Report of the Oil & Liquids Pipeline Regulation Committee

Energy Law Journal, July 1, 2012 | Go to article overview

Report of the Oil & Liquids Pipeline Regulation Committee


This report summarizes policy developments and legal decisions that have occurred at the Federal Energy Regulatory Commission ("FERC" or "Commission") and the U.S. Courts of Appeals in the area of oil and liquids pipeline regulation. The time frame covered by this report is the period between July 1, 2011, and June 30, 2012.*

I. SIGNIFICANT ADMINISTRATIVE ORDERS

A. Rulemaking Orders

No significant rulemaking orders regarding oil pipelines were issued during the relevant time period.

B. Jurisdictional Issues

1. Kenai Pipe Line Co., 138 F.E.R.C. ¶ 61,034 (2012).

On January 19, 2012, the Commission issued its "Order on Request for Jurisdictional Determination or Temporary Waiver" in Kenai Pipe Line Co.1 In Kenai, a refiner, Tesoro Alaska Co. ("Tesoro Alaska"), and two affiliates sought a determination that certain pipeline spurs and tank and dock facilities owned by the Kenai Pipe Line Company ("KPL") were not subject to Commission jurisdiction under the Interstate Commerce Act (ICA).2 In the alternative, the refiner sought a "temporary waiver" of the tarifffiling and reporting obligations under the statute.3 Although the pipeline facilities had been subject to a tariffsince 1995, Tesoro Alaska contended that changes to operations, including the consolidation of ownership of the facilities in a single affiliated company group, rendered the facilities not subject to Commission jurisdiction because they operated as integral parts of the refinery, and because no transportation to third parties had been provided.4 Several shippers protested, contending that although they did not ship currently, they valued the option of Commission tariffed service.5 They further asserted that the facilities were used for interstate commerce and that although they were not currently transporting crude oil in the facilities, they had considered doing so in the future.6

The Commission found that no other entity than Tesoro had shipped crude petroleum on the facilities since 1995, that Tesoro did not provide or offer to provide interstate services, "that Tesoro has not provided interstate common carrier services on the Kenai facilities for some time," and that there was no intention to "provid[e] interstate common carrier services in the future."7 The Commission found that the facilities were solely employed to support Tesoro's refining operations, and that they were non-jurisdictional for reasons similar to those that the Commission had cited in finding non-jurisdictional certain facilities connected to another Tesoro-owned refinery in Salt Lake City.8

2. Enbridge Energy, Limited Partnership, 139 F.E.R.C. ¶ 61,134 (2012).

On May 18, 2012, the Commission issued its "Order Accepting Tariff," in Enbridge Energy, Limited Partnership, where it rejected a protest by a potential connecting pipeline. 9 The filing carrier, Enbridge Energy, Limited Partnership ("Enbridge"), filed tariffrecords making changes to its nomination procedures, as well as some other minor revisions.10 High Prairie Pipeline, LLC ("High Prairie") filed a protest challenging Enbridge's tariffand tariffadministration on the grounds that Enbridge should provide for reasonable terms for pipelines seeking interconnections.11 High Prairie was a potential new carrier of crude petroleum from the Bakken producing region, and sought to interconnect with Enbridge's mainline facilities at Clearbrook, Minnesota.12 High Prairie contended that the Enbridge tariffrequired shippers to tender volumes at existing origins and that, in conjunction with other tariffprovisions, the current tariffgave Enbridge "almost unlimited" discretion to deny access to shippers seeking new connections - while Enbridge planned a connection with an affiliated new pipeline.13 High Prairie relied on a case involving mandatory access for a pipeline in the Outer Continental Shelf, among other arguments.14 Enbridge responded extensively in an answer.15

The Commission dismissed the protest. …

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