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FERC's Sea Robin Ruling Misses Mark, Pipes & Producers Say

FERC's Sea Robin Ruling Misses Mark, Pipes & Producers Say

FERC's attempt at a "Solomonic solution" to the ongoing debate over the function of Sea Robin Pipeline - dividing the offshore system in two, with the smaller part being declared transportation and the larger section found to be gathering - apparently has failed miserably, with both pipelines and their customers citing shortcomings with the remand decision and seeking rehearing. If the Sea Robin ruling is upheld by FERC, the case - which has been pending since 1995 - would be headed back to the courts for a second time.

"The Commission...apparently [lost] sight of the fact that [King] Solomon did not actually cut the baby in half" to determine who the child's real mother was, as the story in the Bible goes. "Had he done so, he would have defeated the very object of the exercise," said Exxon Co. U.S.A. and Burlington Resources Oil & Gas. The producers insist FERC did just that when it decided on remand to split the baby with respect to Sea Robin's function [CP95-168-003].

In late June, with two commissioners dissenting, the FERC majority ruled that the section of Sea Robin's system upstream of the Vermilion 149 compressor station (about 373 miles of 20-inch pipe) performed a gathering function while the part downstream of Vermilion (a 66-mile, 36-inch pipeline) was transportation in nature. Neither the pipelines nor their producer customers found much to like about the ruling, with pipes saying Sea Robin should have been declared entirely exempt gathering and producers insisting it should have been declared all jurisdictional transportation. Some say FERC took the half gathering-half transportation approach as an easy way out to a difficult situation.

Rather than resolving anything, Indicated Parties - which includes major producers - said the Commission's latest order was "more offensive" than the original FERC orders that found Sea Robin's function to be entirely transportation. The Fifth Circuit Court of Appeals set aside those orders, saying that FERC had relied too heavily on the size - both length and diameter - of the Sea Robin system in reaching its decision. The court criticized the Commission for giving undue weight to Sea Robin's "business purpose, ownership and prior certification" when deciding the offshore pipeline's jurisdictional status. Sea Robin is owned by Sonat Inc.

Additionally, the New Orleans court instructed FERC to "apply consistently" the six factors in its modified primary function test to determine whether a pipeline is jurisdictional, thus subject to Commission purview, or whether it's gathering, which would exempt it from Commission oversight. It specifically directed the Commission "not [to] discount.....application of any factor which points to a non-jurisdictional result." Lastly, the court suggested that FERC reformulate the primary function test, discontinuing factors that weren't relevant.

Sea Robin - the subject of the remand - opposed FERC's June decision because it failed to weigh the "totality of the circumstances," as instructed by the court. Instead, "the Commission has focused on one factor [the central-point-in-the-field factor] involved in the primary function test and chose to weigh its decision in favor of that factor while substantially discounting other factors which would lead to a non-NGA jurisdictional finding. This jurisdictionally-oriented picking and choosing of one factor over another.....ignores prior precedent, and turns its back on the Fifth Circuit's instructions on remand."

The Commission's "sudden revitalization" of the central-point-in-the-field factor - generally a point on a pipeline system denoting a change in the facility's function - was an "arbitrary and capricious force the jurisdictional conclusion," Sea Robin charged.

Sea Robin, as well as the Interstate Natural Gas Association of America (INGAA), also objected to the omission of the behind-the-plant factor in FERC's analysis of the function of the offshore pipeline system. This factor focuses on the location of processing plants, with pipeline facilities located upstream of such plants generally found to be gathering in nature, while facilities downstream of such plants are found to be transportation. ".....[T]he Commission's stripping of the behind-the-plant factor in its analysis is precisely what the Fifth Circuit ordered the Commission not to do on remand," Sea Robin said.

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

"Thus, the unprocessed gas Sea Robin carries cannot be delivered into the onshore pipeline system for further delivery in interstate commerce" without first being processed. "This fact is indicative of a non-jurisdictional gathering function.....," INGAA said.

In contrast, Exxon and Burlington - which contend Sea Robin performs a transportation-only function - took issue with FERC's introduction of what they called the "beyond-the-fork" test in the Sea Robin decision. Under this test, facilities upstream of the fork in a "Y" shaped pipeline system (such as Sea Robin) "would apparently be declared gathering irrespective of size [of pipe], function or configuration."

"The Commission cannot.....simply declare without analysis that huge portions of an existing interstate pipeline are engaged in gathering simply because they are upstream of the last fork in the system," the two producers argued.

Indicated Parties contend a number of factors "prove that Sea Robin's [entire] system continues to perform a transmission function." These factors, they said, include the physical, geographic and operational characteristics of Sea Robin; its prior certification and "consistent operation" for 30 years as an interstate pipeline; and the fact that an upstream pipeline transporting deep-water gas (the Garden Banks Gas Pipeline) is attached to Sea Robin's upstream system.

Susan Parker

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