Tennessee Gas Pipeline Company, L.L.C. 191 Ibla 80
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TENNESSEE GAS PIPELINE COMPANY, L.L.C. 191 IBLA 80 Decided September 11, 2017 United States Department of the Interior a Office of Hearings and Appeals a Interior Board of Land Appeals 801 N. Quincy St., Suite 300 Arlington, VA 22203 703-235-3750 703-235-8349 (fax) TENNESSEE GAS PIPELINE COMPANY, L.L.C. 2014-266, et al. Decided September 11, 2017 Appeal from orders determining that Outer Continental Shelf pipeline right-of-way grants had expired and ordering that their associated pipelines be decommissioned. 01684, et al. Affirmed. 1. Rights-of-Way: Oil and Gas Pipelines; Oil and Gas: Pipelines; Outer Continental Shelf Lands Act: Rights-of-Way The Secretary is authorized to grant pipeline rights-of-way through the Outer Continental Shelf (OCS) for transporting oil, natural gas, or other minerals. However, the design, construction, maintenance, and operation of transporter- operated pipelines on the OCS are subject to standards established by the Department of Transportation (DOT), and regulation by the Federal Energy Regulatory Commission (FERC). Where FERC grants a certificate of public convenience and necessity to an OCS pipeline under the Natural Gas Act, it can be abandoned only after authorized to do so by FERC, and if it loses its certificate of public convenience and necessity, such a pipeline can no longer be used to transport gas on the OCS. APPEARANCES: David M. Hunter, Esq. and Tyler J. Rench, Esq., Jones Walker, LLC, New Orleans, Louisiana, for the appellant; Eric Andreas, Esq., U.S. Department of the Interior, Office of the Solicitor, Washington, DC, for the Bureau of Safety and Environmental Enforcement. 191 IBLA 80 IBLA 2014-266, et al. OPINION BY ADMINISTRATIVE JUDGE JACKSON Tennessee Gas Pipeline Company, (TGP) appeals from a series of expiration notices issued by the Gulf of Mexico Outer Continental Shelf (OCS) Region, Bureau of Safety and Environmental Enforcement (BSEE), dated July 9, 17, and 23, and August 13, (Expiration Notices), and from a BSEE order dated October 22, (Final Order). The Expiration Notices deemed each of 12 pipehne right-of-way (ROW) grants to have expired and directed TGP to decommission their associated pipelines.1 The Final Order denied TGP applications to reinstate these expired ROW grants because BSEE found that the purpose for which they were granted had ceased to exist. BSEE also ruled that the requirement in the Expiration Notices to decommission the associated pipelines remained in effect and directed TGP to complete all decommissioning activities by no later than October 20, We consolidated these appeals by Order dated January 27, SUMMARY In its Final Order BSEE found that since the pipelines at issue were of no further use to their current owner, their purpose had ceased to exist, which was consistent with findings made by the Federal Energy Regulatory Commission (FERC) when it approved their abandonment under the Section 7 of the Natural Gas Act (NGA). The rule at 30 C.F.R § deems a pipeline ROW to have expired if the purpose of the grant ceases to exist or use of its associated pipeline is permanently discontinued. In this case, the record supports BSEE finding that these pipeline ROW grants were of no use to their owner and that their purpose had therefore ceased to cease, which permitted BSEE to deem these OCS pipeline ROW grants to have expired under 43 C.F.R § and then require decommissioning of their associated pipelines under 30 C.F.R. § 250.1010(h). BACKGROUND TGP is a natural-gas company primarily engaged in transporting natural gas in interstate commerce under FERC authorizations.2 Its mainline system consists of roughly miles pipelines extending in a northeasterly direction from the Gulf of Mexico, Texas, and Louisiana, through and to Administrative Record (AR), Tab Final Order, Attachment (table of expired pipeline ROW grants); AR, Tab Expiration Notices. See 15 § 717a(6) (2012) ('"Natural-gas means a person engaged in the transportation of natural gas in interstate commerce."). 191 81 IBLA 2014-266, et al. Arkansas, Mississippi, Alabama, Tennessee, Kentucky, West Virginia, Ohio, Pennsylvania, New York, New Jersey, Massachusetts, New Hampshire, Rhode Island, and Connecticut, with a significant portion located on the OCS off the coast of Louisiana.3 On October 26, 2010, TGP and Kinetica Partners, LLC (Kinetica) entered into a purchase-and-sale agreement (PSA) of numerous pipehnes, including the 12 pipelines and associated ROW grants here at issue.4 They are "DOT pipelines," which were designed, constructed, operated, and maintained under Department of Transportation (DOT) standards had a FERC certificate of public convenience and necessity to transport gas under the NGA.5 TGP and Kinetica requested FERC approval of their PSA, which FERC granted in and denied in part. FERC granted abandonment to gathering facilities it determined were exempt from its jurisdiction. But FERC denied TGP's request to abandon 425 miles of certificated pipelines because their abandonment was not consistent with public convenience or necessity and because Kinetica had not sought a certificate of pubhc convenience and necessity to continue operating them under the TGP and Kinetica entered into an Amended and Restated PSA for the same pipelines and other facilities covered by their original PSA, plus certain other pipelines and facilities, and sought authorization from FERC for TGP to abandon over 1,300 miles of pipehnes.7 Pursuant to their agreement, FERC would determine the jurisdictional status of each pipeline, facility, and other asset: facilities subject to FERC jurisdiction would be abandoned by TGP and acquired by Kinetica Energy Express, LLC (Kinetica Energy), which would be granted a certificate of pubhc convenience and necessity to operate them under the NGA; whereas all non-jurisdictional facilities {e.g., those without certificates of pubhc convenience and necessity) would be abandoned-as-sold by TGP and acquired by Kinetica Midstream FERC approved the sale of TGP pipehnes to Kinetica by order dated May In doing so, FERC re-examined ah certificated pipehnes, found See Statement of Reasons (SOR), Exhibit (Ex.) 6 (Declaration of Thomas C. Dender, Vice-President of Operations, Kinder Morgan, Inc. (TGP's ultimate parent), dated July 20, (Dender Declaration). Id. Id. See TGP, 137 FERC 61,105, 61,536-37, 61,550 (2011); infra note 23. TGP, 143 FERC 61,196, 62,303 (2013). Id. at 62,304. Id. 191 82 IBLA 2014-266, et al. most performed a transportation function under its jurisdiction, approved their abandonment by TGP, and granted a certificate of pubhc convenience and necessity to Kinetica Energy. However, FERC separately addressed unused or underutilized pipehnes, which included the 12 DOT pipelines at issue in this appeal: Unutilized Facilities Kinetica Energy states that it has reviewed the facilities to identify facihties that are no longer being used and which it has no plans to use. While there may be some hnes and some inactive meters that have not been flowing gas under Tennessee, Kinetica Energy states that there are no costs associated with these facilities, and that it plans to put them to use in the future. Kinetica Energy intends to account for these facilities FERC Account 105, Gas Plant Held for Future Use. Kinetica Energy requests we include the unutihzed facihties in its certificate. 162. In responses to data requests, Tennessee and Kinetica Energy identified facihties that have been inactive for one year or more. These facilities include 23 pipehne segments that total approximately 88 miles in length, ranging from less than 0.1 mile to almost 20 miles in length and from 3 inches to 24 inches in diameter. Tennessee notes that another approximately 3- mileTong, Line been inactive for more than one year, but that Tennessee is in the process of tying the supply lateral over to mainline Line 523Q-100 so that it will be returned to service. Kinetica Energy asserts it has a reasonable expectation that the unutihzed facihties be used in the future. In support, Kinetica Energy has presented maps showing well statuses in blocks with apphcations for permits to drill, or active chilling and blocks with leases in their primary term, where the block includes or is adjacent to the originating point of a hne that is not currently utilized, stating that blocks with leases in their primary term are likely sites of future well drilling. * 166. With regard to the inactive pipehne and metering facihties, we find Kinetica Energy's statement that it has a reasonable expectation that the facihties will be used is Kinetica Energy has not sufficiently tied any expectation of timely, new production being connected to specific, currently unutilized facilities. Even Kinetica Energy states that it is unaware of any current drilling activity in locations that are currently connected to 191 83 IBLA 2014-266, et al its facilities and that, on average, there is approximately an 18- month interval between the start of "successful" drilling and the connection of production to a pipehne. With the exception of Line 523M-8200 that Tennessee is placing back into service, none of the inactive pipeline and metering be included in Kinetica Energy's certificate granted by this order. * * 168. Our denial here of certificate authority . for any of the inactive pipeline . should not impose a great burden on Kinetic Energy if it decides nevertheless to acquire such on an uncertificated bases. It wih not need certificate authority to operate these facilities unless and until it desires to place the facilities into jurisdictional use at some future Because FERC determined any future use of these unutihzed, inactive pipehnes was "speculative," none was included in Kinetica's certificate of public convenience and necessity under the NGA, which meant that for FERC purposes, they were to be abandoned-as-sold by TGP and acquired as nonjurisdictional assets by Kinetica Midstream LLC.