On Wednesday, March 7, 2007, the Federal Energy Regulatory Commission (FERC) issued an order approving its stipulation and consent agreement with Bangor Gas Co., LLC, in which Bangor agreed to pay a $1 million civil penalty for violation of the Commission’s Capacity Release program. Notably, Bangor self-reported the violation and did not profit from the violations; further, Commission staff concluded that the violations did not cause any identifiable financial harm to third parties. The violations go back to July 2000. This order exemplifies FERC’s willingness to penalize significantly companies that self-report, even where the company realizes no economic gain and third-parties are not harmed.

As detailed by the Commission’s order accepting the stipulation and consent agreement, Bangor entered into contracts with nine customers for unbundled transportation services from the interconnection of the Veazie and Bucksport Laterals with Maritimes and Northeast Pipeline’s (MNE) mainline to delivery points on Bangor’s own distribution system. According to the Commission, Bangor violated the "shipper-must-have-title" requirement when it failed to hold title to gas transported on those laterals under its firm contract with MNE.

Bangor should have released the capacity necessary to serve its nine transportation-only customers to be in compliance with the Commission’s regulations. Bangor did not release that capacity. The Commission noted that during the six-year investigation period beginning in July 2000, the lateral lines in question were at all times unconstrained.

The Commission stated that in formulating the amount of the civil penalty, it considered the factors contained in FERC’s Policy Statement on Enforcement. FERC noted six factors of particular significance:

  • The “shipper-must-have-title” rule is a long-standing and well-known Commission capacity release program.
  • Senior management failed to ensure Bangor personnel followed the law.
  • Bangor promptly self-reported.
  • Bangor demonstrated exemplary cooperation during the course of the investigation.
  • Bangor took prompt corrective action.
  • Violations occurred only on short laterals serving a small geographic area in Maine, with no identifiable harm to third-parties.

The Commission’s order and the stipulation and consent agreement between the Commission and Bangor is available at http://www.mwe.com/info/pubs/bangor_order.pdf.