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FERC last week reaffirmed the bulk of Order 639 in which it isattempting to bring about some consistency to the regulation ofnatural gas pipelines on the Outer Continental Shelf (OCS) byimposing similar reporting burdens on all facilities. It also madea few nips and tucks in the OCS order, especially with respect thefiling date for the reports and and the types of shippers that areexempted.
In the April ruling, the Commission flexed its seldom-usedauthority under the Outer Continental Shelf Lands Act (OCSLA) tosubject all offshore gas pipelines — including those thatpreviously weren’t covered by its jurisdiction — to uniformreporting requirements. It was FERC’s first real stab at trying tobring an end to the conflicting regulatory regimes in the OCS.
In a companion order, FERC last week also upheld its remanddecision on Sea Robin Pipeline, which declared that the offshorepipeline’s facilities upstream of its Vermillion 149 CompressorStation were exempt gathering, while its facilities downstream fromthat point were subject to FERC jurisdiction under the Natural GasAct [CP95-168-003]. The Commission’s initial decision that SeaRobin was entirely jurisdictional was remanded by the D.C.appellate court, and subsequently led to FERC’s latest review ofits OCS policy and the new OCSLA reporting requirements.
On rehearing of Order 639, a number of pipelines questioned theCommission’s authority under the OCSLA to prescribe such widespreadreporting requirements for all OCS pipelines. FERC conceded ithadn’t exercised its authority under the 1953 OCSLA law much in thepast, but it noted that the changing character of the offshoretransportation infrastructure – from one dominated by pipelinessubject to NGA regulation to one comprised largely of NGA-exemptfacilities – required it now to exercise both its NGA and OCSLAauthority to oversee the offshore.
“Since we can no longer rely on this scheme of regulatorypiggybacking, the new OCSLA reporting requirements are needed toadequately monitor the dynamic, expanding portion of the offshoreinfrastructure that is not subject to NGA oversight.”
It rejected a major pipeline group’s argument that the OCSLAreporting burden was duplicative for jurisdictional offshorepipelines, which already were subject to reporting requirementsunder the NGA. “We observe that, if anything, the enhancedtransactional transparency to be gained by OCSLA reporting willdiminish the differences between OCS service providers nowoperating under joint NGA/OCSLA jurisdiction and those subject onlyto the OCSLA. We would not characterize the new reportingrequirements as another layer of regulation.”
Under the order, all offshore pipelines — whether NGAjurisdictional or not — are required to file with FERCinformation on their ownership, corporate affiliations, adescription of their pipeline facilities (location, length size etal) and a map of their facilities. Also, pipes are required tosubmit compliance filings each quarter, spelling out theirconditions of service along with either all of their currentcontracts or a statement of their operating conditions, rates andhow the rates were derived, as well as any changes in theirfacilities, ownership or affiliations. These reporting requirementsare the core of Order 639.
Pipelines argued that this open-ended requirement forces them todivulge “commercially sensitive, confidential or proprietaryinformation.” The Commission acknowledged that offshore pipelineswould have to “make public aspects of their operations that theyhave heretofore been permitted to keep private,” but it noted the”wide applicability of the new OCSLA reporting requirements, likethe wide applicability of the existing NGA reporting requirements,[will serve] to place competitors on a more consistent regulatoryfooting.”
In Order 639, FERC had required OCS facilities to submitinformation on their facilities on the first day of each quarter,but on rehearing it pushed back the deadline to 15 days after theclose of the quarter. In light of this change, “a report must nowreflect a service provider’s status as of the last day of thepreceding quarter, and describe all changes to a service provider’saffiliates, customers, rates, conditions of service, and facilitiesthat have occurred during the course of that quarter.” Reports fromoffshore pipelines will be due April 15, July 15, Oct. 15 and Jan.15 of each year.
Although it expects the information from OCS pipelines to beadequate, it said if the data in the early rounds of the OCSLAreports prove to be “deficient, excessive, extraneous, redundant,inconsistent or otherwise ineffective, we may then describe a morerigorous format and content for the reports.”
Pipeline facilities that are exempt from the reportingrequirements — single-shipper pipelines, owner-shipper lines andfeeders — could quickly lose their exemption if they take onanother shipper or refuse service to a shipper without good cause.
Pipelines generally urged FERC to eliminate the reportingexemptions, which mainly apply to producer-owned facilities, whilegas producers favored an expansion of the exemptions. But, “wecontinue to believe that an entity that serves a single customer,or that transports only its own gas, has little opportunity ormotive to contravene these OCSLA mandates.
On clarification, the Commission said the owner-shipperreporting exemption would continue to apply even when more than oneparty owns an OCS pipeline and the production attached to thatline. The exemption also would be preserved if the owners contractwith a third party to operate the pipeline or manage othertransportation matters, FERC noted. With respect to thesingle-shipper exemption, it said that two affiliate shippers wouldcount as two shippers, and thus would not qualify for theexclusion. Further, the Commission noted that single-shipper andowner-shipper lines that transport gas on behalf of the MineralsManagement Service (MMS) would jeopardize their exempt statusbecause it would be considered service for a separate shipper.
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