FERC Seeks Public Comment

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FERC Seeks Comment on Intrastate Pipeline Capacity Transfers

On October 21, 2010, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) in Docket No. RM11-1 seeking public comment on the issue of ?whether and how holders of firm interstate capacity on some intrastate pipelines can allow others to use their capacity, including to what extent buy/sell transactions should be permitted.? The comment period will last for 60 days following publication of the NOI in the Federal Register.

This NOI resulted from an order issued by FERC in another proceeding where clarification was sought on the application of FERC?s so-called ?buy/sell? prohibition on interstate pipelines with respect to interstate capacity on intrastate pipelines that have authority from FERC to conduct those transactions. In Docket No. PR10-45, a joint petition was filed by two parties seeking a clarification that a proposed transaction involving the sale of pipeline storage capacity on a Hinshaw facility did not violate the ?buy/sell? prohibition on interstate pipeline capacity release. Instead of clarifying that such transactions do not necessarily constitute prohibited buy/sell arrangements, FERC granted the petitioners a waiver, holding that buy/sell transactions involving Hinshaw and other intrastate facilities do not, as a matter of policy, fall outside of FERC?s prohibition against buy/sell agreements.

Numerous parties sought to intervene late and set aside FERC?s ruling. On October 21, 2010, FERC denied all of the motions for late intervention, dismissed the requests for rehearing and recognizing the significance of the matter issued the NOI. FERC stated ?that the policy issues are more appropriately addressed in a rulemaking proceeding, where all affected industry participants will have an opportunity to comment.? FERC further noted that ?[t]oday?s NOI also grants a blanket waiver allowing buy/sell transactions involving section 311 and Hinshaw [intrastate] pipelines to continue to take place while the [FERC] is considering these policy issues.?

Should you have any questions about this or other matters involving the Federal Energy Regulatory Commission, please contact Kurt Krieger at Steptoe & Johnson PLLC.

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