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
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
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.