Energy & Environmental Law Blog : Energy & Environmental Lawyer & Attorney : Vorys, Sater, Seymour and Pease Law Firm : Oil, Gas & Green Technology

We reported previously on the petition filed by Laser Marcellus Gathering Company, LLC, for a declaratory order that pipeline facilities it intends to construct from Pennsylvania into New York are functionally gathering and therefore exempt from Federal Energy Regulatory Commission jurisdiction under Section 1(b) of the Natural Gas Act.  The Commission recently granted that petition, noting that the fact that the facilities crossed the Pennsylvania-New York border did not affect the exemption:

The history of Commission and court interpretation of Section 1(b), … makes clear that there is a distinction between gathering and transportation, such that the two functions are mutually exclusive. Consequently, otherwise non-jurisdictional production or gathering does not become jurisdictional on the basis that the facilities employed therefor cross a state line.

For a copy of the Commission's decision, see here (search Docket No. CP10-35).

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The U.S. Court of Appeals for the District of Columbia Circuit recently rejected a shipper's attempt to require FERC approval for a pipeline's rate changes under a negotiated contract.  See Iberdrola Renewables, Inc. v. Federal Energy Regulatory Commission (Docket No. 08-1195) (Feb. 26, 2010) (see here - opinions).  The court found that:

The contract’s plain language settles this matter. Even if we were to consider this extrinsic evidence, it is of no help to Iberdrola. Both parties were aware that FERC had instructed Alliance to remove that language [i.e., language making rate changes subject to FERC review] from its tariff and to include it in the Transportation Agreement if the parties wanted FERC approval for any negotiated rate changes. They were, therefore, on notice that FERC would only review rate changes if the parties included such a provision in their contract. Their knowledge of how FERC would read the contract is the most probative piece of extrinsic evidence of the parties’ intent, and it cuts strongly against Iberdrola.

Because the negotiated contract did not include an express role for FERC, the court followed "the well-established rule that freely negotiated rates are presumed just and reasonable."

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The Federal Energy Regulatory Commission (FERC) has issued several notices regarding upcoming technical conferences:  for Electronic Tariff Filings, see here; for Guidance on the Preparation of Market-Based Rate filings, see here (with webcast available); and for FERC Form 552 potential changes, see here.

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The Federal Energy Regulatory Commission (FERC) will be holding a technical conference on Wednesday, March 3, 2010, focusing on the mechanics of preparing an initial electric public utility market-based rate application and subsequent filings.  For a copy of the public notice, see here.

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The Federal Energy Regulatory Commission (FERC) recently published a Notice of Proposed Rulemaking (NOPR) seeking comments on a proposal "to incorporate by reference the latest version (Version 1.9) of business practice standards adopted by the Wholesale Gas Quadrant of the North American Energy Standards Board (NAESB) applicable to natural gas pipelines."  See 74 Fed. Reg. 62261.

Comments are due January 11, 2010.

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The Federal Energy Regulatory Commission (FERC) has initiated Section 5 rate investigations for Natural Gas Pipeline Company of America, LLC (NGPL), Northern Natural Gas Company, and Great Lakes Gas Transmission LP.  The purpose of the investigations - to determine whether the companies over-recovered costs causing their rates to be unjust and unreasonable.

Very unusual.  For more, see here.

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According to this article in the NYT, the Senate Energy and Natural Resources Committee has approved an amendment to energy legislation that would give the Federal Energy Regulatory Commission (FERC) authority to address suspected market manipulation through the issuance of cease and desist orders without a prior hearing on the matter.

[Update:  For more on upcoming hearings, see this article in the NYT.  (Moved up).]

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The Federal Energy Regulatory Commission (FERC) has issued its 2008 State of the Markets Report.  Among other things, it notes that the dramatic natural gas price levels and fluctuations seen last year can only be explained in part by market forces.  It also discusses how unconventional shale production is altering the nature of natural gas markets.  An interesting report (a copy can be found here).

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Last year, in a series of orders the Federal Energy Regulatory Commission (FERC) required certain market participants to report limited information on the previous calendar year's natural gas transactions by May 1st of the following year (see here for more information, including forms).  At the request of the Independent Petroleum Association of America and others, the deadline for compliance this year has been extended to July 1, 2009.

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In Order No. 712, the FERC revised Commission regulations governing the release of interstate capacity in light of changes in the market for short-term pipeline transportation services.  Among other things, it addressed market-based pricing for asset management agreements and the prohibition against tying and bidding requirements for capacity releases associated with state-approved open access programs.  The FERC recently denied rehearing generally of that order in Order No. 712-A, but also clarified several issues raised by marketers and others with respect to asset management agreements and state open access programs.

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The FERC recently issued two enforcement orders approving stipulations between the Office of Enforcement and natural gas marketing and asset management companies that resolve self-reported violations of the FERC's shipper-must-have-title requirements.  NorthWestern Corporation and NorthWestern Services, LLC, agreed to a civil penalty of $450,000.  Cornerstone Energy, Inc., agreed to a civil penalty of $325,000.

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The FERC has issued a Notice of Inquiry seeking comments on whether "the Commission should impose additional reporting requirements on (1) intrastate pipelines providing interstate services pursuant to section 311 of the Natural Gas Policy Act of 1978 (NGPA) and (2) Hinshaw pipelines providing interstate services subject to the Commission's Natural Gas Act (NGA) jurisdiction pursuant to blanket certificates issued under s. 284.224 of the Commission's regulations."  More specifically, the Commission is asking whether it should require section 311 and Hinshaw pipelines to post shipper transaction details in a manner similar to that required of interstate lines under the Commission's regulations.

Comments are due 60 days from the date the NOI is published in the Federal Register.

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Late last year, the FERC issued a Notice of Inquiry (NOI) seeking comments on whether it should change its current policy on the in-kind recovery of fuel and lost-and-unaccounted-for gas by interstate pipelines.  That policy, in general, allowed pipelines two options - One, to establish a fixed fuel retention percentage that would remain unchanged until the pipeline filed a subsequent NGA Section 4 rate case.  Two, to establish a tariff mechanism that allowed for periodic adjustments to the fuel retention percentage outside of a general NGA Section 4 rate case, but which included a true-up mechanism for over- and under-recoveries of fuel.  The NOI asked whether the Commission should change it policy for the purpose of minimizing over-recoveries and provide greater incentives to reduce fuel loss.

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