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Case number 16-1244, City of Clarksville, Tennessee, Petitioner versus Federal Energy Repertory Commission.

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Mr. Janicki for the petitioner, Ms.

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Fisela for the respondent.

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Good morning.

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Good morning.

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Good morning, Your Honors.

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My name is Jeff Janicki, and I represent the petitioner, City of Clarksville, Tennessee.

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This case presents a simple issue, whether FERC has Natural Gas Act certificate authority over a municipality despite the fact that the Natural Gas Act excludes municipalities from the definition of natural gas company.

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We submit that the answer is clearly no.

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As an initial matter, FERC has raised issues of standing and rightness based on its assertion that Clarksville is not harmed by FERC's orders.

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However, the orders directly impose new regulatory burdens on the city.

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Hence, there can be no question that Clarksville has standing and that the case is ripe for review.

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What specific new burden is imposed on the city

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vis-a-vis its ruling in the footnote having to do with the City of Guthrie.

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Okay, so the ruling states that Clarksville's sales to the City of Guthrie are subject to a blanket marketing certificate issued pursuant to FERC's regulations.

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That regulation states that the holder of the certificate is subject to all regulations set forth in subpart L of the portion of the regulations where it was issued.

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And subpart L includes a regulation that states that the holder remarking certificate is required to maintain

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to comply with the data retention requirements that are relevant to its sales made under the marketing certificate.

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In addition, aside from the fact that it currently has to comply with this new data retention mandate that it was not subject to before, it also is subject to a requirement to apply for and obtain regular FERC

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authorization for any similar transactions that it may choose to enter into with other entities.

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But FERC has said that you can challenge those, challenge its jurisdiction later at that time if and when that comes up.

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Okay, two things on that.

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First, the fact that they even have to apply for certificate authority now to enter into those transactions is itself the regulatory burden.

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It didn't have that burden before.

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Secondly, this court has held that race judicata bars a party from challenging an agency's determination of jurisdiction if it could have made that challenge in a prior proceeding.

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Well, if we say it's not right, in part because FERC says that it's not right, and they essentially are going to wave and erase the judicata argument, then why should we deal with that now?

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Well, again, I would say that the fact that you actually have to apply for and obtain certificate authority is itself a new regulatory burden, aside from the fact that they are subject to the new data retention requirement.

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I see multiple burdens here.

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Each on its own would provide represent standing.

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If you look at the State National Bank case that was cited in both our reply brief and FERC's initial brief, FERC's brief,

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It basically held that there was standing based on the fact that the bank merely had to monitor its transactions in order to ensure that it didn't fall into a, to ensure that it stayed within a safe harbor.

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Monitoring its transactions is certainly no greater burden than having to comply with a specific data retention requirement that has been indisputably been imposed on Clarksville in this case.

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That's four to three.

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I'm sorry.

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Did FERC waive that recording?

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No, it did not.

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What it waived was, well, no.

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So there's two places where FERC is asserting jurisdiction, over the sales to Guthrie and the transportation and interstate service.

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The transportation and interstate service was basically, FERC said, that we're going to just go ahead and give this a blessing.

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We're not going to regulate you.

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It's fine.

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on the transportation.

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However, Frick never retracted the fact that Clarksville is subject to the blanket marketing certificate with respect to its sales to Guthrie.

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That's still in effect.

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Subpart L still applies.

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Clarksville is still subject to any regulations under Subpart L or anything else that Frick might decide to impose on holders of blanket marketing certificates.

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Does Guthrie have facilities in Tennessee?

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Yes, it's my understanding that yes, it does.

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It takes receipt of this gas within the state of Tennessee.

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So if there are no further questions on standing, I'd like to turn to the merits.

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Under Chevron step one, this court must give effect to the clear intent of Congress.

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The Natural Gas Act excludes municipalities from the definition of natural gas company, and Section 7 of the Act states that only natural gas companies are required to obtain certificate authority.

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FERC points to no ambiguity in these provisions, and in fact, FERC's brief actually concedes that Clarksville is not a natural gas company.

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Do you think that FERC got it right in Intermountain?

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Your briefs don't take issue with Intermountain.

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takes issue with, I'm sorry, school.

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With the FERC's prior decision in Intermountain?

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We, for the purpose of this case, do not take issue with the Intermountain rule.

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Well, then doesn't that really undermine your argument?

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No.

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If Intermountain allows for the possibility that in some settings, regulatory gap settings in particular, FERC has some jurisdiction over municipalities, what then comes of your argument that it's clear that they don't?

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Well, actually, what Intermountain ruled is that a municipality only exists as a municipality within its own state, and when it is acting outside of its own state, it is no longer a municipality.

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Here, everything Clarksville is doing is taking place entirely within the state of Tennessee, where Clarksville is indisputably a municipality.

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With respect to Guthrie,

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Correct, yes.

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That's the good clarification.

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Well, that's why I asked, Guthrie would be subject to the Intermountain Move because it has facilities in Tennessee.

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Yes, there was, toward the end of the rehearing order, Ferg said, we think probably Guthrie is also subject to the 7F requirement.

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Right, right.

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Yes.

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And so... But, but, but...

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For the issues here, Intermountain doesn't apply because Parksville has no facilities outside of Tennessee.

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That is correct.

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Intermountain nearly ruled that you're no longer a municipality.

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It didn't say, it didn't rule that FERC has regulatory authority over a municipality.

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It said that when you're outside your own state, you're simply not a municipality.

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And FERC concedes that there, that Clarksville is not a natural gas company.

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That's correct.

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They concede that Clarksville is not a natural gas company, but they argue that nonetheless,

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They have certificate authority because they have jurisdiction over all interstate transactions, regardless of the parties involved.

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And help me understand again, why wasn't Clarksville acting outside of Tennessee?

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because the entire sale here, the entire transportation and the sale of the gas takes place within Tennessee because the city of Guthrie takes delivery of it within Tennessee.

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And so the ownership of the gas transfers, but it was known that it was going to resale was going to take place in Kentucky.

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That's correct.

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Yes.

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But first, assertion here now is that even if it's not an afro-gas company, it can assert jurisdiction because it now is claiming it has broad jurisdiction over all interstate transactions, as I said, regardless of who's involved.

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But that interpretation is invalid for numerous reasons.

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First of all, even if it's correct that Section 1B of the Act grants it such broad jurisdiction, it would be irrelevant because Section 7 of the Act states that only natural gas companies are required to obtain certificate authority.

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But here's where I'm a little confused by your argument.

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You affirmatively

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Your client affirmatively sought this Section 7 certificate with respect to the Fort Campbell and the transactions with the 16, I guess, commercial customers.

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And I guess there you did so because you were conceding that your client was a natural gas company vis-a-vis those.

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transactions because your client's pipelines extended from Tennessee into Kentucky?

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Correct.

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So in that context, you're conceding, I guess with respect to FERC's interpretation of intermountain, that that Clarksville is a natural gas company.

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That's correct.

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But your argument here is that with respect to Guthrie, because they take possession of the gas in Tennessee, and you're operating completely within your city limits in your state, you're not a natural gas company for this transaction.

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That's correct.

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And FERC has conceded that, that we are a municipality for this purpose.

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It did not rule that we're a natural gas company everywhere, nor could it, because it's indisputably a municipality within the state of Tennessee.

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Well, I thought in their rehearing order, they did rule that you were, that that interpretation of natural gas company would be too narrow.

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And so they, in effect, said that you were relying upon kind of their reading of that Supreme Court case, whose name escapes me at the moment.

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In terms of the regulatory gap?

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Yeah.

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Yeah.

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Well, I mean,

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If you look at what they're doing here, they quote a Supreme Court case, Phillips Petroleum v. Wisconsin, which says, there can be no dispute that the overriding purpose in enacting the NGA was to plug the regulatory gap in regulation of natural gas companies.

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They then leap from there to the conclusion that Congress intended to regulate not only natural gas companies, but also municipalities.

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But the Act itself says just the opposite.

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But they had an alternative grounds for ruling, right, based on the North Carolina case.

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That's correct.

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And their alternative grounds was that, well, even if you aren't a natural gas company,

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We still have jurisdiction because this is a sale which you know is going to be an interstate sale.

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You know that it's a sale where the gas is going to be transported and delivered across state lines to a customer who is across state lines.

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So what's wrong with that?

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Well, a couple things.

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First of all,

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The North Carolina case that they cited basically held that where the gas has been dedicated to FERC jurisdictional service pursuant to a certificate issued to a natural gas company, that abandonment authority is required in order to terminate the service.

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In this case, there's no natural gas company involved.

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The gas has never been placed under a FERC jurisdictional service.

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Isn't Guthrie a natural gas company?

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In this context, under Inner Mountain, which you can see?

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It is a natural gas company for, potentially is a natural gas company for purposes of Section 7F for its distribution, but it has not, there's been no certificate in this case issued for the purpose of dedicating the gas to for jurisdictional service.

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Tennessee, is it your position that Tennessee could regulate the transaction leading to the gas going to the gutter?

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Yes.

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But it hasn't?

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That's correct.

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But the municipality itself, by virtue of the municipality, which is a state entity, by virtue of being involved in the transaction, it is, in effect, regulating.

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It's deciding to whom and what it's going to sell, how much, what price.

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I thought you told FERC that Tennessee could not regulate this, but that it didn't matter because the city was.

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I thought that FERC made that finding.

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That FERC might have made that finding, but I think basically FERC said that... FERC basically ruled that the

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that the Supreme Court decisions that led to the Natural Gas Act held that a state could not regulate an interstate transaction.

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But here, what we're saying is that by virtue of the fact that Clarksville is a municipality, it is in effect regulating it.

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But in any event, the purpose of closing the regulatory gap was it was a means to an end.

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I'm sorry, did you say that Clarksville is regulating it?

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Clarksville is a state Indian by virtue of being involved in transactions.

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So are you saying there's no regulatory gap because Clarksville's regulating it?

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Well, technically, I understand where you're going with this.

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Clarksville does not have the incentive, obviously.

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Is there a regulatory gap here or not?

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Well, first of all, there's no regulatory gap in the sense that the natural gas act was not intended to regulate municipalities.

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So there's no impermissible regulatory gap because on its face,

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the act is not regular in municipalities, basically said, we see no basis, since the act exempts municipalities as entities from our jurisdiction, there is no basis for the argument that a refusal to exert jurisdiction frustrates the act's purpose.

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And if where you're going with this is what incentive does Clarksville have to set rates for somebody else in another state?

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I mean, even if you were to look at this and say, OK, the act does not permit regulation of municipalities.

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But in this case, who's going to protect those consumers out there?

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Maybe it makes sense to do it in this case.

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The problem is it's inconsistent with the act itself.

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And this case is very similar to what happened in the Western Minnesota case that we cited in our brief, where basically this court rejected FERC's attempt to contradict the plain statutory language in order to achieve what it considered to be a noble policy goal.

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What's wrong with the regulatory gaps?

[00:15:35] Speaker 02:
Well, I don't think in this case there is any problem with it, because the purpose of closing the regulatory gap, it was a means to an end.

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And the end was to curb the abuses of natural gas companies.

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That was a rhetorical.

[00:15:50] Speaker 04:
OK.

[00:15:50] Speaker 02:
The answer is liberty, right?

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But I mean, it was the concern about private entities.

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Municipalities clearly were not the concern here.

[00:16:01] Speaker 02:
Okay, great.

[00:16:03] Speaker 04:
Thank you.

[00:16:04] Speaker 04:
We'll keep you back a couple minutes.

[00:16:09] Speaker 04:
Good morning.

[00:16:10] Speaker 01:
Good morning, Your Honors.

[00:16:11] Speaker 01:
Beth Pacella for FERC.

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The commission had two separate rationales for its determination here.

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The first one was that Clarksville is a person and a natural gas company here because it transports and sells its gas for resale and consumption in another state.

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So the commission wasn't holding that.

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I thought you conceded that it was not a natural gas company.

[00:16:34] Speaker 01:
No, the commission, on page 37 of the brief,

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It does say that if we look on page 35 of the brief, it says exactly the opposite.

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And that was a misstatement in the brief.

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And that was just regarding the difference between distinguishing between.

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Yeah, I mean, the commission specifically held this at JA 112 in the hearing order, paragraph 13.

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It's a holding of the commission.

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And the brief does misstate that.

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On page 37, it does make that misstatement.

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But again, on page 35 of the brief, the commission said the brief says the exact opposite, which is consistent with the orders here.

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Commission is not asserting that Clarksville is a natural gas company.

[00:17:13] Speaker 01:
I understand that, Your Honor.

[00:17:16] Speaker 06:
You do that, and you wait to oral argument to make this correction, and there's a reply brief that came in using that as a premise for their argument.

[00:17:29] Speaker 06:
I think it's much too late for you to tell us that that concession is a mistake.

[00:17:36] Speaker 01:
I understand your point, Your Honor, and I don't

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And I apologize a lot profusely for that.

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I guess the way I saw it, and I see that I was probably wrong, was that I'm defending the commission's orders and not the commission's brief.

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And so the commission's orders are very clear that that was its first holding.

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And so the commission's point there, and I'll discuss the second rationale as well, but let me just quickly address that, is that as in the CalPUC case, the reasoning there, and also in the Oklahoma case that the commission talks about as well in its order, an entity that, where you are,

[00:18:25] Speaker 01:
you're a natural gas company and a person, you can be in circumstances where it doesn't make sense under the statute for you not to be.

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And that's the circumstance here because of the regulatory gap.

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But I don't understand how the commission can hold in case after case after case and decade after decade after decade basically that under Chevron 1 municipalities can't be

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persons under the act because of the plain, clear, unambiguous language.

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And then all of a sudden discover that the language is ambiguous after holding consistently for 50 years that it's not.

[00:19:13] Speaker 03:
I don't think the commission... How does that work?

[00:19:15] Speaker 01:
Sure.

[00:19:16] Speaker 01:
I obviously expected that question.

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It's not so much that the statutory language itself is ambiguous because it's not.

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The statutory language is plain on its... But the commission looked at the structure of the act itself.

[00:19:30] Speaker 03:
So there's a new rule of law here that you want us to adopt that even though the statutory language is clear and plain and unambiguous,

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we're going to just ignore that clear plain and unambiguous language.

[00:19:45] Speaker 01:
Well I think that the CalPUC case stands for that proposition and CalPUC case the statute it was the FPA which had very similar language and it was also very clear

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that you could not, what the issue there was, whether the commission had jurisdiction over sales to municipalities, and municipalities were left out of the definition of entities over which the commission would have jurisdiction, and the court found there that that was.

[00:20:08] Speaker 03:
Well, they only said that persons didn't mean persons with respect to the definition, because it was being used in a different context.

[00:20:18] Speaker 03:
I mean, here, you're under section seven.

[00:20:22] Speaker 03:
Right, Your Honor.

[00:20:25] Speaker 03:
Which uses persons and why in the world shouldn't we use the statutory definition of persons there in Section 7, which the title of it is all about

[00:20:41] Speaker 03:
of regulations of persons or regulations of natural gas companies.

[00:20:47] Speaker 01:
The Commission's point there is that because of the regulatory gap, the entire purpose for enacting the Natural Gas Act and the Federal Power Act was to fill the gap that the Supreme Court determined existed, that resulted from Supreme Court determinations because states can't regulate the matters here.

[00:21:04] Speaker 01:
And when there's consumption, transportation in interstate commerce and sales for resale in interstate commerce, which

[00:21:10] Speaker 01:
which Clarksville concedes is what we have here.

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In that circumstance, the state can't regulate any of this.

[00:21:17] Speaker 01:
And so the whole transaction, the Clarksville portion of it and the Guthrie portion of it are both work jurisdictional, and you can't have the states regulate that, so we have a gas.

[00:21:27] Speaker 01:
So the commission determined, wow, in the circumstance here where the gas is consumed in another state,

[00:21:33] Speaker 01:
than Clarksville's municipality, they're not really a municipality.

[00:21:37] Speaker 01:
But if the court's uncomfortable with that determination, I'm happy to talk about the second basis for this, which is that even if Clarksville is not a natural gas company, its service here is subject to the commission's Natural Gas Act jurisdiction because it allowed its gas to be dedicated to interstate service.

[00:21:54] Speaker 01:
And that's based on the rationale by the Fifth Circuit in North Carolina and the Supreme Court in Southland Royalty.

[00:22:02] Speaker 04:
But it's not subject, I mean, the language of the statute is pretty clear.

[00:22:05] Speaker 04:
The certificates of public convenience and necessity, that language applies only to natural gas companies.

[00:22:13] Speaker 01:
And that's how you're trying to regulate here.

[00:22:18] Speaker 01:
But the point here is that because these entities, the commission can regulate it separately.

[00:22:26] Speaker 01:
That's what happened in these circumstances.

[00:22:29] Speaker 04:
It doesn't mean regulate it separately.

[00:22:30] Speaker 04:
Well, because as the Supreme Court has held... It can require a certificate of... Yes, it can, Your Honor, because... Even though that only appears in 717 FC?

[00:22:43] Speaker 01:
even though it only appears there, Your Honor, because as in... You're talking about the other, the two other heads of jurisdiction.

[00:22:48] Speaker 01:
Exactly, Your Honor.

[00:22:50] Speaker 01:
And the point is, as happened there, there was no, there's no question that the entity in North Carolina fit within being, it wasn't a person there as well, but they did... So that nullifies the, nullifies the municipality exemption.

[00:23:06] Speaker 01:
No, it doesn't, Your Honor.

[00:23:08] Speaker 01:
In the circumstances here, the Commission explains in JA 114, note 25, the municipality exemption would continue, even with its interpretation.

[00:23:19] Speaker 01:
It explained that, for example, the Commission wouldn't have jurisdiction over a municipal high-pressure pipeline

[00:23:27] Speaker 01:
one that didn't qualify as local distribution that was located entirely within the municipality state and access gas supplies for distribution in the municipal service area.

[00:23:38] Speaker 01:
That would remain exempt from the commission's jurisdiction because of the municipal exemption.

[00:23:43] Speaker 06:
But all natural gas, I mean, all the pipelines that go through a state, even if they don't cross a state line or an interstate commerce, right?

[00:23:53] Speaker 06:
And so the next step is to simply say, well, this natural gas is in interstate commerce, even though it doesn't cross the border of the particular state.

[00:24:05] Speaker 06:
Forget about the municipality.

[00:24:07] Speaker 06:
We have jurisdiction over interstate sales and transportation.

[00:24:12] Speaker 01:
That was not the commission's holding here.

[00:24:13] Speaker 06:
Well, it's not the commission's holding here, but it's the very next step to take.

[00:24:17] Speaker 01:
Well, I think this is the very next step from Intermountain, but I think that because the commission in these orders made clear that in note 25 that the municipality invention will continue, that there is a circumstance where the commission would not have jurisdiction, the commission's point is this gas is consumed in another state.

[00:24:34] Speaker 04:
So how big of a gap is this?

[00:24:36] Speaker 04:
Let's imagine we disagreed with your view and decided to apply the statute as it's written.

[00:24:42] Speaker 04:
What sort of problem would that cause?

[00:24:45] Speaker 04:
How much gas are we talking about here, sold by municipalities?

[00:24:48] Speaker 01:
You know, I don't know the answer to that question, Your Honor, I apologize.

[00:24:52] Speaker 01:
How much, I think it probably involves a number, the amicus brief indicates that it involves a number, a lot of entities.

[00:25:00] Speaker 01:
I don't know what that is in volume.

[00:25:03] Speaker 01:
But I would say that the concern here is, which was

[00:25:07] Speaker 01:
sort of being addressed a bit during the first portion of the argument here, is that Clark's bill is setting rates for interstate transactions that are consumed in another state.

[00:25:20] Speaker 01:
So it's setting rates that consumers are going to have to pay in another state, and that's first job.

[00:25:24] Speaker 04:
Do you think Intermountain applies here?

[00:25:26] Speaker 04:
Or do you think it's distinguishable on its facts?

[00:25:28] Speaker 01:
I think Intermountain is, this determination is based on Intermountain.

[00:25:32] Speaker 01:
I think it's the next step.

[00:25:33] Speaker 01:
The commission's determination there was if your own line goes across.

[00:25:38] Speaker 04:
You heard your friend's argument about why Intermountain should not apply here.

[00:25:42] Speaker 04:
What's your response to that?

[00:25:44] Speaker 01:
Because the commission determined here, it's the consumption of another state.

[00:25:48] Speaker 01:
When Clarksville entered into this contract, it knew that this transit,

[00:25:54] Speaker 01:
the Guthrie line, the Guthrie point at which they take this gas is 20 feet from the state line.

[00:26:02] Speaker 01:
They knew that this turns out and they knew that it was going to a line that went across the state line.

[00:26:06] Speaker 01:
So they knew that they were dedicating their gas to interstate commerce.

[00:26:09] Speaker 03:
How is Clarksville setting rates for Guthrie?

[00:26:20] Speaker 03:
whatever Guthrie to the extent that it's doing any reselling, that transaction is between the city of Guthrie and its customers.

[00:26:30] Speaker 03:
Clarksville isn't setting that rate.

[00:26:32] Speaker 01:
The point of that is that the rates that are set in this wholesale transaction end up affecting rates that affect the end user.

[00:26:42] Speaker 01:
And that's actually the point of the commission doing this.

[00:26:46] Speaker 01:
That's why you can't have a regulatory gap here because the rates that are in this

[00:26:50] Speaker 01:
FERC jurisdictional, this wholesale transaction, this interstate transaction, become part of the rates at the state level.

[00:26:58] Speaker 01:
And so the consumers there will be affected by the rate here.

[00:27:02] Speaker 01:
And Clark's still setting its own rate for that, and no one's regulating that.

[00:27:06] Speaker 01:
That's the regulatory gap that the commission's concerned about here.

[00:27:09] Speaker 03:
And the rate that Guthrie sells its gas to its customers, that's not regulated by FERC?

[00:27:19] Speaker 01:
that it now is regulated by, well, no.

[00:27:22] Speaker 01:
The rate that it sells to its customers is not regulated by FERC because it sells not for resale, but the commission is now, post this case, is now regulating the transportation portion of the Guthrie's transaction.

[00:27:38] Speaker 03:
And you're saying that the state of Kentucky, the Kentucky Public Service Commission, isn't regulating the rate that Guthrie sells the gas to

[00:27:48] Speaker 03:
its customers?

[00:27:50] Speaker 01:
It certainly can regulate that.

[00:27:52] Speaker 01:
The problem is the states are required to pass through rates that are interstate rates.

[00:27:58] Speaker 01:
They're not allowed to say you can't charge that unless there's like a settlement that you can increase your rates.

[00:28:02] Speaker 01:
But they have to allow as legitimate rates a pass through of the rates that they're paying to get the gas to sell to their end-use customers.

[00:28:12] Speaker 01:
So the state can't really do anything about that.

[00:28:14] Speaker 01:
That's why the FERC jurisdiction really matters.

[00:28:16] Speaker 01:
You have to have that rate be a just and reasonable rate to make sure that it's going to pass through to end-use customers as just and reasonable rate as well.

[00:28:25] Speaker 06:
Did FERC, well, what's your response?

[00:28:29] Speaker 06:
I asked a question whether FERC waived the data retention requirement and was it 402?

[00:28:35] Speaker 01:
Yeah, on the sales side, the commission, this automatic, there's very, very few requirements on the sales side because there's been deregulation there.

[00:28:47] Speaker 01:
But they do have this data retention requirement of extremely

[00:28:51] Speaker 01:
extremely minimal requirement, and likely they were retaining their data anyway.

[00:28:57] Speaker 01:
So it doesn't seem to me to be enough to satisfy standing.

[00:29:00] Speaker 06:
Before you sit down, show me, or give me the page on which FERC says that Clarksville is a natural gas company.

[00:29:08] Speaker 01:
Sure.

[00:29:09] Speaker 01:
It's in, it's JA 112, paragraph 13, your honor.

[00:29:16] Speaker 01:
Applying here the same reasoning the Supreme Court used in interpreting the Federal Power Act's definition of person in CalPUC, we find that a municipality can be a jurisdictional person and therefore a natural gas company under the Natural Gas Act.

[00:29:29] Speaker 06:
And the commission talks about the regulatory gap and the mission to... Yeah, but that doesn't say Clarksville is, and of course that's true with respect to Intermountain.

[00:29:39] Speaker 06:
Where does it say Clarksville is a natural gas company?

[00:29:41] Speaker 01:
Well, that was the... And then the next thing the Commission says is, at Rehearing Order J112-113, paragraph 14, the Commission says, even if we were to accept Clarksville's argument that, as a municipality, it cannot be a natural gas company for purposes of natural gas sector restriction,

[00:30:02] Speaker 01:
The commission then said its secondary rationale, which is that it dedicated its gas to interstate service.

[00:30:08] Speaker 01:
And therefore, the commission has jurisdiction because of North Carolina and Southland royalty.

[00:30:14] Speaker 01:
The rationale's there.

[00:30:18] Speaker 04:
Thank you very much.

[00:30:19] Speaker 04:
Thank you very much.

[00:30:22] Speaker 02:
Ms.

[00:30:22] Speaker 02:
Janet, we'll give you about one minute.

[00:30:24] Speaker 02:
I'll be very quick.

[00:30:27] Speaker 02:
I just want to say overall, basically all these arguments that FERC is making now were rejected previously by FERC in the Tennessee gas case.

[00:30:34] Speaker 02:
I just want to go through three of them really quickly.

[00:30:36] Speaker 02:
The CPUC case is not, the California Commission case is not relevant because there was in fact an ambiguity there with respect to sales to municipalities because there were provisions in the act that allowed municipalities to

[00:30:51] Speaker 02:
to file complaints, et cetera.

[00:30:53] Speaker 02:
So by contrast here, there's no ambiguity saying that there should be regulation over sales by municipalities.

[00:31:00] Speaker 02:
The GAAP argument, basically the FERC is saying that

[00:31:04] Speaker 02:
We should disregard a precedent because it creates a regulatory gap here.

[00:31:08] Speaker 02:
However, the precedent itself rejects the notion that the failure to regulate a municipality creates a regulatory gap because there's no intent to regulate municipalities to begin with.

[00:31:19] Speaker 02:
And finally, placed within the North Carolina case dedicated to interstate service, if you look at the Southland case, what that term means is placed within the jurisdiction of FERC, which has not happened here.

[00:31:31] Speaker 03:
But what about Council's point that whatever rate or whatever terms of the sale that Clarksville makes to Guthrie are in effect setting a rate in Kentucky when that gas is resold by Guthrie to its customers and that the state is really effectively powerless to regulate that rate.

[00:31:59] Speaker 02:
There may be some truth to that, but two things.

[00:32:02] Speaker 02:
Again, I would emphasize that Congress in implementing the Natural Gas Act was not concerned about any abuses by municipalities.

[00:32:11] Speaker 02:
It was concerned about it with abuses by private companies.

[00:32:15] Speaker 02:
And secondly, as I said earlier,

[00:32:19] Speaker 02:
The problem for FERC here is it cannot contradict the clear language of the statute in order to achieve a policy goal, no matter how noble that might be.

[00:32:28] Speaker 02:
That's what the Western Minnesota case basically said.

[00:32:33] Speaker 02:
Thank you very much.

[00:32:33] Speaker 02:
The case is submitted.