PIPELINE NOTES FROM WASHINGTON
Vol. 4, No. 50
December 21, 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.	Joint Pipeline Associations Meet with Secretary Mineta

On Monday, December 17, along with the natural gas transmission and distribution trade associations, we met with Secretary of Transportation Norman Mineta to pledge the full support of the joint pipeline associations for enactment of pipeline safety reauthorization legislation in the 107th Congress.  Joe Monroe of Unocal and Tom Miesner of Conoco represented the liquid pipeline associations.  The Secretary was very pleased and, we think, relieved to see the pipeline industry united behind a common set of proposals.  He committed to working with us to facilitate passage of an acceptable bill in the House, which is the next step.  The proactive stance of the combined industry associations on reauthorization legislation is essentially CEO driven, and organizing it has been largely the work of Joe Monroe, Captain for Gas-Liquid Relations Team of the AOPL/API Joint Environmental and Safety Initiative.

We also urged the Secretary to expedite issuance of the four liquid rules that AOPL and API wrote to him about on December 4. (See the letter on the AOPL website at http://www.aopl.org/news/2001/Mineta.4.rules.letter.12.3.012.pdf -- repair criteria for integrity management; the Integrity rule of small lines; the corrosion rule update; and the revised incident reporting rule).  These four complete an impressive series of new rules for liquid pipelines begun after the Bellingham accident in June 1999.  DOT hopes to have all four out by yearend.  This series of provides powerful evidence that OPS regulation of pipeline safety is neither lax nor inadequate.

2.	Pipeline Safety Legislation Introduced in the House

On Thursday, December 20, shortly before Congress recessed for the Christmas-New Years break, key House members introduced H.R. 3609, the “Pipeline Infrastructure Protection To Enhance Security and Safety Act”.  The bill was introduced by Rep. Don Young (R-AK), Chairman of the House Transportation and Infrastructure Committee and cosponsored by Rep. Billy Tauzin (R-LA), Chairman of the House Energy and Commerce Committee, Thomas Petri (R-WI), Joe Barton (R-TX), Gene Green (D-TX), Brad Carson (D-OK), Max Sandlin (D-TX) and Ralph Hall (D-TX).  Rep. Petri and Rep. Barton chair subcommittees that will hold the hearings on the bill in these two committees.  It is highly significant that the sponsorship of this bill includes both of the House committees that claim jurisdiction over pipeline safety.  It will be very helpful to have these committees cooperating rather than fighting with each other.  The bipartisan co-sponsorship of the bill is also significant.  Passage of a reasonable bill depends on cooperation across party lines, and this is an excellent start.

If the House is to pass a pipeline safety bill in this Congress, H.R. 3609 will be the vehicle.  The bill is a serious effort with new provisions not seen before.  The text of the bill will be posted on the Library of Congress website: http://thomas.loc.gov.  If you need a copy sooner, let us know and we’ll send one to you.  This bill is the starting point for the pipeline safety debate in the House.  It is significantly different from the bipartisan Senate- passed pipeline safety bill, S.235, authored by Sen. John McCain (R-AZ) and others.  H.R. 3609 incorporates post 9/11 security considerations and doesn’t attempt to write into law desired actions on pipeline integrity management that have already taken or are in process by the Office of Pipeline Safety.  The task for the House, the Administration and the industry now will be to review the provisions of the introduced bill, improve on them where needed, build a consensus in support of the basic bill and, if necessary to achieve a critical mass of support for passage, add additional provisions.   Look for hearings to begin in February, probably leading off with a general oversight hearing on the issues, followed by hearings on the bill itself.  The Transportation and Infrastructure Committee’s press release on introduction is at http://www.house.gov/transportation/

3.	Department of Energy Conference on Security of Energy Facilities

On December 11-12, the Department of Energy hosted a conference with representatives of state governments, and the energy industry associations to discuss energy security, assurance, reliability and energy emergency preparedness. This conference sets the stage for future cooperative efforts between the states, the industry and the DOE.  Check out the presentations on the website of the National Association of State Energy Officials: http://www.naseo.org/committees/energydata/energyassurance/default.htm -- U.S. Department of Energy Energy Assurance Conference.

4.	Energy Information Administration Releases Annual Energy Outlook 2002

This is the official federal government view on what is likely to happen in energy markets in the near term.  The report is interesting browsing even for those who aren’t energy nerds.  Go to http://www.eia.doe.gov/oiaf/aeo/  -- Annual Energy Outlook 2002 with Projections to 2020 (DOE/EIA-0383 (2002), December 21, 2001). 

5.	FERC Issues Proposed Rule on Accounting for Derivatives

	The Federal Energy Regulatory Commission this week issued a Notice of Proposed Rulemaking entitled “Accounting and Reporting of Financial Instruments, Comprehensive Income, Derivatives and Hedging Activities.”  This rule proposes to revise FERC regulations to update the accounting and reporting requirements under its Uniform Systems of Accounts for oil pipelines, among others to establish uniform accounting requirements and related accounts for the recognition of changes in the fair value of certain security investments, items of other comprehensive income, derivative instruments, and hedging activities.   In particular, the Commission proposes to add new balance sheet accounts to the Uniform Systems of Accounts to record items of other comprehensive income and derivative instruments.  The Commission also intends to revise the Form 6 to include this reporting.
	Comments on the proposed rule will be due within 60 days of publication in the Federal Register.  We will let you know when that occurs.  In the interim, you can take a look at this proposed rule by going to http://cips.ferc.gov/Q\CIPS\RULES\RM\RM02-3.000.TXT.  
We also need to understand how much our member companies will be impacted by this rulemaking.  Please give us your thoughts.

6.	Red Butte Depreciation Order Issued

	The Commission approved a depreciation rate of 12.50% for Red Butte.  Red Butte had requested the change due to a crude oil reserve report indicating exhaustion in eight years of the remaining reserves of Oregon Basin field, which produces the majority of Red Butte's crude oil and more than fifty percent of its revenues.  The Commission’s order may be found at http://cips.ferc.gov/Q\CIPS\OIL\O_MS\DO02-1.000.TXT. 

7.	FERC Rejects of SFPP Compliance Filing

	SFPP filed new tariffs in response to the Commission’s Opinion No. 435-B proposing a rate decrease for movements on its East Line (Texas to Arizona) effective December 1, 2001 and December 20, 2001, depending upon the tariff.  The Commission rejected the tariffs, stating that revised tariffs must be effective August 1, 2000.  The orders may be found at http://cips.ferc.gov/Q\CIPS\OIL\IS\IS02-46.000.TXT and http://cips.ferc.gov/Q\CIPS\OIL\IS\IS02-82.000.TXT.

8.	Exxon Mobil Files HOOPS Settlement

	Exxon Mobil this week filed a settlement this week with the FERC reached on the HOOPS offshore facility.  A copy may be obtained at http://rimsweb1.ferc.gov/rims.q?rp2~rimsdocinfo~2230884.

9.	Commission Moves to Internal Paragraph Numbering

	The FERC will be moving to a more uniform citation methodology for its orders and opinions.  Given the number of different forms in which these orders and opinions are published, both electronically and in paper, accurate citation to the body of Commission orders is difficult.  To resolve the issue, the Commission has decided to adopt internal paragraph numbering, with the goal of creating uniform citation that will reference these paragraphs.  To learn more about this initiative, go to http://cips.ferc.gov/Q\CIPS\MISC\CA\CA121901.00A.TXT. 

10.	Commission Revises Gas Pipeline Outreach Requirements

	The FERC has been struggling with how to improve communications with landowners about prospective gas pipeline projects.  It has been come up with a number of proposals including significant pre-filing communications requirements.  Now, the Commission staff has developed a report entitled:  Ideas For Better Stakeholder Involvement In The Interstate Natural Gas Pipeline Planning Pre-Filing Process.  The report can be downloaded from the FERC web-site at www.ferc.gov or requested by e-mail at: gas outreach-feedback@ferc.fed.us.  
	This FERC initiative does not apply to oil pipelines but does indicate what the FERC expects of gas pipeline sponsors.  The Staff is also planning a series of workshops in the new year to bring interstate natural gas companies and Federal, state and local agency representatives, and landowners together to discuss implementation of stakeholder involvement programs.  For more on this initiative, go to http://cips.ferc.gov/Q\CIPS\MISC\M_MS\MS121801.000.TXT.  

11.	Platte Filing Makes Shippers Unhappy

	Platte made a cost-of-service filing several months ago, seeking to raise the ceiling level on its tariffs.  That filing was not protested.  Platte then filed to increase its rates to a level under the ceiling level established.  That filing has been protested by Big West, Chevron Products, Frontier Oil and Refining, Tesoro West Coast, Phillips 66, and Conoco Inc.  The docket number IS02-65.  Copies of the filings may be found under http://rimsweb1.ferc.gov/rims. 

12.	Express Filing Protested

	Express too made a tariff filing that was not acceptable to all.  It was protested by Big West, Chevron Products, Sinclair, and Tesoro West Coast.  Express then withdrew the tariff.  To take a look at the pleadings, go to http://rimsweb1.ferc.gov/rims, look under the docket number IS02-81.

13.	OPS Forms Available on Line

	The new Evaluation Report of a Liquid Pipeline Carrier is available on the OPS website at http://ops.dot.gov/forms/Eval_Liquid_Transmission07_13_2001.pdf. Also available is the Operator Qualification review form for liquid pipelines at http://ops.dot.gov/forms/OQl040401.pdf. OPS also warns that it will soon begin electronic incident reporting for gas transmission lines.  Liquid line reporting will no doubt follow thereafter.  See http://ops.dot.gov/electronic_reporting.htm.

14.	Northwestern U. Offers Course in Houston 

	The Northwestern University Transportation Center is taking the mountain to Mohammed this March.  Rather than offering its pipeline program “Quest for Operational Excellence in the Pipeline Industry” at the main campus outside Chicago, it will present the program in the Houston area.  The course will be offered March 12-14, 2002.  For more program information, go to the Transportation Center’s web site at www.nutc.nrthwestern.edu/public.

15.	Confrontation in Austin

Federal preemption of interstate pipeline regulation will be tested as the City of Austin makes its latest move to stop the Longhorn pipeline project:
 http://www.austin360.com/aas/metro/121901/19longhorn.html -- Austin challenges pipeline's progress; City seeks to suspend Longhorn's replacement of pipe if development rules aren't followed; http://www.austin360.com/aas/metro/122001/20longhorn.html -- City, pipeline company scuttle mediation.

16.	Ammonia Pipeline Spill in Iowa

http://www.dmregister.com/news/stories/c5903220/16805398.html -- Fish kill is Iowa's worst; http://desmoinesregister.com/news/stories/c5903220/environment-front.html -- Environment :Seven-day index of headlines

17.	We Should Get PEMEX to Join AOPL

http://www.ohio.com/home/docs_business/002484.htm -- Mexico in a sticky mess.

18.	Register for the January AOPL Winter Meeting

	Those registering for the AOPL Annual Winter Meeting being held in Washington, DC on January 22-23, 2002 should be sure to get their registrations in to Gail Sumter as soon as possible.  If you need a registration form, contact Gail at gsumter@aopl.org.  Please note that AOPL meetings are open to members only.