Twelve OCS producers last week accused FERC of illegallysubjecting offshore production and production-related facilities tothe reporting requirements in its final rule dealing with theregulation of gas transportation facilities on the OuterContinental Shelf (OCS). Interstate pipelines weren’t especiallyhappy with the final OCS rule either, saying it added another layerof unnecessary regulation.
“The impact of the rule, unless modified and clarified onrehearing, is to subject previously unregulated production andproduction-related activities and facilities to FERC regulation forthe first time under the [Outer Continental Shelf Lands Act], forno valid regulatory purposes and with significant compliancecomplexities, burdens, expense and harm,” the producers told theCommission [RM99-5].
By its action, they contend that FERC exceeded its authorityunder Section 5 of the OCSLA, which the producers said limits theCommission’s jurisdiction in the OCS to “pipeline facilities andpipeline transportation or pipeline purchases.”
The producers urged FERC to issue a “generic declaration”specifying that nothing in the final rule, Order 639, would applyto “production or production-related facilities, services andagreements, including, but not limited to, lease facilities,platforms, collection lines, separators, dehydrators,platform-usage, treatment, handling, processing, [and] operationaland various leasing and rental agreements.”
Moreover, they asked the Commission to redefine the rule’sexemption for “feeder line” facilities so that it would apply to”services rendered over any pipeline or class of pipelines whichfeeds into a facility where natural gas is first collected, or afacility where natural gas is separated, dehydrated or otherwiseprocessed, including the platform and related facilities where suchactivities are performed.”
In Order 639, which was released in late March, the Commissionsought to bring some “symmetry” to the regulation of transportationon the OCS by imposing similar reporting burdens on all “gasservice providers” based on its authority under the lighter-handedOCSLA. It’s those three words that have producers so concerned.They want FERC to clarify that offshore production facilities,which heretofore have been unregulated, aren’t “gas serviceproviders.”
The Interstate Natural Gas Association of America (INGAA), whichrepresents interstate pipelines, argued the final rule wasunwarranted since there’s “no pervasive problem of unduediscrimination on the OCS.”
FERC “should direct its efforts to the original problem…..i.e.the multiple, overlapping regulatory regimes on the OCS that arecontributing to inefficiency and competitive inequities. Thatproblem should be addressed by eliminating unwarranted regulationon the OCS, rather than by adding unneeded regulation,” INGAA saidin its request for rehearing of Order 639.
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