City of Clarksville v. Fed. Energy Regulatory Comm'n, 888 F.3d 477

Background

Clarksville, TN is a municipal gas utility that operates distribution facilities in Tennessee and a short 2,400-foot Kentucky Service Line extending into Kentucky; it also supplies gas to Fort Campbell and to the City of Guthrie, KY via a meter just across the state line.
Clarksville applied to FERC for a §7(f) service-area determination and regulatory waivers; FERC granted the request and, during the proceeding, concluded Clarksville’s sales/transportation to Guthrie fell under FERC jurisdiction and its blanket marketing certificate.
Clarksville sought rehearing, arguing municipalities are excluded from the NGA’s definition of “person” and thus not subject to NGA §7 certificate requirements for sales/transportation when acting as a municipality.
FERC reversed earlier municipal-exemption precedent, reasoning municipalities could not avoid NGA jurisdiction when sales/transportation affect interstate commerce and that excluding such transactions would create a regulatory gap inconsistent with the NGA’s purpose.
The D.C. Circuit considered standing and ripeness and held Clarksville had standing (minimal new reporting obligations cause injury) and the dispute was ripe for review.
On the merits, the court concluded the NGA’s text unambiguously excludes municipalities from the definition of “person” and thus §7(c) does not authorize FERC to require certificates from municipalities acting as municipalities for the sales at issue; it vacated FERC’s orders to the extent inconsistent with this interpretation.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Clarksville has standing to challenge FERC's orders	Clarksville: FERC imposed new minimal reporting/data-retention obligations and has chilled its business decisions — this is an injury in fact	FERC: Clarksville can continue its transactions unchanged and thus is not aggrieved	Held: Clarksville has standing; the minimal new regulatory obligation suffices as injury in fact
Ripeness of the dispute	Clarksville: agency interpretation is final and causes concrete regulatory effects	FERC: no hardship; judicial review premature	Held: Ripe — no factual development required and agency position is crystallized
Whether a municipality is a "person" or "natural-gas company" under the NGA such that FERC may require §7 certificates	Clarksville: NGA defines "person" as individual or corporation and expressly excludes municipalities, so municipalities are not subject to §7 jurisdiction	FERC: CPUC and statutory purpose permit treating municipalities as jurisdictional when transactions affect interstate commerce to avoid regulatory gaps	Held: The statute’s plain text controls; municipalities are excluded from the definition of "person," so FERC may not assert §7 jurisdiction over municipal sales/transportation when the municipality is acting as a municipality
Whether the interstate nature of the transport/sale to Guthrie independently brings the transaction under FERC even if Clarksville is a municipality	Clarksville: transactions occur while acting within its state of incorporation and Guthrie likely resells via its own facilities; no clear acquiescence to FERC jurisdiction	FERC: §1(b) covers transportation and sales in interstate commerce regardless of municipal status; circuit precedent allows jurisdiction when facilities cross state lines or when gas is dedicated to interstate market	Held: FERC’s alternative argument rejected — §1(b) does not override the statutory exclusion; prior cases relied on different facts (e.g., municipal facilities crossing state lines or prior certificate)

Key Cases Cited

NAACP v. Fed. Power Comm’n, 425 U.S. 662 (1976) (Congress enacted NGA to ensure orderly supply and protect consumers)
Hope Nat. Gas Co., 320 U.S. 591 (1944) (explaining NGA’s consumer-protection purpose)
Schneidewind v. ANR Pipeline Co., 485 U.S. 293 (1988) (NGA as federal regulation of wholesales in interstate commerce)
United States v. Public Utils. Comm’n of California, 345 U.S. 295 (1953) (FPA interpretation addressing whether municipalities fall within agency jurisdiction)
Intermountain Mun. Gas Agency v. FERC, 326 F.3d 1281 (D.C. Cir. 2003) (agency exercised jurisdiction over municipally owned pipeline crossing state lines)
City of Arlington v. FCC, 569 U.S. 290 (2013) (deference framework for agency statutory interpretations)
Public Serv. Co. of N.C. v. FERC, 587 F.2d 716 (5th Cir. 1979) (considerations supporting agency jurisdiction where state acquiescence and certification present)
United Distribution Cos. v. FERC, 88 F.3d 1105 (D.C. Cir. 1996) (discussing NGA’s role in filling regulatory gaps)