[Federal Register Volume 64, Number 183 (Wednesday, September 22, 1999)]
[Rules and Regulations]
[Pages 51222-51236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24616]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 385

[Docket No. RM98-1-000; Order No. 607]


Regulations Governing Off-the-Record Communications

Issued September 15, 1999.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final Rule.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
revising its rules concerning communications between persons outside 
the Commission and the Commission and its employees. The revised 
regulations are designed to clarify ambiguities in the existing ex 
parte rules and to provide better guidance on what communications to 
and from the Commission are permissible and what communications are 
prohibited.

EFFECTIVE DATE: This rule is effective on October 22, 1999.

FOR FURTHER INFORMATION CONTACT: David R. Dickey, Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE, 
Washington, DC 20426, (202) 208-2140.

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 
at 888 First Street, NE, Room 2A, Washington, DC 20426.
    The Commission Issuance Posting System (CIPS) provides access to 
the texts of formal documents issued by the Commission from November 
14, 1994, to the present. CIPS can be accessed via Internet through 
FERC's Homepage (http://www.ferc.fed.us) using the CIPS Link or the 
Energy Information Online icon. Documents will be available on CIPS in 
ASCII and WordPerfect 8.0. User assistance is available at (202) 208-
2474 or by E-Mail to [email protected].
    This document is also available through the Commission's Records 
and Information Management System (RIMS), an electronic storage and 
retrieval system of documents submitted to and issued by the Commission 
after November 16, 1981. Documents from November 1995 to the present 
can be viewed and printed. RIMS is available in the Public Reference 
Room or remotely via Internet through FERC's Home Page using the RIMS 
link or the Energy Information Online icon. User assistance is 
available at (202) 208-2222, or by E-Mail to [email protected].
    Finally, the complete text on diskette in WordPerfect format may be 
purchased from the Commission's copy contractor, RVJ International, 
Inc. RVJ International, Inc. is located in the Public Reference Room at 
888 First Street, NE, Washington, DC 20426.

I. Introduction

    The Federal Energy Regulatory Commission is revising its 
regulations governing communications between the Commission's 
decisional employees and persons outside the Commission. The revisions 
clarify the ground rules for communication, consistent with the 
Commission's outreach goals. The final rule is intended to permit fully 
informed decision making while at the same time ensuring the continued 
integrity of the Commission's decisionmaking process.

II. Background

    The amendments added to the Administrative Procedure Act (APA) in 
1976 by the Government in the Sunshine Act provided a general statement 
as to the limitations and procedures governing ex parte communications 
in matters that statutorily require an on the record 
hearing.1 Except as otherwise authorized by law, the APA 
prohibits ex parte communications relevant to the merits of a 
proceeding between employees involved in the decisional process of a 
proceeding and interested persons outside the agency.2 The 
1976

[[Page 51223]]

Act instructed agencies to issue regulations necessary to implement the 
APA's requirements.3 Shortly thereafter, the Federal Power 
Commission implemented ex parte regulations based on the APA's 
guidance.4 Existing Rule 2201 5 applies to all 
covered proceedings before the Commission except those involving oil 
pipelines. The Commission currently has a separate ex parte regulation, 
Rule 1415,6 originally developed by the Interstate Commerce 
Commission (ICC), which applies only to oil pipeline 
proceedings.7 Although directed to the same end--both 
prohibit certain ex parte communications and both describe methods for 
public disclosure of such communications--they differ in significant 
details. The manner in which the existing ex parte regulations have 
been interpreted and applied within and outside of the Commission has 
led to a great deal of confusion.
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    \1\ 5 U.S.C. 551-557. Section 557 applies ``according to the 
provisions thereof, when a hearing is required to be conducted in 
accordance with section 556 of this title.'' Section 556 applies to 
hearings required by sections 553 and 554.
    \2\ 5 U.S.C. 557(d) provides that:
    (1) In any agency proceeding which is subject to subsection (a) 
of this section, except to the extent required for the disposition 
of ex parte matters as authorized by law--
    (A) No interested person outside the agency shall make or 
knowingly cause to be made to any member of the body comprising the 
agency, administrative law judge, or other employee who is or may 
reasonably be expected to be involved in the decisional process of 
the proceeding, an ex parte communication relevant to the merits of 
the proceeding;
    (B) No member of the body comprising the agency, administrative 
law judge, or other employee who is or may reasonably be expected to 
be involved in the decisional process of the proceeding, shall make 
or knowingly cause to be made to any interested person outside the 
agency an ex parte communication relevant to the merits of the 
proceeding;
    (C) A member of the body comprising the agency, administrative 
law judge, or other employee who is or may reasonably be expected to 
be involved in the decisional process of such proceeding who 
receives, or who makes or knowingly causes to be made, a 
communication prohibited by this subsection shall place on the 
public record of the proceeding:
    (i) All such written communications;
    (ii) Memoranda stating the substance of all such oral 
communications; and
    (iii) All written responses, and memoranda stating the substance 
of all oral responses, to the materials described in clauses (i) and 
(ii) of this subparagraph;
    (D) Upon receipt of a communication knowingly made or knowingly 
caused to be made by a party in violation of this subsection, the 
agency, administrative law judge, or other employee presiding at the 
hearing may, to the extent consistent with the interests of justice 
and the policy of the underlying statutes, require the party to show 
cause why his claim or interest in the proceeding should not be 
dismissed, denied, disregarded, or otherwise adversely affected on 
account of such violation; and
    (E) The prohibitions of this subsection shall apply beginning at 
such time as the agency may designate, but in no case shall they 
begin to apply later than the time at which a proceeding is noticed 
for hearing unless the person responsible for the communication has 
knowledge that it will be noticed, in which case the prohibitions 
shall apply beginning at the time of his acquisition of such 
knowledge.
    (2) This subsection does not constitute authority to withhold 
information from Congress.
    \3\ 5 U.S.C. 559.
    \4\ FPC Order No. 562, 42 FR 14701 (Mar. 16, 1977).
    \5\ 18 CFR 385.2201.
    \6\ 18 CFR 385.1415.
    \7\ 18 CFR 385.1415.
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    In October 1992, upon determining that a proposed negotiated 
rulemaking effort would be cumbersome and ineffective,8 the 
Commission noticed a Public Conference for the purpose of examining the 
Commission's ex parte regulations and providing, inter alia, that the 
Commission wanted to provide clearer guidance on whether the ex parte 
prohibitions should apply to all Commission employees or be more 
limited, e.g., to Commissioners, their personal staff, and other 
decisional employees.9 The notice further recited the need 
for clearer standards governing informal consultations between the 
Commission's environmental staff and other federal agencies that have 
environmental responsibilities or interests impacting our decisions, as 
well as contacts between the Commission and applicants and other 
persons for the purpose of obtaining information necessary for 
environmental analyses.10
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    \8\ See Determination Not to Establish a Negotiated Rulemaking 
Committee, Docket No. RM 91-10-000, 57 FR 10621 (Mar. 27, 1992), IV 
FERC Stats. & Regs. para. 35,023 (Mar. 20, 1992).
    \9\ Notice of Public Conference, Regulations Governing Ex Parte 
Communications, Docket No. RM91-10-000, 58 FERC para. 61,320 (Mar. 
20, 1991).
    \10\ Id.
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    As a result of the March 1992 public conference, participants 
developed a general consensus favoring a revised rule that would 
provide the Commission, the industry, and the public with a clearer 
statement of what communications are prohibited and when the 
prohibitions apply.11 It is evident from comments on the 
March 1992 Notice of Public Conference, and from the ongoing 
experiences of staff and persons outside the agency, that the language 
and application of our existing ex parte rule should be revised for the 
sake of clarity.
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    \11\ See, e.g., the comments filed by Interstate Natural Gas 
Association, the Industrial Groups, Pacific Gas Transmission 
Company, and Environmental Action in Docket No. RM91-10-000. Notice 
of Public Conference, 57 FR 10622 (Mar. 27, 1992); IV FERC Stat. & 
Regs. para. 35,023 (Mar. 20, 1992).
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    Moreover, the Commission has recognized the benefits of enhancing 
its access to information from federal and state agencies and other 
interested persons to the extent consistent with law and fair process. 
More recently, discussions undertaken as part of the Commission staff's 
ongoing reengineering effort indicated that many people believe that 
changes to the current ex parte rule could enhance the Commission's 
operations.
    On September 16, 1998, the Commission issued a Notice of Proposed 
Rulemaking (NOPR) to revise its procedural rules concerning 
communications between the Commission and its employees and persons 
outside the Commission.12 The NOPR requested comments on the 
proposed changes to the Commission's procedural rules governing 
communications between the Commission and its employees and persons 
outside the Commission.13 Thirty-two commenters, 
representing the hydropower, electric power, and natural gas pipeline 
industries, as well as state and federal resource agencies filed 
comments generally supporting adoption of the rule as proposed in the 
NOPR.14 Their comments offer a number of recommendations and 
suggestions for improving the proposed rule, some of which are adopted 
in the final rule, and some which are not, as discussed more thoroughly 
below.
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    \12\ Regulations Governing Off-the-Record Communications, 63 FR 
51312 (Sept. 25, 1998); FERC Stats. & Regs. (Proposed Regulations 
1988-1998) para. 32,534 (Sept. 16, 1998).
    \13\ The Commission sought comments notwithstanding that, 
because this is a procedural rule, no opportunity for comment is 
required by the APA.
    \14\ The commenters are identified in Appendix A.
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III. Discussion

    The final rule is based on the fundamental APA principles that are 
the foundation for the ex parte prohibition, and furthers the basic 
tenets of fairness: (1) A hearing is not fair when one party has 
private access to the decision maker and can present evidence or 
argument that other parties have no opportunity to rebut; 15 
and (2) reliance on ``secret'' evidence may foreclose meaningful 
judicial review.16 The final rule sets out when 
communications between the Commission and Commission staff and persons 
outside the Commission may take place off-the-record, and when such 
communications must take place on the record. The final rule also 
contains directions on how both prohibited and exempted off-the-record 
communications will be handled by the Secretary's office and how public 
notice of such communications will be made.
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    \15\ WKAT, Inc. v. FCC, 296 F.2d 375 (D.C. Cir.), cert. denied, 
360 U.S. 841 (1961).
    \16\ Home Box Office, Inc. v. FCC, 567 F.2d 9, 54 (D.C. Cir.), 
cert. denied, 434 U.S. 829 (1977); U.S. Lines v. Federal Maritime 
Commission, 584 F.2d 519, 541-542 (D.C. Cir. 1978).
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A. Overview

    The final rule generally follows the direction of the proposed 
rule. The final rule applies to off-the-record communications made in a 
``contested on-the-record proceeding,'' defined as ``any proceeding 
before the Commission to which there is a right to intervene and in 
which an intervenor disputes any material issue, or any proceeding 
initiated by the Commission on its own motion or in response to a 
filing.'' Proceedings not covered by this rule include informal (i.e., 
notice and comment) rulemaking proceedings under 5 U.S.C. 553; 
investigations under part 1b; public technical, policy, and other 
conferences intended to inform

[[Page 51224]]

the public or solicit comments on general issues of interest to the 
Commission and the public; any other proceeding not having a ``party or 
parties,'' as defined in Rule 102 of the Commission rules of practice 
and procedure 17; and any proceeding in which no party 
disputes any material issues. Although the APA permits off-the-record 
communications concerning general background or policy discussions 
about an industry or segment of an industry, discussions of how such 
background or policy information might apply to the specific merits of 
a pending proceeding are not permitted.18
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    \17\ 18 CFR 385.102.
    \18\ See H.R. Rep. No. 94-880 (Part I), at 20 (1976), reprinted 
in 1976 U.S.C.C.A.N. at 2202.
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    The NOPR proposed 10 exemptions to the general prohibition against 
off-the-record communications in contested, on-the-record proceedings 
at the Commission. Seven of the proposed exemptions are adopted in the 
final rule largely as proposed in the NOPR--(1) off-the-record 
communications expressly permitted by rule or order, (2) off-the-record 
communications related to emergencies, (3) off-the-record 
communications agreed to by the parties, (4) off-the-record written 
communications with non-party elected officials, (5) off-the-record 
communications with other Federal, state, local and Tribal agencies, 
(6) off-the-record communications related to National Environmental 
Policy Act (NEPA) documentation, and (7) off-the-record communications 
with individual non-party landowners. These are discussed below. As a 
clarification, the final rule refers to ``exempted'' rather than 
``permitted'' off-the-record communications in the regulatory text.
    Three proposed exemptions are dropped in this final rule because 
they are unnecessary. The NOPR proposed an exemption for communications 
taking place prior to the filing of an application for Commission 
action (generally referred to as a ``pre-filing'' meeting or 
conference). As more thoroughly discussed below, this exemption is 
eliminated as unnecessary in the final rule, because pre-filing 
communications are outside the purview of this rule because they take 
place prior to the filing of an application, and therefore prior to any 
``proceeding'' at the Commission.
    The NOPR proposed an exemption for published or broadly 
disseminated public information. We subsequently have concluded that, 
where staff obtains such information of its own volition, no exemption 
is required to permit Commission staff to access and consider widely 
available public information. Thus, that exemption has been deleted in 
the final rule although information relied on by the Commission must be 
put into the public record.
    Finally, the NOPR also proposed an exemption for communications 
related to compliance matters where compliance was not the subject of a 
pending proceeding. The final rule addresses this concern by defining 
such communications as not relevant to the merits, rather than by 
providing a separate exemption.
    The final rule establishes notice and disclosure requirements for 
both prohibited and exempted communications. These provisions are 
similar to those proposed in the NOPR.

B. General Comments

    The comments received from the 32 commenters generally were 
supportive of the Commission's efforts to clarify and reform the 
current rules. Several general comments are addressed in this section; 
comments on specific elements of the NOPR are discussed below.
    Several commenters expressed concern that the revised rules could 
operate to the detriment of small entities.19 It is not our 
intent to create rules or regulations having a discriminatory effect on 
any segment of the Commission's constituency, particularly smaller 
entities that may not have a regular presence in Washington, DC, or may 
lack the resources of larger entities. Everybody doing business with 
the Commission should be assured that the purpose of the final rule on 
communications is to enhance the ability of all entities involved in a 
particular proceeding to communicate with the Commission on an equal 
footing.
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    \19\ See EPSA at 4; Joint Commenters at 3-4.
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    One weakness in the prior rule is that it did not expressly apply 
to off-the-record communications initiated by the Commission and its 
staff. This deficiency appears to be inconsistent with the approach of 
the APA that, in general, ex parte proscriptions should apply when one 
party has private off-the-record communications with a decisional 
authority, regardless of who initiated the contact, so that other 
parties are not deprived of fundamental fairness and due process. 
Therefore, the final rule applies to off-the-record communications from 
decisional Commission employees to persons outside the Commission as 
well as off-the-record communications from persons outside the 
Commission to Commission decisional employees. The prohibitions apply 
both to oral and written off-the-record communications.
    One commenter opines that, while most of the reforms set out in the 
proposed rule are generally desirable and will give the Commission more 
flexibility in communicating with other entities, the rule, if strictly 
applied, would seem to reduce some of the flexibility commonly 
practiced under the existing rule.20 This commenter believes 
that exposing staff to possible recriminations for such off-the-record 
communications might have a chilling effect on staff and forecloses the 
type of meaningful dialogue that might otherwise lead to informed 
decision making, and suggests more extensive use of notice and 
disclosure procedures to further enhance communications.
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    \20\ Sempra at 3-4.
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    The final rule is not intended to reduce communications. Rather, by 
clarifying some of the confusion that existed with the prior rule, the 
net result should be to improve meaningful dialogue that is necessary 
to informed and fair decision making. The final rule defines when a 
communication is considered off-the-record, and sets forth certain 
exemptions for when off-the-record communications may be permitted.

C. Definitions in the Final Rule

    The final rule provides relevant definitions. These are discussed 
seriatim.
(1) Off-the-Record Communication
    As proposed in the NOPR, an ``off-the-record communication'' was 
defined as ``any communication which, if written, is not served on the 
parties, and, if oral, is made without prior notice to the parties.'' 
Several commenters believe that the definition of an oral off-the-
record communication should be amended so that even if prior notice is 
provided for the off-the-record oral communication, it should 
nonetheless be categorized as prohibited unless there was an 
opportunity for all parties to be present when the communication was 
made.21 One commenter argues that such an amendment gives 
context to the nature of prohibited oral communications and tracks the 
language of the Federal Communication Commission's (FCC's) ex parte 
rule.22
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    \21\ INGAA at 2 (INGAA's comments are endorsed by Southern 
Natural Gas Company, Natural Gas Supply Association, and the 
Williams Companies).
    \22\ Id. at 2-3.
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    The Commission agrees that the proposed definition should be 
modified along the lines suggested. Accordingly, in the final rule, 
``off-the-record communication'' is defined as ``any

[[Page 51225]]

communication relevant to the merits of a contested on-the-record 
proceeding which, if written, is not filed with the Secretary and not 
served on the parties to the proceeding pursuant to Rule 
2010,23 and if oral, is made without reasonable prior notice 
to the parties to the proceeding, and without the opportunity for such 
parties to be present when the communication is made.'' Many oral 
communications are made by telephone conference calls during which all 
parties may not be physically ``present.'' We will interpret the 
definition of ``present'' to include presence by telephone or similar 
means. The definition of ``written communications'' includes 
communications transmitted by electronic means such as ``e-mail.''
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    \23\ 18 CFR 385.2010
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(2) Contested On-the-Record Proceeding
    The APA ex parte prohibitions apply to adjudications and similar 
cases required by statute to be decided on the record after an 
opportunity for hearing.24 Courts generally have treated 
rules barring private communications as a basic element of a fair 
hearing--whether an APA-type oral evidentiary hearing or one involving 
``paper'' exhibits and pleadings--in any case involving competing 
private claims to a valuable privilege or benefit.25 
Consequently, the final rule extends the prohibitions to all 
``contested on-the-record proceedings.'' The NOPR defined a ``contested 
on-the-record proceeding'' as ``any complaint, action initiated by the 
Commission, or other proceeding involving a party or parties in which 
an intervenor opposes a proposed action.''
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    \24\ 5 U.S.C. 557(d)(1).
    \25\ Sangamon Valley Television Corp. v. United States, 269 F.2d 
221 (D.C. Cir. 1959); and Sierra Club v. Costle, 657 F.2d 298, 400 
(D.C. Cir. 1981).
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    One commenter believes the definition is too narrow because it 
would attach only in a proceeding in which a party has filed in 
opposition to an application. The commenter believes that the 
Commission should deem as contested a proceeding where parties contest 
legal or factual issues, such as the proper scope of mitigation for 
environmental harm, even if they do not necessarily contest the 
propriety of the application, and expresses uncertainty over whether 
the rule would apply in circumstances where the posture of an 
intervention is unclear and the Commission has not yet issued a formal 
determination that the proceeding is contested.26 The 
commenter thus believes that the proposed definition could motivate a 
party to take a position in opposition to an application merely to 
prevent off-the-record communications from taking place, a proposition 
it notes as contrary to the new policy of encouraging collaboration in 
licensing proceedings.27 As a solution, the commenter 
suggests amending the proposed definition to include the possibility 
that the prohibition on off-the-record communications could be invoked 
by an intervenor's mere request that the rule apply, even in the 
absence of dispute over a material issue.
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    \26\ HRC at 2.
    \27\ Id. at 2-3.
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    The Commission will not rely on intervenor requests to trigger the 
rule's application. One purpose of the final rule is to permit and 
encourage more open communications between the Commission and the 
public, and, therefore, an overbroad definition of when this rule would 
be triggered would be counter to this goal. The Commission will not 
treat an intervention as triggering the requirements of this rule when 
it appears to have been made solely for the purpose of causing the 
intervenor to be placed on the service list or solely for the purpose 
of seeking permission to participate in a hearing, should the 
Commission order that a hearing be held.
    To clarify, however, the Commission will amend the definition in 
the final rule so that a ``contested on-the-record proceeding'' is 
``any proceeding before the Commission to which there is a right to 
intervene and in which an intervenor disputes any material issue, or 
any proceeding initiated by the Commission on its own motion or in 
response to a filing.'' Consistent with current practice, a dispute of 
``any material issue'' may include a dispute of fact, law or policy. 
This amendment to the NOPR's definition of a contested on-the-record 
proceeding is more consistent with the APA and its legislative history. 
The explicit requirement that the proceeding be ``contested'' before ex 
parte rules attach reflects the notion that procedural requirements and 
constraints originally developed to preserve the rights of parties in 
an adjudication have no place in an administrative proceeding in which 
there is no ``contest'' comparable to the controversy in a judicial 
case. For purposes of this definition, an ``on-the-record'' proceeding 
includes both proceedings set for oral hearings and so-called ``paper 
hearings'' where the matter is disposed of on evidence taken only by 
written submissions.
    The definition expressly excludes ``notice-and-comment rulemaking 
under 5 U.S.C. 553, investigations under part 1b of this chapter, 
proceedings not having a party or parties, or any proceeding in which 
no party disputes any material issue.'' With this change, the NOPR's 
separate definition of ``proceeding involving a party or parties'' is 
unnecessary and is omitted.
(3) Decisional Employee, Contractor, and Person
    The NOPR proposed to define a ``decisional employee'' as ``a 
Commissioner or member of his or her personal staff, an administrative 
law judge, or any other employee or contractor of the Commission who is 
or may reasonably be expected to be involved in the decisional process 
of a particular proceeding, but does not include an employee designated 
as a part of the Commission's trial staff in a proceeding, a settlement 
judge appointed under Rule 603 (settlement of negotiations before a 
settlement judge), a neutral (other than an arbitrator) in an 
alternative dispute resolution proceeding subject to Rule 604, or an 
employee designated as non-decisional in a particular proceeding 
subject to the separation of functions requirements applicable to trial 
staff under Rule 2202 (separation of functions of staff).''
    One resource agency asks whether the definition of ``decisional 
employee'' includes the Commission's environmental staff and directors 
of the program offices.28 It does. As a general rule, we 
view these employees as involved in the analysis and decisionmaking 
process so that, to the extent they are assigned to a particular 
proceeding with the goal of making recommendations for the Commission's 
consideration, they must be considered as decisional employees. 
However, specified communications between persons outside the 
Commission and the Commission's environmental staff and directors of 
the program offices may take place off-the-record pursuant to one of 
the exemptions to the prohibition of the general rule discussed below. 
Another commenter notes that, as proposed, the rule would not apply to 
staff who are non-decisional employees, focuses on prohibited 
communications to and from persons outside the Commission, and does not 
address communications between decisional and non-decisional FERC 
staff.29 The commenter apparently reads the rule as eroding 
or modifying the Commission separation of functions rule (18 CFR 
385.2202) and requests the Commission to reaffirm Rule 2202 and specify 
that decisional and non-decisional staff

[[Page 51226]]

would not be permitted to engage in prohibited communications in 
contested proceedings.30 Other commenters specifically 
request that the definition be amended to include Commission trial 
staff and other non-decisional employees.31 One commenter 
suggests that these Commission employees be considered as outside of 
the Commission, and subject to the rule.32
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    \28\ ACHP at 1.
    \29\ INGAA at 3.
    \30\ Id.
    \31\ WPPI at 4; SCSI at 2-3
    \32\ SCSI at 2-3.
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    We find that these proposed modifications are not necessary or 
practicable. Rule 102(b) of the Commission's rules of practice and 
procedure sets forth the definition of a ``participant'' in Commission 
proceedings as ``(1) Any party; or (2) any employee of the Commission 
assigned to present the position of the Commission staff in a 
proceeding before the Commission,'' thus distinguishing between 
Commission trial staff and a party participant to a 
proceeding.33 Furthermore, Rule 2202 remains in place and as 
such adequately regulates the conduct of intra-agency communications 
that concerns these commenters.34 The Commission reaffirms 
its commitment to the tenets of the separation of functions rule. This 
commitment is recognized in the current Commission organizational 
design, with the new Office of Administrative Litigation encompassing 
all Commission employees engaged in trial work.
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    \33\ 18 CFR 385.102(b).
    \34\ 18 CFR 385.2202. The Separation of Functions Rule precludes 
employees performing investigative or trial functions in a 
particular case from participating as ``decisional employees'' in 
the same matter or in a related matter.
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    As set forth in the NOPR and reflected in the final rule, the 
Commission may designate any member of the Commission staff as ``non-
decisional in a proceeding.'' As a non-decisional employee, he or she 
would be subject to the requirements of Rule 2202. This gives the 
Commission the necessary flexibility to make appropriate allocations of 
its human resources.
    The Commission's administrative law judges fall into a unique 
category. Consequently, with the addition of a clause to the exemptions 
provisions discussed below, the final rule prohibits the making of any 
off-the-record communications to or by a presiding officer in any 
proceeding set for hearing under subpart E of the Commission's rules of 
practice and procedure.35 For subpart E proceedings, none of 
the exemptions for off-the-record communications applies to presiding 
officers.
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    \35\ 18 CFR 385.501 et seq.
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    In contrast, when an administrative law judge is appointed by the 
Chief Administrative Law Judge as a settlement judge under rule 
603,36 or when an administrative law judge is selected as a 
neutral under rule 604 37 the administrative law judge is 
not a decisional employee in that proceeding.
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    \36\ 18 CFR 385.603.
    \37\ 18 CFR 385.604.
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    Pursuit of alternative dispute resolution by the Commission's 
Dispute Resolution Service (DRS) is not part of the decisional process 
and is not subject to these ex parte rules. Alternative dispute 
resolution procedures are set out in Commission Rule 604.38 
Communications undertaken in the context of alternative dispute 
resolution are confidential. Moreover, DRS employees are not decisional 
employees themselves, nor do they advise decisional employees on 
matters relevant to the merits of a particular matter.
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    \38\ Id.
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    One commenter opposes including third-party contractors in the 
definition of decisional employees, asserting that applicants need to 
have confidential discussions with those preparing their NEPA 
evaluations.39 To be sure, third-party contracting reflects 
a scheme by which an applicant is responsible for directly paying and 
cooperating with a contractor selected to perform environmental 
analyses. However, the selection of the contractor is subject to 
Commission approval and Commission staff is responsible for directing 
the work of the contractor.40 Thus, in the same manner as 
direct Commission contractors, a third-party contractor plays the role 
of a Commission decisional employee, subject to the proscriptions of 
the rules against prohibited off-the-record communications. 
Accordingly, merits-related communications between an applicant and a 
contractor are governed by these rules.
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    \39\ NHA at 2.
    \40\ 40 CFR 1506.5.
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    Finally, one resource agency commented that pre-decisional 
technical involvement by Commission staff should be outside the purview 
of the rule, so that Federal, state, local or tribal agencies may 
freely communicate with Commission staff on technical 
issues.41 To the extent that the technical issues are not 
related to the merits of the underlying proceeding, such communications 
would be permitted. Such communications may also be permitted under the 
exemptions for communications between Federal agencies having common 
jurisdictional interests in a particular matter or for NEPA document 
preparation.42
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    \41\ See Interior at 11-12.
    \42\ 18 CFR 385.2201(e)(1)(v), 385.2201(e)(1)(vi).
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(4) Relevant to the Merits
    The final rule applies to off-the-record communications relevant to 
the merits of a Commission proceeding in covered proceedings. The term 
``relevant to the merits'' is taken directly from the APA and its 
definition is drawn from the legislative history of those 
provisions.43 The term is defined to mean ``capable of 
affecting the outcome of a proceeding, or of influencing a decision, or 
providing an opportunity to influence a decision, on any issue in the 
proceeding.'' The regulatory text states that purely procedural 
inquiries or status requests that will not have an effect on the 
outcome of a case or on the decision on any issue are not ``relevant to 
the merits.'' Communications relating to purely procedural inquiries, 
such as how to intervene in a proceeding, the number of days before a 
responsive filing is due, or the number of copies that must be provided 
for a required filing are permitted at any time. Where a communication 
states or implies a preference for a particular party or position, it 
would be considered as being relevant to the merits. Although simple 
requests for action by a specific date or for expedited action may be 
viewed as not relevant to the merits, the Commission strongly 
encourages that any such requests be made in writing and on the record.
---------------------------------------------------------------------------

    \43\ See H.R. Rep. No. 94-880 (Part I), at 20, reprinted in 1976 
U.S.C.C.A.N. at 2202:
    The (statute) prohibits an ex parte communication only when it 
is ``relative to the merits of the proceeding.'' This phrase is 
intended to be construed broadly and to include more than the phrase 
``fact in issue'' currently used in the Administrative Procedure 
Act. The phrase excludes procedural inquiries, such as requests for 
status reports, which will not have an effect on the way the case is 
decided. It excludes general background discussions about an entire 
industry which do not directly relate to specific agency 
adjudication involving a member of that industry, or to formal 
rulemaking involving the industry as a whole. It is not the intent 
of this provision to cut an agency off from general information 
about an industry that an agency needs to exercise its regulatory 
responsibilities. So long as the communication containing such data 
does not discuss the specific merits of a pending adjudication it is 
not affected by this section.
---------------------------------------------------------------------------

    As discussed further below, the definition also excludes 
communications related to compliance matters if compliance is not the 
subject of an ongoing proceeding.

[[Page 51227]]

D. Exempt Off-the-Record Communications

    The final rule sets out seven exemptions from the general 
prohibitions against off-the-record communications. These exemptions 
are independent of one another. Accordingly, if any exemption applies 
to the circumstances of a particular proceeding, off-the-record 
communications will be permitted subject to any disclosure 
requirements. For example, Rule 2201(e)(1)(iii),44 provides 
that the proscriptions of this rule do not apply where all parties to a 
proceeding have agreed in writing that off-the-record communications 
may take place. However, even in the absence of such unanimity, off-
the-record communications relating to development of an environmental 
impact statement would be permitted in accordance with the exemption 
contained in Rule 2201(e)(1)(vi).45
---------------------------------------------------------------------------

    \44\ 18 CFR 385.2201(e)(1)(iii).
    \45\ 18 CFR 385.2201(e)(1)(vi).
---------------------------------------------------------------------------

    We note that while the final rule exempts certain off-the-record 
communications from the prohibitions of the rule, the Commission and 
Commission staff retain the discretion not to engage in permitted 
communications if, in their judgment, such communications would create 
the appearance of an impropriety or otherwise seem inconsistent with 
the best interests of the Commission.46
---------------------------------------------------------------------------

    \46\ See 18 CFR 385.2201(j)(2).
---------------------------------------------------------------------------

(1) Off-the-Record Communications Expressly Permitted by Rule or Order
    To the extent permitted by law, Rule 2201(a) allows the Commission, 
by rule or order, to modify any of the ex parte provisions as they 
apply to all or part of a proceeding. Resource agencies commented that 
statutes such as the Endangered Species Act require interagency 
consultations, within and outside of the context of preparing an 
environmental document.47 These commenters ask if the rule 
should consider whether statutes mandating such consultations properly 
fit within this exemption.
---------------------------------------------------------------------------

    \47\ E.g., Interior at p. 6.
---------------------------------------------------------------------------

    As discussed in the NOPR,48 only where there is specific 
statutory authority permitting or directing interagency consultations 
to take place on an ex parte basis, would such off-the-record 
communications be construed as ``authorized by law.'' We do not believe 
that statutes requiring interagency consultations should be viewed as 
authorizing such communications to take place off-the-
record.49 Under other exemptions of the final rule, however, 
the types of communications addressed by resource agencies may often be 
permissible, subject to a disclosure requirement.50
---------------------------------------------------------------------------

    \48\ Notice of Proposed Rulemaking, Regulations Governing Off-
the-Record Communications, 63 FR 51312, 51316 (Sept. 25, 1998).
    \49\ In fact, pursuant to NEPA, prior to issuing a detailed 
environmental statement, an agency must make available, pursuant to 
the Freedom of Information Act (FOIA), the comments and views of 
cooperating agencies. See 42 U.S.C. 4233(C.)
    \50\ See 18 CFR 385.2201(e)(1)(v) or (vi). We note however that 
the disclosure requirement in this rule does not permit the 
Commission or any resource agency to publicly disclose statutorily 
protected information. There are statutory prohibitions against 
disclosing the location of certain historically, culturally, or 
environmentally sensitive resources, but there is no such 
prohibition on setting conditions to protect such resources. See, 
e.g., Section 304 of the National Historic Preservation Act, as 
amended, 16 U.S.C. 470w-3.
---------------------------------------------------------------------------

(2) Off-the-Record Communications Related to Emergencies
    The final rule provides an exemption, subject to a notice and 
disclosure provision, for communications relating to emergencies. The 
NOPR proposed such an exemption for communications related to 
emergencies, and specifically requested comments on whether last year's 
Midwest price spike might qualify as an emergency under such an 
exemption. Some commenters suggest that an ``act of God'' emergency 
would not likely occur in the context of a contested 
proceeding.51 Because of the high stakes that might be 
involved in a contested proceeding, however, it was suggested that, if 
adopted, the proposed exemption be triggered only after a decision by 
the Commission or a senior staff official.
---------------------------------------------------------------------------

    \51\ E.g., Joint Commenters at 9-10.
---------------------------------------------------------------------------

    Other comments suggest that the final rule better define covered 
emergencies, and that generic fact-finding would be a better mechanism 
for handling communications concerning emergencies.52 
Commenters also noted that, because resource agencies might have 
specific statutory responsibilities relating to natural disasters, the 
Commission should promptly disclose off-the-record communications 
related to such emergencies.53
---------------------------------------------------------------------------

    \52\ EEI at 8-9.
    \53\ Interior at 7.
---------------------------------------------------------------------------

    We agree with the commenters' suggestions that it is unlikely that 
communications relating to emergencies would take place in the context 
of a pending contested proceeding, and we also find some merit in the 
argument that permitting off-the-record communications during 
``economic'' emergencies could have an adverse effect on regulated 
energy markets in the context of a contested proceeding.54 
We believe that the Commission's investigative powers under its 
enabling statutes and part 1b (``Rules Relating to Investigations'' 
under subchapter A ``General Rules'') of its regulations appear to be 
sufficiently broad to allow informal investigations into ``significant 
market anomalies,'' and such investigations are outside the scope of 
this rule.
---------------------------------------------------------------------------

    \54\ Joint Commenters at 9-10.
---------------------------------------------------------------------------

    However, especially with regard to emergencies affecting a 
regulated entity's ability to deliver energy, it is imperative that the 
regulated community be assured that, in the face of an emergency, it 
may initiate communications with the Commission without fear of 
violating the prohibitions on off-the-record communications, even in 
the context of a contested proceeding. By their very nature, 
emergencies do not allow prior opportunity for public participation in 
meetings addressing issues relating to the emergency. Concomitantly, 
Commission staff must be able to receive an emergency communication 
without fear of violating ex parte considerations or other provisions 
of the Commission's standards of conduct for employees. Therefore, the 
final rule adopts this exemption. Because we believe that the 
Commission can proceed to investigate emergencies, once identified, 
under its part 1b procedures, the final rule makes clear that this 
exemption is limited to communications from persons outside the 
Commission, and requires prompt notice and disclosure of the 
communication. The prompt disclosure required under this exemption 
should alleviate any possible detriment occasioned by allowing such 
communications.
(3) Off-the-Record Communications Agreed to by the Parties
    The NOPR proposed to retain prior Rule 2201(b)(6) permitting 
communications which all the parties to a proceeding agree may be made 
without regard to communication constraints. We conclude that 
agreements to waive this rule must be in writing and subject to 
Commission approval.55
---------------------------------------------------------------------------

    \55\ See WKAT, Inc., v. FCC, 296 F.2d 375 at 383 (D.C. Cir. 
1961).
---------------------------------------------------------------------------

    The NOPR sought comments on whether pre-filing communications 
protocols permitted under our collaborative procedures initiatives 
56

[[Page 51228]]

should be allowed to remain in effect after a filing is made. The 
general consensus of commenters is that pre-filing communications 
protocols agreements should be renewed or otherwise approved by all 
parties to a proceeding once a filing is made and the time for filing 
interventions has passed.57
---------------------------------------------------------------------------

    \56\ See Order No. 596, Regulations for the Licensing of 
Hydroelectric Projects, 62 FR 59802 (Nov. 5, 1997), III FERC Stats. 
& Regs. para. 31,057 (Oct. 29, 1997).
    \57\ See, e.g., ACHP at 2; EEI at 9; Williston at 5-6; SMUD; at 
5.
---------------------------------------------------------------------------

    We agree with the commenters. In order to qualify for this 
exemption, pre-filing protocols must be renewed by all parties and 
approved by the Commission after an application is filed with the 
Commission and the time for filing interventions has expired. At that 
time, the identities of all parties participating in the proceeding 
have been determined.
(4) Off-the-Record Written Communications from Non-Party Elected 
Officials
    The Commission receives numerous letters from Federal and state 
elected officials requesting expedition and forwarding correspondence 
from constituents. The NOPR proposed treating such written 
communications as permitted communications, subject to a notice and 
disclosure requirement under which the communications would be placed 
in the public record.58 Various commenters urge that the 
exemption include any communications from Commission officials to the 
non-party elected official,59 be limited to 
Congress,60 restrict covered officials from forwarding to 
the Commission the comments of constituents who are parties to a 
particular proceeding,61 and extend to Tribal 
officials.62
---------------------------------------------------------------------------

    \58\ The legislative history of the APA makes clear that members 
of Congress are ``interested persons'' subject to the APA 
restrictions on communications. It also indicates, however, that 
this prohibition is not intended to prohibit routine inquiries or 
referrals of constituent correspondence. See H.R. Rep. No. 94-880 
(Part 1), (at 21-22), reprinted in 1976 U.S.C.C.A.N at 2203.
    \59\ INGAA at 4, SoCalEd at 8-9.
    \60\ Id.
    \61\ BPA at 3-4.
    \62\ Interior at 10.
---------------------------------------------------------------------------

    The final rule generally adopts the proposed exemption. The 
exemption covers only written communications. Because such 
communications may be relevant to the merits, this exemption contains a 
notice and disclosure requirement.
    We agree with commenters that communications from elected, non-
party Tribal officials should be included among those communications 
permitted by this exemption. Indian tribes frequently have interests 
that may be substantially affected by Commission proceedings.
    Any communications from Commission officials to elected officials 
are not covered by this exemption. Consistent with current practice, 
Commission responses to correspondence from elected officials do not 
address the merits. Nevertheless, such responses will be placed in the 
record.
(5) Off-the-Record Communications with Other Federal, State, Local, and 
Tribal Agencies
    Prior Rule 2201(b)(1) 63 permitted off-the-record 
communications from interceders who are Federal, state or local 
agencies that have no official interest in, and whose official duties 
are not affected by, the outcome of a covered proceeding to which the 
communication relates. What was meant by ``official duties'' or having 
``no official interest in'' a covered proceeding was unclear, at best.
---------------------------------------------------------------------------

    \63\ 18 CFR 385.2201(b)(1).
---------------------------------------------------------------------------

    Because many of the agencies with which the Commission works have 
an interest in Commission proceedings, the NOPR proposed an exemption 
to permit off-the-record communications, subject to a disclosure 
requirement, with Federal, state, or local agencies that are not 
parties in a specific contested proceeding. As proposed, there would be 
an exemption for off-the-record communications involving: (1) A request 
for information by the Commission or Commission staff; or (2) a matter 
over which the other Federal, state, or local agency and the Commission 
share regulatory jurisdiction, including authority to impose or 
recommend licensing conditions.
    One commenter strongly objects to this exemption and suggests that 
agencies use memoranda of understanding to define their respective 
roles.64 Three other commenters suggest that government 
agencies are no different from other parties with specific interests in 
the outcome of a proceeding and, thus, should not be accorded special 
treatment, particularly when the Commission may grant late intervention 
to agencies.65 On the other hand, most resource agencies 
believe the exemption should be expanded to include party, as well as 
non-party, agencies.66
---------------------------------------------------------------------------

    \64\ HRC at 5-6.
    \65\ See, EEI at 3; Joint Commenters at 10-11; NHA at 2-3.
    \66\ Interior at 11-12; NMFS at 2; EPA at 1-2.
---------------------------------------------------------------------------

    One commenter argues that, because some agencies have authority to 
make mandatory licensing conditions, interagency off-the-record 
communications should be prohibited unless applicants have similar 
access to the Commission.67 NARUC urges the Commission to 
consider its statutory obligations for consultations with its member 
state utility commissions, and clarify when communications with state 
commissions are necessary.68 At least one state agency 
believes that excluding party agencies from this exemption would chill 
their ability to participate fully in some proceedings.69 
Finally, it was suggested that communications with non-party Indian 
Tribes be covered by this exemption.70
---------------------------------------------------------------------------

    \67\ NHA at 2-3.
    \68\ NARUC at 2-4.
    \69\ California Oversight at 2.
    \70\ Interior at 11-12.
---------------------------------------------------------------------------

    The exemption, modeled on similar ex parte exemptions adopted by 
the Federal Communications Commission (FCC), is adopted as 
proposed.71 The intent is to recognize that, except when the 
other Federal, state, or local agency is directly involved in a 
Commission case as a party, the public interest favors a free flow of 
information between government agencies with shared jurisdiction. Where 
agencies are charged with shared jurisdiction and regulatory 
responsibilities, a cohesive government policy can best be developed 
and implemented through communication, cooperation and collaboration 
between agencies and their staff that sometimes can take place most 
effectively off-the-record.72 To ensure that such 
communications do not compromise the procedural rights of the parties 
or the integrity of the Commission's decisional record, the exemption 
as proposed and adopted includes a disclosure provision, requiring that 
information obtained through off-the-record communications with 
Federal, state or local agencies, and relied upon by the Commission in 
reaching its decision, be placed in the public record to allow the 
public to discern the basis of the Commission's decision.
---------------------------------------------------------------------------

    \71\ See, e.g., 47 CFR 1.1204(a)(5).
    \72\ Similar exclusions appear in the Federal Communications 
Commission's ex parte regulations. See 47 CFR 1.1204(b)(5), (7) and 
(8).
---------------------------------------------------------------------------

    We do not believe it appropriate to require disclosure of 
communications between the Commission and non-party cooperating 
agencies that exchange views and information in the development of an 
environmental impact statement or environmental assessment under NEPA. 
Such cooperation typically involves an interagency sharing of the staff 
work necessary to prepare an environmental document. This collaboration 
is most

[[Page 51229]]

effective when not burdened by notice and disclosure requirements. 
Where the involved agencies are not parties before the Commission, we 
believe this collaboration can occur off-the-record without prejudice 
to the parties. Thus, the final rule excludes such communications from 
the disclosure requirements.
(6) Off-the-Record Communications Relating to NEPA Documentation
    The NOPR proposed to exclude from the general prohibitions of this 
rule all off-the-record communications relating to the preparation of 
either an environmental impact statement (EIS) or an environmental 
assessment (EA) where the Commission has determined to solicit public 
comment on the EA. Under the proposed exemption, off-the-record 
communications would be permitted by the rule if they are made prior to 
the issuance of a final NEPA document. The proposed exemption provided 
for notice and disclosure of off-the-record communications.
    Several commenters would limit application of the exemption to off-
the-record communications leading up to the issuance of a draft 
environmental impact statement (DEIS) and require all communications 
occurring after issuance of the DEIS to take place on the 
record.73 One commenter expresses concern that if the 
Commission adopts the rule as proposed, permitting off-the-record 
communications during the period between issuance of a DEIS and final 
environmental impact statement (FEIS), an applicant might learn of 
post-DEIS comments only upon issuance of the final environmental 
document, thus denying it an opportunity to respond. Accordingly, this 
commenter asks that, should the Commission permit off-the-record 
communications until issuance of the FEIS, such communications should 
be immediately disclosed and parties should be allowed to comment on 
the substance of the communication prior to the Commission addressing 
such communication in the FEIS.74
---------------------------------------------------------------------------

    \73\ E.g. INGAA at 4-5, NHA at 3-4, SMUD at 8.
    \74\ INGAA at 4-5.
---------------------------------------------------------------------------

    Federal agency commenters enthusiastically support this exemption 
and would broaden it to allow communications related to areas within 
their jurisdictional expertise even after a FEIS issues.75 
They cite statutory obligations such as, but not limited to, the Clean 
Water Act,76 Endangered Species Act,77 and 
National Historic Preservation Act of 1966,78 as requiring 
input from their respective agencies even after the Commission issues 
its decisions. Furthermore, CEQ regulations require that Federal 
agencies integrate related surveys, required by other relevant 
environmental review laws, into an EIS.79
---------------------------------------------------------------------------

    \75\ Interior at 12, NMFS at 4-5, ACHP at 1-2, BPA at 4-10, CEQ 
at 1.
    \76\ 33 U.S.C. 1251, et seq.
    \77\ 16 U.S.C. 1632, et seq.
    \78\ 16 U.S.C. 470, et seq.
    \79\ Such statutes include, but are not limited to, the Coastal 
Zone Management Act of 1972, 16 U.S.C. 1451 et seq.; National 
Historic Preservation Act of 1966, 16 U.S.C. 470 et seq.; Endangered 
Species Act, 16 U.S.C. 1532 et seq.; and section 401, the Clean 
Water Act, 33 U.S.C. 1341.
---------------------------------------------------------------------------

    Another commenter responds that government agencies that are also 
parties to a proceeding should not have access to materials under 
circumstances where other parties lack such access, but that a 
disclosure requirement would alleviate such concerns.80 One 
commenter responds that there is no need to share confidential trade 
secret information with agencies in order to prepare an environmental 
document.81
---------------------------------------------------------------------------

    \80\ Williston at 6.
    \81\ SoCalEd at 2.
---------------------------------------------------------------------------

    The Commission basically adopts the exemption in the final rule as 
proposed in the NOPR. The Commission appreciates the concerns raised by 
the commenters, both those supporting narrowing the scope of the 
exemption, and those supporting broadening its scope, but we do not 
believe that they require us to make changes to the rule as proposed. 
While the Commission prefers that all NEPA-related communications take 
place on the record, we acknowledge that there will be times when off-
the-record contacts may assist in the development of sound 
environmental analysis.
    The public NEPA process provides sufficient opportunity for 
interested persons to fully participate in the development of the 
environmental document that will be part of the Commission's record of 
decision. In proceedings where the preparation of an EIS is necessary, 
CEQ rules describe a public scoping requirement that may include 
noticed, public, on-the-record meetings, and require that all 
substantive comments (whether written or oral) received on the DEIS, or 
summaries thereof, where the response has been especially voluminous, 
should be addressed in the final environmental document, whether or not 
they are relied upon by the agency.82 Just as with the 
development of an EIS, CEQ regulations provide that, to the extent 
practicable, environmental agencies, the applicant, environmental 
interest groups, and the public should be involved in the process of 
crafting an EA.83 Thus, the process of NEPA document 
preparation is an open one, with ample opportunities for public 
participation.
---------------------------------------------------------------------------

    \82\ 40 CFR 1503.4(b).
    \83\ 40 CFR 1501.4.
---------------------------------------------------------------------------

    The final rule adopts a notice and disclosure requirement. The 
disclosure requirement provides that any written communication, and a 
summary of any oral communication obtained through an exempted off-the-
record communication to or from Commission staff, will be promptly 
placed in the decisional record of the proceeding, and noticed by the 
Secretary.84 Thus, interested persons will have notice of 
comments received on a NEPA document and be given the opportunity to 
respond. Such a practice will enhance the openness of the NEPA process 
and allow the Commission to make the most informed decisions 
practicable.
---------------------------------------------------------------------------

    \84\ As discussed above, the notice and disclosure requirements 
do not apply to communications with non-party cooperating agencies. 
See 18 CFR 385.2201(g)(1).
---------------------------------------------------------------------------

    Finally, there were two comments related to the timing of this 
exemption. One commenter asks the Commission to clarify when this 
exemption would be in effect: from the time an application is received, 
or from the time of notice that the application is ready for 
environmental analysis? 85 The CEQ regulations suggest that 
the environmental analysis process start at the earliest possible time, 
including the possibility that such preparation start before an 
application is filed with an agency.86 This exemption will 
be triggered by the filing of an application, and remain in effect no 
later than the date on which the final environmental document (either 
FEIS or Finding of No Significant Impact) is issued.
---------------------------------------------------------------------------

    \85\ Interior at 12.
    \86\ See, e.g., 40 CFR 1501.2.
---------------------------------------------------------------------------

    The second commenter suggests that the exemption provide for 
disclosure of an off-the-record communication within ten days of the 
communication.87 We believe that the general provision 
requiring disclosure promptly after receipt is appropriate, and is 
included in the final rule. While the final rule adopts the exemption 
for off-the-record communications relating to contested proceedings 
that require the preparation of environmental documents, any off-the-
record communications relevant to the merits taking place after the 
Commission's issuance of the final environmental document will be 
considered prohibited ex parte communications under the final rule, 
unless covered by another exemption.
---------------------------------------------------------------------------

    \87\ SMUD at 8.

---------------------------------------------------------------------------

[[Page 51230]]

(7) Off-the Record Communications With Individual Non-Party Landowners
    Subject to a disclosure requirement, the NOPR proposed, and the 
final rule permits, off-the-record communications with non-party 
landowners whose property may be affected by a pending proceeding.
    Several commenters oppose this exemption and suggest that all 
landowner communications should be filed and served on all 
parties.88 Other commenters suggest that while some 
exemption for landowner communications is appropriate, such 
communications should be limited in number or restricted to those 
owners whose property is or will be affected by an action over which 
the Commission has statutory authority.89 Another commenter 
notes that the Commission's Landowner Notification proposal 
90 was intended to make it easier for landowners to 
participate in proceedings that directly affect them. This commenter 
asks the Commission to clarify, in this proceeding, when an individual 
landowner is or is not a party, who may comment without intervening, 
and whether these landowners need to be served filings by parties to 
the proceeding.91
---------------------------------------------------------------------------

    \88\ E.g., HRC at 7, NGSA at 11.
    \89\ Joint Commenters at 12, BPA at 7.
    \90\ See ``Landowner Notification, Expanded Categorical 
Exclusions and Other Environmental Filing Requirements,'' Docket No. 
RM98-17-000 64 FR 27717 (May 21, 1999), IV FERC Stats & Regs. ] 
32,540 (Apr. 28, 1999).
    \91\ Williston at 5.
---------------------------------------------------------------------------

    This non-party landowner exemption does not apply to landowners who 
have intervened as a party to a proceeding. Such a party will be 
treated as any other party to a contested Commission proceeding. 
Landowners desiring to become parties may do so in the same manner as 
any other person desiring to do so: By filing an application or timely 
intervention or opposition to the proceeding, or at such time the 
Commission accepts a request to file out of time. Once a landowner 
becomes a party to a proceeding, all communications between the 
landowner and the Commission must be made on-the-record and served on 
all parties to the proceeding. As an intervenor, the landowner will be 
placed on the service list and will receive copies of all documents of 
record. Also as an intervenor, the landowner has the right to seek 
rehearing of any Commission order, and to appeal any final Commission 
action.
    During the NEPA process, landowner comments (as well as comments by 
others) are placed in the record and, to the extent required by CEQ 
regulations, responded to in any final environmental document. For 
purposes of preparing an environmental impact statement or an 
environmental assessment, such commenters are not deemed to be 
intervenors, absent their having formally intervened as a party 
pursuant to the Commission's procedural rules. Thus, they do not 
receive documents of record, nor do they have the right to seek 
rehearing or appeal of Commission orders. On the other hand, they do 
not have the burden of serving copies of their comments on all parties 
on the service list.
    The exemption provides an opportunity for individuals who may not 
have the knowledge of Commission practice and procedure to obtain 
information from the Commission. The Commission is concerned that in 
spite of its efforts and those of applicants, many landowners may 
remain unaware that a project directly affects their property until the 
time for intervention in a proceeding has passed. A non-party landowner 
should be able to contact the Commission to determine what is going on 
and how to participate in the proceeding if he or she so chooses. 
Further, if a landowner decides not to intervene, that landowner should 
be permitted to comment without the need to incur the expense of 
formally intervening in a proceeding. Any possible bias to the parties 
is mitigated by the notice and disclosure requirement that off-the-
record communications with affected landowners be placed in the record 
of the proceeding and made available for review and comment. While the 
Commission agrees that an individual non-party landowner should not 
have an unlimited number of contacts, we believe that it is preferable 
to rely on the sound judgment of the Commission and its staff to 
prevent abuse rather than setting ``bright line'' restrictions on the 
number of such contacts.
    In addition, only those non-party landowners whose property would 
be used by or whose property abuts property that would be used by the 
proposed project would qualify for the exemption. This exemption 
applies throughout the course of the proceeding, even after the NEPA 
process has been completed, but does not apply to landowner 
organizations, or to individual landowners who are parties to the 
proceeding.

E. Proposed Exemptions Not Adopted in the Final Rule

    As indicated above, three of the ten exemptions proposed in the 
NOPR are not included as exemptions in the final rule.
(1) Pre-filing Communications Outside the Scope of the Final Rule
    The NOPR proposed an exemption that would have permitted off-the-
record communications relating to ``pre-filing communications, 
including communications under Secs. 4.34(i), 4.38 and 16.8 of this 
chapter, to take place before the filing of an application for an 
original, new, nonpower, or subsequent hydropower license or exemption 
or a license amendment.'' A clarifying note added that application of 
this exemption is not limited to the referenced hydropower regulations, 
but would also include the submission of draft rate schedules for the 
purpose of receiving suggestions under Sec. 35.6 of the Commission's 
rules, and certain informal pipeline certificate consultations pursuant 
to Sec. 157.14(a). Further, the Commission has always encouraged pre-
filings by oil pipeline companies. In our work on streamlining the oil 
regulations in Order No. 561,92 we specifically included 
Sec. 341.12, ``Informal Submissions,'' to allow for this. In addition, 
the NOPR anticipated additional initiatives permitting pre-filing 
collaborative procedures designed to expedite the process of reviewing 
applications subsequently filed with the Commission.
---------------------------------------------------------------------------

    \92\ 58 FR 58753 (Nov. 4, 1993), FERC Stats. & Regs. 
(Regulations Preambles 1991-1996) para. 30,985 (Oct. 22, 1993).
---------------------------------------------------------------------------

    There is general support for this exemption; however, several 
commenters argue in favor of setting conditions on allowing pre-filing 
communications to take place off-the-record.93 As noted by 
other commenters, however, pre-filing communications generally fall 
outside the scope of the APA's definition of ex parte.94 
Except for mandating that ex parte provisions take effect no later than 
the date a matter is noticed for hearing, the APA leaves to the 
individual agency the decision as to whether ex parte proscriptions 
should attach at an earlier date.95 The Commission views 
pre-filing

[[Page 51231]]

communications as harmonious with the APA and, consistent with our past 
practice, does not believe that any bar to communications should exist 
prior to the time a matter is formally contested, let alone prior to 
the time a matter is filed for its consideration.
---------------------------------------------------------------------------

    \93\ E.g., SCSI at 4 (supports as long as pre-filing 
consultations do not address merits of the proceeding to be filed); 
WPPI at 6-7 (if adopted, permitted communications should be limited 
to procedure and precedent, and be disclosed); NGSA at 10 (favors 
exemption but reminds Commission that its decision must be based on 
record evidence, not pre-filing communications).
    \94\ HRC at 4, Interior at 5 (requests that the rule reference 
need for certain interagency communications).
    \95\ See, 5 U.S.C. 557(d)(1)(E). It should be noted, however, 
that the APA requires that, when the agency knows that the matter 
will be set for hearing, ex parte prohibitions should be enforced at 
that point.
---------------------------------------------------------------------------

    We agree with the commenters' assertion that there is no need to 
provide an exemption for pre-filing communications, as such 
communications fall outside this rule's applicability. Accordingly, 
this exemption is deleted from the final rule.96
---------------------------------------------------------------------------

    \96\ Even though we find that pre-filing communications fall 
outside the scope of this rule, we are nonetheless sensitive to the 
concerns expressed by some commenters regarding communications that 
take place before an application is filed. The Commission's pre-
filing collaborative procedures address these concerns, typically 
with communications protocols.
---------------------------------------------------------------------------

(2) Consideration of Published or Widely Disseminated Public 
Information
    As articulated in the NOPR, the Commission proposed this exemption 
to allow the Commission to consider publicly available information such 
as speeches, articles, and other published or widely disseminated 
information that may have a bearing on the issues involved in a 
contested proceeding. For example, Commission staff should be able to 
consult various regulated companies' electronic bulletin boards such as 
OASIS sites in order to obtain market information. The Commission can 
take official notice of that information in making its determination in 
the contested case. Independent research such as this does not qualify 
as an ex parte communication. This policy is not intended to encourage 
parties to forward for Commission consideration any published or 
otherwise broadly disseminated information in any manner other than on-
the-record.
    Commenters acknowledge that the Commission may take notice of 
public domain information but urge that parties not be permitted to 
provide such information to a decisional employee without formal 
notice.97 It was also argued that exercising judicial notice 
is appropriate as long as the Commission identifies and allows parties 
a chance to rebut any such information it relies upon, and that the 
Commission clarify that the exemption applies to the document and not 
to direct communications with its makers.98
---------------------------------------------------------------------------

    \97\ ACHP at 3.
    \98\ NGSA at 9.
---------------------------------------------------------------------------

    We agree with the commenters' assertions. However, we do not 
believe that a specific exemption is necessary to allow the Commission 
to access and consider in its decision making process any publicly 
available, widely disseminated materials. Independent research or fact 
gathering where no oral or written communication is exchanged does not 
qualify as a communication. Nor do we believe that a specific exemption 
is warranted to permit parties the opportunity to forward such 
information for Commission consideration off-the-record. Accordingly, 
we do not believe that a specific exemption is required for off-the-
record communications of published or widely disseminated public 
information, and this exemption is deleted from the final rule. To the 
extent persons outside the Commission wish to communicate publicly 
available information in contexts not otherwise exempt under the rule, 
those communications must take place on-the-record.
(3) Off-the-Record Communications Concerning Non-Contested Compliance 
Matters
    The NOPR proposed an exemption for certain staff communications 
concerning compliance matters where the compliance issue is not a 
subject of the rehearing. We note that several commenters supporting 
this exemption suggested that it be subject to a disclosure 
requirement.99 Two commenters opposed lifting any 
restrictions on off-the-record communications relating to compliance, 
preferring that all such communications take place on the record. 
100 It also was suggested that the exemption be limited to 
matters concerning environmental and safety concerns as well as to 
routine audits, and would require that the communication be disclosed 
with an opportunity for comment.101
---------------------------------------------------------------------------

    \99\ E.g., HRC at 7; INGAA at 10; Interior at 10; Indicated 
Shippers at 10, NGSA at 5.
    \100\ NMFS at 4 (suggesting that its role in compliance matters 
could be adversely affected if it is not provided prior notice of 
communications between the Commission and the licensee); WPPI at 5-
6.
    \101\ Indicated Shippers at 10.
---------------------------------------------------------------------------

    The Commission does not believe that a specific exemption is needed 
to allow the sort of off-the-record communications we envisioned as 
being permitted by this proposed exemption. If a compliance matter is 
unrelated to a pending rehearing, it is no longer subject to an on-
going Commission proceeding, and communications related to such matters 
are not relevant to the merits and, therefore, are not subject to the 
rule in any case. In order to clarify our intent, the definition of 
``relevant to the merits'' has been modified to expressly exclude 
``communications relating to compliance matters not the subject of an 
ongoing proceeding.'' With this definitional change, the proposed 
exemption is not included in the final rule.
    Under the final rule, if a hydropower licensee or certificate 
holder is having difficulty complying with a particular condition 
imposed by the Commission in its order authorizing the subject 
facility, and the licensing or certification order is pending rehearing 
on issues unrelated to compliance issues, the licensee or certificate 
holder and the Commission may engage in off-the-record communications 
necessary solely to resolve issues related to the mechanics of 
compliance. However, communications relating to the need for the 
particular condition would be considered as relevant to the merits and 
would have to take place on the record.102
---------------------------------------------------------------------------

    \102\ In this example, should the permitted communication result 
in a conclusion that the condition cannot practicably be met, the 
licensee would have to seek an amendment to its license, which must 
be on-the-record, subject to comment by all parties to the 
proceeding.
---------------------------------------------------------------------------

F. Application of the Prohibitions on Off-The-Record Communications

    The final rule generally follows the proposed rule, stating that 
the prohibitions on off-the-record communications do not apply prior to 
the initiation of a proceeding at the Commission. The rule's 
proscriptions apply: For proceedings initiated by the Commission--from 
the time an order initiating the proceeding is issued; for proceedings 
returned to the Commission on judicial remand--from the date the court 
issues its mandate; for complaints initiated pursuant to Rule 206 
103--from the date of the filing of the complaint with the 
Commission, or the date the Commission initiates an investigation, on 
its own motion; and for all other proceedings--from the time of the 
filing of an intervention disputing any material issue that is the 
subject of a proceeding.
---------------------------------------------------------------------------

    \103\ 18 CFR 385.206.
---------------------------------------------------------------------------

    As discussed above, pre-filing communications are not governed by 
this rule. With respect to licenses and certificates, even though pre-
filing communications are not prohibited under the provisions of this 
rule, our intent and preference is that pre-filing protocols will 
continue to be used as an element of our collaborative pre-filing 
procedures.
    Several commenters suggest that the Commission should presume that 
all docketed matters will be contested and,

[[Page 51232]]

therefore, the prohibition on off-the-record communications should be 
in effect from the time of filing of an application until the time for 
interventions and protests has expired. If no opposing pleading has 
been filed by that time, the Commission could then notice that 
communications may take place off-the-record.104 Another 
commenter requests that the Commission announce that ex parte 
provisions have been triggered at the same time it announces receipt of 
any filing. 105
---------------------------------------------------------------------------

    \104\ Indicated Shippers at 7, WPPI at 3.
    \105\ Interior at 15.
---------------------------------------------------------------------------

    The Commission is not adopting these suggestions. The thrust of 
these comments would be to begin the prohibition on ex parte contacts 
as soon as an application is filed with the Commission. This would mean 
that there could be no off-the-record communications about any 
proceeding docketed by the Commission--a result that the Commission 
finds is too restrictive and is not required by law. To trigger the 
rule upon application, for example, could prevent the Commission from 
efficiently obtaining important information necessary to cure an 
incomplete filing.
    As noted above, the prohibitions on off-the-record communications 
will typically be triggered by the filing of a protest or an 
intervention that disputes any material issue in an application for 
Commission action, not by the filing of the application itself. Because 
a properly filed intervention is recorded on the docket sheet and is 
available on other public electronic information retrieval systems 
maintained by the Commission and should be served by the maker on the 
parties, the Commission does not believe it is necessary to formally 
notice in any individual proceeding when the prohibitions on off-the-
record communications are in effect. However, the Commission will 
explore electronic tools for indicating, perhaps on the docket sheet, 
when the prohibitions on off-the-record communications have been 
triggered.
    Once triggered, the prohibitions against off-the-record 
communications remain in effect until the time for rehearing has 
expired and no party has filed for rehearing, or the Commission has 
disposed of all petitions for rehearing or clarification, or the 
proceeding is otherwise terminated or is no longer contested. If the 
Commission order is subject to judicial review which results in a 
remand, the prohibitions against off-the-record communications once 
again apply when the court issues its mandate remanding the matter to 
the Commission.
    One commenter suggested that the prohibitions should remain in 
effect during judicial review.106 This commenter's concern 
was that, in the event of a remand, whether voluntarily requested by 
the Commission or as a result of judicial review, information 
communicated while the proceeding is before the court by the parties to 
the case to Commission staff defending the Commission's orders could be 
improperly used to prejudice any Commission action on 
remand.107
---------------------------------------------------------------------------

    \106\ Indicated Shippers at 7-9.
    \107\ Id.
---------------------------------------------------------------------------

    The final rule does not adopt this suggestion. During judicial 
review, there is no matter pending before the Commission that would 
trigger the ex parte communication prohibitions of the APA. During the 
judicial review process, the record of the Commission's proceedings is 
closed. In the event of a remand, any further Commission action would 
be required to be based on that existing record or on additions made to 
that record after remand and the reopening of the record. As the rule's 
prohibitions would once again apply on remand, any additional matter 
made part of the record would be admitted under the protections of the 
rule.

G. Handling Prohibited Off-The-Record Communications

    The final rule, as did the proposed rule, differentiates between 
two types of off-the-record communications: those prohibited by the 
regulations, and those permitted by the regulations under specific 
exemptions. This section sets forth the treatment for prohibited off-
the-record communications under the regulations, while the next section 
addresses the handling of exempted off-the-record communications.
    The NOPR proposed to depart from the prior Rule 2201,108 
but not the APA, by dropping the requirement that submissions to the 
public, non-decisional file revealing prohibited off-the-record 
communications must be served on the parties to the proceeding. The 
proposed substitution of public notice, rather than requiring the 
Commission to make individual service on all parties to a proceeding, 
was modeled on the approach used in the FCC's ex parte rule with regard 
to off-the-record communications.109
---------------------------------------------------------------------------

    \108\ 18 CFR 385.2201.
    \109\ 47 CFR 1.1206(b).
---------------------------------------------------------------------------

    Comments received on this provision of the rule express concern 
about the adequacy of notice, with a number of commenters arguing that 
mere ``bulletin board'' posting is insufficient notice.110 
However, several other commenters argue that, although merely posting a 
notice on the Commission's bulletin board is not sufficient, proper 
notice could be accomplished electronically through the Internet, 
electronic mail, or by posting the notice on the Commission's web 
page.111 The final rule reflects these comments. In 
addition, in the case of a prohibited off-the-record written 
communication, the final rule requires the Secretary to instruct the 
author to directly serve the document on all parties listed on the 
Commission's official service list.
---------------------------------------------------------------------------

    \110\ E.g., NHA at 4-5, Interior at 16-17, EEI, at 4, HRC at 8. 
``Bulletin board'' posting in this context means the posting of a 
paper document on a public bulletin board at Commission 
headquarters.
    \111\ See, e.g., INGAA at 9, BPA at 7, Williams at 2-3, 
Williston at 6-10.
---------------------------------------------------------------------------

    Commission decisional employees who make or receive a prohibited 
off-the-record communication relevant to the merits of a contested on-
the-record proceeding, are obligated to deliver a copy of the 
communication, if written, or a summary of the substance of any oral 
communication, to the Secretary for submission into a public, non-
decisional file associated with the decisional record in the 
proceeding. This obligation must be met promptly after the prohibited 
off-the-record communication occurs.
    The final rule, under Rule 2201(h),112 requires the 
Secretary to issue a public notice, at least as often as every 14 days, 
of the receipt of any prohibited off-the-record communications. Such 
notice will list the maker of the prohibited off-the-record 
communication, date of receipt by the Commission, and the docket number 
to which the prohibited off-the-record communication relates. The 
notice also will state that the prohibited, off-the-record 
communication will not be considered by the Commission.
---------------------------------------------------------------------------

    \112\ 18 CFR 385.2201(h).
---------------------------------------------------------------------------

    Parties to a proceeding may seek an opportunity to respond on the 
record to any facts or contentions made in a communication and placed 
in the non-decisional file, and may request that the Commission include 
the prohibited off-the-record communication and responses thereto in 
the public decisional record, as well. The Commission will grant such 
requests only when it determines that fairness so requires. If the 
request is granted, a copy of the off-the-record communication and the 
permitted on-the-record response will be made a part of the decisional 
record.
    The public notice will appear on the Commission's web page in a 
place

[[Page 51233]]

designated for such notices. The notice will describe the prohibited 
off-the-record communication in sufficient detail to allow interested 
persons to ascertain whether it is of interest and how it may be 
accessed through RIMS or some other means. In addition, the Secretary 
will periodically, but not less than every 14 days, publish in the 
Federal Register a list of prohibited off-the-record communications.

H. Handling Exempted Off-The-Record Communications

    Many of the exemptions to the final rule require notice and 
disclosure of off-the-record communications permitted under their 
terms. Because the exemptions require notice and disclosure of off-the-
record communications that are relevant to the merits, one commenter 
asks that when the Secretary notices an exempted off-the-record 
communication, whether written or oral, such notice provide details of 
the contact, such as the related docket number, maker, time and place 
of a communication, and a summary of the substance of the 
communication.113 Because this section addresses exempted, 
rather than prohibited communications, this commenter believes that it 
is very important that notice of the communication be made promptly so 
as to allow time for a meaningful response.114
---------------------------------------------------------------------------

    \113\ HRC at 8-9.
    \114\ Id.
---------------------------------------------------------------------------

    These comments have merit. Exempted off-the-record communications 
subject to a disclosure requirement will be placed in the decisional 
record and may be used by the Commission in coming to a decision on the 
merits in a proceeding. Accordingly, such communications must be 
available for review by all parties to the proceeding, and there must 
be an efficient and effective method for noticing the receipt of such 
off-the-record communications and making such off-the-record 
communications available for public inspection and comment. In the case 
of exempted off-the-record communications, prompt electronic notice 
through an electronic service list will be made and the document will 
be made available through the Commission's public automated information 
retrieval systems.

J. Notice of Prohibited and Exempted Off-The-Record Communications

    The NOPR had two different subsections regarding notice of off-the-
record communications. Rule 2201(f)(2) required notice of prohibited, 
off-the-record communications, and Rule 2201(g)(2) required notice of 
permitted off-the-record communications.115 The final rule 
consolidates these two subsections into final Rule 2201(h): ``Public 
notice requirement of prohibited and exempted off-the-record 
communications.''
---------------------------------------------------------------------------

    \115\ The comments relating to the notice requirements were 
discussed in the previous section.
---------------------------------------------------------------------------

K. Sanctions for Making Prohibited, Off-The-Record Communications

    The final rule adopts the NOPR's proposed sanctions. Any party or 
its agent who knowingly makes or causes to be made prohibited off-the-
record communications may be required to show cause why its claim or 
interest should not be dismissed, disregarded, or otherwise adversely 
affected because of the improper communication. This particular 
sanction is already found in our existing ex parte 
regulation,116 and mirrors that provided for in the APA 
itself.117 An additional sanction subjects to possible 
suspension or disbarment from practice before the Commission, any 
individual knowingly making or causing to be made, prohibited off-the-
record communications. The final rule allows the Commission to take 
action against the representative of a party to a proceeding, the party 
itself, or both. In those rare instances where a party uses attorneys 
or other representatives who repeatedly violate Commission procedures, 
both the party and the individual offender may be subject to Commission 
disciplinary measures.
---------------------------------------------------------------------------

    \116\ 18 CFR 385.2201(f).
    \117\ 5 U.S.C. 557(d)(1)(D).
---------------------------------------------------------------------------

    The general view of the commenters is that the existing ex parte 
sanction, coupled with Rule 2102 on suspensions from practice before 
the Commission,118 is already sufficient to dissuade 
individuals from engaging in improper off-the-record 
communications.119 One commenter argues that the sanctions 
set forth in the NOPR seem disproportionate and may discourage contact 
with the Commission.120
---------------------------------------------------------------------------

    \118\ 18 CFR 385.2102
    \119\ See, e.g., NGSA at 12.
    \120\ Indicated Shippers at 14-15.
---------------------------------------------------------------------------

    To the extent the commenters support the new sanctions, they 
suggest making clear that this section should be applied in only the 
most egregious cases, e.g., repeated violations by the same person, and 
then only after due process requirements have been 
satisfied.121 The Commission also is urged not to invoke 
sanctions for inadvertent violations, and to assure that the sanction 
of disqualification would apply to an individual representing a party 
to a proceeding and not the party itself.122
---------------------------------------------------------------------------

    \121\ Id. See also Process Gas at 6, EEI at 13,.
    \122\ NGSA at 12.
---------------------------------------------------------------------------

    The final rule retains the sanctions as proposed. In so doing, we 
acknowledge the overlap with this provision and Rule 
2102.123 The ex parte sanctions are intended to clarify that 
persons who engage in prohibited communications are subject to 
sanctions for the violation of the rule. The final rule properly 
provides that knowing and willful violations of the prohibitions could 
result in suspension or disbarment pursuant to the provisions of Rule 
2102.
---------------------------------------------------------------------------

    \123\ 18 CFR 385.2102.
---------------------------------------------------------------------------

    One commenter suggests that the final rule provide that those 
Commission employees who violate these provisions should be subject to 
the Commission's disciplinary procedures.124 The 
Commission's standards of conduct 125 and administrative 
directives 126 provide that staff who violate its rules are 
subject to sanctions ranging from admonishment to removal from Federal 
service, depending on the severity of the violation. One intent of the 
revisions to the existing ex parte rule is to clarify that the 
prohibitions apply to communications by Commission decisional employees 
as well as to communications from persons outside the Commission. 
Accordingly, the final rule includes a provision that Commission 
personnel violating this rule may be subject to Commission disciplinary 
action.
---------------------------------------------------------------------------

    \124\ INGAA at 11.
    \125\ 18 CFR 385.3c
    \126\ Federal Energy Regulatory Commission, Administrative 
Directive 3-7B (FERC Work Force Discipline Program).
---------------------------------------------------------------------------

IV. Regulatory Flexibility Certification Statement

    The Regulatory Flexibility Act 127 requires rulemakings 
either to contain a description and analysis of the impact the rule 
would have on small entities, or to certify that the rule will not have 
a significant economic impact on a substantial number of small 
entities. An analysis is not required if a proposed rule will not have 
such an impact.128
---------------------------------------------------------------------------

    \127\ 5 U.S.C. 601-612.
    \128\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    The regulations proposed in this rulemaking would revise the 
Commission's rules of practice and procedure dealing with certain off-
the-record communications. The Commission certifies that this final 
rule will not have a significant economic impact on small entities.

V. Environmental Statement

    Commission regulations require that an environmental assessment or 
an

[[Page 51234]]

environmental impact statement be prepared for any Commission action 
that may have a significant adverse effect on the human 
environment.129 The Commission has categorically excluded 
certain actions from this requirement as not having a significant 
effect on the human environment. Among these are proposals for rules 
that are procedural.130 The final rule falls under this 
exception; consequently, no environmental consideration is necessary.
---------------------------------------------------------------------------

    \129\ 18 CFR part 380.
    \130\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------

VI. Information Collection Statement

    The Office of Management and Budget's (OMB's) regulations require 
that OMB approve certain information collection requirements imposed by 
agency rules.131 However, this final rule contains no 
information collection requirements and therefore is not subject to OMB 
approval.
---------------------------------------------------------------------------

    \131\ 5 CFR part 1320.
---------------------------------------------------------------------------

VII. Congressional Review and Effective Date

    The provisions of 5 U.S.C. 801, regarding Congressional review of 
rulemakings, do not apply to this rulemaking because it concerns agency 
procedure and practice and will not substantially affect the rights and 
obligations of non-agency parties.132
---------------------------------------------------------------------------

    \132\ 5 U.S.C. 804(3)(C).
---------------------------------------------------------------------------

    The rule is effective October 22, 1999.

List of Subjects in 18 CFR Part 385

    Administrative practice and procedure, Electric Power, Penalties, 
Pipelines, and Reporting and record keeping requirements.

    By the Commission.
David P. Boergers,
Secretary.
    In consideration of the foregoing, the Commission amends part 385, 
chapter I, Title 18, Code of Federal Regulations, as follows:

PART 385--RULES OF PRACTICE AND PROCEDURE

    1. The authority citation for part 385 continues to read as 
follows:

    Authority: 5 U.S.C.551-557; 15 U.S.C. 717-717w, 3301-3432; 16 
U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352; 49 
U.S.C. 60502; 49 App. U.S.C. 1-85.


Sec. 385.101  [Amended]

    2. In Sec. 385.101, remove paragraph (b)(4)(ii), and redesignate 
paragraph (b)(4)(i) as (b)(4).
    3. Section 385.915 is revised to read as follows:


Sec. 385.915  Off-the-record communications (Rule 915).

    The provisions of Rule 2201 (prohibited communications and other 
communications requiring disclosure) apply to proceedings pursuant to 
this subpart, commencing at the time the Secretary issues a proposed 
remedial order under 10 CFR 205.192, an interim remedial order for 
immediate compliance under 10 CFR 205.199D, or a proposed order of 
disallowance under 10 CFR 205.199E.
    4. Section 385.1012 is revised to read as follows:


Sec. 385.1012  Off-the-record communications (Rule 1012).

    The provisions of Rule 2201 (prohibited communications and other 
communications requiring disclosure) apply to proceedings pursuant to 
this subpart, commencing at the time a petitioner files a petition for 
review under Rule 1004 (commencement of proceedings).


Sec. 385.1415  [Removed]

    5. Section 385.1415 is removed.
    6. The heading of Subpart V is revised to read as follows:

Subpart V--Off-the-Record Communications; Separation of Functions

    7. Section 385.2201 is revised to read as follows:


Sec. 385.2201  Rules governing off-the-record communications. (Rule 
2201).

    (a) Purpose and scope. This section governs off-the-record 
communications with the Commission in a manner that permits fully 
informed decision making by the Commission while ensuring the integrity 
and fairness of the Commission's decisional process. This rule will 
apply to all contested on-the-record proceedings, except that the 
Commission may, by rule or order, modify any provision of this subpart, 
as it applies to all or part of a proceeding, to the extent permitted 
by law.
    (b) General rule prohibiting off-the-record communications. Except 
as permitted in paragraph (e) of this section, in any contested on-the-
record proceeding, no person shall make or knowingly cause to be made 
to any decisional employee, and no decisional employee shall make or 
knowingly cause to be made to any person, any off-the-record 
communication.
    (c) Definitions. For purposes of this section:
    (1) Contested on-the-record proceeding means
    (i) Except as provided in paragraph (c)(1)(ii) of this section, any 
proceeding before the Commission to which there is a right to intervene 
and in which an intervenor disputes any material issue, or any 
proceeding initiated by the Commission on its own motion or in response 
to a filing.
    (ii) The term does not include notice-and-comment rulemakings under 
5 U.S.C. 553, investigations under part 1b of this chapter, proceedings 
not having a party or parties, or any proceeding in which no party 
disputes any material issue.
    (2) Contractor means a direct Commission contractor and its 
subcontractors, or a third-party contractor and its subcontractors, 
working subject to Commission supervision and control.
    (3) Decisional employee means a Commissioner or member of his or 
her personal staff, an administrative law judge, or any other employee 
of the Commission, or contractor, who is or may reasonably be expected 
to be involved in the decisional process of a proceeding, but does not 
include an employee designated as part of the Commission's trial staff 
in a proceeding, a settlement judge appointed under Rule 603, a neutral 
(other than an arbitrator) under Rule 604 in an alternative dispute 
resolution proceeding, or an employee designated as being non-
decisional in a proceeding.
    (4) Off-the-record communication means any communication relevant 
to the merits of a contested on-the-record proceeding that, if written, 
is not filed with the Secretary and not served on the parties to the 
proceeding in accordance with Rule 2010, or if oral, is made without 
reasonable prior notice to the parties to the proceeding and without 
the opportunity for such parties to be present when the communication 
is made.
    (5) Relevant to the merits means capable of affecting the outcome 
of a proceeding, or of influencing a decision, or providing an 
opportunity to influence a decision, on any issue in the proceeding, 
but does not include:
    (i) Procedural inquiries, such as a request for information 
relating solely to the status of a proceeding, unless the inquiry 
states or implies a preference for a particular party or position, or 
is otherwise intended, directly or indirectly, to address the merits or 
influence the outcome of a proceeding;
    (ii) A general background or broad policy discussion involving an 
industry or a substantial segment of an industry, where the discussion 
occurs outside the context of any particular proceeding involving a 
party or parties and does not address the specific merits of the 
proceeding; or,

[[Page 51235]]

    (iii) Communications relating to compliance matters not the subject 
of an ongoing proceeding.
    (d) Applicability of prohibitions.
    (1) The prohibitions in paragraph (b) of this section apply to:
    (i) Proceedings initiated by the Commission from the time an order 
initiating the proceeding is issued;
    (ii) Proceedings returned to the Commission on judicial remand from 
the date the court issues its mandate;
    (iii) Complaints initiated pursuant to rule 206 from the date of 
the filing of the complaint with the Commission, or the date the 
Commission initiates an investigation, (other than an investigation 
under part 1b of this chapter), on its own motion; and
    (iv) All other proceedings from the time of the filing of an 
intervention disputing any material issue that is the subject of a 
proceeding.
    (2) The prohibitions remain in force until:
    (i) A final Commission decision or other final order disposing of 
the merits of the proceeding or, when applicable, after the time for 
seeking rehearing of a final Commission decision, or other final order 
disposing of the merits expires;
    (ii) The Commission otherwise terminates the proceeding; or
    (iii) The proceeding is no longer contested.
    (e) Exempt off-the-record communications.
    (1) Except as provided by paragraph (e)(2) of this section, the 
general prohibitions in paragraph (b) of this section do not apply to:
    (i) An off-the-record communication permitted by law and authorized 
by the Commission;
    (ii) An off-the-record communication made by a person outside of 
the agency related to an emergency subject to disclosure under 
paragraph (g) of this section;
    (iii) An off-the-record communication provided for in a written 
agreement among all parties to a proceeding that has been approved by 
the Commission;
    (iv) An off-the-record written communication from a non-party 
elected official, subject to disclosure under paragraph (g) of this 
section;
    (v) An off-the-record communication to or from a Federal, state, 
local or Tribal agency that is not a party in the Commission 
proceeding, subject to disclosure under paragraph (g) of this section, 
if the communication involves:
    (A) An oral or written request for information made by the 
Commission or Commission staff; or
    (B) A matter over which the Federal, state, local, or Tribal agency 
and the Commission share jurisdiction, including authority to impose or 
recommend conditions in connection with a Commission license, 
certificate, or exemption;
    (vi) An off-the-record communication, subject to disclosure under 
paragraph (g) of this section, that relates to:
    (A) The preparation of an environmental impact statement if 
communications occur prior to the issuance of the final environmental 
impact statement; or
    (B) The preparation of an environmental assessment where the 
Commission has determined to solicit public comment on the 
environmental assessment, if such communications occur prior to the 
issuance of the final environmental document.
    (ii) An off-the-record communication involving individual 
landowners who are not parties to the proceeding and whose property 
would be used or abuts property that would be used by the project that 
is the subject of the proceeding, subject to disclosure under paragraph 
(g) of this section.
    (2) Except as may be provided by Commission order in a proceeding 
to which this subpart applies, the exceptions listed under paragraph 
(e)(1) of this section, will not apply to any off-the-record 
communications made to or by a presiding officer in any proceeding set 
for hearing under subpart E of this part.
    (f) Treatment of prohibited off-the-record communications.--(1) 
Commission consideration. Prohibited off-the-record communications will 
not be considered part of the record for decision in the applicable 
Commission proceeding, except to the extent that the Commission by 
order determines otherwise.
    (2) Disclosure requirement. Any decisional employee who makes or 
receives a prohibited off-the-record communication will promptly submit 
to the Secretary that communication, if written, or, a summary of the 
substance of that communication, if oral. The Secretary will place the 
communication or the summary in the public file associated with, but 
not part of, the decisional record of the proceeding.
    (3) Responses to prohibited off-the-record communications. Any 
party may file a response to a prohibited off-the-record communication 
placed in the public file under paragraph (f)(2)of this section. A 
party may also file a written request to have the prohibited off-the-
record communication and the response included in the decisional record 
of the proceeding. The communication and the response will be made a 
part of the decisional record if the request is granted by the 
Commission.
    (4) Service of prohibited off-the-record communications. The 
Secretary will instruct any person making a prohibited written off-the-
record communication to serve the document, pursuant to Rule 2010, on 
all parties listed on the Commission's official service list for the 
applicable proceeding.
    (g) Disclosure of exempt off-the-record communications. (1) Any 
document, or a summary of the substance of any oral communication, 
obtained through an exempt off-the-record communication under 
paragraphs (e)(1)(ii), (iv), (v), (vi) or (vii) of this section, 
promptly will be submitted to the Secretary and placed in the 
decisional record of the relevant Commission proceeding, unless the 
communication was with a cooperating agency as described by 40 CFR 
1501.6, made under paragraph (e)(1)(v) of this section.
    (2) Any person may respond to an exempted off-the-record 
communication.
    (h) Public notice requirement of prohibited and exempt off-the-
record communications. (1) The Secretary will, not less than every 14 
days, issue a public notice listing any prohibited off-the-record 
communications or summaries of the communication received by his or her 
office. For each prohibited off-the-record communication the Secretary 
has placed in the non-decisional public file under paragraph (f)(1) of 
this section, the notice will identify the maker of the off-the-record 
communication, the date the off-the-record communication was received, 
and the docket number to which it relates.
    (2) The Secretary will not less than every 14 days, issue a public 
notice listing any exempt off-the-record communications or summaries of 
the communication received by the Secretary for inclusion in the 
decisional record and required to be disclosed under paragraph (g)(1) 
of this section.
    (3) The public notice required under this paragraph (h) will be 
posted in accordance with Sec. 388.106 of this chapter, as well as 
published in the Federal Register, and disseminated through any other 
means as the Commission deems appropriate.
    (i) Sanctions. (1) If a party or its agent or representative 
knowingly makes or causes to be made a prohibited off-the-record 
communication, the Commission may require the party, agent, or 
representative to show cause why the party's claim or interest in the 
proceeding should not be dismissed, denied, disregarded, or otherwise 
adversely affected because of the

[[Page 51236]]

prohibited off-the-record communication.
    (2) If a person knowingly makes or causes to be made a prohibited 
off-the-record communication, the Commission may disqualify and deny 
the person, temporarily or permanently, the privilege of practicing or 
appearing before it, in accordance with Rule 2102 (Suspension).
    (3) Commission employees who are found to have knowingly violated 
this rule may be subject to the disciplinary actions prescribed by the 
agency's administrative directives.
    (j) Section not exclusive. (1) The Commission may, by rule or 
order, modify any provision of this section as it applies to all or 
part of a proceeding, to the extent permitted by law.
    (2) The provisions of this section are not intended to limit the 
authority of a decisional employee to decline to engage in permitted 
off-the-record communications, or where not required by any law, 
statute or regulation, to make a public disclosure of any exempted off-
the-record communication.
    8. The heading of Sec. 385.2202 is revised to read as follows:


Sec. 385.2202  Separation of Functions (Rule 2202).

Note: This Appendix will not appear in the Code of Federal Regulations

Appendix A--List of Commenters

Adirondack Mountain Club
Advisory Council on Historic Preservation (ACHP)
American Gas Association (AGA)
ANR Pipeline Company/Colorado Interstate Gas Company (ANR/CIG)
Bonneville Power Administration (BPA)
California Electric Oversight Board (Cal Board)
Chevron Pipe Line Company (Chevron)
Edison Electric Institute (EEI)
Electric Power Supply Association (EPSA)
Environmental Protection Agency (EPA)
Executive Office of the President/Council on Environmental Quality 
(CEQ)
Hydropower Reform Coalition (HRC)
Indicated Shippers
Interstate Natural Gas Association of America (INGAA)
Louisiana Department of Wildlife And Fisheries (La W&F)
National Association of Regulatory Utility Commissioners (NARUC)
National Marine Fisheries Services (NMFS)
National Hydropower Association (NHA)
National Rural Electric Cooperative Association/American
Public Power Supply Association (Joint Commenters)
Natural Gas Supply Association (NGSA)
Public Service Commission of New York (PSCNY)
Public Utilities Commission of State of California (PUCCAL)
Public Utilities Commission of State of California/Independent (Cal-
ISO) System Operator
Process Gas Consumers Group (Process Gas)
Sacramento Municipal Utilities District (SMUD)
Sempra Energy Companies (Sempra)
Southern California Edison Company (SoCalEd)
Southern Companies Services, Inc. (SCSI)
Southern Natural Gas Company (SoNat)
United States Department of the Interior (Interior)
Williams Companies (Williams)
Williston Basin Interstate Pipeline Company (Williston)
Wisconsin Public Power, Inc. (WPPI)

[FR Doc. 99-24616 Filed 9-21-99; 8:45 am]
BILLING CODE 6717-01-P