NEW YORK, Sept 16 (Reuters) - A U.S. Federal Energy Regulatory Commission (FERC) judge ruled on Friday that the rates on the Seaway pipeline were too high, landing an initial victory for crude oil shippers in a long-running legal battle.
The 400,000 barrel per day (bpd) pipeline, jointly owned by Enterprise Product Partners LP and Enbridge Inc , is one of the few major arteries carrying crude oil from Cushing, Oklahoma - delivery point of the U.S. crude oil futures contract - to the U.S. Gulf Coast refining hub.
Seaway had proposed tariffs of $3.82 per barrel for light crude and $4.32 for heavy crude, according to the FERC decision, after reversing the line in 2012 to flow north-to south, in an attempt to allow shippers to drain a glut of crude oil at the Cushing storage hub.
FERC said “numerous” protests to the tariffs were filed by shippers and the regulator had suspended the rate in May 2012 to hear the arguments.
“It is the determination of the Presiding Judge that Seaway has failed to carry its burden to prove that its proposed committed and uncommitted shipper rates are just and reasonable,” Presiding Administrative Judge Karen Johnson wrote in her initial 86-page decision.
“The Presiding Judge finds further that Seaway’s proposed committed and uncommitted shipper rates should be modified,” she wrote.
Seaway’s capacity was more than doubled at the start of this year to meet high demand, though the line has been running below its stated 400,000 bpd capacity due to the large volumes of heavier, thicker crude running on the line.
Prices of U.S. crude oil around Cushing have been depressed against seaborne rivals as booming output in the United States had become backed up at the hub.
FERC gave no timeline for the commission to approve or reject the decision.
Enterprise, which operates the line under its agreement with Enbridge, was not immediately available to comment.