Article by Robert Means and Deborah Cohn
The transportation of transport gas for others by natural gas pipeline companies has created substantial controversy. At first glance this is surprising. Such transportation has made up a growing percentage of the pipelines' throughout. In 1974 it accounted for only about fourteen percent. By 1983 it had increased to nearly thirty-five percent; the percentage probably is higher today. Yet complaints about pipelines' refusal to transport gas are common and increasing.
The explanation for the apparent conflict between the reality of increasing pipeline transportation and the perception of pipelines' unwillingness to transport is that the kinds of transportation services that pipelines have been providing generally are not the same as those they have been refusing to provide. Pipelines have for the most part been transporting gas which is destined for markets outside their own sales territory; in most cases, the gas is transported for another pipeline or for one of the affiliates of the transporting pipeline. The refusal of pipelines to transport gas for users who could have purchased gas from the pipelines' system supply is the source of the complaints.
Complaints have been made in various forums: to the Federal Energy Regulatory Commission (FERC), to state utility commissions, and to individual legislators. They also have taken the form of proposed legislation that would legally obligate pipelines to transport gas that they do not own. That obligation has sometimes been called mandatory contract carriage and at other times common carriage; the latter term will be used here. Although the details of such an obligation may vary widely, at its core is the right of a shipper, under some circumstances, to require an unwilling pipeline to transport the shipper's gas.
Several states have imposed a common carriage obligation on the distribution companies and pipelines falling within their jurisdictions, but such an obligation does not now exist for the interstate pipelines that are subject to federal jurisdiction. This article is concerned with the implications that a common carrier obligation carries for those pipelines. Some of the discussion may be applicable to distribution companies, intrastate pipelines, and field market gathering systems as well; however, the latter companies differ significantly from interstate pipelines both in the nature of their operations and in the legal framework within which those operations are conducted. Those differences affect at least some of the implications of a common carriage obligation.
About the Author
Robert Means. Vice President, Swanson Energy Group. Formerly Director of the Office of Regulatory Analysis, Federal Energy Regulatory Commission.
Deborah Cohn. Associate Director, National Coalition for Science and Technology. Formerly Special Assistant, Office of Regulatory Analysis, Federal Energy Regulatory Commission.
Citation
59 Tul. L. Rev. 529 (1985)