Appendices — Producer Coalition v. Federal Energy Regulatory Commission
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APPENDIX A
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Docket No. ADO3- 13-000
Application of the Primary
Function Test for Gathering on
The Outer Continental Shelf
NOTICE OF PUBLIC CONFERENCE
(August 14, 2003)
Take notice that on September 23, 2003, the Commission
will convene a public conference in the above captioned
proceeding. The purpose of the conference will be to explore
whether the Commission should reformulate its test for
defining nonjurisdictional gathering in the shallow waters of
the Outer Continental Shelf (OCS) and if so what the new test
should be.
The Commission has considered its offshore gathering
policy a number of times in the past decade.’ Nevertheless, a
' See generally Natural Gas Gathering Services Performed by Interstate
Pipelines and Interstate Pipeline Affiliates—Issues Related to Rates and
Terms and Conditions of Service, Docket No. RM94-4-000, Notice of
Public Conference, 65 FERC 4 61,136 (1993); Gas Pipeline Facilities and
Services on the Outer Continental Shelf—Issues Related to the Com-
mission’s Jurisdiction Under the Natural Gas Act and the Outer
Continental Shelf Lands Act, Docket No. RM96-5-000, Policy Statement,
74 FERC § 61,222 (1996) (1996 Policy Statement); Chevron. U.S.A., Inc.
v. FERC, 193 F. Supp. 2d 54 (D.D.C., January 11, 2002), appeal pending
sub nom. Williams Companies, ef al. v. FERC, No. 02-5056 (D.C. Cir.)
(appeal of district court ruling on motion that FERC did not have
authority under the Outer Continental Shelf Lands Act (OCSLA) to issue
regulations requiring gas service providers on the Outer Continental Shelf
(OCS)to submit quarterly reports of services provided).
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satisfactory definition of gathering under the Natural Gas Act
has remained elusive. A clear, consistent approach to off-
shore gathering is needed to protect producers and customers
from the market power of third party transporters and to avoid
different jurisdictional outcomes for companies that perform
essentially the same economic function.
Background
A. Evolution of the Primary Function Test
Although section 1|(b) of the Natural Gas Act states that the
provisions of that act do not apply “to the production or
gathering of natural gas,” the act itself does not define those
terms. The Commission has defined gathering as “the
collecting of gas from various wells and bringing it by
separate and several individual lines to a central point where
it is delivered into a single line.” * The Supreme Court has
added that “production” and “gathering” are terms “narrewly
confined to the physical acts of drawing the gas from the
earth and preparing it for the first stages of distribution.”
These definitions have been useful in describing gathering as
a concept. Nevertheless, as the courts have recognized, “the
line between gathering and transportation is inherently
elusive.” Attempts-to establish a functional test, useful in the
!
* Lomak* Petroleum, Inc. v. FERC, 206 F.3d 1193, 1196 (D.C. Cir
2000), quoting from Barnes Transportation Company, 18 FPC at 372
(1957). See also Conoco, Inc. v. FERC, 90 F.3d 536, 539 n.2 (D.C. Cir.
1996)(“Gathering is the process of taking natural gas from the wells and
“moving it to a collection point for further movement through the
pipeline’s principal transmission system.”) (quoting Northwest Pipeline
Corp. v. FERC, 905 F.2d 1403, 1404 n.1 (10th Cir. 1990)).
* Northern Natural Gas Co. y. State C orp. Comm'n, 372 U.S. 84. 90
(1963).
* Exxon Mobil Gas Marketing Company v. FERC (Exxon), No. 00-
1355 (D.C. Cir. August 6, 2002) (Judge Edwards dissenting) slip op. at
18, citing Conoco, Inc. v. FERC 90 F, 3d 536 at 542 (D.C. Cir. 1996).
PEPIN TA, Oo oa ee Ee
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context of specific proceedings, resemble the pursuit of a
desert mirage. Historically, the tendency has been to
announce a particular physical characteristic that could be
used to identify nonjurisdictional gathering, only to substitute
other criteria later to reflect changes in the industry or in the
evolution of Commission policy.” In Farmland Industries,
Inc.,° the Commission identified a number of factors for
consideration in analyzing the section 1(b) gathering test, and
stated that “the ultimate test is whether the primary function
can be classified as transportation or gathering.” The primary
function test factors included:
e the length and diameter of a pipeline (longer and wider
pipe indicating transportation);
e the central point in a field;
* For many years, the Commission employed two principal tests to
differentiate (primarily onshore) transportation from gathering facilities.
The “behind-the-plant” test presumes that all facilities located between the
wellhead and a processing plant are non-jurisdictional gathering lines,
while facilities downstream of the processing plant are presumptively
transportation facilities. See Phillips Petroleum Co., 10 FPC 246 (1951),
rev'd in part on other grounds sub nom. Phillips Petroleum Co. v.
Wisconsin, 347 U.S. 672 (1954). For gas that required no processing, the
“central-point-in-the-field” test applied, under which lateral lines that
collect gas from separate wells before converging into a larger single line
—typically at the point where the gas is compressed for transportation by
the pipeline—were classified as gathering facilities. E.g., Barnes, supra.
° 23 FERC § 61,063 at 61,143 (1983). The Commission later added a
number of “non-physical” criteria, including (1) the purpose, location and
operation of a facility; (2) the business of the owner; (3) whether the
jurisdictional determination is consistent with the objectives of the NGA
and other !egislation; and (4) the changing technical and geographic
nature of exploration and production. Amerada Hess Corp., 52 FERC
q 61,268 at 61,844-45 (1996). Under the primary function test, no one
factor is determinative, nor do all factors apply in every situation. See,
e.g., Williams Field Services, 194 F.3d at 116; Farmland, 23 FERC
at 61,143.
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e the pipeline’s geographic configuration (a web-like
pattern, for example, suggesting a gathering function)
e location of compressors and processing plants (i.e., the
“behind the plant” test);
e the location of wells along all or part of the facdities
(typically indicating gathering); and
© operating pressure of a line, with higher pressure
generally associated with the ‘need to propel gas in a
transportation function
The primary function test has been relatively satisfactory
for analyzing onshore facilities. Offshore, however, the test
has proven more difficult to apply.’ Thus, in EP Operating
Co. v. FERC, 876 F.2d 46, 48-49 (Sth Cir. 1989), the Com-
mission initially ruled that under the primary function test the
offshore platform where initial gas treatment took place
constituted a “central point in the field’ where the gathering
function was complete, and therefore the 51-mile long, 16-
inch diameter OCS pipeline downstream of the platform at
issue in that case was a jurisdictional transportation facility.
The court reversed that finding, holding that while the length
and diameter of pipeline facilities might indicate a trans-
portation function onshore, those factors had less weight in
the offshore context because of the longer distances between
the point of production in deep water and the nearest
’ As more new facilities were constructed offshore on the OCS, where
the pattern of gathering and distribution differs, the applicability of the
factors was questioned. Specifically, it is often not feasible to process raw
gas on open water. As a result, pipelines on the OCS typically do not
gather gas at a local, centralized point within a producing field as they
would onshore, to prepare it for traditional transportation. Rather, on the
OCS, they construct relatively long lines to carry the raw gas from
offshore platforms, where after production only rudimentary gas treatment
takes place (primarily to remove water), to the shore or a point closer to
shore where it can be processed into “pipeline quality” gas that can be
transported by an interstate pipeline.
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connection with an interstate pipeline. The court further
questioned the validity of a central-point-in-the-field analysis
applied to unitary OCS structures.
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In response, the Commission modified its primary function
test for the OCS, stating that as drilling operations pushed
further offshore from existing interstate pipeline connections,
it would apply a sliding scale to allow for the increasing
length and diameter appropriate for gathering lines in
correlation to the distance from shore and the water depth of
the offshore production area. * Later, following a conference
on offshore gathering in Docket No. RM96-5-000, the Com-
mission issued a policy statement announcing that it would
“presume facilities located in deep water [more than 200
meters] are primarily engaged in gathering or production.”
As with onshore facilities, the use of the primary function
tesi, as modified by the policy statement for deepwater
facilities, seems to be workable, and there has been relativeiy
little controversy concerning its application in recent years.
Efforts to apply the primary function test to offshore facilities
in the shallow OCS, however, have been contentious.
B. The Sea Robin Pipeline
Difficulties applying the primary function test to offshore
facilities were highlighted by the Commission’s decision in
Sea Robin Pipeline Company (Sea Robin). '” Sea Robin’s
offshore pipeline facilities were certificated as jurisdictional
transmission facilities by the Commission in 1969. The
system consists of 438 miles of pipeline that transports
unprocessed gas from shallow water on the OCS to a
processing plant onshore. The system is configured in the
form of a “Y”. Along the two arms of the “Y”, 45 lateral
* See Amerada Hess, 52 FERC at 61,988 (1990).
” See 1996 Policy Statement, note | supra.
71 FERC 961,351 (1995), reh’g denied, 75 FERC § 61,332 (1996).
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lines with diameters ranging from 4.5 to 30 inches are
connected to 67 receipt points located on production plat-
forms, or at subsea taps. Through those upstream arms, Sea
Robin moves the gas to a manned platform with two turbine
compressor units at the fork of the “Y” closer to shore. The
bottom line of the “Y”’, from the platform to shore, consists of
66.3 miles of 36-inch pipeline. Along this segment the gas is
mingled with additional gas from four platforms.
In response to a request to reclassify the Sea Robin
facilities from transmission to gathering, the Commission
found that the primary function of Sea Robin’s entire system
was and continued to be jurisdictional transportation. — In
reaching that conclusion, the Commission emphasized the
length and size of Sea Robin’s pipeline, and also certain non-
physical factors, such as the reliance of shippers in the
original jurisdictional determination. The U.S. Court of
Appeals for the Fifth Circuit remanded that decision.'' In
doing so the court said the Commission had relied too heavily
on the size of Sea Robin’s system as a determinative factor
and did not give enough consideration to the different nature
of gathering on the OCS. The court also faulted the Com-
mission for reliance on non-physical considerations, such as
Sea Robin’s ownership and shipper expectations. The court
specifically found that the Commission’s consideration of a
“regulatory gap” in the absence of Natural Gas Act juris-
diction was inappropriate: “Need for regulation cannot alone
create authority to regulate.” '” |
In its decision, the court suggested that the primary func-
tion test could be adapted to the operational characteristics of
the OCS, so that portions of its system could be considered to
be predominantly gathering and other parts predominantly
transportation. On remand, then, the Commission adopted this
'' Sea Robin Pipeline Company v. FERC, 127 F.3d 365 (Sth Cir. 1997).
'? Id.at 371.
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suggestion and reformulated the primary function test to draw
the jurisdictional line at an internal point on the Sea Robin
system, at the junction of the “vy”? The Comm.ssion
concluded that the part of Sea Robin’s pipeline facilities from
the platform to shore was a jurisdictional transportation
system. Upstream of that point the two legs of the “Y”
formed a non-jurisdictional gathering system.
In reformulating its primary function test, the Commission
concluded that the “behind-the-plant” factor is not necessarily
determinative of where gathering ends when applied to off-
shore facilities. In addition, the Commission announced that
where a pipeline system includes a facility where gas is
delivered by several relatively small diameter lines for
aggregation and preparation for further delivery onshore
through a single larger diameter pipeline, the location of
that collection facility will be afforded considerable
weight for purposes of identifying the demarcation point
between gathering and transportation on OCS systems.
Although not all OCS pipeline systems exhibit such a cen-
tralized aggregation point, e.g., facilities with a straight-line
or spine-and-lateral type configuration, the presence of such a
location would be considered the offshore analogue of the
onshore “central-point-in-the-field” criterion.
The Commission’s decision on remand, based on its re-
formulated test that included the central point of aggregation
as a factor offshore, was upheld by the U.S. Court of Appeals
for the District of Columbia Circuit in Exxon (note 4 supra).
'S Sea Robin Pipeline Company, Order on Remand, 87 FERC 4 61,384
(1999) (Comm. Bailey dissenting), rehearing denied, 92 FERC 61,072
(2000). -
'4 87 FERC at 62,248.
'S See also Williams Gas Processing - Gulf Coast Company, L.P. et al.
v. FERC, No. 01-1327 (D.C. Cir. June 20, 2003).
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C. The “Reformulated, Modified Primary Function Test”
Despite the several modifications of the primary function
test described above, its utility in identifying nonjurisdictional
gathering facilities remains uneven. As mentioned, the rule
seems to work fairly well onshore, possibly because where
other factors are not conclusive, there is usually a processing
plant located at the end of a gathering system that serves as a
logical demarcation point between jurisdictional and non-
jurisdictional systems. Also, after an initial round of deci-
sions interpreting the 1996 Policy Statement applying the
primary function test to facilities located in deep water
beyond the OCS, there has been relatively little controversy.
In the shallow areas on the OCS, on the other hand, the status
of facilities remains unsettled. The Commission continues to
receive requests to reclassify jurisdictional transmission
facilities as gathering, over the objection of customers who
have been served through the facilities. In these types of
cases, the correct interpretation of the primary function test is
usually the main issue.
Based on the number of contested cases presented to us, we
are concerned about the high degree of uncertainty that seems
built into the primary function test as applied offshore. The
primary function test lists numerous factors for consideration,
with no one factor having priority. Thus, for example, the size
of a particular system may suggest that it is transmission, but
the configuration may suggest gathering. The primary
function test does not indicate how such inconsistencies
should be resolved. The result, over time, has been the
gradual reclassification of more and larger systems as
gathering, even in cases where systems had been regulated for
many years under the Natural Gas Act. Systems with
generally similar physical characteristic may have a different
regulatory status because of relatively minor physical dif-
ferences. This result can produce different regulatory results
for competitors who perform essentially the same economic
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function. It is also seems unfair t> customers who may have
made investments relying on the regulated status of a
transporter, only to find themselves subject to the market
power of that transporter in its new deregulated form. The
“need for regulation” may not create authority to regulate; on
the other hand, inconsistent classification and regulatory
treatment cannot be what Congress intended when it estab-
lished a comprehensive scheme of federal regulation that
included transportation from the OCS.
Public Conference
The Commission is convening a public conference to hear
suggestions from interested persons on developing a new test
for gathering on the OCS that is reasonably objective and that
furthers the regulatory goals of the Natural Gas Act. (The
conference will not include the policy adopted for deepwater
facilities in Docket No. RM96-5-000.) A new test should
ensure that similar facilities are subject to similar regulatory
treatment. It should also provide incentives for investment in
production, gathering, and transportation infrastructure off-
shore, without subjecting producers to the unregulated market
power of third party transporters. Persons who appear at the
conference should be prepared to indicate how the Com-
mission’s definition of gathering can be changed to achieve
these goals. Persons seeking to make formal statements at the
public conference should be prepared to address questions set
forth below. Other questions may arise during the course of
the proceedings.
Questions
1. To what extent should a gathering test that be based on
the length and diameter of the pipeline, the extent the
facilities are operationally integrated with either production
or transportation facilities, the function of compression in
relation to the facilities, and the proximity to the pipeline
transportation grid?
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2. To what extent should the location of processing plants,
the central point of aggregation, the operating pressure of a
line, and geographic configuration of facilities, be considered
relevant in evaluating the status of facilities on the OCS?
What are the advantages and disadvantages of relying on
these factors? Are there any other factors that should be
considered?
3. What should be the relevance of non physical factors
such as a facility’s history of regulation or the major business
purpose of an owner?
4. If formerly certificated facilities are determined to be
gathering, may the Commission nonetheless require the
company to file for abandonment under section 7(b) of the
Natural Gas act before the facilities may be transferred to
another company?
Procedures
The public conference convened by this notice will be held
on September 23, 2003 at the offices of the Federal Energy
Regulatory Commission, 888 First Street, N.E., Washington,
D.C. 20426. All interested persons are invited to attend.
Persons interested in speaking or making a presentation
should indicate their interest no later than September 3, 2003
by a letter addressed to the Secretary, Federal Energy
Regulatory Commission, 888 First Street, NE, Washington,
DC 20426, and should refer to Docket No. ADO3-13-000.
Each request to participate must include the name of a contact
person, their telephone number and e-mail address. There is
no need to provide advance notice to the Commission simply
to attend the conference.
Comments addressing the questions set out in this notice
may also be filed by September 3, 2003. Every effort will be
made to accommodate requests to make presentations, but
depending on the number of requests received, a limit may
above
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have to be placed on the number of presenters and the time
allowed for presentations.
Members of the Commission intend to participate in the
public conference and will reserve time for questions and
answers. In a subsequent notice, we will provide further
details on the conference, including the agenda and a list of
participants, as plans evolve. For additional information,
please contact Gordon Wagner, Office of General Counsel,
phone 202-502-8947, e-mail: gordon.wagner@ferc.gov.
Magalie R. Salas
Secretary
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APPENDIX B
Excerpts from Outer Continental Shelf Lands Act,
43 U.S.C. § 1331, et seq.
43 U.S.C. § 1332 (2003)
§ 1332. Congressional declaration of policy
It is hereby declared to be the policy of the United States
that—
(1) the subsoil and seabed of the outer Continental
Shelf appertain to the United States and are subject to its
jurisdiction, control, and power of disposition as
provided in this Act;
(2) this Act shall be construed in such a manner that
the character of the waters above the outer Continental
Shelf as high seas and the right to navigation and fishing
therein shall not be affected;
(3) the outer Continental Shelf is a vital national
resource reserve held by the Federal Government for the
public, which should be made available for expeditious
and orderly development, subject to environmental
safeguards, in a manner which is consistent with the
maintenance of competition and other national needs;
(4) since exploration, development, and production of
the minerals of the outer Continental Shelf will have
significant impacts on coastal and non-coastal areas of
the coastal States, and on other affected States, and, in
recognition of the national interest in the effective
management of the marine, coastal, and human
environments—
(A) such States and their affected local govern-
ments may require assistance in protecting their
coastal zones and other affected areas from any tem-
porary or permanent adverse effects of such impacts;
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(B) the distribution of a portion of the receipts from
the leasing of mineral resources of the outer
Continental Shelf adjacent to State lands, as provided
under section 8(g) [43 U.S.C. § 1337(g)], will provide
affected coastal States and localities with funds which
may be used for the mitigation of adverse economic
and environmental effects related to the development
of such resources; and
(C) such States, and through such States, affected
local governments, are entitled to an opportunity to
participate, to the extent consistent with the national
interest, in the policy and planning decisions made by
the Federal Government relating to exploration for,
and development and production of, minerals of the
outer Continental Shelf[.;]
(5) the rights and responsibilities of all States and,
where appropriate, local governments, to preserve and
protect their marine, human, and coastal environments
through such means as regulation of land, air, and water
uses, of safety, and of related development and activity
should be considered and recognized; and
(6) operations in the outer Continental Shelf should be
conducted in a safe manner by well-trained personnel
using technology, precautions, and techniques sufficient
to prevent or minimize the likelihood of blowouts, loss
of well control, fires, spillages, physical obstruction to
other users of the waters or subsoil and seabed, or other
occurrences which may cause damage to the environ-
ment or to property, or endanger life or health.
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43 U.S.C. § 1334 (2003)
§ 1334. Administration of leasing
(a) Rules and regulations; amendment; cooperation with
State agencies; subject matter and scope of regu-
lations.
The Secretary shall administer the provisions of this Act
relating to the leasing of the outer Continental Shelf, and shall
prescribe such rules and regulations as may be necessary to
carry out such provisions. The Secretary may at any time
prescribe and amend such rules and regulations as he
determines to be necessary and proper in order to provide for
the prevention of waste and conservation of the natural
resources of the outer Continental Shelf, and the protection of
correlative rights therein, and, notwithstanding any other
provisions herein, such rules and regulations shall, as of their
effective date, apply to all operations conducted under a lease
issued or maintained under the provisions of this Act. In the
enforcement of safety, environmental, and conservation laws
and regulations, the Secretary shall cooperate with the
relevant departments and agencies of the Federal Government
and of the affected States. In the formulation and prom-
ulgation of regulations, the Secretary shall request and give
due consideration to the views of the Attorney General with
respect to matters which may affect competition. In
considering any regulations and in preparing any such views,
the Attorney General shall consult with the Federal Trade
Commission. The regulations prescribed by the Secretary
under this subsection shall include, but not be limited to,
provisions—
~ (1) for the suspension or temporary prohibition of any
operation or activity, including production, pursuant to
any lease or permit (A) at the request of a lessee, in the
national interest, to facilitate proper development of a
lease or to allow for the construction or negotiation for
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use of transportation facilities, or (B) if there is a threat
of serious, irreparable, or immediate harm or damage to
life (including fish and other aquatic life), to property, to
any mineral deposits (in areas leased or not leased), or to
the marie, coastal, or human environment, and for the
extension of any permit or lease affected by suspension
or prohibition under clause (A) or (B) by a period
equivalent to the period of such suspension or
prohibition, except that no permit or lease shall be so
extended when such suspension or prohibition is the
result of gross negligence or willful violation of such
lease or permit, or of regulations issued with respect to
such lease or permit;
(2) with respect to cancellation of any lease or
permit—
(A) that such cancellation may occur at any time, if
the Secretary determines, after a hearing, that—
(i) continued activity pursuant to such lease or
permit would probably cause serious harm or
damage to life (including fish and other aquatic
life), to property, to any mineral (in areas leased or
not leased), to the national security or defense, or to
the marine, coastal, or human environment;
(ii) the threat of harm or damage will not
disappear or decrease to an acceptable extent within
a reasonable period of time; and
(iii) the advantages of cancellation outweigh the
advantages of continuing such lease or permit in
force;
(B) that such cancellation shall not occur unless and
until operations under such lease or permit shall have
been under suspension, or temporary prohibition, by
the Secretary, with due extension of any lease or
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permit term continuously for a period of five years, or
for a lesser period upon request of the lessee;
(C) that such cancellation shall entitle the lessee to
receive such compensation as he shows to the
Secretary as being equal to the lesser of (i) the fair
value of the canceled rights as of the date of
cancellation, taking account of both anticipated
revenues from the lease and anticipated costs.
including costs of compliance with all applicable
regulations and operating orders, liability for cleanup
costs or damages, or both, in the case of an oilspill,
and all other costs reasonably anticipated on the lease,
or (ii) the excess, if any, over the lessee's revenues,
from the lease (plus interest thereon from the date of
receipt to date of reimbursement) of all consideration
paid for the lease and all direct expenditures made by
the lessee after the date of issuance of such lease and
in connection with exploration or development, or
both, pursuant to the lease (plus interest on such
consideration and such expenditures from date of
payment to date of reimbursement), except that (I)
with respect to leases issued before the date of
enactment of this subparagraph [enacted Sept. 18,
1978], such compensation shall be equal to the
amount specified in clause (i) of this subparagraph;
and (II) in the case of joint leases which are canceled
due to the failure of one or more partners to exercise
due diligence, the innocent parties shall have the right
to seek damages for such loss from the responsible
party or parties and the right to acquire the interests of
the negligent party or parties and be issued the lease in
question;
(3) for the assignment or relinquishment of a lease;
(4) for unitization, pooling, and drilling agreements;
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(5) for the subsurface storage of oil and gas other than
by the Federal Government;
(6) for drilling or easements necessary for exploration,
development, and production;
(7) for the prompt and efficient exploration and
development of a lease area; and
(8) for compliance with the national ambient air
quality standards pursuant to the Clean Air Act (42
U.S.C.§ 7401 et seg.), to the extent that activities
authorized under this Act significantly affect the air
quality of any State.
(b) Compliance with regulations as condition for issuance,
continuation, assignment, or other transfer of leases.
The issuance and continuance in effect of any lease, or of
any assignment or other transfer of any lease, under the
provisions of this Act shall be conditioned upon compliance
with regulations issued under this Act.
(c) Cancellation of nonproducing lease.
Whenever the owner of a nonproducing lease fails to
comply with any of the provisions of this Act, or of the lease,
or of the regulations issued under this Act, such lease may be
canceled by the Secretary, subject to the right of judicial
review as provided in this Act, if such default continues for
the period of thirty days after mailing of notice by registered
letter to the lease owner at his record post office address.
(d) Cancellation of producing lease.
Whenever the owner of any producting lease fails to
comply with any of the provisions of this Act, of the lease, or
of the regulations issued under this Act, such lease may be
forfeited and canceled by an appropriate proceeding in any
United States district court having jurisdiction under the
provisions of this Act.
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(e) Pipeline rights of way; forfeiture of grant.
Rights-of-way through the submerged lands of the outer
Continental Shelf, whether or not such lands are included in a
lease maintained or issued pursuant to this Act, may be
granted by the Secretary for pipeline purposes for the
transportation of oil, natural gas, sulphur, or other minerals,
or under such regulations and upon such conditions as may be
prescribed by the Secretary, or where appropriate the
Secretary of Transportation, including (as provided in section
21(b) of this Act [43 U.S.C. § 1347(b)]) assuring maximum
environmental protection by utilization of the best available
and safest technologies, including the safest practices for
pipeline burial and upon the express condition that oil or gas
pipelines shall transport or purchase without discrimination,
oil or natural gas produced from submerged lands or outer
Continental Shelf lands in the vicinity of the pipelines in such
proportionate amounts as the Federal Energy Regulatory
Commission, in consultation with the Secretary of Energy,
may, after a full hearing with due notice thereof to the
interested parties, determine to be reasonable, taking into
account, among other things, conservation and the prevention
of waste. Failure to comply with the provisions of this section
or the regulations and conditions prescribed under this section
shall be ground for forfeiture of the grant in an appropriate
judicial proceeding instituted by the United States in any
United States district court having jurisdiction under the
provisions of this Act.
(f) Competitive principles governing pipeline operation.
(1) Except as provided in paragraph (2), every permit,
license, easement, right-of-way, or other grant of authority for
the transportation by pipeline on or across the outer
Continental Shelf of oil or gas shall require that the pipeline
be operated in accordance with the following competitive
principles:
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(A) The pipeline must provide open and
nondiscriminatory access to both owner and nonowner
shippers.
(B) Upon the specific request of one or more owner or
nonowner shippers able to provide a guaranteed level of
throughput, and on the condition that the shipper or
shippers requesting such expansion shall be responsible
for bearing their proportionate share of the costs and
risks related thereto, the Federal Energy Regulatory
Commission may, upon finding, after a full hearing with
due notice thereof to the interested parties, that such
expansion is within technological limits and economic
feasibility, order a subsequent expansion of throughput
capacity of any pipeline for which the permit, license,
easement, right-of-way, or other grant of authority is
approved or issued after the date of enactment of this
subparagraph [enacted Sept. 18, 1978]. This
subparagraph shall not apply to any such grant of
authority approved or issued for the Gulf of Mexico or
the Santa Barbara Channel.
(2) The Federal Energy Regulatory Commission may, by
order or regulation, exempt from any or all of the require-
ments of paragraph (1) of this subsection any pipeline or class
of pipelines which feeds into a facility where oil and gas are
first collected or a facility where oil and gas are first
separated, dehydrated, or otherwise processed.
(3) The Secretary of Energy and the Federal tnergy
Regulatory Commission shall consult with and give due
consideration to the views of the Attorney General on specific
conditions to be included in any permit, license, easement,
right-of-way, or grant of authority in order to ensure that
pipelines are operated in accordance with the competitive
principles set forth in paragraph (1) of this subsection. In
preparing any such views, the Attorney General shall consult
with the Federal Trade Commission.
20a
(4) Nothing in this subsection shall be deemed to limit,
abridge, or modify any authority of the United States under
any other provision of law with respect to pipelines on or
across the outer Continental Shelf.
(g) Rates of production.
(1) The leasee [lessee] shall produce any oil or gas, or both,
obtained pursuant to an approved development and _ pro-
duction plan, at rates consistent with any rule or order issued
by the President in accordance with any provision of law.
(2) If no rule or order referred to in paragraph (1) has been
issued, the lessee shall produce such oil or gas, or both, at
rates corisistent with any regulation promulgated by the
Secretary of Energy which is to assure the maximum rate of
production which may be sustained without loss of ultimate
recovery of oil or gas, or both, under sound engineering and
economic principles, and which is safe for the duration of the
activity covered by the approved plan. The Secretary may
permit the lessee to vary such rates if he finds that such
variance is necessary.
(h) Federal action affecting outer Continental Shelf; noti-
fication; recommended changes.
The head of any Federal department or agency who takes
any action which has a direct and significant effect on the
outer Continental Shelf or its development shall promptly
notify the Secretary of such action and the Secretary shall
thereafter notify the Governor of any affected State and the
Secretary may thereafter recommend such changes in such
action as are considered appropriate.
(i) Flaring of natural gas.
After the date of enactment of this section [enacted Sept.
18, 1978], no holder of any oil and gas lease issued or
maintained pursuant to this Act shall be permitted to flare
natural gas from any well unless the Secretary finds that there
2la
is no practicable way to complete production of such gas, or
that such flaring is necessary to alleviate a temporary
emergency situation or to conduct testing or work-over
operations.
(j) Cooperative development of c) mmon_ hydrocarbon-
bearing areas.
(1) Findings. [(A)] The Congress of the United States finds
that the unrestrained competitive production of hydrocarbons
from a common hydrocarbon-bearing geological area under-
lying the Federal and State boundary may result in a number
of harmful nationai effects, including—
(i) the drilling of unnecessary wells, the installation of
unnecessary facilities and other imprudent operating
practices that result in economic waste, environmental
damage, and damage to life and property;
(ii) the physical waste or hydrocarbons and an
unnecessary reduction in the amounts of hydrocarbons
that can be produced from certain hydrocarbon-bearing
areas; and
(iii) the loss of correlative rights which can result in
the reduced value of national hydrocarbon resources and
disorders in the leasing of Federal and State resources.
(2) Prevention of harmful effects. The Secretary shall
prevent, through the cooperative development of an area, the
harmful effects of unrestrained competitive production of
hydrocarbons from a common _ hydrocarbon-bearing area
underlying the Federal and State boundary.
22a
43 U.S.C. § 1349 (2003)
§ 1349. Citizens suits, jurisdiction and judicial review
(a) Persons who may bring actions; persons against whom
action may be brought; time of action; intervention by
Attorney General; costs and fees; security.
(1) Except as provided in this section, any person having a
valid legal interest which is or may be adversely affected may
commence a civil action on his own behalf to compel
compliance with this Act against any person, including the
United States, and any other government instrumentality or
agency (to the extent permitted by the eleventh amendment to
the Constitution) for any alleged violation of any provision of
this Act or any regulation promulgated under this Act, or of
the terms of any permit or lease issued by the Secretary under
this Act.
(2) Except as provided in paragraph (3) of this subsection,
no action may be commenced under subsection (a)(1) of this
section—
(A) prior to sixty days after the plaintiff has given
notice of the alleged violation, in writing under oath, to
the Secretary and any other appropriate Federal official,
to the State in which the violation allegedly occurred or
is occurring, and to any alleged violator; or
(B) if the Attorney General has commenced and is
diligently prosecuting a civil action in a court of the
United States or a State with respect to such matter, but
in any such action in a court of the United States any
person having a legal interest which is or may be
adversely affected may intervene as a matter of right.
- (3) An action may be brought under this subsection
immediately after notification of the alleged violation in any
case in which the alleged violation constitutes an imminent
threat to the public health or safety or would immediately
affect a legal interest of the plaintiff.
23a
(4) In any action commenced pursuant to this section, the
Attorney General, upon the request of the Secretary or any
other appropriate Federal official, may intervene as a matter
of right.
(5) A court, in issuing any final order in any action brought
pursuant to subsection (a)(1) or subsection (c) of this section,
may award costs of litigation, including reasonable attorney
and expert witness fees, to any party, whenever such court
determines such award is appropriate. The court may, if a
temporary restraining order or preliminary injunction is
sought, require the filing of a bond or equivalent security in a
sufficient amount to compensate for any loss or damage
suffered, in accordance with the Federal Rules of Civil
Procedure.
(6) Except as provided in subsection (c) of this section, all
suits challenging actions or decisions allegedly in violation
of, or seeking enforcement of, the provisions of this Act, or
any regulation promulgated under this Act, or the terms of
any permit or lease issued by the Secretary under this Act,
shall be undertaken in accordance with the procedures
described in this subsection. Nothing in this section shall
restrict any right which any person or class of persons may
have under any other Act or common law to seek appropriate
relief.
(b) Jurisdiction and venue of actions.
(1) Except as provided in subsection (c) of this section, the
district courts of the United States shall have jurisdiction of
cases and controversies arising out of, or in connection with
(A) any operation conducted on the outer Continental Shelf
which involves exploration, development, or production of
the minerals, of the subsoil and seabed of the outer Con-
tinental Shelf, or which involves rights to such minerals, or
(B) the cancellation, suspension, or termination of a lease or
permit under this Act. Proceedings with respect to any such
24a
case or controversy may be instituted in the judicial district in
which any defendant resides or may be found, or in the
judicial district of the State nearest the place the cause of
action arose.
(2) Any resident of the United States who is injured in any
manner through the failure of any operator to comply with
any rule, regulation, order, or permit issued pursuant to this
Act may bring an action for damages (including reasonable
attorney and expert witness fees) only in the judicial district
having jurisdiction under paragraph (1) of this subsection.
(c) Review of Secretary's approval of leasing program;
review of approval, modification or disapproval of explor-
ation or production plan; persons who may seek review;
scope of review; certiorari to Supreme Court.
(1) Any action of the Secretary to approve a leasing
program pursuant to section 18 [43 U.S.C. § 1344] of this
Act shall be subject to judicial review only in the United
States Court of Appeal [Appeals] for the District of
Columbia.
(2) Any action of the Secretary to approve, require
modification of, or disapprove any exploration plan or any
development and production plan under this Act shall be
subject to judicial review only in a United States court of
appeals for a circuit in which an affected State is located.
(3) The judicial review specified in paragraphs (1) and (2)
of this subsection shall be available only to a person who (A)
participated in the administrative proceedings related to the
actions specified in such paragraphs, (B) is adversely affected
or aggrieved by such action, (C) files a petition for review of
the Secretary's action within sixty days after the date of such
action, and (D) promptly transmits copies of the petition to
the Secretary and to the Attorney General.
25a
(4) Any action of the Secretary specified in paragraph (1)
or (2) shall only be subject to review pursuant to the
provisions of this subsection, and shall be specifically
excluded from citizen suits which are permitted pursuant to
subsection (a) of this section.
(5) The Secretary shall file in the appropriate court the
record of any public hearings required by this Act and any
additional information upon which the Secretary based his
decision, as required by section 2112 of title 28, United States
Code. Specific objections to the action of the Secretary shall
be considered by the court only if the issues upon which such
objections are based have been submitted to the Secretary
during the administrative proceedings related to the actions
involved.
(6) The court of appeals conducting a proceeding pursuant
to this subsection shall consider the matter under review
solely on the record made before the Secretary. The findings
of the Secretary, if supported by substantial evidence on the
record considered as a whole, shall be conclusive. The court
may affirm, vacate, or modify any order or decision or may
remand the proceedings to the Secretary for such further
action as it may direct.
(7) Upon the filing of the record with the court, pursuant to
paragraph (5), the jurisdiction of the court shall be exclusive
and its judgment shall be final, except that such judgment
shall be subject to review by the Supreme Court of the United
States upon writ of certiorari.
(d) [Repealed]
26a
43 U.S.C. § 1350 (2003)
§ 1350. Remedies and procedures
(a) Injunctions, restraining orders, etc.
At the request of the Secretary, the Secretary of the Army,
or the Secretary of the Department in which the Coast Guard
is operating, the Attorney General or a United States attorney
shall institute a civil action in the district court of the United
States for the district in which the affected operation is
located for a temporary restraining order, injunction, or other
appropriate remedy to enforce any provision of this Act, any
regulation or order issued under this Act, or any term of a
lease, license, or permit issued pursuant to this Act.
(b) Civil penalties; hearing.
(1) Except as provided in paragraph (2), if any person
fails to comply with any provision of this Act, or any
term of a lease, license, or permit issued pursuant to this
Act, or any regulation or order issued under this Act,
after notice of such failure and expiration of any
reasonable period allowed for corrective action, such
~ person shall be liable for a civil penalty of not more than
$ 20,000 for each day of the continuance of such failure.
The Secretary may assess, collect, and compromise any
such penalty. No penalty shall be assessed until the
person charged with a violation has been given an
opportunity for a hearing. The Secretary shall, by
regulation at least every 3 years, adjust the penalty
specified in this paragraph to reflect any increases in the
Consumer Price Index (all items, United States city
average) as prepared by the Department of Labor.
(2) If a failure described in paragraph (1) constitutes
or constituted a threat of serious, irreparable, or
immediate harm or damage to life (including fish and
other aquatic life), property, any mineral deposit, or the
27a
marine, coastal, or human environment, a civil penalty
may be assessed without regard to the requirement of
expiration of a period allowed for corrective action.
(c) Criminal penalties.
Any person who knowingly and willfully (1) violates any
provision of this Act, any term of a lease, license, or permit
issued pursuant to this Act, or any regulation or order issued
under the authority of this Act designed to protect health,
safety, or the environment or conserve natural resources, (2)
makes any false statement, representation, or certification in
any application, record, report, or other document filed or
required to be maintained under this Act, (3) falsifies,
tampers with, or renders inaccurate any monitoring device or
method of record required to be maintained under this Act, or
(4) reveals any data or information required to be kept
confidential by this Act shall, upon conviction, be punished
by a fine of not more than $ 100,000, or by imprisonment for
not more than ien years, or both. Each day that a violation
under clause (1) of this subsection continues, or each day that
any monitoring device or data recorder remains inoperative or
inaccurate because of any activity described in clause (3) of
this subsection, shall constitute a separate violation.
(d) Liability of corporate officers and agents for violations
by corporation.
Whenever a corporation or other entity is subject to
prosecution under subsection (c) of this section, any officer or
agent of such corporation or entity who knowingly and
willfully authorized, ordered, or carried out the proscribed
activity shall be subject to the same fines or imprisonment, or
both, as provided for under subsection (c) of this section.
(e) Concurrent and cumulative nature of penalties.
The remedies and penalties prescribed in this Act shall be
concurrent and cumulative and the exercise of one shall not
preclude the exercise of the others. Further, the remedies and
28a
penalties prescribed in this Act shall be in addition to any
other remedies and penalties afforded by any other law or
regulation.
ss 43 U.S.C. § 1801 (2003)
§ 1801. Congressional findings
The Congress finds and declares that—
(1) the demand for energy in the United. States is
increasing and will continue to increase for the
foreseeable future;
(2) domestic production of oil and gas has declined in
recent years;
(3) the United States has become increasingly de-
pendent upon imports of oil from foreign nations to meet
domestic energy demand;
(4) increasing reliance on imported oil is not
inevitable, but is rather subject to significant reduction
by increasing the development of domestic sources of
energy supply;
(5) consumption of natural gas in the United States
has greatly exceeded additions to domestic reserves in
recent years;
(6) technology is or can be made available which will
allow significantly increased domestic production of oil
and gas without undue harm or damage to the environ-
ment;
(7) the Outer Continental Shelf contains significant
quantities of oil and natural gas and is a vital national
resource reserve which must be carefully managed so as
to realize fair value, to preserve and maintain com-
petition, and to reflect the public interest;
29a
(8) there presently exists a variety of technological,
economic, environmental, administrative, and legal
problems which tend to retard the development of the oil
and natural gas reserves of the Outer Continental Shelf;
(9) environmental and safety regulations relating to
activities on the Outer Continental Shelf should be
reviewed in light of current technology and information;
(10) the development, processing, and distribution of
the oil and gas resources of the Outer Continental Shelf,
and the siting of related energy facilities, may cause
adverse impacts on various States and local govern-
ments;
(11) policies, plans, and programs developed by States
and local governments in response to activities on the
Outer Continental Shelf cannot anticipate and ameliorate
such adverse impacts unless such States, working in
close cooperation with affected local governments, are
provided with timely access to information regarding
activities on the Outer Continental Shelf and an
Opportunity to review and comment on decisions relating
to such activities;
(12) funds must be made available to pay for the
prompt removal of any oil spilled or discharged as a
result of activities on the Outer Continental Shelf and for
any damages to public or private interests caused by
such spills or discharges;
(13) because of the possible conflicts between
exploitation of the oil and gas resources in the Outer
Continental Shelf and other uses of the marine
environment, including fish and shellfish growth and
recovery, and recreational activity, the Federal Govern-
ment must assume responsibility for the minimization or
elimination of any conflict associated with such
exploitation;
30a
(14) the oil and gas resources of the Outer Continental
Shelf are limited; nonrenewable resources which must be
developed in a manner which takes into consideration
the Nation's long-range energy needs and also assures
adequate protection of the renewable resources of the
Outer Continental Shelf which are a continuing and
increasingly important source of food and protein to the
Nation and the world; and
(15) funds must be made available to pay for damage
to commercial fishing vessels and gear resulting from
activities involving oil and gas exploration, develop-
ment, and production on the Outer Continental Shelf.
43 U.S.C. § 1802 (2003)
§ 1802. Congressional declaration of purposes
The purposes of this Act are to—
(1) establish policies and procedures for managing the
oil and natural gas resources of the Outer Continental
Shelf which are intended to result in expedited
exploration and development of the Outer Continental
Shelf in order to achieve national economic and energy
policy goals, assure national security, reduce dependence
on foreign sources, and maintain a favorable balance of
payments in world trade;
(2) preserve, protect, and develop oil and natural gas
resources in the-Outer Continental Shelf in a manner
which is consistent with the need (A) to make such
resources available to meet the Nation's energy needs as
rapidly as possible, (B) to balance orderly energy
resource development with protection of the human,
marine, and coastal environments, (C) to insure the
public a fair and equitable return on the resources of the
Outer Continental Shelf, and (D) to preserve and main-
tain free enterprise competition;
3la
(3) encourage development of new and improved
technology for energy resource production which will
eliminate or minimize risk of damage to the human,
marine, and coastal environments;
(4) provide States, and through States, local govern-
ments, which are impacted by Outer Continental Shelf
oil and gas exploration, development, and production
with comprehensive assistance in order to anticipate and
plan for such impact, and thereby to assure adequate
protection of the human environment;
(5) assure that States, and through States, local gov-
ernments, have timely access to information regarding
activities on the Outer Continental Shelf, and oppor-
tunity to review and comment on decisions relating to
such activities, in order to anticipate, ameliorate, and
plan for the impacts of such activities;
(6) assure that States, and through States, local gov-
ernments, which are directly affected by exploration,
development, and production of oil and natural gas are
provided an opportunity to participate in policy and
planning decisions relating to management of the
resources of the Outer Continental Shelf;
(7) minimize or eliminate conflicts between the ex-
ploration, development, and production of oil and
natural gas, and the recovery of other resources such as
fish and shellfish;
(8) establish an oilspill liability fund to pay for the
prompt removal of any oil spilled or discharged as a
result of activities on the Outer Continental Shelf and for
any damages to public or private interest caused by such
spills or discharges;
32a
(9) insure that the extent of oil and natural gas
resources of the Outer Continental Shelf is assessed at
the earliest practicable time; and
(10) establish a fishermen's contingency fund to pay
for damages to commercial fishing vessels and gear due
to Outer Continental Shelf activities.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.