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Midcoast, GASP Lose Court Fight over AL Line

Midcoast, GASP Lose Court Fight over AL Line

Midcoast Interstate Transmission and two groups of landowners-environmentalists last week lost their year-long battle in court to overturn the FERC orders awarding a certificate to Southern Natural Gas to build and operate a competing pipeline extension into northern Alabama.

Midcoast, which has enjoyed a monopoly over pipeline transportation in the region for years, challenged the orders in the U.S. Court of Appeals in Washington D.C., arguing that FERC failed to make a "reasoned" comparison of the competing environmental and economic factors of Southern Natural's extension with the two system alternatives it proposed - the Alabama-Tennessee Alternative and the Hartselle System alternative. It also challenged the Commission's approval of rolled-in pricing for the extension.

Although FERC in its decision conceded the "environmental superiority" of Midcoast's Alabama-Tennessee option, the Commission said it approved the Southern Natural extension "for countervailing policy reasons" - namely that it would provide for the first time in nearly 50 years a competitive alternative for the captive pipeline customers of Midcoast. It conditioned Southern Natural's certificate on the pipeline agreeing to comply with sterner environmental measures to even the scale with Midcoast's alternative.

The Commission's action "strikes us as responsible agency decision-making," wrote Senior Judge James Buckley in the opinion issued last Tuesday. Also, he said the court couldn't fault FERC for rejecting Midcoast's claims that its system alternatives were economically superior, especially since Midcoast's two largest customers - the municipal utilities of Huntsville and Decatur, AL - had signed long-term contracts to take service on Southern's extension.

The construction of the extension has been completed. It extends about 118 miles from Tuscaloosa, AL, to Huntsville, and will carry 70 MMcf/d of natural gas supplies to the municipalities of Huntsville and Decatur.

Susan Parker

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