A federal appeals court in Washington, DC, Friday said FERC acted reasonably when it decided to reclassify as unregulated gathering only a portion of the “massive” network of pipeline facilities that Transcontinental Gas Pipe Line Corp. sought to spin down to affiliate Williams Gas Processing-Gulf Coast Co. (WGP).

Transco and WGP challenged a series of 2001 orders in which the Commission granted in part and denied in part the pipeline’s request to spin down and reclassify as gathering certain pipe facilities in Texas, Louisiana and on the offshore to its affiliate. The orders involved the spin-downs of the pipeline’s North Padre Island and Central Texas systems, North High Island and West Cameron facilities, and Central Louisiana facilities.

The two Williams Cos. affiliates took issue with the portions of the orders that designated parts of the systems as FERC-jurisdictional transmission facilities, while a coalition of natural gas producers petitioned the court to review the parts of the orders that deemed facilities to be gathering in nature, and thus exempt from federal regulation.

In ruling in FERC’s favor, a three-judge panel of the U.S. Court of Appeals for the District of Columbia said it was guided by a 2002 court ruling in ExxonMobil Gas Marketing Co., “where the court stated it will defer to FERC’s reasonable determination regarding gathering status” under the Natural Gas Act.

“We hold that petitioners fail to demonstrate that FERC’s choices are ‘unreasonable and its chosen line[s] of demarcation [are] not within a zone of reasonableness as distinct from the question of whether the lines [are] precisely right,'” the court said in its 18-page opinion. It ruled the Commission “considered the appropriate factors under the primary function test and sufficiently explained its reasoning.”

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