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FERC Reverses Ruling of Exempt Gathering for Transco in LA

April 25, 2005
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FERC last Tuesday reversed an August 2001 ruling that found part of Transcontinental Gas Pipe Line's network located onshore and offshore Louisiana to be unregulated gathering and eligible to be spun down to affiliate Williams Gas Processing-Gulf Coast Co. (WGP).

"The Commission finds that Transco's facilities downstream of the interconnection with [Jupiter Energy Corp.'s] system are jurisdictional transmission facilities subject to the Commission's jurisdiction under Section 7 of the Natural Gas Act," the order said [CP01,368-004, CP01-369-002]. "Because these facilities are transmission...used to provide service for interstate transportation customers, the Commission further finds that it is in the public interest to vacate the abandonment authority granted to Transco with respect to these facilities."

In May 2004, FERC ordered Transco and WGP to show cause why it should not reverse its 2001 ruling. The Commission at the time said its initial decision in Transco, which was upheld by a federal appeals court, "has been called into question" by a subsequent decision in which the agency held that an offshore system owned and operated by Jupiter Energy provided transmission service that was subject to agency jurisdiction.

In a November 2003 order on rehearing of the Jupiter ruling, which was sought jointly by Jupiter, Williams and Transco, FERC noted that it learned for the first time that Jupiter's system was situated upstream of the Transco pipeline facilities that were previously ruled to be nonjurisdictional. The trio argued at the time that Jupiter's upstream facilities should be declared exempt gathering since Transco's downstream pipe facilities were determined by the agency to be gathering. But FERC in the rehearing order said the opposite was the case. Based on the developments in the Jupiter case, the Commission said it appeared that its previous gathering determination for Transco's downstream facilities was made on the basis of incomplete information.

In the latest order, "the Commission finds that jurisdictional transmission is the primary function of Transco's 12.43 mile long, 24-inch diameter lateral that receives gas from Jupiter's facilities in Vermilion Block 22 and transports it to shore, where it enters Transco's other downstream facilities, which the Commission has already found to be transmission in this proceeding." It also vacated the authority granted to Transco to spin down the facilities.

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