On October 24, 2011, the United States Court of Appeals for the Fifth Circuit significantly limited the Federal Energy Regulatory Commission's ability to require intrastate pipelines to post certain types of information. Section 23 of the Natural Gas Act directs FERC to "facilitate price transparency in the markets for the sale or transportation of physical natural gas in interstate commerce" and also gives FERC rulemaking authority to gather information from "any market participant." In carrying out its obligation under the Act, FERC issued Order No. 720, which required most intrastate pipelines to post capacity and scheduling information.
The Court of Appeals found that FERC exceeded its authority and vacated Order No. 720. The court explained that FERC could not use its authority under Section 23 of the Act to gather information from market participants such as intrastate pipelines that are not otherwise subject to the Commission's jurisdiction.
In addition to preventing FERC from requiring intrastate pipelines to post capacity and scheduling information, the decision will likely limit FERC's ability to act similarly in its regulation of electricity. When Congress created Section 23 of the NGA, it created a companion provision in Section 220 of the Federal Power Act. FERC intends to use FPA Section 220 to require non-public utilities, i.e., entities making wholesale sales in interstate commerce but not subject to the Commission's rate jurisdiction, to file quarterly electronic filings of their sales, just like public utilities. The 5th Circuit decision, however, stands for the proposition that FERC cannot use Section 23 of the NGA (and by extension FPA Section 220) to gather information from market participants that are not otherwise subject to its jurisdiction.
By limiting FERC's reach under NGA Section 23 and FPA Section 220, the decision will limit the regulatory burden of entities not subject to the Commission's jurisdiction. At the same time, the decision will limit information concerning the activities of such entities.