MISSISSIPPI LEGISLATURE
2015 Regular Session
To: Energy
By: Senator(s) Burton
AN ACT TO CREATE THE "EMINENT DOMAIN INTRASTATE PIPELINE CLARIFICATION ACT"; TO CODIFY NEW SECTIONS 77-11-401, 77-11-403, 77-11-405, 77-11-407, 77-11-409 AND 77-11-411, MISSISSIPPI CODE OF 1972, TO CLARIFY OPEN ACCESS OF INTRASTATE GAS PIPELINES AND INTRASTATE GAS GATHERING SYSTEMS TO ENCOURAGE AND FACILITATE THE GATHERING, TRANSPORTATION, SALE AND USE OF CARBON DIOXIDE IN MISSISSIPPI; TO PROVIDE CERTAIN DEFINITIONS UNDER THIS NEWLY CREATED ARTICLE; TO PROVIDE THAT INTRASTATE GAS PIPELINES CONSTRUCTED USING EMINENT DOMAIN SHALL BE DEEMED A COMMON CARRIER OF GAS FOR CERTAIN PURPOSES; TO PROVIDE THAT GAS GATHERERS SHALL BE SUBJECT TO THIS ARTICLE FOR CERTAIN PURPOSES; TO PROVIDE THE STATE OIL AND GAS BOARD WITH JURISDICTION AND CERTAIN RULEMAKING POWERS AND DUTIES UNDER THIS ARTICLE; TO PRESCRIBE PROCEEDINGS FOR THE BOARD AS THEY RELATE TO THIS ARTICLE; TO PROVIDE THAT CERTAIN ENTITIES SHALL NOT BE SUBJECT TO THIS ARTICLE; TO BRING FORWARD SECTIONS 11-27-47 AND 53-3-159, MISSISSIPPI CODE OF 1972, FOR POSSIBLE AMENDMENTS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Sections 1 through 7 of this act shall be known and may be cited as the "Eminent Domain Intrastate Pipeline Clarification Act."
SECTION 2. The following provision shall be codified as Section 77-11-401, Mississippi Code of 1972:
77-11-401. Definitions. For the purposes of this article, the following words and terms shall have the meanings ascribed in this section unless the context clearly indicates otherwise:
(a) "Affiliate" shall have the same meaning as prescribed under Section 77-3-3(g).
(b) "Board" means the State Oil and Gas Board of the State of Mississippi.
(c) "Gas" means carbon dioxide in all and any forms or origins, including naturally occurring (both with and without any associated hydrocarbons and/or impurities therein), anthropogenic, manufactured, and treated or processed.
(d) "Gas gathering system" means the field gathering line(s) and/or pipeline(s) and related facilities located in this state that are constructed or were constructed, in whole or in part, by an exercise or threatened exercise of the power of eminent domain, and are primarily or exclusively used to gather, collect, pipe, carry, transport or deliver gas from the field and/or well(s) where it was produced to the first point of a bona fide delivery, sale or exchange to an intrastate gas pipeline, industrial user, public utility, or public utility owned or operated by a municipality. A gas gathering system includes those activities or processes performed after gas leaves the well site where it is produced and to the first point of a bona fide delivery, sale or exchange, and includes transportation, measurement, conditioning, compressing, pressure regulation, recompressing, cleaning and treating of such gas, and the fuel or gas loss associated with such foregoing activities. The terms "conditioning," "cleaning" and "treating" as used under this article include the processes of separation, dehydration, removal of contaminants and inerts, filtering, and the extraction of natural gas liquids and products. A gas gathering system does not include an intrastate gas pipeline as defined under this article, or a pipeline that is certificated and regulated by the Federal Energy Regulatory Board.
(e) "Gas gatherer" means any person who owns, leases, operates or manages a gas gathering system.
(f) "Intrastate gas pipeline" means a pipeline located within this state that is constructed or was constructed, in whole or in part, by an exercise or threatened exercise of the power of eminent domain, and primarily or exclusively pipes, carries, transports or delivers gas within this state, and includes the primary gas pipeline and all lateral supply lines and related facilities extending therefrom to the point(s) of the sale, delivery or redelivery of gas to or exchange of gas with any owner, user or purchaser. An intrastate gas pipeline does not include a gas gathering system as defined under this article, and does not include an interstate pipeline that is regulated by the Federal Energy Regulatory Board.
(g) "Person" means and includes a natural person, a private or public corporation, a general or limited partnership, a limited liability company, an association, a joint venture, a trust, a municipality, or any other legal entity.
(h) "Intrastate gas pipeline services" means the transportation, carrying and delivery of gas from one location to another location on an intrastate gas pipeline, and/or the exchange of gas volumes delivered at one or more delivery locations on an intrastate gas pipeline for volumes of gas taken at one or more other locations on the intrastate gas pipeline, including an exchange with another intrastate gas pipeline at an interconnection between the two (2) pipelines.
(i) "Public utility" shall have the same meaning as prescribed under Section 77-3-3(d)(ii).
(j) "Shipper" means a person who owns or controls gas and requests or obtains intrastate gas pipeline services on all or part of an intrastate gas pipeline, and/or services on a gas gathering system.
SECTION 3. The following provision shall be codified as Section 77-11-403, Mississippi Code of 1972:
77-11-403. (1) Every person who now or hereafter owns, leases, operates or manages all or any part of an intrastate gas pipeline shall be deemed to be a "common carrier of gas" that is subject to the provisions of this article insofar and only insofar as to the intrastate gas pipeline.
(2) Each common carrier of gas shall offer each shipper who requests intrastate gas pipeline services by contract on an open access, nondiscriminatory basis.
(3) No common carrier of gas shall discriminate, directly or indirectly, in favor of the carriage, transportation or delivery of any gas that is owned, produced or purchased by itself or by an affiliate.
(4) Nothing in this article shall operate or be construed to limit the rights of a shipper and an intrastate gas pipeline to enter into a mutually agreeable lease, contract or other binding agreement that governs the transportation of the shipper's gas. Any such lease, contract or other binding agreement shall control over the provisions of this article to the extent the lease, contract or other binding agreement addresses matters covered in this article.
(5) If, however, a shipper and a common carrier of gas are not able to reach agreement on the terms of a contract for intrastate gas pipeline services, including the availability of capacity for such services, either party may file a petition with the board to resolve the matter. In that proceeding, the board shall have the exclusive original jurisdiction and authority to determine and order what shall be the just and reasonable fees, terms and conditions of service for a contract for such services. "Fees, terms and conditions of service" shall include all factors defining the obligations between the common carrier of gas and the shipper, including, but not limited to, fees, the use and allocation of pipeline capacity, nominations, deductions for fuel, accounting for imbalances, imbalance penalties, assessments, charges or makeup provisions, costs, charges and fees for connection or maintaining connections, duration of transportation services, location of receipt and delivery or exchange points, quality specifications of gas, minimum and maximum pressures, and measurement.
(6) The board shall determine the just and reasonable fees, terms and conditions of service which would result from arm's-length bargaining in good faith in a competitive market between persons of equal bargaining power, and shall consider all economically significant factors for the requested intrastate gas pipeline services which it determines to be relevant which may include, but are not limited to, the following:
(a) The fees, terms and conditions of service which the common carrier of gas receives from other shippers for the same or analogous intrastate gas pipeline services within an area the board determines to be relevant;
(b) The fees, terms and conditions of service provided by other common carriers of gas for the same or analogous intrastate gas pipeline services within an area the board determines to be relevant;
(c) The reasonable financial risks of providing the requested intrastate gas pipeline services;
(d) The reasonable capital, operating and maintenance costs of such a pipeline; and
(e) Such other factors which the board determines to be relevant.
Provided, however, neither the fees nor the terms and conditions of service shall be determined or computed on a utility rate of return basis, and the common carrier of gas shall not be regulated like a public utility in the setting of fees and terms and conditions of service.
(7) A common carrier of gas shall not be required to construct, lay or install a pipeline, gathering line and/or facilities in order to be able to provide requested intrastate gas pipeline services. The shipper shall have the responsibility to construct, lay or install such pipeline, gathering line and/or facilities that are needed in order to connect with a common carrier of gas, and to prepay the reasonable costs to connect to the common carrier's pipeline and install any needed metering facilities. Any dispute regarding the costs and/or manner of safely connecting to the common carrier's pipeline shall be resolved by the board.
(8) The board shall not require a common carrier of gas to accept and transport a shipper's gas if the board finds that:
(a) The shipper's gas cannot reasonably be transported by the common carrier because of the difficulty or expense involved;
(b) Some other common carrier of gas can more conveniently and economically transport such gas;
(c) The shipper's gas does not meet reasonable quality specifications for gas that is transported in the common carrier's pipeline and will pollute the gas being transported in the pipeline; or
(d) A connection cannot reasonably or safely be made to the common carrier's pipeline.
(9) In response to a petition, the board shall have the jurisdiction and power to investigate and determine the facts of an intrastate pipeline's capacity and the use of that capacity, and to allocate the total capacity of the intrastate pipeline of a common carrier of gas among all of the shippers on the pipeline on a basis and/or schedule of transportation that is determined by the board to be just and reasonable so that each shipper is given the opportunity to obtain transportation of a portion of its gas.
SECTION 4. The following provision shall be codified as Section 77-11-405, Mississippi Code of 1972:
77-11-405. (1) Every person who now or hereafter engages in gas gathering shall be subject to the provisions of this article insofar and only insofar as to its gas gathering system.
(2) Each gas gatherer shall offer each shipper who so requests gas gathering services by contract on an open access, nondiscriminatory basis.
(3) No gas gatherer shall discriminate, directly or indirectly, in favor of the gathering, carriage, transportation or delivery of any gas owned, produced or purchased by itself or by an affiliate.
(4) Nothing in this article shall operate or be construed to limit the rights of a shipper and a gas gatherer to enter into a mutually agreeable lease, contract or other binding agreement that governs services on a gas gathering system. Any such lease, contract or other binding agreement shall control over the provisions of this article to the extent the lease, contract or other binding agreement addresses matters covered in this article.
(5) If, however, a shipper and a gas gatherer are not able to reach agreement on the terms of a contract for services on a gas gathering system, including the availability of capacity for such services, either party may file a petition with the board to resolve the matter. In that proceeding, the board shall have the exclusive original jurisdiction and authority to determine and order what shall be the just and reasonable fees, terms and conditions of service for a contract for such services. "Fees, terms and conditions of service" shall include all factors defining the obligations between the gas gatherer and the shipper, including, but not limited to, fees, the use and allocation of gas gathering system capacity, nominations, deductions for fuel, accounting for imbalances, imbalance penalties, assessments, charges or makeup provisions, costs, charges and fees for connection or maintaining connections, duration of transportation services, location of receipt and delivery or exchange points, quality specifications of gas, minimum and maximum pressures, and measurement.
(6) The board shall determine the just and reasonable fees, terms and conditions of service which would result from arm's-length bargaining in good faith in a competitive market between persons of equal bargaining power, and shall consider all economically significant factors for the requested services on the gas gathering system which it determines to be relevant and which may include, but are not limited to, the following:
(a) The fees, terms and conditions of service which the gas gatherer receives from other shippers for the same or analogous gas gathering system services within an area the board determines to be relevant;
(b) The fees, terms and conditions of service of other gas gatherers for the same or analogous gas gathering services within an area the board determines to be relevant;
(c) The reasonable financial risks of providing the requested gas gathering system services;
(d) The reasonable capital, operating and maintenance costs of such gas gathering system services; and
(e) Such other factors which the board determines to be relevant.
Provided, however, the fees, terms and conditions of service shall not be computed on a utility rate of return basis, and the gas gatherer shall not be regulated like a public utility in the setting of fees, terms and conditions of service.
(7) A gas gatherer shall not be required to construct, lay or install a pipeline, gathering line or facilities in order to be able to provide service to a shipper. The shipper shall have the responsibility to construct, lay or install such pipeline, gathering line and/or facilities that are needed in order to connect with the gas gatherer, and to prepay the reasonable costs to connect to the gas gatherer's pipeline, gathering line and/or facilities and install any needed metering facilities. Any dispute regarding the costs and/or manner of safely connecting to the gas gatherer's pipeline, gathering line and/or facilities shall be resolved by the board.
(8) The board shall not require a gas gatherer to accept and transport a shipper's gas if the board finds that:
(a) The shipper's gas cannot reasonably be gathered and transported by the gas gatherer because of the difficulty or expense involved;
(b) Some other gas gatherer can more conveniently and economically provide the gas gathering system services;
(c) The shipper's gas does not meet reasonable quality specifications for gas that is being gathered and transported in the gas gathering system; or
(d) A connection cannot reasonably or safely be made to the gas gatherer's pipeline, gathering line and/or facilities.
(9) In response to a petition, the board shall have the jurisdiction and power to investigate and determine the facts of a gas gathering system's capacity and the use of that capacity, and to allocate the total capacity of the gas gathering system among all of the shippers on the system on a basis and/or schedule of gathering that is determined by the board to be just and reasonable so that each shipper is given the opportunity to obtain the gathering of a portion of its gas.
SECTION 5. The following provision shall be codified as Section 77-11-407, Mississippi Code of 1972:
77-11-407. In addition to its existing procedural rules, the board shall have the power and authority to promulgate rules, regulations and issue orders to implement, administer and enforce the provisions of this article, and may exercise all incidental powers which are necessary and proper to the performance of its duties under this article.
SECTION 6. The following provision shall be codified as Section 77-11-409, Mississippi Code of 1972:
77-11-409. (1) Any shipper, intrastate gas pipeline, gas gatherer or any other interested person may initiate a proceeding under this article by filing a petition with the board under Section 53-1-29, serving a copy of the petition on the other party(ies), and giving public notice as provided for under Section 53-1-21 and the board's procedural rules.
(2) The board shall conduct a hearing and take such evidence as is necessary to decide the petition, the response(s), the issues, and the relief to be granted.
(3) In any proceeding under this article, and in addition to its powers under Section 53-1-35, the board shall have the right to issue process to compel the attendance of any party, witness or other person, and to order and compel the production of any documents that are relevant to a petition, any responsive pleadings, and the issues.
(4) The board shall hold a hearing on the petition within sixty (60) days after the filing of the petition, unless otherwise agreed by the parties. If the parties are unable to agree on an interim fee or terms and conditions of service, or both, for the requested transportation services or gas gathering service to apply during the pendency of the petition before the board, then the board may set such interim fee, or terms and conditions of service, or both.
(5) All matters to be determined by the board under this article shall be heard on an expedited basis and a final, appealable order rendered thereon within one hundred twenty (120) days from the filing of the petition, unless otherwise agreed by the parties.
(6) If, in connection with any proceeding under this article, any person, whether or not a party to the proceeding, furnishes information it desires to be confidential, proprietary and/or privileged, the board, upon motion of such person and a finding by the board that the information is confidential, proprietary or privileged, shall enter such protective order as may be necessary to ensure that the information will be used only as may be required for the proper determination of the merits of a proceeding under this article and will not be used for purposes of competitive advantage.
SECTION 7. The following provision shall be codified as Section 77-11-411, Mississippi Code of 1972:
77-11-411. (1) No person who shall construct, maintain, acquire, extend, own, lease, operate or manage all or any part of an intrastate gas pipeline or a gas gathering system shall be deemed a public utility or shall be required to obtain a gas certificate or a certificate of public convenience and necessity from the Mississippi Public Service Commission to engage in the activities prescribed under this article.
(2) The provisions of this article shall not apply to:
(a) The gas gathering system or intrastate gas pipeline of a person that is a public utility;
(b) An underground gas storage facility that is owned or operated by a gas gatherer or an intrastate gas pipeline; or
(c) Any public utility owned or operated by a "municipality" as defined under Section 77-3-3(c).
SECTION 8. Section 11-27-47, Mississippi Code of 1972, is brought forward as follows:
11-27-47. All companies, associations of persons, municipalities, associations of municipalities, public utility districts authorized by and under the laws of the State of Mississippi, or natural gas districts, incorporated or organized for the purpose of building or constructing pipelines and appliances for the conveying and distribution of oil or gas, including carbon dioxide or other gaseous substances for use in connection with secondary or tertiary recovery projects located within the State of Mississippi for the enhanced recovery of liquid or gaseous hydrocarbons, or for the purpose of constructing, maintaining and operating lines for transmitting electricity for lighting, heating and power purposes, or for the purpose of constructing, maintaining and operating lines and appliances, for storing, transmitting and distributing water and for transmitting, treating and disposing of sewage, are hereby empowered to exercise the right of eminent domain in the manner now provided by law, and to build and construct the said pipelines and appliances along or across highways, waters, railroads, canals and public lands, above or below ground, but not in a manner to be dangerous to persons or property, nor to interfere with the common use of such roads, waters, railroads, canals and public lands.
The board of supervisors of any county through which any such line may pass shall have the power to regulate, within its respective limits, the manner in which such lines and appliances shall be constructed and maintained on and above the highways and bridges of the county. All such companies, associations of persons, municipalities, associations of municipalities, public utility districts authorized by and under the laws of the State of Mississippi or natural gas districts shall be responsible in damages for any injury caused by such construction or use thereof.
SECTION 9. Section 53-3-159, Mississippi Code of 1972, is brought forward as follows:
53-3-159. Any company, person or association of persons, municipality, association of municipalities, public utility district, or natural gas district, incorporated or organized for the purpose of building or constructing pipelines and appliances for the conveying and distribution of oil or gas and authorized by law in Section 11-27-47, Mississippi Code of 1972, to exercise eminent domain rights with respect thereto, is hereby empowered, after obtaining approval of the State Oil and Gas Board as herein required, to exercise the right of eminent domain, in the manner provided by law, to acquire all surface and subsurface rights necessary and useful for the purpose of storing natural gas or compressed air in any underground reservoir, stratum or formation, pursuant to the provisions hereof. Such power shall be exercised under the procedure provided by Chapter 27, Title 11, Mississippi Code of 1972, provided that:
(a) No gas-bearing sand, stratum or formation shall be subject to appropriation by eminent domain unless the condemnor shall show, to the satisfaction of the board, that such sand, stratum or formation has a greater value or utility as a natural gas or compressed air storage reservoir for the purpose of ensuring an adequate supply of natural gas or compressed air for consumers, or for the conservation of natural gas or compressed air, than for the production of the native gas which remains therein;
(b) Adequate and fair compensation for any native gas which is appropriated by eminent domain and which is otherwise capable of being commercially produced shall be included in that hereinabove provided for; and
(c) No rights or interests in underground reservoirs, strata or formations acquired for the injection, storage and withdrawal of natural gas or compressed air by a party who has eminent domain rights under Section 11-27-47, Mississippi Code of 1972, and who has obtained an order from the Oil and Gas Board under the provisions of Section 53-3-155, shall be subject to appropriation hereunder.
SECTION 10. This act shall take effect and be in force from and after its passage.