FERC is scheduled to tackle two major cases today – “alternativemethods” for regulating pipeline facilities on the OuterContinental Shelf (OCS) and Granite State Gas Transmission’sapplication to build an LNG facility in the town of Wells, ME. Italso is expected to vote on the merger of Enova and PacificEnterprises.
Although there were reports last week that FERC was undecided onthe specifics of the draft notice of inquiry (NOI) for OCSregulation and that the case could be stricken from today’s meetingagenda, Commission sources said the item still was on the scheduleas of late Tuesday [RM98-8].
During the past few years, the Commission has struggled to reachthe right balance with respect to its jurisdiction over offshorepipelines. The draft NOI is expected to confront the issue of howFERC’s OCS policy should be re-shaped in light of the Fifth CircuitCourt of Appeals’ decision last fall in the Sea Robin Pipelinecase. There, the court advised FERC to “consider the applicabilityof the primary function test to offshore pipeline systems and, ifnecessary, reformulate this test.” The court suggestedFERC”discontinue criteria not relevant to the physical,geographical and operational characteristics” of offshorepipelines. Specifically, it questioned the Commission’s “accent”on an offshore facility’s prior certification and ownership.
As part of the draft NOI, the Commission also is expected toexplore the issue of whether its regulation of OCS pipelines shouldcontinue to be based on the Natural Gas Act, or couched in theOuter Shelf Lands Act.
Separately, interstate pipelines are eagerly anticipating afinal decision in Granite State’s LNG project to see whether thecase portends any changes in the way FERC assesses whether a newproject meets its “need” test and qualifies for a certificate[CP96-610].
The two holding companies for the natural gas distributionutilities covering the southern half of California, Enova Corp. andPacific Enterprises, are expecting a final favorable ruling ontheir $5 billion “merger of equals.” If the commission approves thedeal, the only remaining requirement for completion of the mergerwould be approval of the Securities and Exchange Commission. PE andEnova are pointing for a July 1 official start of a new holdingcompany, Sempra Energy.
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