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PIPELINE NOTES FROM WASHINGTON
Vol. 4, No. 22 June 8, 2001 Association of Oil Pipe Lines (202) 408-7970 (202) 408-7983 (fax) bcooper@aopl.org The opinions if any expressed in these notes are the author's only and do not represent the views of the Association of Oil Pipe Lines (but they should). 1. Commission Schedules Colonial Market-Based Rate Renewal Request At its June 13 meeting the Federal Energy Regulatory Commission intends to take up Colonial's request to renew its market-based rates into the Northeast markets. In the mid-90's, Colonial was granted market-based rate status on movements from the Gulf Coast and from Philadelphia and New York City area origins into Philadelphia and New York City area destinations, on a temporary basis subject to renewal. In March 2000, Colonial applied for renewal. No one objected, but the Commission has not acted on the matter. Next week they promise to take it up. You can view Colonial's application at http://rimsweb1.ferc.fed.us/rims under docket number OR00-3-000. 2. Commission Reaffirms Colonial Abandonment and New Service Ruling At its last meeting, the Commission approved an Order on Rehearing of the Commission's October 27, 1999 order granting Colonial's petition for a declaratory order on abandonment of existing service to Tennessee and the rate structure of new service to Tennessee. (see 89 FERC 61,095 (1999)). Exxon Mobil and Motiva had asked the Commission to reconsider that ruling. Colonial is building a new line from Birmingham, Alabama to Nashville via Huntsville, Tennessee. When that line is completed, it intends to abandon service to Nashville via a line running from Atlanta. Colonial sought a ruling from the Commission that its abandonment of the Atlanta to Nashville line will not be subject to challenge, that its indexed rates from Houston origins to Birmingham will not be subject to challenge because of the new connection, and that a cost-of-service may be used to establish the initial rate for the service to Nashville and Huntsville via the new pipeline. The Commission approved all of the requests subject to verification at the time that the change takes place. Exxon Mobil and Motiva argued that the rules for setting rates as a new service should not apply to this situation because Colonial is really merely providing a new route for an existing service. The Commission disagreed, finding that rates apply to the specific route and that this was a new route. Exxon Mobil and Motiva also argued that Colonial should not be able to rely on indexed/grandfathered rates to Birmingham and to charge cost-of-service rates for the new pipeline from Birmingham to the Tennessee destinations. They argued this was permitting the pipeline to mix and match rate methodologies. The Commission disagreed, stating that Colonial was merely seeking to add a new service, which under the Commission's rules must be justified either with a negotiated rate or on a cost-of-service basis. Finally, Exxon Mobil argued that the Commission should look more closely at the abandonment to determine whether the cancellation is in the public interest under section 15(3) of the Interstate Commerce Act. The Commission found that complete abandonment of a service is outside its jurisdiction, but allowed Exxon Mobil to argue at the time of the abandonment that a complete abandonment would not take place. A copy of the Commission's order may be found at http://cips.ferc.fed.us/cips/default.htm under docket number OR99-16-000. 3. NTSB Issues Report on Marathon Ashland Spill The National Transportation Safety Board last week issued its accident report on the Marathon Ashland spill in Kentucky last January. According to the report, that 11,644 barrel spill resulted from metal fatigue at a dent site. The line had been pigged in 1997 and an anomaly had been detected there but the pig contractor had determined that the dent was not significant. It did not meet repair criteria used at the time. The NTSB found "failure of the controller and supervisors to timely recognize the rupture, shut down the pipeline, and isolate the ruptured section of the pipeline" contributed to the severity of the accident. To review the report yourself, go to http://www.ntsb.gov/Publictn/2001/PAB0102.htm. To read what the local paper had to say, go to http://enquirer.com/editions/2001/06/02/loc_pipe_workers_are.html, Pipe, workers are faulted in pipeline spill. 4. Nomination for the U.S. Army Corps of Engineers President Bush intends to nominate Michael Parker to be Assistant Secretary of the Army for Civil Works. Parker is a former Congressman from the 4th District of Mississippi serving from 1989 to 1999. He was a member of the Budget, Appropriations, Transportation, Education and Workforce and Veteran's Affairs Committees. His nomination must be approved by the Senate. The Senate Environment and Public Works Committee, chaired by Sen. Jeffords (I-VT), will consider the nomination. Parker was elected as a Democrat to the House of Representatives in 1989, and soon after the House majority became Republican in 1994, Parker also became a Republican. Parker is currently the President and Owner of Parker-Malvaney Consulting, Inc., a government affairs consulting firm in Brookhaven, Mississippi. 5. Patty Murray (D-WA) on Bellingham Accident Anniversary Check the Congressional RECORD for June 7 at page S5959. http://thomas.loc.gov/r107/r107.html TWO-YEAR ANNIVERSARY OF THE BELLINGHAM WASHINGTON PIPELINE EXPLOSION. Sen. Murray's press release is at http://www.senate.gov/~murray/releases/01/06/2001607D05.html. 6. New Lawsuits from the Bellingham Accident http://news.bellinghamherald.com/stories/20010606/LocalState/55677.shtml -- 4 sue Olympic for emotional suffering; Other defendants named include those from prior pipeline suits. 7. FERC Announces New Web Site The FERC has developed a new website including a new URL (www.ferc.gov) designed to be more user friendly and organized "in a more intuitive manner" than the old site. Take a look at it and let us know what you think. 8. Commissioner Wood Sworn In After confirmation by the Senate, it takes a few days for the nominees to wrap up work at their former jobs. FERC Commissioner Pat Wood this week finished his work at the Texas Public Utility Commission, where he was chair, was sworn in on Tuesday and is in his office at the FERC. One of his first tasks will be to travel to California to meet with Governor Gray Davis about the crisis in that state. Commissioner Nora Mead Brownell may not come on board until July. Rumor has it that she will qualify for an improved pension if she stays on in Pennsylvania for another month. 9. Lois Epstein Changes Jobs and Job Locations Lois Epstein, Environmental Defense's pipeline safety advocate, has left Washington DC and Environmental Defense for Anchorage, Alaska. There she will work for a watershed-protection organization called Cook Inlet Keeper "advocating for best possible performance for pipelines, refineries, and other oil and gas infrastructure and working to prevent new oil and gas drilling in sensitive portions of the watershed." This leaves the pipeline safety issue in DC to Jeremiah Baumann of US Public Interest Research Group, Patricio Silva of the Natural Resources Defense Council and Paul Orum of the Working Group on Community Right-to-Know. There is still a possibility that Environmental Defense will assign some new DC person to work on pipeline safety issues. Ms. Epstein hopes to continue as a public member of the Office of Pipeline Safety's Technical Hazardous Liquid Pipeline Safety Advisory Committee. For more on her new job, see www.inletkeeper.org. 10. Exxon Prevails in Louisiana Expropriation Case We thought we had already reported to you on this one but can't find it in back issues, and want to be sure you know. Exxon recently prevailed in the Supreme Court of Louisiana in a case involving valuation of pipeline right-of-way in expropriation cases. The landowners argued that the appropriate measure of value for the expropriated land should be for the highest and best use of the property as a pipeline corridor, and to determine the value by looking at what other pipeline companies paid for similar rights-of-way on a per rod basis. Exxon argued that the appropriate valuation method was using property comparables on a per acre basis. The difference in the two methods in this case was $ 251,505 versus $ 17,172. The lower courts sided with the landowner but the Supreme Court agreed with Exxon. The opinion, Exxon Pipeline Company v. Hill, et al. can be accessed on the court's web site at www.lasc.org. Once you reach the site, go to the May 15th press release to find the opinion. 11. OPS Authorizes Reopening of Chalk Point Pipeline This is the pipeline that runs to the power plant just north of Washington, DC that experienced a spill into a local wetlands last year, now rumored to be the most expensive pipeline spill ever. The line was owned by Potomac Electric Power Company. The Office of Pipeline Safety has proposed a civil fine of $ 674,000, and PEPCO claims the clean up has cost it more than $ 60 million. The line and the power plant have now been sold to Mirant Mid-Atlantic LLC. OPS this week authorized Mirant to start the line back up. The OPS release can be found at http://www.dot.gov/affairs/rspa1601.htm. For the local view see http://washingtonpost.com:80/wp-dyn/articles/A26573-2001Jun5.html, Closed Oil Pipeline Slated for Reopening. 12. Senate Commerce Subcommittee Chairmanships under the Democrats The Democrats organized the Senate this week. In the Coimmerce, Science and Transportation Committee, Sen. Fritz Hollings (D-SC) became Committee Chairman, and the subcommittees got new chairmen. Sen. John Breaux (D-LA) has the important one for us. The lineup is as follows: Aviation: Sen. Jay Rockefeller (D-WV); Communications: Sen. Daniel Inouye (D-HI); Consumer Affairs, Foreign Commerce and Tourism: Sen. Byron Dorgan (D-ND); Oceans & Fisheries: Sen. John Kerry (D-MA); Science, Space & Technology: Sen. Ron Wyden (D-OR); and Surface Transportation and Merchant Marine: Sen. John Breaux (D-LA). 13. Pipeline Safety R&D at the Department of Energy Following is a link to the Department of Energy's Office of Fossil Energy and a recent announcement of several join government/industry projects to develop high-tech ways to improve the safety and performance of the nation's natural gas delivery system. http://www.fe.doe.gov/techline/tl_gasinfra_sel1.shtml. 14. Transportation Facility Siting Pipeline permitting problems are just a subset of the permitting problems of transportation modes generally. http://www.trafficworld.com/news/feature/index.html -- Decongesting Politics: Brawl brewing on Capitol Hill over environmental review of transport projects. 15. Eminent Domain We wrote USA Today to tell them they have to process for liquid pipeline siting wrong in this article: http://www.usatoday.com/usatonline/20010606/3376984s.htm -- Energy plan intrudes on land Bush policy would allow the government to take private property for power line sites, and some say it's not for the public good. 16. Montana Power Costs Becoming a Big Concern We wonder to whether this experience is found in other states. Let us know. http://www.trib.com/HOMENEWS/WYO/PipelinePower.html -- Express Pipeline turns to diesel generators to cut power costs 17. Pipeline to the Salt Lake City Market Service changes like this one are becoming more frequent as the industry seeks to serve growth markets. http://www.durangoherald.com/1news4534.htm -- Pipeline plan worries some residents - PIPELINE NOTES6.8.01.rtf
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