In a historic move, the Federal Energy Regulatory Commission (FERC) for the first time on Friday, February 7, exercised its emergency authority under Section 1(15) of the Interstate Commerce Act. Using that authority, FERC directed Enterprise TE Products Pipeline Company LLC (TEPPCO) to provide priority to shipments of propane to help address propane shortages in the Midwest and Northeast. FERC extended its emergency order on Tuesday, February 11. In doing so, FERC resolved issues raised in an emergency request filed by the National Propane Gas Association (NPGA), which requested that propane shipments get priority over other products shipped by TEPPCO.
On Thursday, February 6, NPGA asked FERC to use its emergency powers to permit or direct TEPPCO to temporarily provide up to 75,000 bbls/day of capacity to propane shipments on a priority basis, through at least the first week in March, in light of current propane supply shortages.
On the heels of NPGA’s filing, and in response to information received from the Department of Homeland Security, governors, and lawmakers, FERC the next evening issued its emergency order noting NPGA’s pending request but separately directing the pipeline to exercise the authority set forth in its prorationing policy “to allocate its Available Capacity on any equitable basis, in a manner different from this policy, during a generally recognized emergency period in order to alleviate the emergency conditions.” FERC directed the emergency relief for seven days. In the order, FERC encouraged the submission of comments in response to NPGA’s pending filing, so that it could gather “concrete factual information” on ongoing propane shortages—including information on the status of propane inventories, projected propane deliveries from all sources, consumption rates, and pricing information. The deadline for comments on NPGA’s request was Tuesday, February 11.
Before the comment deadline passed, NPGA and TEPPCO reached an agreement that resolved, at least for the time being, the issues raised in NPGA’s petition. TEPPCO on Monday, February 10, filed a response to FERC’s emergency order. The pipeline reported that it took immediate steps to comply with the order, and stated that it could fully satisfy the concerns raised in NPGA’s petition if the emergency order were extended by an additional seven days. Also on Monday, NPGA filed a notice to withdraw its emergency request, without prejudice, upon the issuance and effectiveness of a FERC order directing a seven-day extension of the emergency order.
FERC followed suit on Tuesday, February 11, issuing its order extending, through February 21, 2014, TEPPCO’s priority treatment for propane shipments. The Commission action was predicated on both its emergency authority under the ICA and the fact that TEPPCO’s tariff actually contemplated such emergency modification to its allocation policy.