FERC on Wednesday said both Trunkline Gas and ANR Pipeline have misused “critical notices” and operational flow orders (OFOs) to impose stricter quality limits for natural gas accepted into their systems, and ordered the two pipelines to stop the practices.

The Commission granted separate complaints brought by a producer group, which accused Trunkline and ANR of using “multi-year” critical notices and OFOs to unilaterally enforce tougher quality specifications on natural gas that they would accept into their systems. Producers complained that Trunkline and ANR were bypassing FERC regulations and the Natural Gas Act (NGA), which require pipes to get FERC approval before making changes to the gas quality specifications in their tariffs.

Similar complaints also were filed against El Paso’s Tennessee Gas Pipeline and NiSource’s Columbia Gulf Transmission, but the FERC order addressed only the Trunkline and ANR cases [RP04-64, RP04-65].

At issue in the Trunkline complaint was a critical notice that was first posted by the pipeline on Jan. 26, 2001 and still remained in effect in early December, the producers said. The critical notice reduced the heating value of the gas Trunkline would accept to 1,050 Btu per cubic foot, while the pipeline’s tariff on file at the agency put the upper limit at 1,200 Btu. As for ANR, producers said the pipeline had OFOs in place since Jan. 1, 2001 restricting the Btu content of gas entering its system.

Trunkline removed the critical notice that prompted the complaint on Dec. 10, and declared the complaint to be moot. But the Commission, in its order, said the dispute was far from moot.

First, it noted Trunkline did not satisfy agency regulations that require both parties — the complainant and Trunkline — to file a joint motion seeking dismissal of the complaint. “Nor is the complaint moot because all of the issues have been resolved.” Although Trunkline has withdrawn the critical notice, “there is other relief requested — a requirement to cease and desist from such conduct in the future,” the order said.

FERC also rejected the pipelines’ arguments that the complaints should be dismissed because they were procedurally deficient. “The Commission finds that, in this case, the Commission’s regulatory interests in the issues raised in the complaints outweigh the procedural deficiencies cited by the pipelines,” it noted.

“Trunkline’s and ANR’s practice of making their gas quality standards more restrictive through posting notices on their web sites is contrary to Section 4(d) of the NGA. Consequently, the Commission holds Trunkline and ANR have improperly used OFOs or critical notices to make permanent changes to their tariffs.”

Critical notices and OFOs “are intended to be used for temporary and transient emergency situations,” the order said. “The Commission disagrees with ANR that it was authorized by the OFO provisions in its tariff to issue either long-standing, continuous OFOs or a series of sequential short-term OFOs that effectively overrode the gas quality standards in its tariff.”

In making this ruling, FERC “is not inhibiting pipelines from performing actions necessary to deal with emergency situations that could impact the integrity of the pipeline system or its operations. [But] neither pipeline has alleged that it was experiencing a force majeure situation that led to the limitation on liquids and liquefiables.”

The order directed both pipelines to “cease and desist” from the practice of using critical notices or OFOs to enforce long-term gas quality standards. FERC, noting that Trunkline has already removed its critical notice, ordered ANR to do likewise by Jan. 31. “We consider it appropriate to err on the side of safety and reliability and allow ANR a transition period through Jan. 31.”

During this transition, “ANR must meet, as it proposed, with interested parties concerning the gas quality standards that will prevail on its system,” and then file a proposal at FERC as soon as possible, the order said. “It is incumbent on ANR to address the demonstrated liquids problems [on its system] through a tariff filing rather than through OFOs,” the agency noted.

“The Commission finds that ANR has described operational problems that may occur on its system when liquids and liquefiable hydrocarbons are not removed from the gas that is transported. The Commission has approved pipeline proposals to include provisions in their tariffs permitting some flexibility with regard to gas quality standards in order to respond to changing conditions.”

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