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ALJ Certifies FERC Enforcement, Oasis Pipeline Settlement

FERC Administrative Law Judge (ALJ) Bruce Birchman last Monday certified under seal a joint offer of settlement that, if ultimately approved by the agency, would resolve all charges that Energy Transfer Partners' Oasis Pipeline LP and affiliates discriminated against nonaffiliated shippers and charged excessive rates in violation of Section 311 of the Natural Gas Policy Act (NGPA).

"I find and conclude that the agreement reflects a fair and reasonable negotiated resolution of all of the issues set for hearing in this proceeding...I further find and conclude that the agreement is an uncontested offer of settlement which does not present any genuine issue of material fact and appears to be...in the public interest," Birchman said in his decision [IN06-3-004].

He noted that the settlement would vacate his partial initial decision issued in late November, which dismissed the meat of the Federal Energy Regulatory Commission (FERC) enforcement case against Oasis Pipeline -- that it discriminated against nonaffiliated shippers in favor of affiliated shippers (see NGI, Nov. ). "Upon approval of the settlement, this proceeding [against Oasis Pipeline] should be terminated," Birchman said. The Federal Energy Regulatory Commission can either approve or reject the ALJ's decision in full or in part.

Details of the settlement, which was submitted under seal, were not disclosed.

FERC enforcement staff and Oasis Pipeline reached a settlement in principle in mid-December (see NGI, Dec. 15, 2008). Chief ALJ Curtis Wagner Jr. at the time granted both parties' request to suspend the trial schedule so that they could work on the settlement.

Last 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 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, 2008). The charges were spelled out in a July 2007 show cause order.

For the Oasis Pipeline NGPA violations, the Commission proposed that Energy Transfer pay $15.5 million in civil penalties for undue discrimination and undue preference, and $500,000 for failure to file an amended operating statement. The Commission also proposed that the company disgorge $267,122, plus interest, in unjust profits.

The joint offer of settlement between FERC enforcement and Oasis reportedly does not resolve the charges against Energy Transfer Partners, parent of Oasis. Energy Transfer Partners and several affiliates -- Energy Transfer Co., ETC Marketing Ltd. and Houston Pipeline Co. -- are accused of manipulating physical natural gas prices at the Houston Ship Channel (HSC) and Waha trading hub on various dates from December 2003 through December 2005.

Energy Transfer and affiliates face potential civil penalties of $82 million -- $79 million for the manipulations at the HSC and $3 million for the 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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