Amoco Production and Amoco Energy Trading have wasted no time inpetitioning the D.C. Circuit Court of Appeals to review FERC’srecent decision upholding Dynegy Marketing and Trade’s 1.3 Bcf/dcontract with El Paso Natural Gas.

Although the parties didn’t have to state the reason for theirappeal in their petition, it’s believed they will challenge the ElPaso-Dynegy contract arrangement on the grounds that it’s anegotiated-rate transaction that’s harmed producers and marketerson El Paso’s pipeline system.

Producers, industrial gas users and municipals previously hadpetitioned the court to review the 1996 FERC policy statement thatallows pipelines to negotiate rates with individual customers, butthe court denied it saying that it needed a “real” case before itcould examine the negotiated-rate policy. The El Paso-Dynegycontract could turn out to be that case.

In its July order on rehearing, the Commission upheld the bulkof its prior decision approving the whopping El Paso-Dynegyarrangement, finding that while it posed some competitive concerns,it was not “unduly discriminatory” in nature. It also gave El Pasoshippers a victory of sorts by diluting Dynegy’s control over itscontracted-for capacity on the pipeline. FERC relaxed thecircumstances under which El Paso shippers could recall from Dynegythe so-called Block II capacity (614 MMcf/d) to deliver gas tonorthern California.

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