Answer of Osage Pipe Line Co., LLC to Complaint of HollyFrontier Ref. & Mktg. LLC in Docket No. OR12-21.

Public Version - Privileged Information Removed UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION HollyFrontier Refining & Marketing LLC ) ) v. ) Docket No. OR12-21-000 ) Osage Pipe Line Company, LLC ) ANSWER OF OSAGE PIPE LINE COMPANY, LLC TO COMPLAINT OF HOLLYFRONTIER REFINING & MARKETING LLC Pursuant to Rule 343.4(a) of the Procedural Rules Applicable to Oil Pipeline proceedings, 18 C.F.R. 343.4(a), Rules 206 and 213 of the Commissions Rules of Practice and Procedure, 18 C.F.R. 385.206, 385.213, and the Notice of Complaint issued on June 26, 2012, Osage Pipe Line Company (Osage) hereby answers the complaint filed by HollyFrontier Refining & Marketing LLC (HollyFrontier) on June 25, 2012 (Complaint). As explained in greater detail below, HollyFrontiers Complaint is deficient as a matter of fact and law and should be dismissed by the Commission without further proceedings. First, HollyFrontiers Complaint is barred by a throughput and deficiency agreement entered into with Osage under which HollyFrontiers predecessor not only agreed to pay the rates that are the subject of its Complaint but also agreed to support the rates as fair and equitable in any proceeding before the Commission. That agreement was entered into in direct response to the request of HollyFrontiers predecessor that Osage upgrade its system to transport higher viscosity and greater volumes of crude oil, at substantial additional cost to Osage. Second, the rates at issue in the Complaint are entitled to grandfathered protection under the Energy Policy Act of 1992 (EPAct), 42 U.S.C. 13201, et seq. (2011), and HollyFrontier fails to satisfy the threshold test established by the Commission for challenging grandfathered rates. Most significantly, its analysis ignores relevant and publicly available data regarding the economic basis for the rates and uses unreliable information regarding the economic circumstances when the EPAct was enacted. When the analysis is properly performed and changes in the return on owners equity examined, it is clear that there has been no substantial change in economic circumstances that would justify an investigation of the rates. In addition, HollyFrontier has failed to show that there has been a substantial change in the nature of the services provided by Osage. Osage has always transported crude oil and it continues to do so today. Third, HollyFrontier does not even attempt to make the proper showing that Osage is not entitled to the indexed-based rate increases it challenges. It makes no showing that the cumulative index increases above the grandfathered rate substantially diverge from the actual cost increases ...