Some pipeline regulation changes elude harvest

Regulatory Commission of Alaska decides actions on moving forward but finds some ‘low hanging fruit’ to be just out of reach

Alan Bailey

Petroleum News

In its March 8 public meeting, the Regulatory Commission of Alaska discussed two dockets, R-05-11 and R-05-12, both of which involve potential changes to the regulation of oil and gas pipelines.

In docket R-05-12 RCA has published a draft regulation that would enable operators to file for construction of a non-utility pipeline separately from filing for operation of the pipeline. Under current regulations operators must file for a certificate for both construction and operation prior to starting construction. Filing for operation involves publishing pipeline tariffs — companies have complained that this tariff filing involves significant time and expense before ultimate pipeline costs and revenues become known.

The March 8 meeting provided the first opportunity for revisions to RCA’s initial draft of the proposed regulation. And, in an effort to move forward, Commissioner Dave Harbour tried to find some easy ways to simplify the draft language.

“I would suggest that today that we try to identify the low-hanging fruit. That is, identify some rather easy changes to make and redraft … before our next public meeting,” Harbour said.

Unfortunately it turned out that juicy tidbits like changing the words “people and entities” to “people” proved a little out of reach and had to be deferred for further research. It seems that achieving legal and regulatory clarity isn’t necessarily straightforward.

“Gee. This isn’t as easy as I thought it would be,” Harbour reflected after the first plum swung away.

However, the commissioners, with the advice of RCA staff, did agree on some changes, such as simplifying the language specifying the data needed in an application. RCA will now review the draft further and research issues associated with the proposed regulations. Further discussion of the proposed regulation will be scheduled in the commission’s next public meeting.

Multiple pipeline classes

“It was so general that it’s difficult for us to take that information and proceed with it,” he said.

Commenters did make a specific request for a class of pipeline that could be exempt from regulation. But administrative law Judge Janis Wilson told the commissioners that all pipelines that come under Alaska statute 42.06, the statute that relates to non-utility pipelines, require regulation. So there is no way of exempting a pipeline from regulation by placing it into a distinct class, Wilson said.

“There must be some level of regulation for any industry that meets the definition of ‘pipeline’ under 42.06,” she said.

To move forward on the docket, the commissioners all agreed that draft language of a new regulation is now needed. However, there was some debate regarding whether the commission or industry should have a first go at drafting the regulation.

Given the current RCA docket load, Commission Chair Kate Giard recommended that industry should prepare proposed regulations and that RCA should then hold a workshop to reconcile and review the industry proposals. That would be the most expeditious way of moving the docket forward, she said.

So, the commissioners agreed on an order requesting draft regulations for consideration and providing for a future workshop.

During the course of their discussions of both dockets the commissioners also considered the question of whether the dockets should be merged. Possible dependencies between the regulations involved in the two dockets might merit the regulations being worked on as a single package.

However, the commissioners came to a view that, at least for the time being, the issues addressed are sufficiently distinct to merit the dockets remaining separate.