FERC Remands Initial Decision in Seaway Crude Oil Pipeline Case, Rejecting Among Other Things An Attempt to Modify the Rates Negotiated With the Committed Shippers

摘要

Last Friday, FERC issued an order that reviews the 9/13/13 Initial Decision that addressed the rate structure and rates that Seaway Crude Oil Pipeline Co. LLC (IS12-226) filed on 4/13/12 for transport of crude oil from Cushing, Oklahoma to the U.S. Gulf Coast, pursuant to terms of negotiated Transportation Service Agreements (TSAs). This order reverses the Initial Decision and remands the proceeding to the presiding Administrative Law Judge (ALJ) for further action. In upholding the terms of the TSA, the Commission declared it is not “blindly” honoring these contracts. In setting the matter for hearing, the Commission sought an investigation into the open season and the contract formation process. The question was -- whether the process was open, transparent, and free of the traditional contract nullifiers such as fraud? The record, according to the Commission, shows no appearance of impropriety in the negotiation process. And there is no question that the Commission has the authority to review the TSAs, that the Commission exercised this power, that the Commission allows for negotiated rates for committed shippers, and that these rates will not be determined unjust and unreasonable solely due to a divergence from cost-of-service rates.