Interstate Natural Gas Association of America v. Federal Energy Regulatory Authority

The Natural Gas Act (NGA) authorized the Federal Energy Regulatory Commission (FERC) (defendant) to deregulate the natural-gas sales market. FERC Order No. 636 required natural-gas pipelines to unbundle sales and transportation services. In this order, FERC capped the purchase price for capacity releases at the same maximum rates as the rates for capacity sales by pipelines. FERC expressed concern that the pipelines could wield market power to command higher prices if given increased pricing flexibility. FERC also explained that market-based rates in the short-term market might tempt pipelines to limit construction of new pipeline capacity in order to charge higher prices. Later, FERC issued a final rule, Order No. 712, which lifted the price ceilings for short-term capacity releases by natural-gas shippers but not for capacity sales by natural-gas pipelines, as set by Order No. 636. FERC found that the short-term capacity-release market for selling natural-gas supply was generally competitive but that price ceilings were still necessary to ensure pipelines that provided natural-gas transportation services did not take advantage of customers. The Interstate Natural Gas Association of America; Spectra Energy Transmission, LLC; and Spectra Energy Partners, LP (plaintiffs) filed petitions for review of Order No. 712 in the United States Court of Appeals for the District of Columbia Circuit.