On October 15, 2015, FERC issued a certificate of public convenience and necessity under section 7(c) of the Natural Gas Act (“NGA”) and a blanket certificate under Part 157 of the FERC’s regulations to Regency Field Services LLC (“Regency”) to continue operating the existing Coyanosa Residue Line.  In issuing the certificates, FERC held that the Coyanosa Residue Line was jurisdictional under FERC’s current five-mile processing plant “stub line” test, even though the line was in operation well before FERC adopted the test in 1994.

The Coyanosa Residue Line is an 8.1-mile-long pipeline in Pecos County, Texas.  The pipeline transports gas from the outlet of Regency’s Coyanosa processing plant to four intrastate pipelines and one interstate pipeline.  The Coyanosa Residue Line was placed into service in 1969, replaced in 2000, acquired by Regency in 2013, and has always carried processed gas from the Coyanosa processing plant to interstate and intrastate pipelines.  On April 27, 2015, Regency filed an application for (1) NGA section 7(c) authorization to continue to operate and maintain the Coyanosa Residue Line and (2) a blanket certificate pursuant to Part 157 of FERC’s regulations authorizing routine construction, operation, and abandonment.  In the alternative, Regency requested that FERC find that the Coyanosa Residue Line is a non-jurisdictional gathering and processing line under NGA section 1(b), arguing that the line was an incidental extension of its upstream gathering system and processing plant, and would not have been considered jurisdictional when built and put in operation.

In the order, FERC found that the Coyanosa Residue Line is used for jurisdictional transportation of natural gas in interstate commerce.  In making this finding, FERC applied the five-mile plant “stub line” test that it established in 1994.  Under the test, FERC declines to consider a pipeline to be an extension of a gathering system if it is (1) downstream from a processing plant and (2) at least 5 miles long.  Even though the Coyanosa Residue Line was in operation before FERC announced the current test in 1994, FERC decided to apply the current test, reasoning that this was FERC’s initial opportunity – triggered by Regency’s 2013 acquisition of the pipeline – to consider its status.

Upon finding that the Coyanosa Residue Line is jurisdictional, FERC found that granting Regency NGA section 7 certificate authorization to operate and maintain the existing line is consistent with its Certificate Policy Statement and required by the public convenience and necessity.  FERC also issued a Part 157 blanket certificate authorizing Regency to perform routine activities on the Coyanosa Residue Line.  Furthermore, because Regency transports not only its own gas, but also gas owned by third parties, FERC required Regency to file a tariff containing each agreement for providing transportation on the line and each agreement that provides for gathering in connection with transportation.  However, FERC granted Regency’s request for waiver with respect to (1) open-access requirements, until Regency receives a bona fide request for firm transportation service; (2) Part 157 filing requirements; and (3) Part 358 Standards of Conduct.

A copy of the order is available here.