On May 23, 2011, INGAA requested clarification, rehearing and reconsideration of an April 2011 Order on Petition concerning FERC’s policy on reservation charge credits. INGAA argued that FERC exceeded its authority, issued a rule without following rulemaking procedures and departed from long-standing policy without reasonable explanation when it subjected pipelines to audit and enforcement liability if their tariffs do not comply with standards for issuing reservation charge credits during service outages.
Five shipper trade associations petitioned FERC in Novemeber, 2010, to require pipelines to revise their tariffs to conform to what the shipper groups said was a clear FERC policy on reservation charge crediting. In its Order on Petition, FERC did not issue the requested order but instead “urged” pipelines to review their tariffs and file tariff revisions as necessary to conform to FERC policy. FERC backed its urging by directing the FERC Division of Audits to to determine whether pipelines’ reservation charge credit tariff provisions comply with FERC policy and by strongly stating that it will consider other appropriate actions to obtain compliance.
INGAA argued that FERC’s unprecedented “urge and audit” order amounted to a finding under section 5 of the Natural Gas Act that reservation charge crediting across the industry was not just and reasonable, and pipelines had to amend their tariffs to make them just and reasonable. Section 5 of the Natural Gas Act restricts FERC’s authority to issue this type of generic order and INGAA argued that FERC did not follow statutory requirements. INGAA also argued that FERC’s “urge and audit” order amounted to a regulation, since it applied to all pipelines and imposed liability for non-compliance. Finally, INGAA argued that, contrary to the commission’s assertions, FERC’s longstanding policy on reservation charge crediting has been to decide reservation charge credit provisions in individual pipeline cases. FERC’s order was invalid because it offered no reasonable explanation for a departure from this policy, INGAA argued.
INGAA asked FERC to remove the “urge and audit” portion of the order. It also asked FERC either to issue an order that denies the shipper groups’ petition without volunteering a new policy or else an order that re-writes the policy to correct numerous defects.