[Federal Register Volume 65, Number 32 (Wednesday, February 16, 2000)]
[Proposed Rules]
[Pages 7803-7806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3597]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 157
[Docket No. RM00-5-000]
Optional Certificate and Abandonment Procedures for Applications
for New Service Under Section 7 of the Natural Gas Act
Issued February 9, 2000.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Notice of Proposed Rulemaking.
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SUMMARY: The Federal Energy Regulatory Commission is proposing to
remove its optional certificate regulations. On September 15, 1999, the
Commission issued a policy statement to provide the industry with
guidance with respect to how the Commission will evaluate new proposals
for pipeline construction projects to take account of changes in the
natural gas industry in recent years. The Policy Statement provides
that pipelines should not rely on existing customers to subsidize new
projects that do not benefit them, and also provides that the
Commission will only certificate new projects where it finds that, on
balance, the public benefits outweigh any adverse effects. The Policy
Statement did not include applications for new construction projects
filed under the optional certificate rules, however. The Commission is
proposing to remove the optional certificate regulations because it
believes that a uniform regulatory scheme applicable to all certificate
applications will best accomplish the Commission's goals, as set out in
the Policy Statement, of assuring that all relevant interests and
circumstances are considered and balanced in assessing the public
convenience and necessity.
DATES: Written comments are due on or before April 3, 2000.
ADDRESSES: File comments with the Office of the Secretary, Federal
Energy Regulatory Commission, 888 First Street, NE, Washington, DC
20426.
FOR FURTHER INFORMATION CONTACT:
William L. Zoller, Office of Energy Projects, Federal Energy Regulatory
Commission, 888 First Street, NE, Washington, DC 20426, (202) 208-1203.
Joseph B. O'Malley, Office of the General Counsel, Federal Energy
Regulatory Commission, 888 First Street, NE, Washington, D.C. 20426,
(202) 208-0088.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Federal Energy Regulatory Commission proposes to remove its
optional certificate regulations in Subpart E of Part 157 of the
Commission's regulations.\1\ The policies embedded in these regulations
have been overtaken by subsequent policy developments--most
particularly the Commission's September 15, 1999 Policy Statement.\2\
The optional certificate regulations, promulgated in 1985, established
procedures whereby an eligible applicant may obtain, for purposes of
providing new service, a certificate authorizing: the transportation of
natural gas; sales of natural gas; the construction and operation of
natural gas facilities; the acquisition and operation of natural gas
facilities; and conditional pre-granted abandonment of such activities
and facilities. On September 15, 1999, the Commission issued a policy
statement to provide the industry guidance with respect to how the
Commission will evaluate new proposals for pipeline construction
projects to take account of changes in the natural gas industry in
recent years. The Policy Statement provides that pipelines may not rely
on existing customers to subsidize new projects that will not benefit
them and that construction projects will be approved only where the
public benefits outweigh any adverse effects. The optional regulations
do not provide for consideration and weighing of public interest
factors, and are thus inconsistent with current Commission policy.
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\1\ 18 CFR 157.100 et seq.
\2\ Certification of New Interstate Natural Gas Pipeline
Facilities, 88 FERC para.61,227 (1999) (Policy Statement)
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II. Background
Before a pipeline may construct any natural gas facilities subject
to the Commission's Natural Gas Act (NGA) jurisdiction, it must obtain
a certificate of public convenience and necessity authorizing such
construction under section 7 of the NGA. In conjunction with the open
access transportation program that the Commission established in Order
No. 436, the Commission adopted the optional certificate regulations in
1985 as an alternative to the conventional certificate process. A key
goal of the optional certificate program was to provide the full
benefits of competition to consumers by facilitating easier pipeline
entry and exit from markets.\3\
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\3\ See Order No. 436, Regulation of Natural Gas Pipelines After
Partial Wellhead Decontrol, 50 FR 42408 (Oct. 18, 1985), 50 FR 45907
(Nov. 5,1985); FERC Stats. & Regs. para.30,665 (1985), at p. 31,570.
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The optional certificate regulations establish a rebuttable
presumption that, subject to review under the National Environmental
Policy Act, an application is required by the public convenience and
necessity if the applicant is willing to assume all the economic risk
of a new service.\4\ To assure that the applicant shoulders the project
risk, the optional regulations prohibit cost shifting \5\ and any
reduction in the certificated level of billing determinants used to
design initial rates for a project or service.\6\ In addition, the
Commission requires maximum demand and usage recourse rates in optional
certificates based on
[[Page 7804]]
100 percent and 95 percent of the project's design capacity,
respectively.\7\
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\4\ See Order No. 436, at p. 31,584.
\5\ Section 157.103(d)(8) provides that no costs originally
allocated to the new service (or facility) by the certificate holder
may thereafter be shifted by the certificate holder to any other
service without a filing under Part 154 and a determination by the
Commission that the costs sought to be reallocated are in fact being
incurred for the benefit of the other services.
\6\ Section 157.103(d)(4) provides that any rate filed for new
service must be designed to recover costs on the basis of projected
units of service. The units projected for the new service in the
filed initial may be increased in a subsequent rate filing (in
effect, decreasing rates) but may not be decreased.
\7\ See, e.g., Mojave Pipeline Company, 47 FERC para. 61,200
(1989) and Delta Pipeline Company, 52 FERC para. 61,004 (1989). The
Commission found that design of rates on a lower load factor has the
effect of shielding the pipeline from the risks of underutilization
of capacity. The 95% load factor used to design usage rates
recognizes that the design capacity of the capacity is not always
available due to maintenance considerations and compressor outages.
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The Commission's September 15, 1999 Policy Statement
In a Notice of Inquiry issued July 29, 1998,\8\ the Commission
revisited its section 7 certificate policy in view of the continuing
changes taking place in the natural gas industry. After conducting a
comprehensive review, with considerable input from the public, the
Commission issued its September 15, 1999 Policy Statement,
Certification of New Interstate Natural Gas Pipeline Facilities, to
provide guidance on how the Commission will evaluate proposals for
certificating new construction in the future. The Policy Statement did
not adopt new rules for filing applications; rather, the Policy
Statement is intended to provide an analytical framework for
determining when a particular pipeline project is required by the
public convenience and necessity.
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\8\ Notice of Inquiry, Regulations of Interstate Natural Gas
Transportation Services, 84 FERC para. 61,087 (1998).
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The threshold requirement of the new policy is that the pipeline
must be prepared to develop the project without relying on
subsidization by its existing customers.\9\ The Policy Statement also
encourages pipelines seeking a certificate to resolve potential issues
very early in the process by submitting applications designed to avoid
or minimize adverse effects on such groups as existing customers of the
applicant, existing pipelines serving the market and their captive
customers, and affected landowners and other community interests. After
the applicant makes efforts to minimize adverse effects, construction
projects that have residual unresolved issues will be approved only
where the public benefits of the projects are found to outweigh the
adverse effects. An applicant may submit evidence of the public
benefits to be achieved by the proposed project, such as contracts,
precedent agreements, studies of projected demand in the market to be
served, or other evidence of public benefit of the project.
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\9\ Policy Statement, at p. 61,750.
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III. Discussion
The Commission is proposing to remove the optional certificate
regulations because it believes that a uniform regulatory scheme
applicable to all certificate applications will best accomplish the
Commission' s goals, as set out in the Policy Statement, of assuring
that all relevant interests and circumstances are considered and
balanced in assessing the public convenience and necessity.
The Commission's Policy Statement established a core set of
principles and considerations for evaluating new pipeline construction
projects that is in part consistent with the policies that underlie the
optional certificate procedures. By precluding subsidization of new
projects, the Policy Statement provides that existing customers are
protected from assuming the risk of a project that was not designed for
their benefit. Similarly, under the optional certificate program, the
applicant cannot look to subsidization from customers.\10\ In other
respects, however, current policy is inconsistent with the optional
certificate regulations. Because the optional certificates operate
under a rebuttable presumption that they are in the public interest,
the Commission does not weigh the public benefits against the adverse
effects in considering such applications. The Commission believes that
at this point it is better to consider all certificate applications
under the recently articulated Policy Statement.\11\
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\10\ The Commission notes that the optional certificate
regulations have not resulted in faster issuance of certificates, as
originally anticipated. There has been little or no difference
between the two programs in Commission review and processing time.
Environmental review is the driving force in total processing time,
and environmental review requirements are the same under either
program.
\11\ In its order clarifying the Policy Statement, which is
being issued contemporaneously with this NOPR, the Commission
provides that, pending a final rule in this proceeding, the
presumption in favor of an application filed under the optional
certificate regulations will be considered rebutted if the adverse
affects of the proposed project are found to outweigh its benefits.
This is an interim solution, however. In the long run, the
Commission believes that the better course is to treat all
applications under one set of procedures.
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IV. Environmental Analysis
Commission regulations describe the circumstances where preparation
of an environmental assessment or an environmental impact statement
will be required.\12\ The Commission has categorically excluded certain
actions from this requirement as not having a significant effect on the
human environment.\13\ No environmental consideration is necessary for
the promulgation of a rule that is clarifying, corrective, or
procedural, or that does not substantially change the effect of
legislation or regulations being amended.\14\
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\12\ Regulations Implementing National Environmental Policy Act,
52 FR 47897 (Dec. 17, 1987), codified at 18 CFR Part 380.
\13\ 18 CFR 380.4(a)(2)(ii).
\14\ 18 CFR 380.4.
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This proposed rule removal is procedural in nature. Applicants for
pipeline construction authority must satisfy the same environmental
requirements under either the optional or Policy Statement procedure.
Thus, no environmental assessment or environmental impact statement is
necessary for the requirements proposed in the rule.
V. Regulatory Flexibility Impact Statement
The Regulatory Flexibility Act of 1980 (RFA) \15\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The Commission is not required to make such analysis if a rule would
not have such an effect.\16\
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\15\ 5 U.S.C. 601-612.
\16\ 5 U.S.C. 605(b).
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The Commission does not believe that removal of the optional
certificate rules would have such an impact on small entities. The
proposed removal of regulations would have impact only on interstate
pipelines, which generally do not fall within the RFA's definition of
small entity.\17\ Accordingly, pursuant to Section 605(a) of the RFA,
the Commission proposes to certify that the removal of regulations
proposed here will not have a significant economic impact on a
substantial number of small entities.
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\17\ 5 U.S.C. 601(3), citing to section 3 of the Small Business
Act, 15 U.S.C. 632. Section 3 of the Small Business Act defines a
``small business concern'' as a business which is independently
owned and operated and which is not dominant in its field of
operations.
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VI. Information Collection Statement
The following collection of information is being forwarded to the
Office of Management and Budget (OMB) for review under section 3507(d)
of the Paperwork Reduction Act of 1995.\18\ The collection of
information related to the subject involved here falls under FERC-537,
Gas Pipeline Certificates: Construction, Acquisition, and
Abandonment.\19\
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\18\ 44 U.S.C. 3507(d).
\19\ The current burden estimate for FERC-537 is 138,264 hours.
This number is based on an average of 50 respondents (companies
making filings), 11.2 responses (filings per respondent), and 246.9
hours of preparation time per response.
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The action proposed here will remove a heretofore little used
alternative to the conventional section 7(c) application
[[Page 7805]]
process. While the optional certificate process does arguably offer
pipelines a less burdensome process, in practice the overwhelming
majority of applications for construction authority since adoption of
the optional certificate rules have been filed under the conventional
application process. What we are intending to accomplish is not to
impose new information burdens on pipeline applicants, but to maintain
the informational status quo. As a practical matter, our action should
not have any appreciable effect on the collection of data from the
pipeline industry. Nevertheless, we invite parties submitting comments
to address this matter. Comments are solicited on the Commission's need
for this information, whether the information will have practical
utility, the accuracy of the provided burden estimates, ways to enhance
the quality, utility, and clarity of the information to be collected ,
and any suggested methods for minimizing respondents' burden, including
the use of automated information techniques.
The OMB regulations require OMB to approve certain information
collection requirements imposed by agency rule.\20\ Accordingly,
pursuant to OMB regulations, the Commission is providing notice of its
proposed information collection to OMB.
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\20\ 5 CFR 1320.11.
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Title: FERC-537, Gas Pipeline Certificates: Construction,
Acquisition, and Abandonment.
Action: Proposed Data Collection.
OMB Control No. 1902-0060. The respondent shall not be penalized
for failure to respond to this collection of information unless the
collection of information displays a valid OMB control number.
Respondents: Business or other for profit.
Frequency of Responses: On occasion.
Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE, Washington, DC 20426, [Attention:
Michael Miller, Office of the Chief Information Officer, Phone: (202)
208-1415, fax: (202) 208-2425, e-mail: [email protected]]
For submitting comments concerning the collection of information
and the associated burden estimate, please send your comments to the
contact listed above and to the Office of Management and Budget, Office
of Information and Regulatory Affairs, Washington, DC 20503.
[Attention: Desk Officer for the Federal Energy Regulatory Commission,
phone: (202) 395-3087, fax: (202) 395-7285]
VII. Comment Procedure
The Commission invites interested persons to submit written
comments on the matters and issues proposed in this notice to be
adopted, including any related matters or alternative proposals that
commenters may wish to discuss.
The original and 14 copies of such comments must be received by the
Commission before 5:00 p.m. April 3, 2000. Comments should be submitted
to the Office of the Secretary, Federal Energy Regulatory Commission,
888 First Street, NE, Washington DC 20426 and should refer to Docket
No. RM00-5-00.
In addition to filing paper copies, the Commission encourages the
filing of comments either on computer diskette or via Internet E-Mail.
Comments may be filed in the following formats: WordPerfect 8.0 or
below, MS Word Office 97 or lower version, or ASCII format.
For diskette filing, include the following information on the
diskette label: Docket No. RM00-5-000; the name of the filing entity;
the software and version used to create the file; and the name and
telephone number of a contact person.
For Internet E-Mail submittal, comments should be submitted to
``[email protected]'' in the following format. On the subject
line, specify Docket No. RM00-5-000. In the body of the E-Mail message,
include the name of the filing entity; the software and version used to
create the file, and the name and telephone number of the contact
person. Attach the comment to the E-Mail in one of the formats
specified above. The Commission will send an automatic acknowledgment
to the sender's E-Mail address upon receipt. Questions on electronic
filing should be directed to Brooks Carter at 202-501-8145, E-Mail
address [email protected].
Commenters should take note that, until the Commission amends its
rules and regulations, the paper copy of the filing remains the
official copy of the document submitted. Therefore, any discrepancies
between the paper filing and the electronic filing or the diskette will
be resolved by reference to the paper filing.
All written comments will be placed in the Commission's public
files and will be available for inspection in the Commission's Public
Reference room at 888 First Street, NE, Washington, DC 20426, during
regular business hours. Additionally, comments may be viewed, printed,
or downloaded remotely via the Internet through FERC's Homepage using
the RIMS or CIPS links. RIMS contains all comments but only those
comments submitted in electronic format are available on CIPS. User
assistance is available at 202-208-2222, or by E-Mail to
[email protected].
VIII. Document Availability
In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through FERC's Home Page (http://www.ferc.fed.us) and in
FERC's Public Reference Room during normal business hours (8:30 a.m. to
5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, Washington,
DC 20426.
From FERC's Home Page on the Internet, this information is
available in both the Commission Issuance Posting System (CIPS) and the
Records and Information Management System (RIMS).
--CIPS provides access to the texts of formal documents issued by the
Commission since November 14, 1994.
--CIPS can be accessed using the CIPS link or the Energy Information
Online icon. The full text of this document is available on CIPS in
ASCII and WordPerfect 8.0 format for viewing, printing, and/or
downloading.
--RIMS contains images 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 from FERC's Home Page using the RIMS
link or the Energy Information Online icon. Descriptions of documents
back to November 16, 1981, are also available from RIMS-on-the-Web;
requests for copies of these and other older documents should be
submitted to the Public Reference Room. User assistance is available
for RIMS, CIPS, and the Website during normal business hours from our
Help line at (202) 208-2222 (E-Mail to [email protected]) or the
Public Reference at (202) 208-1371 (E-Mail to
[email protected] ).
During normal business hours, documents can also be viewed and/or
printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC
Website are available. User assistance is also available.
[[Page 7806]]
List of Subjects in 18 CFR Part 157
Administrative practice and procedure, Natural gas, Reporting and
recordkeeping requirements.
By direction of the Commission.
Linwood A. Watson, Jr.,
Acting Secretary.
In consideration of the foregoing, the Commission proposes to amend
Part 157--Chapter I, Title 18, Code of Federal Regulations, as follows.
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
1. 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.
Subpart E of Part 157--[Removed and Reserved]
2. Remove and reserve subpart E, consisting of Sec. Sec. 157.100
through 157.106.
[FR Doc. 00-3597 Filed 2-15-00; 8:45 am]
BILLING CODE 6717-01-P