[Federal Register Volume 86, Number 104 (Wednesday, June 2, 2021)]
[Rules and Regulations]
[Pages 29503-29506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11353]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 154, 260, and 284

[Docket Nos. RM18-11-002 and RP18-415-002; Order No. 849-B]


Interstate and Intrastate Natural Gas Pipelines; Rate Changes 
Relating to Federal Income Tax Rate American Forest & Paper Association

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Final rule.

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SUMMARY: Order No. 849 adopted procedures for determining which 
jurisdictional natural gas pipelines may be collecting unjust and 
unreasonable rates in light of the income tax reductions provided by 
the Tax Cuts and Jobs Act and the Commission's revised policy and 
precedent concerning tax allowances to address the double recovery 
issue identified by United Airlines, Inc. v. FERC. These procedures 
also allowed interstate natural gas pipelines to voluntarily reduce 
their rates. In this final rule, the Commission finds that there are no 
more expected filings that will make use of these special procedures, 
which are uniquely tied to the Tax Cuts and Jobs Act, and that all 
existing proceedings under these procedures have closed. Therefore, the 
Commission removes the procedures from the Code of Federal Regulations 
as obsolete.

DATES: This rule is effective August 2, 2021.

FOR FURTHER INFORMATION CONTACT: 
    Vince Mareino (Legal Information), Office of the General Counsel, 
888 First Street NE, Washington, DC 20426, (202) 502-6167, 
[email protected].
    Laura Kane (Technical Information), Office of Energy Market 
Regulation, 888 First Street NE, Washington, DC 20426, (202) 502-8653, 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    1. On July 18, 2018, the Commission issued a final rule \1\ (Order 
No. 849) adopting procedures for determining which jurisdictional 
natural gas pipelines may be collecting unjust and unreasonable rates 
in light of the income tax reductions provided by the Tax Cuts and Jobs 
Act \2\ and the Commission's Revised Policy

[[Page 29504]]

Statement \3\ and precedent \4\ concerning tax allowances to address 
the double recovery issue identified by United Airlines, Inc. v. 
FERC.\5\ These procedures also allowed interstate natural gas pipelines 
to voluntarily reduce their rates. On April 18, 2019, the Commission 
denied all outstanding requests for rehearing and reaffirmed the 
Commission's determinations in Order No. 849 (Order No. 849-A).\6\
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    \1\ Interstate & Intrastate Nat. Gas Pipelines; Rate Changes 
Relating to Fed. Income Tax Rate, Order No. 849, 83 FR 36672 (July 
30, 2018), 164 FERC ] 61,031 (2018).
    \2\ An Act to provide for reconciliation pursuant to titles II 
and V of the concurrent resolution on the budget for fiscal year 
2018, Public Law 115-97, 131 Stat. 2054 (2017) (Tax Cuts and Jobs 
Act).
    \3\ Inquiry Regarding the Commission's Policy for Recovery of 
Income Tax Costs, 81 FR 94366 (Dec. 23, 2016), 162 FERC ] 61,227 
(Revised Policy Statement), order on reh'g, 83 FR 12362 (March 21, 
2018), 164 FERC ] 61,030 (2018) (Revised Policy Statement 
Rehearing).
    \4\ SFPP, L.P., Opinion No. 511-C, 162 FERC ] 61,228, at P 9 
(2018).
    \5\ 827 F.3d 122 (D.C. Cir. 2016) (United Airlines). For 
purposes of this order, the Revised Policy Statement, United 
Airlines, and Opinion No. 511-C will collectively be referred to as 
``United Airlines Issuances.''
    \6\ Interstate & Intrastate Nat. Gas Pipelines; Rate Changes 
Relating to Fed. Income Tax Rate, Order No. 849-A, 84 FR 17739 
(April 26, 2019), 167 FERC ] 61,051 (2019).
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    2. Order No. 849 established a requirement, pursuant to sections 10 
and 14(a) of the Natural Gas Act (NGA),\7\ that all interstate natural 
gas companies with cost-based stated rates that filed a 2017 FERC Form 
No. 2 or 2-A must file the FERC Form No. 501-G informational filing for 
the purpose of evaluating the impact of the Tax Cuts and Jobs Act and 
the United Airlines Issuances on interstate natural gas pipelines' 
revenue requirements. In addition to the FERC Form No. 501-G filing 
requirement, the Commission provided four options for each interstate 
natural gas pipeline to make a filing to address the changes to the 
pipeline's recovery of tax costs or explain why no action is needed: 
(1) A limited NGA section 4 \8\ rate reduction filing (Option 1), (2) a 
commitment to file a general section 4 rate case or prepackaged 
settlement in the near future (Option 2), (3) an explanation why no 
rate change is needed (Option 3), and (4) no action (Option 4). These 
procedures were intended to encourage natural gas pipelines to 
voluntarily reduce their rates to the extent the tax changes result in 
their over-recovering their cost of service, while also providing the 
Commission and stakeholders information necessary to take targeted 
actions under NGA section 5 \9\ where necessary to achieve just and 
reasonable rates.
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    \7\ 15 U.S.C. 717i(a), 717m(a).
    \8\ 15 U.S.C. 717c.
    \9\ 15 U.S.C. 717d.
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    3. Order No. 849 made three changes to the Code of Federal 
Regulations. First, new Sec.  260.402 of the Commission's regulations 
established the FERC Form No. 501-G filing requirement described 
above.\10\ Second, new Sec.  154.404 of the Commission's regulations 
established the regulations necessary to govern Option 1, the limited 
NGA section 4 rate reduction filings.\11\ Options 2, 3, and 4 above did 
not require any change in regulations, as they could proceed under 
preexisting regulatory authority. Third, new Sec.  284.123(i) of the 
Commission's regulations provided procedures for section 311 of the 
National Gas Policy Act of 1978 (NGPA) \12\ and Hinshaw \13\ pipelines 
to establish fair and equitable rates for their interstate 
services.\14\
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    \10\ 18 CFR 260.402.
    \11\ 18 CFR 154.404.
    \12\ 15 U.S.C. 3371.
    \13\ Section 1(c) of the NGA, 15 U.S.C. 717(c), exempts from the 
Commission's NGA jurisdiction those pipelines which transport gas in 
interstate commerce if: (1) They receive natural gas at or within 
the boundary of a state, (2) all the gas is consumed within that 
state, and (3) the pipeline is regulated by a state Commission. This 
is known as the Hinshaw exemption.
    \14\ 18 CFR 284.123(i).
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II. Discussion

    4. In Order No. 849, the Commission identified 129 interstate 
natural gas pipelines with cost-based rates that were required to file 
the FERC Form No. 501-G, codified in Sec.  260.402. As of the date of 
Order No. 849-A, the Commission had received filings from all 129 
identified pipelines.\15\ As of April 15, 2021, all of these FERC Form 
No. 501-G filings have been accepted for filing, and the proceedings 
terminated. Because Order No. 849 established a one-time reporting 
requirement tied to a past event, it would not apply to any new 
pipelines that may enter the market in the future. Therefore, the 
regulations implemented in Order No. 849 are no longer needed, and we 
hereby remove Sec.  260.402 from the Commission's regulations.
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    \15\ Order No. 849-A, 167 FERC ] 61,051 at P 4.
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    5. Eleven pipelines chose Option 1, codified in Sec.  154.404. 
Under Option 1, pipelines could only choose to make these limited NGA 
section 4 rate reduction filings at the time of their FERC Form No. 
501-G filings. Just as no new FERC Form No. 501-G filings are possible, 
likewise no new filings under Sec.  154.404 are possible.
    6. For any of these limited NGA section 4 rate reduction filings 
that proceeded to hearing, Sec.  154.404 also governs the process by 
which these hearings are adjudicated, so it would not have been 
reasonable to remove Sec.  154.404 before all the existing hearings 
concluded, either with the acceptance of a settlement or with the 
publication of an Initial Decision. There are no remaining dockets that 
are either in an Option 1 hearing or eligible to be set for an Option 1 
hearing. As a result, the regulations governing this type of limited 
NGA section 4 rate reduction filings are no longer needed. We shall 
therefore remove Sec.  154.404 of the Commission's regulations.
    7. Order No. 849 also established separate regulations under Sec.  
284.123(i) to address the unique jurisdictional situation of section 
311 and Hinshaw pipelines, which have their interstate rates regulated 
by the Commission, but which are primarily regulated at the state 
level. Under pre-existing policy, the Commission reviews the rates of 
section 311 and Hinshaw pipelines every five years on a rolling 
basis.\16\ Section 284.123(i), in brief, provided a mechanism to lower 
these pipelines' interstate rates prior to their five-year review, in 
the event that state government regulators also adjusted their rates in 
light of the recent changes in tax code and tax policy. In the three-
and-a-half years from the passage of the Tax Cuts and Jobs Act in 
November 2017 until the present, almost all section 311 and Hinshaw 
pipelines have either come before the Commission for their five-year 
review, or have come before the Commission for an out-of-cycle rate 
review, whether due to Sec.  284.123(i), voluntary action, or the other 
requirements of section 284 of the Commission's regulations that can 
compel an out-of-cycle rate review. The Commission, through its own 
review, finds it is unlikely that the remaining section 311 and Hinshaw 
pipelines will trigger Sec.  284.123(i), and in any event all are due 
for their five-year review in the near future under the Commission's 
pre-existing policy. As a result, the special circumstances presented 
by the Tax Cuts and Jobs Act that required Sec.  284.123(i) are no 
longer present. We shall therefore remove Sec.  284.123(i) of the 
Commission's regulations.
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    \16\ Contract Reporting Requirements of Intrastate Nat. Gas 
Cos., Order No. 735, 75 FR 29404 (May 26, 2010), 131 FERC ] 61,150, 
at P 96, order on reh'g, Order No. 735-A, 75 FR 80685 (Dec. 23, 
2010), 133 FERC ] 61,216 (2010); see also Hattiesburg Indus. Gas 
Sales, L.L.C., 134 FERC ] 61,236 (2011) (imposing a five-year rate 
review requirement on Hattiesburg Industrial Gas Sales, L.L.C.).
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III. Regulatory Requirements

A. Information Collection Statement

    8. The Paperwork Reduction Act \17\ requires each Federal agency to 
seek and obtain the Office of Management and Budget's (OMB) approval 
before undertaking a collection of information (including reporting, 
record keeping, and public disclosure requirements)

[[Page 29505]]

directed to ten or more persons or contained in a rule of general 
applicability. OMB regulations require approval of certain information 
collection requirements contemplated by final rules (including 
deletion, revision, or implementation of new requirements). Upon 
approval of a collection of information, OMB will assign an OMB control 
number and an expiration date. Respondents subject to the filing 
requirements of a rule will not be penalized for failing to respond to 
the collection of information unless the collection of information 
displays a valid OMB control number. The following discussion describes 
and analyzes the collection of information to be deleted by this final 
rule.
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    \17\ 44 U.S.C. 3501-3521.
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    9. Public Reporting Burden: In this final rule, the Commission 
eliminates FERC Form No. 501-G \18\ (One-time Report on Rate Effect of 
the Tax Cuts and Jobs Act). This final rule eliminates an existing data 
collection, FERC-501G (OMB Control No. 1902-0302). Order No. 849 (in 
Docket No. RM18-11-000) allowed the Commission to determine which 
jurisdictional natural gas pipelines may be collecting unjust and 
unreasonable rates in light of the recent reduction in the corporate 
income tax rate in the Tax Cuts and Jobs Act and changes to the 
Commission's income tax allowance policies following the United 
Airlines decision. FERC Form No. 501-G collected information as to 
whether the pipeline was a pass-through entity. FERC Form No. 501-G 
collected income and balance sheet statement financial data from all 
NGA pipelines that have stated cost-based rates on file with the 
Commission. NGA pipelines whose rates were examined in a general rate 
case under section 4 of the NGA or in an investigation under section 5 
of the NGA were not required to file FERC Form No. 501-G.
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    \18\ FERC-501G has also been referenced as FERC Form No. 501-G.
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    10. The Commission identified 129 interstate natural gas pipelines 
with cost-based rates that were required to file the adopted FERC Form 
No. 501-G. Interstate natural gas pipelines had four options as to how 
to address the results of the formula contained in the FERC Form No. 
501-G. Each option has a different burden profile and a different cost 
per response. Companies made their own business decisions as to which 
option they selected. This final rule eliminates FERC Form No. 501-G 
which reduces burden on all applicants.
    11. All burden from FERC Form No. 501-G has already been incurred. 
For informational purposes, the previous estimate of burden and cost 
for the now-complete FERC Form No. 501-G collection follows.

FERC-501G--Rate Changes Relating to Federal Corporate Income Tax Rate for Interstate Natural Gas Pipelines, To Be Eliminated by the Final Rule in Docket
                                                                     No. RM18-11-002
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                                                                                          Average burden
                                            Respondents    Responses per       Total         hour per      Average cost    Total burden   Total cost ($)
                                                            respondent       responses       response      per response        hours
                                                     (1)             (2)     (1) * (2) =             (4)             (5)     (1) * (4) =     (1) * (5) =
                                                                                     (3)                                             (6)             (7)
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                                                 Interstate Natural Gas Pipelines With Cost-Based Rates
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FERC Form No. 501-G, One-time Report                 129               1           * 129        * 9 hrs.          * $756         * 1,161       * $97,524
 (reduction) 19.........................
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                                                                    Optional Response
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No Response (reduction).................              51               0               0               0               0               0               0
Case for no change (reduction)..........              62               1              62               5             420             310          26,040
Limited Sec 4 filing (reduction) 20.....              15               1              15               6             504              90           7,560
General Sec. 4 filing (reduction) 21....               1               1               1          22 512          42,968             512          42,968
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                                              NGPA Section 311 and Hinshaw Pipelines With Cost-Based Rates
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NGPA rate filing (reduction) 23.........           24 15               1              15              24           2,015             360          30,225
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    Total, To Be Eliminated by RM18-11-           25 144  ..............           * 222  ..............  ..............         * 2,433       * 204,317
     002................................
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* (reduction).

    12. This final rule eliminates all information collection and 
recordkeeping requirements associated with RM18-11-000. The removal of 
the FERC-501G eliminates the estimated annual information collection 
burden (2,433 hours) and cost ($204,317) associated with FERC-501G (OMB 
Control No. 1902-0302).
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    \19\ 18 CFR 260.402 (as revised).
    \20\ 18 CFR 154.404 (as revised).
    \21\ 18 CFR 154.312.
    \22\ The estimate for hours is based on the estimated average 
hours per response for the FERC-545 (OMB Control No. 1902-0154), 
with general NGA section 4, 18 CFR 154.312 filings weighted at a 
ratio of 20 to one.
    \23\ 18 CFR 284.123(i) (as revised).
    \24\ Estimate of number of respondents assumes that states will 
act within one year to reduce NGPA section 311 and Hinshaw pipeline 
rates to reflect the Tax Cuts and Jobs Act.
    \25\ Number of unique respondents = (One-time Report) + (NGPA 
rate filing).
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B. Environmental Analysis

    13. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement

[[Page 29506]]

for any action that may have a significant adverse effect on the human 
environment.\26\ The actions taken here fall within categorical 
exclusions in the Commission's regulations for rules regarding 
information gathering, analysis, and dissemination.\27\ Therefore, an 
environmental review is unnecessary and has not been prepared in this 
rulemaking.
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    \26\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. 
& Regs. ] 30,783 (1987) (cross-referenced at 41 FERC ] 61,284).
    \27\ See 18 CFR 380.4(a)(2)(ii) and (a)(5).
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C. Regulatory Flexibility Act

    14. The Regulatory Flexibility Act of 1980 (RFA) \28\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a rulemaking while minimizing any 
significant economic impact on a substantial number of small entities. 
In lieu of preparing a regulatory flexibility analysis, an agency may 
certify that a final rule will not have a significant economic impact 
on a substantial number of small entities.\29\ In Order No. 849, the 
Commission found that the institution of the new regulations would not 
have a significant impact on a substantial number of small 
entities.\30\ Most of the natural gas pipelines regulated by the 
Commission do not fall within the RFA's definition of a small 
entity.\31\ For the same reasons, removing these regulations will not 
have a significant impact on a substantial number of small entities.
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    \28\ 5 U.S.C. 601-612.
    \29\ 5 U.S.C. 605(b).
    \30\ Order No. 849, 164 FERC ] 61,031 at P 296.
    \31\ In Order No. 849, the Commission determined 3.9% of the 
total potential NGA respondents and 5.1% of the total NGPA section 
311 and Hinshaw pipelines could be considered a small entity. 
Eliminating the filing requirement would eliminate any burden and 
cost from FERC-501G for small and large entities.
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D. Document Availability

    15. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
internet through the Commission's Home Page (http://www.ferc.gov). At 
this time, the Commission has suspended access to the Commission's 
Public Reference Room due to the President's March 13, 2020 
proclamation declaring a National Emergency concerning the Novel 
Coronavirus Disease (COVID-19).
    16. From the Commission's Home Page on the internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    17. User assistance is available for eLibrary and the Commission's 
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

E. Effective Date and Congressional Notification

    18. These regulations are effective August 2, 2021. This rule does 
not alter the substantive rights or interests of any interested 
persons, and it merely removes certain outdated and nonessential 
natural gas regulations from the Commission's body of regulations on a 
prospective basis. Therefore, prior notice and comment under section 4 
of the Administrative Procedure Act (APA) \32\ are unnecessary. The 
Commission has determined that this rule is not a ``major rule'' as 
defined in section 351 of the Small Business Regulatory Enforcement 
Fairness Act of 1996.
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    \32\ 5 U.S.C. 553(b).
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List of Subjects

18 CFR Part 154

    Natural gas, Pipelines, Reporting and recordkeeping requirements.

18 CFR Part 260

    Natural gas, Reporting and recordkeeping requirements.

18 CFR Part 284

    Continental shelf, Natural gas, Reporting and recordkeeping 
requirements.

    By the Commission.

    Issued: May 20, 2021.
Kimberly D. Bose,
Secretary.

    In consideration of the foregoing, the Commission amends parts 154, 
260, & 284, chapter I, title 18, Code of Federal Regulations, as 
follows:

PART 154--RATE SCHEDULES AND TARIFFS

0
1. The authority citation for part 154 continues to read as follows:

    Authority:  15 U.S.C. 717-717w; 31 U.S.C. 9701; 42 U.S.C. 7102-
7352.


Sec.  154.404  [Removed]

0
2. Remove Sec.  154.404.

PART 260--STATEMENTS AND REPORTS (SCHEDULES)

0
3. The authority citation for part 260 continues to read as follows:

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


Sec.  260.402  [Removed]

0
4. Remove Sec.  260.402.

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

0
5. The authority citation for part 284 continues to read as follows:

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


Sec.  284.123  [Amended]

0
6. In Sec.  284.123, remove paragraph (i).

[FR Doc. 2021-11353 Filed 6-1-21; 8:45 am]
BILLING CODE 6717-01-P