Oil Pipeline Capacity Allocation Issues and Anomalous Conditions, 10355-10358 [2022-03912]
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Dated: February 17, 2022.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2022–03913 Filed 2–23–22; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
[Docket No. AD22–7–000]
Oil Pipeline Capacity Allocation Issues
and Anomalous Conditions
Federal Energy Regulatory
Commission, Department of Energy.
ACTION: Notice of inquiry.
AGENCY:
In this Notice of Inquiry, the
Federal Energy Regulatory Commission
(Commission) seeks comment on oil
pipeline capacity allocation issues that
arise when anomalous conditions affect
the demand for oil pipeline capacity. In
addition, the Commission seeks
comment on what actions, if any, the
Commission should consider to address
those allocation issues.
DATES: Initial Comments are due April
25, 2022, and Reply Comments are due
May 25, 2022.
ADDRESSES: Comments, identified by
docket number, may be filed in the
following ways. Electronic filing
through https://www.ferc.gov, is
preferred.
• Electronic Filing: Documents must
be filed in acceptable native
applications and print-to-PDF, but not
in scanned or picture format.
• For those unable to file
electronically, comments may be filed
by USPS mail or by hand (including
courier) delivery.
Æ Mail via U.S. Postal Service Only:
Addressed to: Federal Energy
Regulatory Commission, Secretary of the
Commission, 888 First Street NE,
Washington, DC 20426.
Æ Hand (including courier) delivery:
Deliver to: Federal Energy Regulatory
Commission, 12225 Wilkins Avenue,
Rockville, MD 20852.
The Comment Procedures Section of
this document contains more detailed
filing procedures.
FOR FURTHER INFORMATION CONTACT:
Adrianne Cook (Technical Information),
Office of Energy Market Regulation,
Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–
8849, Adrianne.Cook@ferc.gov
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SUMMARY:
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Caitlin Tweed (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street NE, Washington, DC
20426, (202) 502–8073,
Caitlin.Tweed@ferc.gov
SUPPLEMENTARY INFORMATION: 1. In this
Notice of Inquiry, the Federal Energy
Regulatory Commission (Commission)
seeks to explore oil pipeline capacity
allocation issues that arise when
anomalous conditions affect the demand
for oil pipeline capacity and what
actions, if any, the Commission should
consider to address those allocation
issues. Specifically, the Commission
seeks public comment on anomalous
conditions and their potential impacts
on oil pipeline capacity allocation, as
well as whether there are changes to the
Commission’s existing policies (such as
those regarding prorationing) that the
Commission should consider to mitigate
these impacts. The Commission also
seeks comment on the effects of recent
anomalous conditions—those arising
from the COVID–19 pandemic—on the
availability of pipeline capacity for
transporting jet fuel.
I. Background
A. Allocation of Capacity
2. Interstate oil pipelines are regulated
as common carriers subject to the
Interstate Commerce Act (ICA).1
Accordingly, oil pipeline rates, terms,
and conditions of service must be just
and reasonable 2 and nondiscriminatory.3 Furthermore, an oil
pipeline is obligated to provide
transportation upon reasonable request.4
3. Prorationing is the mechanism that
oil pipelines use to allocate capacity
among shippers when their total
nominations exceed the pipeline’s
capacity. The Commission does not
prescribe a uniform prorationing
methodology, but a pipeline’s
methodology must be consistent with
the ICA.5
4. Historically, oil pipelines have
employed two general types of
prorationing methodologies: Pro rata
and history-based. A pro rata
methodology awards available capacity
to shippers in proportion to their
nominations each nomination cycle,
regardless of how much service, if any,
they have taken in the past.6 In contrast,
1 49
U.S.C. app. 1 (1988).
§ 15(1).
3 Id. § 3(1).
4 Id. § 1(4).
5 Suncor Mktg. Inc. v. Platte Pipe Line Co., 132
FERC ¶ 61,242, at P 24 (2010).
6 Id. P 26. In a simplified example, if a pipeline’s
available capacity per cycle is 100 barrels and
Shipper A and Shipper B each nominate 100
2 Id.
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10355
a history-based methodology gives
preference to shippers with a history of
shipping on the pipeline.7 However, the
Commission has required pipelines
using this methodology to allow all
shippers the opportunity to develop a
record of transportation on the pipeline
so as to attain preferred historical
shipper status.8 When a pipeline uses a
history-based methodology, it must
reserve a portion of its capacity for new
shippers.9
B. Anomalous Conditions
5. Oil pipelines serve a critical
function transporting crude oil, refined
products,10 and natural gas liquids.11
Pipelines move crude oil from
production areas to refineries and
refined products to markets for
consumption. Pipeline transportation is
often more convenient and more costeffective than alternative forms of
transportation. Many pipelines offer
transportation of more than one kind of
product, often using a batching system
to differentiate between products on the
system.
6. As explained above, pipeline
prorationing policies determine which
shippers may access the pipeline when
shipper demand exceeds pipeline
capacity. These prorationing policies are
often important during anomalous
conditions that may cause sudden and
unexpected changes to the demand for
pipeline capacity. Anomalous
conditions can result from a number of
circumstances, including, but not
limited to, extreme weather, national
emergencies, and major market
disruptions. Anomalous conditions can
significantly and suddenly increase
shipper nominations above available
barrels, each shipper would be allocated 50 barrels.
If in the next cycle, Shippers A and B each
nominate 100 barrels again, but new Shippers C and
D also each nominate 100 barrels, each shipper
would be allocated 25 barrels.
7 Id. P 25. In a simplified example, assume that
a pipeline’s available capacity per cycle is 100
barrels and that Shipper A and Shipper B each
nominate 100 barrels. Assume also that, over the
prior 12 months, Shipper A shipped 900 barrels and
Shipper B shipped 300 barrels. If Shipper A and
Shipper B each nominate 100 barrels in a particular
cycle, then Shipper A would be allocated 75 barrels
of the 100 available barrels of capacity (reflecting
its historical usage of 75% of total usage over the
past year) and Shipper B would be allocated 25
barrels of the 100 available barrels of capacity
(reflecting its historical usage of 25% of total usage
over the past year).
8 See Colonial Pipeline Co., 156 FERC ¶ 61,001, at
PP 19–24 (2016); Suncor, 132 FERC ¶ 61,242 at P
25; Platte Pipe Line Co., 117 FERC ¶ 61,296, at P
46 (2006).
9 See Colonial, 156 FERC ¶ 61,001 at P 24; Platte,
117 FERC ¶ 61,296 at P 56.
10 Refined petroleum products include motor
gasoline, jet fuel, diesel, naphtha, and kerosene.
11 Natural gas liquids include propane, butane,
ethane, and natural gasoline.
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pipeline capacity. Likewise, anomalous
conditions can temporarily reduce some
shippers’ usage of the pipeline system.
Under these circumstances, if demand
subsequently increases above pipeline
capacity, prorationing policies must
address the allocation of pipeline
capacity among different shippers
whose most recent shipping histories
may not reflect their longer-term
historical usage.
7. The COVID–19 pandemic
significantly affected jet fuel shippers’
demand for oil pipeline capacity,
although it reduced demand rather than
increasing it. For example, at a July
2020 technical conference discussing
the serious impacts that emergency
conditions caused by the COVID–19
pandemic were having on the energy
industry, one panelist raised concerns
regarding jet fuel shippers’ ability to
access capacity on oil pipelines using
history-based prorationing due to a
disproportionate decrease in jet fuel
consumption during the COVID–19
pandemic.12 Then, in July 2021, certain
jet fuel shippers filed a request for
emergency relief, asking the
Commission to direct SFPP to prioritize
jet fuel shipments on its North Line to
Reno-Tahoe International Airport to
prevent jet fuel shortages.13
8. As reflected in these proceedings,
Airlines 14 have raised capacity
allocation issues related to the COVID–
19 pandemic’s effects on demand for jet
fuel shipments and subsequent effects
on pipeline allocation.15 After demand
12 See Impacts of COVID–19 on the Energy
Industry, Docket No. AD20–17–000, Tr. 222–224,
242–246 (O’Mahoney); see also Comment of Delta
Air Lines, Inc., Docket No. AD20–17–000
(submitted June 30, 2020). Additionally, in May
2021, SFPP, L.P. (SFPP) proposed a temporary
change to its prorationing policy that would allow
jet fuel shippers to obtain new shipper space as
well as regular shipper space. This filing was
protested, and SFPP subsequently withdrew it.
SFPP, L.P., Tariff Filing, Docket No. IS21–322–000
(submitted May 11, 2021; withdrawn June 1, 2021).
13 The jet fuel shippers that filed the request for
emergency relief included Airlines for America,
Reno-Tahoe Airport Authority, Alaska Air Group,
Inc., Allegiant Air, American Airlines, Inc., Delta
Air Lines, Inc., Federal Express Corp., Frontier
Airlines, JetBlue Airways Corp., National Air
Carrier Assoc., Southwest Airlines Co., and World
Fuel Services, Inc. Airlines for America, Request for
Emergency Relief, Docket No. OR21–10–000
(submitted July 26, 2021) (Request for Emergency
Relief). The Commission denied the request because
the petition did not establish that the circumstances
rose to the level of a public health emergency
warranting extraordinary relief under § 1(15) of the
ICA. Airlines for Am., 176 FERC ¶ 61,065, at PP 14–
16 (2021).
14 As used herein, ‘‘Airlines’’ refers to various jet
fuel shippers that supply airports, primarily
airlines, and their trade association, Airlines for
America.
15 See, e.g., Airlines for America, Motion to
Intervene, Docket No. IS21–322–001 (filed May 27,
2021); Airlines for America, Request for Emergency
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for air travel declined due to the start of
the pandemic in March 2020, Airlines
state that they reduced shipments of jet
fuel on several multi-product pipelines
that supply airports.16 Because these
pipelines use history-based
prorationing, Airlines claim that their
decreased shipments during the
pandemic reduced the future capacity
allocated to them.17 Airlines state that
this reduction harms their ability to
continue to self-supply jet fuel using
their shipper history on pipelines as
they did prior to the pandemic. They
state that fuel is a major cost and that
self-supply enables them to better
control fuel costs.18
II. Discussion
9. In this proceeding, we seek
comment on oil pipeline capacity
allocation issues that arise under
anomalous conditions, including the
availability of pipeline capacity for
transporting jet fuel to supply airports
following the onset of the COVID–19
pandemic. We also seek comment on
whether there are any actions the
Commission should consider that would
mitigate the effects of anomalous
conditions on oil pipeline capacity
allocations, including the effects of the
COVID–19 pandemic on demand for
pipeline capacity to airport destinations.
A. Capacity Allocation Issues Arising
Under Anomalous Conditions
A1. Using specific historical
examples, please describe any
anomalous conditions that have affected
demand for, and thus shipper access to,
pipeline capacity. In discussing each
example, commenters should (a)
generally describe the differential
between the shipper’s nominations and
Relief, Docket No. OR21–10–000 (filed July 26,
2021).
16 See Airlines for America, Request for
Emergency Relief, Docket No. OR21–10–000, at 2
(filed July 26, 2021) (‘‘[D]emand for air travel
radically decreased at the start of the COVID–19
pandemic and remained depressed throughout 2020
and into early 2021. Consequently, shipments of jet
fuel on interstate pipelines . . . significantly
decreased as well.’’); Airlines for America, Motion
to Intervene, Docket No. IS21–322–001, at 2–3 (filed
May 27, 2021) (‘‘While demand for air travel was
depressed, airlines were unable to meet their
minimum shipping requirements and nominate
future volumes in accordance with their line space
history.’’).
17 For example, SFPP’s prorationing policy
provides that 95% of its capacity shall be allocated
to regular shippers based on each shipper’s average
historical shipments over a rolling 12-month base
period. SFPP, L.P., Proration Policy dated June 1,
2019, at 1, 3, available at https://www.kinder
morgan.com/item/Policy/SFPP%20Policy/1.
18 Impacts of COVID–19 on the Energy Industry,
Docket No. AD20–17–000, Tr. 222–224
(O’Mahoney); Airlines for America, Request for
Emergency Relief, Docket No. OR21–10–000 (filed
July 26, 2021).
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actual, pro-rated shipments, (b) describe
how long the anomalous conditions
existed, (c) explain whether the
anomalous conditions continued to
affect pipeline access even after the
anomalous conditions concluded, and
(d) describe whether and to what extent
the shipper was able to use
transportation alternatives (e.g.,
trucking) or other means to compensate
for the difference between its
nominations and actual, pro-rated
shipments.
A2. Do current prorationing policies
sufficiently address the allocation of
capacity during and after anomalous
conditions? For commenters responding
that current prorationing policies are
insufficient, please explain how current
prorationing policies are insufficient
and describe any aspects of current
prorationing policies that pose
particular problems or impediments.
A3. Are there any actions the
Commission should consider that would
mitigate the effects of anomalous
conditions on pipeline capacity
allocations? To the extent the
Commission considers changes to
prorationing policies to address capacity
allocation issues under anomalous
conditions, should the Commission
consider alternatives to history-based
prorationing and pro rata allocations?
Or should the Commission instead
modify existing capacity allocation
methodologies? In proposing any
potential actions, please describe how
such actions would be consistent with
the ICA.
A4. Please describe the current
availability of secondary transactions for
acquiring shipper history 19 or for
otherwise obtaining access to pipeline
capacity outside a pipeline’s
nomination and prorationing process.
Please describe any experience with,
and the practical implications of, using
such secondary transactions to mitigate
the impacts of anomalous conditions.
Please also explain whether and, if so,
how the availability of secondary
transactions could be enhanced or
expanded to improve shipper access to
pipeline capacity during anomalous
conditions.
19 Under a history transfer, a shipper’s credit for
accumulated shipping history on a particular
pipeline could be transferred to another shipper in
exchange for payment. The replacement shipper
could then nominate on the pipeline during
prorationing using the shipper history of the selling
shipper, thereby obtaining a higher allocation than
it otherwise might be entitled to.
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B. Access to Capacity for Transporting
Jet Fuel Following the Onset of the
COVID–19 Pandemic
B1. In the context of the Airlinespecific issues that have been raised to
the Commission, please identify any
pipelines and the destination airports
where Airlines anticipate receiving
capacity for moving jet fuel in 2022 or
2023 that is both (a) below prepandemic levels and (b) below Airlines’
anticipated fuel needs, notwithstanding
Airlines’ efforts to mitigate the
pipeline’s capacity constraints.20
B2. Are there pipelines transporting
jet fuel that were not in prorationing at
any time over the past 12 months that
would have been in prorationing had jet
fuel volumes shipped at 2019 levels? If
so, for each nomination cycle (or month)
in which the pipeline would have been
in prorationing, please describe the
degree to which nominations would
have exceeded capacity to the extent
possible.
B3. Regarding pipelines identified in
response to B1, please provide both
historical and projected levels of total
jet fuel demand at the airport
destinations, aggregate jet fuel
nominations to each airport destination,
and aggregate pipeline capacity awarded
for jet fuel movements to each airport
destination, beginning with January
2018.21
B4. For pipelines that transport jet
fuel, please provide the pipeline’s
current total capacity for shipments of
all products at destinations serving
airports and any changes to total
capacity that occurred since January
2018.
B5. Regarding products other than jet
fuel transported on pipelines serving
airport destinations, please provide data
showing how aggregate product
nominations and aggregate pipeline
capacity awarded for each product have
changed during the COVID–19
pandemic. Please discuss any specific
shifts in product demand that caused
these changes. In addition, please
provide information regarding how
sudden demand shifts have affected
pipeline capacity allocations for some
products to the detriment of others,
including jet fuel.
B6. Please describe any action that the
Commission should consider to address
concerns regarding oil pipeline capacity
to airport destinations. Such actions
20 Mitigation could include increased trucking,
tankering, and other attempts to obtain fuel
supplies.
21 Although an individual shipper may not have
complete information regarding pipeline capacity, a
shipper could provide information related to its
own nominations and capacity or could work with
other shippers to provide aggregate information.
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could include broader policy changes,
as discussed in Section A above, or
proposals specifically designed to
address the capacity allocation issues
that have arisen due to the effects of the
COVID–19 pandemic on demand for jet
fuel shipments. For example, should the
Commission consider adjustments to
existing capacity allocation
methodologies to enhance shippers’
ability to transfer their history or
otherwise transfer capacity rights to
mitigate the impacts of the COVID–19
pandemic? In proposing any potential
actions, please describe how such
actions would be consistent with the
ICA.
B7. Please describe whether
expansions of capacity on the pipelines
serving airport destinations would help
address current and future jet fuel
needs. Please identify whether any of
the pipelines serving airports were in
prorationing in the 12 months prior to
March 2020. Please explain in detail the
extent of the capacity constraints on
these pipelines and discuss whether
expansions of pipeline capacity are
necessary to avoid continued
prorationing going forward.
III. Comment Procedures
10. The Commission invites interested
persons to submit comments on the
matters and issues proposed in this
notice, including any related matters or
alternative proposals that commenters
may wish to discuss. Initial Comments
are due April 25, 2022, and Reply
Comments are due May 25, 2022.
Comments must refer to Docket No.
AD22–7–000, and must include the
commenter’s name, the organization
they represent, if applicable, and their
address. All comments will be placed in
the Commission’s public files and may
be viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this proposal are not required to
serve copies of their comments on other
commenters.
11. The Commission encourages
comments to be filed electronically via
the eFiling link on the Commission’s
website at https://www.ferc.gov. The
Commission accepts most standard
word processing formats. Documents
created electronically using word
processing software must be filed in
native applications or print-to-PDF
format and not in a scanned format.
Commenters filing electronically do not
need to make a paper filing.
12. Commenters that are not able to
file comments electronically may file an
original of their comment by USPS mail
or by courier-or other delivery services.
For submission sent via USPS only,
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filings should be mailed to: Federal
Energy Regulatory Commission, Office
of the Secretary, 888 First Street NE,
Washington, DC 20426. Submission of
filings other than by USPS should be
delivered to: Federal Energy Regulatory
Commission, 12225 Wilkins Avenue,
Rockville, MD 20852.
IV. Document Availability
13. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the internet through the
Commission’s Home Page (https://
www.ferc.gov). At this time, the
Commission has suspended access to
the Commission’s Public Reference
Room due to the President’s March 13,
2020 proclamation declaring a National
Emergency concerning the Novel
Coronavirus Disease (COVID–19).
14. From the Commission’s Home
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in PDF and Microsoft Word format for
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To access this document in eLibrary,
type the docket number excluding the
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15. User assistance is available for
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Commission’s Online Support at 202–
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public.referenceroom@ferc.gov.
By direction of the Commission.
Commissioner Danly is concurring with a
separate attached.
Issued: February 17, 2022.
Debbie-Anne A. Reese,
Deputy Secretary.
Department of Energy
Federal Energy Regulatory Commission
Oil Pipeline Capacity Allocation Issues and
Anomalous Conditions, Docket No. AD22–7–
000
DANLY, Commissioner, concurring:
1. I concur because the Commission always
has discretion to issue a Notice of Inquiry
(NOI) on any topic within its purview. I also
concur because I agree that we recently faced
a potential jet fuel shortage driven, at least
in part, by the mechanisms in our pipeline
tariffs. I write separately to express three
concerns.
2. First, it is my view that the Commission
should only issue notices of inquiry when
there is a problem that in fact may need to
be resolved and can be done so by the
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Commission. I do not believe that to be the
case here.
3. Today’s NOI characterizes the problem
as whether oil pipeline allocation
methodologies sufficiently address
anomalous conditions and identifies only
one instance where this problem has
occurred: ‘‘effects of the COVID–19 pandemic
on demand for pipeline capacity to airport
destinations.’’ 1 The NOI does not show
airlines as having raised concerns since July
2021 when certain airlines filed a request for
emergency relief.2 Airlines are not shy before
the Commission. If there were still a problem,
we would have heard from them.3
4. Second, while I again acknowledge that
we had a particular problem with supplies of
jet fuel in 2021, as a general matter, I am
wary of any action wherein the Commission
singles out a particular shipper category as
the basis for exploring changes to its policies
and tariffs.4 This is especially true when, as
here, we have not even made the most
preliminary of showings that this shipper
category is not similarly situated with other
shippers, nor have we identified some other
legitimate factor that justifies disparate
treatment.5 As commenters in response to the
July 2021 request for relief stated: ‘‘All
industries and shipper classes faced
unprecedented demand destruction during
the COVID–19 pandemic. All shippers faced
challenges and choices to manage the
downturn and prepare for the upcoming
period when demand will return.’’ 6
5. Third, I am not confident that carriers
will willingly provide the information the
Commission requests on destinations,
nominations, and capacity awarded.7 Section
15(13) of the Interstate Commerce Act
prohibits common carriers from disclosing:
any information concerning the nature, kind,
quantity, destination, or consignee, or routing
of any property tendered or delivered to such
common carrier for interstate transportation,
which information may be used to the
detriment or prejudice of such shipper or
consignee, or which may improperly disclose
his business transactions to a competitor
. . . .8
6. While I acknowledge the Commission
attempts to strategically deploy the word
‘‘aggregate,’’ I do not think that this
maneuver is sufficient. Oil pipelines that
deliver to airport destinations in many cases
only have a few shippers, meaning that, even
if data is ‘‘aggregated,’’ it is not difficult to
discern individual shipper data. And even
so, I could imagine some shippers arguing
that the information, aggregated or not, might
be used to their detriment or prejudice.
For these reasons, I respectfully concur.
James P. Danly,
Commissioner.
[FR Doc. 2022–03912 Filed 2–23–22; 8:45 am]
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1 Oil
Pipeline Capacity Allocation Issues and
Anomalous Conditions, 178 FERC ¶ 61,105, at P 9
(2022) (Oil Pipeline Allocation NOI).
2 Id. P 7.
3 See also Chief Administrative Law Judge, Final
Status Report, Conference to Discuss Resolution of
Jet Fuel Issues at the Reno-Tahoe International
Airport, Docket No. AD21–16–000, at PP 2–3 (Aug.
25, 2021) (‘‘The long-term concerns raised regarding
jet fuel capacity are too speculative at this time for
the parties to a find a consensual resolution in this
form . . . it is determined that the participants are
at an impasse regarding long term remedies . . . .
Going forward, based on a general assessment of the
matters at issue, the attendees and other concerned
entities would be well advised to continue
discussions, in their regular course of business. It
seems beneficial for all entities to keep open lines
of communication to identify issues or disputes
before they arise, and to engage in dialogue on how
to best obtain optimal commercial resolution of
what they perceived to be issues in this matter.’’).
But see Hearing to Review Admin. of Laws Within
FERC’s Jurisdiction Before the S. Comm. on Energy
and Nat’l Res., 117th Cong. (2021) (responding to
Senator Cortez Masto on 2021 jet fuel shortages, ‘‘I
think this issue of historical use needs to be
addressed. I raised this as an issue in a technical
conference we had earlier in the year. I think we
need a different approach to allocating capacity
because of different anomalies. And you have my
commitment that we will take a look at that and
hopefully act before next summer’s demand peak’’)
(statement of Richard Glick, Chairman of the Fed.
Energy Regulatory Comm’n), https://www.energy.
senate.gov/hearings/2021/9/full-committee-hearingto-review-administration-of-laws-within-fercjurisdiction.
4 I also note that the NOI solicits information not
related to the anomalous conditions problem. Id. P
9, Question B.7 (‘‘Please describe whether
expansions of capacity on the pipelines serving
airport destinations would help address current and
future jet fuel needs.’’).
5 See 49 App. U.S.C. 3 (1988) (prohibiting undue
preference).
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DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
[Docket No. CP22–51–000]
CNG Holding 1 LLC; Notice of Petition
for Declaratory Order
Take notice that on February 11, 2022,
pursuant to Rule 207(a)(2) of the Federal
Energy Regulatory Commission’s
(Commission) Rules of Practice and
Procedure, CNG HOLDING 1 LLC (CNG
6 Pilot Travel Centers LLC, et al., Joint Motion to
Intervene and Protest, Docket No. OR21–10–000, at
3 (Jul. 27, 2021); see also Chevron Products Co., et
al., Response to Request for Emergency Relief under
Section 1(15) of the Interstate Commerce Act,
Docket No. OR 21–10–000, at 2 (Jul. 28, 2021) (‘‘The
Commission should ask whether the Request is
seeking to prioritize jet fuel and those who can
afford to access air travel at the expense of
supplying transportation fuels that affect many
more people and their daily lives as they go to
work, daycare, school, and deliver goods and
services in support of their communities.’’).
7 See Oil Pipeline Allocation NOI, 178 FERC
¶ 61,105 at P 9, Question B.3 (‘‘[P]lease provide . . .
aggregate jet fuel nominations to each airport
destination, and aggregate pipeline capacity
awarded for jet fuel movements to each airport
destination . . . .’’); id. Question B.5 (‘‘Regarding
products other than jet fuel transported on
pipelines serving airport destinations, please
provide data showing how aggregate product
nominations and aggregate pipeline capacity
awarded for each product have changed during the
COVID–19 pandemic.’’).
8 49 App. U.S.C. 15(13) (1988).
PO 00000
Frm 00027
Fmt 4703
Sfmt 4703
Holding) filed a petition for declaratory
order requesting the Commission issue
an order stating that CNG Holding’s: (1)
Proposed compressed natural gas (CNG)
production facility; (2) the docks from
which CNG Holding will export the
CNG; and (3) CNG Holding’s proposal to
construct an on-site truck fueling
station, a bunkering pipeline to
transport end-use fuel to vessels, and
provide an industrial fueling service to
industrial customers in Louisiana are
not subject to the Commission’s
jurisdiction under section 3 or section 7
of the Natural Gas Act, 15 U.S.C. 717b,
717f (2018).
Any person desiring to intervene or to
protest this filing must file in
accordance with Rules 211 and 214 of
the Commission’s Rules of Practice and
Procedure (18 CFR 385.211, 385.214).
Protests will be considered by the
Commission in determining the
appropriate action to be taken, but will
not serve to make protestants parties to
the proceeding. Any person wishing to
become a party must file a notice of
intervention or motion to intervene, as
appropriate. Such notices, motions, or
protests must be filed on or before the
comment date. Anyone filing a motion
to intervene or protest must serve a copy
of that document on the Petitioner.
The Commission encourages
electronic submission of protests and
interventions in lieu of paper using the
‘‘eFiling’’ link at https://www.ferc.gov.
Persons unable to file electronically may
mail similar pleadings to the Federal
Energy Regulatory Commission, 888
First Street NE, Washington, DC 20426.
Hand delivered submissions in
docketed proceedings should be
delivered to Health and Human
Services, 12225 Wilkins Avenue,
Rockville, Maryland 20852.
In addition to publishing the full text
of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the internet through the
Commission’s Home Page (https://
ferc.gov) using the ‘‘eLibrary’’ link.
Enter the docket number excluding the
last three digits in the docket number
field to access the document. At this
time, the Commission has suspended
access to the Commission’s Public
Reference Room, due to the
proclamation declaring a National
Emergency concerning the Novel
Coronavirus Disease (COVID–19), issued
by the President on March 13, 2020. For
assistance, contact the Federal Energy
Regulatory Commission at
FERCOnlineSupport@ferc.gov or call
toll-free, (886) 208–3676 or TYY, (202)
502–8659.
E:\FR\FM\24FEN1.SGM
24FEN1
Agencies
[Federal Register Volume 87, Number 37 (Thursday, February 24, 2022)]
[Notices]
[Pages 10355-10358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03912]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Docket No. AD22-7-000]
Oil Pipeline Capacity Allocation Issues and Anomalous Conditions
AGENCY: Federal Energy Regulatory Commission, Department of Energy.
ACTION: Notice of inquiry.
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SUMMARY: In this Notice of Inquiry, the Federal Energy Regulatory
Commission (Commission) seeks comment on oil pipeline capacity
allocation issues that arise when anomalous conditions affect the
demand for oil pipeline capacity. In addition, the Commission seeks
comment on what actions, if any, the Commission should consider to
address those allocation issues.
DATES: Initial Comments are due April 25, 2022, and Reply Comments are
due May 25, 2022.
ADDRESSES: Comments, identified by docket number, may be filed in the
following ways. Electronic filing through https://www.ferc.gov, is
preferred.
Electronic Filing: Documents must be filed in acceptable
native applications and print-to-PDF, but not in scanned or picture
format.
For those unable to file electronically, comments may be
filed by USPS mail or by hand (including courier) delivery.
[cir] Mail via U.S. Postal Service Only: Addressed to: Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street NE, Washington, DC 20426.
[cir] Hand (including courier) delivery: Deliver to: Federal Energy
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
The Comment Procedures Section of this document contains more
detailed filing procedures.
FOR FURTHER INFORMATION CONTACT:
Adrianne Cook (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426, (202) 502-8849, [email protected]
Caitlin Tweed (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, (202) 502-8073, [email protected]
SUPPLEMENTARY INFORMATION: 1. In this Notice of Inquiry, the Federal
Energy Regulatory Commission (Commission) seeks to explore oil pipeline
capacity allocation issues that arise when anomalous conditions affect
the demand for oil pipeline capacity and what actions, if any, the
Commission should consider to address those allocation issues.
Specifically, the Commission seeks public comment on anomalous
conditions and their potential impacts on oil pipeline capacity
allocation, as well as whether there are changes to the Commission's
existing policies (such as those regarding prorationing) that the
Commission should consider to mitigate these impacts. The Commission
also seeks comment on the effects of recent anomalous conditions--those
arising from the COVID-19 pandemic--on the availability of pipeline
capacity for transporting jet fuel.
I. Background
A. Allocation of Capacity
2. Interstate oil pipelines are regulated as common carriers
subject to the Interstate Commerce Act (ICA).\1\ Accordingly, oil
pipeline rates, terms, and conditions of service must be just and
reasonable \2\ and non-discriminatory.\3\ Furthermore, an oil pipeline
is obligated to provide transportation upon reasonable request.\4\
---------------------------------------------------------------------------
\1\ 49 U.S.C. app. 1 (1988).
\2\ Id. Sec. 15(1).
\3\ Id. Sec. 3(1).
\4\ Id. Sec. 1(4).
---------------------------------------------------------------------------
3. Prorationing is the mechanism that oil pipelines use to allocate
capacity among shippers when their total nominations exceed the
pipeline's capacity. The Commission does not prescribe a uniform
prorationing methodology, but a pipeline's methodology must be
consistent with the ICA.\5\
---------------------------------------------------------------------------
\5\ Suncor Mktg. Inc. v. Platte Pipe Line Co., 132 FERC ]
61,242, at P 24 (2010).
---------------------------------------------------------------------------
4. Historically, oil pipelines have employed two general types of
prorationing methodologies: Pro rata and history-based. A pro rata
methodology awards available capacity to shippers in proportion to
their nominations each nomination cycle, regardless of how much
service, if any, they have taken in the past.\6\ In contrast, a
history-based methodology gives preference to shippers with a history
of shipping on the pipeline.\7\ However, the Commission has required
pipelines using this methodology to allow all shippers the opportunity
to develop a record of transportation on the pipeline so as to attain
preferred historical shipper status.\8\ When a pipeline uses a history-
based methodology, it must reserve a portion of its capacity for new
shippers.\9\
---------------------------------------------------------------------------
\6\ Id. P 26. In a simplified example, if a pipeline's available
capacity per cycle is 100 barrels and Shipper A and Shipper B each
nominate 100 barrels, each shipper would be allocated 50 barrels. If
in the next cycle, Shippers A and B each nominate 100 barrels again,
but new Shippers C and D also each nominate 100 barrels, each
shipper would be allocated 25 barrels.
\7\ Id. P 25. In a simplified example, assume that a pipeline's
available capacity per cycle is 100 barrels and that Shipper A and
Shipper B each nominate 100 barrels. Assume also that, over the
prior 12 months, Shipper A shipped 900 barrels and Shipper B shipped
300 barrels. If Shipper A and Shipper B each nominate 100 barrels in
a particular cycle, then Shipper A would be allocated 75 barrels of
the 100 available barrels of capacity (reflecting its historical
usage of 75% of total usage over the past year) and Shipper B would
be allocated 25 barrels of the 100 available barrels of capacity
(reflecting its historical usage of 25% of total usage over the past
year).
\8\ See Colonial Pipeline Co., 156 FERC ] 61,001, at PP 19-24
(2016); Suncor, 132 FERC ] 61,242 at P 25; Platte Pipe Line Co., 117
FERC ] 61,296, at P 46 (2006).
\9\ See Colonial, 156 FERC ] 61,001 at P 24; Platte, 117 FERC ]
61,296 at P 56.
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B. Anomalous Conditions
5. Oil pipelines serve a critical function transporting crude oil,
refined products,\10\ and natural gas liquids.\11\ Pipelines move crude
oil from production areas to refineries and refined products to markets
for consumption. Pipeline transportation is often more convenient and
more cost-effective than alternative forms of transportation. Many
pipelines offer transportation of more than one kind of product, often
using a batching system to differentiate between products on the
system.
---------------------------------------------------------------------------
\10\ Refined petroleum products include motor gasoline, jet
fuel, diesel, naphtha, and kerosene.
\11\ Natural gas liquids include propane, butane, ethane, and
natural gasoline.
---------------------------------------------------------------------------
6. As explained above, pipeline prorationing policies determine
which shippers may access the pipeline when shipper demand exceeds
pipeline capacity. These prorationing policies are often important
during anomalous conditions that may cause sudden and unexpected
changes to the demand for pipeline capacity. Anomalous conditions can
result from a number of circumstances, including, but not limited to,
extreme weather, national emergencies, and major market disruptions.
Anomalous conditions can significantly and suddenly increase shipper
nominations above available
[[Page 10356]]
pipeline capacity. Likewise, anomalous conditions can temporarily
reduce some shippers' usage of the pipeline system. Under these
circumstances, if demand subsequently increases above pipeline
capacity, prorationing policies must address the allocation of pipeline
capacity among different shippers whose most recent shipping histories
may not reflect their longer-term historical usage.
7. The COVID-19 pandemic significantly affected jet fuel shippers'
demand for oil pipeline capacity, although it reduced demand rather
than increasing it. For example, at a July 2020 technical conference
discussing the serious impacts that emergency conditions caused by the
COVID-19 pandemic were having on the energy industry, one panelist
raised concerns regarding jet fuel shippers' ability to access capacity
on oil pipelines using history-based prorationing due to a
disproportionate decrease in jet fuel consumption during the COVID-19
pandemic.\12\ Then, in July 2021, certain jet fuel shippers filed a
request for emergency relief, asking the Commission to direct SFPP to
prioritize jet fuel shipments on its North Line to Reno-Tahoe
International Airport to prevent jet fuel shortages.\13\
---------------------------------------------------------------------------
\12\ See Impacts of COVID-19 on the Energy Industry, Docket No.
AD20-17-000, Tr. 222-224, 242-246 (O'Mahoney); see also Comment of
Delta Air Lines, Inc., Docket No. AD20-17-000 (submitted June 30,
2020). Additionally, in May 2021, SFPP, L.P. (SFPP) proposed a
temporary change to its prorationing policy that would allow jet
fuel shippers to obtain new shipper space as well as regular shipper
space. This filing was protested, and SFPP subsequently withdrew it.
SFPP, L.P., Tariff Filing, Docket No. IS21-322-000 (submitted May
11, 2021; withdrawn June 1, 2021).
\13\ The jet fuel shippers that filed the request for emergency
relief included Airlines for America, Reno-Tahoe Airport Authority,
Alaska Air Group, Inc., Allegiant Air, American Airlines, Inc.,
Delta Air Lines, Inc., Federal Express Corp., Frontier Airlines,
JetBlue Airways Corp., National Air Carrier Assoc., Southwest
Airlines Co., and World Fuel Services, Inc. Airlines for America,
Request for Emergency Relief, Docket No. OR21-10-000 (submitted July
26, 2021) (Request for Emergency Relief). The Commission denied the
request because the petition did not establish that the
circumstances rose to the level of a public health emergency
warranting extraordinary relief under Sec. 1(15) of the ICA.
Airlines for Am., 176 FERC ] 61,065, at PP 14-16 (2021).
---------------------------------------------------------------------------
8. As reflected in these proceedings, Airlines \14\ have raised
capacity allocation issues related to the COVID-19 pandemic's effects
on demand for jet fuel shipments and subsequent effects on pipeline
allocation.\15\ After demand for air travel declined due to the start
of the pandemic in March 2020, Airlines state that they reduced
shipments of jet fuel on several multi-product pipelines that supply
airports.\16\ Because these pipelines use history-based prorationing,
Airlines claim that their decreased shipments during the pandemic
reduced the future capacity allocated to them.\17\ Airlines state that
this reduction harms their ability to continue to self-supply jet fuel
using their shipper history on pipelines as they did prior to the
pandemic. They state that fuel is a major cost and that self-supply
enables them to better control fuel costs.\18\
---------------------------------------------------------------------------
\14\ As used herein, ``Airlines'' refers to various jet fuel
shippers that supply airports, primarily airlines, and their trade
association, Airlines for America.
\15\ See, e.g., Airlines for America, Motion to Intervene,
Docket No. IS21-322-001 (filed May 27, 2021); Airlines for America,
Request for Emergency Relief, Docket No. OR21-10-000 (filed July 26,
2021).
\16\ See Airlines for America, Request for Emergency Relief,
Docket No. OR21-10-000, at 2 (filed July 26, 2021) (``[D]emand for
air travel radically decreased at the start of the COVID-19 pandemic
and remained depressed throughout 2020 and into early 2021.
Consequently, shipments of jet fuel on interstate pipelines . . .
significantly decreased as well.''); Airlines for America, Motion to
Intervene, Docket No. IS21-322-001, at 2-3 (filed May 27, 2021)
(``While demand for air travel was depressed, airlines were unable
to meet their minimum shipping requirements and nominate future
volumes in accordance with their line space history.'').
\17\ For example, SFPP's prorationing policy provides that 95%
of its capacity shall be allocated to regular shippers based on each
shipper's average historical shipments over a rolling 12-month base
period. SFPP, L.P., Proration Policy dated June 1, 2019, at 1, 3,
available at https://www.kindermorgan.com/item/Policy/SFPP%20Policy/1.
\18\ Impacts of COVID-19 on the Energy Industry, Docket No.
AD20-17-000, Tr. 222-224 (O'Mahoney); Airlines for America, Request
for Emergency Relief, Docket No. OR21-10-000 (filed July 26, 2021).
---------------------------------------------------------------------------
II. Discussion
9. In this proceeding, we seek comment on oil pipeline capacity
allocation issues that arise under anomalous conditions, including the
availability of pipeline capacity for transporting jet fuel to supply
airports following the onset of the COVID-19 pandemic. We also seek
comment on whether there are any actions the Commission should consider
that would mitigate the effects of anomalous conditions on oil pipeline
capacity allocations, including the effects of the COVID-19 pandemic on
demand for pipeline capacity to airport destinations.
A. Capacity Allocation Issues Arising Under Anomalous Conditions
A1. Using specific historical examples, please describe any
anomalous conditions that have affected demand for, and thus shipper
access to, pipeline capacity. In discussing each example, commenters
should (a) generally describe the differential between the shipper's
nominations and actual, pro-rated shipments, (b) describe how long the
anomalous conditions existed, (c) explain whether the anomalous
conditions continued to affect pipeline access even after the anomalous
conditions concluded, and (d) describe whether and to what extent the
shipper was able to use transportation alternatives (e.g., trucking) or
other means to compensate for the difference between its nominations
and actual, pro-rated shipments.
A2. Do current prorationing policies sufficiently address the
allocation of capacity during and after anomalous conditions? For
commenters responding that current prorationing policies are
insufficient, please explain how current prorationing policies are
insufficient and describe any aspects of current prorationing policies
that pose particular problems or impediments.
A3. Are there any actions the Commission should consider that would
mitigate the effects of anomalous conditions on pipeline capacity
allocations? To the extent the Commission considers changes to
prorationing policies to address capacity allocation issues under
anomalous conditions, should the Commission consider alternatives to
history-based prorationing and pro rata allocations? Or should the
Commission instead modify existing capacity allocation methodologies?
In proposing any potential actions, please describe how such actions
would be consistent with the ICA.
A4. Please describe the current availability of secondary
transactions for acquiring shipper history \19\ or for otherwise
obtaining access to pipeline capacity outside a pipeline's nomination
and prorationing process. Please describe any experience with, and the
practical implications of, using such secondary transactions to
mitigate the impacts of anomalous conditions. Please also explain
whether and, if so, how the availability of secondary transactions
could be enhanced or expanded to improve shipper access to pipeline
capacity during anomalous conditions.
---------------------------------------------------------------------------
\19\ Under a history transfer, a shipper's credit for
accumulated shipping history on a particular pipeline could be
transferred to another shipper in exchange for payment. The
replacement shipper could then nominate on the pipeline during
prorationing using the shipper history of the selling shipper,
thereby obtaining a higher allocation than it otherwise might be
entitled to.
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[[Page 10357]]
B. Access to Capacity for Transporting Jet Fuel Following the Onset of
the COVID-19 Pandemic
B1. In the context of the Airline-specific issues that have been
raised to the Commission, please identify any pipelines and the
destination airports where Airlines anticipate receiving capacity for
moving jet fuel in 2022 or 2023 that is both (a) below pre-pandemic
levels and (b) below Airlines' anticipated fuel needs, notwithstanding
Airlines' efforts to mitigate the pipeline's capacity constraints.\20\
---------------------------------------------------------------------------
\20\ Mitigation could include increased trucking, tankering, and
other attempts to obtain fuel supplies.
---------------------------------------------------------------------------
B2. Are there pipelines transporting jet fuel that were not in
prorationing at any time over the past 12 months that would have been
in prorationing had jet fuel volumes shipped at 2019 levels? If so, for
each nomination cycle (or month) in which the pipeline would have been
in prorationing, please describe the degree to which nominations would
have exceeded capacity to the extent possible.
B3. Regarding pipelines identified in response to B1, please
provide both historical and projected levels of total jet fuel demand
at the airport destinations, aggregate jet fuel nominations to each
airport destination, and aggregate pipeline capacity awarded for jet
fuel movements to each airport destination, beginning with January
2018.\21\
---------------------------------------------------------------------------
\21\ Although an individual shipper may not have complete
information regarding pipeline capacity, a shipper could provide
information related to its own nominations and capacity or could
work with other shippers to provide aggregate information.
---------------------------------------------------------------------------
B4. For pipelines that transport jet fuel, please provide the
pipeline's current total capacity for shipments of all products at
destinations serving airports and any changes to total capacity that
occurred since January 2018.
B5. Regarding products other than jet fuel transported on pipelines
serving airport destinations, please provide data showing how aggregate
product nominations and aggregate pipeline capacity awarded for each
product have changed during the COVID-19 pandemic. Please discuss any
specific shifts in product demand that caused these changes. In
addition, please provide information regarding how sudden demand shifts
have affected pipeline capacity allocations for some products to the
detriment of others, including jet fuel.
B6. Please describe any action that the Commission should consider
to address concerns regarding oil pipeline capacity to airport
destinations. Such actions could include broader policy changes, as
discussed in Section A above, or proposals specifically designed to
address the capacity allocation issues that have arisen due to the
effects of the COVID-19 pandemic on demand for jet fuel shipments. For
example, should the Commission consider adjustments to existing
capacity allocation methodologies to enhance shippers' ability to
transfer their history or otherwise transfer capacity rights to
mitigate the impacts of the COVID-19 pandemic? In proposing any
potential actions, please describe how such actions would be consistent
with the ICA.
B7. Please describe whether expansions of capacity on the pipelines
serving airport destinations would help address current and future jet
fuel needs. Please identify whether any of the pipelines serving
airports were in prorationing in the 12 months prior to March 2020.
Please explain in detail the extent of the capacity constraints on
these pipelines and discuss whether expansions of pipeline capacity are
necessary to avoid continued prorationing going forward.
III. Comment Procedures
10. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice, including any related
matters or alternative proposals that commenters may wish to discuss.
Initial Comments are due April 25, 2022, and Reply Comments are due May
25, 2022. Comments must refer to Docket No. AD22-7-000, and must
include the commenter's name, the organization they represent, if
applicable, and their address. All comments will be placed in the
Commission's public files and may be viewed, printed, or downloaded
remotely as described in the Document Availability section below.
Commenters on this proposal are not required to serve copies of their
comments on other commenters.
11. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's website at https://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software must be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
12. Commenters that are not able to file comments electronically
may file an original of their comment by USPS mail or by courier-or
other delivery services. For submission sent via USPS only, filings
should be mailed to: Federal Energy Regulatory Commission, Office of
the Secretary, 888 First Street NE, Washington, DC 20426. Submission of
filings other than by USPS should be delivered to: Federal Energy
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
IV. Document Availability
13. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (https://www.ferc.gov). At
this time, the Commission has suspended access to the Commission's
Public Reference Room due to the President's March 13, 2020
proclamation declaring a National Emergency concerning the Novel
Coronavirus Disease (COVID-19).
14. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
15. User assistance is available for eLibrary and the Commission's
website during normal business hours from the Commission's Online
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
[email protected].
By direction of the Commission. Commissioner Danly is concurring
with a separate attached.
Issued: February 17, 2022.
Debbie-Anne A. Reese,
Deputy Secretary.
Department of Energy
Federal Energy Regulatory Commission
Oil Pipeline Capacity Allocation Issues and Anomalous Conditions,
Docket No. AD22-7-000
DANLY, Commissioner, concurring:
1. I concur because the Commission always has discretion to
issue a Notice of Inquiry (NOI) on any topic within its purview. I
also concur because I agree that we recently faced a potential jet
fuel shortage driven, at least in part, by the mechanisms in our
pipeline tariffs. I write separately to express three concerns.
2. First, it is my view that the Commission should only issue
notices of inquiry when there is a problem that in fact may need to
be resolved and can be done so by the
[[Page 10358]]
Commission. I do not believe that to be the case here.
3. Today's NOI characterizes the problem as whether oil pipeline
allocation methodologies sufficiently address anomalous conditions
and identifies only one instance where this problem has occurred:
``effects of the COVID-19 pandemic on demand for pipeline capacity
to airport destinations.'' \1\ The NOI does not show airlines as
having raised concerns since July 2021 when certain airlines filed a
request for emergency relief.\2\ Airlines are not shy before the
Commission. If there were still a problem, we would have heard from
them.\3\
---------------------------------------------------------------------------
\1\ Oil Pipeline Capacity Allocation Issues and Anomalous
Conditions, 178 FERC ] 61,105, at P 9 (2022) (Oil Pipeline
Allocation NOI).
\2\ Id. P 7.
\3\ See also Chief Administrative Law Judge, Final Status
Report, Conference to Discuss Resolution of Jet Fuel Issues at the
Reno-Tahoe International Airport, Docket No. AD21-16-000, at PP 2-3
(Aug. 25, 2021) (``The long-term concerns raised regarding jet fuel
capacity are too speculative at this time for the parties to a find
a consensual resolution in this form . . . it is determined that the
participants are at an impasse regarding long term remedies . . . .
Going forward, based on a general assessment of the matters at
issue, the attendees and other concerned entities would be well
advised to continue discussions, in their regular course of
business. It seems beneficial for all entities to keep open lines of
communication to identify issues or disputes before they arise, and
to engage in dialogue on how to best obtain optimal commercial
resolution of what they perceived to be issues in this matter.'').
But see Hearing to Review Admin. of Laws Within FERC's Jurisdiction
Before the S. Comm. on Energy and Nat'l Res., 117th Cong. (2021)
(responding to Senator Cortez Masto on 2021 jet fuel shortages, ``I
think this issue of historical use needs to be addressed. I raised
this as an issue in a technical conference we had earlier in the
year. I think we need a different approach to allocating capacity
because of different anomalies. And you have my commitment that we
will take a look at that and hopefully act before next summer's
demand peak'') (statement of Richard Glick, Chairman of the Fed.
Energy Regulatory Comm'n), https://www.energy.senate.gov/hearings/2021/9/full-committee-hearing-to-review-administration-of-laws-within-ferc-jurisdiction.
---------------------------------------------------------------------------
4. Second, while I again acknowledge that we had a particular
problem with supplies of jet fuel in 2021, as a general matter, I am
wary of any action wherein the Commission singles out a particular
shipper category as the basis for exploring changes to its policies
and tariffs.\4\ This is especially true when, as here, we have not
even made the most preliminary of showings that this shipper
category is not similarly situated with other shippers, nor have we
identified some other legitimate factor that justifies disparate
treatment.\5\ As commenters in response to the July 2021 request for
relief stated: ``All industries and shipper classes faced
unprecedented demand destruction during the COVID-19 pandemic. All
shippers faced challenges and choices to manage the downturn and
prepare for the upcoming period when demand will return.'' \6\
---------------------------------------------------------------------------
\4\ I also note that the NOI solicits information not related to
the anomalous conditions problem. Id. P 9, Question B.7 (``Please
describe whether expansions of capacity on the pipelines serving
airport destinations would help address current and future jet fuel
needs.'').
\5\ See 49 App. U.S.C. 3 (1988) (prohibiting undue preference).
\6\ Pilot Travel Centers LLC, et al., Joint Motion to Intervene
and Protest, Docket No. OR21-10-000, at 3 (Jul. 27, 2021); see also
Chevron Products Co., et al., Response to Request for Emergency
Relief under Section 1(15) of the Interstate Commerce Act, Docket
No. OR 21-10-000, at 2 (Jul. 28, 2021) (``The Commission should ask
whether the Request is seeking to prioritize jet fuel and those who
can afford to access air travel at the expense of supplying
transportation fuels that affect many more people and their daily
lives as they go to work, daycare, school, and deliver goods and
services in support of their communities.'').
---------------------------------------------------------------------------
5. Third, I am not confident that carriers will willingly
provide the information the Commission requests on destinations,
nominations, and capacity awarded.\7\ Section 15(13) of the
Interstate Commerce Act prohibits common carriers from disclosing:
any information concerning the nature, kind, quantity, destination,
or consignee, or routing of any property tendered or delivered to
such common carrier for interstate transportation, which information
may be used to the detriment or prejudice of such shipper or
consignee, or which may improperly disclose his business
transactions to a competitor . . . .\8\
---------------------------------------------------------------------------
\7\ See Oil Pipeline Allocation NOI, 178 FERC ] 61,105 at P 9,
Question B.3 (``[P]lease provide . . . aggregate jet fuel
nominations to each airport destination, and aggregate pipeline
capacity awarded for jet fuel movements to each airport destination
. . . .''); id. Question B.5 (``Regarding products other than jet
fuel transported on pipelines serving airport destinations, please
provide data showing how aggregate product nominations and aggregate
pipeline capacity awarded for each product have changed during the
COVID-19 pandemic.'').
\8\ 49 App. U.S.C. 15(13) (1988).
---------------------------------------------------------------------------
6. While I acknowledge the Commission attempts to strategically
deploy the word ``aggregate,'' I do not think that this maneuver is
sufficient. Oil pipelines that deliver to airport destinations in
many cases only have a few shippers, meaning that, even if data is
``aggregated,'' it is not difficult to discern individual shipper
data. And even so, I could imagine some shippers arguing that the
information, aggregated or not, might be used to their detriment or
prejudice.
For these reasons, I respectfully concur.
James P. Danly,
Commissioner.
[FR Doc. 2022-03912 Filed 2-23-22; 8:45 am]
BILLING CODE 6717-01-P