[Federal Register Volume 62, Number 107 (Wednesday, June 4, 1997)]
[Rules and Regulations]
[Pages 30435-30448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14418]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 153

[Docket No. RM97-1-000; Order No. 595]


Applications for Authorization To Construct, Operate, or Modify 
Facilities Used for the Export or Import of Natural Gas

Issued May 28, 1997.
AGENCY: Federal Energy Regulatory Commission. DOE.

ACTION: Final rule.

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SUMMARY: The Commission is reorganizing, rewriting, and updating its 
regulations governing the filing of applications under section 3 of the 
Natural Gas Act governing the filing of applications for the siting, 
construction, and operation of facilities for the import or export of 
natural gas and the issuance and amendment of Presidential Permits for 
the construction and operation of border facilities. The rule is part 
of the Commission's ongoing program to review its filing and reporting 
requirements and reduce unnecessary burdens by eliminating the 
collection of data that is not necessary to the performance of the 
Commission's regulatory responsibilities. The rule is necessary to 
conform the Commission's regulations to the Commission's current 
responsibilities, as delegated by the Secretary of Energy.

EFFECTIVE DATE: This Final Rule is effective August 4, 1997.

FOR FURTHER INFORMATION CONTACT:

Albert J. Francese, Office of the General Counsel, Federal Energy 
Regulatory Commission, 888 First Street, NE, Washington, DC 20426, 
(202) 208-0736.
Richard W. Foley, Office of Pipeline Regulation, Federal Energy 
Regulatory Commission, 888 First Street, NE, Washington, DC 20426, 
(202) 208-2245.

SUPPLEMENTARY INFORMATION: In addition to publishing the full text of 
this document in the Federal Register, the Commission also provides all 
interested persons an opportunity to inspect or copy the contents of 
this document during normal business hours in the Public Reference 
Room, Room 2A, 888 First Street, NE, Washington, DC 20426.
    The Commission Issuance Posting System (CIPS), an electronic 
bulletin board service, also provides access to the texts of formal 
documents issued by the Commission. CIPS is available at no charge to 
the user and may be accessed using a personal computer with a modem by 
dialing 202-208-1397 if dialing locally or 1-800-856-3920 if dialing 
long distance. To access CIPS, set your communications software to 
19200, 14400, 12000, 9600, 7200, 4800, 2400, or 1200 bps, full duplex, 
no parity, 8 data bits, and 1 stop bit. The full text of this document 
will be available on CIPS in ASCII and Word Perfect 6.1 format. CIPS 
user assistance is available at 202-208-2474.
    CIPS also is available on the Internet through the Fed World 
system. Telnet software is required. To access CIPS via the Internet, 
point your browser to the URL address: http://www.fedworld.gov and 
select the ``Go to the FedWorld Telnet Site'' button. When your Telnet 
software connects you, log-on to the FedWorld system, scroll down and 
select FedWorld by typing: 1 and at the command line type:/go FERC. 
FedWorld also may be accessed by Telnet at the address fedworld.gov.
    Finally, the complete text on diskette in Word Perfect format may 
be purchased from the Commission's copy contractor, La Dorn Systems 
Corporation. La Dorn Systems Corporation is also located in the Public 
Reference Room at 888 First Street, NE, Washington, DC 20426.

TABLE OF CONTENTS

I. Introduction
II. Background
III. Discussion
    A. Background and Statutory Authority
    B. Objectives of the Final Rule
    C. Electronic Filing
    D. The Revised Regulations
    1. Subpart A--General Provisions
    a. Section 153.1 Purpose
    b. Section 153.2 Definitions
    2. Subpart B--Application under Section 3
    a. Section 153.5 Who Shall Apply
    b. Section 153.6 Time of Filing
    c. Section 153.7 Contents of Application
    i. Information Regarding Applicant
    ii. Summary
    iii. Statements
    d. Section 153.8 Required Exhibits
    e. Section 153.9 Transferability
    f. Section 153.10 Authorization Not Exclusive
    g. Section 153.11 Supplemental Orders
    3. Subpart C--Application for a Presidential Permit
    a. Section 153.15 Who Shall Apply
    b. Section 153.16 Contents of Application
    c. Section 153.17 Effectiveness of Presidential Permit
    4. Subpart D--Paper Media and Other Requirements
    a. Section 153.20 General Rule
    b. Section 153.21 Conformity with Requirements
    c. Section 153.22 Amendments and Withdrawals
    d. Section 153.23 Reporting Requirement
IV. Regulatory Flexibility Act Certification
V. Information Collection Statement
VI. Environmental Statement
VII. Effective Date and Congressional Notification
VIII. Regulatory Text

I. Introduction

    The Federal Energy Regulatory Commission (Commission) is amending 
part 153 of its regulations governing the siting, construction, and 
operation of facilities for the import and export of natural gas 
between the United States and a foreign country. Part 153 has not been 
significantly revised since the Commission's predecessor, the Federal 
Power Commission (FPC), recodified its regulations in 1947.1
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    \1\ Order No. 141, 12 FR 8596 (December 19, 1947). The part 153 
regulations originally became effective on July 11, 1938, in FPC 
Order Nos. 52 (section 3 authorizations) and 66 (Presidential 
Permits).
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    The rule conforms the Commission's filing requirements in part 153 
to the Commission's current responsibilities as changed by intervening 
legislation and Department of Energy (DOE) delegation orders. The DOE 
delegation orders divide jurisdiction and authority over natural gas 
import and export issues arising under section 3 of the Natural Gas Act 
(NGA) 2 between the Commission and DOE.3 The 
revisions to part 153 implement the Commission's currently delegated 
responsibilities under NGA section 3 and Executive Order 10485, as 
amended, regarding the construction and operation of facilities

[[Page 30436]]

for the import and export of natural gas.4
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    \2\ 15 U.S.C. 717b.
    \3\ DOE previously issued regulations implementing its delegated 
authorities under NGA section 3 for the import/export of natural 
gas. See 10 CFR 590.100, et seq.
    \4\ Executive Order 10485, 3 CFR, 2949-1953 Comp., p. 970, as 
amended by Executive Order 12038, 3 CFR 1978 Comp., p. 136.
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    The Final Rule redefines and clarifies the Commission's role with 
respect to granting the authorizations necessary to construct and 
operate facilities for the import and export of natural gas between a 
foreign country and the United States. The regulations codify existing 
practice which requires the applicant proposing to construct or modify 
LNG facilities to file exhibits concerning the environmental and safety 
features of those facilities.
    Over the last 11 years (1986-1996), there has been a dramatic 
increase in the volume of natural gas import and export activity 
involving the United States.5 In 1996 alone, United States 
firms imported 2,883.3 Bcf of natural gas from Canada, while exporting 
61.4 Bcf to Canada. In the same year, United States firms imported 13.9 
Bcf from Mexico and exported 33.8 Bcf of natural gas to Mexico. The 
issuance of the Final Rule coincides with proposals recently filed by 
pipelines for substantial new construction to bring even more Canadian 
natural gas into the United States.6 The Final Rule will 
improve Commission monitoring of all facilities authorized under part 
153.
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    \5\ DOE/FE, Natural Gas Imports and Exports, Fourth Quarter 
Report (1996) at p. ii.
    \6\ The Final Rule will apply to all part 153 applications filed 
after the effective date of the Final Rule.
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    The changes to the Commission's regulations are effective August 4, 
1997.

II. Background

    On February 3, 1997, the Commission issued a Notice of Proposed 
Rulemaking (NOPR) proposing a major overhaul of its regulations 
governing applications for the construction of facilities for the 
import/export of natural gas.7 The Commission is determined 
to issue sensible regulations that impose the least burden without 
sacrificing rational and necessary protections.8 The 
Commission is bringing its filing requirements and procedures up to 
date to match its current substantive policies and authority and is not 
significantly changing its procedures for processing applications filed 
under part 153. The revised regulations are designed to provide the 
Commission and interested parties with the information generally 
required to process an application under part 153. Where more 
information is needed, it may be collected on a case-by-case basis.
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    \7\ Applications for Authorization to Construct, Operate, or 
Modify Facilities Used for the Export or Import of Natural Gas, 62 
FR 5940 (February 10, 1997), IV FERC Stats. & Regs. para. 32,523 
(1997).
    \8\ The President's memorandum, dated March 4, 1995, concerning 
the National Performance Review, requires agencies, among other 
things, to eliminate or revise outdated regulations and to move from 
a process that creates large numbers of regulations to issuing 
``sensible regulations that impose the least burden without 
sacrificing rational and necessary protections.''
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    The Commission received six comments on the NOPR.9 The 
commenters suggested various clarifications and modifications some of 
which are incorporated into the Final Rule with appropriate revisions. 
The Final Rule:
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    \9\ The commenters were the Canadian Association of Petroleum 
Producers, Coastal Companies, Great Lakes Gas Transmission Limited 
Partnership, PanEnergy Pipelines, Phillips Petroleum Company, and 
Yukon Pacific Company L.P. While PanEnergy Pipelines' comments were 
filed three days late, the Commission will consider them in order to 
address all issues raised in this proceeding.
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     Clarifies that Sec. 153.5 does not require the holder of a 
Commission section 3 authorization to file an amendment with the 
Commission upon DOE/FE's extension of import/export authority;
     Clarifies that Sec. 153.5 requires the holder of an 
existing section 3 authorization for LNG facilities to file for 
additional section 3 authorization to modify existing LNG facilities 
with facilities to be used for the import/export of natural gas, but no 
amendment would be required if the holder seeks to modify facilities at 
the LNG plant site that are not used to import/export LNG;
     Requires in Sec. 153.6 an applicant to state for the first 
time whether an application for DOE/FE authorization is required or has 
been obtained at the time of filing a section 3 application with the 
Commission;
     Clarifies that the list in Sec. 153.7(c)(1) of public 
interest criteria is illustrative and adds as a factor for 
consideration the enhancement of competition within the United States 
for natural gas transportation or supply;
     Clarifies that Sec. 153.9 permits the transfer or 
assignment of section 3 authorizations and related facilities upon 
prior Commission approval, and;
     Exempts applicants that do not possess pipeline 
transportation capacity (such as LNG terminals) from the new 
requirement in Sec. 153.23 to report annually estimated peak day 
capacity and actual peak day usage of the import/export facility.

III. Discussion

A. Background and Statutory Authority

    Section 3 of the NGA requires prior authorization before exporting 
or importing natural gas from or to the United States.10 
Section 3 authorizes the Commission to grant an application, in whole 
or in part, with modifications and upon terms and conditions as the 
Commission may find necessary or appropriate. Section 3 also authorizes 
the Commission to make ``such supplemental order in the premises as it 
may find necessary or appropriate.''
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    \10\ 15 U.S.C. 717b.
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    Currently, responsibilities under section 3 are divided between 
DOE/FE and the Commission. The Commission's responsibilities under 
section 3, as under the other provisions of the Natural Gas Act, are to 
be administered ``to protect consumers against exploitation at the 
hands of natural gas companies.'' 11
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    \11\ FPC v. Hope Natural Gas Co., 320 U.S. 591, 610 (1944).
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    Initially, the FPC was vested with exclusive jurisdiction under 
section 3 to decide all natural gas import and export issues, including 
the authorization to import and export natural gas and to construct and 
operate necessary facilities. The FPC also had the authority, pursuant 
to Executive Order 10485, as amended, to issue or modify a Presidential 
Permit for the construction and operation of border facilities at the 
international boundary between the United States and Canada or Mexico.
    The Department of Energy Organization Act (DOE Act), enacted in 
1977, transferred all the FPC's authority over natural gas imports and 
exports to the Secretary of Energy ``unless the Secretary assigns such 
a function to the (Federal Energy Regulatory) Commission.'' 
12 Between October 1, 1977, and February, 1984, DOE and the 
Commission shared responsibility over natural gas import and export 
issues pursuant to DOE delegation orders (which have since been 
rescinded). The Secretary of Energy administered his authority over 
natural gas import and export issues pursuant to FPC rules in place on 
September 30, 1977, until DOE issued its own final 
regulations.13
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    \12\ See sections 301(b), 402(a) and 402(f) of the Department of 
Energy Organization Act, 42 U.S.C. 7151(b), 7172(a) and 7172(f).
    \13\ DOE's final rules establishing procedures for processing 
applications for the import and export of natural gas and revised ex 
parte rules became effective on September 6, 1984. 49 FR 35302 
(September 6, 1984).
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    The Secretary issued new delegation orders 0204-111 and 0204-112, 
discussed below, in February 1984, to minimize problems of coordination 
on certain import/export issues.14 These delegation orders 
allocated regulatory functions concerning the import and

[[Page 30437]]

export of natural gas to the Commission and DOE/Economic Regulatory 
Administration (ERA).15 DOE and the Commission continue to 
share responsibility for determining natural gas import/export issues 
under these currently applicable delegation orders.
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    \14\ Both delegation orders were published at 49 FR 6684 
(February 22, 1984).
    \15\ Effective on February 7, 1989, the Assistant Secretary for 
Fossil Energy (DOE/FE) assumed the delegated responsibilities of the 
Administrator of ERA. See DOE Delegation Order No. 0204-127. 54 
11436 (March 20, 1989).
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    Under DOE Delegation Order 0204-111, effective February 22, 1984, 
the Secretary of Energy delegated to the Administrator of ERA authority 
under section 3 of the NGA to regulate the import (including the place 
of entry) and the export (including the place of exit) of natural gas. 
On the same date, the Secretary of Energy issued Delegation Order 0204-
112 which delegated to the Commission exclusive authority over specific 
import/export matters.
    The responsibilities delegated to the Commission include the 
authority to approve or disapprove proposals for the construction, 
operation, and siting of facilities, and when the construction of new 
domestic facilities is involved, the place of entry for imports or 
place of exit for exports. The Commission's delegated authority is 
subject to DOE's right of disapproval if the Administrator finds 
disapproval to be appropriate ``in the circumstances of a particular 
case.'' Thus, under the most recent and presently applicable delegation 
orders, the facility and siting aspects of natural gas import and 
export are delegated and assigned to the Commission for determination 
of the public interest.
    Section 3 of the NGA provides that the Commission ``shall issue an 
order upon application, unless * * * it finds that the proposed 
exportation or importation will not be consistent with the public 
interest.'' The Commission determines the public interest in particular 
proceedings upon consideration of all relevant factors. For example, 
the Commission has authorized the construction and operation of import/
export facilities under NGA section 3 based upon substantial evidence 
that the proposal is necessary to access gas supplies, deliver imported 
gas to an industrial user,16 provide a more economic source 
of natural gas,17 or enhance competition, system 
reliability, flexibility, or the dependability of international energy 
trade, and will not adversely affect the service or rates of existing 
customers.18 The Commission's current practice in 
implementing NGA section 3 does not require that an applicant include 
in its application evidence of specific market support for its project 
(such as precedent agreements between the applicant and shippers), 
although construction authorized under section 3 must be associated 
with the import/export of natural gas.19
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    \16\ See National Steel Corp., 45 FERC para. 61,100 (1988).
    \17\ See Atlantic Richfield Co. and Intalco Aluminum Corp., 49 
FERC para. 61,294 (1989), reh'g denied in part, 50 FERC para. 61,210 
(1990).
    \18\ Great Lakes Transmission Limited Partnership, 76 FERC para. 
61,148 (1996).
    \19\ Unlike precedent under section 3, Commission precedent 
under NGA section 7 requires an applicant to file executed precedent 
or service agreements to demonstrate sufficient demand for proposed 
capacity. See, e.g., El Paso Natural Gas Co., 65 FERC para. 61,276 
(1993).
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    A person applying to the Commission for authority under section 3 
must also apply to the Commission, pursuant to DOE Delegation Order No. 
0204-112, for the issuance of a Presidential Permit or an amendment to 
an existing Presidential Permit if the proposed facilities are to be 
located at the borders of the United States and either Canada or 
Mexico.20 A Presidential Permit authorizes the applicant to 
construct, operate, maintain, or connect natural gas pipeline 
facilities at the international borders.
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    \20\ Pursuant to an opinion rendered by the Office of the Legal 
Counsel of the Department of Justice, the FPC determined that 
Executive Order No. 10485 does not apply to gas facilities on the 
border of the United States and international waters because there 
would be no border facilities involving any physical connection 
between the facilities involving any physical connection between the 
United States and a foreign country. See Phillips Petroleum Co., et 
al., 37 FPC 777 (1967).
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    The Commission has the jurisdiction, pursuant to Executive Order 
10485, as amended, to condition a Presidential Permit ``as the public 
interest may in its judgment require.'' 21 In addition, 
Executive Order 10485, as amended, requires the Commission to obtain 
the concurrence of the Secretary of State and the Secretary of Defense 
who will consider foreign policy and national security aspects of the 
application.
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    \21\ These conditions are stated as ``articles'' in the body of 
a Presidential Permit. The articles describe the facilities, design 
capacity, nature of the service and include various uniform 
provisions concerning transferability of the Presidential Permit or 
facilities, inspection and access to the facilities, liability for 
damages, filing of information, removal of facilities upon 
surrender/revocation of the Presidential Permit, possession by the 
United States, and control by a foreign government.
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    An applicant proposing to alter a term of an existing Presidential 
Permit that does not also necessitate new construction, e.g., a 
revision to the authorized operating or design capacity of an existing 
import/export facility, must file to amend its Presidential 
Permit.22 That applicant, however, does not also require 
section 3 authorization when existing facilities are unchanged. On the 
other hand, the applicant granted authorization under NGA section 3 
does not require a Presidential Permit for the construction of natural 
gas import/export facilities located at tidewater or on the border of 
the United States and international waters because, as the Commission 
interprets and applies Executive Order 10485, as amended, there would 
be no physical connection of border facilities at the boundary between 
the United States and a foreign country.23
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    \22\ See Panhandle Eastern Pipe Line Co., 62 FERC para. 61,190 
(1993).
    \23\ See EcoElectrica, L.P., 75 FERC para. 61,157 (1996), Yukon 
Pacific Corp., 39 FERC para. 61,216 (1987), and Phillips Petroleum 
Co., 37 FPC 777 (1967).
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    The holder of a Presidential Permit may file to terminate, revoke, 
or surrender its Presidential Permit which had been activated by the 
construction of authorized facilities. Pursuant to uniform article 9 of 
a Presidential Permit, the holder of a surrendered Presidential Permit 
must remove the authorized import/export facilities as prescribed by 
Commission order. The holder of a surrendered Presidential Permit may 
not transfer the related section 3 authorization and facilities to 
another owner/operator without prior Commission authorization. 
24
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    \24\ See Western Gas Interstate Co., 74 FERC para. 61,347 (1996) 
and Northern Natural Gas Co., et al., 71 FERC para. 61,292 (1995).
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    The holder of a Presidential Permit also may file a request to 
surrender its Presidential Permit if the Presidential Permit was never 
activated and no facilities were constructed. 25 Upon 
receipt of an application to surrender a Presidential Permit, the 
Commission's practice is to provide public notice of the application to 
determine whether its surrender would be disputed. 26
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    \25\ Application pending Commission review in Western Gas 
Interstate Co.'s Docket No. CP69-169-000 to discontinue a 
Presidential Permit authorized by prior FPC order (41 FPC 385 
(1969)) because certain border facilities were never constructed.
    \26\ The Commission's review of the annual report for non-
natural gas company applicants required by Sec. 153.23 of the Final 
Rule and Form No. 2 and other reports for natural gas companies will 
enable the Commission to determine the current status of import/
export facilities authorized under section 3 and a Presidential 
Permit.
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B. Objectives of the Final Rule

    Part 153 currently imposes specific filing requirements on 
applicants for authorization under section 3 and Executive Order 10485, 
as amended, to site, construct, and operate facilities for

[[Page 30438]]

the import or export of natural gas. 27 The Final Rule 
incorporates basic housekeeping changes to eliminate obsolete and 
redundant language and sections concerning filing fees, bundled sales 
service, and the filing of import/export contracts and rate schedules. 
The Final Rule also makes conforming changes to the current regulations 
to reflect the Commission's diminished responsibilities in the 
regulation of natural gas imports and exports under DOE's currently 
effective delegation orders.
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    \27\ Thus, neither the current regulations nor the Final Rule 
address filing requirements applicable to the construction of any 
connecting facilities transporting natural gas in interstate 
commerce. Such facilities would be within the scope of section 7 and 
the Commission's part 157 regulations. See Williston Basin 
Interstate Pipeline Co., 63 FERC para. 61,179 (1993) and Panhandle 
Eastern Pipe Line Co., 5 FPC 476 (1946).
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    The Final Rule also updates the type of information and exhibits 
that an applicant must include in its application. The Commission is 
revising its filing requirements to match its current responsibilities 
and does not propose to change its substantive policies.
    Other changes to part 153 reflect the separate but related nature 
of the Commission's and DOE's responsibilities concerning natural gas 
import and export issues. The Commission's revisions will make clear 
that the part 153 regulations apply only to the siting, construction, 
operation, or modification of facilities for the import or export of 
natural gas. On the other hand, DOE's responsibility is the 
authorization of requests to import/export natural gas.28
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    \28\ Under DOE regulations, applications must be filed at least 
90 days prior to the proposed import or export, unless a later date 
is permitted for good cause shown. See 10 CFR 590.201. DOE processes 
applications for import/export authority where a free trade 
agreement applies on an expedited basis. NGA section 3(c), added by 
the Energy Policy Act of 1992, provides that ``applications for such 
importation or exportation shall be granted without modification or 
delay.'' 15 U.S.C. 717b(c).
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    Section 153.6 of the Final Rule requires the FERC applicant, for 
the first time, to include in its application a statement indicating 
whether a related application with DOE/FE (or an amendment to an 
existing blanket authorization) is required, and if so, whether that 
application or amendment has been granted by DOE/FE.29 
Section 153.6 of the Final Rule also requires the FERC applicant to 
file a statement before it commences construction that DOE/FE has 
granted any required, related import/export authority. Based on 
comments received, the Final Rule deletes Sec. 153.6 of the NOPR which 
provided for the simultaneous or prior filing of a related application 
with DOE/FE.
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    \29\ The person filing with DOE/FE for import/export 
authorization may be a shipper on the facilities of the FERC 
applicant and need not be the FERC applicant.
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    Section 153.7 of the Final Rule codifies Commission practice 
concerning evidentiary support for an application for authorization for 
the construction of facilities under section 3 or an amendment to an 
existing authorization. Section 153.7(c)(1) permits an applicant to 
support its statement that its application is not inconsistent with the 
public interest by including evidence that its proposal or proposed 
construction is beneficial (with examples stated in the Final Rule), 
that there will be no impairment of service at reasonable rates, and 
that no anti-competitive agreements are involved. In addition, the 
applicant must submit, pursuant to Sec. 153.7(c)(2), a statement 
describing the nature of the transportation service that the applicant 
will provide using the import/export facilities. This statement will 
assist the Commission in determining the extent to which a pipeline 
applicant will use its import/export capacity for all shippers.
    Subpart D of the Final Rule provides for the rejection of 
incomplete applications and for amendments and withdrawals of pending 
applications consistent with the Commission's practice in part 157. 
Certain section 3 applicants are not natural gas companies, and, thus, 
are not currently required to notify the Commission of basic 
operational data (such as the completion of construction or start-up of 
service through authorized facilities). The Final Rule requires those 
applicants to report such information to the Commission.

C. Electronic Filing

    The Commission is not modifying part 153 at this time to require an 
applicant to file its applications on electronic media. The Commission 
will review in a future proceeding the electronic filing requirements 
for the entire certificate application process, including existing 
electronic filing requirements for part 157 applications and 
appropriate electronic filing procedures to adopt for part 153 
applications. The Commission will determine where changes are necessary 
to reflect current policies and will modify existing electronic filing 
requirements as necessary to streamline and update the filing process.
    As was done in proceedings in Docket Nos. RM95-3-000 30 
and RM95-4-000, 31 the Commission will solicit participation 
of the industry and other users of filed information in formulating 
final electronic filing instructions.
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    \30\ Filing and Reporting Requirements for Interstate Natural 
Gas Company Rate Schedules and Tariffs, 60 FR 3111 (January 13, 
1995).
    \31\ Revisions to Uniform System of Accounts, Forms, Statements, 
and Reporting Requirements for Natural Gas Companies, 60 FR 3141 
(January 13, 1995).
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D. The Revised Regulations

    The revised part 153 has a new organization, different from that in 
the current regulations, and virtually every section has been changed 
in some way. The text has been revised to remove outdated references to 
the import/export of natural gas and fees and rewritten to be more 
concise with separate subparts A through D. Part 153 starts with a new 
heading and updated legal authorities. The final regulations are 
discussed below.
1. Subpart A--General Provisions
a. Section 153.1  Purpose
    The Commission has included in Sec. 153.1 a statement of the 
purpose of its part 153 regulations--to implement the Commission's 
authorities delegated under section 3 of the Natural Gas Act and 
Executive Order 10485, as amended. Part 153 revamps the Commission's 
procedures and evidentiary requirements for applying for section 3 
authorization and for a Presidential Permit.
b. Section 153.2  Definitions
    The Final Rule includes a section defining key terms used in part 
153--``DOE/FE'' (Department of Energy/Office of Fossil Energy), 
``NBSIR'' (National Bureau of Standards Information Report), and 
``person'' for purposes of part 153 (``person'' is currently undefined 
in part 153). The Commission's definition of person is identical with 
and cross-references DOE's definition of ``person'' stated at 10 CFR 
590.102(m), which DOE uses for purposes of considering applications for 
import/export authorization.32 The Commission's definition 
will by its own terms automatically incorporate any future changes in 
DOE's definition of ``person.'' The Commission's definition would not 
change current Commission practice in processing applications under 
section 3 or Executive Order 10485, as amended.
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    \32\ 10 CFR 590.102(m).

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[[Page 30439]]

2. Subpart B--Application Under Section 3
a. Section 153.5  Who Shall Apply
    Section 153.5(a) of the Final Rule retains the requirement in 
current Sec. 153.1 that a person file an application to seek 
authorization under section 3 and adds a new provision, codifying 
current practice, requiring the filing of an application in order to 
amend an existing authorization under section 3, including the 
modification of existing import/export facilities.
    Phillips Petroleum Company (Phillips) asks the Commission to 
clarify that the proposed Sec. 153.5(a) does not require it to file an 
application with the Commission under section 3 to amend its existing 
Commission authorization, if DOE/FE authorizes an extension of its 
existing LNG export agreement.33
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    \33\ See Phillips Petroleum Co., et al., 37 FPC 777 (1967). The 
Commission authorized, pursuant to NGA section 3, the export of LNG 
and the construction of facilities currently known as the Kenai LNG 
plant in the Cook Inlet area of Alaska for the liquefaction and 
storage of natural gas and the loading of LNG onto ships for export 
and delivery to Japan. From time to time, Phillips has filed with 
DOE/FE requests to extend the term of its export authorization.
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    If an entity seeks to modify its facilities authorized under 
section 3, that entity must file an application with the Commission 
under section 3 in order to amend its existing authorization. A grant 
by DOE/FE of an extension of an existing contract to export LNG would 
not by itself require a Commission-authorized entity to file an 
application to modify its facilities, and no amendment to its section 3 
authorization would be required. Accordingly, the requested 
clarification is granted. Proposed Sec. 153.5(a) is revised to 
eliminate duplicative language concerning the necessity to file an 
amendment to an existing Commission authorization in order to modify 
facilities authorized under section 3.
    Phillips also asks the Commission to clarify that proposed 
Sec. 153.5(a) would not require it to file an application with the 
Commission under section 3 in order to modify facilities at its LNG 
plant site which are not used for the export of natural gas.
    The holder of a section 3 authorization is required to obtain prior 
Commission authorization under section 3 to amend that current section 
3 authorization if the applicant proposes to implement changes in its 
import/export facilities or operations.34 Thus, if Phillips 
seeks to modify facilities which serve its LNG function at the Cook 
Inlet area in order to provide incidental activities, such as 
intrastate sales of LNG or regassified natural gas to industrials, 
Phillips must file an amendment to its existing section 3 authorization 
to undertake that construction.35 This is so because 
Phillips would be modifying existing export facilities that would 
continue to serve its LNG export function while providing non-export 
service. The additional service could not occur without the underlying 
LNG facilities for storage, gasification, or transportation.
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    \34\ A pipeline may not construct or modify an existing LNG 
facility, whether an import facility authorized under section 3 or 
not, under its part 157 blanket (subpart F) certificate pursuant to 
18 CFR 157.202(b)(2)(ii)(D), which excludes such construction from 
the scope of a part 157 blanket (subpart F) certificate. See 
Algonquin LNG, Inc., 79 FERC para. 61,139 (1997).
    \35\ Ordering Paragraph (d) of the FPC's 1967 order provides 
that Phillips and Marathon Oil Co., joint applicants, ``shall not * 
* * materially change or alter their export operations without first 
obtaining the permission and approval of the Commission.'' 37 FPC at 
778.
---------------------------------------------------------------------------

    If Phillips seeks to modify facilities at its LNG plant site which 
are not currently used to export LNG in order to sell natural gas or 
natural gas products within the state of Alaska, Phillips would not 
need to make a Commission filing to implement that construction which 
would facilitate intrastate transactions. If Phillips is unclear about 
whether proposed modifications involve dual-purpose facilities 
providing LNG-export and non-LNG export service, it may also file a 
request for a declaratory order with the Commission to resolve the 
uncertainty.
    PanEnergy asks the Commission to clarify Sec. 153.5(a) to provide 
that a pipeline does not have to file an amendment to its existing 
section 3 authorization if it proposes to change the valves, meters, 
piping, or other minor construction associated with import/export 
facilities. 36 PanEnergy's request for an exemption for 
minor facilities, if granted, would be inconsistent with the public 
interest. That construction could affect the reliability of service 
through the import/export facility, and may require the modification of 
facilities in Canada or Mexico. The Commission might not become aware 
of self-implemented construction until years after the facilities are 
altered as in the case of Panhandle Eastern Pipeline 
Co.(Panhandle).37 While Panhandle involved a certificated 
export delivery point and not the modification of border-crossing 
facilities, the same result should apply in the case of modifications 
of border-crossing facilities authorized under section 3 or a 
Presidential Permit. The request for rule clarification is rejected.
---------------------------------------------------------------------------

    \36\ PanEnergy's motion questions the need to file an amendment 
to its ``import/export license'' for such minor construction. We 
construe PanEnergy's request as referring to the need to file to 
amend the Commission's section 3/Presidential Permit authorization. 
There would not necessarily be a need to amend a DOE/FE import/
export authorization because of Commission-authorized section 3 
construction.
    \37\ 65 FERC para. 61,169 (1993). In Panhandle, the Commission 
found that the pipeline had abandoned an existing certificated 
delivery point and constructed a new delivery point at the United 
States-Canada border without prior Commission authorization under 
section 7(b) and without following the prior notice procedures of 
its part 157 (subpart) F) certificate. The Commission granted 
retroactive abandonment authorization as well as the authority to 
operate the new delivery point under the pipeline's part 157 
(subpart F) certificate.
---------------------------------------------------------------------------

    Section 153.5(b) of the Final Rule cross-references subpart C 
(applications for a Presidential Permit). Section 153.5(b) establishes 
a requirement that an applicant must also simultaneously apply under 
subpart C for a Presidential Permit for the construction of border 
facilities at the international boundary between the United States and 
Canada or Mexico.
b. Section 153.6  Time of Filing
    Filing requirements prescribing the number of copies and form of 
applications for section 3 authorizations (and for Presidential 
Permits) are moved from current Sec. 153.2 to Sec. 153.20(a) of subpart 
D of the Final Rule. This change avoids duplication of regulatory text.
    The current part 153 regulations do not require a pipeline to file 
an FERC application under section 3 under any particular timetable in 
relation to its shippers' filing of a related, required application for 
import/export authorization with DOE/FE. That is so because the current 
regulations became effective when the FPC had exclusive jurisdiction 
over all natural gas import/export issues. The NOPR recognized that 
under current delegation orders separate applications would be filed 
with the Commission and DOE/FE. Proposed Sec. 153.6 recognized the 
related nature of those applications before the Commission and DOE/FE 
on import/export issues by requiring the pipeline's shipper to make 
prior or simultaneous filings with DOE/FE for import/export 
authority.\38\
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    \38\ See Atlantic Richfield Co., et al., 49 FERC para. 61.294 
(1989), reh'g denied, 50 FERC para. 61,210 (1990) and National Steel 
Corp., 45 FERC para. 61,100 (1988). In both cases, DOE issued import 
authorizations before the Commission issued an order approving the 
place of import under section 3.
---------------------------------------------------------------------------

    The Coastal Companies and Great Lakes Gas Transmission Limited 
Partnership (Great Lakes) assert that proposed Sec. 153.6 would 
establish a new

[[Page 30440]]

requirement which is not workable. Both assert that DOE/FE filings are 
likely to be made after the filing of border-crossing applications with 
the Commission. According to Great Lakes, a potential FERC applicant 
should not be required to coordinate its filing with third parties and 
to wait to file with the Commission until its shippers have filed their 
applications before DOE/FE. Great Lakes argues that an applicant should 
file with the Commission under section 3 before filing an application 
with DOE because Commission proceedings, with environmental reviews, 
may continue longer than the minimum 90-day period of review under 
DOE's regulations for applications to import/export natural 
gas.39 Great Lakes asks the Commission to revise its 
proposed regulations to require an applicant to state whether an 
application for DOE/FE authorization will be required and, if so, to 
agree to a condition that ``all necessary DOE authorizations have been 
or will be obtained prior to the operation of import/export 
facilities.''
---------------------------------------------------------------------------

    \39\ Under DOE's regulations, applications to import/export 
natural gas must be filed at least 90 days prior to the proposed 
import/export date, unless a later date is permitted for good cause 
shown. 10 CFR 590.201.
---------------------------------------------------------------------------

    The Commission's purpose in the NOPR was two-fold. First, the 
Commission was proposing to amend its filing requirements to reflect 
the division of authority between the Commission and DOE on import/
export issues. Second, the proposed regulation was based on the 
assumption that an application for new or changed import/export 
authority is a step which would precede an application before the 
Commission for necessary, related import/export facilities.
    Great Lakes proposes substitute language in proposed Sec. 153.6 
that would require a pipeline to state whether an application for DOE/
FE authorization is also required, and, if so, to represent that DOE/FE 
will grant that application prior to the operation of the border 
facilities.
    The Commission recognizes that not all applications filed with the 
Commission under NGA section 3 require modification to an existing 
import/export authorization. For example, some construction may be 
undertaken to enhance system reliability and flexibility, which does 
not necessitate a change in an existing import/export authorization. 
Other construction may be used to transport volumes previously 
authorized under an existing DOE/FE blanket certificate. Moreover, it 
may be difficult for a pipeline to control the timing of its shippers' 
filing of required, related applications for import/export 
authorization.
    Accordingly, we will delete proposed Sec. 153.6 and, in its place, 
add a new paragraph (a) to Sec. 153.6 requiring an applicant to state 
whether DOE/FE authorization is required 40 and, if so, 
whether all required DOE/FE authorizations have been granted prior to 
filing a section 3 application with the Commission.
---------------------------------------------------------------------------

    \40\ A shipper's blanket import/export authorization from DOE/FE 
satisfies the Final Rule, and no further DOE/FE authorization would 
be ``required.''
---------------------------------------------------------------------------

    Great Lakes also suggests that the Commission could require the 
FERC applicant, as a condition of its authorization, to file a 
statement that DOE/FE authorizations ``will be obtained prior to the 
operation of the border facilities.'' This recommendation is not 
workable because if the applicant's representation of DOE/FE approval 
does not materialize, the Commission would be in the undesirable 
position of having authorized the construction of facilities which may 
never become operational. The pipelines' customers would derive no 
benefits from unused construction, and the environment would have been 
needlessly disturbed.
    Accordingly, the Commission will also revise proposed Sec. 153.6 to 
condition its grant of section 3 authorization on the applicant's 
filing a subsequent statement, before the applicant may commence 
construction, that its shippers have applied for and obtained all 
required DOE/FE authorizations for the import/export of natural gas. We 
will adopt Great Lakes' proposed condition, as revised, in 
Sec. 153.6(b) of the Final Rule. The Commission intends to apply the 
Final Rule to all future section 3 applications that also require an 
application for DOE/FE authorization or an amendment to an existing 
authorization for the import/export of natural gas.
c. Section 153.7  Contents of Application
i. Information Regarding Applicant
    The requirements in Secs. 153.7 and 153.8 (exhibits) of the Final 
Rule apply to applications under subpart B for authorization under NGA 
section 3 and under subpart C for Presidential Permits for the 
construction of import/export facilities at the border. Informational 
requirements in current Secs. 153.3(a) through 153.3(c), identifying 
the applicant, its authorized agent, legal status, and address, are 
revised and retained in proposed Sec. 153.7(a)(1) through (a)(3) of the 
Final Rule with a paragraph heading added. The informational 
requirements in current Secs. 153.3(d) through 153.3(f) are deleted 
because they require information no longer essential to the 
Commission's delegated responsibilities--the name and location of gas 
production fields and reserves as well as the name of the seller and 
producer of gas to be imported and the proposed rates to the paid by 
the applicant. For the same reason, current Sec. 153.8, requiring the 
filing of import/export contracts and rate schedules, is deleted.
    Section 153.7(a)(3) of the Final Rule reflects a merging of 
application requirements for section 3 authorizations and Presidential 
Permits which are separately stated in current regulations. The Final 
Rule relocates in Sec. 153.7(a)(3) the current requirement in 
Sec. 153.11(a)(4) that applications for Presidential Permits identify 
foreign ownership or subsidy of the applicant.
    The Canadian Producers ask the Commission to clarify why it is 
necessary for an applicant to indicate whether the applicant is owned 
or subsidized by a foreign government. As noted, the current 
regulations applicable to Presidential Permits require a section 3 
applicant to supply information about foreign government ownership/
subsidy. This information assists the Commission's implementation of 
its delegated authorities under Executive Order No. 10485, as amended, 
which derives from the constitutional authority vested in the President 
of the United States over foreign relations and as Commander-in-
Chief.\41\ This informational requirement enables the Commission and 
the Secretaries of State and Defense, upon their review of a Commission 
request for concurrence, to consider all relevant factors in 
determining whether an application for a Presidential Permit for the 
construction of border facilities is in the public interest. Foreign 
ownership or subsidy of an applicant is one such material factor.
---------------------------------------------------------------------------

    \41\ See Yukon Pacific Corp., 39 FERC para. 61,216 at pp. 
61,759-60 (1987).
---------------------------------------------------------------------------

ii. Summary
    The requirement in current Sec. 153.3(g) to describe proposed 
facilities is retained, expanded, and redesignated as Sec. 153.7(b) of 
the Final Rule with a ``summary'' paragraph heading added. The Final 
Rule requires the applicant to summarize its proposal and to file a 
description of the proposed facilities and a description of state, 
foreign, or other Federal licenses or permits for the construction or 
operation of facilities (revising a similar requirement in

[[Page 30441]]

current Sec. 153.11(d) applicable to Presidential Permits). In 
addition, Sec. 153.7(b) of the Final Rule adds a new requirement that 
the applicant must also state the status of any non-FERC regulatory 
proceedings (United States or foreign) related to the proposal.
iii. Statements
    Section 153.7(c) of the Final Rule requires the applicant to file 
two statements with its application. The first statement demonstrates 
the public interest. It consists of three elements (Sec. 153.7(c)(1) 
(i) through (iii))--demonstrating, respectively, benefits from the 
proposal, whether existing service at reasonable rates would be 
impaired, and whether there are any applicable anti-competitive 
agreements. Section 153.7(c)(1)(i) of the Final Rule is new, while the 
requirements in Secs. 153.7(c)(1)(ii) and (iii) are in the current 
regulations and have been continued with revisions. The second 
statement (Sec. 153.7(c)(2)) requires, for the first time, a 
description of the nature of the transportation service offered through 
the authorized border-crossing facilities.
    With respect to the first element of the public interest statement, 
Sec. 153.7(c)(1)(i) of the NOPR identified illustrative elements of the 
public interest, including a demonstration that the proposal will 
access new foreign supplies of natural gas and new markets, or enhance 
system reliability and/or flexibility. Section 153.7(c)1)(ii) and (iii) 
required representations that the proposal would not impair service to 
existing customers at reasonable rates or involve anti-competitive 
agreements that may prevent other United States companies from 
competing in the same general area.
    Great Lakes and PanEnergy Pipelines (PanEnergy) ask the Commission 
to clarify that the criteria relating to the public interest in 
Sec. 153.7(c)(1)(i) are illustrative only and, because the listing is 
not all-inclusive, that an applicant should not be required to make a 
showing of ``any of those specific criteria * * * since there are other 
criteria that can also demonstrate that the proposed siting and 
construction are not inconsistent with the public interest.''\42\ These 
parties assert that an applicant should be allowed to raise any factor 
showing that its project is not inconsistent with the public interest. 
In particular, Great Lakes points out certain situations, not 
enumerated in the NOPR, which it believes would not be inconsistent 
with the public interest. These situations include border facilities 
required by an existing market to provide an alternative less costly 
transportation path to import gas from existing foreign supply sources, 
or border facilities to reach new markets in the United States or to 
allow existing markets to access new foreign supply sources.
---------------------------------------------------------------------------

    \42\ Comments at p. 5 (filed April 11, 1997).
---------------------------------------------------------------------------

    Great Lakes offers substitute regulatory text which would revise 
proposed Sec. 153.7(c)(1), assign separate paragraphs to the items 
listed in proposed Sec. 153.7(c)(1)(i) with the addition of an item for 
the enhancement of competition, and renumber proposed Secs. 153.7(c)(1) 
(ii) and (iii) as Secs. 153.7(c)(1) (vi) and (vii), respectively.
    Section 153.7(c)(1)(i) of the Final Rule does not change the 
statutory standard under NGA section 3 that the Commission ``shall 
issue such order upon application, unless * * * it finds that the 
proposed exportation or importation will not be consistent with the 
public interest.'' In Commission orders issued under section 3, the 
Commission determines the public interest on the basis of all relevant 
factors of record.
    As Great Lakes and PanEnergy state, the list in Sec. 153.7(c)(1)(i) 
illustrates particular factors which may be relevant in a specific 
proceeding as evidence that the proposal or proposed construction is 
not inconsistent with the public interest. An applicant does not have 
to make a showing with respect to each of the factors listed in 
paragraph (i) unless each applies to the applicant's project. 
Accordingly, Great Lake's and PanEnergy's requested clarification is 
granted.
    It is unnecessary to revise proposed Sec. 153.7(c)(1) or to 
designate separate paragraphs in Sec. 153.7(c)(1)(i), as Great Lakes 
proposes. The last item listed in proposed Sec. 153.7(c)(1)(i) (that an 
application ``will not impair transportation service to existing 
customers'') is deleted as duplicative of the same item separately 
stated in proposed Sec. 153.7(c)(1)(ii). Proposed Sec. 153.7(c)(1)(i) 
is revised to add as a factor evidencing the public interest the 
enhancement of competition within the United States for natural gas 
transportation or supply, as Great Lakes proposes.
    Proposed Sec. 153.7(c)(1)(i) permitted the applicant to indicate in 
its application whether its proposal will access ``new foreign supplies 
of natural gas and service new market demand.'' PanEnergy asks the 
Commission to clarify that the proposed regulation covers both ``new 
and additional'' supplies without reference to foreign or domestic 
sources. Great Lakes states that import/export facilities may be 
warranted to provide a cheaper transportation path between existing 
supplies and existing markets.
    Since the Final Rule is intended to apply to export facilities 
which transport domestic gas supplies (as well as to import 
facilities), the reference to ``foreign'' gas supplies is deleted from 
Sec. 153.7(c)(1)(i). Moreover, the reference in Sec. 153.7(c)(1)(i) to 
``new'' gas supplies is deleted because it excludes the construction of 
facilities used to transport existing supplies to existing or new 
markets.
    Proposed Sec. 153.7(c)(1)(ii) required the pipeline applicant to 
show that the proposal ``will not impair the ability of the applicant 
to render transportation service at reasonable rates to customers in 
the United States.'' Thus, proposed paragraph (ii) would require the 
pipeline applicant to make a showing both that its proposal will not 
interfere with its ability to continue to provide transportation 
service and that its proposal would not cause the pipeline's systemwide 
rates to become unreasonable.
    The Canadian Association of Petroleum Producers (Canadian 
Producers) contends that temporary operational restrictions could 
constitute a service impairment to the applicant's existing United 
States customers that could require rejection of a section 3 
application. The NOPR, however, continued the same service continuation 
obligation in current Sec. 153.3(h)--to avoid the impairment of service 
(at reasonable rates) to existing customers. The construction of a new 
import point would make more gas available for delivery to the 
pipeline's customers and could result in capacity constraints 
downstream. Likewise, a new export point could cause constraints on the 
capacity of non-export customers. The required statement puts the 
burden on the pipeline applicant to review the service consequences of 
its application before proposing an import or export project.\43\ The 
Canadian Producers' concern appears unwarranted.
---------------------------------------------------------------------------

    \43\ Pipelines may avoid possible constraints by simultaneously 
proposing the construction of necessary facilities under NGA section 
7. See, e.g., Williston Basin Interstate Pipeline Co., 63 FERC para. 
61,179 (1993).
---------------------------------------------------------------------------

    The Canadian Producers ask the Commission to clarify that the 
Commission intends to apply the 1995 pricing policy statement to new 
import/export facilities (without an additional reasonableness 
analysis).\44\ PanEnergy asks the Commission to clarify that the 
Commission does not intend in

[[Page 30442]]

proposed Sec. 153.7(c)(1)(ii) to require the pipeline applicant to make 
any additional showing about the justness and reasonableness of its 
rates beyond that established under NGA sections 4, 5, and 7.
---------------------------------------------------------------------------

    \44\ Pricing Policy for New and Existing Facilities Constructed 
by Interstate Natural Gas Pipelines, 71 FERC para. 61,241 (1995).
---------------------------------------------------------------------------

    The Commission's practice is to apply its 1995 facilities pricing 
policy statement to determine the reasonableness of a pipeline's rates 
resulting from the construction of import/export facilities by 
interstate pipelines in the same fashion as the Commission applies that 
policy statement to interstate facilities under section 7 in 
certificate proceedings.\45\ We do not regard the application of the 
policy statement to a section 3 proceeding as requiring an additional 
showing by the pipeline. There is no basis for exempting facilities 
authorized under section 3 from the pricing policy statement which 
applies to all other construction by interstate pipelines.
---------------------------------------------------------------------------

    \45\ See, e.g., Great Lakes Transmission Limited Partnership, 76 
FERC para. 61,148 (1996), in which the Commission applied the 
pricing policy statement to the construction of import/export 
facilities.
---------------------------------------------------------------------------

    PanEnergy also asks the Commission to clarify that the reasonable 
rate standard of proposed Sec. 153.7(c)(1)(ii) is satisfied if the 
pipeline represents that it can continue to ``render transportation 
service at the rates approved by the Commission and contained in 
applicant's tariff.'' \46\ In light of our application of the pricing 
policy statement to an interstate pipeline's facilities authorized 
under section 3, PanEnergy's proposed clarification is granted.
---------------------------------------------------------------------------

    \46\ Comments of PanEnergy at 5 (filed April 14, 1997).
---------------------------------------------------------------------------

    The Canadian Producers ask the Commission to revise proposed 
Sec. 157.7(c)(1)(ii) to state that there should be no impairment of 
service at reasonable rates to applicant's existing customers in the 
North American market (instead of the NOPR's impairment of service ``to 
customers in the United States.'') The Canadian Producers read the NOPR 
as applying to service rendered to all United States customers of all 
pipelines. We clarify the Final Rule to track the current regulation, 
which requires the pipeline's demonstration to relate to the pipeline-
applicant's customers. The Final Rule also relocates the reference ``in 
the United States'' in the current regulation and the NOPR to modify 
``transportation service'' instead of ``customers.'' This revision 
makes it clear that the facilities and transportation service that the 
Commission authorizes are located in the United States (or its 
possessions) and that a pipeline's Canadian or Mexican customers may 
receive transportation service through the pipeline's import/export 
facilities.
    Section 153.7(c)(1)(iii) of the NOPR revised the requirement in 
current Sec. 153.11(c) to file a statement describing certain contracts 
applicable to Presidential Permits. Proposed Sec. 153.7(c)(1)(iii) 
required the applicant for section 3 authorization to file a statement 
describing any existing contracts involving the control of operations 
at import/export facilities or transportation rates that could prevent 
competing United States companies from extending their activities in 
the same general area.
    The Canadian Producers ask the Commission to clarify why the 
Commission established the new requirement in Sec. 153.7(c)(1)(iii) to 
file certain agreements and whether such agreements could impact free 
trade. First, Sec. 153.7(c)(1)(iii) does not establish a new 
requirement. A similar provision in Sec. 153.11(c) currently applies to 
the filing of applications for Presidential Permits. Second, there 
could be exclusivity or market allocation agreements between the 
applicant-transporter and its shipper or the applicant and a foreign 
government that could prevent other transporters from competing for the 
same customers in the same general area. If they existed, such 
agreements could be anti-competitive and could interfere with free 
trade. The parties to a section 3 proceeding should have the 
opportunity to comment on the acceptability of those contracts. Thus, 
it is appropriate to require their disclosure at the time of filing.
    With respect to the second statement an applicant for section 3 
authorization must file, the NOPR established a new requirement in 
Sec. 153.7(c)(2) requiring the applicant's demonstration that the 
proposed import/export facilities will be used: (1) To render 
transportation services under part 284, (2) to provide private 
transportation, or (3) to provide service that is exempt from the 
provisions of the NGA pursuant to sections 1(b) or 1(c) thereof.\47\ 
This requirement was intended to enable the Commission to determine 
whether the applicant's operations are consistent with the Commission's 
open access transportation policies.
---------------------------------------------------------------------------

    \47\ Section 1(b) states that the provisions of the NGA apply, 
inter alia, to the transportation of natural gas in interstate 
commerce but not to ``any other transporation,'' the local 
distribution of natural gas, or the production or gathering of 
natural gas. Section 1(c) exempts a Hinshaw pipeline from the 
provisions of the NGA. The Commission, however, regulates the 
activities of these exempt entities in foreign commerce under 
section 3. See, e.g., Interenergy Sheffield Processing, 78 FERC 
para. 61,085 (1997) (gathering); Havre Pipeline Co., et al., 71 FERC 
para. 61,292 (1995) (intrastate pipeline/gatherer engaging in 
foreign commerce); and Vermont Gas System, Inc., 24 FERC para. 
61,366 (1983) (local gas distribution company).
---------------------------------------------------------------------------

    PanEnergy asserts that the NOPR failed to refer to the continued 
existence of individually certificated part 157 transportation service, 
which section 3 facilities could enhance. Under Commission policy after 
Order No. 436, transportation service through available capacity on a 
pipeline's facilities, including import/export facilities, must be 
offered on an open access and non-discriminatory basis. The Commission 
almost always rejects applications for service under new part 157 
certificates, extensions to existing part 157 certificates, or 
amendments to part 157 certificates that seek to provide some of the 
benefits of part 284 status without the affected customer's converting 
to service under part 284.\48\
---------------------------------------------------------------------------

    \48\ See Algonquin LNG, Inc. 79 FERC para. 61,139 (1997) and 
Tennessee Gas Pipeline Co., 78 FERC para. 61,340 (1997).
---------------------------------------------------------------------------

    We will amend proposed Sec. 153.7(c)(2) to recognize that some 
pipelines, operating as open access transporters, currently provide 
individually certificated transportation services under part 157. The 
Commission will revise proposed Sec. 153.7(c)(2) to require the 
pipeline-applicant to represent that: (1) The pipeline's proposed 
increases in capacity at existing import/export points is not 
exclusively reserved for part 157 users and (2) all services made 
available as a result of new or modified import/export facilities will 
be under part 284.
    The Canadian Producers ask the Commission to clarify what ``private 
transportation'' means in proposed Sec. 153.7(c)(2). We intend private 
transportation to mean transportation service provided through 
facilities owned by the same person that uses the natural gas 
transported. Private transportation typically arises in the case of 
transportation through a pipeline constructed and owned by an 
industrial user to transport natural gas only to its industrial 
facility.\49\
---------------------------------------------------------------------------

    \49\ See, e.g., Sumas Energy Inc., 55 FERC para. 61,163 (1991) 
and National Steel Corp., 45 FERC para. 61,100 (1988).
---------------------------------------------------------------------------

d. Section 153.8  Required Exhibits.
    The Commission in the Final Rule is redesignating current 
Sec. 153.4 as Sec. 153.8, which retains the requirement to file current 
Exhibits A through C in new paragraphs (a)(1), (a)(2), and (a)(3), 
respectively, with editorial revisions. Current Exhibit A is revised to 
incorporate the requirement of current Sec. 153.11(a)(3) that an 
applicant for a Presidential Permit describe the amount and classes of 
capital stock issued by a corporate applicant and the nationality

[[Page 30443]]

of officers, directors, and stockholders, and the amount and class of 
stock held by each. The Commission is eliminating obsolete exhibits D 
and E (contracts for the export or import of natural gas) because DOE/
FE oversees those activities.
    Section 153.8(a) of the Final Rule requires an applicant to file 
new exhibits D (copy of any construction and operation agreements), E 
(LNG-related engineering data), E-1 (LNG-related seismic information 
for certain facilities), and F (an environmental report required by 
part 380 for LNG and non-LNG related facilities). Applicants may refer 
to the ``Guidance Manual for Environmental Report Preparation'' to 
assist in the preparation of these exhibits.
    In the NOPR, the Commission proposed to require the applicant to 
file a new Exhibit D consisting of copies of construction and operation 
agreements between the applicant and the operator of border facilities 
in the United States and Canada or Mexico. The NOPR stated that Exhibit 
D would enable the Commission to verify the business feasibility of the 
import/export project and would show how the applicant and its Canadian 
or Mexican counterpart intend to jointly construct and operate the 
border-crossing facilities.
    Coastal asks the Commission to eliminate proposed Exhibit D as a 
filing requirement because construction/operation agreements may not be 
available at the time application is filed. As a general observation, 
the Commission can not process an incomplete application because it 
would not contain the material elements of information required by our 
regulations. We regard a construction and operation agreement as a 
material element of an application because it would show the business 
feasibility of the import/export project. If the executed agreement is 
not available when the potential applicant wishes to file its 
application, the Commission expects the applicant to wait to file its 
application until after the agreement is available. At a minimum, the 
applicant must seek to obtain waiver of Sec. 153.8 (Exhibit D) of the 
Final Rule which may be granted upon the pipeline's filing of an 
agreement in principle that shows the roles and responsibilities of the 
parties. The Final Rule is clarified accordingly.
    Great Lakes would exempt from filing construction and operation 
agreements involving facilities constructed or operated by a single 
entity on the United States or Canadian border. Great Lakes, however, 
takes an unduly narrow view of the variety of possible operational 
agreements for border-crossing facilities in the United States or 
Canada and Mexico that could affect the public interest. Most of the 
United States facilities may be operated only by United States 
entities, and operating agreements with respect to these facilities are 
no less relevant to the public interest than United States facilities 
which may be jointly operated by United States and Canadian entities. 
The Commission intends the Final Rule to require the applicant to file 
as part of its application copies of all agreements between the 
applicant and the facility operator(s) for the construction and 
operation of border facilities.
    New Exhibits E, E-1, and F in the NOPR codified existing practice 
which requires an applicant for the construction of LNG facilities to 
provide sufficient information that will enable the Commission to 
determine whether the new facilities will be constructed and operated 
safely, reliably, and with minimal adverse environmental impact. These 
exhibits are retained in the Final Rule and are justified by the 
significant safety and environmental implications of LNG terminal 
facilities. The requirement to file a map is revised as Exhibit G to 
require a map of suitable scale.
    Phillips asks the Commission to clarify that its safety and 
environmental review of Exhibits E, E-1, and F relating to any proposed 
modification of LNG facilities will be limited to the proposed new 
facilities and will exclude existing facilities. The primary focus of 
Exhibits E, E-1, and F of the Final Rule is to demonstrate that the 
safety and environmental consequences of the proposed facilities (i.e., 
a new LNG facility or modification of an existing LNG facility) are 
within acceptable limits and that the plant design provides a reliable 
natural gas service. Thus, the Commission will not impose revised 
environmental/safety conditions or scrutinize again the operation of a 
previously authorized LNG import/export facility unless there has been 
a material change in circumstances.
    The Commission's staff conducts cryogenic design and facility 
reviews of LNG facilities on a two-year basis. While the Commission 
will not reopen its previous environmental/safety review of Phillips' 
LNG facility, which has been operational since November 1969, a 
modification of existing LNG facilities is related to the function, 
operation, and environmental/safety integrity of the existing 
facilities. Accordingly, the applicant proposing to modify an existing 
LNG facility with new LNG facilities must describe the environmental/
safety aspects of the proposed facilities and how the proposed 
facilities integrate with the existing facilities. The Commission must 
determine that the proposed modification will not materially alter the 
safe and environmentally sound operation of the integrated facility. 
Section 153.8 (Exhibits E, E-1, and F) of the Final Rule are clarified 
accordingly.
e. Section 153.9  Transferability.
    The NOPR continued in Sec. 153.9(a) the provision in the current 
regulations (Sec. 153.6(a) (transferability)) that authorizations under 
subpart B are not transferable or assignable except temporarily in the 
case of involuntary transfer of facilities to receivers, trustees, or 
purchasers under foreclosure or judicial sale. Section 153.9(b) in the 
NOPR continued current Sec. 153.6(b) to permit the Commission to make 
supplemental orders as it may find necessary or appropriate.
    Yukon Pacific Company L.P. (Yukon Pacific) states that it is 
unclear whether the proposed (or current) regulations would allow Yukon 
Pacific to transfer or assign its existing section 3 authorization 
except in the limited case of involuntary transfer.50 Yukon 
Pacific asks the Commission to amend proposed Sec. 153.9 to clarify 
that the holder of a section 3 authorization can transfer or assign 
that authorization for ``good commercial or other reasons'' subject to 
prior Commission approval. In the alternative, Yukon Pacific asks the 
Commission to state in the preamble of the Final Rule that proposed 
Sec. 153.9(b), permitting supplemental orders, authorizes the 
Commission to permit the transfer of section 3 authorizations in the 
same fashion that DOE/FE currently permits the transfer of its 
authorizations upon prior DOE approval.51
---------------------------------------------------------------------------

    \50\ On May 22, 1995, the Commission issued an order granting 
Yukon Pacific auhtorization under section 3 for the siting, 
construction, and operation of an LNG export facility at Port 
Valdez, Alaska. 71 FERC para. 61,197 (1995), reh'g denied, 72 FERC 
para. 61,226 (1995), affirming 39 FERC para. 61,216 (1987). Yukon 
Pacific's proposed LNG export facility is not yet constructed.
    \51\ Under DOE regulations, import/export authorizations are not 
transferable or assignable ``unless specifically authorized by the 
Assistant Secretary.'' 10 CFR 590.405.
---------------------------------------------------------------------------

    Under the Commission's current practice, the holder of a section 3 
authorization (and a Presidential Permit) may not transfer those 
authorizations or related facilities without prior Commission 
authorization.52 For example, the

[[Page 30444]]

Commission implements a transfer of section 3 authorization and/or 
facilities by approving the amendment of an existing authorization 
53 or granting a new authorization to the acquiring 
entity.54 The Final Rule continues this practice and revises 
proposed Sec. 153.9(a) to deny transfer or assignment of a section 3 
authorization (absent an involuntary transfer) without prior Commission 
authorization.55 Thus, Yukon Pacific's request for 
clarification is granted. The Final Rule relocates as substitute text 
in Sec. 153.9(b) the NOPR's provision (based on current Sec. 153.6) 
permitting the temporary transfer of facilities in the event of an 
involuntary transfer.
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    \52\ The Commission similarly reviews and approves under section 
7 of the NGA the proposed abandonment of interstate facilities and 
services and the acquisition of those facilities by natural gas 
companies.
    \53\ The Commission may approve an amendment to an existing 
Presidential Permit in order to change the legal status of the 
Permittee from corporation to limited partnership pursuant to a 
reorganization or to change its name. See, e.g., PNM Gas Services, 
Secretary's notice in Docket No. CP93-98-002 of redesignation of 
name, January 17, 1997 (unreported) and Great Lakes Gas Transmission 
Limited Partnership, 53 FERC para. 61,264 (1990).
    \54\ Western Gas Interstate Co., et al., 74 FERC para.61,347 
(1996) (issuance of a new section 3 authorization and Presidential 
Permit to entity acquiring facilities incident to reorganization).
    \55\ Similarly, uniform article 8 of a Presidential Permit 
prohibits the voluntary transfer of a Presidential Permit or related 
facilities.
---------------------------------------------------------------------------

    Section 3(a) of the NGA gives the Commission the authority, after 
hearing, for good cause shown, to make ``such supplemental order in the 
premises as it may find necessary or appropriate.'' Section 153.9(b) of 
the NOPR, following NGA section 3(a) and current regulations, gave the 
Commission the discretion to issue supplemental orders in the case of a 
transfer of a section 3 authorization or facilities depending on the 
public interest considerations in particular proceedings. Since the 
Commission's authority under section 3 to issue supplemental orders 
applies to all aspects of the Commission's implementation of section 3, 
the Commission is relocating Sec. 153.9(b) of the NOPR to Sec. 153.11 
(supplemental orders) in subpart B of part 153.
    PanEnergy asserts that proposed Sec. 153.9(b)(supplemental orders) 
is ambiguous and, in the alternative, asks the Commission to clarify 
that proposed Sec. 153.9(b) may not be applied to impose retroactive 
requirements that would change the economics of border construction.
    PanEnergy's dispute is with NGA section 3 itself, which authorizes 
the Commission for good cause after hearing to issue necessary or 
appropriate supplemental orders. In Distrigas Corporation v. FPC, the 
Court observed that section 3 (now section 3(a)) authorizes the 
Commission to reexamine its decisions authorizing imports/exports based 
on its view of the public interest.56 The Commission, 
however, would be limited by ``principles of fairness implicit in all 
standards governing exercise of regulatory power.'' 57 There 
is no justification to eliminate the provision permitting supplemental 
orders (relocated to Sec. 153.11) from the Final Rule, as PanEnergy 
implies, or to clarify the Final Rule as requested.
---------------------------------------------------------------------------

    \56\ 495 F.2d 1057, 1065-66 (D.C. Cir. 1974).
    \57\ 495 F.2d 1065.
---------------------------------------------------------------------------

f. Section 153.10  Authorization Not Exclusive
    The Commission is redesignating current Sec. 153.7 as Sec. 153.10 
and is revising the current regulation to eliminate references to 
authorizations for the import/export of natural gas, replacing them 
with references to authorizations for construction and operation under 
section 3 of the NGA. Under Sec. 153.10, which codifies current 
Commission practice, if the Commission authorizes the construction of 
facilities pursuant to section 3, the Commission is not prevented from 
granting authorization to another applicant under section 3 at the same 
general location.58
---------------------------------------------------------------------------

    \58\ See, e.g., Tenneco Baja California Corp., 75 FERC para. 
61,192 (1996) and Pacific Interstate Offshore Co., 74 FERC para. 
61,350 (1996).
---------------------------------------------------------------------------

 g. Supplemental Orders
    The Final Rule removes proposed Sec. 153.9(b)(supplemental orders) 
and relocates it as new Sec. 153.11. The provision concerning 
supplemental orders would apply to each section in subpart B of the 
Final Rule instead of only to Sec. 153.9 concerning transferability of 
section 3 authorizations.
3. Subpart C--Application for a Presidential Permit
a. Section 153.15  Who Shall Apply
    The existing heading prefacing current Secs. 153.10 through 153.12 
is deleted and replaced with a more concise heading (Application for a 
Presidential Permit) substituted under a new subpart C of part 153. The 
Final Rule redesignates current Sec. 153.10 as Sec. 153.15 and divides 
proposed Sec. 153.15 into paragraphs (a) and (b) with individual 
headings.
    The Commission is using the same definition of person in subpart C 
of the Final Rule as is used in subpart B. It is appropriate in the 
Final Rule to use the same definition because the same entity that 
applies under subpart C to construct and operate border facilities 
would need to apply for authorization under subpart B. Section 
153.15(b) of the Final Rule cross-references the requirement to file 
simultaneously an application under subpart B for the siting or 
construction of facilities, deleting the current cross-reference to 
applications for authorization to import or export natural gas. Since 
the NOPR required the filing of an application to amend an existing 
Presidential Permit, it is appropriate to delete from proposed 
Sec. 153.15(a) the duplicative requirement to file an application ``to 
change the operation or maintenance of facilities.''
b. Section 153.16  Contents of Application
    The Final Rule redesignates current Sec. 153.11 as Sec. 153.16, 
with a revised heading. Filing requirements prescribing the number of 
copies for Presidential Permit applications stated in the first 
sentence of current Sec. 153.11 are deleted and relocated to new 
subpart D of part 153.
    The Final Rule merges the informational requirements for filing an 
application for a Presidential Permit and for an application under NGA 
section 3. Thus, Sec. 153.16(a) states that an applicant for a 
Presidential Permit that complies with the informational filing 
requirements under subpart B is not required to satisfy separate filing 
requirements under subpart C.
    Accordingly, current Secs. 153.11 (a)(1) and (a)(2) and the first 
part of paragraph (a)(3) are deleted as they duplicate the same 
provisions in Sec. 153.7(a) of the Final Rule. The remainder of current 
Sec. 153.11(a)(3) is redesignated in Sec. 153.8 (Exhibit A). Current 
Sec. 153.11(a)(4) is revised to update references to applicants 
``subventioned'' (subsidized) by a foreign government and is relocated 
to Sec. 153.7(a)(3). Current Sec. 153.11(b), requiring an applicant to 
file a map, is deleted because it duplicates the same requirement in 
Sec. 153.8(a)(8) (Exhibit G) of the Final Rule.
    Current Sec. 153.11(c), concerning anti-competitive agreements, and 
current Sec. 153.11(d), concerning permits granted by a foreign 
government, are revised to eliminate out-dated references to bundled 
gas service, ``landing licenses,'' and import/export permits. These 
sections are redesignated as Secs. 153.7(c)(1)(iii) and 153.7(b), 
respectively, of the Final Rule.
    For amendments to an existing Presidential Permit that do not 
involve related section 3 applications or amendments, Sec. 153.16(b) of 
the Final Rule requires that applicant to provide information 
identifying itself pursuant to Sec. 153.7(a) and to fully explain and

[[Page 30445]]

justify its proposed amendment. This applicant would not be required to 
provide the remainder of information required by Secs. 153.7 and 153.8 
of the Final Rule, applicable to the construction of facilities.
    Current Sec. 153.12, authorizing the Commission to request such 
other information in connection with an application as it may deem 
pertinent, is deleted. In its place, Sec. 153.21(b), in subpart D of 
the Final Rule, authorizes the Commission to direct the applicant to 
file such information as may be necessary to cure a deficient 
application.
c. Section 153.17  Effectiveness of Presidential Permit
    Section 153.17 of the Final Rule codifies the Commission's existing 
practice of requiring a Permittee to accept an issued Presidential 
Permit by executing, with proof of proper authorization, the Testimony 
of Acceptance of the Presidential Permit. The Permittee is required to 
file a copy of the executed Testimony of Acceptance with the Secretary 
prior to the start of construction.59
---------------------------------------------------------------------------

    \59\ See MidCon Texas Pipeline Corp., 77 FERC para. 61,205 
(1996).
---------------------------------------------------------------------------

4. Subpart D--Paper Media and Other Requirements
a. Section 153.20  General Rule
    The Commission is relocating its current filing requirements for 
paper media in subpart D.
b. Section 153.21  Conformity with Requirements
    Section 153.21 of the Final Rule states the requirement that an 
application must conform to the requirements of part 153 or be 
rejected. The Commission will reject and wishes to discourage 
undocumented applications for section 3 authorization.60
---------------------------------------------------------------------------

    \60\ In the past, the Commission has rejected applications for 
import/export facilities that were not properly supported by 
required documentation. See SouthCoast Transmission Corp., 49 FERC 
para. 61,161 (1989) and Flormax Energy Corp., 21 FERC para. 61,319 
(1982).
---------------------------------------------------------------------------

c. Section 153.22  Amendments and Withdrawals
    Section 153.22 of the Final Rule applies the Commission's Rules of 
Practice and Procedure applicable to amending or withdrawing pleadings 
to amending or withdrawing an application under subpart B or subpart C 
of part 153.
d. Section 153.23  Reporting Requirement
    Interstate pipelines are currently required to file operational 
information about facilities authorized under section 3 in their FERC 
Form No. 2 (annual report), FERC Format No. 567 (annual system flow 
diagram), and annual report of estimated peak capacity pursuant to 18 
CFR 284.12. Commission regulations do not require applicants which are 
not natural gas companies to file operational information with the 
Commission concerning facilities authorized under section 3. 
61 Uniform article 7 of a Presidential Permit requires the 
Permittee to file with the Commission requested statements or reports 
concerning the natural gas exported/imported and the facilities 
described in the Presidential Permit.
---------------------------------------------------------------------------

    \61\ The Commission has imposed such reporting as a condition in 
individual section 3 proceedings. See, e.g., Yukon Pacific Co., 
L.P., 71 FERC para. 61,197 (1995) and EcoElectrica, L.P., 75 FERC 
para. 61,157 (1996).
---------------------------------------------------------------------------

    Proposed Sec. 153.23 required applicants which are not otherwise 
required to file operating information concerning facilities authorized 
under section 3 with the Commission to report the completion of 
construction or modification, and the date service commenced through 
the authorized facilities. 62 The NOPR also required each 
applicant to report annually by March 1 the estimated peak day capacity 
and actual peak day usage of its import/export facilities.
---------------------------------------------------------------------------

    \62\ Effective November 13, 1995, the Commission eliminated its 
annual report of import/export volumes in FPC Form 14. See Final 
rule, Revisions to Uniform System of Accounts, Forms, Statements and 
Reporting Requirements for Natural Gas Companies, 60 FE 53019 
(October 11, 1995). The Commission eliminated FPC Form 14 because 
importers/exporters currently file quarterly reports with DOE/FE 
including the same volume and price information.
---------------------------------------------------------------------------

    Phillips asks the Commission to exempt the owners/operators of LNG 
facilities that are not used as peak shaving facilities or pipelines 
from the requirement to file peak day capacity and actual peak day 
usage information. The Commission is aware that the capacity and usage 
of non-pipeline facilities are subject to many variables not applicable 
to pipeline operations. Thus, we agree with Phillips that peak day 
capacity and actual peak day usage information is irrelevant in the 
case of entities that do not own or operate pipeline capacity. The 
proposed regulation is revised to exempt applicants that do not own or 
operate pipeline capacity, including the owners/operators of LNG 
facilities, from the requirement to file annually peak day capacity/
usage information. The Commission, however, retains the right to seek 
capacity/usage information from non-pipeline operators should such 
information be needed for the performance of its duties on a case-by-
case basis. Phillips' requested clarification is granted.

IV. Regulatory Flexibility Act Certification

    The Regulatory Flexibility Act (RFA) requires agencies to prepare 
certain statements, descriptions, and analyses of proposed rules that 
will have a significant economic impact on a substantial number of 
small entities.63 The Commission is not required to make 
such analyses if a rule would not have such an effect.
---------------------------------------------------------------------------

    \63\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

    The Commission does not believe that this rule would have such an 
impact on small entities. Most filing companies regulated by the 
Commission do not fall within the RFA's definition of small 
entity.64 Further, the filing requirements of small entities 
are reduced by the rule. Therefore, the Commission certifies that this 
rule will not have a significant economic impact on a substantial 
number of small entities. Therefore, no regulatory flexibility analysis 
is required.
---------------------------------------------------------------------------

    \64\ 5 U.S.C. 601(3), citing to section 3 of the Small Business 
Act, 15 U.S.C. 632. Section 3 of the Small Business Act defines a 
``small-business concern'' as a business which is independently 
owned and operated and which is not dominant in its field of 
operation.
---------------------------------------------------------------------------

V. Information Collection Statement

    The OMB regulations require OMB to approve certain reporting and 
recordkeeping (collections of information) imposed by agency 
rule.65 OMB has approved the NOPR without comment. The Final 
Rule will affect one existing data collection, FERC-539. Respondents 
subject to the filing requirements of this Final Rule will not be 
penalized for failing to respond to these collections of information 
unless the collections of information display a valid OMB control 
number.
---------------------------------------------------------------------------

    \65\ 5 CFR 1320.11.
---------------------------------------------------------------------------

    Title: FERC-539, Gas Pipeline Certificate: Import/Export.
    Action: Proposed Data Collection.
    OMB Control No.: 1902-0062.
    Respondents: Interstate natural gas pipelines (Business or other 
for-profit, including small businesses).
    Frequency of Responses: On occasion.
    Necessity of the Information: The Final Rule revises the filing 
requirements contained in 18 CFR part 153 for the siting, construction, 
and operation of facilities for the import or export of natural gas 
under NGA section

[[Page 30446]]

3 and for Presidential Permits that have been issued and modified for 
the construction and operation of border facilities. These filing 
requirements are being updated to conform to the Commission's current 
responsibilities as changed by intervening legislation and DOE 
delegation orders.
    The Commission received six comments on its NOPR but none on its 
reporting burden or cost estimates. The Commission's responses to the 
comments are addressed in the Discussion portion (Part III) of this 
Final Rule. The Commission is submitting a copy of this Final Rule to 
OMB for information purposes because the Final Rule is not 
significantly different from the NOPR and OMB has not provided any 
comments on the NOPR.
    Interested persons may obtain information on the reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
888 First Street, NE., Washington, DC 20426 (Attention: Michael Miller, 
Information Services Division, (202) 208-1415) or send comments to the 
Office of Management and Budget (Attention: Desk Officer for the 
Federal Energy Regulatory Commission (202) 395-3087, fax: 395-728). You 
shall not be penalized for failure to respond to this collection of 
information unless the collection of information displays a valid OMB 
control number.

VI. Environmental Statement

    The Commission excludes certain actions not having a significant 
effect on the human environment from the requirement to prepare an 
environmental assessment or an environmental impact 
statement.66 No environmental consideration is raised by the 
promulgation of a rule that is procedural or that does not 
substantially change the effect of legislation or regulations being 
amended.67 The instant rule updates the part 153 regulations 
and does not substantially change the effect of the underlying 
legislation or the regulations being revised or eliminated. 
Accordingly, no environmental consideration is necessary.
---------------------------------------------------------------------------

    \66\ 18 CFR 380.4.
    \67\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------

VII. Effective Date and Congressional Notification

    The regulations are effective August 4, 1997. The Small Business 
Regulatory Enforcement Fairness Act of 1996 requires agencies to report 
to Congress on the promulgation of certain final rules prior to their 
effective dates.68 That reporting requirement applies to 
this Final Rule. The Commission has determined, with the concurrence of 
the Administrator of the Office of Information and Regulatory Affairs 
of OMB, that this rule is not a ``major rule'' as defined in section 
351 of the Small Business Regulatory Enforcement Fairness Act of 1996.
---------------------------------------------------------------------------

    \68\ Pub. L. No. 104-121, 110 Stat. 847 (1996).
---------------------------------------------------------------------------

List of Subjects in 18 CFR Part 153

    Exports, Imports, Natural gas, Reporting and recordkeeping 
requirements.

    By the Commission.
Lois D. Cashell,
Secretary.

    For the reasons set out in the preamble, the Commission is revising 
18 CFR part 153 to read as follows:

PART 153--APPLICATIONS FOR AUTHORIZATION TO CONSTRUCT, OPERATE, OR 
MODIFY FACILITIES USED FOR THE EXPORT OR IMPORT OF NATURAL GAS

Subpart A--General Provisions

Sec.
153.1  Purpose and scope.
153.2  Definitions.

Subpart B--Application Under Section 3

Sec.
153.5  Who shall apply.
153.6  Time of filing.
153.7  Contents of application.
153.8  Required exhibits.
153.9  Transferability.
153.10  Authorization not exclusive.
153.11  Supplemental orders.

Subpart C--Application for a Presidential Permit

153.15  Who shall apply.
153.16  Contents of application.
153.17  Effectiveness of Presidential Permit.

Subpart D--Paper Media and Other Requirements

153.20  General rule.
153.21  Conformity with requirements.
153.22  Amendments and withdrawals.
153.23  Reporting Requirements.

    Authority: 15 U.S.C. 717b, 717o; E.O. 10485, 3 CFR, 1949-1953 
Comp., p. 970, as amended by E.O. 12038, 3 CFR, 1978 Comp., p. 136, 
DOE Delegation Order No. 0204-112, 49 FR 6684 (February 22, 1984).

Subpart A--General Provisions


Sec. 153.1  Purpose and scope.

    The purpose of this part is to implement the Commission's delegated 
authorities under section 3 of the Natural Gas Act and Executive Order 
10485, as amended by Executive Order 12038. Subpart B of this part 
establishes filing requirements an applicant must follow to obtain 
authorization under section 3 of the Natural Gas Act for the siting, 
construction, operation, place of entry for imports or place of exit 
for exports. Subpart C of this part establishes filing requirements an 
applicant must follow to apply for a Presidential Permit, or an 
amendment to an existing Presidential Permit, for border facilities at 
the international boundary between the United States and Canada or 
Mexico.


Sec. 153.2  Definitions.

    (a) DOE/FE means the Department of Energy/Office of Fossil Energy 
or its successor office.
    (b) NBSIR means the National Bureau of Standards Information 
Report.
    (c) Person means an individual or entity as defined in 10 CFR 
590.102(m).

Subpart B--Application Under Section 3


Sec. 153.5  Who shall apply.

    (a) Applicant. Any person proposing to site, construct, or operate 
facilities which are to be used for the export of natural gas from the 
United States to a foreign country or for the import of natural gas 
from a foreign country or to amend an existing Commission 
authorization, including the modification of existing authorized 
facilities, shall file with the Commission an application for 
authorization therefor under subpart B of this part and section 3 of 
the Natural Gas Act.
    (b) Cross-reference. Any person applying under paragraph (a) of 
this section to construct facilities at the borders of the United 
States and Canada or Mexico must also simultaneously apply for a 
Presidential Permit under subpart C of this part.


Sec. 153.6  Time of filing.

    (a) An application filed pursuant to Sec. 153.5(a) shall state 
whether DOE/FE authorization for the import/export of natural gas is 
required and whether DOE/FE has granted all required authorizations for 
the import/export of natural gas.
    (b) If all required DOE/FE authorizations have not been obtained 
prior to filing an application with the Commission, the applicant 
agrees, as a condition of its authorization, to file a statement that 
all required DOE/FE authorizations have been obtained prior to 
applicant's construction of border facilities.


Sec. 153.7  Contents of application.

    Every application under subpart B of this part shall include, in 
the order indicated, the following:
    (a) Information regarding applicant. (1) The exact legal name of 
applicant;

[[Page 30447]]

    (2) The name, title, and post office address, telephone and 
facsimile numbers of the person to whom correspondence in regard to the 
application shall be addressed;
    (3) If a corporation, the state or territory under the laws of 
which the applicant was organized, and the town or city where 
applicant's principal office is located. If applicant is incorporated 
under the laws of, or authorized to operate in, more than one state, 
all pertinent facts should be stated. If applicant company is owned 
wholly or in part by any foreign government entity, or directly or 
indirectly subsidized by any foreign government entity; or, if 
applicant company has any agreement for such ownership or subsidization 
from any foreign government, provide full details of ownership and/or 
subsidies.
    (b) Summary. A detailed summary of the proposal, including 
descriptions of the facilities utilized in the proposed export or 
import of natural gas; state, foreign, or other Federal governmental 
licenses or permits for the construction, operation, or modification of 
facilities in the United States, Canada, or Mexico; and the status of 
any state, foreign, or other Federal regulatory proceedings which are 
related to the proposal.
    (c) Statements. (1) A statement demonstrating that the proposal or 
proposed construction is not inconsistent with the public interest, 
including, where applicable to the applicant's operations and proposal, 
a demonstration that the proposal:
    (i) Will improve access to supplies of natural gas, serve new 
market demand, enhance the reliability, security, and/or flexibility of 
the applicant's pipeline system, improve the dependability of 
international energy trade, or enhance competition within the United 
States for natural gas transportation or supply;
    (ii) Will not impair the ability of the applicant to render 
transportation service in the United States at reasonable rates to its 
existing customers; and,
    (iii) Will not involve any existing contract(s) between the 
applicant and a foreign government or person concerning the control of 
operations or rates for the delivery or receipt of natural gas which 
may restrict or prevent other United States companies from extending 
their activities in the same general area, with copies of such 
contracts; and,
    (2) A statement representing that the proposal will be used to 
render transportation services under Parts 157 or 284 of this chapter, 
private transportation, or service that is exempt from the provisions 
of the Natural Gas Act pursuant to sections 1(b) or 1(c) thereof. The 
applicant providing transportation service under part 157 of this 
chapter must represent that the pipeline's proposed increase in 
capacity at an existing import/export point is not exclusively reserved 
for Part 157 users and that all new service made available as a result 
of a new or modified import/export facility will be under part 284 of 
this chapter.


Sec. 153.8  Required exhibits.

    (a) An application must include the following exhibits:
    (1) Exhibit A. A certified copy of articles of incorporation, 
partnership or joint venture agreements, and by-laws of applicant; the 
amount and classes of capital stock; nationality of officers, 
directors, and stockholders, and the amount and class of stock held by 
each;
    (2) Exhibit B. A detailed statement of the financial and corporate 
relationship existing between applicant and any other person or 
corporation;
    (3) Exhibit C. A statement, including signed opinion of counsel, 
showing that the construction, operation, or modification of facilities 
for the export or the import of natural gas is within the authorized 
powers of applicant, that applicant has complied with laws and 
regulations of the state or states in which applicant operates;
    (4) Exhibit D. If the proposal is for a pipeline interconnection to 
import or export natural gas, a copy of any construction and operation 
agreement between the applicant and the operator(s) of border 
facilities in the United States and Canada or Mexico;
    (5) Exhibit E. If the proposal is to import or export LNG, evidence 
that an appropriate and qualified concern will properly and safely 
receive or deliver such LNG, including a report containing detailed 
engineering and design information. The Commission staff's ``Guidance 
Manual for Environmental Report Preparation'' may be obtained from the 
Commission's Office of Pipeline Regulation, 888 First Street, NE., 
Washington, DC 20426;
    (6) Exhibit E-1. If the LNG import/export facility is to be located 
at a site in zones 2, 3, or 4 of the Uniform Building Code's Seismic 
Risk Map of the United States, or where there is a risk of surface 
faulting or ground liquefaction, a report on earthquake hazards and 
engineering. Guidelines are contained in ``Data Requirements for the 
Seismic Review of LNG Facilities,'' NBSIR 84-2833. This document may be 
obtained from the National Technical Information Service or the 
Commission's Office of Pipeline Regulation, 888 First Street, NE., 
Washington, DC 20426;
    (7) Exhibit F. An environmental report as specified in Sec. 380.3 
of this chapter. Refer to Commission staff's ``Guidance Manual for 
Environmental Report Preparation;'' and
    (8) Exhibit G. A geographical map of a suitable scale and detail 
showing the physical location of the facilities to be utilized for the 
applicant's proposed export or import operations The map should 
indicate with particularity the ownership of such facilities at or on 
each side of the border between the United States and Canada or Mexico, 
if applicable.
    (b) The applicant may incorporate by reference any Exhibit required 
by paragraph (a) of this section already on file with the Commission.


Sec. 153.9  Transferability.

    (a) Non-transferable. Authorizations under subpart B of this part 
and section 3 of the Natural Gas Act and related facilities shall not 
be transferable or assignable without prior Commission authorization.
    (b) Involuntary transfer. A Commission order granting such 
authorization shall continue in effect temporarily for a reasonable 
time in the event of the involuntary transfer of facilities used 
thereunder by operation of law (including such transfers to receivers, 
trustees, or purchasers under foreclosure or judicial sale) pending the 
making of an application for permanent authorization and decision 
thereon, provided notice is promptly given in writing to the Commission 
accompanied by a statement that the physical facts relating to 
operations of the facilities remain substantially the same as before 
the transfer and as stated in the initial application for such 
authorization.


Sec. 153.10  Authorization not exclusive.

    No authorization granted pursuant to subpart B of this part and 
section 3 of the Natural Gas Act shall be deemed to prevent the 
Commission from granting authorization under subpart B to any other 
person at the same general location, or to prevent any other person 
from making application for such authorization.


Sec. 153.11  Supplemental Orders.

    The Commission also may make, at any time subsequent to the 
original order of authorization, after opportunity for hearing, such 
supplemental orders implementing its authority under section 3 of the 
Natural Gas Act as it may find necessary or appropriate.

[[Page 30448]]

Subpart C--Application for a Presidential Permit


Sec. 153.15  Who shall apply.

    (a) Applicant. Any person proposing to construct, operate, 
maintain, or connect facilities at the borders of the United States and 
Canada or Mexico, for the export or import of natural gas to or from 
those countries, or to amend an existing Presidential Permit, shall 
file with the Commission an application for a Presidential Permit under 
subpart C of this part and Executive Order 10485, as amended by 
Executive Order 12038.
    (b) Cross-reference. Any person applying under paragraph (a) of 
this section for a Presidential Permit for the construction and 
operation of border facilities must also simultaneously apply for 
authorization under subpart B of this part.


Sec. 153.16  Contents of application.

    (a) Cross-reference. The submission of information under 
Secs. 153.7 and 153.8 of subpart B of this part shall be deemed 
sufficient for purposes of applying for a Presidential Permit or an 
amendment to an existing Presidential Permit under subpart C of this 
part for the construction and operation of border facilities.
    (b) Amendment not proposing construction. An applicant proposing to 
amend the article(s) of an existing Presidential Permit (other than 
facilities aspects) must file information pursuant to Sec. 153.7(a) and 
a summary and justification of its proposal.


Sec. 153.17  Effectiveness of Presidential Permit.

    A Presidential Permit, once issued by the Commission, shall not be 
effective until it has been accepted by the highest authority of the 
Permittee, as indicated by Permittee's execution of a Testimony of 
Acceptance, and a certified copy of the accepted Presidential Permit 
and the executed Testimony of Acceptance has been filed with the 
Commission.

Subpart D--Paper Media and Other Requirements


Sec. 153.20  General rule.

    (a) Number of copies. Applications under subpart B of this part 
must be submitted to the Commission in an original and 7 conformed 
paper copies. Applications under subpart C of this part must be 
submitted to the Commission in an original and 9 conformed paper 
copies.
    (b) Certification. All applications must be signed in compliance 
with Sec. 385.2005 of this chapter.
    (1) The signature on an application constitutes a certification 
that: The signer has read the filing signed and knows the contents of 
the paper copies; and, the signer possesses the full power and 
authority to sign the filing.
    (2) An application must be signed by one of the following:
    (i) The person on behalf of whom the application is made;
    (ii) An officer, agent, or employee of the governmental authority, 
agency, or instrumentality on behalf of which the filing is made; or,
    (iii) A representative qualified to practice before the Commission 
under Sec. 385.2101 of this chapter who possesses authority to sign.
    (c) Where to file. The paper copies and an accompanying transmittal 
letter must be submitted in one package to: Office of the Secretary, 
Federal Energy Regulatory Commission, Washington, DC 20426.


Sec. 153.21  Conformity with requirements.

    (a) General Rule. Applications under subparts B and C of this part 
must conform with the requirements of this part.
    (b) Rejection of applications. If an application does not conform 
to the requirements of this part, the Director of the Office of 
Pipeline Regulation will notify the applicant of all deficiencies. 
Deficient applications not amended within 20 days of the notice of 
deficiency, or such longer period as may be specified in the notice of 
deficiency, will be rejected by the Director of the Office of Pipeline 
Regulation as provided by Sec. 385.2001(b) of this chapter. Copies of a 
rejected application will be returned. An application which relates to 
an operation, service, or construction concerning which a prior 
application has been filed and rejected, shall be docketed as a new 
application. Such new application shall state the docket number of the 
prior rejected application.


Sec. 153.22  Amendments and withdrawals.

    Amendments to or withdrawals of applications must conform to the 
requirements of Secs. 385.215 and 385.216 of this chapter.


Sec. 153.23  Reporting requirements.

    Each person authorized under this part 153 that is not otherwise 
required to file information concerning the start of construction or 
modification of import/export facilities, the completion of 
construction or modification, and the commencement of service must file 
such information with the Commission within 10 days after such event. 
Each person, other than entities without pipeline capacity, must also 
report by March 1 of each year the estimated peak day capacity and 
actual peak day usage of its import/export facilities.

[FR Doc. 97-14418 Filed 6-3-97; 8:45 am]
BILLING CODE 6717-01-P