[Federal Register Volume 65, Number 160 (Thursday, August 17, 2000)]
[Proposed Rules]
[Pages 50376-50400]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19742]



[[Page 50375]]

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

Part IV





Department of Energy





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



Federal Energy Regulatory Commission



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



18 CFR Parts 352, 357, and 385



Revisions to and Electronic Filing of the FERC Form No. 6 and Related 
Uniform Systems of Accounts; Proposed Rules

  Federal Register / Vol. 65, No. 160 / Thursday, August 17, 2000 / 
Proposed Rules  

[[Page 50376]]


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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 352, 357, and 385

[Docket No. RM99-10-000]


Revisions to and Electronic Filing of the FERC Form No. 6 and 
Related Uniform Systems of Accounts

Issued July 27, 2000.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes 
to amend parts 352, 357, and 385 of its regulations. The Commission 
proposes to revise Form 6 schedules and instructions to better meet 
current and future regulatory requirements and industry needs, update 
Uniform Systems of Accounts (USofA) requirements to be more consistent 
with current Generally Accepted Accounting Principles (GAAP), and amend 
its regulations to provide for the electronic filing of Form 6 
commencing with reporting year 2000, due on or before March 31, 2001. 
The Commission is also testing the software and related elements of the 
electronic filing mechanism prior to its formal implementation.

DATES: Comments on the proposed rulemaking are due on or before October 
16, 2000.

ADDRESSES: File comments on the notice of proposed rulemaking with the 
Office of the Secretary, Federal Energy Regulatory Commission, 888 
First Street, N.E., Washington, D.C. 20426. Comments should reference 
Docket No. RM99-10-000.

FOR FURTHER INFORMATION CONTACT:
Donna A. Culbertson (Technical Information) Office of Finance, 
Accounting and Operations, 888 First Street, N.E., Washington, D.C. 
20426 (202) 219-1102
Julia A. Lake (Legal Information) Office of General Counsel, 888 First 
Street, N.E., Washington, D.C. 20426 (202) 208-2019

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction

II. Background

III. Proposed Revisions to Form 7

A. Changes to the Form 6 Reporting Threshold
B. Form 6 Revisions
    1. General Instructions (Page i-ii)
    2. Definitions (Page iii)
    a. System Property
    b. Crude Oil
    c. Jurisdictional and Non-Jurisdictional
    3. Receivables From Affiliated Companies (Page 200)
    4. Instructions for Schedules 212-215 (New Title--Instructions 
for Schedules 212-217) (Page 211)
    5. Carrier Property (Pages 212-213)
    6. Depreciation Base and Rates--Carrier Property (Page 214) and 
Depreciation Base and Rates--System Property (Page 215)
    7. Depreciation Base and Rates--Carrier Property (Page 214) and 
Depreciation Base and Rates--System Property (Page 215) (New Title--
Undivided Joint Interest Property) (Pages 214-215)
    8. Accrued Depreciation--Carrier Property (Page 216)
    9. Accrued Depreciation--System Property (New Title--Accrued 
Depreciation--Undivided Joint Interest Property (Page 217)
    10. Noncarrier Property (Page 220)
    11. Other Deferred Charges (Page 221)
    12. Payables to Affiliated Companies (Page 225)
    13. Analysis of Federal Income and Other Taxes Deferred (Pages 
230-231)
    14. Operating Revenue Accounts (Account 600) (Page 301)
    15. Operating Expense Accounts (Account 610) (Pages 302-304)
    16. Income From Noncarrier Property (Page 335), Interest and 
Dividend Income (Page 336), and Miscellaneous Items in Income and 
Retained Income Accounts for the Year (Page 337)
    17. Statistics of Operations (Pages 600-601) and Miles of 
Pipeline Operated at End of Year (Pages 602-603)
    18. Annual Cost of Service Based Analysis Schedule (Page 700)
    19. Miscellaneous Items
    a. Electronic Filing of Form 6
    b. Form 6 Reporting Alternatives

IV. Revisions to the Uniform Systems of Accounts Regulations

A. Changes in the Application of Generally Accepted Accounting 
Principles (GAAP)
B. Other Accounting Changes

V. Environmental Statement

VI. Regulatory Flexibility Act

VII. Information Collection Statement

VIII. Public Comment Procedures

IX. Document Availability

Regulatory Text
Appendix A--Comments Received
Appendix B--Summary of FERC Form No. 6: Annual Report of Oil 
Pipeline Companies Revisions

I. Introduction

    The Federal Energy Regulatory Commission (Commission or FERC) 
proposes to amend Parts 352, 357, and 385 of its regulations to revise 
its FERC Form No. 6: Annual Report of Oil Pipeline Companies (Form 6) 
schedules and instructions to better meet current and future regulatory 
requirements and industry needs; update Uniform Systems of Accounts 
(USofA) requirements to be more consistent with current Generally 
Accepted Accounting Principles (GAAP); and amend its regulations to 
provide for the electronic filing of Form 6 commencing with reporting 
year 2000, due on or before March 31, 2001. The Commission also 
continues to test the software and related elements of the electronic 
filing mechanism prior to formal implementation. This proposed rule is 
part of the Commission's ongoing program to update and eliminate 
burdensome and unnecessary accounting and reporting requirements and if 
adopted, these changes would reduce by about 24.7 percent the burden on 
regulated companies for maintaining and reporting information under the 
Commission's regulations.

II. Background

    In 1977, the responsibility to regulate oil pipeline companies was 
transferred to the Commission from the Interstate Commerce Commission 
(ICC).\1\ In accordance with the transfer of authority, the Commission 
was delegated the responsibility under section 1 of the Interstate 
Commerce Act (49 U.S.C. 1) to regulate the rates and charges for 
transportation of oil by pipeline and establish valuation of those 
pipelines, and under section 20 of that Act to require pipelines to 
file annual reports of information necessary for the Commission to 
exercise its statutory responsibilities.\2\
---------------------------------------------------------------------------

    \1\ Section 402(b) of the Department of Energy Organization Act 
(DOE Act), 42 U.S.C. 7172, provides that: ``[t]here are hereby 
transferred to, and vested in, the Commission all functions and 
authority of the Interstate Commerce Commission or any officer of 
component of such Commission where the regulatory function 
establishes rates or charges for the transportation of oil by 
pipeline or established the valuation of any such pipeline.''
    \2\ The Secretary of Energy delegated to the Commission the 
authority under the Interstate Commerce Act which was formerly 
vested in the ICC, as that statute relates ``to the transportation 
of oil pipeline to the extent that such . . . [statute is] not 
transferred to, and vested in, FERC by Section 402(b) of the DOE Act 
. . .'' (Delegation Order No. 0204-1, Oct. 1, 1977).
---------------------------------------------------------------------------

    The ICC developed the Form P to collect information on an annual 
basis to enable it to carry out its regulation of oil pipeline 
companies under the Interstate Commerce Act. A comprehensive review of 
the reporting requirements for oil pipeline companies was performed on 
September 21, 1982, when the Commission issued Order 260 revising the 
former ICC Form P, ``Annual Report of Carriers by Pipeline'' and 
redesignating it as FERC Form No. 6, ``Annual Report of Oil Pipeline

[[Page 50377]]

Companies.'' In 1994, the Commission addressed additional revisions to 
the Form 6 in Order Nos. 571 and 571-A, including adding a new page 
700. The information included in the Form 6 was determined at that time 
to be the minimum necessary for Shippers to assess filed rate changes 
under Order 561.
    The current oil pipeline regulations call for the Commission and 
its Staff to play a less active role in monitoring and overseeing 
pipeline rates and practices. Consequently, the oil pipeline Shippers 
have to play a more active role in monitoring and alerting the 
Commission to rate and tariff abuses. Unlike Shippers in the natural 
gas and electric industries regulated by the Commission, oil pipeline 
Shippers bear a greater burden in proving that proposed rate changes 
are unjust and unreasonable. Moreover, when a Shipper attempts to 
justify a complaint against an existing or grandfathered rate, it must 
satisfy a substantial evidentiary burden before a hearing and formal 
discovery rights are granted. This burden requires an in-depth analysis 
of oil pipelines' cost and revenue data.
    As a result of the shift in responsibilities and the specific 
information requirements outlined in Commission Rule 206 for a protest 
or complaint, the Commission is proposing the following changes to Form 
6 information collection in this NOPR.
    On September 21, 1999, Commission Staff conducted a technical 
conference to solicit comments and discuss potential changes to Form 6 
to better meet current and future regulatory requirements and industry 
needs.\3\ Based on comments received during the staff technical 
conference and written comments filed with the Commission, this notice 
of proposed rulemaking proposes to revise the current Form 6 reporting 
requirements for oil pipeline companies to better meet current and 
future regulatory requirements and industry needs and updates related 
Uniform Systems of Accounts accounting requirements to be more 
consistent with current GAAP. The NOPR also proposes to amend the 
regulations to provide for the electronic filing of Form 6 commencing 
with reporting year 2000, due on or before March 31, 2001. The 
Commission is also testing the software and related elements of the 
electronic filing mechanism prior to formal implementation.
---------------------------------------------------------------------------

    \3\ 64 FR 42623 (Aug. 5, 1999) and 64 FR 45931 (Aug. 23, 1999).
---------------------------------------------------------------------------

III. Proposed Revisions to Form 6

    The Commission is proposing to revise Part 357--Annual Special or 
Periodic Reports: Carriers Subject to Part I of the Interstate Commerce 
Act for pipeline carriers subject to the provisions of section 20 of 
the Interstate Commerce Act. For the most part, these proposed changes 
will revise the annual filing requirements for Form 6, and raise the 
minimal filing threshold for the Form 6. The Commission is also 
proposing to revise the Form 6 instructions and schedules to clarify 
definitions and general instructions, eliminate duplicate reporting 
requirements, remove and consolidate schedules, update current 
schedules, and revise current schedules. The changes are intended to 
lower the reporting burden on relatively small companies and clarify 
the Form 6 reporting requirements to promote consistent reporting 
practices among pipeline carriers. Also, since the Form 6 is intended 
to be both a financial and ratemaking document,\4\ these changes will 
ensure that the Commission will have the financial, operational, and 
ratemaking information needed to carry out its regulatory 
responsibilities to monitor the oil pipeline industry in a dynamically 
changing environment.
---------------------------------------------------------------------------

    \4\ Cost of Service Reporting and Filing Requirements for Oil 
Pipelines, FERC Stats., & Regs. [Regs. Preambles, 1991-1996] para. 
31,006 at 31,169 and FERC Form No. 6, p. i, Roman Numeral I.
---------------------------------------------------------------------------

A. Changes to the Form 6 Reporting Threshold

    Current Requirements. The Commission's regulations currently 
require each pipeline carrier subject to the provisions of section 20 
of the Interstate Commerce Act whose annual jurisdictional operating 
revenues have been more than $350,000 for each of the three previous 
calendar years to prepare and file a Form 6 with the Commission on or 
before March 31st of each year for the previous calendar year. Carriers 
exempt from filing the Form 6, however, must prepare and file page 700 
``Annual Cost of Service Based Analysis Schedule'' and page 1 
``Identification and Attestation'' schedule of the Form 6 on or before 
March 31 of each year.\5\
---------------------------------------------------------------------------

    \5\ 18 CFR 357.2 and FERC Form No. 6: Annual Report of Oil 
Pipeline Companies, OMB No. 1902-0022, p. i, Roman Numeral II 
(expires Jan. 31, 2002).
---------------------------------------------------------------------------

    Industry Comments. The Association of Oil Pipe Lines (AOPL) 
proposed that the Commission raise the operating revenues reporting 
threshold for Form 6 reporting from $350,000 to $1,000,000 to lower the 
reporting burden on relatively small companies.
    Sinclair Oil Corporation shares the AOPL's concerns but argues 
their research indicates that the AOPL's recommendation to increase the 
reporting threshold level from $350,000 to $1,000,000 would exclude too 
many pipelines from filing the report and recommends raising the 
reporting threshold level from $350,000 to $500,000.
    Various Shipper Interests object to raising the operating revenues 
reporting threshold for Form 6 reporting since such a modification 
would result in inconsistencies in the statistics compiled by the 
Commission.
    Commission's Proposal. The Commission reviewed the oil pipeline 
company operating revenues reported in their 1996, 1997, and 1998 Forms 
6 to determine the impact of raising the Form 6 reporting threshold 
from $350,000 to $500,000 or $1,000,000 for calendar year 1999 
reporting. We determined that for calendar year 1999, of the 149 
pipeline companies that filed a complete Form 6 for 1998: s
     137 pipelines would file complete Forms 6 if the $350,000 
reporting threshold was retained. We determined 12 out of the 149 oil 
pipeline companies that filed a complete Form 6 in 1998, roughly 8% of 
the jurisdictional pipeline companies, would not be required to file a 
complete Form 6 if the current $350,000 reporting threshold was 
retained.
     134 pipelines would file complete Forms 6 if the reporting 
threshold was raised to $500,000. Thus, if the reporting threshold was 
raised from $350,000 to $500,000 as proposed by Sinclair Oil 
Corporation, only 3 of the 149 oil pipeline companies that filed a 
complete Form 6 in 1998, approximately 2% of the jurisdictional 
pipeline companies, would not be required to file a complete Form 6 for 
1999.
     129 pipelines would file complete Forms 6 if the reporting 
threshold was raised to $1,000,000. We determined that 8 out of the 149 
oil pipeline companies that filed a complete Form 6 in 1998, roughly 6% 
of the jurisdictional pipeline companies, would not be required to file 
a complete Form 6 if the reporting threshold increased from $350,000 to 
$1,000,000 as proposed by AOPL.
    Based on the results of our review, the Commission is proposing to 
raise the operating revenues reporting threshold for Form 6 reporting 
from $350,000 to $1,000,000. The Commission understands the need to 
reduce the reporting burden on relatively small companies and concludes 
that exempting the eight oil pipeline companies from filing the Form 6 
will not cause major inconsistencies in the

[[Page 50378]]

statistics compiled by the Commission or compromise the Commission's 
ability to gather meaningful data upon which to base its regulation of 
the oil pipeline industry.
    The Commission currently assesses jurisdictional oil pipeline 
companies annual charges if their annual jurisdictional operating 
revenues are greater than $350,000 in any of the three calendar years 
immediately preceding the fiscal year for which the Commission is 
assessing annual charges.\6\ Consequently, the Commission is also 
proposing to require jurisdictional oil pipeline companies with annual 
jurisdictional operating revenues greater than $350,000 but less than 
$1,000,000 for each of the three previous calendar years to prepare and 
file pages 1 ``Identification and Attestation,'' 301 ``Operating 
Revenue Accounts (Account 600),'' and 700 ``Annual Cost of Service 
Based Analysis Schedule'' of the Form 6 on or before March 31 of each 
year. This will enable the Commission to continue to obtain the 
information it needs to assess jurisdictional oil pipeline companies' 
annual charges as it has in the past.
---------------------------------------------------------------------------

    \6\ 18 CFR 382.102(c).
---------------------------------------------------------------------------

    Additionally, the Commission is proposing to require oil pipeline 
companies with annual jurisdictional operating revenues of $350,000 or 
less for each of the three previous calendar years to prepare and file 
with the Commission pages 1 ``Identification and Attestation'' and 700 
``Annual Cost of Service Based Analysis Schedule'' of FERC Form No. 6 
on or before March 31 of each year for the previous calendar year. This 
will enable the Commission to continue to obtain the information 
reported on page 700 of the Form 6 since this page is an integral part 
of the Commission's data collection efforts to ensure that the index 
prescribed by Order No. 561 \7\ properly tracks industry costs.
---------------------------------------------------------------------------

    \7\ Revisions to Oil Pipeline Regulations Pursuant to the Energy 
Policy Act of 1992, Order No. 561, 58 FR 58753 (Nov. 4, 1993) FERC 
Stats. & Regs. [Regulations Preambles January 1991-June 1996] para. 
30,985 (Oct. 22, 1993); Order No. 561-A, 59 FR 40243 (Aug. 8, 1994) 
FERC Stats. & Regs. [Regulations Preambles January 1991-June 1996] 
para. 30,1006 (1994).
---------------------------------------------------------------------------

B. Form 6 Revisions

1. General Instructions (Page 1-ii).\8\
---------------------------------------------------------------------------

    \8\ Note: The page numbers referred to throughout the NOPR 
reference the page numbers in the revised Form 6 at Appendix C.
---------------------------------------------------------------------------

    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to enter on the Form 6 
whole numbers (dollars) only, except where otherwise noted. Oil 
pipeline companies would enter cents for averages where cents are 
important.\9\
---------------------------------------------------------------------------

    \9\ FERC Form No. 6, p. ii, Instruction II.
---------------------------------------------------------------------------

    Industry Comments. The AOPL recommends the Commission revise the 
standard Form 6 reporting unit (page ii, II) from whole numbers 
(dollars) to thousands of dollars. AOPL states reporting in thousands 
of dollars rather than dollars as currently required, is more widely 
used in the financial world and would alleviate a reporting burden on 
companies that provides little or no benefit.
    Commission's Proposal. The Commission is proposing to continue to 
require reporting of dollar amounts on the basis of whole dollars i.e., 
rounding cents to the nearest dollar. One reason is that rounding 
dollars to the nearest thousand may inaccurately reflect the operations 
of smaller companies. Also, if a number is currently not reported in 
the Form 6, the Commission knows the value is zero. If oil pipeline 
companies are permitted to round to the nearest $1,000 the Commission 
will not know whether a number is not reported because the value is 
zero or the value is rounded down to zero. In addition, dollar amounts 
are rounded to the nearest dollar in other Commission filings including 
Forms 1 and 2; therefore, rounding to the nearest dollar should be 
retained in the Form 6 for consistency. This is especially important 
since more companies are beginning to operate in cross-industry 
operations.
    The Commission, however, is planning to perform a comprehensive 
review of the FERC's data collection requirements and believes this 
recommendation needs to be looked at during this review. The Commission 
believes revising the requirement to report dollar amounts on the basis 
of whole dollars prior to the comprehensive review would be premature. 
Therefore, the Commission is proposing that oil pipeline companies 
continue to report dollar amounts on the basis of whole dollars in 
order to continue providing consistent reporting across industries and 
between various filings and reports.
2. Definitions (Page iii)
    Current Requirements. The Commission defines select terms commonly 
used throughout the oil industry to facilitate consistent reporting of 
information in the Form 6 between oil pipeline companies.\10\ 
Currently, the Commission does not define ``system property'' in the 
Form 6.
---------------------------------------------------------------------------

    \10\ FERC Form No. 6, p. iii.
---------------------------------------------------------------------------

    The Commission defines ``crude oil'' in the Form 6; however, the 
term is inconsistently defined throughout the form. The Commission 
defines crude oil on page iii as ``oil in its natural state, not 
altered, refined, or prepared for use by any process.'' \11\ However, 
the Commission instructs oil pipeline companies to classify and report 
natural gasoline or other similar products, whenever blended with crude 
oil in transit as crude oil on page 600.\12\
---------------------------------------------------------------------------

    \11\ FERC Form No. 6, p. iii, Definition No. 8.
    \12\ FERC Form No. 6, p. 600, Instruction No. 2.
---------------------------------------------------------------------------

a. System Property
    Industry Comments. The AOPL recommends the Commission define system 
property as a company's interest in an undivided joint interest 
company. The AOPL recommends the Commission should not incorporate a 
geographic interpretation of the word (e.g., the east system, the west 
system) which can change over time and is used more for operational 
than financial reasons.
    Refinery Holding Company, L.P., recommends the Commission define 
system property geographically as defined by the Commission in case 
law.\13\
---------------------------------------------------------------------------

    \13\ SFPP, L.P., 80 FERC para. 63,189 (1997).
---------------------------------------------------------------------------

    Sinclair Oil Corporation, however, recommends the Commission define 
a pipeline system as a single trunk line or a group of trunk pipelines 
and all associated lines that are connected with each other.
    Commission's Proposal. The Commission researched interpretations of 
the term ``system property'' and determined the industry and the 
Commission do not have a common understanding of the definition of 
system property. Some companies define system property as undivided 
joint interest property; where all the companies involved own a 
percentage of all the property rather than one company owning the 
entire pipeline or a company owning a discrete piece of the pipeline, 
such as the pump station, etc. (e.g., Trans Alaskan Pipeline). Other 
companies define system property as a geographically independent 
pipeline which comprises part of a company's entire pipeline ownership 
(e.g., the east system, the west system). To date, the Commission has 
not defined each company's pipeline geographically and does not 
currently have a need for oil pipeline companies to report property in 
this detail. To change this requirement would create additional burden 
on the Commission requiring it

[[Page 50379]]

to classify all pipeline property geographically and would increase the 
reporting burden on the industry.
    For these reasons, the Commission is proposing to eliminate the 
term ``system property'' entirely since there is confusion as to its 
intended definition among the industry and Commission staff. The 
Commission is also proposing to replace the term ``system property'' 
with the term ``undivided joint interest property.'' The Commission 
proposes to define ``undivided joint interest property'' as ``carrier 
property owned as part of an undivided joint interest pipeline.'' \14\ 
Further, the Commission is proposing to define an ``undivided joint 
interest pipeline'' as ``a common carrier by pipeline controlled by 
more than one common carrier.'' \15\
---------------------------------------------------------------------------

    \14\ FERC Form No. 6, p. iii, New Instruction No. 14.
    \15\ FERC Form No. 6, p. iii, New Instruction No. 13.
---------------------------------------------------------------------------

b. Crude Oil
    Industry Comments. Sinclair Oil Corporation recommends redefining 
crude oil to exclude contaminants such as natural gasoline since 
quality-of-crude-oil issues have become increasingly important to 
Shippers in view of regulations imposed by the Environmental Protection 
Agency (EPA).
    Commission's Proposal. The purpose of the Form 6 is to collect 
financial, operational, and ratemaking information \16\ on an annual 
basis to enable the Commission to carry out its regulatory requirements 
under the Interstate Commerce Act. The Commission recognizes that 
Shippers have numerous requirements imposed on them by other government 
agencies, but currently has no plans to add reporting requirements to 
its Form 6 in support of EPA or other outside agency requirements if 
the additional information is not necessary for the Commission to meet 
its regulatory responsibility. For this reason, the Commission is not 
proposing to add crude oil reporting requirements to the Form 6. The 
Commission does agree, however, the different definitions of crude oil 
in the Form 6 are confusing and is proposing to revise the definition 
of crude oil on page iii. Definition eight will be revised to include 
natural gasoline and other similar natural constituents whenever 
blended with crude oil in transit as is currently required on page 600, 
Instruction No. 2. The Commission also proposes to delete the 
definition of crude oil defined in Instruction No. 2 on page 600 to 
eliminate redundancy and so the revised crude oil definition on page 
iii is used consistently throughout the Form 6.
---------------------------------------------------------------------------

    \16\ Cost of Service Reporting and Filing Requirements for Oil 
Pipelines, FERC Stats., & Regs. [Regs. Preambles, 1991-1996] 
para.31,006 at 31,169 and FERC Form No. 6, p. i, Roman Numeral I.
---------------------------------------------------------------------------

c. Jurisdictional and Non-Jurisdictional
    Industry Comments. ARCO Products Company, a Division of Atlantic 
Richfield Company, Tosco Corporation, and Ultramar Inc., state the Form 
6 allows vertically integrated companies to subjectively allocate 
jurisdictional and non-jurisdictional costs and revenues.
    Sinclair Oil Corporation agrees with ARCO and recommends redefining 
the terms ``jurisdictional'' and ``non-jurisdictional'' to prevent 
reporting discrepancies.
    Commission's Proposal. The Interstate Commerce Act (ICA) provides 
guidance regarding what the Commission has jurisdiction over as it 
relates to oil pipeline companies. The determination of jurisdiction 
under the ICA depends on the specific facts of the individual case.\17\ 
Attempting to further define the terms jurisdictional and non-
jurisdictional beyond the guidance of the ICA could result in 
definitions which are too narrow and not all encompassing, and could 
create additional reporting discrepancies. For these reasons, the 
Commission is proposing that the industry and Shippers continue to rely 
on the ICA's jurisdictional parameters, and is not proposing to further 
define these terms at this time.
---------------------------------------------------------------------------

    \17\ SFPP, L.P., et al., 80 FERC para. 61,200 (1997).
---------------------------------------------------------------------------

3. Receivables From Affiliated Companies (Page 200)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to report receivables 
from affiliated companies in excess of $500,000. For debtors whose 
balances are less than $500,000, a single entry may be made under a 
caption ``Minor accounts, each less than $500,000.'' \18\
---------------------------------------------------------------------------

    \18\ FERC Form No. 6, p. 200, Instruction No. 2.
---------------------------------------------------------------------------

    Industry Comments. The AOPL recommends the Commission modify item 2 
of the instructions to increase the threshold for reporting receivables 
from affiliated companies to $1,000,000.
    Commission's Proposal. The Commission reviewed the 149 oil pipeline 
companies that filed the entire Form 6 with the Commission in 1998 and 
determined 29 companies reported receivables from affiliated companies 
less than or equal to $1,000,000. Of those 29 companies, 17 companies 
reported receivables from affiliated companies less than or equal to 
$500,000. Therefore, increasing the reporting threshold from $500,000 
to $1,000,000 would eliminate 12 (29-17) companies from filing page 200 
in detail. Since a significant amount of data would be lost by 
increasing the reporting threshold to $1,000,000, the Commission is 
proposing to retain the reporting threshold in Instruction No. 2 at 
$500,000. The Commission, however, is proposing to revise Instruction 
No. 2 to read as follows: In column (a), list every item amounting to 
$500,000 or more. For debtors whose balances were less than $500,000, a 
single entry may be made under a caption ``Minor accounts, less than 
$500,000.''
4. Instructions for Schedules 212-215 (New Title--Instructions for 
Schedules 212-217 (Page 211)
    Current Requirements. The Commission currently provides 
instructions for completing pages 212 through 215 of the Form 6 on page 
211.
    Industry Comments. The AOPL recommends the Commission modify the 
instructions as necessary based on changes made to pages 212-215.
    The AOPL recommends the Commission modify the instructions for 
column (e) on page 213 to make clear that this will generally be a 
positive number, so that the calculation in column (f) works properly. 
Carriers have interpreted the use of the word ``credit'' to have 
opposite meanings.
    The AOPL also recommends the first instruction for pages 215 and 
217 should make clear that undivided joint ownership information should 
be reported on these pages, one page for each undivided joint 
ownership. In other words, a company with multiple undivided joint 
ownership interests would file a 215a, 215b, 215c, and so on. A company 
with different depreciation rates on different parts of one system 
would be free to file additional sheets for those system parts.
    Commission's Proposal. The Commission is proposing to revise page 
211, Instruction No. 2 for pages 212-213, to make it clear that the 
information reported in column (e) on page 213 will generally be a 
positive number, so that the calculation in column (f) works properly. 
Additionally, the Commission is also proposing to delete the 
instructions on page 211 for the schedules on pages 214-215 and replace 
them with instructions for the revised schedule on

[[Page 50380]]

pages 214-215.\19\ The Commission is also proposing to revise page 211 
so the first instruction for pages 214-215 and 216-217 makes clear that 
undivided joint ownership information should be reported on pages 214-
215 and 217, one page for each undivided joint ownership. In other 
words, a company with multiple undivided joint ownership interests 
would file a 214a, 215a; 214b, 215b; and so on. The Commission is also 
proposing to add instructions for completing pages 216-217. The 
Commission believes these changes will provide jurisdictional oil 
pipelines clearer instructions for more consistent industry reporting 
of property information on the Form 6.
---------------------------------------------------------------------------

    \19\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 6.
---------------------------------------------------------------------------

5. Carrier Property (Pages 212-213)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to report carrier 
property by gathering, trunk, and general facilities. Additionally, the 
Commission requires companies to report property changes during the 
year showing its expenditures for new construction and existing 
property, and property sold or retired.
    Industry Comments. The AOPL recommends the Commission condense the 
gathering, trunk, and general facility classifications into one 
category because this breakout of categories seems to require 
unnecessary detail of no known regulatory value, and the distinction is 
not made for any other reporting requirements.
    Also, the AOPL recommends the Commission modify the heading of 
column (e) to make clear that this will generally be a positive number, 
so that the calculation in column (f) works properly. Carriers have 
interpreted the use of the word ``credit'' to have opposite meanings.
    Commission's Proposal. The Commission is proposing to continue to 
require pipeline companies to report carrier property by gathering, 
trunk, and general facilities. The Commission believes these categories 
should not be combined because different classes of property have 
different rate designs, depreciation rates, and tariff rates. Further, 
each account reflects different service lives and different 
depreciation rates. Gathering lines generally are tied to one reserve, 
have a shorter depreciation life, and use units of property 
depreciation whereas trunk lines have many sources of life and use 
straight line depreciation. The Commission needs carrier property data 
as currently required to conduct depreciation studies. Additionally, 
the Commission uses this information to perform cost of service 
analysis. Generally, trunk lines and general facilities are used in the 
cost of service calculation and if this information is condensed, it 
will be difficult for the Commission to perform cost of service 
analysis.
    The Commission, however, is proposing to modify column (e) on page 
213 by deleting the words ``Credits for'' from the heading to eliminate 
confusion over whether the number should be positive or negative. 
Additionally, the Commission is proposing to revise column headings (c) 
, (e), and (h) to be consistent with the instructions on page 211 and 
clarify what information is required to be reported. The Commission 
proposes to revise column headings (c), (e), and (h) to read as 
follows:

(c)--Expenditures for New Construction, Additions, and Improvements
(e)--Property Sold, Abandoned, or Otherwise Retired During the Year
(h)--Increase or Decrease During the Year (fg) (In 
dollars).

The Commission believes these changes will clarify the carrier property 
reporting requirements eliminating the confusion pipelines have 
experienced in the past and facilitate more consistent industry 
reporting.
6. Depreciation Base and Rates--Carrier Property (Page 214) and 
Depreciation Base and Rates--System Property (Page 215)
    Current Requirements. Currently the Commission requires 
jurisdictional oil pipeline companies to report the beginning, ending, 
and average depreciation base and the annual composite/component rates 
for carrier and system property on pages 214 and 215, respectively. The 
current instructions require oil pipeline companies to report 
information on page 215 only when specifically directed by the 
Commission.\20\
---------------------------------------------------------------------------

    \20\ Form 6, Page 215, Instruction No. 1.
---------------------------------------------------------------------------

    Industry Comments. AOPL recommends the Commission eliminate page 
214 and carry forward the depreciation rate information from page 214, 
column (e) to a new column on page 216, Accrued Depreciation--Carrier 
Property. The information on page 214 is virtually the same as shown on 
pages 212-213.
    AOPL also recommends the Commission eliminate page 215. This page 
is rarely completed and appears to require unnecessary detail. To the 
extent carriers need to report this information, it could be 
accomplished through supplements(s) to pages 212 and 213, Carrier 
Property.
    Subsequent to the Staff Technical Conference, AOPL submitted 
additional comments recommending the Commission eliminate page 215 and 
require carriers to report this information on page 214 instead. This 
combination will eliminate the filing of redundant and unnecessary 
information.
    Various Shipper Interests oppose eliminating pages 214 and 215. 
They argue that eliminating these pages would severely hamper and 
restrict the ability of a Shipper on an oil pipeline to file a 154-B 
rate case in protest to an oil pipeline's rates, as allowed by the 
Commission in Order Nos. 561 and 571.
    Commission's Proposal. The Commission is proposing to eliminate the 
schedules on pages 214 and 215 and carry forward the depreciation rate 
information reported in column (e) on both schedules to a new column 
(g) on pages 216 and 217, respectively. The Commission also proposes to 
revise column heading (g) on page 217 to read as ``Annual Composite/
Component Rates (In Percent).'' The deletion of these schedules will 
not eliminate any information that the Commission and other users of 
the Form 6 cannot calculate from other information reported in the Form 
6. For example, the Commission and users of the Form 6 can calculate 
the average balance for the year currently reported on pages 214 and 
215 by dividing the amount reported in Account 540 on pages 216 and 
217, column (c) by the annual composite/component rates reported in the 
new column (g) on pages 216 and 217, respectively. The Commission is 
proposing to transfer the annual composite/component rates to pages 216 
and 217 since this information is not provided anywhere in the Form 6 
and will centrally locate all the carrier and undivided joint interest 
property depreciation information on separate pages in the Form 6.
    Additionally, the Commission is proposing to delete the 
instructions on page 211 for the current schedules on pages 214-215 and 
replace them with revised instructions for the revised schedule on 
pages 214-215. Instruction No. 1 for pages 214-215 would make it clear 
that undivided joint ownership information should be reported on these 
pages, one page for each undivided joint ownership.\21\
---------------------------------------------------------------------------

    \21\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 4.

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

[[Page 50381]]

7. Depreciation Base and Rates--Carrier Property (Page 214) and 
Depreciation Base and Rates--System Property (Page 215) (New Title--
Undivided Joint Interest Property) (Pages 214-215)
    Current Requirements. Currently the Commission requires 
jurisdictional oil pipeline companies to report the beginning, ending, 
and average depreciation base and the annual composite/component rates 
for carrier and system property on pages 214 and 215, respectively. The 
current instructions require oil pipeline companies to report 
information on page 215 only when specifically directed by the 
Commission.\22\
---------------------------------------------------------------------------

    \22\ Form 6, Page 215, Instruction No. 1.
---------------------------------------------------------------------------

    Industry Comments. AOPL states although the current instructions 
require that system property pages should only be used when 
specifically instructed by the Commission, carriers have frequently 
used this page to report information on pipelines that form part of the 
parent company's ``system.''
    AOPL and Sinclair Oil Corporation recommend pipeline companies that 
own part of an undivided joint interest in a pipeline should be 
required to file data separately for each pipeline system.
    Commission's Proposal. The Commission is proposing to revise pages 
214-215 for companies to report their interest(s) in Undivided Joint 
Interest Property. The Commission is proposing to revise these pages 
because the Commission currently does not receive detailed financial 
information on Undivided Joint Interest Property from another source of 
information. The Commission is proposing the revised pages have the 
same cost categories and format required for Carrier Property reported 
on pages 212-213. Additionally, the Commission is proposing to delete 
the instructions on page 211 for the current schedules on pages 214-215 
and replace them with instructions for the revised schedule on pages 
214-215. Instruction No. 1 for pages 214-215 would make it clear that 
undivided joint ownership information should be reported on these 
pages, one page for each undivided joint ownership.\23\ The Commission 
believes that revising this page in combination with eliminating the 
term system property, defining undivided joint interest property,\24\ 
deleting previous page 215,\25\ and revising page 217 \26\ will 
eliminate the confusion oil pipeline companies currently experience 
when reporting property information on the Form 6.
---------------------------------------------------------------------------

    \23\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 4.
    \24\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 2.
    \25\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 6.
    \26\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 9.
---------------------------------------------------------------------------

8. Accrued Depreciation-Carrier Property (Page 216)
    Current Requirements. Currently the Commission requires 
jurisdictional oil pipeline companies to report details on the credits 
and debits to Account No. 31, Accrued Depreciation--Carrier Property.
    Industry Comments. AOPL recommends the Commission eliminate the 
distinction between gathering and trunk lines. AOPL also recommends the 
Commission eliminate page 214 and carry forward the depreciation rate 
information from page 214, column (e) to a new column on page 216, 
Accrued Depreciation--Carrier Property.\27\
---------------------------------------------------------------------------

    \27\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 6.
---------------------------------------------------------------------------

    Commission's Proposal. The Commission is proposing to retain the 
distinction between gathering, trunk, and general. The Commission uses 
this information to calculate depreciation per account and to conduct 
depreciation studies, cost allocation, and trend analysis.\28\ The 
Commission, however, is proposing to add a new column (g) on page 216 
to report the annual composite/component rates currently reported on 
page 214.\29\ The Commission is proposing to transfer this information 
to page 216 since it is not provided anywhere in the Form 6 and will 
centrally locate carrier property depreciation information on one page 
in the Form 6.
---------------------------------------------------------------------------

    \28\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 5.
    \29\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 6.
---------------------------------------------------------------------------

    Additionally, the Commission is proposing to revise column headings 
(c) and (d) to replace the terms ``Charged'' and ``Charge'' with 
``Debits'' and ``Debit.'' This proposed change will ensure the terms 
debits and credits are consistently used throughout the Form 6. The 
Commission proposes to revise column headings (c) and (d) to read as 
follows:

(c)--Debits to Account No. 540 of USofA (In dollars)
(d)--Net Debit From Retirement of Carrier Property (In dollars)

The Commission believes these changes will continue to provide the 
accrued depreciation information it needs to regulate carrier property 
and will clarify the Form 6 reporting requirement by uniformly using 
the terms debits and credits.
9. Accrued Depreciation--System Property (New Title--Accrued 
Depreciation--Undivided Joint Interest Property) (Page 217)
    Current Requirement. The Commission requires jurisdictional oil 
pipeline companies to annually report accrued depreciation for system 
property. Currently, this page is only required to be used when 
specifically directed by the Commission.
    Industry Comments. AOPL recommends the Commission eliminate page 
217 and the information collected on this page be collected on page 216 
because this page is rarely completed and appears to require 
unnecessary detail. It is also unclear to AOPL what is to be gained by 
having authorized ``System Property'' reported on page 217 instead of 
216 with supplements filed as necessary if carrier normally reports 
information on these pages. Although the current instructions state 
that this page should only be used when specifically instructed by the 
Commission, carriers have frequently used this page to report 
information on pipelines that form part of the parent company's 
``system.'' Requiring all carriers to report carrier property on pages 
212 and 213 and accrued depreciation on page 216, supplemented as 
necessary, should result in more consistent industry reporting.
    Subsequent to the Staff Technical Conference, AOPL submitted 
additional comments recommending the Commission modify page 217 so it 
includes the same cost categories as on page 216. AOPL asks that 
Instruction No. 1 to page 217 clarify that undivided joint ownership 
information should be reported on these pages, one page for each 
undivided joint ownership. A company with different depreciation rates 
on different parts of one system would be free to file additional 
sheets for those system parts.
    Commission's Proposal. The Commission is proposing to add a new 
column (g) on page 217 to retain the annual composite/component rates 
currently reported on page 215. The Commission proposes the header for 
column (g) to read as follows: Annual Composite/Component Rates (In 
percent). The Commission is proposing to transfer this information to 
page 217 since it is not provided anywhere in the Form 6 and will 
centrally locate carrier property depreciation information for 
undivided joint interest pipelines on one page in the Form 6.
    The Commission is proposing to eliminate the requirement that 
companies only report information on this page when directed by the

[[Page 50382]]

Commission. The Commission is also proposing to revise the page title 
to eliminate the term ``System'' in the Form 6.\30\ Additionally, the 
Commission is proposing to delete Instruction Nos. 1 through 3 on page 
217 and add instructions for completing page 217 on page 211. 
Instruction No. 1 for pages 216-217 would make clear that undivided 
joint ownership information should be reported on page 217, one page 
for each undivided joint ownership.\31\
---------------------------------------------------------------------------

    \30\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 2.
    \31\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 4.
---------------------------------------------------------------------------

10. Noncarrier Property (Page 220)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to report noncarrier 
property of $250,000 or more. Items less than $250,000, may be combined 
in a single entry titled ``Minor items, each less than $250,000.'' \32\
---------------------------------------------------------------------------

    \32\ FERC Form No. 6, p. 220, Instruction No. 2.
---------------------------------------------------------------------------

    Industry Comments. The AOPL recommends the Commission modify item 2 
of the instructions to increase the threshold for reporting noncarrier 
property to $1,000,000.
    Kaneb Pipeline Company, L.P. proposes that the disclosure of 
noncarrier property items be limited to a single line entry in the 
Balance Sheet since the Commission, by definition, does not have 
regulatory authority over noncarrrier activities. Kaneb Pipeline 
Company, L.P. suggests that the detail required on page 220 appears to 
be more than required and lacks some standard format.
    Commission's Proposal. The Commission is proposing to continue to 
require jurisdictional oil pipeline companies to report noncarrier 
property annually on page 220. However, the Commission is proposing to 
raise the noncarrier property reporting threshold in Instruction No. 2 
from $250,000 to $1,000,000. The data reported with a higher threshold 
should be sufficient for Commission purposes and the new threshold 
should further reduce respondent burdens. If the Commission should 
require a more detailed breakdown of the noncarrier property reported 
for a ratemaking proceeding, settlement, or hearing the Commission 
could request additional information at this time during discovery. The 
Commission is not proposing to revise page 220 to create a standard 
format for reporting noncarrier property. A standard format would be 
too cumbersome since the term ``noncarrier'' includes anything that is 
not carrier.
11. Other Deferred Charges (Page 221)
    Current Requirements. The Commission requires jurisdictional oil 
pipeline companies to provide an analysis of Account No. 44, Other 
Deferred Charges, annually showing in detail each item or subaccount of 
$250,000 or more. Items less than $250,000 may be combined in a single 
entry designated Minor Items, Each Less Than $250,000.
    Industry Comments. AOPL proposes to replace 28 out of the 43 pages 
in the Form 6 with GAAP financial statements and modify other pages to 
reflect these changes. One of the pages the AOPL proposes to eliminate 
is page 221 since adequate detail would be provided in the GAAP 
financial statements and Notes.
    Commission's Proposal. The Commission is proposing to continue to 
require jurisdictional oil pipeline companies to file the Form 6 in 
lieu of GAAP financial statements.\33\ As such, the Commission is 
proposing to continue to require jurisdictional oil pipeline companies 
to file page 221 because it is the only source of information on 
deferred charges that the Commission receives from all reporting 
companies. However, the Commission is proposing to raise the other 
deferred charges reporting threshold from $250,000 to $500,000. The 
data reported with a higher threshold should be sufficient for 
Commission purposes and the new threshold should further reduce 
reporting burden. If the Commission should require a more detailed 
breakdown of the other deferred charges reported during an audit, rate 
proceeding, settlement, or hearing the Commission could request 
additional information at this time during discovery.
---------------------------------------------------------------------------

    \33\ See NOPR, Roman Numeral III, No. 19 (b)--Form 6 Reporting 
Alternatives.
---------------------------------------------------------------------------

12. Payables to Affiliated Companies (Page 225)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to report payables from 
affiliated companies in excess of $250,000. For creditors whose 
balances were less than $250,000, a single entry may be made under a 
caption ``Minor Accounts, Each Less Than $250,000.'' \34\
---------------------------------------------------------------------------

    \34\ FERC Form No. 6, Page 225, Instruction Nos. 2 and 3.
---------------------------------------------------------------------------

    Industry Comments. The AOPL recommends the Commission eliminate 
this page because the information is available in GAAP financial 
statements and notes.
    Commission's Proposal. The Commission compared the information 
reported in the Form 6 to that reported in the GAAP financial 
statements and notes. Although the GAAP financial statements and notes 
contain much of the same type of financial information as the Form 6, 
the Commission noted material differences in the detail of information 
reported. GAAP financial statements contain less detailed reporting and 
lack a standard format. The current standard format allows anyone to 
collect and analyze data with relative ease. Performing an analysis in 
the future without some sort of standard format could be cumbersome and 
time consuming. For these reasons, the Commission is proposing to 
retain this page in lieu of accepting GAAP financial statements and 
notes.
    The Commission, however, reviewed the possibility of raising the 
$250,000 reporting threshold currently required for oil pipeline 
companies to report payables to affiliated companies to $500,000 or 
$1,000,000. The Commission reviewed the 149 oil pipeline companies that 
filed the entire Form 6 with the Commission in 1998 and determined 43 
companies reported payables from affiliated companies less than or 
equal to $1,000,000. Of those 43 companies, 26 companies reported 
payables from affiliated companies less than or equal to $250,000 and 
34 reported payables from affiliated companies less than or equal to 
$500,000. Therefore, increasing the reporting threshold from $250,000 
to $500,000 would eliminate 8 (34-26) companies from filing page 225 in 
detail. Based on the results of our review, the Commission is proposing 
to raise the reporting threshold from $250,000 to $500,000. The 
Commission is also proposing to delete Instruction No. 3 and to revise 
Instruction No. 2 to read as follows: In column (a), list every item 
amounting to $500,000 or more. For creditors whose balances were less 
than $500,000, a single entry may be made under a caption ``Minor 
accounts, less than $500,000. Raising the reporting threshold to 
$500,000 will provide consistent reporting requirements in the future 
for both payables from and receivables to affiliated companies. The 
data reported with a higher threshold should be sufficient for 
Commission purposes and the new threshold should further reduce 
respondent burdens. If there is a need for a more detailed breakdown of 
affiliated company payables for a rate proceeding, settlement, or 
hearing the Commission

[[Page 50383]]

or its Staff could request additional information at that time.
13. Analysis of Federal Income and Other Taxes Deferred (Pages 230-231)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to annually report 
Federal Income and Other Taxes Deferred data on the Form 6. The 
instructions on page 230, however, currently require pipelines to 
follow outdated Accounting Principles Board Opinion No. 11 (APB 11) 
requirements when reporting this data.
    Industry Comments. The AOPL recommends the Commission eliminate 
this page since pipelines would adequately disclose this information on 
the GAAP financial statements and notes of taxable entities.
    Various Shipper Interests oppose eliminating this page because this 
page contains essential elements for the ratemaking process. 
Additionally, since some of the reporting pipelines are not taxable 
entities, their information need 43 companies reported payables from 
affiliated companies less than or equal to $1,000,000. Of those 43 
companies, 26 companies reported payables from affiliated companies 
less than or equal to $250,000 and 34 reported payables from affiliated 
companies less than or equal to $500,000. Therefore, increasing the 
reporting threshold from $250,000 to $500,000 would eliminate 8 (34-26) 
companies from filing page 225 in detail. Based on the results of our 
review, the Commission is proposing to raise the reporting threshold 
from $250,000 to $500,000. The Commission is also proposing to delete 
Instruction No. 3 and to revise Instruction No. 2 to read as follows: 
In column (a), list every item amounting to $500,000 or more. For 
creditors whose balances were less than $500,000, a single entry may be 
made under a caption ``Minor accounts, less than $500,000. Raising the 
reporting threshold to $500,000 will provide consistent reporting 
requirements in the future for both payables from and receivables to 
affiliated companies. The data reported with a higher threshold should 
be sufficient for Commission purposes and the new threshold should 
further reduce respondent burdens. If there is a need for a more 
detailed breakdown of affiliated company payables for a rate 
proceeding, settlement, or hearing the Commission or its Staff could 
request additional information at that time.
13. Analysis of Federal Income and Other Taxes Deferred (Pages 230-231)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to annually report 
Federal Income and Other Taxes Deferred data on the Form 6. The 
instructions on page 230, however, currently require pipelines to 
follow outdated Accounting Principles Board Opinion No. 11 (APB 11) 
requirements when reporting this data.
    Industry Comments. The AOPL recommends the Commission eliminate 
this page since pipelines would adequately disclose this information on 
the GAAP financial statements and notes of taxable entities.
    Various Shipper Interests oppose eliminating this page because this 
page contains essential elements for the ratemaking process. 
Additionally, since some of the reporting pipelines are not taxable 
entities, their information ??l tariff may apply to the movements of 
only one Shipper, or it may be a tariff used by multiple Shippers. All 
Shippers are in competition with each other. For this reason, section 
15(13) of the Interstate Commerce Act makes it illegal for a pipeline 
to divulge any information regarding a Shipper's volumes, routing, or 
other information that would constitute sensitive business information. 
To do so can be rewarded with fines and/or jail time.
    Refinery Holding Company, L.P. recommends the following information 
be added to page 700 to assist Shippers in accurately assessing the 
justness and reasonableness of a rate under the 154-B methodology: 
Composite depreciation rate and base, last approved rate of return, 
debt-equity ratio, operations and maintenance expense actually incurred 
(not including reserves created), capital structure, SRB write-up and 
annual amortization, inflation adjustment rate used if different from 
the FERC index rate. Now that revised complaint procedures require a 
complainant to make detailed allegations in the original petition and 
support them with calculations and documentation this information is 
needed so a complaint is not rejected by the Commission. Rule 206(4) 
now requires a complaining party to ``make a good faith effort to 
quantify the financial impact or burden created for the complainant as 
a result of the action or inaction'' complained of. It is no longer 
adequate to allege in the complaint that the pipeline is overcharging.
    AOPL states the revenue and cost of service information Shippers 
need to challenge a pipeline company's application of the index is 
filed on page 700 of the Form 6. Shippers, however, have access to 
information necessary to contest every pipeline filing without having 
to resort to information in the Form 6. If a Shipper or potential 
Shipper disagrees with a ``negotiated'' rate, it may file a statement 
with the Commission stating the pipeline must withdraw the rate or 
defend it using a cost-of-service methodology. Additionally, the public 
version of a pipeline filing requesting market-based rate treatment and 
requests for cost service treatment are supplied to all Shippers.
    Sinclair Oil Corporation; ARCO Products Company, Tosco Corporation 
and Ultramar Inc.; and Various Shipper Interests also recommend page 
700 be revised to correct the existing mismatch in reporting of 
revenues and expenses. They recommend the operating revenues be revised 
to report total company revenues to match total company cost of 
service.
    Additionally, Sinclair Oil Corporation and ARCO Products Company, 
Tosco Corporation and Ultramar Inc. recommend the workpapers showing 
the derivation of the cost of service be included in the Form 6 or made 
available to customers upon request. Such a requirement would impose 
almost no additional burden on pipeline companies since they already 
must perform cost of service supporting calculations. The inclusion of 
this data, however, would help Shippers greatly in analyzing a 
pipeline's cost of service.
    Commission's Proposal. The current state of oil pipeline regulation 
calls for the Commission and its Staff to play a less active role in 
terms of monitoring and oversight regarding pipeline rates and 
practices, and for oil pipeline Shippers to play a more active role in 
monitoring and alerting the Commission to rate and tariff abuses.\48\ 
Given the shift in responsibilities, it is imperative that oil pipeline 
Shippers have the information they need in order to make

[[Page 50384]]

informed analyses and judgements regarding the pipelines they use (or 
may use). This is particularly true given the fact that many oil 
pipeline companies have affiliates who ship over the pipeline's 
capacity and affiliates who compete directly with other Shippers over 
that same line.
---------------------------------------------------------------------------

    \48\ Order No. 561, Revisions to Oil Pipeline Regulations 
Pursuant to the Energy Policy Act of 1992, FERC Stats. & Regs [Regs. 
Preambles, 1991-1996] para. 30,985 at 30,947-48 (1993) (it is 
expected that data will be available to the public and to the 
Commission which will allow determinations to be made as to the 
reasonableness of increases produced by the application of the 
index; cost data included in Form No. 6 can be used by an interested 
person to form the basis of a complaint or protest that the increase 
sought under any of the methodologies is not justified), and 30,955-
56 (a protest must allege reasonable grounds for believing that the 
discrepancy between the actual cost increase to the pipeline and the 
proposed change in rate is so substantial that the proposed rate 
change is not just and reasonable within the meaning of the ICA; 
Form No. 6 data are available to all parties to challenge a 
pipeline's rate increase).
---------------------------------------------------------------------------

    The burden upon Shippers to perform their own assessments, and thus 
their need for Form 6 information, has not abated since Order Nos. 561 
and 571. If anything, the need for information has increased. The 
Commission has begun interpreting what is required for Shippers to 
demonstrate the ``substantial change in economic circumstances'' 
necessary to challenge rates.\49\ For example, in SFPP, the Commission 
refers to the need for Shippers to address the ``economic basis'' of 
the rates they challenge, and suggests that the rate elements 
???initions 30 (g) and ???e they are aggregated, and separately analyze 
rates. Specific functionalization issues arose in the Williams \37\ and 
SFPP would not appear on the GAAP financial statements of taxable 
entities.
    Sinclair Oil Corporation supports revising page 230 to adopt 
Statement of Financial Accounting Standards No. 109 (SFAS 109) use of 
the liability method for deferred taxes.
    Commission's Proposal. The Commission is proposing to continue to 
require jurisdictional oil pipeline companies to file the Form 6 in 
lieu of GAAP financial statement.\35\ As such, the Commission is 
proposing to continue to require jurisdictional oil pipeline companies 
to file pages 230-231. The Commission uses the data on the page for 
auditing comparisons among various companies, and for decisionmaking in 
its rate proceedings. However, the Commission is proposing to update 
page 230 to include the current SFAS 109 reporting requirements. SFAS 
109 adopted a liability approach for determining deferred income taxes 
rather than the previously used deferral method under APB 11. The 
structure of page 230 is generally consistent with the liability 
approach used for accounting for income taxes under GAAP, however, the 
Commission is proposing to revise the terminology which still refers to 
the deferral method of accounting for income taxes.
---------------------------------------------------------------------------

    \35\ See NOPR, Roman Numeral III, No. 19 (b)--Form 6 Reporting 
Alternatives.
---------------------------------------------------------------------------

    Additionally, the Commission is proposing to revise the following 
18 CFR Part 352 accounting regulations to make them consistent with the 
SFAS 109 liability method of accounting for income taxes: Definition 
No. 30, Income Taxes; General Instruction 1-12, Accounting for Income 
Taxes; Account 19-5, Deferred Income Tax Charges; Account 45, 
Accumulated Deferred Income Tax Charges; Account 59, Deferred Income 
Tax Credits; Account 64, Accumulated Deferred Income Tax Credits; 
Account 671, Provision for Deferred Taxes; Account 695, Income Taxes on 
Extraordinary Items; and Account 696, Provision for Deferred Taxes--
Extraordinary Items.\36\
---------------------------------------------------------------------------

    \36\ See NOPR, Roman Numeral IV, A--Changes in the Application 
of GAAP, No. 5.
---------------------------------------------------------------------------

    As a result of these changes, the Commission is also proposing to 
revise the Form 6 titles for Balance Sheet Accounts 19-5 and 45 and 
Income Statement Accounts 59 and 64 on pages 110-114.
14. Operating Revenue Accounts (Account 600) (Page 301)
    Current Requirement. The Commission's regulations currently require 
jurisdictional oil pipeline companies to report revenue by crude and 
products and to identify whether the revenue is associated with 
gathering, trunk, or delivery services.
    Industry Comments. The AOPL recommends the Commission eliminate the 
distinction between crude and products revenue and provide comparative 
disclosure (i.e., current year versus prior year and variance). AOPL 
states the distinction dates back to the Department of Justice Consent 
Decree which allowed different rates of return for the two types of 
pipelines and is no longer needed with today's Commission 
methodologies. Also, those companies that manage systems on crude and 
products basis should already capture this information in GAAP 
financial statements according to SFAS 131.
    Sinclair Oil Corporation opposes eliminating the distinction 
between crude oil and products services. Although pipelines may not 
always differentiate between crude oil and petroleum product lines for 
the purposes of their financial record keeping, the distinction between 
the two types of lines is reasonable and necessary in an operational 
sense. Crude oil and product lines have different operating costs and 
characteristics. They are usually physically distinct, serve entirely 
different markets, and each type of line has different costs associated 
with it. Additionally, the Commission's regulations require Shippers to 
file complaints and protests against an individual tariff. Pipeline 
operational data that distinguishes between crude oil and petroleum 
product lines serves as a useful tool for Shippers in evaluating the 
reasonableness of a tariff. This information is beneficial to Shippers 
who must evaluate the operating revenues incurred by different pipeline 
companies. The data must be maintained to preserve the ability of 
complainants to support their case using Form 6 data.
    Sinclair Oil Corporation, however, recommends the Commission 
aggregate the trunk, gathering, and delivery services distinctions 
currently appearing on Form 6. These particular categories have rarely 
been relevant to an analysis of the pipeline industry.
    Commission's Proposal. The Commission is proposing to continue to 
require jurisdictional oil pipeline companies to report operating 
revenues by crude and products and identify whether the revenue is 
associated with gathering, trunk, or delivery services. Keeping the 
revenue accounts reported by crude and products and between gathering, 
trunk, and delivery services coincides with the carrier property and 
expense accounts, and enables the Commission and other interested 
parties to match costs with revenues. Lumping all pipeline expenses 
into one category or function in the Form 6 would make it very 
difficult to properly separate the costs, functionalize them once they 
are aggregated, and separately analyze rates. Specific 
functionalization issues arose in the Williams \37\ and SFPP \38\ 
cases. Moreover, this type of distinction in information is useful for 
analyzing and making jurisdictional determinations, such as occurred in 
Texaco Refining and Marketing v. SFPP, 80 FERC para. 61,200 (1997), 
Lakehead Pipe Line Co., 71 FERC para. 61,338 at 62,324-26 (1995), and 
SFPP, supra at 61,074. Issues concerning the propriety of pipeline 
functionalizations are not uncommon to oil pipelines, and this 
information should continue to be available to Shippers in the Form 6.
---------------------------------------------------------------------------

    \37\ See, Williams Pipe Line Co., 84 FERC para. 61,022 at 
61,109-110 (1998).
    \38\ SFPP L.P., 86 FERC para. 61,022 at 61,080 (1999).
---------------------------------------------------------------------------

    Additionally, the Commission does not see the benefit of revising 
page 301 to require pipelines to report the prior year revenues next to 
the current year revenues and report the variance. This will not 
provide the Commission any additional information it doesn't already 
have. If the Commission needs to compare the current and prior year 
revenues of a company it can retrieve

[[Page 50385]]

the company's prior year Form 6 filing and perform the calculation.
    The Commission, however, is proposing to add a separate table to 
the bottom of page 301 to provide a standard format for pipelines to 
report interstate and intrastate revenue information which is currently 
reported as a footnote. The Commission believes a standard format will 
make it easier for the pipelines to report this information in the 
proposed electronic format.\39\
---------------------------------------------------------------------------

    \39\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 19(a).
---------------------------------------------------------------------------

15. Operating Expense Accounts (Account 610) (Pages 302-304)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to report operating 
expenses by Operations, Maintenance, and General classes of operating 
costs.
    Additionally, the Commission requires operating cost to be reported 
by crude and products and to identify whether the expense is associated 
with Gathering, Trunk, or Delivery services.
    Industry Comments. The AOPL and Kaneb Pipe Line Company, L.P. 
recommend the Commission consolidate FERC Accounts 300 (Operations), 
400 (Maintenance), and 500 (General). Additionally, the AOPL suggests 
that one account series be chosen for reporting purposes and these 
numbers should be reported on page 304. The only reported line items 
that would be affected are salaries and wages (300, 400, 500), supplies 
and expenses (310, 410, 510), and outside services (320, 420, 520). All 
other Operating Expense Accounts line items are unique, so that rolling 
them into one category would have no impact. The breakdown of operating 
expenses is burdensome, of no apparent regulatory use, and forces 
companies to engage in an artificial allocation that would not be made 
absent the FERC requirement. Consolidating these operating cost codes 
would greatly simplify the reporting process, accounting systems, and 
provide more relevant information on a company's total operating costs.
    Sinclair Oil Corporation recommends consolidating the operating and 
maintenance accounts and dividing the expenses into two basic 
categories: direct and indirect, with appropriate subcategories in each 
grouping. This will provide a more accurate division of expenses 
between direct operating and maintenance expenses as opposed to 
indirect or overhead expenses. However, if the Commission wishes to 
retain the operations, maintenance and general categories, Sinclair Oil 
Corporation recommends the cost line items be standardized across these 
categories so that they match.
    The AOPL recommends the Commission eliminate the distinction 
between crude and products and between gathering, trunk, and delivery 
services but proposes to add a comparative disclosure of the prior 
year's numbers and exclude from the pages amounts already specified on 
GAAP financial statements, such as depreciation and power.
    Sinclair Oil Corporation agrees with aggregating the trunk, 
gathering, and delivery services distinctions currently appearing on 
Form 6. These particular categories have rarely been relevant to an 
analysis of the pipeline industry.
    Sinclair Oil Corporation and various Shippers, however, oppose 
eliminating the distinction between crude oil and products. Although 
pipelines may not always differentiate between crude oil and petroleum 
product lines for the purposes of their financial record keeping, the 
distinction between the two types of lines is reasonable and necessary 
in an operational sense. Crude oil and product lines have different 
operating costs and characteristics. They are usually physically 
distinct and serve entirely different markets in practical usage. 
Additionally, each type of line has differing costs associated with it. 
Also, the Commission's regulations require Shippers to file complaints 
and protests against an individual tariff. Consequently, pipeline 
operational data that distinguishes between crude oil and petroleum 
product lines serves as a very useful tool for Shippers in evaluating 
the reasonableness of a tariff. This information is beneficial to 
Shippers that must evaluate the operating expenses incurred by 
different pipeline companies and must be maintained to preserve the 
ability of complainants to bring a rate case using the Form 6.
    Commission's Proposal. The Commission is proposing to continue to 
require jurisdictional oil pipeline companies to report operating cost 
by crude and products and among gathering, trunk, and delivery 
services. However, the Commission is proposing to delete column (f) on 
page 303 because companies don't typically gather products at the 
refinery. The Commission is also proposing to delete page 304, but add 
column (i) to page 303 for companies to report the grand total of their 
operating expense accounts. The Commission is also proposing to 
consolidate the operating and maintenance accounts and revise the 
operating expense accounts as follows:
    a. Eliminate Accounts 400, 410, 420, and 430;
    b. Redefine the definitions for Accounts 300, 310, and 320 to 
include both operations and maintenance expenses;
    c. Rename Account 310 ``Materials and Supplies'' and redefine its 
definition to include the items previous reported in Accounts 310, 410, 
and 430 except other expenses (i.e., the expenses of aircraft and 
vehicle operations; travel and other expenses of operating employees; 
and other related operations and maintenance expenses).
    d. Add Accounts 350 Rentals and 390 Other Expenses. The Commission 
is proposing to include only those rental expenses related to 
operations and maintenance in Account 350. This should enable oil 
pipeline companies to more accurately report their operating and 
maintenance expenses. The Commission is proposing to create Account 390 
to record the other expense items that are currently reported in 
Accounts 310 and 410 (i.e., the expenses of aircraft and vehicle 
operations; travel and other expenses of operating employees; and other 
related operations and maintenance expenses). These other expenses no 
longer apply to the renamed Account 310 so the Commission is proposing 
to report these expenses separately.
    e. Rename Account 510 ``Materials and Supplies'' and redefine its 
definition to include materials and the items previously reported in 
Account 510 except other expenses (i.e., the expenses of aircraft and 
vehicle operations; travel and other expenses of operating employees; 
and other related operations and maintenance expenses).
    f. Redefine Account 530. The Commission is proposing to include 
only those rental expenses related to general operations in Account 
530.
    g. Rename Account 550 ``Employee Benefits'' to better reflect the 
information reported in this account.
    h. Add Account 590 Other Expenses. The Commission is proposing to 
create this account to record the other expense items that are 
currently reported in Account 510 (i.e., the expenses of aircraft and 
vehicles used for general purposes; travel and other expenses of 
general employees and offices; utilities services; and all other 
incidental general expenses). These other expenses no longer apply to 
renamed Account 510 so the Commission is proposing to report these 
expenses separately.
    The Commission believes revising the operations, maintenance, and 
general operating expenses as proposed above will eliminate the 
interpretations problems companies have had in the past categorizing 
expenses between operations and maintenance. It will also

[[Page 50386]]

greatly simplify both the reporting process and accounting systems.
    Also, keeping the expense accounts reported by crude and products 
and between gathering, trunk, and delivery services coincides with the 
carrier property and revenue accounts, and enables the Commission and 
other interested parties to match costs with revenues. Moreover, 
Commission policy generally requires that cost incurrence follow cost 
responsibility.\40\ Lumping all pipeline expenses into one category or 
function in the Form 6 would make it very difficult to properly 
separate the costs, or to functionalize them once they are aggregated, 
in order to separately analyze rates. Moreover, this type of 
distinction in information is useful for analyzing and making 
jurisdictional determinations.
---------------------------------------------------------------------------

    \40\ See, Williams Pipe Line Co., 84 FERC para. 61,022 at 
61,109-110 (1998).
---------------------------------------------------------------------------

16. Income From Noncarrier Property (Page 335), Interest and Dividend 
Income (Page 336), and Miscellaneous Items in Income and Retained 
Income Accounts for the Year (Page 337)
    Current Requirements. The Commission's regulations currently 
require jurisdictional oil pipeline companies to report detailed 
information about income from noncarrier property, interest and 
dividend income, and miscellaneous items in income and retained income 
accounts for the year on separate pages of the Form 6.
    Industry Comments. AOPL proposes the Commission aggregate pages 
335-337 to support other income (expenses) already reported on GAAP 
financial statements. The Commission could require further detail as 
necessary through the use of supplement sheets.
    Kaneb Pipeline Company, L.P. proposes the disclosure of noncarrier 
property items on page 335 be limited to a single line entry in the 
Income Statement since the Commission, by definition, does not have 
regulatory authority over noncarrrier activities. The detail required 
on page 335 appears to be more than required and lacks a standard 
format.
    Commission's Proposal. The Commission is proposing to continue to 
require jurisdictional oil pipeline companies to file the Form 6 in 
lieu of GAAP financial statements.\41\ The Commission is proposing to 
continue to require jurisdictional oil pipeline companies to report the 
information on pages 335, 336, and 337 as currently required. The 
Commission is not proposing to revise page 335 to create a standard 
format for reporting income from noncarrier property. A standard format 
would be too cumbersome since the term ``noncarrier'' includes anything 
that is not carrier.
---------------------------------------------------------------------------

    \41\ See NOPR, Roman Numeral III, No. 19(b)--Form 6 Reporting 
Alternatives.
---------------------------------------------------------------------------

    Unlike Shippers in the natural gas and electric industries 
regulated by the Commission, oil pipeline Shippers bear the burden in 
most instances of proving that proposed rate changes are unjust and 
unreasonable. Moreover, any time a Shipper attempts to justify a 
complaint against an existing or grandfathered rate, it must satisfy a 
substantial evidentiary burden before it will even be granted a hearing 
and formal discovery rights. This burden requires an in-depth analysis 
of an oil pipeline's cost and revenue data. Thus, since most of the 
relevant information is not presented elsewhere, sufficient information 
must be made available in the Form 6.
    The information provided on page 335 is useful to the Commission, 
and vital to Shippers in order to evaluate the proper separation of 
carrier and non carrier revenues and expenses. This information is 
required to allow Shippers to properly analyze proposed or existing 
rates.
    In addition, pages 336 and 337 provide the Commission and Shippers 
with a detailed analysis of certain income and retained earnings 
accounts not provided on any other pages. The information on these 
pages provides data essential to Shippers when analyzing an oil 
pipeline's financial statement. The data required to be filed on page 
336 becomes a key element in any complaint when used to assess a 
pipeline's profitability as measured by its earned equity return. It is 
particularly important to know whether income other than operating 
income is from sources in which the subject pipeline has some control, 
such as income from Securities Investments in Affiliated Companies.
    Similarly, the data on page 337 is useful in order to determine 
gains or losses on reacquired debt in order to compute debt costs. All 
the information described above is essential to conducting the kind of 
thorough analyses which the Commission requires of any oil pipeline 
Shipper who attempts to contest an existing rate, or proposed rate.
17. Statistics of Operations (Pages 600-601) and Miles of Pipeline 
Operated at End of Year (Pages 602-603)
    Current Requirements. The Commission's regulations currently 
require undivided joint interest oil pipeline companies to report 
information inconsistently between pages 600-601 and 602-603. The 
instructions on pages 602-603 indicate that mileage for undivided joint 
interest pipelines is not to be included where the pipeline is operated 
by another entity. No such limitation applies to pages 600 and 601.
    Industry Comments. Sinclair Oil Corporation recommends the 
Commission revise pages 600-603 so each individual owner of an 
undivided interest pipeline report its volumes and pipeline mileage 
separately on both pages to ensure that the data reported in barrel 
miles and miles of pipeline are reported uniformly. Sinclair states 
that the instructions on pages 600-601 do not state on pages 602-603 
that the volumes of crude oil and other liquids shipped on undivided 
interest pipelines are not to be included where the pipeline is 
operated by another entity.
    Commission's Proposal. Based on the proposed changes to definitions 
of ``crude oil'' and ``system property,'' \42\ the Commission is 
proposing to eliminate Instruction No. 2 on page 600 and on pages 600-
603 delete the word ``system'' entirely or replace the term ``system'' 
with ``pipeline'' as appropriate.
---------------------------------------------------------------------------

    \42\ See NOPR, Roman Numeral III, Section B--Form 6 Revisions, 
No. 2(a) and (b).
---------------------------------------------------------------------------

    The Commission is also proposing to renumber Instruction No. 3 on 
page 600 to No. 2 and add the sentence ``Any barrels received into a 
pipeline owned by the respondent, but operated by others, should not be 
included on this schedule.'' Additionally, the Commission is proposing 
to renumber Instruction No. 4 on page 600 to No. 3 and add the sentence 
``Any barrels delivered out of a pipeline owned by the respondent, but 
operated by others, should not be included on this schedule.'' If a 
pipeline owns several undivided joint interest pipelines, it would be 
required to separately submit volumes for each entity. Many undivided 
joint interest pipelines already file this information separately so 
this clarification should only apply to a few companies.
    The Commission believes these changes will clarify how pipelines 
should report the volumes of crude oil and other liquids shipped on 
undivided interest pipelines on pages 600-601 so there is less 
redundancy and improved industry reporting.
18. Annual Cost of Service Based Analysis Schedule (Page 700)
    Current Requirements. The Commission addressed revisions to the 
Form 6 in Order Nos. 571 and 571-A,\43\

[[Page 50387]]

including adding a new page 700.\44\ Page 700 of the Form 6 currently 
requires that a pipeline only provide single amounts for total annual 
cost of service (as calculated under the Order No. 154-B methodology), 
operating revenues, throughput in barrels and throughput in barrel-
miles.\45\ At that time, many of the requirements formerly included in 
the Form 6 were reduced or eliminated and the information now required 
to be included in the Form 6 was determined to be the minimum necessary 
``to provide at least a preliminary basis for Shipper assessments of 
filed rate changes under Order No. 561.'' \46\ Recently, however, the 
Commission revised Rule 206 of its Rules of Practice and Procedure 
outlining specific minimal information requirements complainants must 
now file before a protest or complaint will be reviewed by the 
Commission.\47\
---------------------------------------------------------------------------

    \43\ Cost of Service Reporting and Filing Requirements for Oil 
Pipelines, 59 FR 59137 (Nov. 16, 1994), FERC Stats. & Regs. [Regs. 
Preambles, 1991-1996] para. 31,006 (Oct. 28, 1994); 60 FR 356 (Jan. 
4, 1995), FERC Stats. & Regs. [Regs. Preambles, 1991-1996] para. 
31,012 (Dec. 28, 1994).
    \44\ Id. at 31,168-70.
    \45\ Order No. 571 at 31,168.
    \46\ Cost of Service Reporting and Filing Requirements for Oil 
Pipelines, 59 FR 59137 (Nov. 16, 1994), FERC Stats. & Regs. [Regs. 
Preambles, 1991-1996] para. 31,006 at 31,169 (Oct. 28, 1994); 60 FR 
356 (Jan. 4, 1995), FERC Stats. & Regs. [Regs. Preambles, 1991-1996] 
para.31,012 (Dec. 28, 1994).
    \47\ Complaint Procedures, Order No. 602, 64 FR 17087 (Apr. 8, 
1999), III FERC Stats. & Regs. para. 31,072 at pages 21-23 and 50-52 
(Mar. 31, 1999); Order 602-A, 64 FR 43600 (Aug. 11, 1999) III FERC 
Stats. & Regs. para. 31,076 (July 28, 1999); Order No. 602-B, 64 FR 
53959 (Oct. 5, 1999), III FERC Stats. & Regs. para. 31,083 (Sept. 
29, 1999).
---------------------------------------------------------------------------

    Industry Comments. Sinclair Oil Corporation and Refinery Holding 
Company, L.P. recommend that page 700 be changed to report cost of 
service, revenue, and volume information on a tariff by tariff 
assessment, system-by-system, or segmented basis rather than a single 
company-wide computation. This will enable Shippers to file a complaint 
against a specific rate rather than all rates charged by a pipeline 
company since the burden of proof falls on Shippers when challenging a 
pipeline's rate that falls within the applicable index ceiling.
    AOPL opposes reporting data on a tariff by tariff assessment, 
system-by-system, or segmented basis. AOPL states that to break 
information down in this way would be extremely costly and burdensome 
and/or illegal. An individual pipeline may have hundreds of rates. Some 
may be negotiated rates or market based rates, and set so that revenues 
do not exceed Opinion No. 154-B revenue requirements. An individual 
tariff may apply to the movements of only one Shipper, or it may be a 
tariff used by multiple Shippers. All Shippers are in competition with 
each other. For this reason, section 15(13) of the Interstate Commerce 
Act makes it illegal for a pipeline to divulge any information 
regarding a Shipper's volumes, routing, or other information that would 
constitute sensitive business information. To do so can be rewarded 
with fines and/or jail time.
    Refinery Holding Company, L.P. recommends the following information 
be added to page 700 to assist Shippers in accurately assessing the 
justness and reasonableness of a rate under the 154-B methodology: 
Composite depreciation rate and base, last approved rate of return, 
debt-equity ratio, operations and maintenance expense actually incurred 
(not including reserves created), capital structure, SRB write-up and 
annual amortization, inflation adjustment rate used if different from 
the FERC index rate. Now that revised complaint procedures require a 
complainant to make detailed allegations in the original petition and 
support them with calculations and documentation this information is 
needed so a complaint is not rejected by the Commission. Rule 206(4) 
now requires a complaining party to ``make a good faith effort to 
quantify the financial impact or burden created for the complainant as 
a result of the action or inaction'' complained of. It is no longer 
adequate to allege in the complaint that the pipeline is overcharging.
    AOPL states the revenue and cost of service information Shippers 
need to challenge a pipeline company's application of the index is 
filed on page 700 of the Form 6. Shippers, however, have access to 
information necessary to contest every pipeline filing without having 
to resort to information in the Form 6. If a Shipper or potential 
Shipper disagrees with a ``negotiated'' rate, it may file a statement 
with the Commission stating the pipeline must withdraw the rate or 
defend it using a cost-of-service methodology. Additionally, the public 
version of a pipeline filing requesting market-based rate treatment and 
requests for cost service treatment are supplied to all Shippers.
    Sinclair Oil Corporation; ARCO Products Company, Tosco Corporation 
and Ultramar Inc.; and Various Shipper Interests also recommend page 
700 be revised to correct the existing mismatch in reporting of 
revenues and expenses. They recommend the operating revenues be revised 
to report total company revenues to match total company cost of 
service.
    Additionally, Sinclair Oil Corporation and ARCO Products Company, 
Tosco Corporation and Ultramar Inc. recommend the workpapers showing 
the derivation of the cost of service be included in the Form 6 or made 
available to customers upon request. Such a requirement would impose 
almost no additional burden on pipeline companies since they already 
must perform cost of service supporting calculations. The inclusion of 
this data, however, would help Shippers greatly in analyzing a 
pipeline's cost of service.
    Commission's Proposal. The current state of oil pipeline regulation 
calls for the Commission and its Staff to play a less active role in 
terms of monitoring and oversight regarding pipeline rates and 
practices, and for oil pipeline Shippers to play a more active role in 
monitoring and alerting the Commission to rate and tariff abuses.\48\ 
Given the shift in responsibilities, it is imperative that oil pipeline 
Shippers have the information they need in order to make informed 
analyses and judgements regarding the pipelines they use (or may use). 
This is particularly true given the fact that many oil pipeline 
companies have affiliates who ship over the pipeline's capacity and 
affiliates who compete directly with other Shippers over that same 
line.
---------------------------------------------------------------------------

    \48\ Order No. 561, Revisions to Oil Pipeline Regulations 
Pursuant to the Energy Policy Act of 1992, FERC Stats. & Regs [Regs. 
Preambles, 1991-1996] para. 30,985 at 30,947-48 (1993) (it is 
expected that data will be available to the public and to the 
Commission which will allow determinations to be made as to the 
reasonableness of increases produced by the application of the 
index; cost data included in Form No. 6 can be used by an interested 
person to form the basis of a complaint or protest that the increase 
sought under any of the methodologies is not justified), and 30,955-
56 (a protest must allege reasonable grounds for believing that the 
discrepancy between the actual cost increase to the pipeline and the 
proposed change in rate is so substantial that the proposed rate 
change is not just and reasonable within the meaning of the ICA; 
Form No. 6 data are available to all parties to challenge a 
pipeline's rate increase).
---------------------------------------------------------------------------

    The burden upon Shippers to perform their own assessments, and thus 
their need for Form 6 information, has not abated since Order Nos. 561 
and 571. If anything, the need for information has increased. The 
Commission has begun interpreting what is required for Shippers to 
demonstrate the ``substantial change in economic circumstances'' 
necessary to challenge rates.\49\ For example, in SFPP, the Commission 
refers to the need for Shippers to address the ``economic basis'' of 
the rates they challenge, and suggests that the rate elements that 
affect the economic basis for most rates are volumes, asset base, 
operating, and perhaps capital costs. A Shipper must

[[Page 50388]]

not only show that a substantial change has occurred in at least one of 
these elements, but it must also explain why this change is likely to 
have rendered the existing rate unjust and unreasonable.\50\ In SFPP, 
although the Shippers had access to much information in addition to 
that provided in the Form 6, and the Commission recognized that:
---------------------------------------------------------------------------

    \49\ See, Santee Distribution Co. v. Dixie Pipeline Co., 75 FERC 
para. 61,254 at 61,821 (1996); SFPP L.P., 86 FERC para. 61,022 at 
61,063-072 (1999).
    \50\ Id. at 61,066-067.
---------------------------------------------------------------------------

[i]n the instant case it would have been difficult for a complaining 
party to attack an existing rate based on a settlement without 
access to information about the costs, revenues, and volumes that 
underlie SFPP's settlement rates.\51\
---------------------------------------------------------------------------

    \51\ Id. at 61,072.

Additionally, recent revisions to Rule 206 \52\ outline specific 
information a Shipper must now file before a complaint or protest will 
be reviewed by the Commission.
---------------------------------------------------------------------------

    \52\ Complaint Procedures, Order No. 602, 64 FR 17087 (Apr. 8, 
1999), III FERC Stats. & Regs. para. 31,072 at pages 21-23 and 50-52 
(Mar. 31, 1999); Order 602-A, 64 FR 43600 (Aug. 11, 1999) III FERC 
Stats. & Regs. para. 31,076 (July 28, 1999); Order No. 602-B, 64 FR 
53959 (Oct. 5, 1999), III FERC Stats. & Regs. para. 31,083 (Sept. 
29, 1999).
---------------------------------------------------------------------------

    Shippers need more information than that contained in the Form 6 to 
sustain a complaint or protest, not less. For these reasons, the 
Commission is proposing to revise Instruction No. 3 on page 700 to 
require oil pipeline companies to report total company revenues to be 
consistent with the total cost of service currently required. This 
should eliminate the confusion caused by companies comparing the 
operating revenues of the pipeline service to the total company cost of 
service.
    The Commission is not proposing to require oil pipelines companies 
to provide information on a system-by-system, tariff by tariff, or 
segmented basis as this would be extremely burdensome for the industry 
and in some instances would make the Form 6 voluminous. However, the 
Commission is proposing to add the following reporting requirements: 
Operating and maintenance expenses, depreciation expense, AFUDC 
depreciation, amortization of deferred earnings, rate base, rate of 
return, return on rate base, and income tax allowance.
    The Commission believes these additional requirements are merely a 
change in the number of line items reported on page 700 and could be 
provided with little or no additional burden since companies already 
calculate the data to determine the total cost of service reported. The 
Commission is also proposing to add Instruction No. 7 to page 700 which 
states subject to Commission discretion (e.g., under certain 
circumstances in a complaint proceeding), a pipeline company may need 
to make its cost of service work papers available for inspection upon 
request.
    The Commission believes, in light of the burden placed upon oil 
pipeline Shippers to identify unreasonable rates and practices, the 
Form 6 should contain the additional information proposed on page 700. 
Such information would be invaluable in assisting Shippers to 
understand and evaluate how the cost of service was prepared and 
provide the additional information Shippers need to satisfy the minimum 
filing requirements now required to file a protest or complaint 
considered by the Commission.
19. Miscellaneous Items
a. Electronic Filing of Form 6
    Current Requirements. The Commission, in the exercise of its 
authority under the Interstate Commerce Act,\53\ collects data 
pertaining to the oil industry in the United States. One of the 
principal forms used for collection of this information is Form 6, 
which is submitted annually by about 159 oil pipeline companies. The 
Form 6 is currently submitted in a paper or hardcopy format. Form 6 
respondents must file an original and three hard copies annually with 
the Office of the Secretary.\54\
---------------------------------------------------------------------------

    \53\ 49 U.S.C. 20.
    \54\ FERC Form 6, p. i, Instruction Nos. II and III.
---------------------------------------------------------------------------

    During the course of the past year, the Commission has worked to 
develop procedures for filing the Form 6 electronically. During the 
Staff Technical Conference on September 21, 1999, several oil pipeline 
companies volunteered to participate in an electronic filing pilot 
program. The volunteers have been extremely supportive and responsive 
in providing the Commission comments as it continues to develop the 
appropriate software package to provide electronic filing for Form 6.
    Industry Comments. The AOPL supports the FERC's efforts to develop 
a version of the Form 6 that may be filed electronically and is 
amenable to filing in both paper and electronic format for the first 
year, with the goal of only filing electronically in future years.
    Sinclair Oil Corporation supports electronic filing as it will 
simplify Form 6 reporting by the industry, increase public 
accessibility of Form 6 data, and decrease the amount of data entry 
errors that have appeared in the Form 6 in the past.
    Chevron Pipe Line Company also supports the electronic filing of 
the Form 6, if it can be accomplished without requiring oil pipeline 
companies to invest in costly new software solely for the purpose of 
the Form 6 filing.
    Commission's Proposal. The Commission is proposing to require 
electronic filing of the Form 6 in addition to the currently required 
number of paper copies commencing with the report for calendar year 
2000, due on or before March 31, 2001. To facilitate a smooth 
transition for industry, the Commission is inviting any additional 
parties interested in participating in the pilot program to contact 
Bolton Pierce in the Office of the Chief Information Officer at (202) 
255-5465 or [email protected].
    The Commission is proposing to use a Windows 95/98/NT version 
software and to provide software distribution, set-up, updates, and 
submission of the electronic filing via the Internet. The Commission is 
also proposing to provide access to the Form 6 filings for viewing and 
printing via the Internet.
    In order to disseminate information on the software and to keep 
interested parties aware of development status, the Commission is 
proposing to create a point-of-contact list for companies that file 
Form 6, other federal agencies, and state commissions. The Commission 
is proposing the point-of-contact information include: name, company/
agency, address, phone number, and e-mail address, and be submitted via 
the Internet by accessing a form on the Commission's web site or by 
filing a paper copy.
    Additionally, the Commission is proposing that persons who submit 
Form 6 either for their company, or as an agent for another company, 
register to get an Access Number(s) in order to file using the 
software. Federal and state agencies and others who access or use the 
data would not need an Access Number. The Commission is also proposing 
to add instructions to pages i and ii for filing the Form 6 
electronically.\55\ The Commission invites comments on the 
implementation of electronic filing for the revised Form 6. The 
Commission believes that the automation of Form 6 filing will yield 
significant benefits, including more timely analysis and publication of 
data, increased data analysis capability, reduced cost of data entry 
and retrieval, simplification of form design, and overall reduction of 
reporting burden.
---------------------------------------------------------------------------

    \55\ FERC Form 6, Pages i and ii, Roman Numerals III and VIII.

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

[[Page 50389]]

b. Form 6 Reporting Alternatives
    Current Requirements. The Commission's regulations currently 
require each pipeline carrier subject to the provisions of section 20 
of the Interstate Commerce Act whose annual jurisdictional operating 
revenues have been more than $350,000 for each of the three previous 
calendar years to prepare and file a Form 6 with the Commission on or 
before March 31st of each year for the previous calendar year. Carriers 
exempt from filing the Form 6, however, must prepare and file page 700 
``Annual cost of Service Based Analysis Schedule'' and page 1 
``Identification and Attestation'' schedule of the Form 6 on or before 
March 31 of each year.\56\ Additionally, the Commission currently 
authorizes carriers to prepare and publish financial statements in 
reports to stockholders and others, except in reports to the 
Commission, based on generally accepted accounting principles.\57\
---------------------------------------------------------------------------

    \56\ 18 CFR 357.2 and FERC Form 6, Page i, Roman Numeral II.
    \57\ 18 CFR 351.1.
---------------------------------------------------------------------------

    Industry Comments. The AOPL and Chevron recommend the Commission 
move toward reporting data in accordance with GAAP, rather than the 
current Uniform Systems of Accounts (USofA) prescribed for oil 
pipelines. AOPL believes the bulk of the information now collected 
through the Form 6 would continue to be available by companies filing 
their financial statements and those pages of the Form 6 not covered by 
the financial statements. This change would substantially reduce the 
reporting burden on oil pipelines, since they would not have to contend 
with two often diametrically opposed accounting conventions. It would 
also reduce or eliminate additional regulatory burdens the industry 
incurs seeking approval to record transactions in accordance with GAAP.
    AOPL proposes to replace 28 out of the 43 pages in the Form 6 with 
GAAP financial statements and modify other pages to reflect these 
changes. AOPL states that at one time the Form 6 conformed to GAAP 
accounting, but was not modified as GAAP accounting conventions changed 
over time creating a costly and unnecessary differentiation between 
GAAP and USofA accounting.
    Sinclair Oil Corporation strongly opposes replacing the Form 6 
reporting pages with GAAP financial statements certified by external 
accountants. The USofA statements require a standard reporting format 
and consistent definitions for all items reported by the pipeline 
companies. Filing reports in GAAP format would eliminate any standard, 
uniform format increasing the analytical burden on Shipper, Commission 
Staff, and pipeline companies themselves to compare financial data 
across companies and within one company over time.
    Kaneb Pipe Line Operating Partnership, L.P. states that while the 
SEC Form 10-K requires much of the same financial information as the 
Form 6, it lacks a standard form. One of the benefits of the Form 6 has 
been its standard format. Analysis without some sort of standard format 
could be cumbersome and time consuming.
    Commission's Proposal. The Commission compared the Form 6 of a 
company to its GAAP financial statements to determine the feasibility 
of accepting GAAP financial statements in lieu of the Form 6. During 
our review, the Commission noted several differences between the 
information reported in each report. Information is reported in 
dissimilar categories and several detailed line items on the Form 6 are 
rolled up into larger, less specific line items on the GAAP financial 
statements. These differences make it difficult to correlate and 
compare data between reports for the same year.
    Additionally, not all pipeline companies currently produce 
externally audited financial reports. The Commission reviewed each 
jurisdictional company's structure to determine if the pipeline's 
financial statements would be certified by external accountants. Often 
the pipeline's operations are small and its financial information is 
rolled into the reporting company's financial statements. When this 
occurs, only the reporting company's financial statements are certified 
by the external accountants. The external accountants do not separately 
certify the pipeline's financial statements.
    Based on our review, we determined 93 of the 172 (54%) 
jurisdictional companies in 1998 were either integrated or joint 
venture (integrated) pipelines and may not have financial statements 
currently certified by the external accountants. If the Commission were 
to accept GAAP financial statements in lieu of the Form 6, these 93 oil 
pipeline companies would incur an additional regulatory burden to 
produce externally audited financial reports.
    For these reasons, the Commission is proposing to continue to 
require jurisdictional oil pipeline companies to file the Form 6 in 
lieu of GAAP financial statements. The Commission, however, does 
recognize the need to clarify and simplify the Form 6 and has proposed 
many changes to the Form 6 pages in this NOPR.\58\ Additionally, the 
Commission is proposing to update the USofA regulations to reflect the 
current Statements of Financial Accounting Standards.\59\
---------------------------------------------------------------------------

    \58\ See NOPR, Section B--Form 6 Revisions, Nos. 1-19.
    \59\ See NOPR, Roman Numeral IV, Section A--Changes in the 
Application of GAAP.
---------------------------------------------------------------------------

    The Commission believes the proposed Form 6 page changes will 
simplify the Form 6, reduce the overall reporting burden on pipeline 
companies, and result in more consistent industry reporting while 
providing the Commission the information it needs to regulate the oil 
industry.

IV. Revisions to the Uniform Systems of Accounts Regulations

    The Commission is also proposing to revise Part 352-- Uniform 
Systems of Accounts (USofA) for Oil Pipeline Companies subject to the 
provisions of the Interstate Commerce Act. These proposed changes will 
either clarify or update the Commission's accounting regulations in 
light of changes in standards issued by the Financial Accounting 
Standards Board (FASB) over the years. The changes are intended to 
promote consistency in accounting practices, while ensuring that the 
Commission will continue to have the information needed to carryout its 
regulatory responsibilities. Other proposed changes will streamline the 
aggregation of certain expense data because of changes in the 
Commission's monitoring efforts of the oil pipeline industry.

A. Changes in the Application of Generally Accepted Accounting 
Principles (GAAP)

    The Commission generally maintains its USofA in conformity with the 
standards issued by FASB. However, in cases where there are conflicts 
between FASB's standards and Commission ratemaking and oversight 
responsibilities, the Commission's USofA regulations differ from those 
standards.
    The Commission is proposing several changes to either clarify or 
update its USofA regulations in light of changes in standards issued by 
FASB over the years. Specifically, the Commission is proposing to 
revise its accounting regulations related to: (1) prior period 
adjustments; (2) contingent assets and liabilities; (3) accounting for 
improvements; (4) allowance for uncollectible accounts and (5) deferred 
income taxes.

[[Page 50390]]

1. Prior Period Adjustments
    Current Requirements. Under General Instruction 1-6(d), Prior 
Period Adjustments, the correction of an error in the financial 
statements of a prior period is required to be reported as a prior 
period adjustment. In addition, a change in certain accounting 
principles may be reflected as prior period adjustments with the 
approval of the Commission.
    Industry Comments. AOPL states the USofA only allows for the use of 
prior period adjustments for material correction of an error in a prior 
period financial statement. AOPL recommends that the Commission revise 
the USofA to allow for the recording of prior period adjustments under 
the additional criteria specified in GAAP.
    Commission's Proposal. Under GAAP, an adjustment of previously 
issued financial statements is required if there is a correction of an 
error in the financial statements of a prior period, a change in 
certain accounting principles or if an enterprise realizes the income 
tax benefits of a preacquisition loss carryforward of a purchased 
subsidiary. General Instruction 1-6(d) does not address recording a 
prior period adjustment for the income tax benefits of a preacquisition 
loss carryforward of a purchased subsidiary. Therefore, the Commission 
proposes to revise General Instruction 1-6(d) to clarify that carriers 
can record a prior period adjustment for the income tax benefits of a 
preacquisition loss carryforward of a purchased subsidiary.
2. Contingent Assets and Liabilities
    Current Requirements. Balance Sheet Account Instruction No. 2-7, 
Contingent assets and liabilities, currently requires that contingent 
assets and liabilities not be shown in the balance sheet but be 
explained in a footnote or supplementary statement.
    Industry Comments. AOPL states that GAAP allows for the accrual of 
contingent liabilities if certain conditions are met, while the USofA 
does not allow for such accruals. AOPL recommends that the Commission 
revise the USofA to allow for the accrual of contingent liabilities 
under the conditions specified in GAAP.
    Commission's Proposal. Under SFAS 5, Accounting for Contingencies, 
a loss contingency should be accrued if it is probable that an asset 
had been impaired or a liability incurred and the amount of the loss 
can be reasonably estimated. SFAS 5 requires disclosure of loss 
contingencies not meeting both those conditions if there is a 
reasonable possibility that a loss may have been incurred. The 
accounting provisions of SFAS 5 are consistent with the Commission's 
requirement that carriers keep their accounts using the accrual method 
of accounting. Therefore, the Commission is proposing to revise the 
instructions in Balance Sheet Account Instruction No. 2-7 to allow the 
accrual of loss contingencies if the conditions described in SFAS 5 are 
met.
3. Accounting for Improvements.
    Current Requirements. Carrier Property Instruction 3-5, 
Improvements, currently requires that property improvements be 
accounted for by charging the cost of the improvement to the 
appropriate property account, except that any labor expense is to be 
charged to maintenance expense.
    Industry Comments. AOPL states that GAAP allows for the 
capitalization of labor associated with improvements, while the USofA 
does not. AOPL recommends that the Commission revise the USofA to allow 
for the capitalization of labor associated with improvements.
    Commission's Proposal. According to Definition 18 of the USofA, 
improvements are alterations or changes in structural design of 
property which result in increased service life or efficiency. Under 
GAAP, expenditures to improve the efficiency or extend the life of an 
asset, including labor expense, are capitalized since the expenditures 
benefit the operations of more than one period. The capitalization of 
labor costs associated with property improvements allows for the proper 
recognition of these expenses to future periods. Therefore, the 
Commission is proposing to revise Carrier Property Instruction 3-5 to 
allow for the capitalization of labor associated with improvements.
4. Allowance for Uncollectible Accounts
    Current Requirements. Current USofA regulations provide for the 
write-off of uncollectible accounts at the time a specific account or 
note has definitely been established as uncollectible.
    Industry Comments. AOPL states that the USofA should allow the use 
of the allowance method of recognizing uncollectible accounts as 
provided for by GAAP. AOPL recommends that the Commission revise the 
USofA to allow the allowance method of recognizing uncollectible 
accounts.
    Commission's Proposal. GAAP requires companies, for financial 
statement purposes, to deduct asset valuation allowances \60\ for 
losses such as those on receivables from the assets or groups of assets 
to which the allowances relate, with appropriate disclosure. The use of 
a valuation allowance allows for a proper matching of revenues and 
expenses in the period in which revenue is earned. Therefore, the 
Commission is proposing to allow carriers the flexibility to use either 
the allowance method of recognizing uncollectible accounts or 
continuing to use the approach to write-off uncollectible accounts at 
the time they are determined to be uncollectible. Further, the 
Commission is proposing to create a new account entitled Account 14-5, 
Accumulated Provision for Uncollectible Accounts, to record allowances 
for uncollectible accounts.
---------------------------------------------------------------------------

    \60\ FASB Concepts Statement No. 6, Elements of Financial 
Statements, in paragraphs 34 and 43, defines a valuation allowance 
as a separate item that reduces or increases the carrying amount of 
an asset or liability. Valuation allowances are part of the related 
assets or liabilities and are neither assets nor liabilities in 
their own right.
---------------------------------------------------------------------------

5. Deferred Income Taxes
    Current Requirements. The current accounting instructions in the 
USofA require carriers to use comprehensive interperiod income tax 
allocation. The Commission's accounting and ratemaking treatment of 
income taxes is consistent with the liability approach of accounting 
for income taxes. However, some of the terminology in the USofA 
regulations still refer to the deferral method of accounting for income 
taxes.
    Industry Comments. AOPL states that the USofA uses the deferred tax 
method of accounting for income taxes, while GAAP requires the use of 
the liability method for accounting for income taxes. AOPL recommends 
that the Commission revise the USofA to allow the liability method for 
accounting for income taxes.
    Commission's Proposal. SFAS 109, Accounting for Income Taxes, 
significantly changed the manner in which enterprises account for 
income taxes. SFAS 109 superseded Accounting Principles Board Opinion 
No. 11, Accounting for Income taxes (APB 11). SFAS 109 adopted a 
liability approach for determining deferred income taxes rather than 
the previously used deferral method under APB 11. Under SFAS 109's 
liability approach, deferred income taxes are recognized for the 
deferred tax consequences of all events that have been recognized in 
the financial statements or tax returns, measured on the basis of 
enacted tax law. Under the deferral method, deferred tax consequences 
were recognized based on the differences between the periods in which 
transactions affect taxable income and the periods in which they enter 
into the determination of pretax accounting income.

[[Page 50391]]

    The current USofA requires carriers to use comprehensive 
interperiod income tax allocation. In addition, the Commission adopted 
normalization as the standard for oil pipeline ratemaking in Opinion 
No. 154-B.\61\ The Commission also allows carriers to compute the 
income tax component in its cost of service by making provision for any 
excess or deficiency in deferred taxes. Consequently, the Commission's 
current accounting and ratemaking treatment of income taxes is 
generally consistent with the liability approach used for accounting 
for income taxes under GAAP. However, some terminology in the USofA 
regulations still refer to the deferral method of accounting for income 
taxes. Therefore, the Commission proposes to revise its accounting 
regulations to make them consistent with the liability method of 
accounting for income taxes by amending the following: (1) Definition 
No. 30, Income Taxes; (2) General Instruction 1-12, Accounting for 
Income Taxes; Account 19-5, Deferred Income Tax Charges; Account 45, 
Accumulated Deferred Income Tax Charges; Account 59, Deferred Income 
Tax Credits; Account 64, Accumulated Deferred Income Tax Credits; 
Account 671, Provision for Deferred Taxes; Account 695, Income Taxes on 
Extraordinary Items; and Account 696, Provision for Deferred Taxes--
Extraordinary Items.
---------------------------------------------------------------------------

    \61\ See 31 FERC para. 61,377, at p. 61,833.
---------------------------------------------------------------------------

B. Other Accounting Changes

Aggregation of Operations and Maintenance Expenses
    Current Requirements. The Commission's current accounting 
regulations require carriers to account for expenses related to 
operations and maintenance separately.
    Industry Comments. The AOPL and Kaneb Pipe Line Operating 
Partnership, L.P., recommend the Commission consolidate the operations, 
maintenance, and general classes of operating expenses because the 
classifications are burdensome, of no apparent regulatory use, and 
inconsistently applied by companies because they do not understand the 
reason for this cost division.
    The AOPL recommends the Commission eliminate the distinction 
between crude oil and products.
    Various Shipper Interests oppose eliminating the distinction 
between crude and products because of the difference in operating costs 
and characteristics of the crude and products line.
    Commission's Proposal. The Commission believes that aggregation of 
operations and maintenance expenses is no longer needed for its 
regulatory oversight in light of changes in the Commission's regulation 
of the oil pipeline industry. Therefore, the Commission proposes to 
revise its operations expense accounts to eliminate the separate 
aggregation of operations and maintenance expenses and group them in 
accounts of a similar nature. The Commission proposes to revoke Account 
400, Salaries and Wages; Account 410, Supplies and Expenses; and 
Account 420, Outside Services. Expenses previously classified in these 
accounts will now be classified in Account 300, Salaries and Wages; 
Account 310, Materials and Supplies; and Account 320, Outside Services; 
respectively. The Commission proposes to redesignate Account 430, 
Maintenance Materials as Account 310 and revoke Account 430. The 
Commission is also proposing to add Account 350, Rentals and Accounts 
390 and 590, Other Expenses. Additionally, the Commission is proposing 
to rename and redefine Account 510, Materials and Supplies; redefine 
Account 530, Rentals; and rename Account 550, Employee Benefits. The 
proposed changes will not diminish the Commission's ability to obtain 
the necessary information, as needed, to determine the reasonableness 
of a carrier's expense levels either through a rate proceeding or an 
audit.

V. Environmental Statement

    Commission regulations require that an environmental assessment or 
an environmental impact statement be prepared for any Commission action 
that may have a significant adverse effect on the human 
environment.\62\ 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,\63\ and also for information gathering, 
analysis, and dissemination.\64\ The proposed rules changes do not 
substantially change the effect of the underlying legislation or change 
the Forms, and also involve information gathering. Accordingly, no 
environmental considerations are necessary.
---------------------------------------------------------------------------

    \62\ Regulations Implementing National Environmental Policy Act, 
52 FR 47897 (Dec. 17, 1987); FERC Stats. & Regs. para. 30,783 (Dec. 
10, 1987).
    \63\ 18 CFR 380.4(a)(2)(ii).
    \64\ 18 CFR 380.4(a)(5).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA)\65\ requires rulemakings to 
contain either a description and analysis of the effect that the 
proposed rule will have on small entities or a certification that the 
rule will not have a significant economic impact on a substantial 
number of small entities.
---------------------------------------------------------------------------

    \65\ 5 U. S. C. 601-612.
---------------------------------------------------------------------------

    In Mid-Tex Elect. Coop. v. FERC, 773 F. 2d 327 (D.C. Cir. 1985), 
the court found that Congress, in passing the RFA, intended agencies to 
limit their consideration ``to small entities that would be directly 
regulated'' by proposed rules. Id. at 342. The court further concluded 
that ``the relevant `economic impact' was the impact of compliance with 
the proposed rule on regulated small entities.'' Id. at 342. The 
Commission does not believe that this proposed rule will have an 
adverse impact on small entities, nor will it impose upon them any 
significant costs of compliance. Most filing entities regulated by the 
Commission do not fall within the RFA's definition of a small 
entity.\66\ Therefore, the Commission certifies that this rule will not 
have a significant economic impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \66\ 5 U.S.C. 601(3), citing to section 3 of the Small Business 
Act, 15 U.S.C. 632. Section 3 of the Small Business Act defines a 
``small-business concern'' as a business which is independently 
owned and operated and which is not dominant in its field of 
operation.
---------------------------------------------------------------------------

VII. Information Collection Statement

    The following collection of information contained in this proposed 
rule is being submitted to the Office of Management and Budget (OMB) 
for review under Section 3507(d) of the Paperwork Reduction Act of 
1995.\67\ FERC identifies the information provided under Part 352 and 
Sec. 357.2 as FERC Form No. 6.
---------------------------------------------------------------------------

    \67\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    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.
Public Reporting Burden: Estimated Annual Burden
    The proposed rule, if adopted, would establish new reporting 
requirements, modify existing reporting requirements and eliminate 
those requirements that are no longer applicable. The Commission seeks 
to simplify and

[[Page 50392]]

streamline its requirements to reduce the burden on oil pipelines. The 
current public reporting burden for these information collections is 
estimated to average the following number of hours per response: 159 
respondents, 130.9 hours (rounded off) per response for total annual 
hours of 20,811 hours.\68\ These estimates include the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
---------------------------------------------------------------------------

    \68\ OMB's current inventory identifies FERC Form No. 6 as 
having 20,622 hours based on the filing by 148 respondents on the 
Form 6 in its entirety and 5 respondents filing the Page 700. 
However, an adjustment is being made to reflect the most recent 
filing (1998) which saw an increase in the number of respondents to 
149 and 10 accordingly.
---------------------------------------------------------------------------

    The burden estimates for complying with this proposed rule are as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                     Number of       Number of       Hours per     Total  annual
                 Data collection                    respondents      responses       response          hours
----------------------------------------------------------------------------------------------------------------
FERC Form 6.....................................             129               1             119          15,351
(Pages 1 & 700).................................              11               1              10             110
(Pages 1, 301 & 700)............................              19               1              11             209
                                                 ---------------------------------------------------------------
      Totals....................................             159               1              99          15,670
----------------------------------------------------------------------------------------------------------------

Total Annual Hours for collections:
    (Reporting + Record keeping, (if appropriate)) = 15,670 hours

    The simplified filing requirements under the proposed regulations 
and projected reduced number of filings per year would result in a 
reduction of 5,141 hours per year from the revised OMB burden inventory 
for the above data collection.
    Information Collection Costs: The Commission seeks comments on the 
costs to comply with these requirements. It has projected the average 
annualized cost for all respondents to be:

------------------------------------------------------------------------
                       Annualized     Annualized costs
 Data collection    capital/start-up    (operations &         Total
                         costs          maintenance)    annualized costs
------------------------------------------------------------------------
            FERC Form No. 6  $0.00           $840,341         $840,341
------------------------------------------------------------------------
(For 129 respondents completing the FERC Form No. 6, the cost per
  company would be $6,382, pages 1 & 700 = $536 and pages 1, 301 & 700 =
  $590)

    To consider the impact on the persons affected by this rulemaking, 
the Commission would like specific comments on the impact of this rule 
on individual oil pipeline companies. Both estimates of current burden 
and impact should be in work hours and dollar costs in sufficient 
detail to demonstrate methodology and assumptions.
    The OMB regulations require OMB to approve certain information 
collection requirements imposed by agency rule.\69\ Accordingly, 
pursuant to OMB regulations, the Commission is providing notice of its 
proposed information collections to OMB.
---------------------------------------------------------------------------

    \69\ 5 CFR 1320.11.
---------------------------------------------------------------------------

    Title: FERC Form No. 6, Annual Report of Oil Pipeline Companies.
    Action: Proposed Data Collection.
    OMB Control No.: 1902-0022.
    The regulated entity 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: Businesses or other for profit.
    Frequency of Responses: Annually.
    Necessity of Information: The proposed rule revises the 
Commission's requirements contained in 18 CFR parts 352, 357, and 385. 
As explained in this NOPR, the proposed rule revises Form 6 schedules 
and instructions to better meet current and future regulatory 
requirements and industry needs; updates the USofA requirements to be 
more consistent with current GAAP accounting; and amends regulations to 
provide for the electronic filing of Form 6 commencing with reporting 
years 2000, due on or before March 31, 2001. The Commission uses the 
information for administration of the Interstate Commerce Act and in 
various rate proceedings.
    Internal Review: The Commission has assured itself, by means of its 
internal review, that there is specific, objective support for the 
burden estimates associated with the information requirements. The 
Commission's staff will use the data for compliance reviews on the 
financial conditions of regulated companies. These requirements conform 
to the Commission's plan for efficient information collection, 
communication, and management within the oil pipeline industry. Data 
will contribute to well-informed decision-making and streamlined 
workload processing. 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)273-0873, email: 
[email protected]
    For submitting comments concerning the collections of information 
and the associated burden estimates, 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.

VIII. Public Comment Procedures

    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. October 16, 2000. Comments should be 
submitted to the Office of the Secretary, Federal Energy Regulatory 
Commission, 888 First Street, N.E., Washington D.C. 20426 and should 
refer to Docket No. RM99-10-000.
    In addition to filing paper copies, the Commission encourages the 
filing of comments either on computer diskette

[[Page 50393]]

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. RM99-10-000; 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. RM99-10-000. 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, N.E., Washington D.C. 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 link. 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].

IX. 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 and FERC 
Form No. 6 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, N.E., 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 will be 
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 Room 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

18 CFR Part 352

    Pipelines, Reporting and recordkeeping requirements, Uniform System 
of Accounts.

18 CFR Part 357

    Pipelines, Reporting and recordkeeping requirements, Uniform System 
of Accounts.

18 CFR Part 385

    Administrative practice and procedure, Electric power, Penalties, 
Pipelines, Reporting and recordkeeping requirements.

By direction of the Commission.
David P. Boergers,
Secretary.
    In consideration of the foregoing, the Commission proposes to amend 
parts 352, 357 and 385 of Chapter I, title 18 of the Code of Federal 
Regulations, as follows:

PART 352--UNIFORM SYSTEMS OF ACCOUNTS PRESCRIBED FOR OIL PIPELINE 
COMPANIES SUBJECT TO THE PROVISIONS OF THE INTERSTATE COMMERCE ACT

    1. The authority citation for part 352 is revised to read as 
follows:

    Authority: 49 U.S.C. 60502; 49 App. U.S.C. 1-85 (1988).

    2-4. In part 352, in List of Instructions and Accounts, 
Definitions, Definition 30, paragraphs (e) through (h) and paragraph 
(j) are revised to read as follows:

Definitions

* * * * *
    30. * * *
    (e) Temporary difference means a difference between the tax basis 
of an asset or liability and its reported amount in the financial 
statements that will result in taxable or deductible amounts in future 
years when the reported amount of the asset or liability is recovered 
or settled, respectively. Some events recognized in financial 
statements do not have tax consequences. Certain revenues are exempt 
from taxation and certain expenses are not deductible. Events that do 
not have tax consequences do not give rise to temporary differences.
    (f) Deductible temporary difference means temporary differences 
that result in deductible amounts in future years when the related 
asset or liability is recovered or settled, respectively.
    (g) Deferred tax asset means the deferred tax consequences 
attributable to deductible temporary differences and carryforwards. A 
deferred tax asset is measured using the applicable enacted tax rate 
and provisions of the enacted tax law. A valuation allowance should be 
recognized if it is more likely than not (a likelihood of more than 50 
percent) that some portion or all of the deferred tax asset will not be 
realized.
    (h) Deferred tax liability means the deferred tax consequences 
attributable to taxable temporary differences. A deferred tax liability 
is measured using the applicable enacted tax rate and provisions of the 
enacted tax law.
* * * * *
    (j) Tax allocation within a period means the process of allocating 
income tax expense applicable to a given period among continuing 
operations, discontinued operations, extraordinary items, and items 
charged or credited directly to shareholders' equity.
* * * * *
    5. In General Instructions, Instruction 1-6, paragraph (d) is 
revised as follows:
    1-6  Extraordinary, unusual or infrequent items, prior period

[[Page 50394]]

adjustments, discontinued operations and accounting changes.
* * * * *
    (d) Prior Period Adjustments. The correction of an error in the 
financial statements of a prior period and adjustments that result from 
realization of income tax benefits of preacquisition loss carryforwards 
of purchased subsidiaries shall be accounted for as prior period 
adjustments and excluded from the determination of net income from the 
current year. All other revenues, expenses, gains, and losses 
recognized during a period shall be included in the net income of that 
period.
* * * * *
    6. In General Instructions, Instruction 1-12, paragraph (a) is 
amended by removing the words ``where material timing differences (see 
definition 30(e)) occur between pretax accounting income and taxable 
income'' and adding, in their place, the words ``to all material 
temporary differences (see definition 30(e)) between the tax basis of 
an asset or liability and its reported amount in the financial 
statements that will result in taxable or deductible amounts in future 
years''.
    7. In General Instructions, Instruction 1-12, paragraphs (b) and 
(c) are revised to read as follows:
    1-12  Accounting for income taxes.
* * * * *
    (b) Under the interperiod tax allocation method of accounting a 
deferred tax liability or asset is to be recognized for all temporary 
differences (see definition 30(e)) that result in taxable amounts in 
future years when the related asset or liability is recovered or 
settled. Deferred taxes are classified as current or noncurrent based 
on the classification of the related asset or liability. A carrier 
shall apply the applicable enacted tax rate in determining the amount 
of deferred taxes. The carrier shall adjust its deferred tax 
liabilities and assets for the effect of the change in tax law or rates 
in the period that the change is enacted. The adjustment shall be 
recorded in the proper deferred tax balance sheet accounts based on the 
nature of the temporary difference and the related classification 
requirements of the account.
    (c) An entity shall record the income tax effects of a net 
operating loss carryforward or a tax credit carryforward as a deferred 
tax asset in the year the loss occurs. In the event that it is more 
likely than not (a likelihood of more than 50 percent) that some 
portion of its deferred tax assets will not be realized, a carrier 
shall reduce the asset by a valuation allowance. The valuation 
allowance should be recorded in a separate subaccount of the deferred 
tax asset account. The carrier shall disclose full particulars as to 
the nature and amount of each type of operating loss and tax credit 
carryforward in the notes to its financial statements.
* * * * *
    8. In General Instructions, Instruction 1-12, paragraph (e) is 
amended by removing the words ``Accumulated deferred income tax 
credits'' and adding, in their place, the words ``Accumulated deferred 
income tax liabilities''.
    9. In Instructions for Balance Sheet Accounts, Instruction 2-7 is 
revised to read as follows:

Instructions for Balance Sheet Accounts

* * * * *
    2-7  Contingent assets and liabilities. (a) A contingency is an 
existing condition, situation, or set of circumstances involving 
uncertainty as to possible gain or loss to a carrier that will 
ultimately be resolved when one or more future events occur or fail to 
occur. Resolution of the uncertainty may confirm the acquisition of an 
asset or the reduction of a liability or the loss or impairment of an 
asset or the incurrence of a liability.
    (b) An estimated loss from a contingent liability shall be charged 
to income if it is probable that an asset had been impaired or a 
liability had been incurred and the amount of the loss can be 
reasonably estimated. The carrier shall disclose in a footnote in its 
annual report any accrued contingent liabilities, along with any 
contingent liabilities not meeting both conditions for accrual if there 
is a reasonable possibly that a liability may have been incurred.
    (c) Contingent assets should not be reflected in the accounts. The 
carrier shall disclose in a footnote in its annual report any 
contingencies that might result in an asset.
    10. In Instructions for Carrier Property Accounts, Instruction 3-3, 
paragraph (11) is revised to read as follows:

Instructions for Carrier Property Accounts

    3-3  Cost of property constructed. * * *
    (11)(i) Interest during construction includes the cost incurred in 
financing the construction of carrier property. The rate for 
calculating interest shall be determined as follows: If the carrier 
associates a specific new borrowing with an asset, it may apply the 
rate on that borrowing to the appropriate portion of the expenditures 
for the asset. A weighted average of the rates on other borrowings is 
to be applied to qualified expenditures not covered by specific new 
borrowings. The amount of interest cost capitalized in an accounting 
period shall not exceed the total amount of interest cost incurred by 
the carrier in that period.
    (ii) In situations involving qualifying assets financed with the 
proceeds of restricted tax-exempt borrowings, the amount of interest 
cost to be capitalized shall be all interest cost of those borrowings 
less any interest earned on temporary investment of the proceeds of 
those borrowings from the date of borrowing until the specified 
qualifying assets acquired with those borrowings are ready for their 
intended use.
* * * * *
    11. In Instructions for Carrier Property Accounts, Instruction 3-5, 
paragraph (a) is amended by removing the words ``except that the 
related labor expense shall be charged to the maintenance expense 
account''.
    12. In Instructions for Operating Revenues and Operating Expenses, 
Instruction 4-4, paragraph (a) is revised, paragraph (b) is removed, 
and paragraph (c) is redesignated as paragraph (b) to read as follows:

Instructions for Operating Revenues and Operating Expenses

    4-4  Expense classification. * * *
    (a) Operations and maintenance expense. This group of accounts 
includes all costs directly associated with the operation, repairs and 
maintenance of property devoted to pipeline operations including 
scheduling, dispatching, movement, and delivery of crude oil, oil 
products and other commodities.
* * * * *
    13. In Balance Sheet Accounts, a new Account 14-5 is added to read 
as follows:

Balance Sheet Accounts

    14-5  Accumulated provision for uncollectible accounts.
    This account shall be credited with amounts provided for losses on 
notes and accounts receivable which may become uncollectible, and also 
with collections on accounts previously charged hereto. This account 
shall be charged with any amounts which have been found to be 
impractical of collection.
    14. In Balance Sheet Accounts, Account 19-5 is revised to read as 
follows:

Balance Sheet Accounts

    19-5  Deferred income tax assets.

[[Page 50395]]

    (a) This account shall include the portion of deferred income tax 
assets and liabilities relating to current assets and liabilities, when 
the balance is a net debit.
    (b) A net credit balance shall be included in account 59, Deferred 
income tax liabilities.
    15. In Balance Sheet Accounts, Account 45 is revised to read as 
follows:

Balance Sheet Accounts

    45  Accumulated deferred income tax assets.
    This account shall include the amount of deferred taxes determined 
in accordance with instruction 1-12 and the text of account 64, 
Accumulated deferred income tax liabilities, when the balance is a net 
debit.
    16. In Balance Sheet Accounts, Account 59 is revised to read as 
follows:

Balance Sheet Accounts

    59  Deferred income tax liabilities.
    (a) This account shall include the portion of deferred income tax 
assets and liabilities relating to current assets and liabilities, when 
the balance is a net credit.
    (b) A net debit balance shall be included in account 19-5, Deferred 
income tax assets.
    17. In Balance Sheet Accounts, Account 64, the title is amended by 
removing the word ``credits'' and inserting, in its place, the word 
``liabilities''; in paragraph (a), by removing the words ``material 
timing differences (see definitions 30 (g) and (e)) originating and 
reversing in'' and adding, in their place, the words ``changes in 
material temporary differences (see definition 30 (e)) during''; in 
paragraph (d), by removing the word ``unamortized'' in its entirety and 
removing the word ``timing'' and adding, in its place, the word 
``temporary''; and in Notes A and B to Account 64, by revising the text 
to read as follows:

Balance Sheet Accounts

    64  Accumulated deferred income tax liabilities.
* * * * *

    Note A: The portion of deferred assets and liabilities relating 
to current assets and liabilities should likewise be classified as 
current and included in account 19-5, Deferred Income Tax Assets, or 
Account 59, Deferred Income Tax Liabilities, as appropriate.


    Note B: This account shall include a net credit balance only. A 
net debit balance shall be recorded in account 45, Accumulated 
deferred income tax assets.

    18. In Operating Expenses, the title ``Operations'' is revised to 
read ``Operations and Maintenance'' and Accounts 300, 310, and 320 are 
revised and Accounts 350 and 390 are added to read as follows:

Operating Expenses

Operations and Maintenance
    300  Salaries and wages.
    This account shall include the salaries and wages (including pay 
for holidays, vacations, sick leave and similar payroll disbursements) 
of supervisory and other personnel directly engaged in transportation 
operations and the maintenance and repair of transportation property.
    310  Materials and supplies.
    This account shall include the cost of materials applied in the 
repair and maintenance of transportation property. The salvage value of 
materials recovered in maintenance work shall be credited to this 
account. This account shall also include the cost of supplies consumed 
and expended in operations and in support of the maintenance activity.
    320  Outside services.
    This account shall include the cost of operating and maintenance 
services provided by other than company forces under contract, 
agreement, and other arrangement. The cost of service performed by 
affiliated companies shall be segregated within the account.
* * * * *
    350  Rentals.
    This account shall include the cost of renting property used in the 
operations and maintenance of carrier transportation service, such as 
complete pipeline or segment thereof, office space, land and buildings, 
and other equipment and facilities.
    390  Other expenses.
    This account shall include the expenses of aircraft, vehicles, and 
work equipment used in support of operations and maintenance 
activities; travel, lodging, meals, memberships, and other expenses of 
operating and maintenance employees; and other related operating and 
maintenance expenses that are not defined or classified in other 
accounts.
    19. In Operating Expenses, Maintenance, Accounts 400, 410, 420 and 
430 are removed.
    20. In Operating Expenses, General, Accounts 510, 530, and 550 are 
proposed to be revised and Account 590 is added to read as follows:

Operating Expenses

    510  Materials and supplies.
    This account shall include the cost of materials and supplies 
consumed and expended for administration and general services.
* * * * *
    530  Rentals.
    This account shall include the cost of renting property used in the 
administration and general operations of carrier transportation 
service, such as complete pipeline or segment thereof, office space, 
land and buildings, and other equipment and facilities.
* * * * *
    550  Employee benefits.
    This account shall include the cost to the carrier of annuities, 
pensions, and benefits for active or retired employees, their 
beneficiaries or designees. Contributions to health or welfare funds or 
payment for similar benefits to or on behalf of employees shall be 
included herein. Premiums, to the extent borne by the carrier, for 
group life, health, accident and other beneficial insurance for 
employees shall also be included in this account.
* * * * *
    590  Other expenses.
    This account shall include the cost of expenses expended for 
administrative and general services including, the expenses of 
aircraft, vehicles, and work equipment used for general purposes; 
travel, lodging, meals, memberships, and other expenses of general 
employees and officers; utilities services; and all other incidental 
general expenses not defined or classified in other accounts.
    21. In Income Accounts, Account 671, paragraph (a) is amended by 
removing the words ``all material timing differences (see definitions 
30 (g) and (e)) originating and reversing in,'' and adding, in their 
place, the words ``changes in material temporary timing differences 
(see definition 30 (e)) during''.
    22. In Income Accounts, Account 695, is amended by removing the 
words ``timing differences caused by recognizing an item in the account 
provided for extraordinary items in different periods in determining 
accounting income and taxable income'' and adding, in their place, the 
words ``temporary differences caused by recognizing an item in the 
account provided for extraordinary items''.
    23. In Income Accounts, Account 696, is amended by removing the 
words ``debits or credits for the current accounting period for income 
taxes deferred currently, or for amortization of income taxes deferred 
in prior accounting periods'' and adding, in their place, the words 
``the deferred tax expense or benefit related to temporary 
differences''.

[[Page 50396]]

PART 357--ANNUAL SPECIAL OR PERIODIC REPORTS: CARRIERS SUBJECT TO 
PART I OF THE INTERSTATE COMMERCE ACT

    1. The authority citation for part 357 is revised to read as 
follows:

    Authority: 42 U.S.C. 7101-7352; 49 U.S.C. 60502; 49 App. U.S.C. 
1-85 (1988).

    2. Section 357.2 is revised to read as follows:


Sec. 357.2  FERC Form No. 6, Annual Report of Oil Pipeline Companies.

    (a) Who must file. (1) Each pipeline carrier subject to the 
provisions of section 20 of the Interstate Commerce Act whose annual 
jurisdictional operating revenues has been $1,000,000 or more for each 
of the three previous calendar years must prepare and file with the 
Commission copies of FERC Form No. 6, ``Annual Report of Oil Pipeline 
Companies,'' pursuant to the General Instructions set out in that form. 
Newly established entities must use projected data to determine whether 
FERC Form No. 6 must be filed.
    (2) Notwithstanding the exemption provided in (a) of this section, 
oil pipeline carriers exempt from filing Form No. 6 whose annual 
jurisdictional operating revenues has been more than $350,000 but less 
than $1,000,000 for each of the three previous calendar years must 
prepare and file pages 301, ``Operating Revenue Accounts (Account 
600),'' and 700, ``Annual Cost of Service Based Analysis Schedule,'' of 
FERC Form No. 6. When submitting pages 301 and 700, each exempt oil 
pipeline carrier must include page 1 of Form No. 6, the Identification 
and Attestation schedules.
    (3) Notwithstanding the exemption provided in paragraph (a) of this 
section, oil pipeline carriers exempt from filing Form No. 6 and pages 
301 and whose annual jurisdictional operating revenues were $350,000 or 
less for each of the three previous calendar years must prepare and 
file page 700, ``Annual Cost of Service Based Analysis Schedule,'' of 
FERC Form No. 6. When submitting page 700, each exempt oil pipeline 
carrier must in page 1 of Form No. 6, the Identification and 
Attestation schedules.
    (4) Notwithstanding the exemption provided in paragraph (a) of this 
section, oil pipeline carriers exempt from filing Form No. 6 must 
prepare and file page 700, ``Annual Cost of Service Based Analysis 
Schedule,'' of FERC Form No. 6. When submitting page 700, each exempt 
oil pipeline carrier must include page 1 of Form No. 6, the 
Identification and Attestation schedules.
    (b) When to file. This report must be filed on or before March 31st 
of each year for the previous calendar year.
    (c) What to submit. (1) This report form must be filed as 
prescribed in Sec. 385.2011 of this chapter and as indicated in the 
General Instructions set out in the report form, and must be properly 
completed and verified.
    (2) A copy of the report must be retained by the pipeline carrier 
in its files. The conformed copies may be produced by any legible means 
of reproduction.
    (3) Filing on electronic media pursuant to Sec. 385.2011 of this 
chapter will be required with report year 2000, due on or before March 
31, 2001.

PART 385--RULES OF PRACTICE AND PROCEDURE

    3. The authority citation for part 385 is revised 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 (1988).

    4. In Sec. 385.2011, paragraph (a)(7) is added to read as follows:


Sec. 385.2011  Procedures for filing on electronic media (Rule 2001).

    (a) * * *
    (7) FERC Form No. 6, Annual Report of Oil Pipeline Companies.
* * * * *

    Note: These appendices will not appear in the Code of Federal 
Regulations.

Appendix A--Comments Received

Pre-Staff Technical Conference Comments Received

ARCO Products Company, a Division of Atlantic Richfield Company; 
Tosco Corporation, and Ultramar Inc. (ARCO)
Association of Oil Pipe Lines (AOPL)
Chevron Pipe Line Company (Chevron)
Kaneb Pipe Line Operating Partnership, L.P. (Kaneb)
Refinery Holding Company, L.P. (Refinery)
Sinclair Oil Corporation (Sinclair)

Post-Staff Technical Conference Comments Received

Association of Oil Pipe Lines (AOPL)
Refinery Holding Company, L.P. (Refinery)
Sinclair Oil Corporation (Sinclair)
Various Shipper Interests (Shippers)

Appendix B--Summary of FERC Form No. 6: Annual Report of Oil Pipeline 
Companies Revisions

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Revised and changed schedules
                                   Old          New     --------------------------------------------------------------------   Deleted
        Schedule title           schedule     schedule                  Changed       Revised       Revised       Deleted     complete     Explanation
                                 page No.     page No.      As is      threshold   instructions    schedule       columns     schedule
--------------------------------------------------------------------------------------------------------------------------------------------------------
General......................  i..........  i..........                        X             X                                           Raised overall
                                                                                                                                          Form 6
                                                                                                                                          reporting
                                                                                                                                          threshold from
                                                                                                                                          $350,000 to
                                                                                                                                          $1,000,000
                                                                                                                                          under 18 CFR
                                                                                                                                          Part 3572.
                                                                                                                                         Added
                                                                                                                                          submission
                                                                                                                                          requirements
                                                                                                                                          for electronic
                                                                                                                                          filing.
General Instructions.........  ii.........  ii.........                                      X                                           Added
                                                                                                                                          resubmission
                                                                                                                                          requirements
                                                                                                                                          for electronic
                                                                                                                                          filing.
Definitions..................  iii........  iii........                                      X                                           Revised
                                                                                                                                          Definition No.
                                                                                                                                          8  Crude Oil.
                                                                                                                                         Added
                                                                                                                                          Definition
                                                                                                                                          Nos. 13 and 14
                                                                                                                                          for
                                                                                                                                          ``Undivided
                                                                                                                                          Joint Interest
                                                                                                                                          Pipeline'' and
                                                                                                                                          ``Undivided
                                                                                                                                          Joint Interest
                                                                                                                                          Property,''
                                                                                                                                          respectively.
Identification/Verification..  1..........  1..........          X   ............  ............  ............  ............  ..........  ...............
Excerpts From the Law........  iv.........  iv.........          X   ............  ............  ............  ............  ..........  ...............
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 50397]]


------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Retained
                                                     Old          New     ----------------------------------------------------------------------    Deleted
                 Schedule title                    schedule     schedule                    Changed       Revised       Revised       Deleted      complete               Explanation
                                                   page No.     page No.       As Is       threshold   instructions    schedule       columns      schedule
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
List of Schedules..............................          2-3          2-3                                                      X                               Revised to show schedule changes.
General Information............................          101          101            X
Control Over Respondent........................          102          102            X
Companies Controlled by Respondent.............          103          103            X
Principal General Officers.....................          104          104            X
Directors......................................          105          105            X
Important Changes During the Year..............      108-109      108-109            X
Comparative Balance sheet Statement............      110-113      110-113                                                      X                               Revised Account 19.5 to read
                                                                                                                                                                ``Deferred Income Tax Assets'',
                                                                                                                                                                Account 59 to read ``Deferred
                                                                                                                                                                Income Tax Liabilities''.
                                                                                                                                                                Account 45 to read ``Accumulated
                                                                                                                                                                Deferred Income Tax Assets'',
                                                                                                                                                                and Account 64 to read
                                                                                                                                                                ``Accumulated Deferred Income
                                                                                                                                                                Tax Liabilities'' as changed on
                                                                                                                                                                page 230.
Income Statement...............................          114          114            X
Appropriated Retained Income...................          118          118            X
Unappropriated Retained Income Statement.......          119          119            X
Statement of Cash Flows........................      120-121      120-121            X
Notes to Financial Statements..................      122-123      122-123            X
Receivables From Affiliated Companies..........          200          200                                                                                      Revised Instruction No. 2 to
                                                                                                                                                                include requirements for
                                                                                                                                                                reporting amounts equal to
                                                                                                                                                                $500,000.
General Instructions Concerning Schedules 202            201          201            X
 Thru 205.
Investments in Affiliated Companies............      202-203      202-203            X
Investments in Common Stocks of Affiliated           204-205      204-205            X
 Companies.
Instructions For Schedules 212-215 (New Title--          211          211                                        X                                             Revised instructions for pages
 Instructions for Schedules 212-217).                                                                                                                           212-215 and added instructions
                                                                                                                                                                for pages 216-217.
Carrier Property...............................      212-213      212-213                                        X                                             Revised page 212 column (c)
                                                                                                                                                                heading to read ``Expenditures
                                                                                                                                                                for New Construction, Additions,
                                                                                                                                                                and Improvement.''
                                                                                                                                                               Revised page 213 column (e)
                                                                                                                                                                heading to read ``Property Sold,
                                                                                                                                                                Abandoned, or Otherwise Retired
                                                                                                                                                                During the Year.''
                                                                                                                                                               Revised page 213 column (h)
                                                                                                                                                                heading to read ``Increase or
                                                                                                                                                                Decrease During the Year (fg) (In dollars).''
Depreciation Base and Rates--Carrier Property..          214  ...........                                                                                  X   Move column (e) to page 216.

[[Page 50398]]

 
Depreciation Base and Rates--System Property...          215  ...........                                                                                  X   Move column (e) to page 217.
                                                                                                                                                               Revise column heading to read
                                                                                                                                                                ``Annual Composite/Component
                                                                                                                                                                Rates (In percent).''
Undivided Joint Interest Property..............                   214-215                                                                                      Schedule added to allow for a
                                                                                                                                                                more complete presentation of
                                                                                                                                                                undivided joint interest carrier
                                                                                                                                                                property.
Accrued Depreciation--Carrier Property.........          216          216                                        X                                             Revised instructions, column (c)
                                                                                                                                                                heading to read ``Debits to
                                                                                                                                                                Account No. 540 of USofA (in
                                                                                                                                                                dollars)'', and column (d)
                                                                                                                                                                heading to read ``Net Debit From
                                                                                                                                                                Retirement of Carrier Property
                                                                                                                                                                (In dollars).''
                                                                                                                                                               Added column (e) from page 214.
                                                                                                                                                                Renamed column (g).
Accrued Depreciation--System Property (New               217          217                                        X                                             Revised instructions, column (c)
 Title--Accrued Depreciation--Undivided Joint                                                                                                                   heading to ``Debits to Account
 Interest Property).                                                                                                                                            No. 540 of USofA (In dollars)'',
                                                                                                                                                                and column (d) heading to read
                                                                                                                                                                ``Net Debit From Retirement of
                                                                                                                                                                Carrier Property (In dollars).''
                                                                                                                                                               Added column (e) from page 215.
                                                                                                                                                                Renamed the column (g) and
                                                                                                                                                                revised column heading to read
                                                                                                                                                                ``Annual Composite/Component
                                                                                                                                                                Rates (In percent).''
                                                                                                                                                               Deleted requirement to report
                                                                                                                                                                only when specifically directed
                                                                                                                                                                by the Commission.
Amortization Base and Reserve..................      218-219      218-219            X                                                                         .................................
Noncarrier Property............................          220          220                          X                                                           Raised threshold from $250,000 to
                                                                                                                                                                $1,000,000 for grouping minor
                                                                                                                                                                items.
Other Deferred Charges.........................          221          221                          X                                                           Raised threshold from $250,000 to
                                                                                                                                                                $500,000 for grouping minor
                                                                                                                                                                items.
Payables to Affiliated Companies...............          225          225                          X             X                                             Raised threshold from $250,000 to
                                                                                                                                                                $500,000 for grouping minor
                                                                                                                                                                items.
                                                                                                                                                               Combined Instruction Nos. 2 and 3
                                                                                                                                                                and renumbered Instruction No. 2
Long-Term Debt.................................      226-227      226-227            X                                                                         .................................
Analysis of Federal Income and Other Taxes           230-231      230-231                                        X             X                               Updated to include current
 Deferred.                                                                                                                                                      Statement of Financial
                                                                                                                                                                Accounting Standards No. 109
                                                                                                                                                                requirements.
Capital Stock..................................      250-251      250-251            X                                                                         .................................
Capital Stock Changes During the Year..........      252-253      252-253            X                                                                         .................................
Additional Paid-In Capital.....................          254          254            X                                                                         .................................

[[Page 50399]]

 
Operating Revenue Accounts.....................          301          301                                        X             X                               Added table to provide a standard
                                                                                                                                                                format for pipelines to report
                                                                                                                                                                interstate and intrastate
                                                                                                                                                                revenue which was previously
                                                                                                                                                                reported in a footnote.
Operating Expense Accounts.....................      302-304      302-303                                                      X             X                 Deleted:
                                                                                                                                                               --maintenance expense Accounts
                                                                                                                                                                400, 410, 420, and 430,
                                                                                                                                                               --columns (a) and (f) on page
                                                                                                                                                                303, and
                                                                                                                                                               --page 304
                                                                                                                                                               Added:
                                                                                                                                                               --Account 350, Rentals,
                                                                                                                                                               --Accounts 390 and 590,
                                                                                                                                                               Other Expenses;
                                                                                                                                                               --grand total column (i) on page
                                                                                                                                                                303.
                                                                                                                                                               Combined:
                                                                                                                                                               --Accounts 310 Supplies and
                                                                                                                                                                Expenses and 430 Maintenance
                                                                                                                                                                Materials.
                                                                                                                                                               Redefined:
                                                                                                                                                               --Account 530, Rentals
                                                     302-303      302-303                                                      X             X                 Renamed:
                                                                                                                                                               --Accounts 310 and 510, Materials
                                                                                                                                                                and Supplies.
                                                                                                                                                               --Account 550, Employee Benefits
Operating Expense Accounts (New Title-None)....          304         None                                                                                  X
Pipeline Taxes (Other Than Income Taxes).......          305          305            X
Income From Noncarrier Property................          335          335            X
Interest and Dividend Income...................          336          336            X
Miscellaneous Items in Income and Retained               337          337            X
 Income Accounts for the Year.
Payments for Services Rendered by Other Than             351          351            X
 Employees.
Statistics of Operations.......................      600-601      600-601                                        X                                             Revised instructions; header over
                                                                                                                                                                columns (b), (c), and (d) to
                                                                                                                                                                read ``Number of Barrels
                                                                                                                                                                Received''; header over columns
                                                                                                                                                                (f), (g), (h), and (i) to read
                                                                                                                                                                ``Number of Barrels Delivered
                                                                                                                                                                Out''; column (e) header to read
                                                                                                                                                                ``Total Received (b+c+d); and
                                                                                                                                                                column (i) header to read
                                                                                                                                                                ``Total Delivered Out (f+g+h).''
Miles of Pipeline Operated at end of Year......      602-603      602-603                                        X                                             Revised instructions to clarify
                                                                                                                                                                information to be reported.
Footnote Data..................................          604          604            X

[[Page 50400]]

 
Annual Cost of Service Based Analysis Schedule.          700          700                                        X             X                               Revised Instruction No. 2.
 
                                                                                                                                                               Added lines to report: Operating
                                                                                                                                                                and Maintenance Expenses,
                                                                                                                                                                Depreciation Expense, AFUDC
                                                                                                                                                                Depreciation, Amortization of
                                                                                                                                                                Deferred Earnings, Rate Base,
                                                                                                                                                                Rate of Return, Return on Rate
                                                                                                                                                                Base, and Income Tax Allowance.
Annual Cost of Service Based Analysis Schedule           700          700                                        X             X                               Revised Instruction No. 3 and
 (Continued).                                                                                                                                                   Line 10 to report Total Company
                                                                                                                                                                Revenues.
Index..........................................    Index 1-3    Index 1-3                                                      X                               Revised to show schedule changes.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[FR Doc. 00-19742 Filed 8-16-00; 8:45 am]
BILLING CODE 6717-01-P