Pipes, Producers Seek Changes to OCS Rule
Twelve OCS producers last week accused FERC of illegally
subjecting offshore production and production-related facilities to
the reporting requirements in its final rule dealing with the
regulation of gas transportation facilities on the Outer
Continental Shelf (OCS). Interstate pipelines weren't especially
happy with the final OCS rule either, saying it added another layer
of unnecessary regulation.
"The impact of the rule, unless modified and clarified on
rehearing, is to subject previously unregulated production and
production-related activities and facilities to FERC regulation for
the first time under the [Outer Continental Shelf Lands Act], for
no valid regulatory purposes and with significant compliance
complexities, burdens, expense and harm," the producers told the
By its action, they contend that FERC exceeded its authority
under Section 5 of the OCSLA, which the producers said limits the
Commission's jurisdiction in the OCS to "pipeline facilities and
pipeline transportation or pipeline purchases."
The producers urged FERC to issue a "generic declaration"
specifying that nothing in the final rule, Order 639, would apply
to "production or production-related facilities, services and
agreements, including, but not limited to, lease facilities,
platforms, collection lines, separators, dehydrators,
platform-usage, treatment, handling, processing, [and] operational
and various leasing and rental agreements."
Moreover, they asked the Commission to redefine the rule's
exemption for "feeder line" facilities so that it would apply to
"services rendered over any pipeline or class of pipelines which
feeds into a facility where natural gas is first collected, or a
facility where natural gas is separated, dehydrated or otherwise
processed, including the platform and related facilities where such
activities are performed."
In Order 639, which was released in late March, the Commission
sought to bring some "symmetry" to the regulation of transportation
on the OCS by imposing similar reporting burdens on all "gas
service providers" based on its authority under the lighter-handed
OCSLA. It's those three words that have producers so concerned.
They want FERC to clarify that offshore production facilities,
which heretofore have been unregulated, aren't "gas service
The Interstate Natural Gas Association of America (INGAA), which
represents interstate pipelines, argued the final rule was
unwarranted since there's "no pervasive problem of undue
discrimination on the OCS."
FERC "should direct its efforts to the original problem.....i.e.
the multiple, overlapping regulatory regimes on the OCS that are
contributing to inefficiency and competitive inequities. That
problem should be addressed by eliminating unwarranted regulation
on the OCS, rather than by adding unneeded regulation," INGAA said
in its request for rehearing of Order 639.