The D.C. Circuit Court of Appeals has remanded a PanhandleEastern Pipe Line decision that it says clearly departed fromFERC’s established policy on pipeline connections without providingany justification for the action.

Panhandle challenged the 1997 orders because it said they”conflicted with or changed” the Commission’s long-held policyrequiring pipes to build interconnects only when they hadconstructed them for similarly-situated parties in the past [No.98-1048].

At issue were orders that directed Panhandle to buildinterconnects for “any party willing to pay the reasonable costsand expenses of the construction and who meets the other conditionsof Panhandle’s interconnect construction policy as modified by theCommission.” The FERC modifications are what prompted the courtchallenge.

Specifically, FERC eliminated provisions in Panhandle’s tariffthat required a party seeking an interconnect to: 1) be a shipper;2) demonstrate the existence of “market demand commensurate withthe facility requested;” and 3) show that the construction of aninterconnect will not result in “adverse economic impact toPanhandle.” Panhandle insisted the tariff changes gave partiesseeking interconnects, regardless of whether they were similarlysituated, wholesale access to its pipeline system. And the courtagreed.

“FERC’s argument fails to persuade us that it has not changedits policy,” the appellate court opined. “…[W]ere we to upholdFERC’s orders, Panhandle would be bound to construct aninterconnect for any [requesting party] falling within itsFERC-modified tariff, even if the requester were notsimilarly-situated to any party for whom Panhandle had previouslybuilt an interconnect. That constitutes a clear change in FERC’spolicy,” it said.

“FERC may well be able to defend its new policy. The orders…,however, neither acknowledge the change nor explain itsrationale…..As we have repeatedly reminded FERC, if it wishes todepart from its prior policies, it must explain the reasons for itsdeparture.”

Susan Parker

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.