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House Panel Nixes Proposal Giving FERC Authority over Offshore Gathering

The House Energy and Commerce Committee late Wednesday dropped a proposal that would have given the Federal Energy Regulatory Commission the authority to regulate rates for gathering service in federal waters. Instead, the House panel adopted a watered-down amendment that allows the agency to monitor operators of offshore gas gathering lines, but it stops short of awarding FERC regulatory authority in this area.

Committee Chairman Joe Barton (R-TX) included the initial proposal extending FERC authority to offshore gathering in a wider Republican-crafted bill that sought to spur the construction of oil refineries and pipelines in the United States. The panel approved the bill in a midnight vote last Wednesday that capped off a day-long, heated hearing. Reports indicated the measures may be merged with another energy bill approved by the House Resources Committee last Wednesday, and considered on the House floor on Oct. 7.

The Barton proposal would have given the Commission jurisdiction over gas gathering in the Outer Continental Shelf (OCS), an area that has gone unregulated and allowed gatherers to collect monopoly rents (in excess of regulated rates) from shippers. FERC on several occasions has tried to assert jurisdiction over offshore gathering, but has been overturned by the courts.

FERC Chairman Joseph Kelliher and Commissioner Suedeen Kelly in early September called on Congress to amend the Natural Gas Act, giving the agency outright authority over offshore gas gathering.

Barton withdrew his contentious proposal after coming under heavy pressure from pipelines and producers that own offshore gathering assets. Instead, the chairman offered, and the committee approved last week, a proposal that requires offshore gas gatherers to submit to FERC a report on changes to their service rates, conditions of service or facilities in the quarter after the revisions occur. The proposal, however, does not give FERC any authority to crack down on gatherers who charge excessive rates.

In addition to the gathering issue, the Barton measure seeks to encourage the expeditious construction of a long-line natural gas pipeline from Alaska to markets in the Lower 48 states. Specifically, the bill would sunset the federal loan guarantee for the Alaska gas pipeline within two years of enactment of the bill if the state of Alaska and interested parties fail to reach an agreement regarding construction of the line.

Democrats on the House energy panel criticized the bill, saying Republicans were in a "mad dash" to ram the initiative through. "These were bad ideas when they were first proposed" prior to the twin hurricanes striking the Gulf Coast, said Rep. Henry Waxman (D-CA).

The committee rejected a Democratic substitute amendment that, among other things, would have given the Federal Trade Commission new authority to investigate and prosecute companies that engage in "predatory pricing" of a number of energy fuels, including natural gas. Rep. Bart Stupak (D-MI) also tried to include the proposal in a bill that was being considered on the House floor last week, but it was soundly defeated.

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