U.S. Appeals Court Reverses Williams Pipeline Decision

Article excerpt

A federal appeals panel has reversed a lower court decision and ruled in favor of Williams Natural Gas Co. of Tulsa in the legal dispute over natural gas transportation to Smith Cogeneration Inc. in Oklahoma City.

However, the legal battle with Oklahoma Natural Gas Co. is not over.

Appeals related to the issue are still pending at the U.S. Court of Appeals in the District of Columbia and Oklahoma Supreme Court. On Monday, Williams said it filed a notice with the state Supreme Court of the 10th Circuit U.S. Court of Appeals decision.

ONG, a division of ONEOK Inc. in Tulsa, said it plans to appeal the 10th Circuit decision to the U.S. Supreme Court.

In the interim of resolution of the legal dispute, Smith Cogeneration is operating with service from ONG rather than Williams, with which it first contracted for service.

At issue in the case is pipeline transportation of natural gas. Smith Cogeneration is purchasing Oklahoma-produced natural gas from Ladd Petroleum Corp. of Denver.

The 10th Circuit U.S. Court of Appeals in Denver filed its decision Wednesday and local attorneys in the case received notice of it Friday, although most offices were closed for the Thanksgiving holiday.

In its decision, the appeals panel reversed a U.S. District Court order in Oklahoma City that did not fully enforce a federal certificate issued to Williams to build and operate the pipeline. The 10th Circuit decision also reversed a portion of the local federal court ruling that refused to bar interference of enforcement of the federal certificate by a related state court action initiated by ONG.

The 10th Circuit remanded the case back to the local federal court for proceedings consistent with its decision.

Williams, a subsidiary of The Williams Companies Inc. of Tulsa, argued that as an interstate pipeline company it is exclusively regulated by the Federal Energy Regulatory Commission.

The FERC agreed with Williams, denying arguments from ONG that the pipeline is an intrastate pipeline and should be subject to state franchise laws.

"We're on air," said Williams' attorney Bill Burkett in Oklahoma City. "We're not surprised, though."

ONG said it was concerned the ruling would damage its position as related to the franchise laws of Oklahoma. The utility does not have franchises in all areas it serves, about two-thirds of the state, nor are its franchises exclusive franchises.

"We look at this decision as one that could cripple the whole franchise laws of Oklahoma," said ONG spokesman Don Sherry. …

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