Conflict Over Regulation

In a West Virginia State Journal article, an individual representing the Interstate Natural Gas Pipeline, complains about the lack of uniformity between the States. At the same time, many U.S. Senators, for the most part Republican because of their philosophy that this is a Federal government maintaining local decision making, believe that the decision making for pipeline and electric line routing should be at the state level. This creates a true conflict. This conflict arises out of whether our gas and oil policies should be federally mandated or state regulated.

For those who argue there should be no regulation at all, how do they deal with the Kelo opposition, maintaining that private interest should not be provided the power of eminent domain. If condemnation is to be granted to a private utility, the action will reverse the decision in every case for the last 200 years holding that if there is a private entity acquiring property, the entity should be subject to governmental regulation. When one reads Wayne County v Hathcock, the underpinning of the decision reversing Poletown contemplates private takings only when there is clear public regulation.

West Virginia State Journal

Kurt Krieger, a Steptoe & Johnson attorney who focuses on interstate natural gas pipelines, said his clients are often concerned about how pipelines are going to be economically regulated.

"The issues I tend to deal with clients is that they want to know how are the pipelines that I'm going to build or buy from somebody going to be regulated? When I say regulated, I mean economic regulation."

Krieger wrote a paper addressing the issue in which he details the various types of regulation that could be faced by companies trying to build or purchase gathering lines.

"Depending upon the configuration of the pipelines, the manner in which they are used to transport natural gas, and the type of customer transporting the gas on the pipeline, the answer could be: (1) no regulation, (2) regulation by a state commission or (3) possible regulation by (the Federal Energy Regulatory Commission) over services that are otherwise regulated by state commissions, or over the entire pipeline facility," Krieger said. "And with respect to state regulation, as one might imagine, the extent of state regulation varies by state."

The West Virginia Public Service Commission has elected to not regulate gathering lines, but the definition of a pipeline can vary.

Economic regulation of pipelines, Krieger explained, means the types of services they may offer and under what sort of contracts and terms of service.

"The challenge has been that a lot of the pipelines that are being built are called gathering pipelines," Krieger said. "Generally speaking, in West Virginia and in Ohio, gathering pipelines are not subject to economic regulation. The problem is that the definition of what is gathering is different between states and FERC."

Krieger said the lack of uniformity can cause confusion, particularly when companies begin to build gathering lines that cross state lines.

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