On October 15, 2020, the Federal Energy Regulatory Commission (FERC) issued a proposed policy statement containing guidance for oil (and petroleum products) pipeline common carriers proposing rates and terms pursuant to affiliate contracts. The proposed guidance likely stems from a 2017 order in Magellan Midstream Partners, L.P., wherein FERC denied a petition for declaratory order requesting that a proposal to establish a marketing affiliate to buy, sell, and ship crude oil be found compliant with the Interstate Commerce Act (ICA). FERC’s guidance seeks to address the key issue identified in the Magellan order—using affiliates to provide a discount or rebate to producers that are not shippers. The policy statement addresses this concern by requesting additional disclosures in an effort to foster greater transparency.
The policy statement provides oil pipelines with clear guidelines when seeking approval in a petition for declaratory order or tariff filing for contract rates or terms pursuant to an affiliate contract. The policy statement outlines information carriers