OVERVIEW OF FEDERAL REGULATION—OIL PIPELINE REGULATION UNDER THE INTERSTATE COMMERCE ACT AND THE HAZARDOUS LIQUID PIPELINE SAFETY ACT
| Jurisdiction | United States |
(Jan 1995)
OVERVIEW OF FEDERAL REGULATION—OIL PIPELINE REGULATION UNDER THE INTERSTATE COMMERCE ACT AND THE HAZARDOUS LIQUID PIPELINE SAFETY ACT
Association of Oil Pipe Lines
Washington, D.C.
SPECIAL INSTITUTE ON
OIL AND NATURAL GAS PIPELINES:
WELLHEAD TO END USER
January 26-27, 1995
INTRODUCTION
The purpose of this paper is to provide general background on oil pipeline regulation and the principal federal statutes governing oil pipelines. Others will later provide more detail on the application of these statutes by the governing regulatory agency.
Like most energy industries in this country, federal rules and regulations permeate all aspects of oil pipeline operations. This paper, however, will address only those laws that are unique to oil pipelines.
INTERSTATE COMMERCE ACT
A. BACKGROUND
Oil pipelines were made subject to certain provisions in Part I of the Interstate Commerce Act ("ICA") through enactment of the Hepburn Amendment in 1906.1 The principal purpose of the Amendment was to protect independent crude producers from exploitation by the Standard Oil Company. Stemming in part from this legislative action, the Standard Oil Company was broken up. Today, there are approximately 120 interstate oil pipeline companies transporting crude oil, petroleum products or both. Roughly half of the regulated companies are independently owned; that is to say, are not a subsidiary of a vertically integrated company. See Attachment 1 for a brochure generally describing the industry.
Until 1977, the Interstate Commerce Commission (ICC) exercised economic regulation over oil pipelines. In that year, the Department of Energy Organization Act2 transferred oil pipeline
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regulation to the newly formed Federal Energy Regulatory Commission (FERC or the Commission).3 The Commission was in fact the reincarnation of the former Federal Power Commission, which had previously regulated gas and electric utilities. The bulk of FERC work is still in these two areas. At last report, oil pipeline regulation accounted for less than 10% of the FERC's resources.
In 1978, the Interstate Commerce Act was revised and recodified in the Revised Interstate Commerce Act (the "Revised Act")4 . The pre-existing version of Part I applicable to railroads was repealed. However, the portion of Part I of the Interstate Commerce Act applicable to oil pipelines was preserved.
Section 4(c) of the Revised Act stated:
The laws specified in the schedule in subsection (b) of this section, as they existed on October 1, 1977, are not repealed to the extent —
(1) those laws (A) vested functions in the Interstate Commerce Commission, or in the Chairman or members of the Commission, related to the transportation of oil by pipeline, and (B) vested functions and authority in the Commission, or an officer or component of the Commission, related to the establishment of rates or charges for the transportation of oil by pipeline or the valuation of such pipeline; and
(2) those functions and authority were transferred by section 306 and 402(b) of the Department of Energy Organization Act.
Thus, the version of the ICA found in the body of the U.S. Code does not apply to oil pipelines. Certain editions of the U.S. Code will publish the 1977 version of Part I in the pocket parts. However, it is the entire Part I rather than just the portion applicable to oil pipelines because no formal determination has even been made as to which portions of Part I survived the 1978 repeal.5
The last Congress recodified certain portions of Title 49 of the U.S. Code, including that portion specific to oil pipelines. We understand an attempt was made to settle the ICA question prior to recodification but no resolution was reached. The recodified
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version therefore merely references the legislative history of the ICA as it applies to oil pipelines. (See Attachment 2).
Obviously, lack of Congressional guidance as...
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