Applications, hearings, determinations, etc.: Burlington Resources Oil & Gas Co.,

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Federal Register: October 1, 1999 (Volume 64, Number 190)NoticesPage 53368-53369From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr01oc99-81

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Docket No. GP99-15-000Burlington Resources Oil & Gas Company; Notice of Petition for Dispute Resolution or, Alternatively, for Staff Adjustment Relief From Refund Obligation

September 27, 1999.

Take notice that, on May 12, 1998, Burlington Resources Oil & Gas Company (Burlington) requested that the Commission resolve Burlington's dispute with Northern Natural Gas Company (Northern) over the Kansas ad valorem tax reimbursement refunds that Northern claims Burlington owes as a result of tax reimbursements that Northern paid to Burlington's predecessor--Southland Royalty Company (Southland).\1\ Burlington requests that the Commission find that it has no such refund liability to Northern, due to a February 28, 1989 Take-or-Pay Settlement Agreement (1989 Settlement) between Southland and Northern that settled certain claims involving over 30 separate gas purchase contracts, covering properties located in three different states, including the State of Kansas. Burlington's petition is on file with the Commission and is open to public inspection.

\1\ Burlington's May 12, 1998 dispute resolution request was originally filedin Docket No. SA99-1-000, Burlington's petition for staff adjustment with respect to Panhandle Eastern Pipe Line Company's Kansas ad valorem tax reimbursement refund claim. Burlington's May 12 request is now being docketed separately as a petition for dispute resolution, under Docket No. GP99-15-000, because it pertains to a different Kansas ad valorem tax reimbursement refund claim, levied by a different pipeline.

In its September 10, 1997 order in Docket No. RP97-369-000, et al.,\2\ the Commission required First Sellers to refund the Kansas ad valorem tax reimbursements to the pipelines (with interest) for the period from 1983 to 1988. In its January 28, 1998 Order Clarifying Procedures [82 FERC para.61,059 (1998)], the Commission stated that producers (i.e., First Sellers) could file dispute resolution requests with the Commission, asking the Commission to resolve disputes with the pipeline over the amount of Kansas ad valorem tax refunds owed.

\2\ See: 80 FERC para. 61,264 (1997); rehearing denied, 82 FERC para. 61,058 (1998).

In its petition, Burlington asserts that the 1989 Settlement between Southland and Northern explicitly resolved all disputes between the parties regarding the affected contracts, and that the parties mutually agreed to release and discharge each other and their respective successors and assigns from any and all liabilities claims and causes of action relating to those contracts, whether at law or in equity, and whether known or unknown, for all periods through January 31, 1989. Burlington contends that, under the 1989 Settlement, all claims for additional monies associated with the subject contracts, for any time period prior to January 31, 1989, were intended by the parties to be resolved as of February 28, 1989. Thus, Burlington contends that Northern, by contract, has agreed to release Burlington from any responsibility regarding additional monies owed with respect to the Kansas contracts, and that Northern is contractually bound to indemnify Burlington, as Southland's successor, with respect to any claims, including

[Page 53369]Northern's Kansas ad valorem tax reimbursement refund claim.

Burlington adds, however, that it is not claiming that the tax reimbursement refunds should not be made to the ultimate consumers, only that Southland entered into an arms-length contractual agreement with Northern, and that Northern, by agreeing to release Southland from any and all future liability with regard to the Kansas contracts, assumed the obligation to make such payments on behalf of Southland, as consideration for value received from Southland pursuant to the 1989 Settlement, including the mutual release and indemnification, and the termination of Northern's take-or-pay obligations under numerous contracts.

Burlington also contends that, to the extent its predecessor (Southland) received any value in excess of the applicable maximum lawful price for the gas Northern purchased under the Kansas contract, Southland has already reimbursed Northern for that value through the consideration provided to Northern pursuant to the release of Northern from its take-or-pay liability under the numerous contracts covered by the 1989 Settlement.

Burlington also asserts that the Natural Gas Policy Act of 1978 (NGPA) does not prohibit a pipeline from contractually assuming a producer's refund liability under the NGPA. Burlington contends that, since the Commission has found that the consumers are bound by their contractual agreements that relinquished their rights to Kansas ad valorem tax reimbursement refund from El Paso Natural Gas Company, Natural Gas Pipeline Company of America, and ANR Pipeline Company,\3\ there is no justification for not holding a pipeline to its contractual agreements to release and indemnify gas sellers from the obligation to refund tax reimbursements.

\3\ El Paso Natural Gas Co. 85 FERC para. 61,003 (1998); Natural Gas Pipeline Company of America, 85 FERC para. 61,004 (1998); and ANR Pipeline Co., 85 FERC para. 61,005 (1998).

In the event that the Commisison finds that Northern's indemnification of Southland is not applicable to the actual Kansas ad valorem tax reimbursement refund amounts (i.e., the principal portion of Northern's refund claim), Burlington contends that the Commisison should nevertheless find, at a minimum, that Northern has indemnified Burlington from paying the interest on the principal. In the event that the Commisison finds that Northern has not assumed Burlington's refund liability, as a result of entering into the 1989 Settlement, Burlington requests relief from having to pay both the principal and interest to Northern, pursuant to section 502(c) of the NGPA, based on Burlington's contention that it would be inequitable to absolve Northern of its contractual commitment to release Burlington from all liabilities associated with the Kansas contracts. In this regard, Burlington claims that the release Northern obtained was for value in exchange for its indemnification, and that it would be inequitable to allow Northern to now be relieved of its quid pro quo under the 1989 Settlement, solely because the indemnification obligation would require Northern to assume Burlington's liability for Kansas ad valorem tax reimbursement refunds.

Any person desiring to comment on or make any protest with respect to the above-referenced petition should, on or before October 18, 1999, file with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, a motion to intervene or protest in accordance with the requirements of the Commisison's Rules of Practice and Procedure (18 CFR 385.214 or 385.211). All protests filedwith the Commission will be considered by it in determining the appropriate action to be taken, but will not serve to make the protestants parties to the proceedings. Any person wishing to become a party to the proceeding, or to participate as a party in any hearing therein, must file a motion to intervene in accordance with the Commission's Rules. David P. Boergers, Secretary.

FR Doc. 99-25586Filed9-30-99; 8:45 amBILLING CODE 6717-01-M

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