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FERC Defends Reporting Requirements for OCS Pipes

FERC Defends Reporting Requirements for OCS Pipes

FERC last week reaffirmed the bulk of Order 639 in which it is attempting to bring about some consistency to the regulation of natural gas pipelines on the Outer Continental Shelf (OCS) by imposing similar reporting burdens on all facilities. It also made a few nips and tucks in the OCS order, especially with respect the filing date for the reports and and the types of shippers that are exempted.

In the April ruling, the Commission flexed its seldom-used authority under the Outer Continental Shelf Lands Act (OCSLA) to subject all offshore gas pipelines --- including those that previously weren't covered by its jurisdiction --- to uniform reporting requirements. It was FERC's first real stab at trying to bring an end to the conflicting regulatory regimes in the OCS.

In a companion order, FERC last week also upheld its remand decision on Sea Robin Pipeline, which declared that the offshore pipeline's facilities upstream of its Vermillion 149 Compressor Station were exempt gathering, while its facilities downstream from that point were subject to FERC jurisdiction under the Natural Gas Act [CP95-168-003]. The Commission's initial decision that Sea Robin was entirely jurisdictional was remanded by the D.C. appellate court, and subsequently led to FERC's latest review of its OCS policy and the new OCSLA reporting requirements.

On rehearing of Order 639, a number of pipelines questioned the Commission's authority under the OCSLA to prescribe such widespread reporting requirements for all OCS pipelines. FERC conceded it hadn't exercised its authority under the 1953 OCSLA law much in the past, but it noted that the changing character of the offshore transportation infrastructure - from one dominated by pipelines subject to NGA regulation to one comprised largely of NGA-exempt facilities - required it now to exercise both its NGA and OCSLA authority to oversee the offshore.

"Since we can no longer rely on this scheme of regulatory piggybacking, the new OCSLA reporting requirements are needed to adequately monitor the dynamic, expanding portion of the offshore infrastructure that is not subject to NGA oversight."

It rejected a major pipeline group's argument that the OCSLA reporting burden was duplicative for jurisdictional offshore pipelines, which already were subject to reporting requirements under the NGA. "We observe that, if anything, the enhanced transactional transparency to be gained by OCSLA reporting will diminish the differences between OCS service providers now operating under joint NGA/OCSLA jurisdiction and those subject only to the OCSLA. We would not characterize the new reporting requirements as another layer of regulation."

Under the order, all offshore pipelines --- whether NGA jurisdictional or not --- are required to file with FERC information on their ownership, corporate affiliations, a description of their pipeline facilities (location, length size et al) and a map of their facilities. Also, pipes are required to submit compliance filings each quarter, spelling out their conditions of service along with either all of their current contracts or a statement of their operating conditions, rates and how the rates were derived, as well as any changes in their facilities, ownership or affiliations. These reporting requirements are the core of Order 639.

Pipelines argued that this open-ended requirement forces them to divulge "commercially sensitive, confidential or proprietary information." The Commission acknowledged that offshore pipelines would have to "make public aspects of their operations that they have heretofore been permitted to keep private," but it noted the "wide applicability of the new OCSLA reporting requirements, like the wide applicability of the existing NGA reporting requirements, [will serve] to place competitors on a more consistent regulatory footing."

In Order 639, FERC had required OCS facilities to submit information on their facilities on the first day of each quarter, but on rehearing it pushed back the deadline to 15 days after the close of the quarter. In light of this change, "a report must now reflect a service provider's status as of the last day of the preceding quarter, and describe all changes to a service provider's affiliates, customers, rates, conditions of service, and facilities that have occurred during the course of that quarter." Reports from offshore pipelines will be due April 15, July 15, Oct. 15 and Jan. 15 of each year.

Although it expects the information from OCS pipelines to be adequate, it said if the data in the early rounds of the OCSLA reports prove to be "deficient, excessive, extraneous, redundant, inconsistent or otherwise ineffective, we may then describe a more rigorous format and content for the reports."

Pipeline facilities that are exempt from the reporting requirements --- single-shipper pipelines, owner-shipper lines and feeders --- could quickly lose their exemption if they take on another shipper or refuse service to a shipper without good cause.

Pipelines generally urged FERC to eliminate the reporting exemptions, which mainly apply to producer-owned facilities, while gas producers favored an expansion of the exemptions. But, "we continue to believe that an entity that serves a single customer, or that transports only its own gas, has little opportunity or motive to contravene these OCSLA mandates.

On clarification, the Commission said the owner-shipper reporting exemption would continue to apply even when more than one party owns an OCS pipeline and the production attached to that line. The exemption also would be preserved if the owners contract with a third party to operate the pipeline or manage other transportation matters, FERC noted. With respect to the single-shipper exemption, it said that two affiliate shippers would count as two shippers, and thus would not qualify for the exclusion. Further, the Commission noted that single-shipper and owner-shipper lines that transport gas on behalf of the Minerals Management Service (MMS) would jeopardize their exempt status because it would be considered service for a separate shipper.

Susan Parker

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