[Federal Register Volume 64, Number 190 (Friday, October 1, 1999)]
[Notices]
[Pages 53368-53369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25586]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission
[Docket No. GP99-15-000]


Burlington 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.
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    \1\ Burlington's May 12, 1998 dispute resolution request was 
originally filed in 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.
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    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.
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    \2\ See: 80 FERC para. 61,264 (1997); rehearing denied, 82 FERC 
para. 61,058 (1998).
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    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.
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    \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).
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    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 filed with 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. 99-25586 Filed 9-30-99; 8:45 am]
BILLING CODE 6717-01-M