Opinion ID: 530275
Heading Depth: 3
Heading Rank: 1

Heading: The Transaction Under Review

Text: 5 In September 1986, Minnegasco agreed to purchase a specified volume of gas over a ten-year period from TransCanada Pipelines Ltd. (TransCanada). 2 As the interstate pipeline physically closest to Minnegasco, Midwestern was the most promising alternative delivery system to link Minnegasco with TransCanada. Since Midwestern's firm capacity was fully committed at the time, Minnegasco negotiated with one of Midwestern's existing customers, ANR, to release a portion of its firm capacity on Midwestern. At the time, Midwestern purchased gas from TransCanada for resale to ANR under an arrangement whereby ANR assumed all of the take-or-pay liability. 3 Therefore, before ANR could relinquish some of its firm capacity, it needed assurance that it would not continue to be responsible for the relinquished capacity on a take or pay basis. Given the practicality of this somewhat unusual take-or-pay arrangement, Midwestern agreed to reduce ANR's contract demand, and TransCanada agreed to reduce Midwestern's obligation for a comparable amount. 6 In December 1986, with these agreements in place, Midwestern sought FERC approval under Section 7 of the Natural Gas Act. 4 A number of parties raised concerns about discriminatory access to Midwestern's pipeline system. FERC ordered a technical conference during which these concerns were addressed. Midwestern Gas Transmission Company, 42 F.E.R.C. p 61,035 (Jan. 21, 1988). 5 7 Tarpon intervened after the technical conference had been held. It contended that Midwestern's application presented serious questions of undue discrimination. In particular, Tarpon argued that Midwestern agreed to release some of its firm capacity only because Minnegasco could offer it relief from its take-or-pay liabilities. Tarpon asked that Midwestern, instead, be required to offer any abandoned pipeline capacity to all potential shippers on a nondiscriminatory basis.