On February 7, 2014, FERC invoked its emergency authority under the Interstate Commerce Act in an effort to alleviate a severe shortage of propane in the Midwest and Northeast. Specifically, FERC’s order directed Enterprise TE Products Pipeline Company, LLC (“Enterprise”) to temporarily provide priority treatment to propane shipments from Texas to the Midwest and Northeast regions. The Midwest and Northeast have been suffering from severe cold weather, and this sustained cold has depleted stocks of propane, leading multiple states to declare a state of emergency. FERC then extended this priority treatment by an additional week, requiring priority shipments through February 21, 2014. This marks the first time that FERC has used this emergency authority.
Section 1(15) of the Interstate Commerce Act (49 App. U.S.C. § 1(15) (1988)) provides that whenever FERC is of the opinion that an emergency shortage requiring immediate action exists in any section of the country, it has the authority to direct companies to provide preference or priority in transportation, embargoes or movement of traffic.
FERC acted in response to a plea from the National Propane Gas Association, which requested FERC to direct Enterprise to stop shipping diluents and instead use the pipeline to deliver about 75,000 barrels per day of propane. In order to accommodate the priority transportation, Enterprise needed to temporarily suspend the 81,000 bpd it reserves on a firm basis for contract shippers of diluent with minimum volume commitments. The extension was granted after Enterprise and the National Propane Gas Association reached an agreement relating to the shipments.
Acting FERC Chairman Cheryl LaFleur issued a statement explaining that the problem was acute enough that FERC felt compelled to act and that FERC is “mindful of the emergency situation that has developed in parts of the country where bitter cold weather has created problems for consumers who need supplies of propane.”
Click here to view the initial order and the extension order.