POTENTIAL MONETARY RECOVERY FOR AIRLINES CHALLENGING PIPELINE TRANSPORTATION RATES FOR JET FUEL
February 18, 2014
On January 3, 2014, Southwest Airlines and United Air Lines filed a formal complaint with FERC, alleging that Colonial’s existing and proposed rates for pipeline transportation service are excessive. The complaint sought reparations for past charges and a determination from FERC regarding rates going forward. Southwest stated that it overpaid by $4.4 million over the last two years and will overpay approximately $1.8 million annually going forward under the proposed rates. Similarly, United indicated that it overpaid by $5.4 million over the last two years and will overpay approximately $2.6 million annually going forward under the proposed rates. Southwest and United allege that Colonial over-recovered $303 million from all customers in 2012.
On December 31, 2013, US Airways and Colonial filed a settlement agreement with FERC for approval. Under the proposed settlement, Colonial will pay US Airways an undisclosed sum. US Airways will forgo reparations for charges prior to January 1, 2014, but retains the right to challenge rates for service provided thereafter.
Under the Interstate Commerce Act, FERC may award reparations for the two-year period preceding filing of a complaint if FERC determines that pipeline rates have been excessive. The Colonial pipeline system serves refineries in the Gulf Coast and Northeast regions and consumer markets throughout the Gulf Coast, Southeast, Mid-Atlantic and Northeastern states. Airports served by Colonial include: Atlanta, Nashville, Charlotte, Greensboro, Raleigh-Durham, Dulles, Baltimore-Washington International, Newark, and potentially others. Reparations may be available to fuel consumers who have directly or indirectly paid Colonial transportation rates or are otherwise affected by those rates, in the event FERC determines those rates are excessive.
This Eckert Seamans Aviation Blog is intended to keep readers current on matters affecting businesses and is not intended to be legal advice. If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).