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Oasis Pipe Seeks Disclosure of FERC Hotline Caller

Because FERC enforcement staff litigating charges against Energy Transfer Partners' Oasis Pipeline LP disclosed to a third party the identity of a hotline caller that prompted an agency probe of the pipeline, Oasis last week called on an administrative law judge (ALJ) to waive privilege and confidentiality and require the disclosure of the caller's name to the pipeline.

In related action, Federal Energy Regulatory Commission (FERC) Chief Judge Curtis L. Wagner last Thursday terminated settlement talks between Energy Transfer, Oasis Pipeline and FERC's enforcement litigation staff, saying that a settlement was "not feasible at this point in time." However, he indicated the parties could make a plea to resume the talks at a later date.

In a recent deposition FERC's expert witness Thomas J. Norris, a consultant and former long-time employee of Tenneco Inc., admitted that the enforcement litigation staff divulged to him the identity of the person who placed the hotline call to the Federal Energy Regulatory Commission, accusing Oasis Pipeline of denying capacity to interstate shippers. He also said he knew whether the caller had a dual contract arrangement with Oasis Pipeline.

FERC regulations require that all information and documents obtained via the hotline be treated as nonpublic by the Commission and its staff.

"Staff should be required to produce to Oasis (if necessary, subject to the protective order) all information that it has provided to its putative expert, Mr. Norris. Staff's disclosure of the information conveyed by the caller to Mr. Norris effectuated a waiver with respect to any qualified protection or privilege that may have attached to the hotline call," attorneys for Oasis told FERC [IN06-3-004].

"Even if the hotline call was 'privileged,' staff's disclosure of its contents to Mr. Norris...waived any such privilege and necessitates production of the information that staff provided to Mr. Norris," the Oasis attorneys said.

"Staff's attempt to skirt this issue by not playing the actual [hotline call] recording or tendering the actual transcript to Mr. Norris does not change the fact that they have clearly discussed with him the information conveyed in the four corners of the call and possibly additional information that staff acquired from the caller."

Specifically, Oasis asked presiding ALJ Bruce L. Birchman to direct the FERC litigation staff to produce Norris for a second deposition related to the hotline caller, or to answer written interrogatories on the issue.

In May, FERC set for hearing the issues of whether affiliates Oasis Pipeline LP, Oasis Pipeline Co. Texas LP and ETP Texas Pipeline Ltd. violated certain regulations under Section 311 of the Natural Gas Policy Act (NGPA), including unduly discriminating against nonaffiliated shippers and unduly preferring affiliated shippers; charging rates in excess of the Commission-approved fair and equitable rates, and, if so, the amount of unjust profits due shippers; and failing to file an amended operating statement in violation of agency regulations (see NGI, May 19).

The Commission proposes that the company pay $15.5 million in civil penalties for the alleged NGPA violations of undue discrimination and undue preference, and $500,000 for failure to file an amended operating statement. The Commission also is proposing that Oasis disgorge $267,122, plus interest, in unjust profits.

Also in the May order FERC set for hearing allegations that Oasis Pipeline's parent, Energy Transfer Partners, and several affiliates -- Energy Transfer Co., ETC Marketing Ltd. and Houston Pipeline Co. -- manipulated physical natural gas prices at the Houston Ship Channel (HSC) and Waha trading hub on various dates from December 2003 through December 2005.

FERC has accused Energy Transfer and affiliates of market manipulation, with potential civil penalties totaling $82 million -- $79 million for the manipulations at the HSC and $3 million for alleged manipulations at Waha and Permian trading hubs (see NGI, July 30, 2007). The Commission also proposed disgorgement of $69.9 million, plus interest, in unjust profits.

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