The U.S. District Court for the District of Columbia has enjoined the Federal Energy Regulatory Commission (FERC) from enforcing its open-ended reporting requirement on natural gas pipelines operating offshore, ruling that the agency far exceeded its authority under the Outer Continental Shelf Lands Act (OCSLA) when it took this action nearly two years ago.

The court agreed with Chevron U.S.A. Inc., Duke Energy Field Services LP and Williams Cos. Inc., which argued that the Commission lacked the authority under the OCSLA law to force pipelines to comply with the extensive reporting requirements that were mandated in Order 639.

FERC Chairman Pat Wood said last week that the Commission would “very likely” appeal the court’s ruling. If not FERC, he noted that shippers on offshore pipelines surely would do so. He believes the shippers are the big losers in the decision because they will be denied critical information about pipelines on which they transport their gas.

The federal court opined that the “clear, unambiguous text of the OCSLA does not provide the FERC with the power to promulgate the regulations at issue in these case.” Based on this, it concluded that “FERC cannot adopt these reporting requirements.” The court noted that FERC was mentioned in only two subsections of the OCSLA.

In what the court called a “bold assertion,” the Commission argued that it had “wholesale” authority under the OCSLA to take whatever action necessary to enforce open-access transportation on the Outer Continental Shelf. However, the court held that FERC’s legal construction of the OCSLA “[was] not reasonable and, therefore, must be rejected.” It further added that the legislative history of the act did not support the Commission’s arguments.

In individual orders for Chevron, Duke and Williams, the court “permanently enjoined” the Commission from enforcing its April 2000 Order 639 and the subsequent Order 639-A. The two orders required offshore gas pipelines to file with FERC information on their ownership, corporate affiliations, a description of their pipe facilities and a map of the facilities, and to make quarterly compliance filings that included their pipes’ conditions of service, rates and any changes to their facilities and ownership.

The court’s injunction also extended to two later orders in which FERC rejected offshore pipelines’ requests for confidential treatment of the filed data.

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