MEC&F Expert Engineers : 09/14/15

Monday, September 14, 2015

DAH!! A Tarp Does Not Constitute a Roof for Insurance Claim Purposes in California

Posted on September 11, 2015 by Kenneth Kan

A Tarp Does Not Constitute a Roof for Insurance Claim Purposes in California

Some Californians have faith that El Niño will bring about major storms later this year. While I am a skeptic, many homeowners being proactive by electing to repair or replace their existing roofs in advance of El Niño should do so before any serious rain.

When roofing work is performed, tarps or plastic sheeting are commonly used to cover exposed portions of the roof, albeit temporarily. Well, what happens if, during a rain storm, the plastic sheeting blows open allowing rain to enter the property? Is there coverage for the resulting interior damage? This was addressed by the court in Diep v. California Fair Plan Association.¹ In Diep, the insurance policy provided in relevant part:

Company shall not be liable for loss to the interior of the building(s) or the property covered therein caused: (1) by rain, snow, sand or dust, whether driven by wind or not, unless the building(s) covered or containing the property covered shall first sustain an actual damage to roof or walls by the direct action of wind or hail and then shall be liable for loss to the interior of the building(s) or the property covered therein as may be caused by rain, snow, sand or dust entering the building(s) through openings in the roofs or walls made by direct action of wind or hail.

The above language is commonplace in practically all property policies which provides coverage for interior property damage and contents only if wind or hail first creates openings allowing rain (in the case of a rain storm) to intrude into the property. In other words, it is not sufficient for rain to find its way into the property without the prerequisite damage to the roof or walls.

The court in Diep held that if the tarp or plastic sheeting constituted a roof, then there would be coverage if the wind blew the sheeting open allowing rain to enter. However, after working through some dictionary definitions of "roof," the court deemed that plastic sheeting was only a nonstructural "band-aid" and therefore could not be construed as a roof since a roof is considered a "permanent part of the structure it covers."

Important to the court's analysis was that the breach of the roof was not caused by wind or hail, but by workers who removed the portion of the roof needing the repair prior to placing the plastic sheeting to the open areas.² Hence, the court found that plastic sheeting does not constitute a roof and thus, there was no covered occurrence.

It is important to note that courts in states other than California have ruled whether a tarp can be construed as a roof. The majority of those courts that have dealt with the issue have held that tarps do not constitute roofs. If you are a policyholder uncertain as to your own claim or case, consult with an insurance professional. As is often the case, there is no uniformity among the states on any given issue.

¹ Diep v. California Fair Plan Association (1993) 15 Cal. App. 4th 1205.
² If a tarp is used by the property owner to safeguard the property following a storm which caused damage to the roof and subsequent winds blew off the tarp, then this would be a different scenario. Coverage should be afforded if the damage occurs when the property owner is mitigating his damages by taking further protective measures.

Obviously here the lawyers made a killing by presenting that stupid tarp argument to the court and receiving huge fees. The big loser here is the insured who lost his money and his property got damaged. Cheers mate.

New Jersey Insurance Coverage Litigation - Direct Actions against Insurance Companies

Direct Actions against Insurance Companies

Posted: 11 Sep 2015 09:14 AM PDT

Labor Day has just passed as I write this, and this summer (that went by too quickly) was a busy one for the New Jersey appellate courts, insurance-wise. The New Jersey Supremes, for example, dealt with a question often posed by our clients in construction defect cases: Namely, can a claimant proceed directly against a defendant’s insurance company? (That is, sue the defendant’s insurance company directly instead of, or in addition to, suing the defendant?) In fact, as I was working over the holiday (ugh) I got a call from a potential client whose general contractor messed up her house pretty badly, and whose homeowners’ carrier is giving her a hard time about paying for the damage, which includes water infiltration and mold as the result of the GC’s shoddy work. (Why was I talking to a prospective client on Labor Day? Because, when you own your own firm, every day is “Labor Day”.) She asked whether she could sue the GC’s insurance carrier directly, since she didn’t think the GC had any money.

The answer, at least in New Jersey, is generally no. The new Supreme Court decision is Ross v. Lowitz. The facts: Home heating oil leaked from a neighbor’s underground storage tank onto the property of John and Pamela Ross. In addition to suing the current and former owners of the neighboring property, the Rosses also sued the insurance companies who provided homeowners’ coverage to the former owners of the neighboring property, for bad faith in not resolving the loss fully. The Rosses argued that they were third-party beneficiaries under the neighbors’ policies, and therefore were entitled to bring a direct claim.

But the Court disagreed, writing: “It is a fundamental premise of contract law that a third party is deemed to be a beneficiary of a contract only if the contracting parties so intended when they entered into their agreement. Here, there is no suggestion in the record that the parties to the insurance contract at issue had any intention to make plaintiffs, then the neighbors of the insured, a third-party beneficiary of their agreements. Nor does migration of oil from [the neighbors’] property to plaintiffs’ residence retroactively confer third-party beneficiary status on plaintiffs. The insurer’s duty of good faith and fair dealing in this case extended to their insured, not to plaintiffs.”

To the extent that the neighbors’ liability coverage (as opposed to first-party coverage) is implicated, though, this doesn’t make sense. Of course the purpose of liability insurance is to confer a benefit upon an injured third-party. I guess with the Court really meant to say was, unless there is specific intent to confer a benefit on a specific claimant, then third-party beneficiary status does not exist.

The coverage aspect of the Ross case only dealt with the question of whether a third party could sue for bad faith. It remains to be seen how the case will be applied in other contexts. Generally, until now, a claimant would have to take a judgment against a defendant in a specified amount, prove that the defendant is insolvent and cannot pay the judgment, and then request permission from the trial court to pursue the defendant’s liability carrier directly.

You can read the Ross case here.

Another case that came down this summer is 213-15 76th Street Condo Assn. v. Scottsdale Ins. Co. , a federal court decision that stemmed from a Superstorm Sandy related first-party wind damage claim. The case involved the question of whether recovery of attorneys’ fees is permitted in first-party cases in New Jersey. The policyholder argued that discovery “might” show that the insurance company acted in bad faith in handling the claim, and that attorney’s fees should be allowed as damages in bad faith cases. The (quirky) rule in New Jersey (R.4:42-9) is that attorneys’ fees are recoverable by a successful claimant in a third-party (liability) coverage lawsuit, but not specifically in a first-party case.

The Court basically punted, writing: “Under New Jersey law, counsel fees may be awarded when an insurer refuses to indemnify or defend its insured’s third-party liability to another, but an insured who brings direct suit against his insurer for coverage is not entitled to a fee award… Plaintiff asserts that a bad faith claim would support its request for attorneys’ fees, [but] the complaint does not contain any allegations that defendant acted in bad faith… There is no basis for plaintiffs request for attorneys’ fees at this time.” (Emphasis added.)

I’m not sure why defense counsel would waste time filing a motion to strike a claim for attorneys’ fees before an application for attorneys’ fees is actually made, but I guess nothing succeeds like success. Presumably the carrier felt that striking the claim for attorneys’ fees would reduce the settlement value of the case from the plaintiff’s perspective.

You can read the 213-15 76th Street case here.

Dunbar Asphalt to Clean up 29-Acre Portion of Sharon Steel Superfund Site, Hermitage, Pa.

SEPTEMBER 14, 2015

PHILADELPHIA, PA

The U.S. Environmental Protection Agency today announced a proposed settlement the government has reached with Dunbar Asphalt Products, Inc., to clean up a 29-acre portion of the Sharon Steel Corporation Superfund Site in Hermitage, Pa. The cleanup will better protect workers from exposure to contaminants on the site and prevent airborne releases of the contaminants.

“This settlement advances the cleanup work at Sharon Steel, allows for two local businesses to continue operating, and protects workers’ health and the local community,” said EPA Regional Administrator Shawn M. Garvin. “Getting this cleanup work underway builds on the progress we’re steadily making in the overall cleanup and reuse of this property.”

Under this proposed settlement, Dunbar will pay the costs to cover exposed slag with asphalt or clean fill to prevent releases of heavy metals and polyaromatic hydrocarbons (PAHs), and ensure there is no exposed waste. Dunbar will also reimburse EPA for future costs related to the cleanup of this 29-acre portion of the site. EPA estimates that it would have cost the agency $1.7 million to clean up this portion of the site if a settlement had not been reached with Dunbar.

Dunbar and Williams Brothers Trucking Company are each operating businesses at the site. EPA selected a process that allows the businesses to continue operating while the protective remedy is being installed.

The entire Sharon Steel Site covers about 325 acres in Mercer County. Sharon Steel Corp. used this area to dispose of slag and other waste generated from the company’s steel-making operations at its nearby Farrell Works plant. The slag and other wastes contaminated soil and groundwater. In 1998, EPA added the site the National Priorities List of sites that have known, or are threatened by, releases of hazardous substances, pollutants, or contaminants.

The proposed settlement is subject to a 30-day public comment period which started Sept. 11, 2015, and requires court approval before becoming final.

EPA is paying to clean up other areas at this Superfund site.

For proposed settlement and how to comment:

http://www.justice.gov/enrd/consent-decree/us-v-dunbar-asphalt-products-inc. Additional information about the Sharon Steel Corporation (Farrell Works Disposal Area) Superfund Site is at: http://www.epa.gov/reg3hwmd/npl/PAD001933175.htm

23,000 displaced, homes destroyed, people/animals killed, severe air quality from 2 massive wildfires in Northern California

A burned Pacific Gas and Electric truck sits outside a number of homes destroyed by fire Sunday, Sept. 13, 2015, in Hidden Valley, Calif. (Eric Risberg)

Updated 1 hr 3 mins ago

MIDDLETOWN, Calif. --

An explosive wildfire burned largely unchecked Monday after incinerating hundreds of homes and other buildings throughout rural communities north of California's Napa Valley, leaving at least one person dead and sending tens of thousands fleeing down flame-lined streets.

But it's not the only one. A second massive blaze, less than 200 miles away, destroyed 135 homes as it spread through Amador and Calaveras counties in the Sierra Nevada. That fire was 30 percent contained.

Both fires have displaced 23,000 people, Mark Ghilarducci, director of the Governor's Office of Emergency Services, said at a news conference Monday. He says one person died in the wildfire about 20 miles north of the famed Napa Valley, and others are unaccounted for, but didn't have further details.

The fire exploded in size within hours as it chewed through brush and trees parched from four years of drought, destroying 400 homes, two apartment complexes and 10 businesses since igniting Saturday, Cal Fire spokeswoman Lynn Valentine said. By Monday morning, crews had gained 5 percent containment of the 95-square-mile blaze.

Residents fled from Middletown, a town of more than 1,000 residents, dodging smoldering telephone poles, downed power lines and fallen trees as they drove through billowing smoke. Several hundred people spent Sunday night at the Napa County Fairgrounds and awoke to a breakfast of eggs, bacon, and doughnuts.

Evacuees milled around eating, picking up donated clothing and walking their dogs. Nancy O'Byrne, 57, was evacuated from her home in Middletown, but it's still standing.

"I am very, very, very lucky. I have my house," she said, her dog Nellie at her side.

Still, she was worried.

"This place is getting steadily fuller," she said surveying the fairgrounds, where tents were pitched and RVs were parked everywhere.

Michael Alan Patrick, 53, had been at the fairgrounds since Saturday and lost his house in the blaze. When it broke out, he had been sitting in a park with his friends.

"It was like looking through a tunnel. You could see the flames coming," he said. "There was this big old pine tree, it lit up and it went whoosh and it was gone."

Whole blocks of houses burned. On the west side of town, house after house was charred to their foundations, with only blackened appliances and twisted metal garage doors still recognizable.

Valentine said most of the destruction occurred in Middletown and Hidden Valley Lake, as well as among numerous homes along a shuttered state highway. Wind gusts that reached up to 30 mph sent embers raining down on homes and made it hard for firefighters to stop the Lake County blaze from advancing, officials said.

Four firefighters who are members of a helicopter crew suffered second-degree burns during the initial attack on the fire. They remained hospitalized in stable condition.

The fire continued to burn in all directions, triggering the evacuation of a stretch along Highway 281, including Clear Lake Riviera, a town of about 3,000 residents. It was threatening critical communications infrastructure as well as a power plant, Cal Fire said.

Gov. Jerry Brown on Sunday declared a state of emergency to free up resources. He had already declared a state of emergency for the separate 111-square-mile wildfire about 70 miles southeast of Sacramento that has turned the grassy, tree-studded Sierra Nevada foothills an eerie white.

Ghilarducci, of the Governor's Office of Emergency Services, said this summer's fires are the most volatile he has seen in 30 years of emergency response work. The main cause behind the fast-spreading fires is dry conditions from the drought.

"The bushes, the trees have absolutely no moisture in them, and the humidities are so low that we are seeing these 'fire starts' just erupt into conflagrations," Ghilarducci said.

Lake County saw devastation in just the last two months. In late July, a wildfire east of Clear Lake destroyed 43 homes as it spread across 109 square miles. As firefighters drew close to surrounding that blaze, another fire erupted several miles from the community of Lower Lake on Aug. 9 and more than doubled in size overnight.

Residents in the area had to evacuate from their homes two times in as many weeks.

East of Fresno, the largest wildfire in the state continued to march away from the Sierra Nevada's Giant Sequoia trees, some of which are 3,000 years old, fire spokesman Dave Schmitt said. The fire, which was sparked by lightning on July 31, has charred 211 square miles and was 36 percent contained Sunday, the U.S. Forest Service said.

Firefighters have maintained a precautionary line around Grant Grove, an ancient grove of Giant Sequoia trees, and set prescribed burns to keep the flames from overrunning it. The grove is named for the towering General Grant tree that stands 268 feet tall.

Cancer-Causing Substances in the Workplace and Home -Crystalline Silica

Cancer-Causing Substances in the Workplace and Home -Crystalline Silica

What is crystalline silica?

Crystalline silica is a basic component of soil, sand, granite, and many other minerals. It is used extensively in many industrial applications because of its unique physical and chemical properties. Quartz is the most common form of crystalline silica. Cristobalite and tridymite are two other forms of crystalline silica. All three forms may become respirable size particles when workers chip, cut, drill, or grind objects that contain crystalline silica. During the last few years, thousands of workers have been exposed to crystalline silica during hydraulic fracturing activities because several thousand tons of pure crystalline silica are injected into the subsurface at every single gas well to keep the shale fractures open.

Sand, the most common size fraction of natural crystalline silica, has many applications. For example, it may be used in foundry castings, Portland cement, abrasives and sandblasting materials, and hydraulic fracturing. It may also be used as a raw material for the production of silicon and ferrosilicon metals, or as a filter for large volumes of water, i.e. in municipal water and sewage treatment plants. When sand has more than 98% silica and low iron content it can be used for glass and ceramic production. Flours are formed by the grinding or quartz, quartzite, sand and sandstone. Flours are very fine grades of crystalline silica and are used in the ceramic and pottery industry, in the manufacturing of chrysotile cement, as a filler in rubber and paints and as an abrasive in soaps and cleaners.

What are the hazards of crystalline silica?

Silica exposure remains a serious threat to more than 2 million U.S. workers, including more than 100,000 workers in high risk jobs such as abrasive blasting, hydraulic fracturing, foundry work, stonecutting, rock drilling, quarry work and tunneling. The seriousness of the health hazards associated with silica exposure is demonstrated by the fatalities and disabling illnesses that continue to occur in sandblasters and rockdrillers. Crystalline silica has been classified as a human lung carcinogen. Additionally, breathing crystalline silica dust can cause silicosis, which in severe cases can be disabling, or even fatal. The respirable silica dust enters the lungs and causes the formation of scar tissue, thus reducing the lungs’ ability to take in oxygen. There is no cure for silicosis. Since silicosis affects lung function, it makes one more susceptible to lung infections like tuberculosis. In addition, smoking causes lung damage and adds to the damage caused by breathing silica dust.

What are the symptoms of silicosis?

Silicosis is classified into three types: chronic /classic, accelerated, and acute.

Chronic/classic silicosis, the most common, occurs after 15–20 years of moderate to low exposures to respirable crystalline silica. Symptoms associated with chronic silicosis may or may not be obvious; therefore, workers need to have a chest x-ray to determine if there is lung damage. As the disease progresses, the worker may experience shortness of breath upon exercising and have clinical signs of poor oxygen/carbon dioxide exchange. In the later stages, the worker may experience fatigue, extreme shortness of breath, chest pain, or respiratory failure.

Accelerated silicosis can occur after 5–10 years of high exposures to respirable crystalline silica. Symptoms include severe shortness of breath, weakness, and weight loss. The onset of symptoms takes longer than in acute silicosis.

Acute silicosis occurs after a few months or as long as 2 years following exposures to extremely high concentrations of respirable crystalline silica. Symptoms of acute silicosis include severe disabling shortness of breath, weakness, and weight loss, which often leads to death.

Where are construction workers exposed to crystalline silica?

Exposure occurs during many different construction activities. The most severe exposures generally occur during abrasive blasting with sand to remove paint and rust from bridges, tanks, concrete structures, and other surfaces. Other construction activities that may result in severe exposure include: jack hammering, rock/well drilling, hydraulic fracturing, frac sand mining and loading and unloading, concrete mixing, concrete drilling, brick and concrete block cutting and sawing, tuck pointing, tunneling operations.

Where are general industry employees exposed to crystalline silica dust?

The most severe exposures to crystalline silica result from abrasive blasting, which is done to clean and smooth irregularities from molds, jewelry, and foundry castings, finish tombstones, etch or frost glass, or remove paint, oils, rust, or dirt form objects needing to be repainted or treated. Other exposures to silica dust occur in cement and brick manufacturing, asphalt pavement manufacturing, china and ceramic manufacturing and the tool and die, steel and foundry industries. Crystalline silica is used in manufacturing, household abrasives, adhesives, paints, soaps, and glass. Additionally, crystalline silica exposures occur in the maintenance, repair and replacement of refractory brick furnace linings.

In the maritime industry, shipyard employees are exposed to silica primarily in abrasive blasting operations to remove paint and clean and prepare steel hulls, bulkheads, decks, and tanks for paints and coatings.

How is OSHA addressing exposure to crystalline silica?

OSHA has an established Permissible Exposure Limit, or PEL, which is the maximum amount of crystalline silica to which workers may be exposed during an 8-hour work shift (29 CFR 1926.55, 1910.1000). OSHA also requires hazard communication training for workers exposed to crystalline silica, and requires a respirator protection program until engineering controls are implemented. Additionally, OSHA has a National Emphasis Program (NEP) for Crystalline Silica exposure to identify, reduce, and eliminate health hazards associated with occupational exposures.

What can employers/employees do to protect against exposures to crystalline silica?

■ Replace crystalline silica materials with safer substitutes, whenever possible.

■ Provide engineering or administrative controls, where feasible, such as local exhaust ventilation, and blasting cabinets. Where necessary to reduce exposures below the PEL, use protective equipment or other protective measures.

■ Use all available work practices to control dust exposures, such as water sprays.

■ Wear only a N95 NIOSH certified respirator, if respirator protection is required. Do not alter the respirator. Do not wear a tight-fitting respirator with a beard or mustache that prevents a good seal between the respirator and the face.

■ Wear only a Type CE abrasive-blast supplied-air respirator for abrasive blasting.

■ Wear disposable or washable work clothes and shower if facilities are available. Vacuum the dust from your clothes or change into clean clothing before leaving the work site.

■ Participate in training, exposure monitoring, and health screening and surveillance programs to monitor any adverse health effects caused by crystalline silica exposures.

■ Be aware of the operations and job tasks creating crystalline silica exposures in your workplace environment and know how to protect yourself.

■ Be aware of the health hazards related to exposures to crystalline silica. Smoking adds to the lung damage caused by silica exposures.

■ Do not eat, drink, smoke, or apply cosmetics in areas where crystalline silica dust is present. Wash your hands and face outside of dusty areas before performing any of these activities.

■ Remember: If it’s silica, it’s not just dust.

How can I get more information on safety and health?

OSHA has various publications, standards, technical assistance, and compliance tools to help you, and offers extensive assistance through workplace consultation, voluntary protection programs, strategic partnerships, alliances, state plans, grants, training, and education. OSHA’s Safety and Health Program Management Guidelines (Federal Register 54:3904-3916, January 26, 1989) detail elements critical to the development of a successful safety and health management system. This and other information are available on OSHA’s website.

■ For one free copy of OSHA publications, send a self-addressed mailing label to OSHA Publications Office, 200 Constitution Avenue N.W., N-3101, Washington, DC 20210; or send a request to our fax at (202) 693–2498, or call us toll-free at (800) 321–OSHA.

■ To order OSHA publications online at www.osha.gov, go to Publications and follow the instructions for ordering.

■ To file a complaint by phone, report an emergency, or get OSHA advice, assistance, or products, contact your nearest OSHA office under the U.S. Department of Labor listing in your phone book, or call toll-free at (800) 321– OSHA (6742). The teletypewriter (TTY) number is (877) 889–5627.

■ To file a complaint online or obtain more information on OSHA federal and state programs, visit OSHA’s website.

This is one in a series of informational fact sheets highlighting OSHA programs, policies, or standards. It does not impose any new compliance requirements. For a comprehensive list of compliance requirements of OSHA standards or regulations, refer to Title 29 of the Code of Federal Regulations. This information will be made available to sensory-impaired individuals upon request. The voice phone is (202) 693–1999. See also OSHA’s website at www.osha.gov.

Natural Gas Pipeline Compressor Stations and Major Natural Gas Transportation Corridors

Natural gas pipeline compressor stations, like this one on the Trailblazer Pipeline in northeastern Colorado, offer strong opportunities for clean and renewable energy from waste heat recovery.

Natural gas compressor stations using compressors driven by gas turbines or internal combustion engines offer strong opportunities for waste heat recovery.

Transporting natural gas from producers to consumers requires an extensive and elaborate distribution system, which consists of a complex network of pipelines. Compression stations, usually placed at 40 to 100 mile intervals along the pipeline, are required to ensure proper pressurization of natural gas. The natural gas enters the compressor station, where it is compressed by a turbine, or engine. Compressor stations move on average about 700 million cubic feet (MMcf) of natural gas per day, with the largest moving upwards of 4.6 billion cubic feet (Bcf) per day.

Although natural gas compressor stations vary widely in size and layout, the basic compressor systems are comprised of two components - the "mechanical drive" that provides the shaft power that drives the compressor, and the "compressor" itself. The mechanical drive can be an internal combustion (IC) engine, gas turbine, or electric motor. The compressor itself can be a reciprocating, centrifugal, or screw compressor. IC engine and gas turbine drives burn natural gas from the pipeline. Electric motor drives can be used on any type of compressor but require reliable electrical power supply.

Source: Energy Information Administration, Office of Oil & Gas, Natural Gas Division, Natural Gas Transportation Information System. The EIA has determined that the informational map displays here do not raise security concerns, based on the application of the Federal Geographic Data Committee’s Guidelines for Providing Appropriate Access to Geospatial Data in Response to Security Concerns.

Facts and Figures

According to U.S. DOE natural gas pipeline data, the U.S. features:

· More than 210 natural gas pipeline systems.

· 305,000 miles of interstate and intrastate transmission pipelines

· More than 1,400 compressor stations that maintain pressure on the natural gas pipeline network and assure continuous forward movement of supplies (see map above).

· More than 11,000 delivery points, 5,000 receipt points, and 1,400 interconnection points that provide for the transfer of natural gas throughout the United States.

· 24 hubs or market centers that provide additional interconnections.

· 400 underground natural gas storage facilities.

· 49 locations where natural gas can be imported/exported via pipelines.

- 8 LNG (liquefied natural gas) import facilities and 100 LNG peaking facilities

Major Natural Gas Transportation Corridors
Corridors from the Southwest | From Canada | From Rocky Mountain Area | Details about Transportation Corridors

The national natural gas delivery network is intricate and expansive, but most of the major transportation routes can be broadly categorized into 11 distinct corridors or flow patterns.

5 major routes extend from the producing areas of the Southwest

4 routes enter the United States from Canada

2 originate in the Rocky Mountain area.

A summary of the major corridors and links to details about each corridor are provided below.

Corridors from the Southwest Region

More than 20 of the major interstate pipelines originate in the Southwest Region. Some extend to the Southeast through Louisiana and Arkansas, others to the Central and Midwestern States through Texas, Oklahoma, and Arkansas, and to the Western States through New Mexico. This area of the country exports about 45 percent (6.1 trillion cubic feet in 2007) of its production, which is 47 percent of the total natural gas consumed elsewhere in the lower 48 States.

Pipelines exiting the region have the capacity to accommodate as much as 45.2 Bcf per day: 62 percent to the Southeast Region, 20 percent to the Central Region, 13 percent to the Western Region, and the rest to Mexico. Much of the pipeline capacity directed toward the Southeast traverses the region en route to Midwestern and Northeastern markets. To a lesser degree, this is also true for the pipeline capacity exiting to the midsection of the country, much of which is ultimately destined for the Midwestern States.

1. Southwest-Southeast: from the area of East Texas, Louisiana, and the Gulf of Mexico, to the Southeastern States.

2. Southwest-Northeast: from the area of East Texas, Louisiana, and the Gulf of Mexico, to the U.S. Northeast (via the Southeast Region).

3. Southwest-Midwest: from the area of East Texas, Louisiana, Gulf of Mexico, and Arkansas to the Midwest.

4. Southwest Panhandle-Midwest: from the area of southwestern Texas, the Texas and Oklahoma panhandles, western Arkansas, and southwestern Kansas to the Midwest.

5. Southwest-Western: from the area of southwestern Texas (Permian Basin) and northern New Mexico (San Juan Basin) to the Western States, primarily California.

Corridors From Canada

6. Canada-Western: from the area of Western Canada to Western markets in the United States, principally California, Oregon, and Washington State.

7. Canada-Midwest: from the area of Western Canada to Midwestern markets in the United States.

8. Canada-Northeast: from the area of Western Canada to Northeastern markets in the United States.

9. Eastern Offshore Canada-Northeast: from the area of offshore eastern Canada (Sable Island) to New England markets in the United States.

Corridors From the Rocky Mountain Area

In the Central Region, only two major interstate pipelines originating within the region provides transportation services directly to another region, Kern River Transmission Company and the Rockies Express Pipeline Company. All the others operate primarily within the Central Region itself or originate in other regions. Shippers using these interregional lines to move supplies outside the region take advantage of the interconnections these lines have with the interstate pipelines traversing the region, principally those coming out of the Southwest Region.

10. Rocky Mountains-Western: from the Rocky Mountain area of Utah, Colorado, and Wyoming to the Western States, primarily Nevada and California with support for markets in Oregon and Washington.

11. Rocky Mountains-Midwest: from the Rocky Mountain area to the Midwest, including markets in Iowa, Missouri, and eastern Kansas.

Details about the Transportation Corridors

Southwest to Southeastern US

Two fairly distinct subcorridors extend into the Southeast Region from the Southwest: one goes eastward into Mississippi and continues further east, and the second goes northward into Tennessee and Kentucky. Along the first route, five major interstate pipeline companies -- Centerpoint Energy Transmission Company, Florida Gas Transmission Company (FGT), Gulf South Pipeline Company, Gulfstream Natural Gas System, and Southern Natural Gas Company (SONAT) -- transport the vast majority of natural gas that is delivered within the Southeast region. Together they can handle at least 13.3 billion cubic feet (Bcf) per day for shippers in the region.

Since 2006, several major transmission pipeline expansions have taken place on this route as expanding natural gas development and production in the Barnett shale and Bossier formations in east Texas has needed to find access to new markets. Centerpoint Energy Transmission Company and Gulf South Pipeline Company have both extended and expanded their mainline systems to reach interstate pipeline interconnections in Mississippi and Alabama, increasing capacity along this route by 3.7 Bcf/d. By 2010, three more interstate pipelines are scheduled to be built along this corridor, adding 4.2 Bcf/d. They are: Texas Gas Transmission Company's 1.1 Bcf/d Fayetteville/Greenville Laterals, the 1.7 Bcf/d Gulf Crossing Pipeline and the 1.4 Bcf/d MidContinent Express Pipeline.

Varying amounts of capacity on several other large interstate pipelines that follow this subcorridor also serve limited markets in the region. For instance, Transcontinental Gas Pipeline Company (Transco) serves customers in Georgia, South Carolina, and North Carolina as it continues along its route up the east coast. However, this service only represents about 1.1 Bcf per day, or 30 percent, of the 3.5 Bcf per day found on the Transco system as it enters the region. Yet, in North Carolina it is essentially the only source of natural gas supplies to the State.

Along the second subcorridor, one pipeline company Texas Gas Transmission Company (TGT) predominates, at least in terms of delivery points. While this system extends into the Midwest Region, more than 70 percent of its delivery points are located in the States of Kentucky and Tennessee. TGT provides substantial deliveries to underground storage facilities in northern Kentucky that supplement supplies to the local market and to the Midwest Region during the heating season.

Tennessee Gas Pipeline Company (Tenneco) and Texas Eastern Transmission Company (TETCO) are two additional systems operating along this subcorridor, but most of their delivery points are outside the Southeast Region. Tenneco, however, is the principal supplier of gas to two regional interstate pipelines: Enbridge Pipelines (AlaTenn), mostly operating in northern Alabama, and the East Tennessee Gas Company (Tennessee and Virginia).

The underground storage facilities located along this corridor are defined by their location. Those facilities at the corridor's southern end in Louisiana, Mississippi, and Alabama are mainly high-deliverability salt storage sites to support shippers and traders who want to acquire supplies for shipment to market. Of the 11.6 Bcf of daily storage deliverability (withdrawal) available in the area, 56 percent is from salt cavern sites.

This feature provides shippers using these corridors access to very flexible storage, which can be used to enhance their deliverability schedule, avoid transportation imbalances, and support any gas trading or hedging activities they may wish to engage in. In northwestern Kentucky, along the western subcorridor, storage facilities are devoted primarily to providing seasonal supplies. They are supported, for the most part, by deliveries from the Texas Gas Transmission system. The majority of the storage in Mississippi and Alabama is available to shippers using either subcorridor.

Southwest to Northeastern US

The Southwest-to-Northeast corridor consists of two routes. The first extends from East Texas and Louisiana northeastward through Mississippi, Tennessee, Kentucky, and parts of Ohio to enter the Northeast Region via West Virginia or Pennsylvania. The second route begins as the first but then extends northeastward from Mississippi via the east coast States and enters Virginia from the south. The principal interstate pipeline systems operating along the corridor include Tennessee Gas, Columbia Gulf Transmission, and Texas Eastern Transmission on the western segment, and Transcontinental Gas Pipeline on the eastern segment. These four pipeline companies represent approximately 10.2 Bcf per day of total corridor capacity, making this corridor the largest of the major transportation corridors in North America.

During wintertime peak periods, each of the systems is almost fully utilized. During the summer months, however, usage rates for the pipeline systems operating along this corridor tend to drop substantially. The principal factor affecting summertime usage rates on several of these pipeline systems is the demand for gas to refill underground storage sites in the States of West Virginia and Pennsylvania, and, to some degree, Ohio and New York as well.

The majority of the more than 190 underground storage sites located along this corridor are accessible to shippers. At the southwestern terminus of the corridor, more than 30 sites with a working gas capacity of at least 624 billion cubic feet and a daily withdrawal capability of 13 Bcf per day are located within 20 miles of the subject pipeline systems. Most of this capacity is used by producers, who use it to store short-term excess production, and by market centers.

This corridor links with some of the most active trading points located outside the Southwestern production area. One of the most significant is the Ellisburg-Leidy center in Pennsylvania, which provides interconnections and transportation services between the pipelines comprising this corridor and the other major interstate pipelines operating primarily within the Northeast States. Shippers using the corridor may also utilize the services of several natural gas market centers to expand their marketing and transportation options.

Southwest to Midwestern US

The Southwest-to-Midwest corridor extends northward out of East Texas, Louisiana, and Arkansas (Arkoma Basin production) and generally through Tennessee/Kentucky into the Midwest Region, although a part of it also travels through Missouri. The principal interstate pipeline systems operating along this corridor are: ANR Pipeline Company (ANR), Midwestern Gas Transmission Company (via Tennessee Gas Pipeline Company), Natural Gas Pipeline Company of America (NGPL), Texas Gas Transmission Company (TGT), Texas Eastern Transmission Company (TETCO), and Trunkline Gas Company. Mississippi River Gas Transmission Pipeline Company also transports gas along this corridor but it terminates in the St Louis, Missouri, area. Its operations in Illinois are confined to the area east of St Louis.

The portions of these systems located along this corridor represent approximately 7.8 Bcf per day, or 28 percent of the total pipeline capacity feeding into the Midwest Region (27.5 Bcf per day). They also account for more than 30 percent of the total pipeline capacity exiting this area of the Southwest.

Little underground storage is located along the midsection of this corridor. However, shippers have access to significant amounts of storage at either end. This corridor also links together two major gas trading centers: the Henry Hub in Louisiana and the Chicago Center in northern Illinois. In addition, the corridor also includes several natural gas trading (and price discovery) locations accessible to shippers and traders via the several major commercial electronic trading systems set up in the United States and Canada.

During the heating season, these markets are actively used by shippers and other market participants as a way to balance their receipts/deliveries, for arbitrage between the two markets, and to smooth market and price fluctuations through hedging.

Southwest Panhandle to Midwestern US

This route is a major link between the Waha area (Permian Basin) of southwestern Texas and the Chicago area market. It extends from the West Texas and Oklahoma Panhandle areas northward through the major gas production fields (including Hugoton and Panhandle) located in southwestern Kansas, and then northeastward toward the Midwest marketplace. In Nebraska, it links with another corridor (see Rocky Mountain-Midwest section) bringing supplies in from the Rocky Mountain areas of Wyoming, Utah, and Colorado.

There are four major interstate pipelines that run along this corridor: ANR Pipeline Company, Panhandle Eastern Pipeline Company, Northern Natural Gas Company, and Natural Gas Pipeline Company of America. These four pipelines alone constitute 67 percent of total pipeline capacity exiting this area. These pipeline routes, however, represent only about 17 percent of the total capacity into the Midwest Region. The Trailblazer Pipeline system ties in Rocky Mountain supplies with an interconnection to Natural Gas Pipeline Company of America in Nebraska.

Market centers and commercial trading points located in the Waha and Panhandle area of West Texas serve this transportation corridor at its apex. At its terminus, shippers and traders can link their Texas trading with the Chicago market. In addition, trading centers located in south central Kansas provide shippers with the opportunity to do business with traders in the other two areas. All four pipelines operating in the corridor have direct or indirect links with each other.

Only a limited amount of underground storage capacity is available to transporters along this route. However, during the nonheating season a sizeable amount of capacity on these systems is used to transport supplies for injection into storage facilities in Illinois, Indiana, and Michigan. The ANR Pipeline system in particular has a number of open-access sites located at the northern end of its system in Michigan. NGPL has a number of storage sites located in Illinois.

Southwest to Western US

The Southwest-Western corridor is used to transport supplies from the Permian Basin area of West Texas, through New Mexico (where the northern route taps into the San Juan Basin production area), and westward primarily to Arizona and California. Two major interstate pipelines, El Paso Natural Gas Company and Transwestern Pipeline Company, operate along this corridor. Both of these pipelines end at the California or Nevada State borders, where they deliver supplies to Southwest Gas Company (Nevada), Southern California Gas Company, and Pacific Gas & Electric Company, the largest pipelines serving the California marketplace. In addition, Transwestern Gas Pipeline Company links with the Mojave Pipeline Company, an interstate pipeline that transports natural gas supplies to the enhanced oil recovery (EOR) and cogeneration customers located in Kern County, California.

Joining El Paso Natural Gas Company and Transwestern Pipeline Company along the northern route, in 2002 Questar's Southern Trails Pipeline (an oil pipeline conversion) was completed, transporting an additional 90 MMcf per day between the San Juan Basin area and the California border.

Much of the natural gas flowing along this corridor is produced in the San Juan Basin. The TransColorado Pipeline system, completed in 1996, can move as much as 590 MMcf per day from north central Colorado and the Ignacio area of the southern Colorado San Juan Basin to interconnections with the El Paso Natural Gas and Transwestern Pipeline systems in the Blanco area of northwestern New Mexico. Northwest Pipeline Company also can deliver up to 250 Mmcf per day into these two systems.

A significant amount of West Texas and New Mexico gas supplies also are transported along the southern portion of this corridor, which consists primarily of the El Paso Natural Gas Company's Line 2000 which has a throughput capacity of approximately 2.4 Bcf per day. This section of the corridor primarily serves southern Arizona and southern California, but in 2002 it also began service to the new North Baja Pipeline system, designed to transport up to 500 MMcf per day to Mexico. (In 2010, the North Baja Pipeline system will become bidirectional, having the capability to transport up to 2.0 Bcf per day from LNG import facilities in Mexico to Western U.S. markets.)

There is very little underground natural gas storage capacity associated with this corridor. At the extreme eastern end of the corridor, only one site, the Washington Ranch facility operated by El Paso Natural Gas Company, is reserved primarily for system support services and is not available for customer use. At its western end, in southern California, a limited amount of storage capacity is available to shippers at five sites operated by Southern California Gas Company (SoCal).

Although some of the natural gas injected into these storage sites comes from producing fields in southern California, a significant amount of the working gas stored at these sites comes out of this corridor. The combined withdrawal rate capability of the four sites is 3.7 billion cubic feet (Bcf) per day, while their total working gas capacity is 120 Bcf. This translates into roughly 32 days of backup from these sites.

Western Canada to Midwestern US

This transportation corridor lies between Western Canadian supply areas and the U.S. Midwest and links two Canadian systems, TransCanada Pipeline Ltd. and Foothills Pipeline Company, with three United States pipeline systems, Great Lakes Gas Transmission Company, Northern Border Pipeline Company and Viking Gas Transmission Company. In addition, the 1,300-mile Alliance Pipeline, completed in late 2000, provides a direct transportation route for "wet" (natural gas high in liquids content) between producing fields in northwestern British Columbia and Alberta, Canada, and a gas-processing plant (Aux Sable) located outside Chicago, Illinois. These tie-ins represent about 6.2 Bcf per day of pipeline capacity, or about 41 percent of total U.S. natural gas import capacity in 2006. Between 1990 and 2006, capacity on this route more than doubled, going from 3.1 Bcf per day in 1990 to 7.2 Bcf per day in 2006.

The Northern Border Pipeline (NBP) system extended its pipeline system to Illinois (from it original terminus in Iowa) in 1998 and to Indiana in 2001, now providing almost a Bcf per day to the Chicago area and to customers in Indiana. In 2000, another pipeline, the Vector Pipeline system, located between Chicago, Illinois and Dawn, Ontario, at the eastern end of the corridor, was placed in service. It can transport up to one Bcf per day between the United States (Michigan) and Canada (Ontario). It was developed primarily to provide an alternative expansion route for Canadian gas and service to customers in Ontario, Canada. It also lies along a route that can be expanded to potentially accommodate gas transportation of Western Canadian gas to Northeast U.S. markets via the Empire/Millennium gas pipeline system that is scheduled for development in New York State in 2008.

A large number of underground storage facilities are located in proximity to several of the pipeline systems operating in this corridor, although not all of them are directly accessible to shippers. For instance, nine sites (1 Bcf per day injection, 1.8 Bcf per day withdrawal capability) are directly accessible to shippers using the Great Lakes Gas Transmission system, while the storage facilities located in Illinois and operated by Northern Illinois Gas Company (eight sites, 3.4 Bcf working gas capacity) are available only through the Chicago Market Center, which is affiliated with the company, or through the company itself. Altogether, the daily injection capability at storage facilities linked to the receiving end of this corridor represents the potential use of about five Bcf per day of pipeline capacity during the storage refill period from April through October.

Western Canada to Northeastern US

The western portion of the Canada-Northeast corridor links the TransCanada Pipeline system (and Western Canadian gas production) to seven pipeline companies in the Northeastern United States. The seven are: Iroquois Pipeline Company, North Country Pipeline Company, the Portland Gas Transmission System, Tennessee Gas Pipeline Company, Empire Pipeline Company, Vermont Gas Company, and St. Lawrence Gas Company. Indirectly, the corridor also supplies gas to the National Fuel Gas Supply Company and Dominion Transmission Company.

The seven systems transport gas primarily into New York and the New England States at a total capacity level of 3.4 Bcf per day. While the vast majority of the Canadian capacity that comes into the U.S. Northeast is off the northern tier of the TransCanada system, about five percent represents capacity that traverses the U.S. Midwest (on the Great Lakes Transmission system), crosses back into Canada through Ontario, and is imported once again at Niagara, New York.

In Canada, at the western end of this corridor in Alberta and Saskatchewan provinces, approximately 4 Bcf per day of daily storage deliverability is available at 12 sites interconnected with the TransCanada Pipeline System. In addition, over 25 storage sites located at Dawn, Ontario, Canada, are available to shippers transporting supplies to the area via the Great Lakes Transmission system. In the U.S. Northeast, storage deliverability of up to 14.8 Bcf per day is available to these shippers.

Eastern Canada to Northeast (New England)

This corridor consists primarily of the Maritimes and Northeast Pipeline system, completed in late 1999. It can transport more than 445 MMcf per day into the United States from off the eastern coast of Canada at Sable Island. The current system merges with the Portland Gas Transmission System at Wells, Maine to deliver almost 628 MMcf per day in northern Massachusetts to customers on the Tennessee Gas Pipeline system. Beginning in 2002, with the completion of Phase III of the Maritimes and Northeast Pipeline system, shippers have had the option of transporting up to 230 MMcf per day of this capacity to the Boston, Massachusetts area on the system.

Canada to Western US

The Canada-Western route brings natural gas from Alberta and British Columbia, Canada, through the States of Washington, Idaho, and Oregon, with terminating points in Nevada and California. In Canada, Spectra Energy Corporation's Westcoast Gas Transmission Ltd. and Alberta Natural Gas Ltd. (in association with Foothills Pipeline Ltd.) receive gas from the TransCanada Pipeline (NOVA) in Alberta (the principal pipeline system in the region linked into the major production areas in Alberta and British Columbia) and transport that gas to the U.S. border. There the supplies are received by Northwest Pipeline Company (from Westcoast Gas Transmission) and Gas Transmission Northwest from Alberta Natural Gas. The two pipelines have a combined capacity of 4.4 Bcf per day, 99 percent of import capacity in the area. This route represents one-quarter of the total capacity reaching the United States from Canada.

While the Gas Transmission Northwest Company transports most of its gas, about 76 percent in 2006, directly southward to California, the Northwest Pipeline Company system extends south and eastward from its border receipt point, operating on a bidirectional basis along much of the eastern section. At the northern Nevada State line, Northwest Pipeline Company links with the Paiute Pipeline Company, which until recently was the only gas supplier to the Reno, Nevada, area. Only one new pipeline has been added to the corridor since 1990, the Tuscarora Pipeline Company (110 MMcf per day) in 1995. This pipeline interconnects with the Gas Transmission Northwest Company system at the northern California border and transports gas to the Reno, Nevada area.

Access to underground storage for shippers along this corridor is limited. Much of the storage capacity on the southern portion is owned and operated by local distribution companies and is used exclusively to support their own seasonal storage needs. Nevertheless, shippers can acquire access to storage services on an as-available basis through several independent storage operations. The California Gas Transmission Company provides limited access to its three storage sites in northern California. At the Canadian end of the corridor, much of the available storage is intricately linked with market center operations, providing parking and loaning services primarily to producers shipping gas to the United States. These Canadian sites are capable of handling up to 6 Bcf per day deliverability and have a working gas capacity level of about 412 Bcf.

Rocky Mountain Area to Western US

This system extends from the Opal, Wyoming area southwestward through Nevada, just north of Las Vegas, to Kern County, California. In California, the Kern River Pipeline system physically merges with the Mojave Pipeline system (400 MMcf per day) to form one line serving customers primarily in Kern and San Bernardino Counties in California. Mojave receives its supplies from Transwestern Gas Pipeline Company and El Paso Natural Gas Company at the Arizona-California border. Its capacity is approximately 885 million cubic feet per day.

The Kern River Pipeline system was developed primarily to carry gas to the enhanced oil recovery market in southern California, which has been a large natural gas market. In 1997, its service was extended to the Las Vegas electric power generation market with the opening of an expanded metering facility with Southwest Gas Company, the major natural gas distributor in the Las Vegas area. Its system capacity was doubled in 2003 to approximately 1,750 MMcf/d to accommodate the growing demand along its route.

Underground storage facilities, although available at the apex of this corridor in Wyoming and Utah, do not play a major role in the operations of the Kern River Pipeline system. Although six sites are in the vicinity, with a combined daily deliverability of 0.7 Bcf per day and 57 Bcf of working gas capacity, only one, Questar Pipeline Company's Clay Basin facility (0.4 Bcf per day, 51 Bcf), is accessible to shippers.

Rocky Mountain Area to Midwestern US

This corridor links Rocky Mountain natural gas supplies from Utah, Wyoming, and Colorado with markets in the Midwestern United States and with several sizable metropolitan markets in eastern Kansas and Missouri. While the corridor itself does not yet extend into the Midwest, the several pipelines currently operating along this route interconnect with major trunklines that bring natural gas supplies from the Southwest Region to Midwestern markets.

The Trailblazer System, which is a contiguous linkup of the Overthrust, Wyoming Interstate, and Trailblazer pipelines, operates from western Wyoming to eastern Nebraska, where it offloads to the Natural Gas Pipeline Company of America pipeline. Similarly, Colorado Interstate Pipeline Company ’s Cheyenne Plains Pipeline, built in 2004, provides more than 730 MMcf/d of gas transportation for Wyoming and Colorado production from the Cheyenne Hub located in northeastern Colorado. The Cheyenne Plains Pipeline terminates with interconnections to Northern Natural Gas and Natural Gas Pipeline Company of America in southwestern Kansas. Natural gas transported on these pipeline systems is subsequently delivered to customers in the eastern portion of the Central Region and in Midwestern markets.

The Southern Star Central Pipeline (formerly Williams Natural Gas Co – Central) and the KM Interstate Pipeline Company also have operations along this corridor, but these two pipelines serve primarily local regional markets. However, the KM Interstate Pipeline Company system does include its Pony Express Pipeline (255 million cubic feet per day) segment which runs from central Wyoming to south of Kansas City, Missouri. Currently this segment does not provide any interconnections with the two major interstate pipelines connecting this corridor to Midwestern markets; rather, its full capacity is committed to customers located in the Kansas City area.

In 2008, the second segment of the 1.8 Bcf/d Rockies Express Pipeline system, which will eventually comprise more than 1,660 miles and transport Rocky Mountain natural gas to Midwest and Northeast markets, was placed in service. The first segment of the new system, completed in early 2007, involved the construction of a 327-mile pipeline system from the Meeker Hub in Rio Blanco County, Colorado, to the Cheyenne Hub in Weld County, in northeastern Colorado. Completion of the entire system, which is scheduled for early 2010, will mark the first time that Rocky Mountain natural gas supplies would be delivered directly to Midwest and Northeast markets.

Customers using this corridor have a limited number of underground storage facilities available for their use. At the terminus of the corridor in Wyoming and Colorado are 18 sites that customers may access. Much of the storage located at this end, however, is used to support local producers and distribution companies. In the Chicago area corridor, shippers also have access to several storage facilities associated with the Chicago market center.