ONE OF THE thorniest issues that the Federal Energy Regulatory Commission has had to deal with in recent years is defining the scope of its jurisdiction over pipelines on the Outer Continental Shelf. Yet the solution is relatively simple and straightforward.
Fueled by the volatile combination of perceived statutory ambiguity and significant financial gains to pipeline owners, who can convince the Commission that their currently regulated facilities are in fact beyond its jurisdiction, the OCS controversy has raged for years. The issue finally came to a head in 1997 in the Sea Robin case.
The question presented is how to draw the line under Section 1(b) of the Natural Gas Act, 15 U.S.C. § 717(b), between the "transportation" of natural gas on OCS pipelines, which the Commission may regulate, and "production or gathering" of natural gas, which it may not. To date, the effort to draw jurisdictional lines has produced: (1) an administrative test - the so-called modified primary function test - which the Commission effectively concedes is unworkable; (2) two opinions on judicial review (the most recent in Sea Robin) disapproving the Commission's application of the test to OCS facilities; (3) dissension among the Commissioners themselves on how to proceed; and (4) an appeal to the industry at large for comments on the issue in Docket No. RM98-8. To put it mildly, the law in this area is not settled.