[Federal Register Volume 64, Number 194 (Thursday, October 7, 1999)]
[Rules and Regulations]
[Pages 54522-54537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25783]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 2, 157, 284, 380, and 385

[Docket No. RM98-9-001; Order No. 603-A]


Revision Of Existing Regulations Under the Natural Gas Act

Issued September 29, 1999.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule; order on rehearing.

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SUMMARY: On rehearing, the Federal Energy Regulation Commission 
reaffirms its basic determinations in Order No. 603 and modifies and 
clarifies certain aspects of the Final Rule based on the requests for 
rehearing. Order No. 603 updated the Commission's regulations governing 
the filing of applications for the construction and operation of 
facilities to provide service or to abandon facilities or service under 
section 7 of the Natural Gas Act. The changes were necessary to conform 
the Commission's regulations to the Commission's current policies.

DATES: The revision to the regulations in this order on rehearing 
become effective November 8, 1999.

ADDRESSES: Federal Energy Regulatory Commission 888 First Street, N.E. 
Washington DC, 20426.

FOR FURTHER INFORMATION CONTACT:

Michael J. McGehee, Office of Pipeline Regulation, Federal Energy 
Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426, 
(202) 208-2257
Carolyn Van Der Jagt, Office of the General Counsel, Federal Energy 
Regulatory Commission 888 First Street, N.E., Washington, DC 20426 
(202)208-2246.

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 Home Page (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.


[[Page 54523]]



I. Introduction

    In this order the Federal Energy Regulatory Commission (Commission) 
is modifying and clarifying certain aspects of the Final Rule issued in 
Order No. 603.1  Specifically, this order (1) clarifies 
certain aspects of section 2.55, including the 30-day notification 
requirement, the construction area requirements, and the phrase 
``designed delivery capacity'' as it pertains to a storage reservoir; 
(2) clarifies how a pipeline should apply the construction area 
guidelines in Appendix A to Part 2; (3) explains the modifications to 
the existing electronic filing requirements in section 157.6; (4) 
clarifies that under section 157.8 the Director of the Office of 
Pipeline Regulation (OPR) may reject an application subsequent to 
noticing it if the applicant fails to provide necessary information; 
(5) clarifies certain aspects of section 157.10 that requires that the 
pipeline make available copies of its application and voluminous or 
difficult to reproduce material at various locations along the proposed 
pipeline route; (6) explains aspects of section 157.202(b), including 
the application of the terms ``closest available size'' and ``sound 
engineering reasons,'' and clarifies what minor changes to storage 
operations would encompass; (7) changes the definition of 
``interconnecting point'' in section 157.202(b)(2)(ii) to include the 
related pipeline segment; (8) explains the implications of the 
dismissal of protests under section 157.205(g); (9) explains the 
compressor station noise requirements in section 157.206(b)(5); (10) 
removes the phrase ``due to construction delays'' from section 
157.206(c); (11) explains certain environmental requirements in section 
157.208(c)(9); (12) clarifies the applicability of the prior notice 
procedures to increases to the Maximum Allowable Operating Pressures; 
(13) denies requests that the Commission review its bypass and contract 
demand (CD) reduction policies in this proceeding; (14) clarifies the 
automatic and prior notice abandonment authorization in section 
157.216; (15) clarifies the application of certain requirements under 
the National Historic Preservation Act of 1966 in Appendix II to 
Subpart F and section 380.14; (16) explains the requirements concerning 
nonjurisdictional facilities in section 380.12(c)(2); (17) clarifies 
the requirements concerning the cultural resource reports required in 
section 380.12(f)(2); (18) modifies the minimum filing requirements in 
section 380.12(k)(4) for information concerning compressor facilities; 
(19) clarifies the minimum filing requirements applying to the Coastal 
Zone Management Act in Appendix A to Part 380, Resource Report 8; and 
(20) explains the siting and maintenance requirements in section 
380.15.
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    \1\ Revisions of Existing Regulations Under Part 157 and Related 
Sections of the Commission's Regulations Under the Natural Gas Act, 
Order No. 603, 64 FR 26571 (May 14, 1999), FERC Stats. and Regs. 
para. 31,073 (Apr. 29, 1999).
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II. Background

    On April 29, 1999, the Commission issued a Final Rule in Order No. 
603 amending its regulations governing the filing of applications for 
certificates of public convenience and necessity authorizing the 
construction and operation of facilities to provide service or to 
abandon facilities or service under section 7 of the Natural Gas Act 
(NGA),2 and amending the blanket certificate regulations 
under Subpart F of Part 157. The Final Rule: (1) Conformed the existing 
regulations with current practices and policies; (2) eliminated 
ambiguities and obsolete language; (3) made the regulations more 
germane and less cumbersome; and (4) reduced the existing reporting 
burden by a total of 8,284 hours. Additionally, the Final Rule 
consolidated and clarified the Commission's current practices 
concerning the filing and reporting requirements associated with its 
environmental review of pipeline construction projects under the 
National Environmental Policy Act of 1969.3
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    \2\ 15 USC 717b.
    \3\ 42 USC 4321-4370a.
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    The Commission received rehearing/clarification requests from 10 
parties including the American Public Gas Association (APGA), CNG 
Transmission Corporation (CNG), Columbia Gas Transmission Corporation 
and Columbia Gulf Transmission Company (Columbia), El Paso Energy 
Corporation (El Paso), Enron Interstate Pipelines (Enron), Great Lakes 
Gas Transmission (Great Lakes), Indicated Shippers, Interstate Natural 
Gas Association of America (INGAA), Process Gas Consumers Group, the 
American Iron and Steel Institute, and the Georgia Industrial Group 
(Process Gas), and Williston Gas Interstate Pipeline Company (Williston 
Basin).
    Indicated Shippers filed a motion to file an answer and an answer 
to requests for rehearing. While our rules do not permit answers to 
rehearing requests,4 we may, for good cause, waive a 
rule.5 We find good cause to do so in this instance. To 
achieve a complete and accurate record, we will accept Indicated 
Shippers' answer.
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    \4\ See 18 CFR 385.213(a)(2).
    \5\ 18 CFR 385.101(e).
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III. Discussion

A. Section 2.55(a)--Auxiliary Facilities Constructed With Newly 
Proposed Jurisdictional Facilities

    Under section 2.55 of the regulations, the Commission exempts 
auxiliary facilities, such as valves, drips, yard and station piping, 
and cathodic protection equipment, from NGA section 7(c) authority. 
Traditionally, section 2.55 limited the installation of auxiliary 
facilities to facilities installed on an existing transmission system. 
In the Final Rule, the Commission stated that it would include in the 
exemption auxiliary facilities constructed in conjunction with new 
transmission facilities. However, for auxiliary facilities on newly 
authorized transmission facilities not yet in service, the Final Rule 
stated that the Commission would require that the pipeline notify it 30 
days prior to installing the auxiliary facilities.
    Comments. On rehearing, El Paso and INGAA request that the 
Commission clarify that the 30-day advance notice requirement is 
satisfied if the auxiliary facilities are identified in a pipeline's 
certificate or prior notice application. El Paso states that the 
pipeline should not be required to make a separate filing to identify 
such auxiliary facilities.
    El Paso and INGAA also request that the Commission clarify that the 
30-day advance notification requirement does not apply when such 
facilities are being constructed on, or at the same time, as facilities 
which are being constructed automatically under the Subpart F blanket 
construction certificate. They contend that such notification would 
essentially nullify the automatic authorization provision and delay 
construction of such facilities.
    Columbia questions what follows once the pipeline notifies the 
Commission of the impending section 2.55(a) construction. It contends 
that if the Commission intends to conduct a substantive review of the 
facilities, it should have the necessary resources to conduct any 
inquiry in a timely manner.
    Commission Response. The Commission intends to review the filings 
under section 2.55(a)(2) for compliance with the Commission's 
environmental regulations. The Commission intended that the 30-day 
notification requirement in section

[[Page 54524]]

2.55(a)(2)(ii) apply to case-specific projects which include an 
Environmental Report as specified in section 380.12 of the Commission's 
regulations or to prior notice projects under section 157.208. It does 
not apply to projects constructed under the Part 157 automatic 
authorization procedures. To clarify this in the regulations, we will 
add the phrase ``except those authorized under the automatic 
authorization procedures of Subpart F of Part 157 of this chapter'' to 
section 2.55(a)(2)(ii).
    We will also clarify that the 30-day notification requirement does 
not apply if the auxiliary facilities are identified in the certificate 
application. We believe that the use of the word ``or'' between 
paragraphs (ii) and (iii) of paragraph 2.55(a)(2) precludes the 
application of both to a given project and its related auxiliary 
facilities. However, we will also modify the introductory paragraph to 
paragraph 2.55(a)(2) to read, ``[o]ne of the following requirements 
will apply to any specified auxiliary installation.''

B. Section 2.55(b)--Construction Area for Replacement Facilities in 
Existing Right-of-Way

1. Existing, Unrelated Rights-of-Way
    In the Final Rule, the Commission codified its current policy that 
limits the construction area for replacement facilities to the 
temporary work space used to construct the original facilities.
    Comments. On rehearing, Great Lakes contends that the Commission 
did not respond to its comments requesting authority to use its entire 
existing right-of-way, including Commission-approved rights-of-way 
unrelated to the construction of facilities being replaced. It claims 
that any existing right-of-way that has already been disturbed for 
pipeline construction, has been reviewed for archaeological concerns, 
and for which the pipeline has obtained appropriate land rights should 
be available for use. Great Lakes notes that the pipeline would be 
required to obtain updated clearances for cultural resources and 
threatened or endangered species prior to using such replacement 
construction areas. It asserts that the Commission's concerns regarding 
environmental assessments are not present when the pipeline uses an 
existing right-of-way. It requests that the Commission explain why use 
of unrelated, existing right-of-way is not appropriate when use of the 
existing right-of-way approved for the facilities being replaced is 
less safe, environmentally disadvantaged, or impractical.
    Commission Response. The types of construction activities being 
conducted under section 2.55 are replacements that should only involve 
basic maintenance or repair to relatively minor facilities where the 
Commission has determined that no significant impact to the environment 
will occur. The Commission believes that the existing right-of-way that 
was used to construct the original facilities should be sufficient for 
these types of activities. Pipelines may use their blanket certificate 
authority to perform projects involving more extensive work that would 
need additional workspace, including the use of other unrelated rights-
of-way. This would allow for the required additional environmental 
scrutiny. Therefore, those projects should be done under the pipeline's 
blanket certificate.
    As Great Lakes points out, there may be a need for updated 
clearances. The Commission believes that use of the blanket process is 
more appropriate in these situations since the replacement regulations 
do not contain any such requirement. Accordingly, Great Lakes' request 
that the Commission allow the use of any existing rights-of-way for 
activities conducted under section 2.55 is denied.
2. Equivalent Designed Delivery Capacity
    The Final Rule clarified that the phrase ``equivalent designed 
delivery capacity'' used in the context of replacement storage wells 
refers to both the daily deliverability and seasonal cyclic capacity.
    Comments. CNG seeks further clarification that ``designed delivery 
capacity'' refers to the capacity of the entire storage pool, not that 
of each individual well. CNG states that operators manage the pool on 
the basis of overall deliverability and that it is the deliverability 
of the entire storage pool that is certificated, not each individual 
well in the pool. According to CNG, the deliverability from individual 
wells will fluctuate over time, and increasing the deliverability of an 
individual well will not increase the certificated capacity of the 
entire storage pool.
    Commission Response. We agree with CNG that it is the 
deliverability and capacity of a storage reservoir that is 
certificated, not the capability of individual wells. We recognize that 
the deliverability of an individual replacement well may differ from 
the original well being replaced. However, as long as the replacement 
well does not alter the underlying parameters of the storage field, 
i.e., the certificated capacity, deliverability, or storage boundary, 
and functions in a manner similar to the well it replaced, we will view 
such a replacement well as having a substantially equivalent designed 
delivery capacity as the facility it replaced.

C. Appendix A to Part 2--Guidance for Determining the Acceptable 
Construction Area for Replacements

    In the Final Rule, the Commission codified its current policy that 
requires that replacement facilities must be placed in the existing 
right-of-way. Appendix A to Part 2 delineates guidelines for the 
pipeline to use to determine the acceptable construction area for 
replacement facilities. Subpart (b) of the Appendix requires that the 
temporary right-of-way (working side) be on the same side as the 
original construction work area.
    Comments. Williston Basin requests that the Commission clarify how 
subpart (b) applies when there is no documentation as to which side was 
used in constructing the original pipeline. It contends that it may not 
always be possible for the pipeline to tell by visual inspection which 
side was the original working side. Williston Basin suggests that it 
would be appropriate for the Commission to state that, when the 
original working side is unknown, the pipeline should make the working 
side of any replacement activity the side that will have the lowest 
impact on the environment.
    Commission Response. The purpose of Appendix A is to provide 
guidance for determining the appropriate workspace for replacement 
facilities constructed under section 2.55 when the original 
documentation is not available. In Appendix A, the Commission is 
attempting to maximize the probability that the pipeline construction 
footprint of the replacement activities will coincide with the 
footprint of the original construction and that the nature of the 
environmental impact will be the same.
    As stated, the guidelines in paragraph (a) are to be used in the 
absence of contradictory physical evidence. Any reasonable physical 
evidence pointing to the likely location of the working side during the 
initial construction can be used to estimate the size and location of 
the original work space. For example, if the line to be replaced is a 
loop adjacent (within about 25 feet) to another line, it may be assumed 
that the working side was on the opposite side of the line to be 
replaced. If there are trees or structures close to one side of the 
pipeline to be replaced, and they predate the pipeline, then it is 
unlikely that side was the working side.

[[Page 54525]]

    However, we note that when visual inspection fails, i.e., if there 
are no reasonable hints to the location of the working side, the 
facilities cannot be constructed under section 2.55. They must be 
constructed under the Subpart F of Part 157 blanket program to ensure 
protection of the resources. The Part 157 regulations include criteria 
for minimizing environmental impacts without relying on the company's 
guess as to where the facilities should be constructed to have the 
lowest impact on the environment.

D. Section 157.6--Applications; General Requirements

1. Electronic Filing Requirements
    The Final Rule modified the existing electronic filing requirements 
for certificate applications.
    Comments. On rehearing, Enron states that section 157.6(a)(2) has 
been revised to require that all applications and exhibits are to be 
``submitted in electronic format as prescribed by the Commission.'' 
Enron is unsure as to whether the Commission is proposing substantive 
changes to the current electronic reporting requirement or is placing a 
general reference to electronic formats in the regulations in 
anticipation of new or modified electronic formats that may be a result 
of the proceeding in Docket No. PL98-1-000.6 Enron seeks 
clarification that the Commission is not imposing new electronic filing 
requirements as part of the Final Rule. INGAA raises similar concerns.
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    \6\ 63 FR 27532 (May 13, 1998).
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    Commission Response. The Final Rule does not impose any new 
electronic filing requirements. The documents listed in section 
157.6(a)(2) simply delineated the specific documents that previously 
were included in the all encompassing phrase: ``[a]pplications, 
amendments thereto, and all exhibits and other submissions required * * 
* under this subpart'' in section 157.6(a)(1).
    Additionally, on November 30, 1998, a Notice to Provide Additional 
Guidance about the Revised Electronic Filing Requirements for 
Certificate Applications was issued that explained the specific 
electronic format requirements and reduced the electronic filing 
requirements.7 These reduced electronic filing requirements 
will be in effect pending the outcome of the proceeding in Docket No. 
PL98-1-000.
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    \7\ Notice to Provide Additional Guidance About the Revised 
Electronic Filing Requirements for Certificated Application, 80 FERC 
para. 62,139 (1998).
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2. Pricing Policy Statement
    In the Final Rule in section 157.6 (b)(8) the Commission codified 
certain filing requirements in accordance with the Pricing Policy 
Statement For New and Existing Facilities Constructed By Interstate 
Natural Gas Pipeline.8 On September 15, 1999, the Commission 
issued a new statement of policy to provide the industry with guidance 
as to how the Commission will evaluate proposals for certificating new 
construction.9 On rehearing, we will make conforming 
modifications to section 157.6(b)(8) to reflect the new policy 
statement.
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    \8\ 71 FERC para. 61,241 (1995).
    \9\ Certification of New Interstate Natural Gas Pipeline 
Facilities, 88 FERC para. 61,227 (1999).
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E. Section 157.8--Acceptance for Filing or Rejection of Applications

    In the Final Rule, the Commission revised section 157.8 to provide 
that the Director of OPR may reject an application within ten days of 
filing if the application ``patently fails to comply with applicable 
statutory requirements or with applicable Commission rules, 
regulations, and orders.'' The ten day time frame is intended to 
provide the Director the opportunity to make an initial finding that 
the application contains the minimum information necessary for 
providing public notice of the application and to begin preliminary 
processing. As stated in the Final Rule, the Commission recognizes that 
not all information, for example, certain environmental data, may be 
available at the time of filing. However, we note that once the 
application has been noticed, the applicants are required to file any 
and all information necessary to complete their application. We wish to 
clarify that this section does not limit the Director's ability to 
subsequently reject the application after it has been noticed if the 
applicant fails to provide any information needed to fully process that 
application. Therefore, we will modify section 157.8 to state that the 
Director may also reject an application after it has been noticed if it 
does not conform to the requirements of Part 157.

F. Section 157.10--Interventions and Protests

1. Availability of Application
    Section 157.10 of the Final Rule requires that complete copies of 
the application must be available in each county in the project area 
within three days of the filing of the application.
    Comments. CNG contends that the application should not be made 
available until three business days from the time the application is 
issued a docket number and after a Commission notice is issued. 
According to CNG, if the Commission were to reject the application 
later than three days after it were filed, the entire project would 
already be in the public domain, even though no project was then on 
file with the Commission. CNG argues that the pipeline should not be 
subjected to this risk of disclosure. Further, it could cause 
substantial confusion and complication to have a copy of an application 
available to the public before a docket number has been assigned and 
the application has been accepted by the Commission. CNG contends that 
if the application were rejected or modified to respond to Commission 
comments, there could be multiple versions of a project in circulation. 
In that event, CNG states that the benefit of providing a copy to the 
public early to give time for a more thorough review would be 
outweighed by the burden of reviewing a later, conflicting document.
    Commission Response. We will modify Section 157.10 to require that 
pipelines have complete copies of their applications available within 
three business days of the date a filing is issued a docket number. We 
will not, however, extend the time the application needs to be made 
available to after the application is noticed. The Final Rule put 
pipelines on notice that they must file substantially complete 
applications or face the risk of rejection. It is incumbent upon the 
pipeline to ensure that each application is complete and ready to be 
noticed when it is filed to avoid the potential for rejection, the risk 
of disclosure, and the possibility of multiple versions.
    Further, we note that in the Final Rule in Docket No. RM98-17-000, 
the Commission is requiring that pipelines notify all affected 
landowners within three business days of receiving the docket number 
for a filed application. The Commission believes that the application 
should be available for those landowners to review when they receive 
the notice that the application has been filed.
2. Voluminous/Difficult To Reproduce Material
    In section 157.10, the Final Rule also provides that pipelines do 
not have to serve voluminous or difficult to reproduce material, such 
as copies of environmental information, on all parties in the 
proceeding. However, the Final Rule does require that the pipelines 
have copies of the material available for inspection in each county in 
the project area within three business

[[Page 54526]]

days of filing the material with the Commission. It also requires that 
the pipelines make copies of the material available to any party that 
requests it within five business days of receiving a request for the 
material.
    Comments. Enron and INGAA seek rehearing of the requirement to 
serve complete copies of applications, including voluminous or 
difficult-to-reproduce materials, on individual parties that request 
the information. Enron contends that the requirement to establish 
public reference sites to provide access to complete copies of 
applications is not an insignificant effort. According to Enron, this 
effort is worthwhile only to the extent that it offsets the requirement 
to produce voluminous or difficult-to-reproduce materials. However, 
Enron questions the cost/benefit of this effort if parties may 
nevertheless request individual copies. Enron requests that pipelines 
only be required to serve a copy of the application, excluding 
voluminous or difficult-to-reproduce materials. Enron suggests that 
pipelines make the voluminous or difficult-to-reproduce materials 
available on an Internet web site rather than be required to produce 
hard copies of such material. Enron states that such materials will 
also be available at the designated public locations. INGAA agrees.
    Great Lakes also seeks clarification concerning the meaning of the 
requirement to make electronic copies available in each county. It 
requests that the Commission accept placement of the complete 
application on the pipeline's Internet website as complying with the 
requirement to keep electronic copies in each county.
    Additionally, Great Lakes is concerned with the Commission's 
requirement that voluminous materials be made available in each county 
in the project area. Great Lakes contends that libraries and public 
buildings may not be available in every county, may not have evening 
and weekend hours, and that such places may not consent to or be able 
to accommodate the public in this way. Great Lakes seeks clarification 
as to whether any non-public buildings are acceptable as a central 
location. It also seeks rehearing and a determination that flexible 
hours of operation are not a requirement but a goal, because one 
alternative, the County Clerk's office, would not offer evening and 
weekend hours.
    Commission Response. Upon reconsideration, we will modify section 
157.10 and not require that the applicant serve a copy of the entire 
voluminous or difficult-to-reproduce material when requested by a party 
to the proceeding. However, we will require that if an individual party 
requests information concerning that party's particular piece of 
property that may be included in the voluminous and difficult to 
reproduce material, the applicant should provide that particular 
information to that party within 5 business days from the request. For 
example, if a landowner requests a copy of the map that shows where the 
pipeline will be going through that landowner's property, the applicant 
should provide the landowner with a copy of the portion of the map that 
includes that particular piece of property.
    The Commission intends that pipeline applications be readily 
accessible and available to all interested parties along the pipeline 
route. We will not change our requirement that complete copies of 
applications, including voluminous or difficult-to-reproduce materials 
must be placed in publicly available places in each county along the 
pipeline route. However, in light of the rehearing requests, we will 
modify and further clarify that requirement.
    First, the application can either be in paper or electronic format. 
A pipeline does not have to provide both paper and electronic copies, 
unless it desires to do so. However, it must provide a complete copy in 
either one of the two formats. If the copy is in electronic format, any 
party accessing such copy should be able to obtain a hard copy version 
from the electronic format.
    Second, we also believe that it is reasonable to allow pipelines to 
establish an Internet web site on which to post its voluminous and 
difficult-to-reproduce material, in addition to having such material 
available at public sites along the project route. However, because not 
everyone has access to the Internet, we will still require pipelines to 
have complete copies available in each county along the pipeline route.
    Finally, we will modify section 157.10 to allow the applicant more 
flexibility in determining where the applications will be placed for 
public viewing. The applicant should place copies of the complete 
application, including the voluminous and difficult-to-reproduce 
material, in central locations in each county with public access and 
flexible hours. We expect the applicant will use its best judgement in 
determining the best location to put the materials.

G. Section 157.202(b)(2)(i)--Eligible Facilities

1. Replacement of Mainline and Lateral Facilities
    The Final Rule stated that replacing pipeline and compression 
facilities must be done for sound engineering reasons and not for the 
primary purpose of creating additional mainline capacity. The order 
emphasized that such replacement facilities must be the closest 
available size and horsepower rating to the facilities being replaced.
    Comments. Columbia states that the requirement that the replacement 
be the ``closest available size'' may be overly restrictive and go 
beyond the Commission's intended goal. Columbia states that on older 
portions of its system, it has inconsistently sized pipe in the same 
area. For example, in storage fields, Columbia may have a several mile 
pipeline comprised of 4-,
6-, 8- and 10-inch pipeline in alternating segments. Columbia states 
that when one of those segments need to be replaced, sound engineering 
practice dictates that a single size pipe be selected for all 
replacements on that line. It claims that this would permit more 
efficient pipeline maintenance by use of smart pig technology through 
longer segments. Columbia also asserts that it would also reduce the 
need for installing multiple pig launchers and receivers. To that end, 
Columbia states that it might choose to replace a 4-inch segment with 
8-inch line, solely for the purpose of achieving maintenance related 
uniformity, even though 4- and/or 6-inch pipe is available. Columbia is 
concerned that such a replacement might not qualify under the blanket 
certificate regulations. Columbia requests that the Commission refine 
the expansion of eligible facilities so that replacements may be done 
for sound engineering reasons without the restriction that the 
replacement must be the closest available size to the facility being 
replaced.
    Conversely, Indicated Shippers request that the Commission modify 
the Final Rule to eliminate automatic authorization of replacement 
facilities that can increase mainline capacity. Indicated Shippers 
contend that pipelines will use this authority to circumvent the 
spending caps on blanket authorization. Indicated Shippers claim that 
the Commission's statement in the Final Rule that pipelines should not 
segment a project to circumvent the automatic or prior notice spending 
limits, acknowledges that pipelines will have an incentive to do so but 
fails to impose adequate safeguards. They claim that any

[[Page 54527]]

challenge to whether facilities were constructed for sound engineering 
purposes would result in a battle of expert engineers and professional 
judgements that may differ substantially. Further, they argue that a 
shipper's ability to file a complaint against a pipeline for an 
apparent attempt to circumvent the spending caps would be inherently 
limited because the shipper is burdened with assembling the necessary 
facts to support the complaint and that the pipeline will have 
exclusive possession of the relevant information.
    Finally, Indicated Shippers assert that the Commission's suggestion 
that the parties could challenge an improper mainline expansion in a 
future rate case ignores the elimination of the three-year rate filing 
requirement in Order No. 636. As such, the pipelines have no legal 
requirement to file a rate case by any date certain.
    Commission Response. We underscore our policy that the blanket 
certificate regulations cannot be used in a manner that will alter 
mainline capacity in any substantive manner. Thus, we require that 
replacements be done for sound engineering reasons and not for the 
primary purpose of creating additional mainline capacity. We intend 
that virtually the same criteria applicable under section 2.55(b) apply 
to replacements under the blanket certificate. Namely, the existing 
facilities are or will soon become physically deteriorated or obsolete, 
and the replacement will not result in a reduction or abandonment of 
service through the facilities. While replacements under section 
2.55(b) must also have a substantially equivalent designed delivery 
capacity as the facilities being replaced, we recognize that 
replacements done under the blanket certificate may result in an 
incidental increase in mainline capacity because the replacement 
facilities do not exactly match the original. However, pipelines are 
still required to design the replacements so that they have a 
substantially equivalent designed delivery capacity and are prohibited 
from using the blanket certificate to create new point to point 
mainline capacity via the replacement procedure. Thus, there must be a 
physical need to replace facilities.
    We emphasized in the Final Order that replacements must be the 
closest available size and horsepower rating to the facilities being 
replaced. The situation described by Columbia, to the extent it is 
required for sound engineering reasons, i.e., to allow continuous 
pigging and minimize the number of launchers and receivers, could 
qualify for blanket treatment. However, we envision limited 
applicability for such replacements. As described by Columbia, these 
type replacements may pertain to older, inconsistently sized sections, 
such as in storage fields or producing areas. We do not intend for 
pipelines to use this rationale to replace long sections of mainline 
pipeline under the blanket certificate under the guise of ``efficient 
pipeline maintenance.'' We reiterate that the pipeline must be able to 
support its prudent decision to use any replacement facility that is 
not the closest available size and/or horsepower rating to the facility 
being replaced.
    Indicated Shippers reiterate its opposition to automatic 
authorization of facilities that could increase mainline capacity. As 
stated in the Final Rule, replacement facilities must not create new, 
usable capacity that a pipeline would otherwise need to certificate in 
a separate section 7(c) proceeding. Pipelines are reminded that the 
procedures for constructing replacement facilities under the blanket 
certificate do not allow pipelines to circumvent the section 7(c) 
authority needed to construct projects for new mainline capacity. 
Additionally, section 157.208 specifically prohibits pipelines from 
segmenting projects to circumvent the cost limits under the blanket 
certificate.
    The Commission intends to monitor the effect the newly granted 
automatic authorizations have on the workings of the industry and may 
consider whether further changes are necessary. In the interim, if 
Indicated Shippers believe that a pipeline is violating or deliberately 
circumventing the Commission's regulations, it should bring the alleged 
violation to the Commission's attention by filing a complaint. Finally, 
although the three-year filing requirement was eliminated by Order No. 
636, whenever a rate case is filed, the pipeline must include the costs 
of new plant. At that point, any such costs associated with the alleged 
improper mainline expansion would be open to challenge.
2. Minor Storage Operations
    In the Final Rule the Commission modified section 
157.202(b)(2)(ii)(D) to allow minor changes to storage field 
operations, but did not allow the drilling of storage wells as eligible 
facilities.
    Comments. CNG contends that in the NOPR the Commission proposed to 
exclude any facility required to test, develop, or utilize an 
underground storage field as an eligible facility under the blanket 
certificate. According to CNG, the Commission intended to allow minor 
changes to field operations and facilities, such as rerouting or 
changing storage field lines. CNG argues, however, that the practical 
result of the change in the Final Rule was to prevent minor 
modifications of facilities under the blanket certificate.
    CNG also contends that while the Final Rule states that wells must 
still be drilled under section 157.215, it is not clear that this 
section applies to existing storage pools, rather than just new storage 
pools. CNG questions whether drilling a new storage well in an existing 
pool is permitted under this section.
    CNG seeks rehearing of this issue and requests that the Commission 
implement its intent to provide for minor changes to field operations 
and facilities, by changing the ``or'' back to an ``and,'' and clarify 
that new wells can be drilled in existing storage pools under section 
157.215.
    Commission Response. Under the Commission's regulations, pipelines 
currently can use their blanket certificate to construct and operate 
facilities to test and develop underground storage reservoirs for the 
possible storage of gas. However, such facilities are excluded from the 
definition of eligible facilities and must be constructed separately 
under section 157.215. Once such a reservoir is tested and developed, 
pipelines must obtain separate authority under section 7(c) in order to 
utilize a storage reservoir to render service. We are not altering that 
authority here.
    In modifying section 157.202(b)(2)(ii)(D), the Commission intended 
to continue to exclude facilities required to test and develop storage 
fields from the definition of eligible facilities. We also intend to 
exclude wells needed to utilize an underground storage field. However, 
the regulation will allow pipelines to make minor changes to field 
operations and facilities, such as rerouting, changing, or adding 
storage field lines. We intend to allow pipelines to make modifications 
that will improve the operation and/or flexibility of a storage field, 
without altering the parameters of the underlying certificate 
authority.
    As stated in the Final Rule, we do not intend for the change in 
this section to allow pipelines to drill additional injection/
withdrawal wells under the blanket certificate because such wells may 
inherently alter the deliverability, capacity, or boundary of a 
reservoir. Drilling new injection/withdrawal wells in existing storage 
pools requires separate section 7(c) authorization. We will revise 
section 157.202(b)(2)(ii)(D) to clarify that it applies only to the 
testing

[[Page 54528]]

or developing of underground storage fields.

H. Section 157.202(b)(12)--Interconnecting Point

    In the Final Rule, the Commission limited interconnecting points to 
the tap, metering, metering and regulating (M&R) facilities, and minor 
related piping. The Commission found that any related pipeline 
connecting two interstate pipelines would function as a mainline 
facility and thus, not qualify as an eligible facility.
    Comments. El Paso states that the practical effect of the 
Commission's decision prevents ``long'' segments of interconnecting 
pipeline between two transporters of natural gas from being constructed 
under the blanket certificate. El Paso, Enron, Great Lakes, INGAA, and 
Williston Basin all believe that interconnecting segments should be 
included along with the tap and meter as eligible facilities.
    El Paso argues that there is no functional difference between an 
``interconnecting point'' that requires ten feet of interconnecting 
pipeline and a point that requires five miles of pipeline. According to 
El Paso, however, the Commission will allow the ten foot segment to be 
constructed as an eligible facility (as minor piping) but not the five 
mile segment. El Paso contends that both short and long interconnecting 
segments are capable of receiving/delivering the same level of volumes, 
provide the same flexibility to permit backhaul arrangements, could be 
capable of accommodating bi-directional gas flows, and would have the 
same effect on gas flows on the two interconnecting pipelines. Under 
these circumstances, there is no legitimate ``operational'' reason to 
differentiate between a short and long interconnecting segment. Enron 
and INGAA agree that interconnecting pipeline of various lengths share 
these operating characteristics.
    Enron and INGAA contend that interconnecting pipeline segments will 
facilitate interconnection of the pipeline grid. El Paso, however, 
argues that the Commission's goal of fostering development of a 
national pipeline grid is hampered without including long 
interconnecting segments as eligible facilities.
    El Paso and INGAA state that the spending limits for blanket 
certificate construction will effectively limit the length of any 
interconnecting pipeline. Thus, they argue, constructing long 
interconnecting pipeline cannot impact ratepayers to a greater extent 
than construction of any other eligible facility.
    El Paso further argues that the Commission does not support its 
conclusion that a ``long'' interconnecting pipeline between two 
transporters constitutes mainline, not supply or delivery lateral. 
INGAA contends that interconnecting pipeline does not function 
differently than a lateral line; both facilities are designed to 
receive and/or deliver gas supplies. El Paso states that the only 
difference between a lateral and an interconnecting pipeline is that a 
lateral generally connects a pipeline to a production field, gathering 
system or customer delivery point, whereas interconnecting pipeline 
connects a pipeline to another pipeline. According to El Paso, that 
difference cannot serve as a basis to find that ``long'' 
interconnecting pipeline performs a mainline function, while 
interconnecting points, including minor related pipeline, are eligible 
facilities.
    Commission Response. In KN Interstate Gas Transmission Company (KN 
Interstate),10  we found that a 2-mile pipeline was not an 
interconnecting point. The order clarified that ``interconnecting 
point'' under section 157.208(a) specifically refers to taps, meters, 
M&R facilities and minor piping. We adopted that definition in the 
Final Rule. However, upon reconsideration, we will grant rehearing on 
this issue. We will allow interconnecting pipelines between Part 284 
transporters to be constructed as eligible facilities, subject to the 
cost limits under the blanket certificate. We agree that such 
facilities do not operate as mainline facilities or extensions of 
mainline facilities, because they do not alter the mainline 
capacity.11  We will view interconnecting pipeline segments 
in the same manner that we view lateral lines--both serve to receive 
and/or deliver gas supplies, and both can be constructed automatically, 
subject to the cost limits under section 157.208. While we stated in KN 
Interstate that a 2-mile pipeline was not an interconnecting point, we 
now believe that interconnecting pipelines between Part 284 
transporters should be covered under the blanket certificate because 
they display more characteristics in common with lateral lines than 
with mainlines. Thus, we will change the definition in section 
157.202(b)(2)(ii) to reference interconnecting facilities, instead of 
interconnecting points. We will also change the definition in section 
157.202(b)(12) to encompass both the interconnecting point facilities 
and the related pipeline segment necessary to interconnect two Part 284 
transporters. Since the length of such segments will be governed by the 
cost limits of the blanket certificate, these facilities will have a 
minimal impact on a certificate holder's system. Upon reconsideration, 
we believe that allowing interconnecting pipeline segments is 
consistent with the intent of the blanket certificate, which authorizes 
pipelines to construct routine facilities that have relatively little 
impact on ratepayers or pipeline operations.
---------------------------------------------------------------------------

    \10\ 83 FERC para. 61,305 (1998).
    \11\ However, to the extent that any interconnecting facility 
will alter mainline capacity of either Part 284 transporter, such 
facility will not be covered under the blanket certificate.
---------------------------------------------------------------------------

I. Section 157.205(g)--Withdrawal or Dismissal of Protest

    The Final Rule authorized the Director of OPR to dismiss any 
protest to a prior notice filing which does not raise a substantive 
issue and fails to provide any specific reason or rationale for the 
objection.
    Comments. APGA states that the Commission has not documented the 
number of ``no issue'' protests that are the basis for the change in 
the regulation. APGA surmises that there are no protests to bypasses 
that fail to raise substantive issues. However, APGA contends that it 
is the Commission's practice to refuse requests for discovery when a 
protested prior notice is converted to a section 7(c) application. 
According to APGA, the Commission concluded in a recent order that the 
bypassed distributor that protested the application had ``not proffered 
any evidence indicating that unfair competition or undue discrimination 
has occurred,'' while simultaneously denying the Local Distribution 
Company (LDC) the opportunity to seek information from the pipeline 
that might prove such undue discrimination.12 APGA argues 
that if an LDC cannot obtain details of the bypass ``deal,'' then it 
stands to reason that it will not prove its case to the satisfaction of 
the Commission. APGA fears that in such a situation the Director of OPR 
could conclude that distributors that do not prove their case will also 
fail to ``raise a substantive issue and fail to provide any specific 
detailed reason or rationale for its objection.'' Thus, LDCs would be 
denied not only due process rights to obtain information to make a 
case, but they would be denied due process completely by the summary 
rejection of a protest to a bypass application ten days after it is 
filed. APGA argues that the absence of process will rob the Commission 
of its opportunity to detect

[[Page 54529]]

unfair competition because industry participants, particularly LDCs, 
will not be able to bring facts to its attention.
---------------------------------------------------------------------------

    \12\ See Transcontinental Gas Pipe Line Corp., 87 FERC para. 
61,136 (1999).
---------------------------------------------------------------------------

    Alternatively, APGA requests that the Commission clarify the 
relationship among any dismissal by the Director of OPR, conversion to 
a section 7 proceeding, and the 30-day reconciliation period. APGA 
contends that the Commission would enforce a reconciliation or 
settlement period, yet this period would appear to come after the 
dismissal of the protest. Therefore, APGA contends that it is unlikely 
that there can be any settlement on a non-existent protest. APGA states 
that the purpose of the reconciliation period is to obtain the 
withdrawal of the protest; the end-user and the pipeline that seek to 
bypass the LDC need not talk to the LDC if the LDC's protest has been 
dismissed.
    El Paso and INGAA state that section 157.205(g) provides that when 
a protest is dismissed by the Director of OPR, the notice requirements 
will not be fulfilled until the earlier of: (1) 30 days after the 
deadline for filing protests and interventions (referred to as the 
``waiting period''); or (2) the dismissed protesting party notifies the 
Commission that its concerns have been resolved.
    Both El Paso and INGAA believe that imposing a ``waiting period'' 
after a protest is dismissed unfairly penalizes pipelines and rewards 
protesting parties which fail to raise substantive issues or provide 
adequate support for their claims. They argue that if a protest is 
dismissed, a pipeline should not have to wait the additional 30 days 
before it can commence construction. They further argue that this 
section rewards protestors that file frivolous protests, which is 
inconsistent with the intent of the section. They also claim that this 
treatment is inconsistent with the Commission's treatment of withdrawn 
protests under the blanket certificate. El Paso states that prior 
notice authorization becomes effective on the day after all protests 
are withdrawn. El Paso believes that there is no reason to treat a 
dismissed protest differently than a withdrawn protest.
    El Paso, INGAA, and Williston Basin contend that if the Director of 
OPR dismisses a protest within the 45-day notice period, and there are 
no other protests, the proposed construction should be deemed 
authorized consistent with the prior notice procedures, i.e., on the 
day after the 45-day protest/intervention period. If the Director of 
OPR dismisses a protest after the 45-day protest/intervention period 
has passed, and there are no other protests, El Paso and INGAA contend 
that the proposed construction should be deemed authorized on the day 
after the protest is rejected.
    Indicated Shippers disagree with El Paso's position that the 
Commission should not require a pipeline to wait up to 30 days beyond 
the protest deadline if the Director of OPR dismisses a protest for 
failure to raise a substantive issue. Indicated Shippers state that a 
protestor may appeal the dismissal of its protest to the Commission. 
Thus, the additional 30 days that the Commission would add to the end 
of the 45-day protest period does not constitute ``undue delay.''
    Commission Response. First, we find the APGA's concerns that it 
will be denied due process unfounded. As we stated in the Final Rule, a 
protesting party must substantiate its allegation, not necessarily 
prove that the allegation is true. As long as the protesting party 
provides some substantiating evidence, the protest will not be 
dismissed. Further, the party still has its right to request rehearing 
and have the dismissal reviewed by the Commission, and subsequently by 
the court of appeals.
    Second, we disagree that there is no reason to treat a dismissed 
protest differently than a withdrawn protest. The 30-day period is to 
allow appeal of the Director of OPR's action to the Commission, which 
is required under sections 375.301 and 385.1902 (Rule 1902) of the 
regulations.13 While a frivolous protest may delay 
construction beyond the 45-day prior notice protest period to allow for 
the required right to file for rehearing, the application does not roll 
over to a section 7(c), which potentially could result in substantial 
delays for the applicant. Thus, while construction may be delayed in 
such a case, it only will be delayed for a minimal period.
---------------------------------------------------------------------------

    \13\ Section 375.301 states that ``[A]ny action by a staff 
official under the authority of this subpart may be appealed to the 
Commission in accordance with Section 385.1902 of this chapter.''
---------------------------------------------------------------------------

    Finally, we believe the pipeline still has an incentive to 
reconcile or settle with the party with the dismissed protest. For 
example, the Commission may grant the request for rehearing, thereby 
reinstating the protest and possibly converting the prior notice 
proceeding to a section 7(c). Thus, the pipeline may want to resolve 
the protesting party's concerns before the rehearing period has run in 
order to commence construction sooner.

J. Section 157.206(b)(5)--Compressor Station Noise

    In the Final Rule, the Commission updated section 157.206(b)(5) to 
bring it into line with current usage concerning limitations on 
compressor station noise levels. Specifically, it requires that the 
noise attributable to any new compressor stations, compression added to 
an existing station, or any modification, upgrade or update of an 
existing station, must not exceed a day-night level (Ldn) of 55 dBA at 
any pre-existing noise-sensitive area (such as schools, hospitals, or 
residences).
    Comments. On rehearing, Columbia contends that the modification 
would inappropriately include potential noise effects of any change to 
an existing compressor station, not just from compressor unit 
modifications. It claims that nothing has been presented in this 
proceeding to suggest that there is a noise concern for other aspects 
of compressor station operations beyond the compressor units 
themselves.
    Commission Response. In fact, it was the Commission's intent to 
include any potential new noise source or any change in the existing 
station that might have an effect on the noise generated by the station 
and be heard at nearby noise-sensitive areas. There are many potential 
modifications that could do this, including: additions or changes to 
the cooling fans; modification to suction or discharge piping; addition 
or modification of the gas scrubbers; changes to metering facilities 
(including purely operational changes); and removal of structures or 
other screening. Likewise, there is a wide range of modifications that 
cannot reasonably be expected to have any effect on noise (e.g., 
utility, administration, or maintenance structures or their contents, 
and communications equipment). In these cases, surveys would rarely be 
required. The companies should be able to distinguish between the 
different types of modifications. However, there may be occasions where 
a company would want to do a noise survey even if experience indicates 
there is little probability for an effect. For example, there may be 
instances where a complaint or an inspection results in a need for such 
surveys. In these instances, which we believe will be rare, the surveys 
would be done after the change was made.
    While this same wording is used in section 380.12(k), as long as 
the application specifies that the modification (not new or changed 
compressor units) would have no noise impact, it will be up to the 
Commission's staff to determine if a noise analysis is needed. We 
emphasize, however, that noise analyses are always needed for new or 
changed compressor units.

[[Page 54530]]

K. Section 157.206(c)--Commencement

    The Final Rule amended the regulations to allow for facilities to 
be completed ``and made available for service'' instead of ``in actual 
operation'' within one year of authorization. The Final Rule also 
provides that a certificate holder may apply to the Director of OPR for 
an extension of the one year deadline ``due to construction delays.''
    Comments. El Paso and INGAA argue that the Commission should delete 
the phrase ``due to construction delays'' and return to its practice of 
permitting pipelines to seek an extension of the deadline for any 
reason. They state that extensions may be necessary and appropriate for 
reasons other than construction delays. El Paso offers, for example, a 
situation where a pipeline proposes to construct a delivery lateral to 
serve a new power plant which is not expected to be placed into service 
for a couple of years. There, a plant owner may need to ensure that all 
regulatory authorizations are in place before it can obtain the 
financing and contracts necessary to commence construction of the 
plant. In such a situation, it contends that a pipeline may need to 
seek prior notice approval more than a year in advance, while not 
actually constructing facilities until the plant is ready to go on 
line. Thus, it argues the pipeline would need to request an extension 
of the one year deadline. El Paso states that if the Commission does 
not revise section 157.206(c), pipelines face two undesirable 
alternatives in the future: (1) Construct facilities far in advance of 
the end-user's projected service date; or (2) file section 7(c) 
applications for facilities which otherwise could be constructed under 
the blanket certificate.
    Commission Response. The phrase ``construction delays'' was used to 
differentiate between pipeline delays and delays attributable to a 
shipper/end-user. We intend for this section to encompass situations 
such as that described by El Paso. However, in order to clarify this 
intent, we will remove the phrase ``due to construction delays.'' 
Further, the next to last sentence in section 157.206(c) is modified to 
read: ``The certificate holder may apply to the Director of the Office 
of Pipeline Regulation for an extension of this deadline.''

L. Section 157.208(c)(9)--Prior Notice

    In the Final Rule, the Commission required that a copy of 
consultations for the Endangered Species Act, the National Historic 
Preservation Act, and the Coastal Zone Management Act be included in 
all prior notice filings.
    Comments. On rehearing, INGAA, Columbia and Williston Basin state 
that the Commission should allow the pipeline to submit the clearances 
during the 45-day notice period. INGAA asserts that it is current 
industry practice for pipelines to file a prior notice application 
prior to receipt of final clearances but with a statement that the 
pipeline anticipates the clearance to be submitted in the near future. 
It contends that the Commission did not cite any ongoing industry-wide 
abuse of the process or environmental harm which has resulted from the 
current practice that would justify a change. INGAA claims that there 
are significant efficiencies in beginning the prior notice process 
while the pipeline is waiting to hear back from the agencies for their 
final agreements.
    INGAA proposes that the Commission revise section 157.208(c)(9) to 
permit a pipeline to file with its prior notice filing: (1) The 
requests for clearances that have been sent to the various agencies; 
and (2) a commitment that the final agreements will be in place prior 
to the end of the 45-day notice period. It also suggests that the 
application should automatically be deemed protested on the forty-fifth 
day if the clearances are not filed within 30-days of the prior notice 
being filed.
    Similarly, Columbia claims that ``the benefit of permitting the 
filing of a prior notice application when clearances are not in hand 
but soon anticipated is obvious.'' 14 It contends that 
although a portion of the time required to obtain the clearances will 
run concurrently, it should not impede the Commission's ability to 
review the application, nor does it create any risk that the 
construction might begin without necessary clearance.
---------------------------------------------------------------------------

    \14\ See Columbia's request for rehearing, at 5.
---------------------------------------------------------------------------

    Commission Response. We will deny rehearing on this issue. One of 
the purposes of the Final Rule is to make changes in the Commission's 
regulations that would streamline the certificate process. Incomplete 
information at the time applications are filed only fosters 
inefficiencies and additional expenditures of Commission resources.
    INGAA's claim that it is current industry practice to file the 
prior notice prior to receipt of the agency agreements is overly broad 
`` a substantial number of pipelines file this information with the 
prior notice. When clearances are not filed with the application, it 
requires that the Commission's staff expend effort in keeping track of 
the status of the filing and then file a protest if the material is not 
forthcoming. INGAA's proposed compromise, as well as the baseline 
suggestion, introduces an unnecessary level of complexity and 
bookkeeping. In addition, in the case of the compromise solution, the 
company is setting itself up for an automatic protest, more paperwork, 
and delay that would not be necessary if the prior notice filing is 
complete when initially filed.

M. Section 157.208(f)(2)--Maximum Allowable Pressure

    The Final Rule modified section 157.208(f)(2) to permit pipelines 
to follow prior notice procedures in order to increase the Maximum 
Allowable Operating Pressure (MAOP) of laterals constructed under 
individual section 7(c) authority.
    Comments. Indicated Shippers state that the Commission appears to 
have adopted this proposal based on considerations pertinent to 
delivery laterals. However, Indicated Shippers contend that MAOP 
increases have been a basis for concern in recent certificate cases 
involving supply area facilities, in which producers of ``older'' 
reserves faced the prospect of shut-in of lower-pressure production as 
``new'' higher-pressure production is attached to a pipeline's system. 
Indicated Shippers state that the Commission must modify the Final Rule 
to prohibit pipelines from increasing the MAOP of supply area laterals 
under the blanket certificate procedures. Instead, they argue that all 
MAOP increases involving supply area laterals should be authorized 
under Subpart A of Part 157, to provide potentially adversely affected 
parties a meaningful opportunity to present their concerns in advance 
of authorization.
    Commission Response. In the Final Rule, the Commission intended for 
supply area facilities to be treated in the same manner as delivery 
area facilities. In order to clarify this, we will modify section 
157.208(f)(2) to recognize that changes in the MAOP of both supply and 
delivery area laterals are subject to the prior notice procedures under 
section 157.205. In the Final Rule, we also recognized that there could 
be potentially detrimental effects on receipt area facilities. 
Therefore, we subjected this type of construction to the prior notice 
procedures and denied a request to allow MAOP increases to be 
implemented automatically. Under the prior notice procedures, all 
affected parties will have a meaningful opportunity to present their 
concerns and/or protest any proposed change in the MAOP of any lateral 
facilities.

[[Page 54531]]

N. Section 157.211--Delivery Points

    The Final Rule revised section 157.211 to provide for automatic and 
prior notice authorization to acquire, replace, modify, or construct 
delivery points. In the Final Rule, the Commission required that all 
delivery points constructed to provide service for an end-user 
currently being served by an LDC were subject to the Commission's prior 
notice procedures.
1. CD Reduction
    Comments. APGA contends that the Commission erred by failing to 
change its policy on contract demand reduction relief in the event of 
bypass. APGA argues that the Commission should reform its bypass 
practices and policies. According to APGA, the Commission had not 
provided CD reduction relief because it demands that an LDC present 
evidence of a written service contract between the LDC and the bypassed 
customer. AGPA argues that a contract is not the only way in which to 
demonstrate that a nexus exists between the LDC's contract demand on 
the bypassing pipeline and the LDC's service to the end-user. According 
to APGA, evidence of a history of service rendered to the end-user by 
the LDC is equally valid.
    Commission Response. As stated in the Final Rule, the Commission 
determines if CD reductions are appropriate on a case-by-case basis 
depending on the particular facts and circumstances in each 
case.15 The Commission does not believe it is necessary to 
codify its bypass and CD reduction policies in its regulations. Nor 
does it believe it is appropriate to make any changes to that policy in 
the context of this rulemaking proceeding. Any challenges to the 
Commission's existing policies should be made in proceedings where the 
issues are raised.
---------------------------------------------------------------------------

    \15\ See, e.g., Transcontinental Gas Pipe Line Corporation, 84 
FERC para. 61,160 (1998), order on reh'g, 87 FERC para. 61,136 
(1999).
---------------------------------------------------------------------------

2. Prior Notice for Bypass Facilities
    Comments. Process Gas contends that the Commission's ruling that 
the contract must expire before the new delivery point is constructed 
in order not to constitute bypass creates practical problems with 
respect to timing of a service change and the strong possibility the 
gas transportation service to the end user could be interrupted during 
the transition to the new supply arrangement. Process Gas requests 
rehearing in order to prevent such interruptions. It contends that the 
Commission should allow construction of the delivery point as long as 
deliveries through the new delivery point await expiration of the 
user's previous contract with its LDC.
    Similarly, Great Lakes contends that the Commission's definition of 
bypass fails to recognize that the pipeline generally can time the 
construction of its facilities to be in-service contemporaneously with 
the termination date of the LDC's service. It claims that the gap in 
service provides a disincentive for customers of LDCs to look for the 
most economical supply/transportation.
    Great Lakes contends that under the Commission's bypass policy, it 
is engaging in speculation as to the LDC's market by protecting the LDC 
from the forces of competition and creating a gap in service for any 
LDC customer desiring to use a more cost-effective combination of 
supply and transportation. Great Lakes recommends that the Commission 
not require a prior notice filing unless both: (1) the pipeline's 
service to the current LDC customer will take the place of the service 
provided by the LDC; and (2) the effective date of the pipeline's 
service is prior to the termination date of the LDC's contract with the 
same end-user. It states that, if both of the prongs are not met, the 
Commission should only require that the pipeline provide advance notice 
to the LDC of its intent to construct facilities.
    Additionally, Great Lakes and Process Gas contend that the 
Commission should allow automatic authorization for the construction of 
delivery points when an end user served by an LDC is constructing a new 
facility or plant. Process Gas argues that the automatic authorization 
should apply to new facilities at least as long as those facilities are 
not expressly covered by an existing contract between the end user and 
the LDC serving the area. It states that an end user should not be 
subject to the expense and delays of protests and prior notice 
procedures simply because it currently receives LDC service for other 
existing facilities in the LDC's service territory.
    Commission Response. As stated in the Final Rule, the Commission 
believes that an LDC should have notice before facilities that could 
potentially create a bypass of its service area are constructed. This 
gives the LDC an opportunity to negotiate and compete with the pipeline 
for the end user's business. We do not believe that this necessarily 
protects the LDC from competition or creates a problem with a gap in 
service. The end user knows the expiration date of the existing 
contract well in advance. Similarly, the planning and construction of a 
new plant or facilities is not an isolated incident that is decided on 
the spur of the moment. The end users and the pipeline have sufficient 
notice to plan accordingly for the possibility that there may be a 
delay because of the prior notice procedures. The pipeline need not 
wait until the expiration of the existing contract before filing a 
prior notice proceeding. Therefore, being subject to the prior notice 
procedures need not necessarily delay the ultimate construction of the 
new delivery point.

O. Section 157.216--Automatic Abandonment

1. Automatic Authorization
    The Final Rule allowed a pipeline to automatically abandon a 
receipt point which had not been used within a twelve-month period if 
the point is no longer covered under a firm contract.
    Comments. Enron requests that the Commission clarify that the 
availability of a point as an alternate delivery point does not 
preclude automatic abandonment under the new requirements, provided the 
point has not been used for a period of one year prior to the effective 
date of the proposed abandonment. INGAA requests clarification that a 
pipeline should be able to automatically abandon a receipt or delivery 
point so long as the point is no longer covered under a firm contract 
as a primary point--even if the point is listed or has been available 
as an alternative point. INGAA contends that this is consistent with 
the Commission's intent since many pipeline shippers designate all or 
many points as alternatives to their primary points. INGAA argues that 
if this clarification is not granted, pipelines will be unable to 
abandon a point if a shipper has designated all points as alternatives 
to their primary points on their contract. Williston Basin raises a 
similar concern.
    Indicated Shippers argue that the amendments adopted by the 
Commission provide pipelines with considerable discretion to abuse 
market power and limit competition. Indicated Shippers contend that the 
Commission erred in permitting automatic abandonment of any supply area 
facility. Additionally, they claim that the Commission erred in 
refusing to require that pipelines obtain consent of upstream supply 
parties in order to abandon supply area facilities.
    According to Indicated Shippers, the Commission must support pre-
granted abandonment approvals with appropriate findings that existing 
market conditions and regulatory structures protect customers from

[[Page 54532]]

pipeline market power. Indicated Shippers contend that pipelines will 
strand supply if it is in their economic interest to do so, regardless 
of what would be best for supply area competition. Indicated Shippers 
point out that contrary to the Commission's statement that upstream 
suppliers have contract agreements with shippers and that they should 
seek the appropriate remedy from the shipper, suppliers have 
Operational Balancing Agreement (OBA) and pooling agreements with the 
pipelines. They contend that allowing abandonment of pipeline supply 
facilities based solely on the non-opposition from shippers may not 
adequately protect against premature abandonment of those facilities. 
Indicated Shippers contend that the Commission's abandonment rules must 
provide adequate procedures to ensure that upstream suppliers and other 
parties have a meaningful opportunity to present their views and 
supporting information before a pipeline abandons a supply area 
facility. They also claim that the Commission has failed to justify the 
elimination of the supplier's right to protest in a prior notice filing 
to show that the facility will provide a meaningful level of service in 
the foreseeable future. The Commission must provide sufficient 
procedural safeguards to ensure that before a pipeline may abandon 
jurisdictional facilities or services, the public interest is protected 
through adequate safeguards against the pipeline's exercise of market 
power.
    Commission Response. The Commission sees no reason to differentiate 
between primary and alternate firm receipt points. We do not intend to 
allow automatic abandonment for primary and/or alternate points used 
for firm service under effective contracts, because parties paying 
demand charges should retain the availability of those points. However, 
if firm primary or alternate receipt points are no longer under a firm 
contract and have not been used in the prior year, such points would be 
covered by the automatic authority under section 157.216(a)(1). If firm 
primary or alternate receipt points were in use during the last 12 
months, a pipeline can obtain consent of its customers and use the 
automatic provision under section 157.216(a)(2) to abandon such 
facilities. If a pipeline cannot obtain consent, it must use the prior 
notice procedures to abandon such facilities.
    As to Indicated Shippers' argument, pipelines cannot unilaterally 
abandon a receipt point which is under a firm contract or that was used 
for firm or interruptible service during the past 12 months. While 
there may be many reasons a receipt point goes unused for some period 
of time, pipelines should not be required to keep that point available 
indefinitely in the event a supplier and/or their customers determine 
they may need it at some later date. Suppliers must rely on their 
underlying contractual arrangements for remedies. We agree that supply 
area parties do enter into OBAs and pooling agreements with the 
pipeline and not the shipper, but these are balancing agreements only. 
The supply area parties enter into contracts for the sale of gas to 
shippers who contract with the pipeline for transportation. Thus, 
shippers such as LDCs and end-users are contractually committed to the 
suppliers for their required gas supply and to the pipeline for the 
necessary transportation capacity.
    It is to the supply contract with pipeline shippers that these 
parties must look for a remedy if a supply area receipt point is 
proposed to be abandoned by a pipeline. These agreements may cover 
multiple receipt points and a shipper may ultimately decide that it no 
longer needs service from a particular supply area facility because its 
needs have changed, alternative transportation options exist, or its 
supply contract expires or terminates. The point is, supply area 
parties should be aware of the market area situation affecting both the 
shippers purchasing their gas and themselves. If a facility is in use 
by firm or interruptible shippers, pipelines cannot abandon the 
facility without shipper consent. If the shippers consent, the question 
revolves around the status of the shipper-supplier contract. If a 
shipper agrees to the abandonment of a receipt facility while it is 
still contractually committed to a supplier, the supplier would seek 
remedy under its contract with the shipper.
    In the Final Rule, we required pipelines to make a prior notice 
filing in order to abandon delivery facilities which were in use during 
the preceding 12 months. The order stated that delivery points are not 
eligible facilities because of potential bypass situations and are not 
covered by section 157.216(b)(2). We continue to believe that prior 
notice is necessary for the construction of delivery points that 
involve bypass. However, once such delivery facilities are constructed, 
bypass is no longer relevant. Thus, it should not be a factor when the 
time comes to abandon the delivery facilities.
    We believe that delivery facilities which have been in use during 
the preceding 12 months should be eligible for automatic abandonment 
under section 157.216(a)(2), subject to the pipeline's obtaining the 
written consent of the customers served through such facilities. 
Therefore, we will modify section 157.216(a)(2) accordingly.
2. Prior Notice Authorization
    Comments. INGAA states that section 157.216(b)(1) provides that a 
pipeline can abandon any receipt or delivery point if the existing 
customers consent. INGAA contends that the Commission should strike the 
reference to receipt point here because it has already clarified that 
receipt points are eligible for automatic authorization under section 
157.216(a)(2) where customer consent has been received.
    Indicated Shippers request that the Commission clarify that 
pipelines must use the prior notice procedures to abandon receipt 
points and related facilities that exceed the automatic project cost 
limit. Indicated Shippers take issue with INGAA's request that the 
Commission delete reference to receipt points in section 157.216(b)(1) 
because receipt points are eligible for automatic abandonment under 
section 157.216(a)(2).
    According to Indicated Shippers, INGAA assumes that all receipt 
points qualify under section 157.216(a)(2), which requires that the 
facility must have been installed under the automatic construction 
authority of, and met the cost limitations under, section 157.208(a), 
or must qualify at the time of abandonment. Indicated Shippers state 
that pipelines, however, may seek to abandon a receipt point (or 
perhaps multiple receipt points) and other appurtenant supply area 
facilities as part of a single comprehensive abandonment. Indicated 
Shippers aver that those facilities taken as a whole may exceed the 
cost caps in section 157.208, and thus would not qualify for automatic 
abandonment under section 157.216(a).
    Commission Response. The only facilities that can be abandoned 
under the automatic authority of section 157.216(a) are those 
facilities that both meet the eligibility requirements and do not 
exceed the section 157.208 cost limitations. Receipt facilities that 
were constructed under the prior notice requirements or whose original 
cost exceed the level for automatic construction are not eligible for 
automatic abandonment under section 157.216(a). Pipelines must use the 
prior notice authority under section 157.216(b) to abandon such 
facilities. However, since the cost limit for automatic construction 
under the blanket certificate is currently $7.2 million, we do not 
expect that many

[[Page 54533]]

supply area abandonments will exceed this limitation.
3. Abandonment by Sale
    In addition, we clarify that using either the automatic or prior 
notice authority of this section to abandon facilities by sale to a 
third party does not address the jurisdictional status of the 
facilities after the effective date of abandonment. The acquiring party 
is still responsible for seeking a determination, if one is desired, on 
the jurisdictional status of the facilities.

P. Section 157.217--Changes in Rate Schedules

    The Final Rule allowed pipelines to change rate schedules, at 
customer request, for the purpose of converting Part 157 transportation 
or storage service to a complementary Part 284 service. The order also 
provided automatic abandonment authorization for the Part 157 
transportation service and noted that pipelines will need to make a 
filing to reflect removal of the Part 157 rate schedule from their 
tariff. Consistent with this discussion, we will add a new section 
157.217(a)(4) that requires pipelines to remove any Part 157 rate 
schedule under which service has been totally converted to Part 284 
service.

Q. Appendix II to Subpart F--Procedures for Compliance With the 
National Historic Preservation Act of 1966 Under Section 
157.206(d)(3)(ii)

    In the Final Rule, the Commission defined the Tribal Historic 
Preservation Officer (THPO) and added references to the THPO where 
State Historic Preservation Officer (SHPO) is cited in section 
157.202(d)(3)(ii).
    Comments. Enron requests that the Commission clarify that, to the 
extent a THPO declines to comment in writing or a SHPO gives 
conditional clearance subject to the approval of the THPO, a project 
will not automatically convert to a case-specific certificate 
proceeding. El Paso states that the definition of THPO should be 
consistent with the definition in Section 106 of National Historic 
Preservation Act (NHPA) and the implementing regulations of the 
Advisory Council on Historic Preservation (Advisory Council).
    El Paso requests that the Commission clarify who will constitute an 
``alternative consultant'' and how the consultant will be designated by 
the Commission. El Paso also requests that the Commission clarify that 
if the pipeline files a request for clearance, and the SHPO/THPO does 
not respond to the request within 30 days, the lack of response means 
that the SHPO/THPO has declined to consult with the certificate holder. 
Additionally, it contends that the Commission should revise its 
procedures to provide that if the SHPO/THPO does not respond within 30 
days, the pipeline either may proceed With the next step Under the 
Advisory Council's process or should consult with the alternative 
consultant designated by the Commission. Finally, it requests that the 
Commission clarify that if it designates an alternative consultant, 
that consultant must act within 30 days of the pipeline's request for 
clearance.
    Commission Response. Under section 106 of the NHPA, the Commission 
is obligated to ensure that the Advisory Council's process is properly 
carried out. Under the Commission's blanket certificate construction 
program, the pipeline's construction must be subject to the SHPO/THPO 
review and it can have no impact to covered cultural resources. If 
these two requirements are met, the Commission has determined that it 
has met its obligation under the Advisory Council's regulations.
    If the SHPO/THPO have not responded to a company's request within 
30 days, it does not mean that they have declined to consult with the 
certificate holder. Section 106 of the NHPA pertains to responding to 
the Federal agency official, not the applicant. The Commission views 
the SHPO/THPO's failure to respond and declining to consult as two 
different things.
    If the SHPO/THPO respond to the certificate holder that they will 
not consult with the certificate holder, then Appendix II provides that 
the certificate holder should contact the Commission for a 
determination of how to proceed. Depending on the circumstances of the 
project, and the reason given for declining to consult, the Commission 
staff will designate an alternative entity, to be determined by the 
Director of the OPR, or it might take over the consultation 
responsibility. This provision allows the blanket process to continue 
where it might otherwise be stymied. Projects do not convert to the 
case-specific authorization procedures because either the SHPO or the 
THPO decline to consult.
    If the SHPO/THPO fail to respond to the certificate holder, it is 
up to the certificate holder to decide how long it will wait before it 
requests assistance from the Commission or determines that it can not 
use the blanket process for a given project. In any event, it may not 
proceed with the blanket project unless it gets a response from the 
SHPO/THPO or until it contacts the Commission, which will then 
determine how to proceed under the particular circumstances.
    Finally, we will revise paragraph (d) of Appendix II consistent 
with the Advisory Council regulation to state that THPO means the 
Tribal Historic Preservation Officer, as at Title 36 section 
800.2(c)(2) of the Code of Federal Regulations (CFR).

R. Section 380.12(c)(2)--Nonjurisdictional Facilities

    In the Final Rule, the Commission listed the information it needed 
to consider the environmental impact of related nonjurisdictional 
facilities that would be constructed upstream or downstream of the 
jurisdictional facilities for the purpose of delivering, receiving, or 
using the proposed gas volumes.
    Comments. Generally, INGAA and Enron contend that the Commission is 
requesting too much information under the filing requirements relative 
to the four-factor test, 16 and that the information may not 
be available at the time the pipeline files the application. Further, 
they contend that the requirements should not be part of the minimum 
checklist and that the application should not be rejected if the 
pipeline fails to provide all the information.
---------------------------------------------------------------------------

    \16\ See Algonquin Gas Transmission Co., 59 FERC para. 61,255, 
at 61,934 (1992).
---------------------------------------------------------------------------

    Commission Response. The four-factor test cannot be applied without 
a knowledge of what the facilities are and where they are to be 
located. Without a description of the facilities, it is difficult to 
apply the first factor and determine whether the ``regulated activity 
comprises `merely a link' in a corridor type project.'' Without 
location information and a reasonable description of the facilities 
involved, it isn't possible to apply factors two or three to determine 
whether there ``are aspects of the nonjurisdictional facility in the 
immediate vicinity of the regulated activity which uniquely determine 
the location and configuration of the regulated activity'' or the 
``extent to which the entire project will be within the Commission's 
jurisdiction.'' Locational information, as well as the status of 
permits needed for the nonjurisdictional facility, are required to 
determine factor four, ``the extent of cumulative Federal control and 
responsibility.'' Consequently, the Final Rule requires in sections 
380.12(c)(2)(i)(A-C) that the filing provide a brief description, 
locational information, and status of permits for the nonjurisdictional 
facilities.

[[Page 54534]]

    The Final Rule also requires consultation with the appropriate 
agencies for endangered species, cultural resources, and coastal zone 
management in sections 380.12(c)(2)(i)(D-F). While this information is 
not needed for the four-factor test, it is usually needed for a 
complete analysis of the project under the legislation covering these 
resources. Further, if it hasn't already been done by the 
nonjurisdictional sponsor, it can usually be done with very little 
effort at the same time as similar analysis is done for the 
jurisdictional facilities.
    Finally, section 380.12(c)(2)(ii) asks the jurisdictional company 
to give the Commission its view of the results of applying the four-
factor test. This allows the company direct input into the analysis and 
can help the staff more fully understand the circumstances of the 
project so it can make an appropriate recommendation to the Commission.
    The four-factor test must be applied as early in the environmental 
review process as possible to avoid substantial delays. Without it, it 
is difficult for the Commission to determine whether an environmental 
assessment may suffice or whether an environmental impact statement 
would be appropriate. It is difficult to identify the scope of whatever 
environmental document will be prepared without this information, and, 
in fact, if it is filed after the initial scoping, it is entirely 
possible that a second scoping process, including additional public 
meetings, would be required. This would be wasteful of Commission's 
time and resources, as well as having the potential to delay the 
environmental review and the Commission's ultimate disposition of the 
application. Therefore, we believe it is necessary that this 
information be filed with the application.

S. Section 380.12(f)(2)--Cultural Resources

    The Final Rule requires that the documentation of the applicant's 
initial cultural resources consultation and Overview and Survey Reports 
must be filed with the initial application. Further, it requires that 
the comments of the SHPO and land management agency, if appropriate, be 
filed with the initial application if they are available.
1. Survey Reports
    Comments. INGAA requests that the Commission clarify that the 
intent of the language in section 380.12(f)(2) is not to require that a 
survey report is necessary in every case. It states that the general 
practice of the industry is to file an Overview Report with the 
application. It explains that the Overview Report canvasses existing 
literature to identify significant sites in the vicinity of the 
proposed project, and allows the sponsor either to avoid the site or to 
set forth proposed mitigation measures. It argues that a survey report 
takes much longer to complete and is significantly more costly since it 
involves using an archeologist to examine the actual route to determine 
whether there are additional sites not currently identified in existing 
literature. It contends that the determination of whether a survey is 
required is made in consultation with the appropriate SHPO.
    Commission Response. As clearly stated in section 380.12(f)(2), it 
is our intent to require that the survey report is filed with the 
application in all cases where the report is deemed necessary during 
the cultural resources consultations. As stated, one of the 
Commission's goals in the Final Rule is to facilitate expediting the 
certificate process. The current practice of the industry that INGAA 
alludes to is a significant contributing factor to the time required 
for Commission review. Applications which do not have the survey 
reports included are invariably delayed while the applicant and the 
Commission's staff attempt to satisfy the requirements of the law 
before a certificate is issued or construction begins. Therefore, the 
survey report should be filed with the application when it is deemed 
necessary as a result of the consultations.
2. Issuing Certificates
    Comments. Enron and INGAA request that the Commission clarify the 
timing for providing SHPO/THPO clearances in conjunction with the 
issuance of a case-specific certificate. They contend that currently 
certificates are issued contingent on receiving clearances before 
construction begins on the affected area because the pipeline may not 
have been able to secure the land rights necessary to perform cultural 
resource work prior to the issuance of the certificate.
    Commission Response. The Commission prefers that the SHPO/THPO 
comments on the Overview and Survey Reports and the Evaluation Report 
and Treatment Plan, if required, for the entire project be filed before 
a certificate is issued. However, we understand that if access to the 
property is denied by the landowner, comments for the areas to which 
access has been denied would be filed after the certificate is issued. 
The Commission will determine on a case-by-case basis if it is 
necessary to issue a certificate contingent on the pipeline receiving 
clearances before construction begins.

T. Section 380.12(k)(4)--Compressor Facilities

    In the Final Rule, the Commission required that the pipeline 
provide certain specific information concerning the compression 
facilities proposed in an application and the noise impact of proposed 
compression and LNG facilities.
    Comments. On rehearing, INGAA contends that much of the information 
concerning the compression facilities is not available at the time the 
application is filed because the pipeline has not made its final 
selection of compressor units. It requests that the minimum checklist 
be clarified so as to require data that is reasonably available at the 
time the application is filed. Williston Basin makes a similar request.
    Commission Response. The Commission agrees that some of the items 
listed in the minimum checklist may not be available at the time of 
filing, especially for large projects with long lead times. This 
information includes the manufacturer's name and the model number of 
the compressor units. Therefore, we will modify section 
380.12(k)(4)(ii) and paragraph 4 of the Resource Report 9 section of 
the Appendix A to Part 380 and limit the information the pipeline must 
provide for new compressors at the time the application is filed to the 
proposed horsepower of compression, the type of compressor that is 
needed (turbine, reciprocating), and the energy source (natural gas or 
electricity). These are basic pieces of information that are needed to 
formulate a project. If the additional required information listed in 
the resource report is not available at the time the application is 
filed, the applicants should justify the absence of such information, 
especially for smaller projects where there may not be a long lead 
time. Additionally, the application should specify when the listed 
information will be available and when it will be filed.

U. Section 380.14(a)(3)--Cultural Resources Procedure for Case-specific 
Projects

    The Final Rule adds a new section 380.14 to the Commission's 
regulations to address concerns regarding the Commission's compliance 
with the National Historic Preservation Act.
    Comment. INGAA requests that the Commission clarify that if a 
pipeline files a request for clearance and the SHPO/THPO does not 
respond to the pipeline within 30 days, the SHPO/THPO has declined to 
consult with the

[[Page 54535]]

certificate holder for the purpose of complying with section 380.14(a).
    Commission Response. As explained above, under section 106 of the 
NHPA, the Commission is obligated to ensure that the Advisory Council's 
process is properly carried out. If the SHPO/THPO has not responded 
within 30 days, it does not mean that they have declined to consult 
with the certificate holder. If the SHPO/THPO does not respond, the 
applicant should contact the Commission's staff for further guidance.

V. Section 380.15--Siting and Maintenance Requirements

    In section 380.15 of the Final Rule, the Commission moved the 
siting guidelines from section 2.69 in the General Policy and 
Interpretations section to the environmental regulations in Part 380.
    Comments. INGAA requests that the Commission clarify that this 
section should be titled ``guidelines'' and not requirements since 
section 380.15(d) lists suggestions to avoid or minimize effects on 
scenic, historic, wildlife, and recreational values that may or may not 
be applicable to every project.
    Commission Response. In section 380.15 the Commission is requiring 
that the pipeline consider the areas listed when it is planning a 
construction activity. If the requirements of the section are ``not 
applicable'' to a project, then they are not relevant to that project 
and there is no potential for conflict. For projects where they are 
applicable, the wording is such that a good faith effort to comply 
should be adequate. In all cases, the applicant should be able to 
justify the level of compliance.

W. Miscellaneous

    Minor modifications have been made to certain sections in the 
regulations to correct references to other sections that have been 
changed and to update the Commission's address and phone number. 
Additionally, the Commission intends to modify the minimum filing 
requirement in Resource Report 8 for facilities in a designated coastal 
zone management area as specified in number nine in Resource Report 8 
in Appendix A to Part 380. In addition to requiring that the pipeline 
identify all facilities located within a designated coastal zone 
management area, it will also require that the applicant provide a 
consistency determination or evidence that it has requested a 
consistency determination consistent with the existing requirements in 
section 380.12(j)(7).
    The Commission will also clarify the minimum filing requirement in 
Resource Report 3 for threatened or endangered species surveys as 
specified in number six in Resource Report 3 in Appendix A to Part 380. 
The text of this resource report clearly and explicitly indicates that 
the surveys for the species or, in the case where timing problems 
exist, habitat surveys must be done and reported upon as part of the 
initial application. This requirement was implicit in the wording of 
Appendix A. We clarify the intent by making it explicit.
    In the Final Rule, the existing paragraph (a)(2), Maps and 
diagrams, in section 157.6 was inadvertently removed. We will correct 
this error by reinserting this paragraph.
    Finally, in the Final Rule the existing paragraph (g), Reports, in 
section 157.206 was inadvertently removed and paragraph (h), Treatment 
of Revenues, was redesignated as paragraph (d). Paragraph (g), Reports, 
should have been redesignated as paragraph (d) and the Treatment of 
Revenues paragraphs should have been removed. We will correct this 
error in this rehearing order.

List of Subjects

18 CFR Part 2

    Administrative practice and procedure, Electric power, Natural gas, 
Pipelines, Reporting and record keeping requirements.

18 CFR Part 157

    Administrative practice and procedure, Natural gas, Reporting and 
record keeping requirements.

18 CFR Part 284

    Continental shelf, Natural gas, Reporting and record keeping 
requirements.

18 CFR Part 380

    Environmental impact statements, Reporting and record keeping 
requirements.

18 CFR Part 385

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

    By the Commission.
David P. Boergers,
Secretary.

    In consideration of the foregoing, the Commission amends parts 2, 
157, 284, 380, and 385, Chapter I, Title 18, Code of Federal 
Regulations, as follows .

PART 2--GENERAL POLICY AND INTERPRETATIONS

    1. The authority citation for Part 2 continues to read as follows:

    Authority: 5 U.S.C. 601; 15 U.S.C. 717-717w, 3301-3432; 16 
U.S.C. 792-825y, 2601-2645; 42 U.S.C. 4321-4361, 7101-7352.

    2. In Sec. 2.55, paragraphs (a)(2) introductory text and (a)(2)(ii) 
are revised to read as follows:


Sec. 2.55  Definition of terms used in section 7(c).

* * * * *
    (a) * * *
    (2) Advance notification. One of the following requirements will 
apply to any specified auxiliary installation. If auxiliary facilities 
are to be installed:
* * * * *
    (ii) On, or at the same time as, certificated facilities which are 
not yet in service (except those authorized under the automatic 
procedures of part 157 of subpart F of this chapter), then a 
description of the auxiliary facilities and their locations must be 
provided to the Commission at least 30 days in advance of their 
installation; or
* * * * *

PART 157--APPLICATIONS FOR CERTIFICATES OF PUBLIC CONVENIENCE AND 
NECESSITY AND FOR ORDERS PERMITTING AND APPROVING ABANDONMENT UNDER 
SECTION 7 OF THE NATURAL GAS ACT

    3. The authority citation for part 157 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717W, 3301-3432; 42 U.S.C. 7101-7352.

    4. In Sec. 157.6:
    A. Paragraphs (a)(2) through (a)(5) are redesignated as (a)(3) 
through (a)(6).
    B. A new paragraph (a)(2) is added.
    C. Paragraph (b)(8) is revised.
    The addition and revision read as follows:


Sec. 157.6  Applications; general requirements.

    (a) * * *
    (2) Maps and diagrams. An applicant required to submit a map or 
diagram under this subpart must submit one paper copy of the map or 
diagram.
* * * * *
    (b) * * *
    (8) For applications to construct new facilities, detailed cost-of-
service data supporting the cost of the expansion project, a detailed 
study showing the revenue responsibility for each firm rate schedule 
under the pipeline's currently effective rate design and under the 
pipeline's proposed rates, a detailed rate impact analysis by rate 
schedule (including by zone, if applicable), and an analysis reflecting 
the impact of the fuel usage resulting from the proposed

[[Page 54536]]

expansion project (including by zone, if applicable).
* * * * *
    5. Section 157.8 is revised to read as follows:


Sec. 157.8  Acceptance for filing or rejection of applications.

    Applications will be docketed when received and the applicant so 
advised.
    (a) If an application patently fails to comply with applicable 
statutory requirements or with applicable Commission rules, 
regulations, and orders for which a waiver has not been granted, the 
Director of the Office of Pipeline Regulation may reject the 
application within 10 days of filing as provided by Sec. 385.2001(b) of 
this chapter. This rejection is without prejudice to an applicant's 
refiling a complete application. However, an application will not be 
rejected solely on the basis of:
    (1) Environmental reports that are incomplete because the company 
has not been granted access by the affected landowner(s) to perform 
required surveys; or,
    (2) Environmental reports that are incomplete, but where the 
minimum checklist requirements of Part 380, Appendix A of this chapter 
have been met.
    (b) An application which relates to an operation, sale, service, 
construction, extension, acquisition, or abandonment concerning which a 
prior application has been filed and rejected, shall be docketed as a 
new application. Such new application shall state the docket number of 
the prior rejected application.
    (c) The Director of the Office of Pipeline Regulation may also 
reject an application after it has been noticed, at any time, if it is 
determined that such application does not conform to the requirements 
of this part.
    6. Section 157.10 is revised to read as follows:


Sec. 157.10  Interventions and protests.

    (a) Notices of applications, as provided by Sec. 157.9, will fix 
the time within which any person desiring to participate in the 
proceeding may file a petition to intervene, and within which any 
interested regulatory agency, as provided by Sec. 385.214 of this 
chapter, desiring to intervene may file its notice of intervention.
    (1) Any person filing a petition to intervene or notice of 
intervention shall state specifically whether he seeks formal hearing 
on the application.
    (2) Any person may file to intervene on environmental grounds based 
on the draft environmental impact statement as stated at 
Sec. 380.10(a)(1)(i) of this chapter. In accordance with that section, 
such intervention will be deemed timely as long as it is filed within 
the comment period for the draft environmental impact statement.
    (3) Failure to make timely filing will constitute grounds for 
denial of participation in the absence of extraordinary circumstances 
or good cause shown.
    (4) Protests may be filed in accordance with Sec. 385.211 of this 
chapter within the time permitted by any person who does not seek to 
participate in the proceeding.
    (b) A copy of each application, supplement and amendment thereto, 
including exhibits required by Secs. 157.14, 157.16, and 157.18, shall 
upon request be promptly supplied by the applicant to anyone who has 
filed a petition for leave to intervene or given notice of 
intervention.
    (1) An applicant is not required to serve voluminous or difficult 
to reproduce material, such as copies of certain environmental 
information, to all parties, as long as such material is publically 
available in an accessible central location in each county throughout 
the project area.
    (2) An applicant shall make a good faith effort to place the 
materials in a public location that provides maximum accessibility to 
the public.
    (c) Complete copies of the application must be available in 
accessible central locations in each county throughout the project 
area, either in paper or electronic format, within three business days 
of the date a filing is issued a docket number. Within five business 
days of receiving a request for a complete copy from any party, the 
applicant must serve a full copy of any filing on the requesting party. 
Such copy may exclude voluminous or difficult to reproduce material 
that is publically available. Pipelines must keep all voluminous 
material on file with the Commission and make such information 
available for inspection at buildings with public access preferably 
with evening and weekend business hours, such as libraries located in 
central locations in each county throughout the project area.


Sec. 157.103  [Amended]

    7. In Sec. 157.103, in paragraph (i) the reference to 
``157.206(d)'' is removed and a reference to ``157.206(b)'' is added in 
its place.
    8. In Sec. 157.202, the second sentence in paragraph (b)(2)(i), and 
paragraphs (b)(2)(ii)(D) and (b)(12) are revised to read as follows:


Sec. 157.202  Definitions.

* * * * *
    (b) * * *
    (2)(i) * * * Eligible facility also includes any gas supply 
facility or any facility, including receipt points, needed by the 
certificate holder to receive gas into its system for further transport 
or storage, and interconnecting facilities between transporters that 
transport natural gas under part 284 of this chapter. * * *
    (ii) * * *
    (D) A facility required to test or develop an underground storage 
field or that alters the certificated capacity, deliverability, or 
storage boundary, or a facility required to store gas above ground in 
either a gaseous or liquified state, or a facility used to receive gas 
from plants manufacturing synthetic gas or from plants gasifying 
liquefied natural gas, or wells needed to utilize an underground 
storage field.
* * * * *
    (12) Interconnection facilities means the interconnecting point, 
which includes the tap, metering, and M&R facilities and the related 
interconnecting pipeline.
* * * * *
    9. In Sec. 157.206, in the second sentence in paragraph (c) the 
words ``due to construction delays'' are removed, and paragraph (d) is 
revised to read as follows:


Sec. 157.206  Standard conditions.

* * * * *
    (d) Reports. The certificate holder shall file reports as required 
by this subpart.
* * * * *
    10. In Sec. 157.208, the second sentence in paragraph (f)(2) is 
revised to read as follows:


Sec. 157.208  Construction, acquisition, operation, replacement, and 
miscellaneous rearrangement of facilities.

* * * * *
    (f) * * *
    (2) * * * In the event that the certificate holder thereafter 
wishes to change the maximum operating pressure of supply or delivery 
lateral facilities constructed under section 7(c) of the Natural Gas 
Act or facilities constructed under this section, it shall file an 
appropriate request pursuant to the procedures set forth in 
Sec. 157.205(b). * * *
* * * * *
    11. In Sec. 157.216, paragraph (a)(2) is revised to read as 
follows:


Sec. 157.216  Abandonment.

    (a) * * *

[[Page 54537]]

    (2) An eligible facility that was installed pursuant to automatic 
authority under Sec. 157.208(a), or that now qualifies for automatic 
authority under Sec. 157.208(a), or a facility constructed under 
Sec. 157.211, provided the certificate holder obtains the written 
consent of the customers that have received service through the 
facilities during the past 12 months.
* * * * *
    12. In Sec. 157.217, paragraph (a)(4) is added to read as follows:


Sec. 157.217  Changes in rate schedules.

    (a) * * *
    (4) The certificate holder shall make a filing to reflect removal 
of the Part 157 rate schedule from its tariff.
* * * * *
    13. In Appendix I to Subpart F of Part 157, the reference to 
``157.206(b)(2)(vii)'' in the second paragraph of the introductory text 
and the introductory text in paragraph 2, and paragraph 3, is removed 
and a reference to ``157.206(b)(2)(vi)'' is added in its place.
    14. In Appendix II to Subpart F of Part 157, in paragraph (7) the 
phrase ``, or THPO, as appropriate,'' is added after the reference to 
``the SHPO'' wherever it appears, and paragraph (d) is revised to read 
as follows:

Appendix II to Subpart F--Procedures for Compliance With the 
National Historic Preservation Act of 1966 Under 
Sec. 157.206(b)(3)(ii)

* * * * *
    (d) ``THPO'' means the Tribal Historic Preservation Officer, as 
defined at 36 CFR 800.2(c)(2).
* * * * *

PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE 
NATURAL GAS ACT, THE NATURAL GAS POLICY ACT OF 1978 AND RELATED 
AUTHORITIES

    15. The authority citation for part 284 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352; 
43 U.S.C. 1331-1356.

    16. In Sec. 284.11, in paragraphs (a) and (c)(2) the references to 
``157.206(d)'' are removed and references to ``157.206(b)'' are added 
in their place.

PART 380--REGULATIONS IMPLEMENTING THE NATIONAL ENVIRONMENTAL 
POLICY ACT

    17. The authority citation for part 380 is revised to read as 
follows:

    Authority: 42 U.S.C. 4321-4370a, 7101-7352; E.O. 12009, 3 CFR 
1978 Comp., p. 142.


Sec. 380.8  [Amended]

    18. In Sec. 380.8:
    A. The references to ``400 First Street NW.,'' and ``825 North 
Capitol Street NW.,'' are removed and references to ``888 First Street 
NE.,'' are added in their place.
    B. The reference to ``and Producer'' in the second sentence is 
removed.
    C. The telephone number ``376-9171'' is removed and the telephone 
number ``219-2700'' is added in its place.
    D. The telephone number ``357-8500'' is removed and the telephone 
number ``208-0700'' is added in its place.


Sec. 380.9  [Amended]

    19. In Sec. 380.9, in paragraph (b) the reference to ``825 North 
Capitol Street NW., room 1000'' is removed and a reference to ``888 
First Street NE., Room 2A'' is added in its place.
    20. In Sec. 380.12, a heading is added to paragraph (f)(2); and the 
last sentence in paragraph (f)(2) introductory text and paragraph 
(k)(4)(ii) are revised to read as follows:


Sec. 380.12  Environmental Reports for Natural Gas Act Applications.

* * * * *
    (f) * * *
    (2) Initial filing requirements. * * * If surveys are deemed 
necessary by the consultation with the SHPO/THPO, the survey report 
must be filed with the application.
* * * * *
    (k) * * *
    (4) * * *
    (ii) Include sound pressure levels for unmuffled engine inlets and 
exhausts, engine casings, and cooling equipment; dynamic insertion loss 
for all mufflers; sound transmission loss for all compressor building 
components, including walls, roof, doors, windows and ventilation 
openings; sound attenuation from the station to nearby noise-sensitive 
areas; the manufacturer's name, the model number, the performance 
rating; and a description of each noise source and noise control 
component to be employed at the proposed compressor station. For 
proposed compressors the initial filing must include at least the 
proposed horsepower, type of compression, and energy source for the 
compressor.
* * * * *
    21. In Appendix A to Part 380, paragraph 6 of Resource Report 3, 
paragraph 9 of Resource Report 8, and paragraph 4 of Resource Report 9 
are revised to read as follows:

Appendix A to Part 380--Minimum Filing Requirements for 
Environmental Reports Under the Natural Gas Act

* * * * *

Resource Report 3--Vegetation and Wildlife

* * * * *
    6. Identify all federally listed or proposed endangered or 
threatened species that potentially occur in the vicinity of the 
project and discuss the results of the consultations with other 
agencies. Include survey reports as specified in Sec. 380.12(e)(5).
* * * * *

Resource Report 8--Land Use, Recreation and Aesthetics

* * * * *
    9. Identify all facilities that would be within designated coastal 
zone management areas. Provide a consistency determination or evidence 
that a request for a consistency determination has been filed with the 
appropriate state agency. ((Sec. 380.12(j)(4 & 7))
* * * * *

Resource Report 9--Air and Noise Quality

* * * * *
    4. Describe the existing compressor units at each station where 
new, additional, or modified compressor units are proposed, including 
the manufacturer, model number, and horsepower of the compressor units. 
For proposed new, additional, or modified compressor units include the 
horsepower, type, and energy source. (Sec. 380.12(k)(4)).
* * * * *

PART 385--RULES OF PRACTICE AND PROCEDURE

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

    Authority: 5 U.S.C. 551-557; 15 U.S.C. 717-717z, 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. 835.2001  [Amended]

    23. In Sec. 385.2001, the reference in paragraph (a)(1)(i) to ``825 
North Capitol Street'' is removed and a reference to ``888 First Street 
N.E.'' is added in its place.

[FR Doc. 99-25783 Filed 10-6-99; 8:45 am]
BILLING CODE 6717-01-P