[Federal Register Volume 81, Number 168 (Tuesday, August 30, 2016)]
[Rules and Regulations]
[Pages 59436-59437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20802]


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DEPARTMENT OF ENERGY

10 CFR Part 590


Notice of Revised Procedures Affecting Applications and 
Authorizations for the In-Transit Movement of Natural Gas

AGENCY: Office of Fossil Energy, DOE.

ACTION: Notice of procedures.

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SUMMARY: Pursuant to section 3(a) of the Natural Gas Act (NGA), no 
person may import or export natural gas without authorization from the 
Department of Energy (DOE), and DOE will approve such imports or 
exports unless, after opportunity for a hearing, it determines that the 
imports or exports are not consistent with the public interest. Section 
3(c) of the NGA provides that imports and exports of natural gas from 
or to countries with which the United States has entered into a free 
trade agreement (FTA) providing for national treatment for trade in 
natural gas (FTA countries), and all imports of liquefied natural gas 
(LNG) from any country, are deemed in the public interest and must be 
granted without modification or delay. This notice serves to clarify 
that in-transit shipments of natural gas, i.e., shipments of natural 
gas that only temporarily pass through the United States before 
returning to their country of origin, or temporarily pass through a 
foreign country before returning to the United States, for consumption 
or other disposition, are not ``imports'' or ``exports'' within the 
meaning of section 3 of the Natural Gas Act. However, DOE will impose 
monthly reporting requirements on persons making such shipments in 
order to ensure these movements meet the criteria defining in-transit 
shipments, and are tracked accordingly.

DATES: Effective August 30, 2016.

FOR FURTHER INFORMATION CONTACT: 
Brian Lavoie or Larine Moore, U.S. Department of Energy (FE-34), Office 
of Regulation and International Engagement, Office of Fossil Energy, 
Forrestal Building, Room 3E-042, 1000 Independence Avenue SW., 
Washington, DC 20585, (202) 586-2459; (202) 586-9478.
Edward Myers, U.S. Department of Energy (GC-76), Office of the 
Assistant General Counsel for Electricity and Fossil Energy, Forrestal 
Building, 1000 Independence Avenue SW., Washington, DC 20585, (202) 
586-3397.

SUPPLEMENTARY INFORMATION: 

I. Background

    In DOE/FE Order No. 3769,\1\ DOE concluded that ``Congress likely 
did not intend the words ``import'' and ``export'' to capture any 
movement of natural gas across the U.S. border, but rather intended to 
leave some discretion to the Federal Power Commission (the [DOE's] 
predecessor in administering NGA Section 3, 15 U.S.C. 717b) on that 
question.'' \2\ Further, DOE concluded that ``in-transit shipments 
returning to the country of origin are not imports or exports within 
the meaning of section 3 of the Natural Gas Act.'' \3\ Consequently, 
DOE concluded ``that in-transit shipments returning to the country of 
origin fall outside [DOE's] jurisdiction under NGA section 3.'' \4\ 
This Notice sets forth procedures for the submission of information 
concerning in-transit shipments returning to the country of origin.
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    \1\ Bear Head LNG Corporation & Bear Head LNG, LLC, DOE/FE Order 
No. 3769, FE Docket No. 15-14-NG, Opinion and Order Dismissing 
Application for In-Transit Shipments of Canadian-Sourced Natural Gas 
and Directing Submission of Information Concerning In-Transit 
Shipments Returning to the Country of Origin (Feb. 5, 2016).
    \2\ Id. at 8.
    \3\ Id. at 9.
    \4\ Id. at 10.
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    DOE considers an ``in-transit shipment returning to the country of 
origin'' as a shipment of natural gas through the United States between 
points of a single foreign nation, or through a single foreign nation 
between points in the United States, that are physical and direct. 
``Physical'' means that the natural gas will be transported between two 
cross-border points. Thus, exchanges by backhaul or displacement, or 
other virtual shipments, do not qualify as in-transit shipments for

[[Page 59437]]

purposes of this Order. ``Direct'' means that the natural gas must not 
be diverted for other purposes but must travel a commercially 
reasonable path between points in one country consistent with an 
intention merely to transit the other country. And, consistent with the 
U.S. Customs and Border Patrol regulations concerning in-transit 
shipments,\5\ to qualify as ``in-transit'' the natural gas must cross 
points of entry and exit at the United States border within a 30-day 
period. DOE expects the reporting of in-transit volumes--noting any 
line losses and/or natural gas that may be consumed as fuel during the 
transit process--to be made to the Department within 30 days following 
the month during which the in-transit shipment took place. The purpose 
of reporting the in-transit volumes is to confirm the non-
jurisdictional status of such shipments and to understand the extent to 
which imports and exports are affecting the domestic natural gas 
market, and what movements of natural gas are limited to utilizing 
natural gas infrastructure and not directly impacting natural gas 
supply or demand. Additional information on reporting volumes is 
available at: http://energy.gov/fe/services/natural-gas-regulation/guidelines-filing-monthly-reports.
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    \5\ See 19 CFR 18.31, 18.2(c)(2).
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II. Reporting Requirements for In-Transit Shipments of Natural Gas

    a. The entity holding title to the natural gas as it crosses 
borders shall file with the Office of Regulation and International 
Engagement, a report due not later than the 30th day of the month 
following the month of completion of an in-transit shipment. The report 
must give the following details of each in-transit shipment returning 
to the country of origin, including cases where natural gas originates 
from the United States and undergoes in-transit shipment and where 
natural gas originates in another country and transits the United 
States: (1) The name of the country that is both the origin and final 
destination, (2) the name of the country through which the gas is 
transported before returning to the origin country (the transit 
country--this may be either the United States or another country) (3) 
the initial border crossing point, (4) the foreign pipeline at the 
initial border crossing point, (5) the U.S. pipeline at the initial 
border crossing point, (6) the final border crossing point, (7) the 
foreign pipeline at the final border crossing point, (8) the U.S. 
pipeline at the final border crossing point, (9) the volume of natural 
gas moving through the final border crossing point, (10) the month and 
year in which the in-transit shipment took place, (11) the name of the 
entity that has title to the natural gas during the in-transit 
movement, (12) the name of the individual who prepared the report, and 
(13) contact information.

(Approved by the Office of Management and Budget under OMB Control No. 
1901-0294.)

    b. To show that no deliveries into or out of United States 
commercial markets have occurred, DOE/FE additionally requests 
clarification in monthly reports for in-transit shipments specifying 
the difference in volumes entering the transit country and volumes 
leaving the transit country and the reason for any such differences, to 
the extent the information is available.
    c. The entity holding title to the natural gas as it crosses 
borders shall maintain copies of the reports filed under paragraph a., 
supra, for each in-transit shipment returning to the country of origin 
for a period of one year after completion of the in-transit shipment, 
and provide that information to DOE/FE upon request.
    d. All monthly report filings shall be made to U.S. Department of 
Energy (FE-34), Office of Fossil Energy, Office of Regulation and 
International Engagement, P.O. Box 44375, Washington, DC 20026-4375, 
Attention: Natural Gas Reports. Alternatively, reports may be emailed 
to [email protected], or may be faxed to Natural Gas Reports at 
(202) 586-6050.
    e. Companies that currently use import and export authorizations to 
report in-transit natural gas shipments may continue to report under 
their authorizations, but no new authorizations dedicated solely to in-
transit shipments will be issued. Companies should not apply for new 
import and export authorizations if they plan on only conducting in-
transit natural gas transactions.
    f. Companies may use approved OMB information collection forms, 
which will be available on DOE/FE's Web site at: http://www.energy.gov/fe/services/natural-gas-regulation/in-transit.
    g. Companies can submit in-transit reports without docket or order 
numbers, if not reporting under authorizations permitting both imports 
and exports.
    This Notice is effective immediately upon issuance.

    Issued in Washington, DC, on August 23, 2016.
John A. Anderson,
Director, Office of Regulation and International Engagement, Office of 
Oil and Natural Gas.
[FR Doc. 2016-20802 Filed 8-29-16; 8:45 am]
 BILLING CODE 6450-01-P