# Opposition Brief — McCarty v. Midwestern Gas Transmission Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1142%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 2002 - **Citation:** 535 U.S. 1053 ## Text _— es Supreme Court Us. No. 01-1134 IN THE Supreme Court of the Hite Snwtesre CLERK WILLIAM D. MCCARTY, DAVID W. HADLEY, JUDITH G. RIPLEY, CAMIE J. SWANSON-HULL and DAVID W. ZIEGNER, in their official capacities as COMMISSIONERS OF THE INDIANA UTILITY REGULATORY COMMISSION, Petitioners, V. MIDWESTERN GAS TRANSMISSION COMPANY and SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, Respondents. On PETITION FOR A Writ oF CERTIORAKI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT BRIEF IN OPPOSITION FOR RESPONDENT MIDWESTERN GAS TRANSMISSION COMPANY Janet K. PLACE G. Danie KELLEY, Jr. General Counsel Counsel of Record NORTHERN PLAINS NATURAL WILLIAM P. DIENER Gas COMPANY EDWARD P. STEEGMANN 1111 South 103rd Street Ice MILLER Omaha, Nebraska 68124-1000 One American Square (402) 398-7886 Box 82001 Indianapolis, Indiana 46282 (317) 236-2100 Attorneys for Respondent Midwestern Gas Transmission Company 173289 g COUNSEL PRESS \ (800) 274-3321 * (800) 359-6859 pale 1 CORPORATE DISCLOSURE STATEMENT Midwestern Gas Transmission Company (“Midwestern”) is a wholly owned subsidiary of Border Midwestern Company. Border Midwestern Company is a wholly owned subsidiary of Northern Border Intermediate Limited Partnership. Northern Border Intermediate Limited Partnership is owned by three general partners, two of which are wholly owned subsidiaries of Enron Corporation and one of which is a wholly owned subsidiary of The Williams Companies, Inc. The Williams Companies, Inc. is a publicly held company. Northern Border Intermediate Limited Partnership also has one limited partner, Northern Border Partners LP, a publicly held company. il TABLE OF CONTENTS Corporate Disclosure Statement ...............- TRONe OL COMDIIRE 66's ocd v6 Si ea ws eo evdes bees Table of Cited Amtneettaes: os i. ccitnticcvcecatecees TOES OF RINE: 6 is 5 kk hoses in ene Se h00 os No Question Presented — Dismissal Required .... Seatemnent OF Gee COMP io cceseencas ieee eee Deregulated National Market And Open Access Interstate Transportation ...............00008: PE FOOOMEIE «én vise nnnkgddeceedeniaeees FERC’s Unappealed Decision .............ee0: The IURC (Petitioners) Defers Preemption Issue To POGRN FOUND ok ks cv iN Si ewerke ee pawdenes SIGECO Pursues More Litigation .............. Fee EE ive edkawcc nen ou ka hewn bse Corrections Pursuant To S. Ct. Rule 15.2 ........ Reasons for Denying the Petition ............... Question 1 — Presents Nothing But Petitioners’ te rer er rer Terer, ero re 2 rey Page iv xi ill Contents Question 2 Presents Nothing ....-..------+++>: Question 3 Presents Nothing — SIGECO’s Harassing, Vexatious Litigation ...........+-- Seventh Circuit Correctly Determined FERC’s Exclusive Jurisdiction Over Transportation Of User Purchased Gas In One State To User’s Facility In Another State. .........--++++eees ccc vot ccdccevovctevcececcousees 21 29 iv TABLE OF CITEDAUTHORITIES Page Cases: American Gas Association v. FERC, 587 F.2d 1089 Cs St ER 6 ase Uh cosautes buedkanue's 7, 23 Associated Gas Distributors v. FERC, 824 F.2d 981 Set, GE EE Cb Soar eb ksi ans ooeRrs teee 7,23 Baggett v. Department of Professional Regulation, Board of Pilot Commissions, 717 F.2d 521 (11th Ge Res Ue i esee tan necknteh asenpeass 15 Norfolk & W.Ry. v. Public Utils. Comm'n, 926 F.2d FOF GO COED wobec ccncdedwrevesicscs 15 Bud Antle Inc. v. Barbosa, 45 F.3d 1261 (9th Cir. 1995), cert. denied, 516 U.S. 1159 (1995) ..... 15 Bunning v. Commonwealth of Kentucky, 42 F.3d 1008 Se Ma SON bb ds Sed whededdeceVadeCevbecus 15 Cascade Natural Gas Corp. v. FERC, 955 F.2d 1412 SMa: SS 2 Cah C was 0b 14 and Scepter and no doubt purchases such gas in much, much larger quantities.'® What SIGECO is really seeking is exactly what Congress sought to avoid when it required FERC to take away monopoly power from the interstate pipelines, requiring them to unbundle and provide open access non-discriminatory transportation. Now SIGECO wants to have this monopoly power for itself and the other LDC’s which would no doubt create the same anti- competitive conditions that existed prior to Order 636 and be subject oniy to regulation by Indiana so that the industrial consumers are captives to SIGECO. There can be no doubt that monopoly power in transportation will distort the competitive gas sales markets which Congress sought. REASONS FOR DENYING OR DISMISSING THE PETITION Question 1 — Presents Nothing But Petitioners’ Concoctions. Finding no conflict between the decision of the Seventh Circuit and any of this Court or of the other circuits, petitioners embark upon a repetitious series of misquotes to create the illusion that the Seventh Circuit created a novel “*seems’ preempted” exception to Younger. These are patent misconstructions and this Court should summarily dismiss the Petition because there is no attempt to comply with S. Ct. Rule 14.1(a). This Court in both NOPSI/ (where this Court found that the New Orleans City Council’s actions were not clearly or facially seeking to regulate or interfere with wholesale rates) and in Utility Commissioners of Ohio (where this Court sustained enjoining the State Commission’s actions and orders seeking to regulate wholesale rates which were clearly and facially ~ preempted by the Federal Power Act), recognized that Younger abstention is not required where State proceedings or law is 19. See In Re Southern Indiana Gas & Electric Company, 2000 WL 33181398 at * 3 (Ind. URC 2000). 15 clearly, patently or facially invalid as encroaching upon exclusive federal jurisdiction. The Seventh Circuit joined the holdings of the First, Sixth, Ninth and Eleventh Circuits pursuant to Utility Commissioners of Ohio and NOPSF° — that Younger abstention, which 20. P.App. 6a-7a, adopting Chaulk Services, Inc. v. Massachusetts Commission Against Discrimination, 70 F.3d 1361 (1st Cir. 1995) (reversing the district court’s abstention, holding: “a number of courts have held that Younger abstention is inappropriate where a claim of preemption is ‘facially conclusive’ and/or ‘readily apparent’, because no significant State interests are served. It is clear that the State tribunal has acted beyond the lawful limits of its authority.”); Bud Antle Inc. v. Barbosa, 45 F.3d 1261 (9th Cir. 1995), cert. denied, 516 U.S. 1159 (1995) (reversing the district court’s abstention under Younger where it was “readily apparent” that State agency’s assertion of jurisdiction was preempted under Federal law); Bunning v. Commonwealth of Kentucky, 42 F.3d 1008 (6th Cir. 1994) (where the Court concluded that abstention is not required in a case presenting facially conclusive claims of Federal preemption), Gartrell Construction Inc. v. Aubrey, 940 F.2d 437, 441-42 (9th Cir. 1991) (“no significant State interest is served where the State law is preempted by Federal law and preemption is ‘readily apparent.’ .. . Younger abstention is not required. . . . Preemption is readily apparent under [Federal procurement regulation]”); National Railroad Passeng: Corp. v. State of Florida, 929 F.2d 1532, 1537 & n.12 (lithCir. 1991) (“in the present case, the new language of the Rail Passenger Service Act clearly indicates that State and local laws are preempted; thus, the District Court would not be required to abstain [under Younger] from enjoining any ongoing State criminal proceeding”); Baggett v. Department of Professional Regulation, Board of Pilot Commissions, 717 F.2d 521, 524 (11th Cir. 1993) (same); Norfolk & W.Ry. v. Public Utils. Comm'n, 926 F.2d 567, 573 (6th Cir. 1991) (determining that FRA preempted State administrative rule, preemption was “facially conclusive” so abstention not required); see also Freehold Co.-Generation Associates v. Board of Regulatory Commissions, 44 F.3d 1178-87 & n.6 (3d Cir. 1995), cert. denied, 516 U.S. 815 (1995) (“the alleged intrusive action is not by the federal government, but, on the contrary, by a state regulatory agency. We conclude that abstention is not appropriate in this case and does not (Cont'd) ee ee « 16 “presupposes that the State has a valid interest that it is seeking to enforce,” is not required if the State does not hav such an interest, if for example, it is seeking to regulate activities that clearly are under exclusive federal control... . See Chaulk Services, Inc. v. Massachusetts Comm 'n Against Discrimination, 70 F.3d 1361, 1370 (1st Cir. 1995) and cases cited there. ... Mere defiance of clear federal law removing an area from potential State regulation is not such an interest.?’ [P.App. 6a-7a. | Here, Indiana by statute, and SIGECO by the proceedings in question, seek to regulate the interstate transportation of user purchased gas in one State to the end-user’s facility in another State. This, the Seventh Circuit found, adopting the three other circuits that had so held (“It seems to us, as it has seemed to the other courts to have addressed the issue, [see n.26, infra]’’) is the transportation of natural gas in interstate commerce within FERC’s § 1(b) jurisdiction, which in accordance with this Court’s decisions is exclusive, preempting State regulation. Northwest Central Pipeline Corp. v. State Corporation Comm'n, 489 U.S. 493, 506-07 (1989); Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300-01 (1988). Not able to challenge the correctness of the Seventh Circuit’s adoption of the facially clear exception to Younger (Cont'd) warrant extended discussion”); Communications Telesystems Int'l v. California Pub. Util. Comm'n, 196 F.3d 1011, 1017 (9th Cir. 1999) (preemption must be “readily apparent” to prevent abstention). 21. Petitioners contend that NOPS/ broadly defines the State’s interest as being the “regulation of utilities” by the State, Pet. 10, but again selectively quote out of context, ignoring that the interest referenced in NOPS] is not simply regulating utilities but rather the more focused, limited State interest of “regulating intrastate retail rates” 461 U.S. at 377 (emphasis added). and the adoption of the circuits which have found the interstate transportation of user- owned gas in one State to and including the last foot of transportation into the user’s facility within FERC’s exclusive jurisdiction, petitioners embark upon the concoction that the Seventh Circuit created a novel “ ‘seems’ preempted” exception to Younger. Petitioners’ attribution of apparently dispositive significance to the single, commonplace phrase “It seems to us” in the Court of Appeals’ opinion, while ignoring the parallel use “as it has seemed to the other courts” is at best is just plain silly — at worst, misleading. Pet. 12-13. As the parallel construction of this sentence demonstrates, the Seventh Circuit is describing its own holding (“It seems to us”) in exactly the same terms as it is describing the holdings of the other circuits to address the issue. Petitioners do not and cannot contend that the opinions of these other circuits (see pp. 22-26, infra) are anything other than unequivocal holdings against petitioners’ position. Described in the same terms (“seems”), so too is that of the Seventh Circuit — it is not a gratuitous “quick look”, Pet. 11, 13, nor has it “lowered the bar to ‘seems’ preempted,” Pet. 14, or to a “lax ‘seems’ preempted standard.” Pet. 19. Petitioners continue playing fast and loose in another “straw man” argument — the notion that the Seventh Circuit held the mere assertion of a preemption claim precludes Younger abstention. Pet. 13-14. The Court of Appeals again did nothing of the sort, but rather expressly recognized, in accordance with NOPSI, that any such rule “would be question begging.” (“This is not to say that a defense of federal preemption automatically defeats Younger, the position rejected in [NOPS]T]. That would be question begging. The State court has the same right and power to decide a defense of preemption as it does to decide any other federal defense”) P.App. 6a-7a. Petitioners then attack the circuits (now joined by the Seventh Circuit) on the facially clear or readily apparent exception to Younger as being a “full blown assault” by the 18 circuits on Younger. Pet. 13-14. (Pet:*-oners do not and cannot identify a split in the circuits or identify even a single case supporting their own position, nor is this fairly within any question vresented.) The “assault” is yet another figment of petitioners’ imagination. These cases are based on Younger, Utility Commission of Ohio, and NOPSI and do no more than to recognize the necessity of a valid State interest as an “entry requirement” to the extraordinary circumstances needed to justify abstention in the first instance. (See n.20, supra.) The State perforce has no such interest where its actions clearly encroach upon an exclusive federal domain and are thus facially invalid. Utilities Commission of Ohio so holds with respect to State encroachment upon FERC’s exclusive domain. 317 U.S. at 469. To say, as do the circuits’ decisions, n.20, supra, that such facial invalidity of the State’s asserted interest is “readily apparent”, “conclusive”’, “facially conclusive”, “clear”, etc. are but different words for the same thing. Petitioners are casting about for error in the semantic nuances associated with synonymous terms without ever establishing a contravention of this Court’s precedents. Question 2 Presents Nothing. Much like Question 1, Question 2 is based upon a misconstruction that the Seventh Circuit rejected abstention “based on an appellate assumption” that the “regulatory commissioners are prosecuting the State proceedings to serve the commercial interest of a private utility....” As set forth above, the Seventh Circuit’s decision is well grounded, not based on any assumption. See also, infra, pp. 21-18. Obviously, there could have been no such assumption by the Seventh Circuit — the TURC is not prosecuting the State proceedings as petitioners represent. Quite the opposite, SIGECO brought all the proceedings, see infra, pp. 19-21. Petitioners voluntarily stayed SIGECO’s proceedings “deferring the federal preemption issue for resolution by federal forums”. M.App. 57a. 19 Question 3 Presents Nothing — SIGECO’s Harassing, Vexatious Litigation. In Question 3, petitioners once again misconstrue, by taking out of context, several words in the Seventh Circuit’s opinion. Petitioners assert that “in addition to its ‘seems preempted’ standard”, the Seventh Circuit assertedly “swept away the rights of the State courts and agencies to decide the constitutionality of State laws” where a Federal agency “becomes first ‘seised’ of the dispute . . . to which the State is not a patty.” Pet. 19. Of course, Indiana was a party to the FERC proceedings. See n.15, supra. But more importantly, the language upon which petitioners seize is but a part of the Seventh Circuit’s analysis leading to its conclusions that the injunction sought by Midwestern “merely seeks to prevent vexatious litigation by a disappointed party, namely SIGECO, in the FERC regulatory proceeding,” and that SIGECO “must be enjoined from harassing the purchasers and Midwestern by pursuing a State regulatory proceeding aimed at undoing the results of a Federal regulatory proceeding.” P.App. 6a, 8a. These conclusions of the Seventh Circuit can only be viewed in the backdrop of its determination that Younger “has no application to a case such as this. . . , In which, . . . a federal proceeding (here before the Federal Energy Regulatory Commission) overlapping the state proceeding reaches completion while the state proceeding is still pending at an early stage”. The Court noted that SIGECO appeared in the FERC proceeding in which Midwestern sought certification, and made essentially all of the arguments against certification as it sought to raise in the Indiana proceedings, including that FERC should not rule before Midwestern received a certificate from the IURC. P.App. Sa. So what confronted the Seventh Circuit, assertedly requiring abstention, was not merely [URC initiated proceedings against Midwestern with Midwestern running to federal court — the classical abstention case. Rather this case presents: (1) a first- 20 filed FERC case seeking the required FERC approval for unbundled interstate transportation of user-purchased gas in one State to the users’ facilities in another State, (2) filed before SIGECO’s petition to the IURC, (3) a FERC decision while the SIGECO petition had been voluntarily stayed by these petitioners’ Order “deferring the federal preemption issue for resolution by federal forums,” M.App. 57a, (which makes this case an inappropriate vehicle for this Court’s consideration of any Younger issue), (4) in which FERC proceeding, the State appeared through the OUCC, (5) in which FERC proceedings SIGECO made all the various objections which it sought to remake before the URC, (6) which FERC decision neither the State” nor SIGECO appealed as required to a federal circuit court of appeals, 15 U.S.C. § 717r(b) — and (7) SIGECO filed a further state court action against Midwestern, as well as two subsequent IURC proceedings against Midwestern, “aimed at undoing” the FERC decision. If there was ever harassing, vexatious litigation, this case is it — Younger does not require abstention, unless Younger is “turned on its head”! Interestingly, petitioners raise no error or challenge to the Seventh Circuit’s determination that harassing, vexatious litigation does not require Younger abstention. Such has never been doubted in this Court’s decisions. Middlesex County Ethics Committee, etc. v. Garden State Bar Association, 457 U.S. 423, 437 (1982) (because there was “no bad faith or harassment” or other exceptional circumstances dictating to the contrary, the federal court should abstain). Moreover, no principle of federal law, whether comity or statute,”> is violated when state parties 22. “Ifthe state voluntarily chooses to submit to a federal forum, principles of comity do not demand that the federal court force the case back into the State’s own system.” Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 480, 97 S. Ct. 1898, 1904 (1977). 23. The situation presented here is similar to the “relitigation exception” recognized under the Anti-Injunction Act, 28 U.S.C. § 2283, (Cont'd) 21 and courts are enjoined from collaterally ..:king final FERC orders. See Williams Natural Gas Co. v. Cit} -f Oklahoma City, 890 F.2d 255, 259-60 (10th Cir. 1989), cert. den., 497 U.S. 1003 (1990) (determining that an injunction should issue against State proceedings enjoining an interstate pipeline company from acting pursuant to a final FERC order which constituted an impermissible collateral attack on the FERC order, and abstention was inappropriate). Seventh Circuit Correctly Determined FERC’s Exclusive Jurisdiction Over Transportation Of User Purchased Gas In One State To User’s Facility In Another State. Petitioners and SIGECO want to exclude from FERC’s interstate transportation — any transportation to an end-user, or the “last foot’ into an end-user’s facility.2* No such language can be found in the NGA. (Cont'd) which allows a federal court to enjoin state proceedings “that attempt to readjudicate previously decided matters” creating vested federal rights. See, e.g., Ramsden v. Agribank, 214 F.3d 865, 868 (7th Cir. 2000). Like Younger, the Anti-Injunction Act prescribes a point of demarcation at which comity concerns end and an enforcement of federal judgments creating vested federal rights begins. In face of Midwestern’s federally adjudicated right pursuant to the FERC certificates to provide interstate transportation service to GPC and Scepter, no more than the Anti- Injunction Act do principles of comity animating Younger abstention prohibit issuance of an injunction against SIGECO’s “vexatious” and “harassing” collateral attacks on the FERC decision. P.App. 6a, 8a. 24. Petitioners term this “direct delivery to a consumer”, Petition p. 19, or “delivery service to an end-user consumer,” Pet. 18, or “local delivery service” to end-use consumers. Pet. 17. SIGECO’s view of the marketplace is that while the purchase of gas has been deregulated, the second step — transportation from the wellhead to the LDC — is within FERC’s jurisdiction but the final step is always “local distribution by the LDC” reserved to the States. SIGECO Brief, p. 6. SIGECO wants the “direct local service to reach all customers” excluded from interstate transportation. SIGECO Brief 8. 22 The plain language of § 1(b) grants FERC jurisdiction over “transportation of natural gas in interstate commerce” and defines “interstate commerce’”’ as “commerce between any point in a State and any point outside thereof... .” 15 U.S.C. § 717a(7). The language and its applicability to the transportation of user-purchased natural gas in one State to the user’s facility in another State is clear, unquestionable. It is, therefore, no surprise that petitioners can find no support in § 1(b) or any case of a Circuit Court of Appeals or of this Court’ that the last foot of unbundled transportation of user-purchased gas in one State to the user’s facility in another, is other than transportation in interstate commerce. Just as the Seventh Circuit found FERC’s jurisdiction to be clear and exclusive, other circuits have likewise found FERC’s jurisdiction over such unbundled transportation into the user’s facility to be “undoubtable” “hardly conceivable” to find a better fit, “clearly within FERC’s transportation jurisdiction”.*® This Court similarly found such 25. Petitioners reliance on General Motors Corp. v. Tracy, 519 U.S. 278 (1997) is simply wrong. 7racy did not rule on any issue in this case. In addition to acknowledging the holding of the circuits at n.14, this Court also noted the legislative changes since 1938 and that there might be questions raised by such and “we do not decide this issue,” 519 U.S. at 305, n.13, and further noted that § 1(b) “remains unchanged,” 519 U.S. at 305, n.13 but did not discuss that 15 U.S.C. § 3431 limited § 1(b) and other provisions of the NGA from applying to “first sales”. Petitioners’ reliance on Panhandle-Indiana and Michigan is also wrong. These cases said nothing of “local delivery service” being outside FERC’s jurisdiction. Both decisions were grounded in § 1(b)’s grant of only wholesale, but not retail, sales jurisdiction to FERC and said nothing whatever about unbundled interstate transportation. Indeed, this Court in Tracy repeatedly described these cases as recognizing the power of States “to regulate all in-State gas sales directly to consumers... .” 519 U.S. at 281. Of course, the NGPA/NGWDA raise issues as to whether States can regulate “first sales”, whether in-State or out-of- State in the new competitive national market. See n.8, supra. 26. See Michigan Consol. Gas Co. v. Panhandle Eastern Pipeline Co., 887 F.2d 1295, 1300 (6th Cir. 1989), cert. denied, 494 U.S. 1079 (Cont'd) 23 within FERC’s jurisdiction. FPC v. Transcontinental Gas Pipeline, supra. There is no limitation on FERC’s interstate transportation jurisdiction based on whether the gas is to be consumed or resold or whether it is the “last foot” to consumption. “The Act gives the Commission jurisdiction over interstate transportation of natural gas as a separate and distinct matter, whether (Cont'd) (1990) (Michigan PSC enjoined from asserting jurisdiction over FERC certificated unbundled interstate transportation of user-owned gas to user’s facility where the Court found it “hardly conceivable” to find a better fit with FERC’s interstate transportation jurisdiction); Michigan Consolidated Gas Company v. FERC, 883 F.2d 117, 120 (D.C. 1989), cert. denied, 494 U.S. 1079 (1990) (the Court had “no difficulty” affirming FERC’s jurisdiction to grant a certificate of convenience and public necessity for the interstate transportation to a user’s facility); Public Utility Commission of California v. FERC, 900 F.2d 269, 273-77 (D.C. Cir. 1990) (unbundled interstate transportation of user-owned gas is transportation of natural gas in interstate commerce does not end at the “last foot of pipe” before going into the end-user’s facility); and Cascade Natural Gas Corp. v. FERC, 955 F.2d 1412, 1416 (10th Cir. 1992) (FERC has exclusive jurisdiction to authorize unbundled transportation services for user-owned gas to the user’s facility as such “undoubtedly falls within” FERC’s interstate transportation jurisdiction). See also United Distribution Companies v. FERC, supra, (FERC has interstate transportation jurisdiction over LDCs’ capacity sales to their own end-users because gas sales element was severed, unbundled from the transaction, with FERC retaining jurisdiction over interstate transportation component, 88 F.3d at 1153, and sustaining FERC’s exclusive transportation jurisdiction and regulatory preemption of States with respect to LDCs’ buy/sell agreements with their users, id. at 1154-55); National Fuel Gas Supply Corporation v. Public Service Commission of New York, 894 F.2d 571,579 (2d Cir. 1990), cert. denied, 497 U.S. 1004, 1105 S. Ct. 3240 (1990) (FERC has exclusive jurisdiction concerning replacement of 1.6 miles of interstate pipeline and not required to obtain a State environmental certificate because FERC has the authority to consider environmental issues, “State may not engage in concurrent site specific environmental review;” and see also American Gas Association, supra, and Associated Gas Distributors, supra. 24 the transportation is for hire or for sale and whether this sale is for consumption or resale.” United Pipeline Company v. Federal Power Commission, et al., 385 U.S. 83, 89 (1966). The independent jurisdictional grant over interstate transportation allows FERC jurisdiction over curtailment plans for both jurisdictional wholesales and non-jurisdictional retail sales, because the Act does not limit the interstate transportation jurisdiction, as it does the sales jurisdiction. See Federal Power Commission v. Louisiana Power & Light Co., 406 U.S. 621, 636 (1972) (“Though the [NGA’s] application to ‘sales’ is limited to sales of interstate gas for resale, the Act applies to interstate ‘transportation’ regardless of whether the gas transported is ultimately sold retail or wholesale.”), approved in New York, supra, 112 S. Ct. at 1022. Just last month, in New York, et al. v. Federal Energy Regulatory Commission, et al., supra, based on similar unambiguous language in a nearly identical provision of the Federal Power Act, 16 U.S.C. § 824(b), this Court affirmed FERC’s regulation of unbundled retail electric transmissions based on FERC’s exclusive jurisdiction over “the transmission of electric energy in interstate commerce. ...” 16 U.S.C. § 824(b), see n.2, supra. The statutory text thus unambiguously authorizes FERC to assert jurisdiction over two separate activities — transmitting and selling [just as does the NGA over transportation and selling]. It is true that FERC’s jurisdiction over the sale of power has been specifically confined to the wholesale market [as under the NGA for gas]. However, FERC’s jurisdiction over electric transmission contains no such limitation [neither does the NGA for transportation]. Because the FPA authorizes FERC’s jurisdiction over interstate transmissions, without regard to whether the transmissions are sold to a reseller or directly to a consumer [as does the & s - : 2 $ = a y : * é 25 NGA over interstate transportation], FERC’s exercise of this power is valid. [112 S. Ct. at 1024]. Change the words “transmission” to “transportation” and “electric” to “gas”, and the cases are indistinguishable. Petitioners’ reliance on the terms “local distribution” in the proviso portion of § 1(b) (much like the proviso language of the FPA) to encompass the last foot of interest transportation to an end-user was rejected in all of the circuit court cases (and in New York, supra, under the FPA).?’ This Court has repeatedly held the proviso language is “surplusage” and does not limit “any jurisdiction otherwise granted under § 1(b)” and is to be strictly construed. Federal Power Commission v. East Ohio Gas Co., 338 U.S. 464, 471 (1950) (the terms “local distribution” in the proviso were “surplusage which was ‘not actually necessary’ ”); Federal Power Commission v. Louisiana Power & Light Co., et al., 406 U.S. 621, 638 (1972) (“it is well established that the proviso was added to the Act merely for 27. Public Utilities Commission of California, supra, 900 F.2d at 276 (distribution conjures up receiving a large quantity of some good and parceling it out among many takers. The legislative history of the Natural Gas Act supports this view and undercuts any suggestion that final delivery to an end-user transfers the terminal stage of transportation into distribution); Cascade Natural Gas, 955 F.2d at 1418-21 (“local distribution’ as Congress viewed the term, involves two components, the retail sale of natural gas and its local delivery, normally through a network of pipelines designed to supply local consumers” such that “by-pass transactions did not entail the realm of local retail sales that Congress intended to reserve to the States” Michigan Consolidated Gas Co., supra, 883 F.2d at 121-22 (rejecting the argument that by-pass to an end-user involves “local distribution” where the gas was purchased out-of-State from third parties and the pipeline merely transported the gas into an end-user in interstate commerce). See also Oklahoma Natural Gas Co. v. Federal Energy Regulatory Commission, 906 F.2d 708, 710 (D.C. Cir. 1990) (local distribution is “a network of small local lines used to transmit gas from a large interstate pipeline to individual consumers spread out in a local geographic area — not a high pressure line connecting an interstate pipeline to a single end-user”). 26 clarification and was not intended to deprive FPC of any jurisdiction otherwise granted by § 1(b).”); Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 678 (1954) (“we noted that ‘{e]xceptions to the primary grant of jurisdiction in § 1(b)(1) ought to be strictly construed’ ”); Interstate Natural Gas Co. v. FPC, 331 U.S. 682, 690-91 (1947) (same). The Circuit Courts of Appeal have uniformly held that the meaning of “local distribution” is not merely transportation to an end-user, but the breaking down, parceling out and sale of gas to multiple users in a local area, n.27, supra. “Insofar as Congressional committees spoke to the matter, therefore, they appear to have viewed distribution as confined to its parceling out function (and probably) even more narrowly, to parceling out accompanied by retail sales.” Public Utility Commission of California, 900 F.2d at 276 (emphasis in original). Merely because transportation is provided by local distribution companies to gas users does not mean that it is not the transportation of natural gas in interstate commerce — interstate transportation jurisdiction extends to the local distribution companies’ sales of unbundled transportation Capacity to the their own end-users where the gas sales element and the transportation element are severed, unbundled with FERC maintaining jurisdiction over the interstate transportation element. See United Distribution Companies v. FERC, supra, 88 F.3d at 1150-56 (sustaining various aspects of Order 636’s mandatory unbundling and that the interstate transportation jurisdiction extends to FERC’s regulation of local distribution companies’ capacity sales and buy/sell arrangements of transportation to their end-users, and preempts State regulation to the contrary.) Aside from the clear language in § 1(b), later provisions of the NGPA and the NGWDA also demonstrate that FERC’s interstate transportation jurisdiction encompasses the last foot of transportation of user-owned gas from out-of-State into the user’s facility in-State. For instance, consistent with the historical 27 definition of local distribution, Congress in the NGPA expressly defined “distribution companies” as engaged in the breaking down and parceling out of natural gas and sales for consumption. See NGPA § 2(17), where Congress defined a local distribution company as “any person, other than an interstate pipeline or intrastate pipeline engaged in the transportation, or local distribution, of natural gas and the sale of natural gas for ultimate consumption.” 15 U.S.C. § 3301(17) (emphasis added). Nothing in this definition indicates that Congress ever considered transportation of user-owned gas to an end user for consumption (or at the “last foot”) to be the domain of local distribution. In 1978 as a part of the Congressional effort to attack the imbalances in the natural gas supply, Congress amended NGA § 7 to allow FERC to give preference or discriminate in certificating unbundled interstate transportation of user-owned gas to high priority users’ facilities. 15 U.S.C. § 717f(c)(2); M.App. la-2a. If FERC did not have jurisdiction over transportation of user owned gas in interstate commerce into an end-user’s facility pursuant to § 1(b), the amendment would make no sense. Concurrently, in the 1978 NGPA, Congress sought to protect previous certifications for unbundled transportation of user-owned natural gas into utility generation units by prohibiting FERC from revoking any earlier granted certificate for such transportation into generating facilities to replace coal because of such use being an unpreferred use, i.e. gas versus coal.. 15 U.S.C. § 3394(a): “[T]he Commission may not . . . revoke or amend any certificate of public convenience and necessity issued before January 1, 1969 under Section 7 of the Natural Gas Act ... for the transportation of natural gas owned by any electric utility. . .” for a ten year period after November 9, 1978. App. at 3a. Again, Congress recognized FERC’s § 1(b) interstate transportation authority over the transportation of user-purchased gas in one State into the user’s facility in another State. 28 Finally, in the 1992 Energy Policy Act, Congress expressly affirmed the competition which it had encouraged, not only in the integrated, competitive and unregulated national gas market, but also competition in transportation markets. Congress considered further amendments to the NGA and NGPA as a part of the Energy Policy Act of 1992 including requiring 60 day notice to an LDC of a prospective bypass so state commissions could consider providing more flexible rates for a LDC to compete. See House Rept. No. 102-474(I) re proposed Sec. 204, “Rules in Local Distribution Bypass Cases.” 1992 USCCAN 1953 (102nd Cong., 2d Sess., 1992) Instead, Congress enacted a declaration that “natural gas consumers and producers, and the national economy, are best served by competitive natural gas wellhead market.” P.L. 102-486, Sec. 202, entitled “Sense of Congress”.”® In sum, Congress has created an integrated, deregulated competitive national market for the sale and purchase of natural gas, including sales to any end-user. It also recognized that for there to be a market where the lowest cost producers could reach the highest bidding purchasers, and vice versa, FERC had to require unbundled, open access transportation. This allowed the LDC’s and the industrial users to bypass the interstate pipelines and purchase gas from others in the integrated national market. Petitioners and SIGECO now argue the last foot of interstate transportation to any consumer is subject to State jurisdiction. If this is true, then all Congress accomplished in the last 25 years is to transfer the “market function subject to market power” — that is, a monopoly power — from the interstate pipelines to the LDC’s and to exclusive State jurisdiction. 28. Here, there is no plain meaning to overcome. In fact, the plain meaning is established independently of the foregoing. See Solid Waste Agency of Northern Cook County v. United States Army Corp., __ U.S. __, 121 S. Ct. 675, 681 (2001). 29 That is ridiculous. If this were true, Congress would have changed it, too. CONCLUSION The Petition for a Writ of Certiorari to the United States Court of Appeals for the Seventh Circuit should be dismissed or denied. Respectfully submitted, JANET K. PLACE General Counsel G. DANiEL KELLEY, Jr. NORTHERN PLAINS NATURAL Counsel of Record Gas CoMPANY WILLIAM P. DieNeR 1111 South 103rd Street EDWARD P. STEEGMANN Omaha, Nebraska 68124-1000 Ice MILLER (402) 398-7886 One American Square Box 82001 Indianapolis, Indiana 46282 (317) 236-2100 Attorneys for Respondent Midwestern Gas Transmission Company ts ena eed AES Ge Ut st AN RRO A HN et Na AS Np MAID Dein EOL ANTE ALI ARE Ee LIOR ITE APPENDIX la APPENDIX A — ADDITIONAL STATUTORY PROVISIONS 15 U.S.C.A.§ 717. Regulation of natural gas companies * * * (b) Transactions to which provisions of chapter applicable The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas. * * * * 15 U.S.C.A. § 717f. Construction, extension, or abandonment of facilities * * * (c) Certificate of public convenience and necessity (1)(A) No natural-gas company or person which will be a natural-gas company upon completion of any proposed construction or extension shall engage in the transportation or sale of natural gas, subject to the jurisdiction of the Commission, or undertake the construction or extension of any facilities therefor, or acquire or operate any such facilities 2a Appendix A or extensions thereof, unless there is in force with respect to such natural-gas company a certificate of public convenience and necessity issued by the Commission authorizing such acts or operations: Provided, however, That if any such natural-gas company or predecessor in interest was bona fide engaged in transportation or sale of natural gas, subject to the jurisdiction of the Commission, on February 7, 1942, over the route or routes or within the area for which application is made and has so operated since that time, the Commission shall issue such certificate without requiring further proof that public convenience and necessity will be served by such operation, and without further proceedings, if application for such certificate is made to the Commission within ninety days after February 7, 1942. Pending the determination of any such application, the continuance of such operation shall be lawful. (B) In all other cases the Commission shall set the matter for hearing and shall give such reasonable notice of the hearing thereon to all interested persons as in its judgment may be necessary under rules and regulations to be prescribed by the Commission; and the application shall be decided in accordance with the procedure provided in subsection (e) of this section and such certificate shall be issued or denied accordingly: Provided, however, That the Commission may issue a temporary certificate in cases of emergency, to assure maintenance of adequate service or to serve particular customers, without notice or hearing, pending the determination of an application for a certificate, and may by regulation exempt from the requirements of this section temporary acts or operations for which the issuance of a certificate will not be required in the public interest. 3a Appendix A (2) The Commission may issue a certificate of public convenience and necessity to a natural-gas company for the transportation in interstate commerce of natural gas used by any person for one or more high-priority uses, as defined, by rule, by the Commission, in the case of — (A) natural gas sold by the producer to such person; and (B) natural gas produced by such person. * - * * 15 U.S.C.A. § 3394. Limitation on revoking or amending certain pre-1969 certificates of public convenience and necessity (a) General rule The Commission may not, during the 10-year period beginning on November 9, 1978, revoke or amend any certificate of public convenience and necessity issued before January 1, 1969, under section 7 of the Natural Gas Act [15 U.S.C.A. 717f] for the transportation of natural gas owned by any electric utility except upon the application of the person to whom such certificate was issued. * * * * 4a Appendix A 15 U.S.C.A. § 3431. Coordination with the Natural Gas Act (a) Jurisdiction of the Commission under the Natural Gas Act (1) Sales (A) Application to first sales For purposes of section 1(b) of the Natural Gas Act [15 U.S.C.A. § 717(b)], the provisions of the Natural Gas Act [15 U.S.C.A. § 717 et seq.] and the jurisdiction of the Commission under such Act shall not apply to. any natural gas solely by reason of any first sale of such natural gas. * * * * Ind. Code § 8-1-2-87 Gas utilities; necessity certificates; requirements Sec. 87.(a) When used in this section, unless the context otherwise requires: (1) The term “gas” means natural gas, artificial or manufactured gas, and mixed gas. (2) The term “necessity certificate” means a certificate of public convenience and necessity issued by the commission pursuant to the provisions of this section, which certificate shall be deemed an indeterminate permit. 5a Appendix A (3) The term “rural area” means territory within the state of Indiana that is outside the corporate limits of a municipality. (4) The term “gas utility” means and includes any public utility selling or proposing to sell or furnish gas directly to any consumer or consumers within the state of Indiana for his, its or their domestic, commercial, or industrial use. (5) The term “gas distribution service” means the furnishing or sale of gas directly to any consumer within the state of Indiana for his or its domestic, commercial, or industrial use. (b) It is hereby declared that in order adequately to protect the public interest in the distribution of gas to consumers within the state of Indiana, it is necessary and desirable that to the extent provided in this section the holding of necessity certificates should be required as a condition precedent to the rendering of gas distribution service in rural areas of the state of Indiana. (c) After February 26, 1945, no gas utility shall commence the rendering of gas distribution service in any rural area in the state of Indiana in which it is not actually rendering gas distribution service on February 26, 1945, without first obtaining from the commission a necessity certificate authorizing such gas distribution service, defining and limiting specifically the rural area covered thereby, and stating that public convenience and necessity require such gas distribution service within such rural area by such gas utility; and no gas utility required by this section to hold a 6a Appendix A necessity certificate for any rural area shall render gas distribution service within such a rural area to any extent greater than that authorized by such necessity certificate or shall continue to render gas distribution service within such a rural area if and after such necessity certificate has been revoked or transferred as in this section provided. * * * * Ind. Code § 8-1-2-87.5 Transportation of gas; necessity certificate; application; public hearing; grounds for granting certificate; revocation Sec. 87.5. (a) For purposes of this section, “transportation of gas” means physical transmission, exchange, backhaul, displacement, or any other means of transporting gas, including gathering. (b) Any person, corporation, or other entity that: (1) is engaged in the transportation of gas from outside Indiana for direct sale or delivery to any evid use consumer or consumers within this state; (2) is engaged in the transportation of gas solely within this state on behalf of any end use consumer or consumers; or (3) is an end use consumer engaged in the transportation within this state of gas owned or acquired by such end use consumer for use in this state, other than transportation on the premises where the gas is consumed; Ta Appendix A is a public utility as defined in section 1 of this chapter and must obtain a necessity certificate from the commission before it may engage in any activities described in this subsection. This subsection does not apply to a gas utility operating pursuant to an indeterminate permit or necessity certificate issued under section 87 of this chapter, nor to the production, sale, and gathering of natural gas produced in Indiana. Ind. Code § 8-1-2-87.6 Exemption of Indiana produced natural gas; petition and hearing on rates for purchase or transport Sec. 87.6. (a) Except as provided in this section, the production, gathering, sale, or transportation of Indiana produced natural gas is exempt from this chapter. (b) Any person, corporation, or other entity engaged in the production, gathering, sale, or transportation of natural gas produced in Indiana may petition the commission to: (1) require a gas utility certified under section 86 or 87 of this chapter to purchase or transport Indiana produced natural gas owned by the petitioning entity; and (2) set the rates for the purchase or transportation of that gas. 8a APPENDIX B — OPINIONS, ORDERS AND NOTICES OF THE FEDERAL ENERGY REGULATORY COMMISSION ISSUED DECEMBER 16, 1998 Commission Opinions, Orders and Notices Midwestern Gas Transmission Company Docket No. CP98-538-000 Order Authorizing Construction and Operation of Facilities Under Blanket Certificate and Denying Protests (Issued December 16, 1998) Before Commissioners: James J. Hoecker, Chairman; Vicky A. Bailey, William L. Massey, Linda Breathitt, and Curt H (acute)ebert, Jr. On May 12, 1998, Midwestern Gas Transmission Company (Midwestern) filed a prior notice request pursuant to its Part 157 blanket certificate issued in Docket No. CP82-414-000' and the prior notice procedures provided in Sections 157.205 and 157.211 of the Commission’s regulations, for authorization to construct and operate a delivery tap, a delivery lateral, and a meter station. The proposed facilities will be used to transport and deliver gas to anew customer, Grain Processing Corporation (GPC), an industrial end-user. In accordance with the discussion below, we will grant Midwestern’s request. 1. 20 FERC P 62,411 (1982). Southern Indiana Gas and Electric Company argues in its protest that Midwestern erroneously relies on a blanket certificate issued in Docket No. CP82-412-000 to Midwestern’s affiliate, East Tennessee Natural Gas Company. - Although Midwestern inadvertently used the East Tennessee docket number in its prior notice application, we are authorizing Midwestern’s request under its blanket certificate which was issued in Docket No. CP82-414-000. 9a Appendix B I. Background and Proposal Midwestern is a natural gas company under the Natural Gas Act (NGA), engaged in the transportation of natural gas in interstate commerce and the construction of facilities for the transportation of gas pursuant to Part 284 and Part 157, respectively, of the Commission’s regulations. GPC is a manufacturer and marketer of various corn- based products. It is constructing a new corn processing plant in Daviess County, Indiana that it intends to make fully operational during the summer of 1999. GPC plans to begin receiving natural gas supplies in early 1999 to test its new equipment before the plant becomes fully operational. GPC requested service from Midwestern which then filed the prior notice request at issue in this proceeding. Midwestern proposes to install an 8-inch hot tap on its 30-inch diameter, 2100 Line in Knox County, Indiana, on its existing right-of-way; install 2.84 miles of 8-inch lateral line extending from the proposed hot tap to GPC’s new plant in Daviess County, Indiana; and install a meter station with dual 6-inch orifice meter runs and electronic gas measurement equipment (EGM) on a site provided by GPC. Midwestern proposes to own, operate, and maintain the hot tap, interconnecting pipeline, meter station and EGM. In addition, Midwestern proposes to construct and install a dual run, two-stage pressure regulator, gas heating facilities and odorization facilities which GPC will own, operate, and maintain. 10a Appendix B Midwestern states that the project will cost approximately $2,760,000 for which it will be reimbursed by GPC. The proposed lateral would have a maximum volume of 40,000 Dth of natural gas. Midwestern plans to deliver up to 10,000 Dth/d of natural gas to GPC. During the winter of 1998/1999, Midwestern proposes to commence delivery of small amounts of gas to GPC to test GPC’s plant processing equipment pursuant to an interruptible gas transportation agreement under Midwestern’s Rate Schedule IT. When GPC’s plant begins full operation during the summer of 1999, Midwestern will provide service pursuant to a firm transportation agreement under Midwestern’s Rate Schedule FT-A. Midwestern states that it does not expect the addition of the proposed facilities to have any significant impact on its peak day and annual deliveries. Further, Midwestern states that it will have sufficient capacity to accomplish deliveries to GPC without detriment or disadvantage to its other customers. II. Interventions, Protests and Answers Pursuant to Section 157.205(i), authorization to construct and operate qualifying facilities under a blanket certificate is automatic provided no protests to the activity are filed within 45 days of the date notice is issued by the Commission. If a protest is filed, authorization is granted if the protest is withdrawn within 30 days after the 45-day notice period.” 2. See Sections 157.205(h) and (1)(2) of the Commission’s regulations. lla Appendix B If a protest is not withdrawn, the prior notice request proceeds as an application for case-specific authorization.’ On June 1, 1998, in accordance with Section 157.205 of the Commission’s regulations, notice of Midwestern’s prior notice request was published in the Federal Register (63 Fed. Reg. 29723). Within the 45-day notice period provided by the prior notice procedures, timely, unopposed motions to intervene were filed by the Indiana Office of Utility Consumer Counselor; GPC; Proliance Energy, LLC; Northern Indiana Public Service Company (NIPSCO); and Southern Indiana Gas & Electric Company (SIGECO).* SIGECO filed a request for an evidentiary hearing. NIPSCO and SIGECO also filed protests to Midwestern’s proposal which they have not withdrawn. They argue that Midwestern’s construction and operation of the lateral pipeline without state authorization would violate Indiana law. Further, they contend that Midwestern’s proposal may be anti-competitive, lacks market support, would result in wasteful duplication of facilities, would increase costs borne by SIGECO’s customers, and would have substantial adverse environmental impact. Midwestern and GPC filed answers to the protests. SIGECO filed a response and motion requesting the Commission to accept the pleadings SIGECO filed with the 3. See Section 157.205(g) of the Commission’s regulations. 4. Timely, unopposed motions to intervene are granted by the operation of Rule 214 of the Commission’s regulations (18 C.F.R. § 385.214). 12a Appendix B Indiana Utilities Regulatory Commission (IURC) that are related to this proceeding. Midwestern and GPC filed answers and motions requesting the Commission to accept the pleadings they filed with the IURC. While our rules do not permit answers to protests or to answers,” we may, for good cause, waive a rule.° We find good cause to do so in this instance. To ensure a complete and accurate record, we will accept all pleadings tendered to date for filing. III. Discussion A. Jurisdiction SIGECO contends that Midwestern’s construction and operation of the proposed lateral pipeline without state authorization would violate Indiana law. SIGECO states that it has filed a pending petition before the IURC, arguing the point.’ SIGECO contends that Indiana law requires Midwestern, as a gas utility in Indiana, to obtain a certificate 5. See 18 C.ER. § 385.213(a)(2). 6. 18 C.ER. § 385.101(e). 7. SIGECO filed a petition with the IURC requesting that it issue an order directing Midwestern “to cease and desist from engaging in the rendering of gas service in rural areas of Indiana, including the transportation of gas from outside Indiana for direct sale or delivery to consumers within the state” on grounds that Midwestern’s proposed service to GPC would violate Indiana Code sections 8-1-2-87 and 8-1-2-87.5. Midwestern has moved to dismiss SIGECO’s petition arguing that the IURC has no authority to require Midwestern to receive state authorization before it may provide the service proposed in this proceeding. 13a Appendix B of public convenience and necessity from the IURC since Midwestern would be transporting natural gas from outside Indiana for direct delivery to an end-user within the state.® SIGECO cites Public Service Commission of Indiana v. Panhandle Eastern Pipe Line Company (Indiana v. Panhandle) to support its argument that certain activities of natural gas pipeline companies are subject to URC regulation.» SIGECO maintains that the Indiana state court found, and the United States Supreme Court affirmed, that the business of transporting and selling natural gas for ultimate distribution to the public is affected with the public interest mandating state regulation and control. Further, the court found Panhandle to be a public utility subject to state regulation with respect to direct sales to end-users. SIGECO and NIPSCO argue that the Commission should not act on Midwestern’s application until after the IURC issues a final order in response to SIGECO’s petition before the IURC. They contend that the TURC should have the initial opportunity to apply state law to the facts of this case and _ that the TURC’s findings are material to the Commission’s public convenience and necessity analysis. 8. Citing Indiana Code, Secticn 8-1-2-87.5 which states: [a]ny person, corporation, or other entity that is engaged in the transportation of gas from outside Indiana for direct sale or delivery to any end-use consumer or consumers within this state must obtain a necessity certificate from the [[URC] before it may engage in [such transportation of gas]. 9. 71 N.E. 2d 117 (Ind.), aff’d, 332 U.S. 507 (1947). ee ee l4a Appendix B SIGECO states that many of the issues before the Commission, including the application of Indiana law to Midwestern’s application, the extent to which the NGA may preempt aspects of state law, and the manner in which these jurisdictional boundaries should be drawn with regard to this project, are also pending before the IURC. SIGECO contends that the Commission should defer further action on Midwestern’s application pending a decision from the IURC on the issues of state law and the appropriate division between state and federal authority as it applies to the facilities and services proposed by Midwestern. In that regard, SIGECO submits that the Commission has shown substantial deference to state commissions on jurisdictional determinations. For example, it states, in Order No. 888, the Commission acknowledged in the electric regulation context that defining the boundary between state and federal jurisdiction would be highly case-specific, and indicated that it would defer generally to state commissions, applying the Commission’s seven local distribution indicators, to determine “where to draw the jurisdictional line” as to public utilities providing electric transmission service.'° 10. Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, FERC Statutes and Regulations, Regulations Preambles January 1991-June 1996 P 31,036, at pp. 31,783-84 (1996), order on reh’g, FERC Statutes and Regulations P 31,048 (1997), order on reh’g, Order No. 888-B, 81 FERC P 61,248 (1997), order on reh’g, Order No. 888-C, 82 FERC P 61,046 (1998). \ Rn ee 15a Appendix B Midwestern and GPC respond that no portion of the service Midwestern proposes to provide to GPC involves the local distribution of gas. Rather, they maintain, Midwestern will provide interstate transportation of natural gas directly to an end-user and thus the service is subject to the Commission’s exclusive NGA jurisdiction. Commission’s Response Section 1(b) of the NGA gives the Commission jurisdiction over the transportation of natural gas in interstate commerce, the sale in interstate commerce of natural gas for resale, and the natural gas companies engaged in such transportation or sale." Section 1(b) reserves to the states jurisdiction over any other sale of natural gas and the local distribution of gas. Further, the Commission’s jurisdiction, where it applies under the NGA, is exclusive.'? Thus, the Commission has exclusive jurisdiction over the transportation of natural gas in interstate commerce and the facilities used for such transportation.'? 11. 15 U.S.C. § 717(b). 12. See Northwest Central Pipeline Corp. v. State Corporation Commission of Kansas, 109 S.Ct 1262, 1274 (1989); Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300-01 (1988) (Schneidewind); Northern Natural Gas Co., v. State Corporation Commission of Kansas, 83 S.Ct. 646, 650 (1963); Public Utilities Commission of California v. FERC, 900 F.2d 269, 274 (D.C. Cir. 1990) (California PUC); National Fuel Gas Supply Corp. v. Public Service Commission of New York, 894 F.2d 571, 576-77 (2d Cir. 1990), cert. denied, 497 U.S. 1004 (1990) (National Fuel). 13. Schneidewind, 485 U.S. at 299-301; National Fuel, 894 F.2d at 576-77. l6a Appendix B In interpreting the NGA and its legislative history, the Commission and the courts consistently have held that the transportation of natural gas by an interstate pipeline directly to an end-user constitutes transportation in interstate commerce, not local distribution, and, as such, is subject | to the Commission’s exclusive jurisdiction.'* Both the | Commission and the courts consistently have concluded that tie-in facilities such as valves, meters and lateral lines (i.e., the facilities Midwestern proposes to construct to serve GPC) which are integrated with a pipeline’s interstate transmission system, and which are designed to connect such pipeline system to an end-user, are not local distribution facilities.'° 14. See Cascade Natural Gas Corp. v. FERC (Cascade), 955 F.2d 1412, 1417-19; Oklahoma Natural Gas Co. v. FERC (ONG), 906 F.2d 708, 710 (D.C. Cir. 1990); Public Utilities Commission of California v. FERC (California PUC), 900 F.2d 269, 277 (D.C. Cir. 1990); Michigan Consolidated Gas Co. v. FERC, 883 F.2d 117, 121- 22 (D.C. Cir. 1989), cert. denied 494 U.S. 1079 (1990); Michigan Consolidated Gas Co. v. Panhandle Eastern Pipe Line Co., 689 F.Supp. 729,732-38 (W.D. Mich. 1988), aff’d, 887 F.2d 1295, 1300- 01 (6th Cir. 1989, cert. denied, 494 (1990); KN Wattenberg Transmission Limited Liability Co. (KN Wattenberg), 81 FERC P 61,167, at pp. 61,739-90 (1997); Panhandle Eastern Pipe Line Co., 64 FERC P 61,211 (1993); Mojave Pipeline Co., 41 FERC P 61,040, at pp. 61,116-18 (1987), order on reh’g, 42 FERC P 61,351, at p. 62,002 (1998) (Mojave). 15. ONG, 906 F.2d at 710 (lateral line connecting interstate | pipeline to end-user is not a local distribution line); California PUC, 900 F.2d at 277 (acts which constitute interstate transportation remain as such even though they end in deliveries to end-users through tie- in facilities); KN Wattenberg, 81 FERC at p. 61,739 (a lateral is not (Cont’d) 17a Appendix B Further, in determining where interstate transportation ends and local distribution begins, the Commission has stated that the term “local distribution facility” connotes a network of small local lines used to transmit gas from a large interstate pipeline to individual consumers spread out in a local geographic area — not a high-pressure line connecting an interstate pipeline to a single end-user. The courts have agreed: “[d]istribution conjures up receiving a large quantity of some good and parcelling it out among takers.””'® In FPC v. East Ohio Gas Company (EastOhio),'’ the United States Supreme Court held that Commission jurisdiction extended over “the high-pressure trunk lines to the point where pressure was reduced and the gas entered local mains.”'* In California PUC, the court held that “acts which constitute transportation for Section 1(b) purposes under East Ohio remain such even though they end in delivery (Cont’d) a local distribution facility); Williams Natural Gas Co., 46 FERC P 61,160, at p. 61,559 (lateral which connects mainline to end-user is an essential and integral element of the interstate transportation of natural gas). 16. California PUC, 900 F.2d at 276; ONG, 906 F.2d 710. 17. 338 U.S. 464 (1950). 18. Id. at 470. In response to the Court’s finding in East Ohio, Congress later amended the NGA by creating the Hinshaw exception which exempts from the Commission’s jurisdiction transportation by a company that operates exclusively in one state if its rates and services are regulated by the state. See NGA § 1(c) 15 U.S.C. § 717(c). 18a Appendix B (at high pressure) to end-users.””'® The circuit court distinguished a 1951 United States Supreme Court case that upheld Michigan’s power to veto the retail sale by an interstate pipeline to a large end-user despite exclusive federal jurisdiction over the interstate transportation of the gas”° on the basis that the transaction at issue involved the bundled sale of gas to the end-user.”' The court stated that “under modern conditions where the end-user often owns the gas and uses the pipeline solely for transportation, application of East Ohio removes this fulcrum for state power.” In Cascade, the court declined to decide the jurisdictional issue based on the pressure in the line but instead relied on the fact that the pipeline’s bypass of an LDC to directly serve an end- user involved only interstate transportation and did not involve a retail sale of gas by the pipeline to the end-user.” Thus, under any of these lines of reasoning, Midwestern’s proposed service to GPC constitutes interstate transmission of natural gas, not local distribution. Midwestern will deliver the gas to GPC at mainline pressure, there is no retail sale by Midwestern to GPC, and Midwestern will not deliver the gas through a network of small local lines connected to individual consumers within a local geographic area. 19. 900 F.2d at 277. 20. Panhandle v. Michigan, 341 U.S. 329 (1951). 21. 900 F.2d at 277. 22. Id. 23. 955 Fi2d at 1420. 19a Appendix B SIGECO’s reliance on Indiana v. Panhandle is misplaced. In that case, the Court found that states have jurisdiction over a pipeline’s direct sale of natural gas to an end-user. Midwestern is not proposing to make direct sales to GPC; its proposal involves only interstate transportation of gas. Further, the courts and the Commission have explicitly found that Indiana v. Panhandle is inapposite where the pipeline is merely transporting gas supplies directly to an end-user as in this case.” SIGECO’s reliance on Order No. 888 to support its argument that the Commission should defer to the [URC regarding our jurisdiction over Midwestern’s proposed facilities and transportation service is equally unavailing. In Order Nos. 888 and 888-A, the Commission never stated that it would defer to states in determining whether the Commission or the state has jurisdiction over electric transmission. Indeed, the Commission emphasized that “if unbundled retail transmission in interstate commerce occurs voluntarily by a public utility or as a result of a state retail access program, the Commission has exclusive jurisdiction over the rates, terms and conditions of such transmission.” Rather, the Commission explained that, where states unbundle retail sales, “it will give deference to their determinations as to which facilities are transmission and which are local distribution,” provided the states making such determinations apply the seven criteria established by the 24. Cascade, 955 F.2d at 1417-19; Panhandle Eastern Pipe Line Co., 42 FERC P 61,076, at pp. 61,389-49 (1988). 25. Order No. 888-A at p. 30,335. 20a Appendix B Commission in Order No. 888,”° and it did so in order to allocate costs and set rates properly for both transmission and local distribution services.’ The circumstances discussed in Order Nos. 888 and 888-A do not parallel those at issue in this proceeding. In Order Nos. 888 and 888-A, the Commission was addressing unbundled retail transmission and the deference to be accorded a state regulatory authority’s recommendations for drawing of a jurisdictional line between Commission-jurisdictional and state- jurisdictional facilities for purposes of allocating costs and setting rates.”* Here, in contrast, we are not dealing with a state- approved unbundling of retail sales or the cost allocation and ratemaking consequences of such action by a state. SIGECO contends that Midwestern’s and GPC’s argument that the Commission has exclusive jurisdiction over interstate transportation does not necessarily divest the IURC of its jurisdiction over Midwestern’s proposal. SIGECO points to General Motors v. Tracy (Tracy), in which the United States Supreme Court discussed the evolution of state and federal regulation of natural gas markets, including the changes that have enabled large industrial customers to contract to receive service directly from interstate pipelines, rather than from an LDC.” According to SIGECO, the Court states that these 26. Id. 27. Id. at pp. 30,336-37. 28. Id. at pp. 30,336-37. 29. 117 S.Ct. 811 (1997). 2la Appendix B regulatory changes did not undermine the states’ authority over matters that affect the service to be provided to captive customers served by LDCs.*° Further, SIGECO contends, the Court stated that the rate impact on an LDC’s captive customers resulting from a large industrial customer choosing to avoid service from an LDC had an impact on local interests sufficient to support regulation by the state. Finally, SIGECO maintains, the Court specifically refused to endorse decisions of various courts of appeal that have ruled that the Commission has sole authority to regulate bypass transactions where the sale of gas occurs outside of the state and the interstate pipeline company merely transports gas to the industrial customers.*! SIGECO’s argument that the Supreme Court’s decision in Tracy supports SIGECO’s position that the IURC has the authority to review Midwestern’s proposal is without merit. Tracy did not address the specific issue raised by SIGECO in this proceeding. In Tracy the Court was addressing a challenge to Ohio’s sales tax exemption for gas sales made by state-regulated LDCs, but not for sales by gas marketers. The issue was whether the opportunities for competition between gas marketers and LDCs to supply gas to end-users 30. Id. at 817. 31. Id. atn.14. (Specifically, the Court cites Cascade, 955 F.2d at 1414-1422; Michigan Consolidated Gas Co. v. Panhandle Eastern Pipe Line Co., 887. F.2d 1295, 1299-1301 (6th Cir. 1989), cert. denied, 494 U.S. 1079 (1990); Michigan Consolidated Gas Co. v. FERC, 883 F.2d 117, 121-122 (D.C. Cir. 1989), cert. denied, 494 U.S. 1079 (1990). The Court stated “[w]e express no view on the correctness of these decisions”). 22a Appendix B require treating them as similarly situated for Commerce Clause purposes. The Court held that they were not similarly situated for claims of facial discrimination since the LDCs’ state-regulated bundled gas product was sufficiently distinguished from the independent marketers unbundled gas sales. Therefore, Ohio’s tax on independent marketers’ gas sales did not violate the Commerce Clause. In support of its conclusion that states have a legitimate interest in regulating gas sales to consumers, the Court referenced the NGA’s mandate that states have the authority to regulate retail sales of natural gas (it.cluding direct sales to industrial customers) and its prior decisions upholding such mandate.*? The Court recognized, however, that the NGA and the Commerce Clause prohibit the states from regulating the interstate transportation of natural gas.” Nowhere did the Court state or suggest that states have the authority to regulate the interstate transportation of natural gas by an interstate pipeline directly to an end-user. Further, SIGECO erroneously characterizes the Tracy footnote in which the Court states that it “expresses no view” on the correctness of the decisions by several U.S. Courts of Appeals upholding the Commission’s NGA jurisdiction to regulate the transportation of gas by an interstate pipeline directly to an end-user.** The Court’s statement in the footnote 32. Tracy, 117 S.Ct, citing Panhandle v. Indiana, 332 U.S. 507 (1947), and Panhandle v. Michigan, 341 U.S. 329 (1951). 33. 117 S.Ct. at 820-21. 34. Id. at 827, n.14. 23a Appendix B was not a refusal to endorse the referenced decisions; rather, the Court explicitly disavowed any view on the bypass decisions. Further, the cited footnote in no way challenges or undermines the integrity of the appellate decisions (two of which the Court refused to consider upon petitions for certiorari)*® that confirm the Commission’s preemptive certificate authority over transportation facilities. Rather, the Court’s denial of certiorari suggests that the Court found that those cases either did not decide an important question of federal law that needed to be settled by the Court or did not decide an important federal question in a way that conflicts with relevant decisions of the Court.*° Finally, the Commission has rejected claims similar to SIGECO’s contending that Indiana certification was needed for an interstate transportation project. In Panhandle Eastern Pipe Line Company, the Commission stated “[c]oncerning the need for state certificate authorization, it is clear that Panhandle’s proposal involves the transportation of natural gas in interstate commerce over which the Commission has exclusive jurisdiction. Thus, Indiana has no jurisdiction in 35. See Michigan Consolidated Gas Co. v. FERC, 883 F.2d 117 (D.C. Cir. 1989), cert. denied, 494 U.S. 1079 (1990); Michigan Consolidated Gas Co. v. Panhandle Eastern Pipe Line Co., 689 F.Supp. 729 (W.D. Mich. 1988, aff’d 887 F.2d 1295 (6th Cir. 1989), cert. denied, 494 U.S. 1079 (1990). 36. See Rule 10 of the Rules of the Supreme Court of the United States. 24a Appendix B this matter and a state certificate is not required.”*’ We affirm that decision here. For all the reasons discussed above, we find that the Commission has exclusive jurisdiction over Midwestern’s proposal and that Midwestern is not required to obtain a certificate from the IURC to construct and operate the facilities or to provide transportation service to GPC through those facilities. B. Bypass Arguments SIGECO states that GPC’s new plant is located within SIGECO’s franchise area and is less than one-half mile from its existing natural gas distribution system. Thus, SIGECO argues, Midwestern’s proposal is an uneconomic and unreasonable bypass of SIGECO’s system with potentially severe impacts on it and its existing customers. Further, SIGECO contends, to the extent that it is unable to serve large industrial customers located within its service territory because an interstate pipeline decides to provide direct distribution service to an end-user, the fixed costs of SIGECO’s distribution system will be spread among a progressively smaller customer base. SIGECO argues that this puts upward pressure on its rates which harms customers, limits growth, and erodes its competitive position. The Commission has held that pipeline service to new customers who are not currently receiving gas service from 37. Panhandle Eastern Pipe Line Co., 64 FERC P 61,211, at p. 61,612 (1993). 25a Appendix B a protesting LDC does not constitute a bypass of the LDC.** Thus, the service to GPC proposed by Midwestern does not constitute a bypass of SIGECO since SIGECO is not currently providing such service to GPC. Rather, SIGECO’s protest is based on the assumption that it will lose the opportunity to capture GPC’s business for itself if the Commission grants Midwestern’s request for a certificate. As the Commission has stated, lost opportunity is not the same as cost shifting. There are at present no LDC costs being recouped through this potential market. Since this is a new plant, SIGECO cannot claim reduced revenues or load, and neither the duplicative facilities nor cost-shifting arguments are relevant. Further, GPC will pay for the new Midwestern facilities; accordingly, no costs will be shifted to existing Midwestern shippers. What SIGECO really objects to is competition from interstate pipelines. We have consistently held, however, that the public interest is served by fostering such competition.”® There is no merit to SIGECO’s claim that Midwestern’s proposal would result in wasteful duplication of facilities. Neither SIGECO nor Midwestern has ever served GPC, and neither has existing facilities connected to GPC’s new plant to do so. Further, GPC has agreed to reimburse Midwestern for the facilities’ costs. Since GPC has requested service from Midwestern rather than SIGECO, only Midwestern will construct facilities and thus there will be no duplication of facilities as alleged by SIGECO. 38. Texas Eastern Transmission Corp., 71 FERC P 61,020, at p. 61,088 (1995); Mojave Pipeline Co., 69 FERC P 61,244, at p. 61,921 (1994). 39. 50 FERC P 61,069, at p. 61,149 (1990). 26a Appendix B SIGECO also argues that Indiana state law prohibits wasteful duplicative utility facilities and services.*° We have found that Midwestern’s proposal falls within the Commission’s exclusive jurisdiction. Thus, the cited Indiana law has no bearing on Midwestern’s proposal. SIGECO contends that GPC summarily rebuffed SIGECO’s attempts to negotiate an agreement for utility services to GPC’s new plant despite SIGECO’s allegedly superior proposal. SIGECO states that it cannot determine from Midwestern’s application whether Midwestern is the lowest cost provider. Further, SIGECO submits, Midwestern did not explain GPC’s unwillingness to consider SIGECO’s service as an alternative to Midwestern’s. Thus, SIGECO submits, there is no evidence to support a finding that Midwestern’s proposal represents the lowest-cost alternative or that there was a fair competitive process for GPC’s business. Midwestern denies that it has engaged in any anticompetitive or unduly discriminatory behavior. GPC states that, contrary to SIGECO’s contentions, SIGECO’s representatives met with and provided service proposals to GPC. GPC states that it considered a number of suppliers and service providers for natural gas service to its new plant, including SIGECO, Midwestern, and other interstate pipelines. After its review of the various available service options and providers, GPC determined that receiving natural gas through a direct connection to Midwestern, an open access interstate transportation provider, would be the most cost-effective and otherwise appropriate option. According 40. Citing Indiana Code Section 8-1-2-86. PO ee a ree 27a Appendix B to GPC, it gave fair consideration to SIGECO’s proposal but simply did not determine that proposal to be its preferred alternative. GPC maintains that its ability to obtain open access transportation directly from Midwestern and the resulting natural gas cost efficiencies, were crucial factors in its decision to construct a new facility, to locate it in southern Indiana, and in the potential success of the new plant. The Commission’s current policy is to allow competition between local distribution companies and interstate pipelines where there is no indication that the end-user’s choice of the pipeline’s proposed service was the result of the pipeline’s anti-competitive or unduly discriminatory behavior. This policy is based upon a belief that on a national level, natural gas consumers are better served by a competitive natural gas market which encourages improved services at lower costs.*! We note that GPC approached Midwestern and requested Midwestern to establish a delivery point to provide transportation service to GPC. Under current Commission . policy, we strive to honor the decision by an end-user on whether it is economic to undertake direct service from a pipeline supplier.*? This policy allows all participants in the natural gas market greater access to the market. The Commission has stated that it is not willing to shield 41. See, e.g., ANR Pipeline Company, 71 FERC P 61,289 | (1995); Paiute Pipeline Company, 68 FERC P 61,199 (1994); Northern Natural Gas Company, 46 FERC P 61,270 (1989). 42. See Peoples Natural Gas Company, 59 FERC P 61,121, at Pp. 61,475 (1992). 28a Appendix B local distribution companies from the effects of competitive forces, because it believes that in the final analysis, all consumers will benefit from the Commission’s pro- competitive policies.* | GPC made its choice to solicit the services of Midwestern | based upon what it perceived its best interests to be. GPC has merely exercised its right to seek competitive sourcing | for gas services. It is difficult to attribute this to unfair | competition on Midwestern’s part. Further, Midwestern is | required to honor valid requests for open access service on a | nondiscriminatory basis. Midwestern’s award of capacity to | GPC was effectuated in full compliance with the terms of | Midwestern’s tariff. Under these circumstances, we find that | Midwestern has not engaged in anticompetitive or unduly discriminatory behavior. | SIGECO and NIPSCO are concerned that Midwestern’s proposal to construct a pipeline with 30,000 Dth/d of capacity in excess of GPC’s current needs means that Midwestern may be seeking to create its own Indiana local distribution system. SIGECO submits that Midwestern must make a subsequent prior notice filing if it intends to use the proposed pipeline facilities to serve additional customers. Although we agree that Midwestern must make subsequent prior notice filings if it intends to connect additional customers to the proposed lateral pipeline, we 43. ANR Pipeline Company, 71 FERC P 61,289 (1995); Paiute Pipeline Co., 68 FERC P 61,064, order deferring consideration, 69 FERC P 61,247 (1995), order on reh’g, 70 FERC P 61,227 (1995); NorthwestPipeline Corp., 54 FERC P 61,191, at p. 61,574 (1991). LE MR enema en eae 29a Appendix B disagree that Midwestern may be seeking to create a local distribution system by constructing excess capacity. Midwestern states that GPC requested it to install a pipeline capable of accommodating a transportation quantity of approximately 40,000 Dth/d, i.e., an 8-inch line, in anticipation of GPC’s planned expansions of the plant. Further, sizing the line to accommodate future expansions will prevent future environmental disturbances and avoid further inconvenience to landowners. F urthermore, no costs will be shifted to existing customers as a result of construction of an 8-inch diameter lateral because GPC is fully reimbursing Midwestern for the cost of the facilities. Under these circumstances, we have no reason to object to the excess capacity Midwestern proposes to construct. C. Request for Hearing SIGECO requests an evidentiary hearing to address alleged disputed issues of fact including the extent of any duplication of facilities; whether GPC considered SIGECO’s, or anyone’s, competing proposal; whether Midwestern’s agreement with GPC represents the lowest-cost alternative for GPC; a comparison of Midwestern’s and SIGECO’s proposals to serve GPC in terms of the construction costs, the capital and related operating expenses, the rates, terms, and conditions, and the environmental impacts. SIGECO argues that the Commission should at least require the parties to submit the underlying service agreements between Midwestern and GPC to determine whether the competitive process was fair. 30a Appendix B The requirement for a trial-type evidentiary hearing applies only to disputed issues of material fact that cannot be resolved on the basis of the written record.“ We believe that the parties had an adequate opportunity to present their views and the Commission had an adequate record upon which to base its decision. For the reasons discussed above, we find that SIGECO’s protest does not raise any issues of anti-competitive or unduly discriminatory behavior on the part of Midwestern and that there are no material facts in dispute in this proceeding requiring a hearing. Rather, the evidence shows that Midwestern’s proposal will provide GPC with options it desires to better serve its interests. For all the reasons provided above, we find Midwestern’s proposai is required by the public convenience and necessity. As noted above, because of the protest to Midwestern’s prior notice filing, the Commission treated the filing as an application for specific Section 7(c) authorization. It is the Commission’s policy not to grant Section 7(c) case- specific authority to construct and operate facilities when the applicant can do so under its blanket certificate.* The Commission, therefore, will authorize Midwestern to construct and operate the subject facilities under its Part 157 blanket certificate authorization. 44. See, e.g., Amador State Lines, Inc. v. U.S., 685 F.2d 333 (9th Cir. 1892); Boston Carrier, Inc. v. ICC, 728 F.2d 1508 at 1511 n.5 (D.C. Cir. 1984). 45. See Gas Transport, Inc., 50 FERC P 62,013 (1990); Tennessee Gas Pipeline Co., 55 FERC P 61,437 (1991). 3la Appendix B IV. Environmental Analysis On October 9, 1998, after reviewing Midwestern’s prior notice application and the environmental comments by SIGECO in this docket, the Commission’s staff issued a Notice of Intent to Prepare an Environmental Assessment For The Proposed GPC Sales Tap Project and Request For Comments on Environmental Issues (NOI). Five parties responded with comments regarding the NOI: SIGECO, the U.S. Fish and Wildlife Service (FWS), the Federal Aviation Administration, GPC, and Midwestern. These comments are addressed in the Environmental Assessment (EA) prepared by the Commission’s staff. The EA recommends several mitigation measures, which we adopt and upon which this order’s authorization is conditioned. As discussed, Midwestern’s proposed facilities will be used to provide gas service to a corn processing plant under construction by GPC. Because the GPC plant is a nonjurisdictional facility and already under construction, the EA does not consider GPC’s plant. The FWS states that the bottomland forest present in Midwestern’s project area includes valuable habitat for wildlife, including, potentially, the federally listed Indiana bat and the bald eagle. The FWS states that the bald eagle is not likely to occur in the project area and is therefore not of concern. Further, based on mist-net surveys conducted by Midwestern as requested by the FWS, no Indiana bats are present. Thus, the FWS has concluded, and the EA concurs, that the proposed project would not adversely affect any federally endangered or threatened species. 32a Appendix B Midwestern has agreed to compensatory mitigation ratios for restoration of trees within forested habitat of present wildlife. However, long-term impact on present wildlife nevertheless would be associated with the removal of the trees; therefore, avoidance of tree clearing is preferable, where possible. The Commission’s staff has determined that Midwestern could avoid clearing one acre of bottomland hardwood forest by relocating the exit point for its directional drill. Therefore, to minimize the long term effects of the proposed project, the EA recommends that Midwestern relocate the exit point for the directional drill of the West Fork White River east of milepost (MP) 1.54 to avoid the bottomland hardwood forest. In addition, the EA recommends that Midwestern not clear any trees between the east bank of the river and the exit point for the directional drill. The EA also analyzes the alternative plan submitted by Midwestern to open-cut the West Fork White River in the event directionally drilling fails. The EA finds that the alternative plan is generally acceptable and would approve the additional work space required should Midwestern have to open cut. However, if Midwestern does has to cross the West Fork White River using the open-cut technique, the EA recommends that Midwestern: a. limit the width of the construction right-of-way, not including extra work spaces, to 50 feet through the riparian area along the east side of the river; b. replant trees within the temporary portion of the construction right-of-way between MPs 1.45 and 1.49 according to the ratios suggested for this project by the IDNR; and 33a Appendix B c. monitor the success of tree planting in accordance with Midwestern’s Floodway Forest Mitigation Plan. In its comments on the NOI, SIGECO raised the concern that “the Army Corps of Engineers may have improperly authorized this activity [the proposed project] under a nationwide permit.” However, the U.S. Army Corps of Engineers (COE) has subsequently confirmed that Nationwide 12 permit, issued by COE to Midwestern on April 3, 1998, is appropriate for all proposed project activities, including the crossing of Patrick Ditch, the horizontal directional drilling of West Fork White River, and the alternate open-cut method of crossing the West Fork White River. Midwestern proposes to use 100-foot-wide construction right-of-way for its pipeline, of which about half will be permanent right-of-way and half temporary construction right- of-way. Midwestern has stated that the construction work area would be reduced to the 50-foot-wide permanent right-of-way corridor through wetland areas. Extra work spaces would total about 8.4 acres. Of this 8.4 acres, 0.11 acre would be located in the nparian, bottomland hardwood forest. In reducing the proposed 100-foot-wide construction ri ght- of-way width to 50 feet in wetland areas, the Commission’s staff has concluded that 100 feet is wider than necessary to install an 8-inch-diameter pipeline in other portions of the route. Therefore, to minimize impact on the bottomland hardwoods and upland forests, the EA recommends that Midwestern also limit the width of the construction right-of-way through all forested areas to 50 feet. 34a Appendix B In its comment on the NOI, SIGECO stated that “it appears that Midwestern and the state expedited the historic preservation and archeological review process to such an extent that meaningful review was not done” and that the review “may have overlooked cultural resources.” We disagree. Midwestern contacted the Indiana State Historic Preservation Office (SHPO) regarding the need for a cultural resources survey of the proposed project area. In a letter dated February 13, 1998, the SHPO indicated that most of the pipeline alignment east of the West Fork White River had been previously evaluated, and that based on the results of a previous investigation, only that portion of the project west of the river would require a survey. Midwestern completed a cultural resources survey (west of the West Fork White River) which covered a 150- foot-wide corridor, extra work spaces and pipeyards. Two prehistoric sites and two historic sites were identified as a result of the survey. None of these sites were recommended as eligible for the National Register of Historic Places (NRHP). No evidence of any previously recorded sites was identified. Subsequently, Midwestern contacted the SHPO (letter dated March 26, 1998) identifying additional access roads, a pipeyard, and access/ turning areas on the east side of the river. In a letter dated April 24, 1998, addressing both these additional areas and the cultural resources survey report, the SHPO indicated that “the proposed improvements to eastern access roads should have no effect on significant archaeological resources, as long as all construction is limited to previously disturbed areas” and that no further investigation of the eastern pipeyard was warranted. The SHPO also concurred that the four 35a Appendix B archaeological sites were not likely to yield significant information, and no further investigation of the sites appeared to be warranted.“ In further comments, SIGECO provided a brief records and literature review of the “vicinity of Maysville” to evidence that the area has a high potential for historic and prehistoric resources. This potential already been identified by the SHPO and was the basis for the SHPO’s conducting a survey of the previously unsurveyed portions of the proposed project. The survey report includes a literature review and records search of the area within a three-mile radius of the proposed project. The documented historical and archaeological importance of the area notwithstanding, the on-the-ground survey identified no NRHP-eligible cultural resources. The Commission’s staff has reviewed and concurs in the results of the SHPO’s cultural resources survey report. Thus, we find SIGECO’s concerns unfounded and its allegations unsubstantiated. The no-action alternative would preclude Midwestern from providing the proposed service to GPC. GPC would then be forced to make alternative arrangements for natural gas or to use other energy sources, such as fuel oil or coal. Therefore, while denial of Midwestern’s application would avoid the environmental impact identified in the EA, the use 46. The surveying and testing of the portion of the project east of the West Fork White River is documented in a report meeting the Secretary of the Interior’s Standards and Guidelines for the currently proposed project. The report has been reviewed by the SHPO and the Commission’s staff in accordance with Section 106 of the National Historic Preservation Act. 36a Appendix B of fuels other than natural gas could result in more diverse impacts, particularly on air quality. The no-action alternative also would cause a delay in Midwestern’s ability to provide gas service would affect GPC’s plans to test its plant equipment, currently under construction, in April 1999. Aside from the no-action alternative, SIGECO stated that it could provide natural gas service to GPC with fewer facilities and less environmental impact than Midwestern’s proposal. SIGECO’s franchise area. However, it is not clear whether SIGECO could construct the necessary facilities in the time frame required by GPC. Further, it is not known whether SIGECO’s facilities could provide GPC with the same levels of service proposed by Midwestern (i.e., up to 10,000 dekatherms of gas per day for plant start-up, with expansion up to 40,000 dekatherms per day). Moreover, as discussed above, GPC states that it considered and rejected SIGECO as a gas supplier. GPC further stated that its ability to obtain open access transportation directly from Midwestern and the resulting natural gas cost efficiencies were crucial factors in its decision to construct the plant. Therefore, while the EA concludes that SIGECO’s alternative may be environmentally preferable to Midwestern’s proposal based solely on environmental grounds, it is not likely that SIGECO could meet the time frames required by GPC. Further, the Commission’s policy of promoting competition, as discussed above, makes SIGECO’s proposed alternative less desirable. hme etn eed soba nia cms LSS Ae TNE a Le a 37a Appendix B With adoption of the above-discussed recommendations and implementation of the mitigation measures set forth in the appendix to this order, the EA concludes that Midwestern’s project would not constitute a major Federal action significantly affecting the quality of the human environment. V. Conclusion At the hearing held on December 16, 1998, the Commission on its own motion received and made a part of the record in this proceeding, all evidence, including the applications and exhibits thereto, submitted in support of the authorization sought herein, and upon consideration of the record, The Commission orders: (A) Midwestern is authorized to construct and operate the proposed facilities under its Part 157 blanket certificate, all as more fully set forth in this order, subject to the conditions set forth herein and in the appendix to this order. (B) SIGECO’s and NIPSCO’s protests, and SIGECO’s request for a hearing, are denied. (C) Midwestern shall notify the Commission’s environmental staff by telephone and/or facsimile of any environmental noncompliance identified by other Federal, State, or local agencies on the same day that such agency notifies Midwestern. Midwestern shall file a written confirmation of such notification with the Secretary of the Commission within 24 hours. Appendix B Appendix Environmental Mitigation Conditions 1. Midwestern shall follow the construction procedures and mitigation measures described in its application and identified in the environmental assessment (EA), unless modified by this Order. Midwestern must: a. request any modification to these procedures, measures, or conditions in a filing with the Secretary of the Commission (Secretary); b. justify each modification relative to site-specific conditions; c. explain how that modification provides an equal or greater level of environmental protection than the original measure; and d. receive approval in writing from the Director of the Office of Pipeline Regulation (OPR) before using that modification. 2. The Director of OPR has delegated authority to take whatever steps are necessary to ensure the protection of all environmental resources during construction and operation of the project. This authority shall allow: a. the modification of conditions of this Order; and 39a Appendix B b. the design and implementation of any additional measures deemed necessary (including stop work authority) to assure continued compliance with the intent of the environmental conditions as well as the avoidance or mitigation of adverse environmental impact resulting from project construction and operation. 3. Prior to any construction, Midwestern shall file an affirmative statement with the Secretary, certified by a senior company official, that all company personnel, environmental inspectors, and contractor personnel will be informed of the environmental inspector’s authority and have been or will be trained on the implementation of the environmental mitigation measures appropriate to their jobs before becoming involved with construction and restoration activities. 4. Midwestern shall relocate the exit point for the directional drill of the West Fork White River east of milepost (MP) 1.54 to avoid the bottomland hardwood forest. In addition, Midwestern shall not clear any trees between _ the east bank of the river and the exit point for the directional drill. 5. If Midwestern has to cross the West Fork White River using the open-cut technique Midwestern shall: a. limit the width of the construction right-of-way, not including extra work spaces, to 50 feet through the riparian area along the east side of the river; 40a Appendix B b. replant trees within the temporary portion of the construction right-of-way between MPs 1.45 and 1.49 - according to ratios suggested for this project by the Indiana Department of Natural Resources; c. monitor the success of tree planting in accordance with Midwestern’s Floodway Forest Mitigation Plan. 6. Midwestern shall limit the width of the construction right-of-way through all forested areas to 50 feet. Federal Energy Regulatory Commission 85 FERC P 61,358, 1998 WL 878038 (F.E.R.C.) 4la APPENDIX C — ORDER ON MOTION TO DISMISS OF THE STATE OF INDIANA, INDIANA UTILITY REGULATORY COMMISSION DATED JANUARY 27, 1999 STATE OF INDIANA INDIANA UTILITY REGULATORY COMMISSION CAUSE NO. 41197 IN THE MATTER OF THE PETITION BY SOUTHERN INDIANA GAS AND ELECTRIC COMPANY FOR THE INDIANA UTILITY REGULATORY COMMISSION TO ORDER MIDWESTERN GAS TRANSMISSION COMPANY TO CEASE AND DESIST FROM ENGAGING IN THE RENDERING OF GAS DISTRIBUTION SERVICE IN RURAL AREAS OF INDIANA, INCLUDING THE TRANSPORTATION OF GAS FROM OUTSIDE INDIANA FOR DIRECT SALE OR DELIVERY TO CONSUMERS WITHIN THE STATE OF INDIANA RESPONDENT: MIDWESTERN GAS TRANSMISSION COMPANY ORDER ON MOTION TO DISMISS APPROVED: JANUARY 27, 1999 BY THE COMMISSION: Camie Swanson-Hull, Commissioner Scott R. Jones, Assistant Chief Administrative Law J udge RR 42a Appendix C On June 11, 1998, Southern Indiana Gas and Electric Company (“Petitioner” or “SIGECO”) filed its Complaint in the above-captioned matter against Midwestern Gas Transmission Company (“Respondent” or “Midwestern’’). On June 18, 1998, Indiana Gas Company, Inc. filed its “Petition to Intervene of Indiana Gas Company, Inc.” which appears in the following words and figures, to-wit: (H.1.) On June 23, 1998, Respondent filed its “Motion for Extension of Time” which appears in the following words and figures, to-wit: (H.1.) Said Motion was granted by docket entry dated July 16, 1998. On June 26, 1998, Northern Indiana Public Service Company filed its “Petition of Northern Indiana Public Service Company to Intervene” which appears in the following words and figures, to-wit: (H.1.) On July 20, 1998, Respondent filed its “Motion to Dismiss Petition, Or Alternatively for Stay and Certification to the Court of Appeals” which appears in the following words and figures, to-wit: (H.1.) Also on July 20, 1998, Respondent filed its “Memorandum in Support of Motion to Dismiss Petition, or Alternatively 43a Appendix C for Stay and Certification to the Court of Appeals” which appears in the following words and figures, to-wit: (H.1.) On July 27, 1998, the Board of Directors for Utilities of the Department of Public Utilities of the City of Indianapolis d/b/a Citizens Gas and Coke Utility (“Citizens Gas”) filed its “Petition to Intervene of Citizens Gas and Coke Utility” which appears in the following words and figures, to-wit: (H.I.) On August 18, 1998, the Petitioner filed its “Response of Southern Indiana Gas and Electric Company to Motion of Midwestern Gas Transmission Company to Dismiss Petition, or Alternatively, for a Stay and Certification to the Court of Appeals” which appears in the following words and figures, - to-wit: (H.I.) On August 25, 1998, Indiana Gas Company, Inc. and Citizens Gas and Coke Utility filed their “Joint Response of Intervenors Indiana Gas Company, Inc., Citizens Gas and Coke Utility and Northern Indiana Public Service Company in Opposition to Midwestern Gas Transmission Company’s Motion to Dismiss” which appears in the following words and figures, to-wit: 44a Appendix C (H.1.) On September 2, 1998, Respondent filed its “Motion for Leave to File a Reply” which appears in the following words and figures, to-wit: (H.I1.) Also on September 2, 1998, Respondent filed its “Reply of Midwestern Gas Transmission Company to Response of Southern Indiana Gas and Electric Company” which appears in the following words and figures, to-wit: (H.1.) On September 8, 1998, Community Natural Gas Company, Inc. filed its “Community Natural Gas Company, Inc.’s Petition to Intervene” which appears in the following words and figures, to-wit: (H.L) On September 23, 1998, Grain Processing Corporation filed its “Verified Petition of Grain Processing Corporation to Intervene” which appears in the following words and figures, to-wit: (H.1.) Also on September 23, 1998, Grain Processing Corporation filed its “Statement in Support of Midwestern Gas Transmission Company” which appears in the following words and figures, to-wit: 45a Appendix C (H.I.) On September 28, 1998, the Petitioner filed its “Motion of Southern Gas and Electric Company for Leave to File its Response to the Reply of Midwestern Gas Transmission Company and Grain Processing Corporation’s Statement in Support of Midwestern” which appears in the following words and figures, to-wit: (H.1.) Also on September 28, 1998, the Petitioner filed its “Response of Southern Indiana Gas and Electric Company to the Reply of Midwestern Gas Transmission Company and Statement in Support of Grain Processing Corporation” which appears in the following words and figures, to-wit: (H.L) On October 14, 1998, Community Natural Gas Company, Inc. filed its “Community Natural Gas Company, Inc.’s Statement in Support of Southern Indiana Gas and Electric Company, Indiana Gas Company, Inc., Citizens Gas and Coke Utility, and Northern Indiana Public Service Company” which appears in the following words and figures, to-wit: (H.1.) On December 22, 1998, Midwestern filed its “Midwestern Gas Transmission Company’s Second Motion to Dismiss Based on FERC Decision” which appears in the following words and figures, to-wit: 46a Appendix C (H.I.) On December 30, 1998, Grain Processing Corporation filed its “Request of Grain Processing Corporation for Ruling on Motion to Dismiss” which appears in the following words and figures, to-wit: (H.1.) On January 14, 1999, Petitioner filed its “Response of Southern Indiana Gas & Electric Co. to Midwestern Transmission’s Second Motion to Dismiss Based on FERC Decision in Request of Grain Processing Corporation for a ruling on that Motion” which appears in the following words - and figures, to-wit: (H.L.) On January 14, 1999, certain of the Intervenors filed their “Intervenors Indiana Gas Company, Inc., Citizens Gas & Coke Utility and Northern Indiana Public Service Company in Opposition to Midwestern Gas Transmission Company’s Second Motion to Dismiss Based on FERC Decision and a Request of Grain Processing Corporation for a Ruling on Motion to Dismiss” which appears in the following words and figures, to-wit: (H.L.) The Commission based upon the above-described filings and the applicable law, now finds as follows: 47a Appendix C 1. Pending Motions and Petitions. The Commission finds that the Respondent’s Motion for Leave to File a Reply filed on September 2, 1998 should be granted. The Motion of Petitioner filed on September 28, 1998 for Leave to File its Response to the Reply of Midwestern Gas Transmission Company and Grain Processing Corporation’s Statement in Support of Midwestern should also be granted. The petitions to Intervene of Indiana Gas Company, Inc., Northern Indiana Public Service Company, Citizens Gas, Community Natural Gas Company, Inc., and Grain Processing Corporation should all be granted. The Respondent’s request to take administrative notice of the Federal Energy Regulatory Commission’s decision issued December 16, 1998 in Docket No. CP98-S38-000 should be granted. 2. Background. The Petitioner is a corporation, organized and existing under the laws of the State of Indiana and is engaged as a public utility in the rendering of gas utility service to the public in Indiana, including Daviess County. The Respondent is a natural gas Company under the federal Natural Gas Act (“NGA”) engaged in the transportation of natural gas in interstate commerce and in the construction of facilities for the transportation of gas. The Intervenor Grain Processing Corporation (“GPC”) is a manufacturer and marketer of various corn-based products and is constructing a new com processing plant in Daviess County, Indiana, which it intends to make fully operational during the summer of 1999. According to the facts agreed upon by the parties, GPC requested service from the Respondent who filed a prior noticed request with the Federal Energy Regulatory Commission. 48a Appendix C The service which the Respondent would provide GPC would be the interstate transportation of gas which GPC would purchase itself outside of the State of Indiana. The FERC docketed the Respondent’s request as Docket No. CP98-538-000 on May 12, 1998. The Respondent’s request before the FERC was for authorization to construct and operate a delivery tap, a delivery lateral, and a meter station, which facilities would be used to transport and deliver gas to a new customer, GPC, as an industrial end-user. In addition to the Complaint that the Petitioner filed initiating this proceeding, Petitioner, SIGECO, filed with the FERC a request for an evidentiary hearing within the 45-day notice period provided by the prior notice procedures of that federal agency. Additionally, NIPSCO and SIGECO filed protests to Midwestern’s proposal before the FERC. 3. SIGECO’s Petition. The thrust of SIGECO’s Petition before this Commission is that the Respondent threatens to render gas distribution service in rural areas of Indiana without having obtained from the Commission a necessity certificate authorizing it to do so. The Petition states that the rendering of gas distribution service by the Respondent without such a certificate would be unlawful, unreasonable, and in violation of I.C. 8-1-2-87 (b). Further, the Petition states that I.C. 8-1-2-87.5 requires that any entity “engaged in the transportation of gas from outside Indiana for direct sale or delivery to any end use consumer or consumers within the state” must have a necessity certificate from the Commission to do so. (Petition at page 2) The Petition requests that the Commission investigate this matter and find the Respondent to be in violation of I.C. 8-1-2-87 (b) and/or I.C. 8-1-2-87.5 and order the Respondent to cease ————Eeeee 49a Appendix C and desist the rendering of gas distribution service in rural areas of the State of Indiana, including the transportation of gas from outside Indiana for direct sale or delivery to any ‘consumer within the State. 4. Respondent’s Motion to Dismiss. In its Motion to Dismiss, the Respondent Midwestern argues that the transportation of natural gas for GPC in interstate commerce by Midwestern is subject to the exclusive jurisdiction of the FERC under the NGA. 15 U.S.C. Section 717 (b). The Respondent also asserts that because it will be serving a customer and facility new to the service area, no issues of by-pass are present. Thus, any action by this Commission to assert authority over Midwestern’s transportation service to GPC for gas which GPC purchases outside Indiana is preempted by the NGA. In Support of its arguments, the Respondent cites five decisions from federal courts of appeals that have upheld the FERC’s exclusive jurisdiction to regulate the interstate transportation of natural gas, including the interstate transportation of natural gas directly to end users, and rejecting state attempts to regulate such transactions. See Cascade Natural Gas Corp., supra, (10 Cir.) 955 F.2d at 1412-1419; Public Utilities Comm. of California, supra, (D.C. Cir.) 900 F.2d at 274-276; National Fuel Gas Supply Corp. v. Public Service Commission of N.Y., 894 F.2d 571, 579 (2™ Cir.), cert. Denied, 110 S.Ct. 3240 (1990); Michigan Consolidated Gas Co. v. Panhandle Eastern Pipeline Co., 689 F.Supp, 729, 732-738 (W.D. Mich. 1988), affd., 887 F.2d 1295, 1300-1301 (6 Cir, 1989), cert. Denied, 110 S.Ct. 1806 (1990) (Related case at Michigan Consolidated Gas Co. vy. F.E.R.C., 883 F.2d 117, 121-122 (D.C. Cir. 1989), cert. Denied, 110 S.Ct. 1807 (1990)); Public Service Comm. of W. Va. V. FP.C., 437 F.2d 1234, 1283-1239 (4" Cir. 1971). 50a Appendix C In its Memorandum in support of its Motion to Dismiss, the Respondent states that the FERC has addressed the nature of its jurisdiction over interstate facilities in Indiana, in circumstances similar to those in the instant Petition. In Panhandle Eastern Pipeline Co., Docket No. CP93-116-000, August 5, 1993, 64 FERC P61, 211, the interstate pipeline requested authorization under 18 C.F.R. §§157.205 and 157.212 to construct facilities to provide firm transportation service to a customer of a local distribution company. Both the Office of the Utility Consumer Counselor and the LDC filed Motions to Intervene and protested Midwestern’s Application before the FERC. The LDC argued that the pipeline transportation service would result in a wasteful duplication of facilities and cost shifting among the LDC’s customers. The LDC also contended that the customer might be a public utility subject to the IURC’s jurisdiction under I.C, 8-1-2-87.5. Another Intervenor before the FERC in the Panhandle Eastern proceeding argued that the interstate pipeline proposal should also be approved by the IURC, as well as by the FERC. The FERC concluded that “it is clear that Panhandle’s proposal involves the transportation of natural gas in interstate commerce over which the Commission (FERC) has exclusive jurisdiction” (citation omitted). Thus, Midwestern argues in the instant cause, Indiana has no jurisdiction in this matter and a state certificate is not required. Alternatively, the Respondent argues that this Commission should stay any further proceedings until the FERC has issued its decision and order in Docket No. CP98-538-000 and should certify the purely legal question raised to the Indiana Court of Appeals for decision and determination, pursuant to I.C. 8-1-3-10. Sla Appendix C 5. Responsive Arguments. SIGECO and the similarly interested Intervenors supporting SIGECO’s position replied to Midwestern’s arguments with the position that the five federal circuit court decisions did not sufficiently support Midwestern’s position that interstate transportation is the same as local distribution of gas. They also argue that, because the federal decisions cited by the Respondents are from circuits other than the Seventh Circuit they are not controlling authority for the purpose of adjudicating SIGECO’s instant petition. Further, they argue that local distribution occurs when gas is supplied to an end user and that state certification is required for that service even when the gas was purchased outside of the state of delivery. To the extent a conflict exists between federal and state statutes, SIGECO and the Intervenors argue that the Commission is bound to support and enforce the Indiana statutes leaving questions of constitutional law to other forums. SIGECO and the similarly interested Intervenors are also opposed to the certification of the legal question to the Indiana Court of Appeals, arguing that the matter would most conveniently be resolved by the IURC. 6. Respondent’s Second Motion to Dismiss. On December 22, 1998, Midwestern renewed its Motion to Dismiss based upon a FERC decision issued in Docket No. CP98-538-000 on December 16, 1998 authorizing Midwestern to construct and operate facilities to transport natural gas for GPC. The Second Motion to Dismiss also requested that the Commission take administrative notice of the FERC’s decision, which is appended to the Motion and which we have previously found should be granted. In its December 16, 1998 Order, the FERC held that it has exclusive 52a Appendix C jurisdiction over Midwestern’s proposed service to GPC, and that the service constitutes interstate transmission of natural gas, and not local distribution. (FERC Order at pages 5-8) The FERC also held that the proposed service to GPC involves no interstate retail sale which may be regulated by the states, rather that the proposed pipeline will be used solely for transportation of gas in interstate commerce. In its Second Motion, Midwestern argues that the FERC decision collaterally estops subsequent litigation over the issue because (1) the issues sought to be estopped are within the statutory jurisdiction of the FERC; (2) the FERC was acting in a judicial capacity; (3) the parties to that proceeding, and to the proceeding before the IURC have had a fair opportunity to litigate the issues before the FERC; and (4) the FERC decision is subject to judicial review. See U.S. v. Utah Construction and Mining Co., 86 S.Court 1545, 1560 (1966); McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390, 394 (Ind. 1988). In its Second Motion, Midwestern also argues that if the TURC is not inclined to dismiss SIGECO’s Petition, any proceedings in this Cause should be stayed pending the outcome of any rehearing before the FERC and/or judicial review before the United States Court of Appeals as described by Section 19 (a) and (b) of the Natural Gas Act. 15 U.S.C. Sec. 717 (r) (a) and (b). In light of the FERC Order and the exclusivity of judicial review under Section 19 of the Natural Gas Act, Midwestern withdrew its prior alternative request for certification of the legal issue by the Commission to the Indiana Court of Appeals. 53a Appendix C 7. Responses to Second Motion to Dismiss. Petitioner and certain of the similarly interested Intervenors respond to the Second Motion to Dismiss with two basic arguments. First, that whatever the FERC’s Order says, the responsibility of this Commission is to enforce the Indiana Statutes, and that even though the FERC Order contains a determination that it preempts the Indiana Statutes, the Commission’s Statutory duty is to enforce, not invalidate, Indiana law. See General Motors Corp. v. Indianapolis Power & Light Co., 654 N.E.2d 752, 763 (Ind.Ct. of Appeal 1995), Sunshine Promotions Inc. v. Ridlen, 483 N.E.2d 761, 765 (Ind.Ct. of Appeal 1985), State ex rel. Bash v. Medical Licensing Board of Indiana, 451 N.E.2d 691, 696 (Ind.Ct. of Appeal 1983), Consolidated Rail Corp. y. Smith, 664 F.Supp. 1228, 1223 (N.D.Ind. 1987). Second, SIGECO and the similarly interested Intervenors argue that the FERC Order does not collaterally estop litigation of any question before this Commission in this proceeding. In that connection, they argue that the FERC had no Statutory authority to declare Indiana Code Sections 8-1-2-87 and 87.5 invalid, and thus, the issues which the Respondent seeks to estop this Commission from considering were not within the Statutory jurisdiction of the FERC. SIGECO and the similarly interested Intervenors also argue that the FERC, in entering its Order, was not acting in its judicial capacity, but rather as an interested party advocating its own position. Thus, they conclude that they did not have a fair opportunity to litigate the preemption issue before the FERC. Additionally, the responsive parties argue that under Indiana law, collateral estoppel only applies where particular issues are adjudicated in one forum and are then put at issue in a subsequent suit on a different cause of action between the same parties or their privies. See McClanahan 54a Appendix C v. Remington Freight Lines, Inc., 517 N.E.2d 390, 394 (Ind. 1998). The argument follows that since the instant proceeding was initiated prior to the issuance of the FERC decision collateral estoppel would not apply. 8. Findings. The facts in this case, for purposes of resolving the Respondent’s motion to Dismiss, are not in dispute, and therefore, a hearing is not necessary prior to this Commission’s rendering of findings thereon. The Petitioner is a public utility rendering the provision of gas utility service to the public in the State of Indiana including Daviess County, Indiana. Intervenor GPC is a manufacturer and marketer of various corn-based products and is constructing a new corn processing plant in Daviess County, Indiana. GPC has requested the services of the Respondent for the purposes of transportation, in interstate commerce, of natural gas which GPC intends to purchase outside of the State of Indiana and have delivered to its facility in Daviess County, Indiana. The Petitioner argues that such transportation of natural gas, even if transported in interstate comnerce to an end-use customer within the State of Indiana, recuies certification under Indiana law even if the natural zas is owned by the end-use customer prior to its transportation. The Respondent argues that such transactions fall within the NGA and thus are subject to the exclusive jurisdiction of the FERC. The Respondent has supported this position with decisions from federal circuits which have - found that state assertions of jurisdiction for the purpose of requiring certification for the provision of such services are preempted by the federal statutes, and that the FERC’s jurisdiction regarding such matters is exclusive. The Respondent has also provided this Commission with a 1993 55a Appendix C FERC decision based upon facts similar to the instant proceeding in which the FERC found that its jurisdiction was exclusive. The Petitioner and certain of the similarly interested Intervenors have argued that the federal authorities which the Respondent relies upon do not include Seventh Circuit decisions, and thus, this Commission is not bound by them. In assessing the arguments of the parties, we are mindful of the fact that the Seventh Circuit, by which this Commission is bound, has been silent on the issue presented in the instant proceeding. Thus, we may only consider the five federal decisions involving facts similar to those present in this proceeding which the Respondent relies upon as persuasive. The Petitioners and certain of the similarly interested Intervenors have also argued that whether or not the Indiana statute, to the extent it may conflict with the federal statute, is constitutional, unconstitutional, or otherwise preempted, is not a decision for this Commission to make, but rather, the charge to this Commission is simply to enforce the state statutes. This is a strong argument which may not be taken lightly. The Respondent’s Second Motion to Dismiss is based upon a FERC decision issued on December 16, 1998 regarding facts common to the instant proceeding as well as the proceeding before the FERC, and specifically finds that the Indiana law requirement is preempted by the federal law. The Respondent argues in its Second Motion to Dismiss that the Petitioner and the similarly interested Intervenors are collaterally estopped from challenging the preeminence of the federal statutes. The Petitioner and the similarly interested 56a Appendix C Intervenors have responded with the argument that the FERC is without authority to make such a ruling and that this Commission does not owe the FERC’s decision deference with regard to the FERC’s interpretation of federal and state statutes in any event. Further, the Petitioner and the similarly interested Intervenors argue that the FERC decision does not collaterally estop the instant litigation. We agree with the Petitioner that this Commission is just as entitled to interpret statutes as is the FERC. We further appreciate that our function as a state administrative agency is to enforce the statutes entrusted to it, rather than to find that such statutes are unconstitutional. However, the Respondent has demonstrated that states in other federal circuits have been unsuccessful in attempting to enforce state certification statutes when federal jurisdiction has been asserted exclusively. The FERC has recently removed any doubt as to whether it would assert exclusive jurisdiction over the proposed transactions as between the Intervenor GPC and the Respondent Midwestern and while the FERC is surely within its authority to assert jurisdiction over these transactions, the exclusivity of t [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1142%3A4. Public record. Not legal advice.