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FERC Ruling on Sea Robin Pleases No One

FERC Ruling on Sea Robin Pleases No One

FERC's attempt at a "Solomonic solution" to the lingering feud over the function of Sea Robin Pipeline --- dividing the offshore system in two, with the smaller part being declared transportation and the larger section found to be gathering-apparently has failed miserably. Both pipelines and their customers have cited shortfalls with the decision and are seeking rehearing. If the Sea Robin ruling is upheld by FERC on rehearing, the case --- which has been pending since 1995 --- would be headed back to the courts for a second time.

"The Commission.....apparently [lost] sight of the fact that Solomon did not actually cut the baby in half. Had he done so, he would have defeated the very object of the exercise," said Exxon Co. U.S.A. and Burlington Resources Oil & Gas of FERC's decision on remand in which it split the baby with respect to Sea Robin's function [CP95-168-003].

In late June, with two commissioners dissenting, the FERC majority ruled that the section of Sea Robin's system upstream of the Vermilion 149 compressor station (373 miles of pipe) performed a gathering function while the part downstream of Vermilion (a 66-mile pipeline) was transportation in nature. Neither the pipelines nor their customers (producers) found much to like about the ruling, with pipes saying Sea Robin should have been declared entirely exempt gathering and producers insisting it should have been declared all jurisdictional transportation. Some say FERC took the half gathering-half transportation approach as an easy way out of a difficult situation.

Rather than resolving anything, Indicated Parties-which includes major producers-said the Commission's latest order was "more offensive" than the original orders that found Sea Robin's function to be entirely transportation. The Fifth Circuit Court of Appeals vacated those orders, and instructed FERC to consider reformulation of the modified primary function test that's used to determine the function of offshore pipeline facilities.

Sea Robin opposed the June decision because it failed to weigh the "totality of the circumstances" to determine the primary function of its system. Instead, "the Commission has focused on one factor [the central-point-in-the-field test] involved in the primary function test and chose to weigh its decision in favor of that factor while substantially discounting other factors which would lead to a non-NGA jurisdictional finding. This jurisdictionally oriented picking and choosing of one factor over another.....ignores prior precedent, and turns its back on the Fifth Circuit's instructions on remand."

The Commission's "sudden revitalization" of the central-point-in-the-field factor-the point on a pipeline system where gathering ceases and transportation begins-was an "arbitrary and capricious attempt.....to force the jurisdictional conclusion," Sea Robin charged. It noted FERC previously had found this factor to have "little importance" in the context of offshore facilities.

Sea Robin, as well as the Interstate Natural Gas Association of America (INGAA), also objected to the omission of the behind-the-plant factor in FERC's analysis of the function of the offshore pipeline system. This factor focuses on the location of processing plants, with pipeline facilities located upstream of such plants generally found to be gathering in nature, while facilities downstream of such plants are found to be transportation. ".....[T]he Commission's stripping of the behind-the-plant factor in its analysis is precisely what the Fifth Circuit ordered the Commission not to do on remand," Sea Robin said.

Both Sea Robin and INGAA pointed out that the Sea Robin system is located entirely upstream of two processing plants, operated in sequence by Pennzoil and Texaco. Sea Robin transports raw gas to the processing facilities, where it is then stripped of hydrocarbons and delivered to six onshore interstate pipelines.

"Thus, the unprocessed gas Sea Robin carries cannot be delivered into the onshore pipeline system for further delivery in interstate commerce" without first being processed. "This fact is indicative of a non-jurisdictional gathering function and it is error for the Commission to delete this factor from the primary function test.....," INGAA said. It called for FERC on rehearing to return the behind-the-plant factor to its "integral role" in the modified primary function test.

In contrast, Exxon and Burlington-which contend Sea Robin performs a transportation-only function-took issue with FERC's introduction of what they called the "beyond-the-fork" test in the Sea Robin decision. Under this test, facilities upstream of the fork in a "Y" shaped pipeline system (such as Sea Robin) "would apparently be declared gathering irrespective of size [of pipe], function or configuration" of the system.

"The Commission cannot.....simply declare without analysis that huge portions of an existing interstate pipeline are engaged in gathering simply because they are upstream of the last fork in the system," the two producers argued. Although Exxon and Burlington agree with FERC's conclusion that the primary function of Sea Robin's facilities downstream of Vermilion 149 is transportation, "the order contains no analysis whatsoever in support of the conclusion that the facilities upstream of that point are engaged in gathering."

Indicated Parties --- which advocate a transportation finding for Sea Robin --- also contend that the Commission introduced a new test in the Sea Robin decision --- this one called the "central-point-on-the-pipeline" test, which they said "has nothing to do with the demarcation between gathering and transportation," and "arbitrarily refunctionalizes the bulk of Sea Robin's integrated transportation system as non-jurisdictional gathering."

Indicated Parties contend a number of factors "prove that Sea Robin's [entire] system continues to perform a transmission function." These factors, they said, include the physical, geographic and operational characteristics of Sea Robin; its prior certification and "consistent operation" for 30 years as an interstate pipeline; and the fact that an upstream pipeline transporting deep-water gas (the Garden Banks Gas Pipeline) is attached to Sea Robin's upstream system.

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