NERA Economists' Role in In Re Colonial Pipeline
Economic Advice in Litigation
The Situation
On 9 February 2006, the Colonial Pipeline filed a tariff application with the Federal Energy Regulatory Commission (FERC) in which it proposed to ban shipments of gasoline containing methyl tertiary-butyl ether (MTBE), a chemical additive used to improve air emissions characteristics. On 24 February, Colonial changed its application and proposed allowing MTBE to be shipped, but on discriminatory terms. US refinery Lyondell-CITGO Refining (LCR) filed a protest at the FERC requesting that the Commission deny Colonial's request.
NERA's Role
NERA was retained by LCR to provide written testimony regarding the economic impact that would result from a switch from MTBE to an alternate oxygenate, such as ethanol, in the markets served by Colonial. NERA submitted testimony to the FERC along with LCR's protest.
The Result
On 16 March 2006, the FERC issued a decision in which it suspended Colonial's tariff application for seven months and scheduled a "technical conference" to explore the issues raised by the protest, thereby permitting gasoline containing MTBE to continue to be shipped to the Northeast. On 19 April 2006, 14 days prior to the technical conference, Colonial withdrew its application.
