Commissioner James Danly Statement
December 16, 2022
Docket Nos. CP20-312-001, et al.
I agree with the Commission’s decision to grant Equitrans, L.P.’s (Equitrans) abandonment by sale of the Taylor County Field facilities to Big Dog Midstream, LLC (Big Dog Midstream) and the Commission’s issuance of a limited jurisdiction certificate to Big Dog Midstream. I write separately to direct the reader’s attention to my separate statement to the underlying order[1] and to explain why I dissent in part from today’s order.
In my concurrence to the underlying order, I expressed my concerns with the delay in the Commission’s action in this proceeding,[2] I explained that the Commission’s action on the abandonment application did not appear to be a major federal action that is subject to the National Environmental Policy Act,[3] I questioned the Commission’s decision to require Equitrans to show cause why it should not be required to file an application seeking a certificate under Natural Gas Act (NGA) section 7[4] to operate the Taylor County Field facilities,[5] and I explained my view that the Commission could have found, based on the facts in the record, that the Taylor County Field facilities are non-jurisdictional with a primary function of gathering.[6] My views on those issues remain the same.
As to today’s order, I do not understand why the Commission declines to make a determination regarding the functionalization of the Taylor County Field facilities under the operation of Equitrans.[7] For some reason we sidestep the issue of our jurisdiction over the facilities owned by Equitrans when at the same time we conclude that after the abandonment by sale to Big Dog Midstream, “the Taylor County Field facilities will be properly functionalized as gathering.”[8] Why?
Does Big Dog Midstream intend to operate the facilities any differently from the way Equitrans has operated them? No. In fact, as today’s order explains, “[r]egarding flows on the Taylor County Field facilities, Big Dog Midstream stated that it will operate the facilities as Equitrans operates them today, i.e., Big Dog Midstream will work with Peoples Gas WV to flow gas from Equitrans’ transmission system to the gathering facilities when local production is insufficient to meet customers’ supply needs.”[9] And the Commission acknowledges that these facilities, under Big Dog Midstream’s operation will have a primary function of non-jurisdictional gathering of natural gas.[10] So how is it reasoned decision making for the Commission to then decline to declare or disclaim jurisdiction over those very same facilities, operated identically when owned by Equitrans?
Today’s order states that,
[t]he Commission acknowledged in the Abandonment Order that several physical factors of the Taylor County Field facilities—such as pipeline length, diameter, pressure, and arrangement—are “consistent with a gathering or other non-transmission function.” Over the past ten years, 69 percent of flows on the Taylor County Field facilities were locally produced gas. The remaining portion came from backflows from Equitrans’s [sic] NGA-jurisdictional pipeline system.[11]
I remain unconvinced that the periodic backflow of gas from the transmission system to its gathering system changes the “primary function” of the facilities from gathering.[12] Given that the “physical factors” identified are those of a gathering facility, why is the Commission hesitant to conclude that they are gathering facilities when owned by Equitrans? The Commission states the following:
In the Commission’s primary function test, the Commission considers not only the facilities’ physical and geographic factors but also the purpose, location and operation of the facilities, the general business activity of the owner of the facility, and whether the jurisdictional determination is consistent with the NGA and the Natural Gas Policy Act of 1978.[13]
Under the foregoing, how are Equitrans and Big Dog Midstream, and their operation of the Taylor County Field facilities, distinguishable such that “after abandonment by sale to Big Dog Midstream, the Taylor County Field facilities will be properly functionalized as gathering”? Only one thing comes to mind: “the general business activity of the owner of the facility.”
The Commission goes on to hint at this distinction with its observation that “Big Dog Midstream states that it owns no interstate facilities subject to the jurisdiction of the Commission; it is only in the business of gathering.”[14] Indeed, Equitrans is a natural gas company as defined by section 2(6) of the NGA.[15] Big Dog Midstream is not.[16] But is such a fact, in itself, dispositive when making a jurisdictional determination? It is not. While I recognize that court precedent has indicated that non-physical factors, such as “general business activity and prior certification,” are relevant in such jurisdictional inquiries, those considerations should be “secondary to the physical factors.”[17] And the “physical factors” lead to only one conclusion: these are gathering facilities.
“The Commission must apply consistently its primary function test and not discount, without reasoned analysis, application of any factor which points to a non-jurisdictional result.”[18] Moreover, the Supreme Court has recognized that “[e]xceptions to the primary grant of jurisdiction in [NGA section 1(b)] are to be strictly construed”[19] and also that “it has been consistently held that ‘production’ and ‘gathering’ are terms narrowly confined to the physical acts of drawing the gas from the earth and preparing it for the first stages of distribution.”[20] This strikes me as fairly straightforward and I struggle to understand why the order would seek to suggest murkiness where none need exist.
Jurisdiction should not be glossed over in cases such as these. As the Commission recognized in the Abandonment Order, “the Commission has no authority to deny the abandonment of [non-jurisdictional] gathering facilities on the basis of continuity of service.”[21] Jurisdictional determinations are therefore the threshold question in any abandonment inquiry under NGA section 7(b):[22] if the facilities are non-jurisdictional gathering facilities, the inquiry should end there.[23]
For these reasons, I respectfully dissent in part.
[1] Equitrans, L.P., 179 FERC ¶ 61,204 (2022) (Danly, Comm’r, concurring) (Abandonment Order).
[2] Id. (Danly, Comm’r, concurring at PP 2-3, 6).
[3] Id. (Danly, Comm’r, concurring at PP 5-6).
[4] 15 U.S.C. § 717f.
[5] Abandonment Order, 179 FERC ¶ 61,204 (Danly, Comm’r, concurring at P 4).
[6] Id.
[7] See Equitrans, L.P., 181 FERC ¶ 61,235, at P 32 (2022) (“Given that the sale of the Taylor County Field facilities to gatherer Big Dog Midstream is pending, and we are issuing a limited jurisdiction certificate for those facilities to Big Dog Midstream, we decline to further address Equitrans’ arguments regarding the functionalization of the facilities. If the sale does not move forward within a reasonable time, the Commission will revisit the issue.”).
[8] Id. P 36 (emphasis added).
[9] Id. P 19 (citing Big Dog Midstream September 29, 2022 Response to Data Request at 2); see also id. P 36 (“In its response to the Commission’s data request, Big Dog Midstream states that the facilities will be operated ‘just as Equitrans does today,’ ‘work[ing] with Peoples [to] flow gas as needed from Equitrans’ transmission system to the gathering facilities to supplement local production’ ‘[w]hen local production is insufficient for Peoples Gas WV to meet its customers’ supply needs.’”) (citing Big Dog Midstream September 29, 2022 Response to Data Request at 2).
[10] Id. P 37 (“Because of the limited scope of anticipated jurisdictional activities on facilities with a primary function of non-jurisdictional gathering of natural gas, the Commission will issue a certificate of limited jurisdiction to authorize Big Dog Midstream to perform these limited activities without the full panoply of NGA rate and service obligations.”).
[11] Id. P 36 (citations omitted).
[12] Abandonment Order, 179 FERC ¶ 61,204 (Danly, Comm’r, concurring at P 4).
[13] Equitrans, L.P., 181 FERC ¶ 61,235 at P 35 (citations omitted).
[14] Id. P 36.
[15] 15 U.S.C. § 717a(6) (“‘Natural-gas company’ means a person engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale.”).
[16] Equitrans, L.P., 179 FERC ¶ 61,204 at P 4.
[17] Sea Robin Pipeline Co. v. FERC, 127 F.3d 365, 371 (5th Cir. 1997); see id. (“the Commission’s emphasis on ownership may be called into question in light of its recent practice of allowing pipeline companies to spin-off affiliated gatherers and thus make them non-jurisdictional. See, e.g., Pacific Gas & Elec. Co. v. FERC, 106 F.3d 1190, 1196–97 (5th Cir.1997), cert. denied, 522 U.S. 811, 118 S.Ct. 55, 139 L.Ed.2d 19 (1997); Conoco, Inc. v. FERC, 90 F.3d 536 (D.C.Cir.1996), cert. denied, 519 U.S. 1142, 117 S.Ct. 1017, 136 L.Ed.2d 893 (1997) (both allowing a wholly-owned gathering facility to escape FERC jurisdiction). In short, general business activity and prior certification are relevant, but they are only part of the mix. . . . The determinative question is when did gathering cease and transportation commence.”).
[18] Id. at 370.
[19] Interstate Nat. Gas Co. v. Fed. Power Comm’n, 331 U.S. 682, 690-91 (1947).
[20] N. Nat. Gas Co. v. State Corp. Comm’n of Kan., 372 U.S. 84, 90 (1963) (citations omitted).
[21] Abandonment Order, 179 FERC ¶ 61,204 at P 73.
[22] 15 U.S.C. § 717f(b).
[23] But see Equitrans, L.P., 181 FERC ¶ 61,235 at P 30 (conducting the abandonment analysis that the Commission would undertake for jurisdictional facilities and stating that “[i]n reviewing a pipeline company’s request to abandon by sale facilities currently being used to provide jurisdictional services, the Commission considers all relevant factors, including the needs of the two natural gas systems and the public markets they serve, the economic effect on the pipelines and their customers, and the level of assurance of continued service to customers dependent on the subject facilities”).