A federal appeals court in Washington, DC Friday upheld a lower court decision that enjoined the Federal Energy Regulatory Commission from enforcing an open-ended reporting requirement on natural gas pipelines operating offshore, finding the agency exceeded its authority under the Outer Continental Shelf Lands Act (OCSLA) when it ordered the action in 2000.

In affirming the January 2002 ruling of the U.S. District Court for the District of Columbia, the appeals court said the sections of the OCSLA cited by the Commission to justify its action “do not grant FERC general powers to create and enforce open-access rulings on the OCS, but merely assign it a few well-defined tasks.”

The U.S. Court of Appeals for the District of Columbia Circuit, in an 11-page ruling, agreed with The Williams Cos., the Independent Petroleum Association of America and other producers, which argued the Commission lacked authority under the OCSLA law to force all offshore pipelines to comply with the extensive reporting requirements that were mandated in FERC’s Order 639.

FERC petitioned the appellate court to review the district court’s ruling, claiming that the court had interpreted the agency’s authority under the OCSLA too narrowly.

At issue in the case was an April 2000 ruling in which FERC flexed its seldom-used authority under the OCSLA to subject all offshore gas pipelines — including those that previously weren’t covered by its jurisdiction — to uniform reporting requirements. It was the FERC’s first real stab at trying to bring an end to the conflicting regulatory regimes in the Outer Continental Shelf (OCS).

A number of pipeline and producers at the time questioned whether the Commission had the authority under the OCSLA to prescribe such widespread reporting requirements for all OCS pipelines. FERC conceded then it hadn’t exercised its authority under the 1953 OCSLA law much in the past, but it said the changing character of the offshore transportation infrastructure — from one dominated by pipelines subject to Natural Gas Act (NGA) regulation to one comprised largely of NGA-exempt facilities owned by producers — required it to exercise both its NGA and OCSLA authority to oversee the offshore.

Under the agency order, all offshore pipelines — whether NGA jurisdictional or not — were to begin filing 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 were 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, and any changes in their facilities or ownership.

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