ANR PIPELINE CO - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-7320

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ANR PIPELINE COMPANY
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 38-1281775
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)

EL PASO BUILDING
1001 LOUISIANA STREET 77002
HOUSTON, TEXAS (Zip Code)
(Address of Principal Executive Offices)

Telephone Number: (713) 420-2600

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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Common Stock, par value $1 per share. Shares outstanding on August 13,
2002: 1,000

ANR PIPELINE COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTION H(1)(a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS REPORT WITH A REDUCED
DISCLOSURE FORMAT AS PERMITTED BY SUCH INSTRUCTION.
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PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ANR PIPELINE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
(UNAUDITED)

See accompanying notes.

1

ANR PIPELINE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

See accompanying notes.

2

ANR PIPELINE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)

See accompanying notes.

3

ANR PIPELINE COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

We prepared the Quarterly Report on Form 10-Q under the rules and
regulations of the United States Securities and Exchange Commission. Because
this is an interim period filing presented using a condensed format, it does not
include all of the disclosures required by generally accepted accounting
principles. You should read it along with our 2001 Annual Report on Form 10-K
which includes a summary of our significant accounting policies and other
disclosures. The financial statements as of June 30, 2002, and for the quarters
and six months ended June 30, 2002 and 2001, are unaudited. We derived the
balance sheet as of December 31, 2001, from the audited balance sheet filed in
our Form 10-K. In our opinion, we have made all adjustments, all of which are of
a normal, recurring nature (except for the items discussed in Notes 3, 4 and 5
below), to fairly present our interim period results. Due to the seasonal nature
of our business, information for interim periods may not indicate the results of
operations for the entire year. In addition, prior period information presented
in these financial statements includes reclassifications which were made to
conform to the current period presentation. These reclassifications have no
effect on our previously reported net income or stockholder's equity.

Our accounting policies are consistent with those discussed in our Form
10-K, except as discussed below:

Asset Impairments

On January 1, 2002, we adopted Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
SFAS No. 144 changed the accounting requirements related to when an asset
qualifies as held for sale or as a discontinued operation and the way in which
we evaluate impairments of assets. It also changes accounting for discontinued
operations such that we can no longer accrue future operating losses in these
operations. There was no initial financial statement impact of adopting this
statement.

2. DIVESTITURES

In July 2002, our parent entered into a letter of intent with El Paso
Energy Partners, L.P., an affiliate, to sell our Typhoon offshore gas gathering
pipeline. The Typhoon pipeline consists of a 35-mile, 20-inch natural gas
pipeline originating on the Chevron/BHP "Typhoon" platform in the Green Canyon
area of the Gulf of Mexico and extending to our Patterson system in Eugene
Island Block 371. We stopped depreciating the Typhoon assets beginning in July
2002 since these assets are held for sale.

3. MERGER-RELATED COSTS

During the quarter and six months ended June 30, 2001, we incurred
merger-related costs of $107 million and $174 million associated with El Paso
Corporation's (El Paso) merger with The Coastal Corporation (now known as El
Paso CGP Company, and our parent company). Employee costs of $61 million
consisted of severance, retention and transition costs, including pension and
postretirement benefits settled and curtailed under existing benefit plans for
severed employees and early retirees that occurred as a result of El Paso's
merger-related workforce reduction and consolidation. Following the merger,
approximately 900 full-time positions were eliminated through a combination of
early retirements and terminations. The pension and post-retirement benefits
were accrued on the merger date and will be paid over the applicable benefit
periods of the terminated and retired employees. All other employee-related
costs were expensed as incurred and were paid in the first and second quarters
of 2001. Also included in merger-related costs are $113 million associated with
relocating our headquarters from Detroit, Michigan, to Houston, Texas, lease
related costs, write-offs of leasehold improvements, asset impairments and other
charges related to combining operations. A majority of the cash-related charges
were paid in the first quarter of 2001.

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4. CHANGES IN ACCOUNTING ESTIMATES

Included in our operation and maintenance costs for the quarter and six
months ended June 30, 2001, were approximately $19 million in costs related to
changes in estimates. These changes consist of $16 million in additional
environmental remediation liabilities and a $3 million charge to reduce the
value of our spare parts inventories to reflect changes in the usability of
these parts in our operations. These changes arose as a result of an evaluation
of our ongoing remediation projects and conforming the operating strategies of
our company following our parent's merger with El Paso. These charges are
included as operating expenses in our statement of income and reduced our net
income before extraordinary items and net income for the six months ended June
30, 2001, by approximately $12 million.

5. EXTRAORDINARY ITEMS

As a result of El Paso's 2001 merger with Coastal, Deepwater Holdings Inc.,
our unconsolidated affiliate, was required, under a Federal Trade Commission
order, to dispose of its interests in the Stingray pipeline and U-T Offshore
pipeline systems, and we were required to dispose of our 16 percent interest in
the Iroquois pipeline system. For the quarter and six months ended June 30,
2001, net proceeds from these sales were approximately $40 million and $65
million, and we recognized an extraordinary gain (loss) of approximately $2
million and $(1) million, net of income taxes.

6. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

In 1997, we and a number of our affiliates were named defendants in actions
brought by Jack Grynberg on behalf of the U.S. Government under the False Claims
Act. Generally, these complaints allege an industry-wide conspiracy to
underreport the heating value as well as the volumes of the natural gas produced
from federal and Native American lands, which deprived the U.S. Government of
royalties. These matters have been consolidated for pretrial purposes (In re:
Natural Gas Royalties Qui Tam Litigation, U.S. District Court for the District
of Wyoming, filed June 1997). In May 2001, the court denied the defendants'
motions to dismiss.

We and a number of our affiliates were named defendants in Quinque
Operating Company, et al v. Gas Pipelines and Their Predecessors, et al, filed
in 1999 in the District Court of Stevens County, Kansas. This class action
complaint alleges that the defendants mismeasured natural gas volumes and
heating content of natural gas on non-federal and non-Native American lands. The
Quinque complaint was transferred to the same court handling the Grynberg
complaint and has now been sent back to Kansas State Court for further
proceedings. A motion to dismiss this case is pending.

In addition to the above matters, we are also a named defendant in numerous
lawsuits and governmental proceedings that arise in the ordinary course of our
business.

For each of our outstanding legal matters, we evaluate the merits of the
case, our exposure to the matter, possible legal or settlement strategies and
the likelihood of an unfavorable outcome. If we determine that an unfavorable
outcome is probable and can be estimated, we establish the necessary accruals.
As of June 30, 2002, we had reserves totaling $2 million for all outstanding
legal matters.

While the outcome of our outstanding legal matters cannot be predicted with
certainty, based on the information known to date and our existing accruals, we
do not expect the ultimate resolution of these matters to have a material
adverse effect on our financial position, operating results or cash flows. As
new information becomes available or relevant developments occur, we will review
our accruals and make any appropriate adjustments. The impact of these changes
may have a material effect on our results of operations.

Environmental Matters

We are subject to extensive federal, state and local laws and regulations
governing environmental quality and pollution control. These laws and
regulations require us to remove or remedy the effect on the

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environment of the disposal or release of specified substances at current and
former operating sites. As of June 30, 2002, we had a reserve of approximately
$25 million for expected remediation costs (including related environmental
litigation). In addition, we expect to make capital expenditures for
environmental matters of approximately $39 million in the aggregate for the
years 2002 through 2007. These expenditures primarily relate to compliance with
clean air regulations.

We have been designated and have received notice that we could be
designated, or have been asked for information to determine whether we could be
designated, as a Potentially Responsible Party (PRP) with respect to three
active sites under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) or state equivalents. We have sought to resolve our
liability as a PRP at these CERCLA sites, as appropriate, through
indemnification by third parties and settlements which provide for payment of
our allocable share of remediation costs. As of June 30, 2002, we have estimated
our share of the remediation costs at these sites to be approximately $1 million
and have provided reserves that we believe are adequate for such costs. Since
the clean-up costs are estimates and are subject to revision as more information
becomes available about the extent of remediation required, and because in some
cases we have asserted a defense to any liability, our estimates could change.
Moreover, liability under the federal CERCLA statute is joint and several,
meaning that we could be required to pay in excess of our pro rata share of
remediation costs. Our understanding of the financial strength of other PRPs has
been considered, where appropriate, in the determination of our estimated
liabilities.

While the outcome of our outstanding environmental matters cannot be
predicted with certainty, based on the information known to date and our
existing accruals, we do not expect the ultimate resolution of these matters to
have a material adverse effect on our financial position, operating results or
cash flows. It is possible that new information or future developments could
require us to reassess our potential exposure related to environmental matters.
It is also possible that other developments, such as increasingly strict
environmental laws and regulations and claims for damages to property,
employees, other persons and the environment resulting from our current or past
operations, could result in substantial costs and liabilities in the future. As
new information becomes available, or relevant developments occur, we will
review our accruals and make any appropriate adjustments. The impact of these
changes may have a material effect on our results of operations.

Rates and Regulatory Matters

In September 2001, the Federal Energy Regulatory Commission (FERC) issued a
Notice of Proposed Rulemaking (NOPR). The NOPR proposes to apply the standards
of conduct governing the relationship between interstate pipelines and marketing
affiliates to all energy affiliates. The proposed regulations, if adopted by the
FERC, would dictate how we conduct business and interact with our energy
affiliates. In December 2001, we filed comments with the FERC addressing our
concerns with the proposed rules. A public hearing was held on May 21, 2002, at
which interested parties were given opportunity to comment further on the NOPR.
Following the conference, additional comments were filed by El Paso's pipelines
and others. We cannot predict the outcome of the NOPR, but adoption of the
regulations in substantially the form proposed would, at a minimum, place
additional administrative and operational burdens on us.

On July 17, 2002, the FERC issued a Notice of Inquiry (NOI) that seeks
comments regarding its policy, established in 1996, of permitting pipelines to
enter into negotiated rates transactions. Our pipeline has entered into such
transactions over the years and the FERC is now undertaking a review of whether
negotiated rates should be capped, whether or not a pipeline's "recourse rate"
(cost of service based rate) continues to serve as a viable alternative and
safeguard against the exercise of alleged pipeline market power, as well as
other issues related to its negotiated rate program. Comments are due on
September 25, 2002, with reply comments due on October 25, 2002. We cannot
predict the outcome of this NOI.

On August 1, 2002, the FERC issued a NOPR requiring that all arrangements
concerning the cash management or money pool arrangements between a FERC
regulated subsidiary and a non-FERC regulated parent must be in writing, and set
forth: the duties and responsibilities of cash management participants and
administrators; the methods of calculating interest and for allocating interest
income and expenses; and the restrictions on deposits or borrowings by money
pool members. The NOPR also requires specified

6

documentation for all deposits into, borrowings from, interest income from, and
interest expenses related to, these arrangements. Finally, the NOPR proposes
that as a condition of participating in a cash management or money pool
arrangement, the FERC regulated entity must maintain a minimum proprietary
capital balance of 30 percent, and the FERC regulated entity and its parent must
maintain investment grade credit ratings. Comments on the NOPR are due on August
22, 2002. We cannot predict the outcome of this NOPR.

Also on August 1, 2002, the FERC's Chief Accountant issued, to be effective
immediately, an Accounting Release providing guidance on how jurisdictional
entities should account for money pool arrangements and the types of
documentation that should be maintained for these arrangements. The Accounting
Release sets forth the documentation requirements set forth in the NOPR for
money pool arrangements, but does not address the requirements in the NOPR that
as a condition for participating in money pool arrangements the FERC regulated
entity must maintain a minimum proprietary capital balance of 30 percent and
that the entity and its parent must have investment grade credit ratings.
Requests for rehearing are due on September 3, 2002.

While the outcome of our rates and regulatory matters cannot be predicted
with certainty, based on the information known to date, we do not expect the
ultimate resolution of these matters to have a material adverse effect on our
financial position, operating results or cash flows. As new information becomes
available or relevant developments occur, we will establish accruals as
appropriate. The impact of these changes may have a material effect on our
results of operations.

Other Matters

Affiliates of Enron hold both short-term and long-term capacity on our
pipeline system. At this time,
we are uncertain as to Enron's intent to maintain or release capacity associated
with contracts on our
pipeline system and also Enron's ability to honor the terms of their contracts.
The bankruptcy Court has established August 19, 2002 as the deadline for Enron
to assume or reject contracts with us. Future revenue related to these capacity
contracts will depend upon the outcome of Enron's bankruptcy proceedings and our
ability to re-market or otherwise maximize the value of the rejected or released
capacity. We do not presently know the precise values that will be received by
our pipeline as a result of these efforts.

As a result of current circumstances surrounding the energy sector, the
creditworthiness of several industry participants has been called into question.
We have taken actions to mitigate our exposure to these participants; however,
should several of these participants file for Chapter 11 bankruptcy protection
and our contracts are not assumed by other counterparties, it could have a
material adverse effect on our financial position, operating results or cash
flows.

7. RELATED PARTY TRANSACTIONS

We participate in El Paso's cash management program which matches
short-term cash surpluses and needs of its participating affiliates, thus
minimizing total borrowing from outside sources. We had advanced at June 30,
2002 and December 31, 2001, $366 million and $299 million. The market rate of
interest at June 30, 2002 and December 31, 2001 was 1.9% and 2.1%.

At June 30, 2002 and December 31, 2001, we had accounts receivable from
related parties of $4 million and $10 million. In addition, we had accounts
payable to related parties of $17 million and $46 million at June 30, 2002, and
December 31, 2001. These balances arose in the normal course of business.

At June 30, 2002 and December 31, 2001, we had payables to an affiliate of
$204 million for obligations related to a non-cancelable lease on our Detroit
building. Of this amount, $4 million was classified as current at June 30, 2002.
This payable resulted from the relocation of our headquarters from Detroit,
Michigan to Houston, Texas and the transfer of this lease to our affiliate from
a third party. The lease payments are due semi-annually.

We are in the process of selling our Typhoon offshore gas gathering
pipeline to El Paso Energy Partners. See Note 2 for further discussion. This
proposed sale has been approved by both our parent's and El Paso Energy
Partners' Boards of Directors which included the approval by El Paso Energy
Partners' special
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conflicts committee. There were also fairness opinions issued on the
transaction. This transaction is subject to customary regulatory review and
approval. The closing of this sale is expected to occur by the end of 2002.

8. COMMON STOCK

On March 7, 2002, our Board of Directors approved and we filed an amended
and restated certificate of incorporation, changing the total number of
authorized shares of stock to 1,000 shares of common stock, with a par value of
$1.00 per share. This action and the reclassification did not impact our total
equity. As of December 31, 2001, we had 1,000 authorized and issued shares with
a par value of $100 per share.

9. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

Accounting for Asset Retirement Obligations

In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 143, Accounting for Asset Retirement Obligations. This statement requires
companies to record a liability for the estimated retirement and removal costs
of assets used in their business. The liability is recorded at its present
value, and the same amount is added to the recorded value of the asset and is
amortized over the asset's remaining useful life. The provisions of SFAS No. 143
are effective for fiscal years beginning after June 15, 2002. We are currently
evaluating the effects of this statement.

Reporting Gains and Losses from the Early Extinguishment of Debt

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. This statement addresses how to report gains or losses resulting
from the early extinguishment of debt. Under current accounting rules, we report
any gains or losses on early extinguishment of debt as extraordinary items. When
we adopt SFAS No. 145, we will be required to evaluate whether the debt
extinguishment is truly extraordinary in nature. If we routinely extinguish debt
early, the gain or loss will be included in income from continuing operations.
This statement will be effective for our 2003 year-end reporting.

Accounting for Costs Associated with Exit or Disposal Activities

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This statement will require us to recognize
costs associated with exit or disposal activities when they are incurred rather
than when we commit to an exit or disposal plan. Examples of costs covered by
this guidance include lease termination costs, employee severance costs that are
associated with a restructuring, discontinued operations, plant closings or
other exit or disposal activities. The provisions of this statement are
effective for fiscal years beginning after December 31, 2002 and will impact any
exit or disposal activities initiated after January 1, 2003.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information contained in Item 2 updates, and you should read it in
conjunction with, information disclosed in our Annual Report on Form 10-K filed
March 28, 2002, in addition to the financial statements and notes presented in
Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

RECENT DEVELOPMENTS

As a result of current circumstances surrounding the energy sector, the
creditworthiness of several industry participants has been called into question.
We have taken actions to mitigate our exposure to these participants; however,
should several of these participants file for Chapter 11 bankruptcy protection
and our contracts are not assumed by other counterparties, it could have a
material adverse effect on our financial position, operating results or cash
flows.

RESULTS OF OPERATIONS

Pipeline results are relatively stable, but can be subject to variability
from a number of factors, such as weather conditions, including those conditions
that may impact the amount of power produced by natural gas fired turbines, as
well as gas supply availability which can displace the pipeline's delivery
capabilities to the markets they serve. Results can also be impacted by the
ability to market excess natural gas which is influenced by a pipeline's rate of
recovery for use and efficiencies of the compression equipment. Future revenues
may also be impacted by expansion projects in our service areas, competition by
other pipelines for those expansion needs and regulatory impacts on rates. Below
are the operating results and an analysis of these results for the periods ended
June 30:

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(1) BBtu/d means billion British thermal units per day.

Second Quarter 2002 Compared to Second Quarter 2001

Operating revenues for the quarter ended June 30, 2002, were $25 million
lower than the same period in 2001. The decrease was primarily due to sales of
excess natural gas in 2001 that did not recur in 2002, lower realized prices on
resales of natural gas purchased from the Dakota gasification facility, lower
transportation revenues from capacity sold under short-term contracts and lower
throughput due to milder weather in 2002.

Operating expenses for the quarter ended June 30, 2002, were $131 million
lower than the same period in 2001. The decrease was primarily due to $107
million of merger-related costs incurred to relocate our headquarters from
Detroit, Michigan to Houston, Texas and asset impairments, as well as a change
in estimate of $19 million recorded in the second quarter of 2001 primarily for
additional environmental remediation liabilities. Also contributing to the
decrease were lower prices on natural gas purchased at the Dakota gasification
facility, lower corporate overhead allocations in the second quarter of 2002 and
lower benefit costs in 2002. The decrease was partially offset by additional
2002 accruals on estimated liabilities to assess and remediate our environmental
exposure due to an ongoing evaluation of our facilities.

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Other income for the quarter ended June 30, 2002, was $3 million lower than
the same period in 2001 primarily due to lower equity earnings of affiliates
resulting from the sale of our equity investment in Deepwater Holdings Inc. in
2001.

Six Months Ended 2002 Compared to Six Months Ended 2001

Operating revenues for the six months ended June 30, 2002, were $62 million
lower than the same period in 2001. The decrease was primarily due to sales of
excess natural gas in 2001 that did not recur in 2002, lower realized prices on
resales of natural gas purchased from the Dakota gasification facility, lower
transportation revenues from capacity sold under short-term contracts and lower
throughput due to milder weather in 2002.

Operating expenses for the six months ended June 30, 2002, were $229
million lower than the same period in 2001. The decrease was primarily due to
$174 million of merger-related costs incurred to relocate our headquarters from
Detroit, Michigan to Houston, Texas and asset impairments, costs for employee
benefits, severance, retention and transition charges and a change in estimate
of $19 million recorded in 2001 primarily for additional environmental
remediation liabilities. Also contributing to the decrease were lower prices on
natural gas purchased from the Dakota gasification facility, lower benefit
costs, lower operating expenses due to cost efficiencies following El Paso's
merger with Coastal and lower corporate overhead allocations in 2002. The
decrease was partially offset by additional 2002 accruals on estimated
liabilities to assess and remediate our environmental exposure due to an ongoing
evaluation of our facilities.

Other income for the six months ended June 30, 2002, was $8 million lower
than the same period in 2001 primarily due to lower equity earnings of
affiliates resulting from the sale of our equity investment in Deepwater
Holdings Inc. in 2001. The decrease was partially offset by the resolution of
uncertainties associated with the sale of our interest in the Iroquois pipeline
system in 2001.

INCOME TAXES

Income tax expense for the quarter and six months ended June 30, 2002, was
$14 million and $40 million, resulting in effective tax rates of 37 percent and
36 percent. Our effective tax rates were different than the statutory rate of 35
percent primarily due to state income taxes.

Income tax benefit for the quarter and six months ended June 30, 2001, was
$24 million and $18 million, resulting in effective tax rates of 36 percent for
both periods. Our effective tax rates were different than the statutory rate of
35 percent primarily due to state income taxes.

COMMITMENTS AND CONTINGENCIES

See Item 1, Financial Statements, Note 6, which is incorporated herein by
reference.

NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

See Item 1, Financial Statements, Note 9, which is incorporated herein by
reference.

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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

This report contains or incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Where any forward-looking statement includes a statement of the
assumptions or bases underlying the forward-looking statement, we caution that,
while we believe these assumptions or bases to be reasonable and to be made in
good faith, assumed facts or bases almost always vary from the actual results,
and the differences between assumed facts or bases and actual results can be
material, depending upon the circumstances. Where, in any forward-looking
statement, we or our management express an expectation or belief as to future
results, that expectation or belief is expressed in good faith and is believed
to have a reasonable basis. We cannot assure you, however, that the statement of
expectation or belief will result or be achieved or accomplished. The words
"believe," "expect," "estimate," "anticipate" and similar expressions will
generally identify forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information updates, and you should read it in conjunction with,
information disclosed in Part II, Item 7A in our Annual Report on Form 10-K for
the year ended December 31, 2001, in addition to the information presented in
Items 1 and 2 of this Quarterly Report on Form 10-Q.

There are no material changes in our quantitative and qualitative
disclosures about market risks from those reported in our Annual Report on Form
10-K for the year ended December 31, 2001.

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PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 1, Financial Statements, Note 6, which is incorporated
herein by reference.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

a. Exhibits

Each exhibit identified below is filed as a part of this report. Exhibits
not incorporated by reference to a prior filing are designated by an "*"; all
exhibits not so designated are incorporated herein by reference to a prior
filing as indicated.

*99.A -- Certification of Chairman of the Board (Principal
Executive Officer) pursuant to 18 U.S.C. sec. 1350 as
adopted pursuant to sec. 906 of the Sarbanes-Oxley Act of
2002.
*99.B -- Certification of Chief Financial Officer pursuant to 18
U.S.C. sec. 1350 as adopted pursuant to sec. 906 of the
Sarbanes-Oxley Act of 2002.

Undertaking

We hereby undertake, pursuant to Regulation S-K, Item 601(b), paragraph
(4)(iii), to furnish to the U.S. Securities and Exchange Commission, upon
request, all constituent instruments defining the rights of holders of our
long-term debt not filed herewith for the reason that the total amount of
securities authorized under any of such instruments does not exceed 10 percent
of our total consolidated assets.

b. Reports on Form 8-K

None.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

ANR PIPELINE COMPANY

Date: August 13, 2002 /s/ JOHN W. SOMERHALDER II
----------------------------------
John W. Somerhalder II
Chairman of the Board and Director
(Principal Executive Officer)

Date: August 13, 2002 /s/ GREG G. GRUBER
----------------------------------
Greg G. Gruber
Senior Vice President,
Chief Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)

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EXHIBIT INDEX

Each exhibit identified below is filed as a part of this report. Exhibits
not incorporated by reference to a prior filing are designated by an "*"; all
exhibits not so designated are incorporated herein by reference to a prior
filing as indicated.

*99.A -- Certification of Chairman of the Board (Principal
Executive Officer) pursuant to 18 U.S.C. sec. 1350 as
adopted pursuant to sec. 906 of the Sarbanes-Oxley Act of
2002.
*99.B -- Certification of Chief Financial Officer pursuant to 18
U.S.C. sec. 1350 as adopted pursuant to sec. 906 of the
Sarbanes-Oxley Act of 2002.