[Federal Register Volume 65, Number 43 (Friday, March 3, 2000)]
[Rules and Regulations]
[Pages 11462-11464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5116]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 157

[Docket No. RM98-9-002; Order No. 603-B]


Revision of Existing Regulations Under the Natural Gas Act

Issued February 28, 2000.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule; Order on rehearing.

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SUMMARY: On rehearing, the Federal Energy Regulation Commission 
reaffirms its basic determinations in Order Nos. 603 and 603-A that its 
regulations only allow minor changes to storage field operations and 
that facilities constructed to interconnect transporters under the 
Natural Gas Act can be constructed under a pipeline's blanket 
certificate authorization.

DATES: The revision to the regulations in this order on rehearing 
become effective April 3, 2000.

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

FOR FURTHER INFORMATION CONTACT:  

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

SUPPLEMENTARY INFORMATION:  

I. Introduction and 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 services under 7 of the Natural Gas Act (NGA).\1\ 
On September 29, 1999, the Commission issued Order No. 603-A in which 
it modified and clarified certain aspects of the Final Rule.\2\ In this 
order, the Commission is clarifying that Sec. 157.202(b)(2)(ii)(D) of 
its regulations allows only minor changes to storage field operations 
and that new injection and withdrawal wells cannot be drilled under the 
miscellaneous rearrangement provision of Sec. 157.208. The Commission 
is also reiterating that facilities necessary to interconnect part 284 
transporters can be constructed under the pipeline's blanket 
certificate.
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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).
    \2\ Revisions of Existing Regulations Under Part 157 and Related 
Sections of the Commission's Regulations Under the Natural Gas Act, 
Order No. 603-A, 64 FR 54522 (Oct. 7, 1999), FERC Stats. and Regs. 
para. 31,081 (Sept. 29, 1999).
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II. Discussion

A. Miscellaneous Rearrangement of Storage Wells

    In Order No. 603, the Commission modified Sec. 157.202(b)(2)(ii)(D) 
to allow minor changes to storage field operations, but did not allow 
the drilling of storage injection/withdrawal wells as eligible 
facilities. In Order No. 603-A, the Commission clarified that 
Sec. 157.202(b)(2)(ii)(D) only applies to the testing and developing of 
underground storage fields. It stated that drilling new injection/
withdrawal wells in existing storage pools requires separate NGA 7(c) 
authority because such wells may inherently alter the daily and 
seasonal deliverability, volumetric capacity, or boundary of a storage 
field.
    CNG Transmission Corporation (CNG) seeks further clarification of 
the Commission's interpretation of a company's ability to drill storage 
wells under its blanket certificate. Specifically, CNG contends that 
although new wells may not qualify as eligible facilities under 
Sec. 157.202(b), under certain circumstances the drilling of such wells 
may qualify as a miscellaneous rearrangement of facilities under 
Sec. 157.208(a). As an example, CNG states that the West Virginia 
Department of Transportation plans to build a highway through a portion 
of its storage field that would require that two active wells be capped 
and abandoned. It claims that in order to replace the deliverability of 
those wells it ``must drill an undetermined number of new wells in the 
same storage field,'' \3\ which cannot be drilled in the same footprint 
as the original wells. It argues that it should be able to drill the 
new wells under the miscellaneous rearrangement provision in 
Sec. 157.208. It requests that the Commission clarify that new wells 
may be drilled in a certificated storage field under the miscellaneous 
rearrangement provision if the purpose of the wells is to replace a 
well that been abandoned, and if the new well(s) does not exceed the 
certificated deliverability of the storage field.
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    \3\ CNG's request for clarification, at 2.
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Commission Response
    As stated in Order No. 603-A and Order No. 609,\4\ the Commission 
does not believe that blanket certificate authorization provides 
adequate oversight of the construction of new injection/withdrawal 
wells. Such wells may inherently alter the daily or seasonal 
deliverability, volumetric capacity, or boundary of a storage 
reservoir. Accordingly, drilling new injection/withdrawal wells in 
existing storage pools requires separate 7(c) authorization. Such wells 
are not contemplated under any provision of the blanket certificate, 
including the miscellaneous rearrangement provisions of Sec. 157.208. 
For clarification, we will revise Sec. 157.202(b)(6) to specifically 
exclude underground storage injection/withdrawal wells from the 
definition of miscellaneous rearrangement.
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    \4\ Landowner Notification, Expanded Categorical Exclusions, and 
Other Environmental Filing Requirements, Order No. 609, 64 FR 57374, 
(Oct. 25, 1999), FERC Stats. and Regs. para. 31,082 (Oct.13, 1999).
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B. Interconnecting Points

    In Order No. 603, the Commission limited interconnecting points to 
the tap, metering, metering and regulating (M&R) facilities, and minor 
related piping. It found that any related

[[Page 11463]]

pipeline connecting two interstate pipeline would function as a 
mainline facility and would not qualify as an eligible facility. 
However, on rehearing in Order No. 603-A, upon reconsideration, it 
determined 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 
and do not alter mainline capacity. The Commission found that since the 
length of these segments would be governed by the cost limits of the 
blanket certificate, these facilities would have a minimal impact on 
the certificate holder's system. It also found that this 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.
    In their request for rehearing, Indicated Shippers contend that in 
Order No. 603 the Commission:

recognized that facilities interconnecting interstate pipeline could 
affect the mainline capacity and thereby affect the rates and 
services for the respective pipelines' shippers. For these reasons, 
the Commission excluded these activities from the blanket 
certificate regulations.\5\
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    \5\ Indicated Shippers' request for rehearing, at 4.

    They argue that despite finding in Order No. 603 that 
interconnecting pipelines would expand mainline capacity, the 
Commission, in Order No. 603-A, subsequently found ``that such 
interconnects do not increase mainline capacity after all.'' \6\ They 
contend that the Commission's finding is arbitrary, capricious, not 
supported by substantial evidence and is erroneous. Indicated Shippers 
assert that interconnecting pipelines do increase mainline capacity 
and, therefore, the Commission should retain its authority to review 
such facilities individually prior to granting authorization. They 
argued that the Commission erred by relinquishing its authority to 
review these facilities prior to construction.
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    \6\ Id., at 5.
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    They further assert that the footnote in Order No. 603-A that 
states that an interconnecting facility that will alter mainline 
capacity will not be covered by the blanket certificate is 
impracticable and unenforceable. They contend that the Commission has 
not ``set forth any objective standards for ascertaining whether a 
pipeline interconnect could alter mainline capacity,'' \7\ and gives no 
indication of how it intends to enforce the limitation. They also argue 
that the regulatory text does not refer to the limitation.
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    \7\ Id., at 8.
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    Finally, Indicated Shippers state that the allowing pipelines to 
construct interconnecting pipeline under their blanket authority would 
enable pipelines to abuse their market power to control access to 
market. They argue that ``an after-the-fact rate case remedy is 
unlikely to deter or mitigate such conduct.'' \8\
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    \8\ Id., at 9.
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Commission Response
    In Order No. 603, the Commission determined that interconnecting 
pipeline for new receipt and delivery points was not an eligible 
facility ``because it is a mainline connecting two interstate 
pipelines, and not a supply or delivery lateral,'' \9\ and mainline 
facilities are not eligible facilities. The Commission did not 
specifically find that such pipelines would necessarily increase 
mainline capacity as Indicated Shippers incorrectly argues.
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    \9\ Order No. 603, at 30,795.
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    On rehearing of Order No. 603, several parties argued that an 
interconnecting pipeline between two transporters does not function 
differently than a lateral line. Specifically, they contended that both 
facilities are designed to receive and/or deliver gas supplies. They 
asserted that the only difference between a lateral and 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.
    On rehearing, the Commission determined that interconnecting 
pipelines display more characteristics in common with lateral lines 
than with mainlines. Therefore, the Commission found that it was 
appropriate to allow pipelines to construct such facilities under their 
blanket authorization. However, as with all facilities constructed 
under a pipeline's blanket authorization, the interconnecting pipeline 
cannot alter or increase the capacity of the mainline. If it does, it 
is excluded from the definition of eligible facility.\10\ Accordingly, 
pipelines can only construct interconnecting pipelines if they do not 
increase the capacity of their mainline system. If Indicated Shippers 
believes that a pipeline has used it blanket authorization to construct 
facilities that increase mainline capacity, it should file a complaint 
and the Commission will investigate. Indicated Shippers request for 
rehearing is denied.
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    \10\ See 18 CFR Sec. 157.202(b)(2)(ii)(C), eligible facility 
does not include a facility that alters the capacity of a mainline.
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C. Reporting Requirements

    In Order No. 603, the Commission redefined Sec. 157.211 to provide 
for automatic and prior notice authority for the construction of new 
delivery points. Section 157.211(c) requires that the pipeline identify 
facilities constructed under Sec. 157.211 in their annual report. 
Consistent with the reporting requirements in Sec. 157.208(e), 
Sec. 157.211(c) should have included reporting requirements for both 
automatic and prior notice activities. However, the Commission 
inadvertently limited the reporting requirements to only facilities 
constructed under the automatic authorization.\11\ Accordingly, we will 
modify Sec. 157.211(c) to require that prior notice activities be 
included in the pipeline's annual report. However, we note that because 
the prior notice application fulfills the requirements of 
Secs. 157.211( 1), (2), and (4), the pipeline only needs to refer to 
the docket number of the prior notice filing and report the actual cost 
and completion date of the delivery in the annual report.
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    \11\ We note that the Commission took into consideration both 
automatic and prior notice situations in its burden estimates listed 
in the Final Rule.
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III. 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.

[[Page 11464]]

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.

List of Subjects in 18 CFR Part 157

    Administrative practice and procedure, Natural gas, Reporting and 
recordkeeping requirements.

    By the Commission.
David P. Boergers,
Secretary.


    In consideration of the foregoing, the Commission amends 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 for Part 157 continues to read as follows:

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


    2. In Sec. 157.202, the introductory text in paragraph (b)(6) is 
revised to read as follows:


Sec. 157.202  Definitions.

* * * * *
    (b) * * *
    (6) Miscellaneous rearrangement of any facility means any 
rearrangement of a facility, excluding underground storage injection/
withdrawal wells, that does not result in any change of service 
rendered by means of the facilities involved, including changes in 
existing field operations or relocation of existing facilities:
* * * * *


Sec. 157.211  [Amended]

    3. In Sec. 157.211(c) the reference to ``(a)(1)'' is removed and a 
reference to ``(a)'' is added in its place.

[FR Doc. 00-5116 Filed 3-2-00; 8:45 am]
BILLING CODE 6717-01-P