FERC’s attempt at a “Solomonic solution” to the ongoing debateover 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 hasfailed miserably, with both pipelines and their customers citingshortcomings with the remand decision and seeking rehearing. If theSea Robin ruling is upheld by FERC, 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 that[King] Solomon did not actually cut the baby in half” to determinewho 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 theexercise,” said Exxon Co. U.S.A. and Burlington Resources Oil &Gas. The producers insist FERC did just that when it decided onremand to split the baby with respect to Sea Robin’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 (about 373 miles of 20-inchpipe) performed a gathering function while the part downstream ofVermilion (a 66-mile, 36-inch pipeline) was transportation innature. Neither the pipelines nor their producer customers foundmuch to like about the ruling, with pipes saying Sea Robin shouldhave been declared entirely exempt gathering and producersinsisting it should have been declared all jurisdictionaltransportation. Some say FERC took the half gathering-halftransportation approach as an easy way out to a difficultsituation.

Rather than resolving anything, Indicated Parties – whichincludes major producers – said the Commission’s latest order was”more offensive” than the original FERC orders that found SeaRobin’s function to be entirely transportation. The Fifth CircuitCourt of Appeals set aside those orders, saying that FERC hadrelied too heavily on the size – both length and diameter – of theSea Robin system in reaching its decision. The court criticized theCommission for giving undue weight to Sea Robin’s “businesspurpose, ownership and prior certification” when deciding theoffshore pipeline’s jurisdictional status. Sea Robin is owned bySonat Inc.

Additionally, the New Orleans court instructed FERC to “applyconsistently” the six factors in its modified primary function testto determine whether a pipeline is jurisdictional, thus subject toCommission purview, or whether it’s gathering, which would exemptit from Commission oversight. It specifically directed theCommission “not [to] discount…..application of any factor whichpoints to a non-jurisdictional result.” Lastly, the court suggestedthat FERC reformulate the primary function test, discontinuingfactors that weren’t relevant.

Sea Robin – the subject of the remand – opposed FERC’s Junedecision because it failed to weigh the “totality of thecircumstances,” as instructed by the court. Instead, “theCommission has focused on one factor [thecentral-point-in-the-field factor] involved in the primary functiontest and chose to weigh its decision in favor of that factor whilesubstantially discounting other factors which would lead to anon-NGA jurisdictional finding. This jurisdictionally-orientedpicking and choosing of one factor over another…..ignores priorprecedent, and turns its back on the Fifth Circuit’s instructionson remand.”

The Commission’s “sudden revitalization” of thecentral-point-in-the-field factor – generally a point on a pipelinesystem denoting a change in the facility’s function – was an”arbitrary and capricious attempt…..to force the jurisdictionalconclusion,” Sea Robin charged.

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…..,” INGAA said.

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.”

“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.

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.

Susan Parker

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