FERC’s attempt at a “Solomonic solution” to the lingering feudover the function of Sea Robin Pipeline — dividing the offshoresystem in two, with the smaller part being declared transportationand the larger section found to be gathering-apparently has failedmiserably. Both pipelines and their customers have cited shortfallswith the decision and are seeking rehearing. If the Sea Robinruling is upheld by FERC on rehearing, the case — which has beenpending since 1995 — would be headed back to the courts for asecond time.

“The Commission…..apparently [lost] sight of the fact thatSolomon did not actually cut the baby in half. Had he done so, hewould have defeated the very object of the exercise,” said ExxonCo. U.S.A. and Burlington Resources Oil & Gas of FERC’sdecision on remand in which it split the baby with respect to SeaRobin’s function [CP95-168-003].

In late June, with two commissioners dissenting, the FERCmajority ruled that the section of Sea Robin’s system upstream ofthe Vermilion 149 compressor station (373 miles of pipe) performeda gathering function while the part downstream of Vermilion (a66-mile pipeline) was transportation in nature. Neither thepipelines nor their customers (producers) found much to like aboutthe ruling, with pipes saying Sea Robin should have been declaredentirely exempt gathering and producers insisting it should havebeen declared all jurisdictional transportation. Some say FERC tookthe half gathering-half transportation approach as an easy way outof a difficult situation.

Rather than resolving anything, Indicated Parties-which includesmajor producers-said the Commission’s latest order was “moreoffensive” than the original orders that found Sea Robin’s functionto be entirely transportation. The Fifth Circuit Court of Appealsvacated those orders, and instructed FERC to consider reformulationof the modified primary function test that’s used to determine thefunction of offshore pipeline facilities.

Sea Robin opposed the June decision because it failed to weighthe “totality of the circumstances” to determine the primaryfunction of its system. Instead, “the Commission has focused on onefactor [the central-point-in-the-field test] involved in theprimary function test and chose to weigh its decision in favor ofthat factor while substantially discounting other factors whichwould lead to a non-NGA jurisdictional finding. Thisjurisdictionally oriented picking and choosing of one factor overanother…..ignores prior precedent, and turns its back on theFifth Circuit’s instructions on remand.”

The Commission’s “sudden revitalization” of thecentral-point-in-the-field factor-the point on a pipeline systemwhere gathering ceases and transportation begins-was an “arbitraryand capricious attempt…..to force the jurisdictional conclusion,”Sea Robin charged. It noted FERC previously had found this factorto have “little importance” in the context of offshore facilities.

Sea Robin, as well as the Interstate Natural Gas Association ofAmerica (INGAA), also objected to the omission of thebehind-the-plant factor in FERC’s analysis of the function of theoffshore pipeline system. This factor focuses on the location ofprocessing plants, with pipeline facilities located upstream ofsuch plants generally found to be gathering in nature, whilefacilities downstream of such plants are found to betransportation. “…..[T]he Commission’s stripping of thebehind-the-plant factor in its analysis is precisely what the FifthCircuit ordered the Commission not to do on remand,” Sea Robinsaid.

Both Sea Robin and INGAA pointed out that the Sea Robin systemis located entirely upstream of two processing plants, operated insequence by Pennzoil and Texaco. Sea Robin transports raw gas tothe processing facilities, where it is then stripped ofhydrocarbons and delivered to six onshore interstate pipelines.

“Thus, the unprocessed gas Sea Robin carries cannot be deliveredinto the onshore pipeline system for further delivery in interstatecommerce” without first being processed. “This fact is indicativeof a non-jurisdictional gathering function and it is error for theCommission to delete this factor from the primary functiontest…..,” INGAA said. It called for FERC on rehearing to returnthe behind-the-plant factor to its “integral role” in the modifiedprimary function test.

In contrast, Exxon and Burlington-which contend Sea Robinperforms a transportation-only function-took issue with FERC’sintroduction of what they called the “beyond-the-fork” test in theSea Robin decision. Under this test, facilities upstream of thefork in a “Y” shaped pipeline system (such as Sea Robin) “wouldapparently be declared gathering irrespective of size [of pipe],function or configuration” of the system.

“The Commission cannot…..simply declare without analysis thathuge portions of an existing interstate pipeline are engaged ingathering simply because they are upstream of the last fork in thesystem,” the two producers argued. Although Exxon and Burlingtonagree with FERC’s conclusion that the primary function of SeaRobin’s facilities downstream of Vermilion 149 is transportation,”the order contains no analysis whatsoever in support of theconclusion that the facilities upstream of that point are engagedin gathering.”

Indicated Parties — which advocate a transportation findingfor Sea Robin — also contend that the Commission introduced a newtest in the Sea Robin decision — this one called the”central-point-on-the-pipeline” test, which they said “has nothingto do with the demarcation between gathering and transportation,”and “arbitrarily refunctionalizes the bulk of Sea Robin’sintegrated transportation system as non-jurisdictional gathering.”

Indicated Parties contend a number of factors “prove that SeaRobin’s [entire] system continues to perform a transmissionfunction.” These factors, they said, include the physical,geographic and operational characteristics of Sea Robin; its priorcertification and “consistent operation” for 30 years as aninterstate pipeline; and the fact that an upstream pipelinetransporting deep-water gas (the Garden Banks Gas Pipeline) isattached to Sea Robin’s upstream system.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.