Academic journal article Energy Law Journal

EXXONMOBIL GAS MKTG. CO. V. FERC

Academic journal article Energy Law Journal

EXXONMOBIL GAS MKTG. CO. V. FERC

Article excerpt

I. SUMMARY

On August 6, 2002, the United States Court of Appeals for the District of Columbia Circuit denied ExxonMobil Gas Marketing Company's1 (ExxonMobil) and the Producer Coalition's2 petitions for review of the Federal Energy Regulatory Commission's (FERC) order granting non-jurisdictional gathering status to a portion of the Sea Robin pipeline system.3

This note examines the application of the primary function test to the Sea Robin pipeline system. Section II gives a factual description of the Sea Robin pipeline system. Section III reviews the procedural history that led to ExxonMobil Gas Marketing Co. v. FERC.4 This history includes four decisions: (1) the FERC's denial of a petition for declaratory order; (2) the United States Court of Appeals for the Fifth Circuit's remand to the FERC; (3) the FERC's order on remand; and (4) the FERC's order denying rehearing. Section IV examines the United States Court of Appeals for the District of Columbia's review of the FERC's remand order. Section V contains the conclusion of the Court of Appeals for the District of Columbia Circuit decision.

II. THE SEA ROBIN PIPELINE SYSTEM

The Sea Robin pipeline system consists of 438 miles5 of dual-phase pipeline6 located offshore on the Outer Continental Shelf (OCS) in the Gulf of Mexico.7 This system generates 69,540 horsepower (hp) of compression with the capacity to transport 1.26 billion cubic feet of gas per day.8 The configuration of the system resembles an inverted "Y."9 The Sea Robin pipeline system runs south from Erath, Louisiana to the Vermilion 149 Compressor Station. At the Vermilion 149 Compressor Station, the Sea Robin pipeline system separates into two pipelines (upstream arms), which extend southwest and southeast from the station on to the OCS.10

Along these two upstream arms, forty-five lateral lines connect with sixty-seven receipt points. These lateral lines range in diameter from 4.5 to thirty inches.11 These receipt points are of two types: production platforms and subsea taps.12 Through these two upstream arms, the raw gas collected from the receipt points moves to the Vermilion 149 Compressor Station.13 Upon arriving at the Vermilion 149 Compressor Station, the gas collected from the upstream arms is compressed for travel to the Erath Compressor Station.14 Along the 66.3 mile Vermilion 149 Erath segment (Vermilion-Erath segment), the system collects gas from four additional platforms.15 Then, the thirty-six inch diameter Vermilion-Erath line delivers the gas to two processing plants. Sea Robin holds no ownership interest in either of the processing plants.16 From the processing plants, the gas travels 1.8 miles downstream to the Erath Compressor Station where the gas is compressed again and is entered into transmission pipelines.17

III. BACKGROUND AND PROCEDURAL HISTORY

A. FERC Proceeding

In 1995, the Sea Robin Pipeline Company (Sea Robin) sought an exemption from the FERC's Natural Gas Act (NGA) jurisdiction and petitioned the FERC for a declaration that its facilities performed a gathering function rather than a transportation function.18 In addition, Sea Robin also requested rescission of the certificates of public convenience and necessity and rate schedules applicable to Sea Robin.19

In the petition for declaration, Sea Robin submitted several arguments why its facilities performed gathering functions as opposed to transportation functions. Those arguments included the following: (1) Sea Robin's business purpose was gathering gas; (2) the length and large diameter of the lines was necessitated by the number of wells along the system; (3) the "behind-the-plant" factor supported a gathering function because the majority of gas processing took place onshore with nearly all Sea Robin's facilities located upstream of the processing plants; (4) the location of wells along the Sea Robin system were consistent with a gathering system; (5) the compression of the system was necessitated by the size of the production area and the distances that the gas must travel to the onshore processing plants; (6) the central-point-in-the-field was the onshore market center; (7) the geographic configuration, an inverted "Y," was indicative of other gathering systems' configuration; (8) the operating pressures of the system were consistent with other gathering systems; (9) prior certification and jurisdictional status of Sea Robin was irrelevant; and (10) Sea Robin's operation as a dual-phase system was indicative of a gathering function. …

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