12 October 2023

FERC Assesses $1.2 Million Civil Penalty For Abandonment Without Authorization And Incomplete Application

FERC's order and the accompanying Stipulation and Consent Agreement describe two sets of violations.
United States Energy and Natural Resources
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A recent Federal Energy Regulatory Commission (FERC) order approving a Stipulation and Consent Agreement between Georgia-Pacific Crossett LLC (GPC) and FERC's Office of Enforcement providing for payment of a $1.2 million civil penalty serves as an important object lesson for all natural gas companies owning interstate natural gas pipelines or other jurisdictional facilities subject to a certificate of public convenience and necessity under Section 7(c) of the Natural Gas Act (NGA).

FERC's order and the accompanying Stipulation and Consent Agreement describe two sets of violations. First, because GPC largely completed abandonment work on its pipeline and related facilities before filing for abandonment authorization, it abandoned a jurisdictional interstate pipeline without prior FERC approval contrary to Section 1(b). Second, GPC's application lacked:

(1) "all pertinent data and information necessary for a full and complete understanding of the proposed project," contrary to section 157.5(a) of the Commission's regulations; (2) "all information and supporting data necessary to explain fully the proposed project," contrary to section 157.7(a) of the Commission's regulations; and (3) "a full and complete explanation of the data submitted,' contrary to section 157.18 of the Commission's regulations."

Georgia-Pacific Crossett LLC, 184 FERC ¶ 61,151 at P 13 (2023).

The certificate and abandonment requirements of Section 7 of the NGA are fundamental and well-known components of FERC's jurisdiction and authority. There are very few exceptions, particularly once an interstate pipeline or other facilities are certificated and operational. In this case, GPC's Crossett Pipeline was certificated by FERC's predecessor the Federal Power Commission in 1971 to transport natural gas from Louisiana to Georgia-Pacific's plants in Arkansas.

The lesson is simple: Do not abandon certificated facilities or services or begin any physical activities in anticipation of abandonment without first obtaining an order granting abandonment authorization from FERC under Section 7(b) of the NGA.

Similar caution should be exercised before planning the construction of new pipelines or facilities that require a certificate of public convenience and necessity under Section 7(c).

Equally important, never file an application for abandonment (or any other FERC application) describing work to be done in the future when, in fact, the abandonment work (or any construction activity) has already been undertaken or completed. FERC takes its authority seriously and so should all existing or prospective certificate holders. If you own or plan to own jurisdictional natural gas facilities, always check with experienced FERC counsel before undertaking any construction activity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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