 1325 n.6 (D.C. Cir. 1985) (“It is, of course, well settled that the comparable provisions of the Natural Gas Act and the Federal Power Act are to be construed in para materia.”).

[6] See Order, 179 FERC ¶ 61,233 at P 18.

[7] Id.

[8] Tenn. Gas Pipeline Co., 73 FERC ¶ 61,278, 61,765 (1995).

[9] This is not to say that we should accept Tennessee’s PCG Pooling Service Option and PCG Criteria as just and reasonable under NGA section 4.  I am voting for an order issued concurrently today, Tenn. Gas Pipeline Co., L.L.C., 179 FERC ¶ 61,237 (2022), affirming our April 29 Order that found that “Tennessee has failed to demonstrate that incorporating the PCG Criteria into its tariff is just and reasonable.”  Tenn. Gas Pipeline Co., L.L.C., 179 FERC ¶ 61,076, at P 17 (2022).  I continue to agree with the April 29 Order that “it is unclear how the Commission would evaluate Tennessee’s decision to adopt any specific proposed criteria for PCG or propose any changes thereto.”  Id. P 19.  I would be reluctant to vote for an order in which the Commission establishes standards in a field about which it has no knowledge or experience and over which it has no clear jurisdiction.

[10] Id. P 21.

[11] Id.

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