On April 24, 2025, FERC denied NGO Transmission, Inc.’s (“NGO Transmission”) application under 7(b) of the Natural Gas Act (“NGA”) to abandon its jurisdictional facilities and reclassify them from jurisdictional transmission facilities to non-jurisdictional local distribution facilities. FERC concluded that NGO Transmission’s facilities do not directly serve end-use customers in a manner consistent with local distribution.

In 2003, FERC issued NGO Transmission a certificate of public convenience and necessity (“CPCN”) to operate three underground natural gas storage facilities, approximately 170 miles of natural gas pipeline, and appurtenant facilities. NGO Transmission receives natural gas from three upstream pipelines and directly delivers that gas to end-users through farm taps and to the local distribution facilities of National Gas & Oil Cooperative (“NGO Cooperative”), an affiliated company.

In the instant proceeding, NGO Transmission explained that in establishing compliance with safety initiatives implemented by the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), most of its pipeline facilities were reclassified from transmission to distribution for PHMSA purposes, which led it to reevaluate how its facilities were classified by FERC, and to then subsequently file to abandon and reclassify its facilities as non-jurisdictional. NGO Transmission stated that if FERC approved the proposed abandonment, it would cease to own any FERC-jurisdictional facilities and would therefore no longer qualify as a natural gas company under the NGA, and thus, would file to withdraw its FERC Gas Tariff. NGO Transmission noted that although it would continue to retain nominal ownership of the facilities, they would be operated by NGO Cooperative as part of its local distribution system.

When evaluating requests for abandonment, FERC considers factors such as pipe diameter and pressure, the geographic configuration of a system, and whether and to what extent the facilities serve retail customers. FERC acknowledged that several of NGO Transmission’s system features are consistent with local distribution facilities (i.e., the facilities are comprised of smaller diameter pipeline, the facilities operate at pressures much lower than the pressures of the interconnected upstream interstate pipelines, and the system has a circular structure with points of interconnection with NGO Cooperative’s local distribution system) but ultimately denied abandonment finding that NGO Transmission’s lack of direct retail service “points too strongly in the other direction.”

Although NGO Transmission serves 205 end-use customers directly through farm taps, FERC noted that “local distribution companies typically service thousands, and often millions, of customers.” Moreover, FERC referenced its 2003 order granting NGO Transmission a CPCN, and how it noted that NGO Transmission chose to operate as an interstate pipeline subject to FERC jurisdiction even though NGO Transmission had only one firm shipper, NGO Cooperative, and as affiliates, NGO Transmission and NGO Cooperative have an “operationally interrelated structure.” FERC determined that because NGO Transmission “remains unchanged” from 2003, the company continues to be an interstate pipeline subject to FERC jurisdiction.

Finally, FERC dismissed NGO Transmission’s argument that its facilities were local distribution facilities because they were classified as such under PHMSA’s regulations. FERC noted that classifications under PHMSA’s safety regulations are “not relevant” to its determination of whether pipeline facilities are jurisdictional transmission or non-jurisdictional local distribution under the NGA.

The full order, issued in Docket No. CP25-11-000, can be accessed here.