[Federal Register Volume 89, Number 160 (Monday, August 19, 2024)]
[Proposed Rules]
[Pages 67040-67056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18138]
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DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials Safety Administration
49 CFR Part 190
[Docket No. PHMSA-2022-0118]
RIN 2137-AF61
Pipeline Safety: Cost Recovery for Siting Reviews for LNG
Facilities
AGENCY: Pipeline and Hazardous Materials Safety Administration
[[Page 67041]]
(PHMSA), Department of Transportation (DOT).
ACTION: Notice of proposed rulemaking (NPRM).
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SUMMARY: PHMSA is proposing a new fee for cost recovery for siting
reviews of liquefied natural gas (LNG) facility project applications
where the design and construction costs total $2.5 billion or more.
This proposed rule is necessary to implement section 103 of the
Protecting our Infrastructure of Pipelines and Enhancing Safety Act of
2020 (PIPES Act of 2020), and to help provide adequate resources for
siting reviews to promote the public safety and environmental
protection objectives of the Office of Pipeline Safety (OPS). This
proposed rule also revises current regulations authorizing PHMSA's cost
recovery for design safety reviews of gas, hazardous liquid, and carbon
dioxide pipeline facilities to improve the clarity of the regulations
and reduce unnecessary administrative burdens.
DATES: Individuals interested in submitting written comments on this
NPRM must do so by October 18, 2024.
ADDRESSES: Comments should reference Docket No. PHMSA-2022-0118 and may
be submitted in any of the following ways:
E-Gov Web: http://www.regulations.gov. This site allows
the public to enter comments on any Federal Register notice issued by
any agency. Follow the online instructions for submitting comments.
Mail: Docket Management System: U.S. Department of
Transportation, 1200 New Jersey Avenue SE, West Building Ground Floor,
Room W12-140, Washington, DC 20590-0001.
Hand Delivery: DOT Docket Management System: West Building
Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, between 9:00
a.m. and 5:00 p.m. EST, Monday through Friday, except federal holidays.
Fax: 202-493-2251.
Instructions: Include the agency name and identify Docket No.
PHMSA-2022-0118 at the beginning of your comments. Note that all
comments received will be posted without change to https://www.regulations.gov including any personal information provided. If you
submit your comments by mail, submit two copies. If you wish to receive
confirmation that PHMSA received your comments, include a self-
addressed stamped postcard.
Confidential Business Information: Confidential Business
Information (CBI) is commercial or financial information that is both
customarily and actually treated as private by its owner. Under the
Freedom of Information Act (5 U.S.C. 552), CBI is exempt from public
disclosure. If your comments in response to this NPRM contain
commercial or financial information that is customarily treated as
private, that you actually treat as private, and that is relevant or
responsive to this NPRM, it is important that you clearly designate the
submitted comments as CBI. Pursuant to 49 Code of Federal Regulations
(CFR) 190.343, you may ask PHMSA to provide confidential treatment to
the information you give to the agency by taking the following steps:
(1) mark each page of the original document submission containing CBI
as ``Confidential;'' (2) send PHMSA a copy of the original document
with the CBI deleted along with the original, unaltered document; and
(3) explain why the information you are submitting is CBI. Submissions
containing CBI should be sent to Alyssa Imam, 1200 New Jersey Avenue
SE, DOT: PHMSA-PHP-30, Washington, DC 20590-0001. Any comment PHMSA
receives that is not explicitly designated as CBI will be placed in the
public docket.
Privacy Act Statement
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the
public to better inform its rulemaking process. DOT posts these
comments, without edit, including any personal information the
commenter provides, to www.regulations.gov, as described in the system
of records notice (DOT/ALL-14 FDMS), which can be reviewed at
www.dot.gov/privacy.
Docket: To access the docket, which contains background documents
and any comments that PHMSA has received, go to https://www.regulations.gov. Follow the online instructions for accessing the
docket. Alternatively, you may review the documents in person at DOT's
Docket Management Office at the address listed above.
FOR FURTHER INFORMATION CONTACT: Alyssa Imam by telephone at 202-738-
4203 or via email at [email protected].
SUPPLEMENTARY INFORMATION:
I. Summary
II. Background and Justification
III. Proposed Amendments
IV. Section-by-Section Analysis
V. Regulatory Analyses and Notices
I. Summary
This proposed rulemaking would implement a mandate in the PIPES Act
of 2020 (Pub. L. 116-260, Division R) to amend the pipeline safety
regulations (49 CFR parts 190-199) to prescribe a fee assessment
methodology for PHMSA to recover its costs in performing 49 CFR part
193, subpart B, siting reviews of applications for new or expanded LNG
facilities with project design and construction costs totaling $2.5
billion or more. PHMSA expects that the cost recovery mechanisms
proposed in this NPRM will help ensure that PHMSA maintains adequate
resources to perform those siting reviews without diverting its limited
resources from other critical dimensions of its regulatory oversight of
jurisdictional gas (including LNG), hazardous liquid, and carbon
dioxide pipeline facilities, while ensuring the costs associated with
the review are borne by the project applicant rather than by all
pipeline operators through the expenditure of operator user fees. The
proposed rule would also revise current regulations authorizing PHMSA's
cost recovery for design safety reviews of gas, hazardous liquid, and
carbon dioxide pipeline facilities to improve the clarity of the
regulations and reduce unnecessary administrative burdens.
II. Background and Justification
PHMSA conducts both a facility design safety review and siting
review of LNG facilities under part 193. PHMSA conducts facility design
safety reviews in connection with applications to the Federal Energy
Regulatory Commission (FERC) or state regulators (as applicable) to
construct, expand, or operate gas (including LNG) and hazardous liquid
(as well as carbon dioxide \1\) pipeline facilities; those reviews
include reviews of application materials and inspections verifying
construction in accordance with the application and pipeline safety
regulations.
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\1\ PHMSA in a parallel rulemaking (under RIN2137-AF64) will
consider expanding the carbon dioxide pipelines subject to PHMSA
regulation--and by extension, the pipelines subject to cost recovery
under part 190 for PHMSA's design safety reviews.
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Prior to the Pipeline Safety, Regulatory Certainty, and Job
Creation Act of 2011 (2011 Act, Pub. L. 112-90), PHMSA did not recover
costs incurred for conducting facility design safety reviews for LNG
facilities or any other pipelines. Section 13 of the 2011 Act, 49
U.S.C. 60117(o), authorized PHMSA to recover costs for facility design
safety reviews if the project application either involved design and
construction costs totaling at least $2.5 billion, or involved new or
novel technologies, designs (such as LNG facilities, whose design,
construction, and employed technology will often materially change from
one project to the next), or new materials. While the 2011 Act allowed
PHMSA to
[[Page 67042]]
recover fees for its costs incurred in performing facility design
safety reviews, the 2011 Act did not allow PHMSA to expend any
collected fees absent specific appropriation by Congress.
In 2017, PHMSA exercised the authority granted in section 13(a) of
the 2011 Act by prescribing a fee structure and assessment methodology
based on the costs of providing design safety reviews of applications
for gas (including LNG) or hazardous liquid (including carbon dioxide)
pipeline facilities.\2\ In that final rule, PHMSA amended the pipeline
safety regulations at part 190, subpart E, to prescribe a fee structure
and assessment methodology for recovering costs associated with design
safety reviews of applications for new projects for gas, hazardous
liquid, LNG, and carbon dioxide pipeline facilities (each with design
and construction costs totaling at least $2.5 billion, or that contain
new and novel technologies).
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\2\ PHMSA, ``Final Rule--Pipeline Safety: Operator
Qualification, Cost Recovery, Accident and Incident Notification,
and Other Pipeline Safety Changes,'' 82 FR 7972 (Jan. 23, 2017).
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PHMSA is also responsible for the review of LNG facility siting;
that review is an input to FERC's evaluation of applications for
authorization to construct and operate a new LNG facility (or an
expansion of an existing LNG facility). During the LNG facility siting
review, PHMSA assesses the siting packages prepared by the applicants
for new or expanded LNG facility projects for compliance with siting
regulations at part 193, subpart B.
PHMSA had historically not been authorized by statute to assess
fees recovering its costs associated with those reviews.\3\ However, in
section 103 of the PIPES Act of 2020, Congress added a new statutory
mandate at 49 U.S.C. 60303 allowing PHMSA to collect fees directly from
operators of LNG facilities to recover the necessary expenses PHMSA
incurs to perform subpart B siting reviews in connection with
applications for new or expanded, large ($2.5 billion or more project
design and construction cost). But Congress did not make that new
statutory authority self-executing; rather, in 49 U.S.C. 60303(b)(1),
Congress directed PHMSA to ``prescribe procedures'' for collection of
those fees. And although Congress omitted from the statutory language
at 49 U.S.C. 60303 explicit authorization to use fees collected from
operators without subsequent congressional appropriations, in the
Consolidated Appropriations Act of 2023 (2023 Act, Pub. L. 117-328),
Congress appropriated $400,000 to the Liquefied Natural Gas Siting
Account for use of any monies collected from cost recovery for LNG
facility subpart B siting reviews.\4\
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\3\ PHMSA notes that for a period of time it worked around this
legislative gap by entering into a Memorandum of Understanding and
related Interagency Agreement with FERC by which FERC reimbursed
PHMSA for the latter's part 193, subpart B, siting reviews.
Memorandum of Understanding (MOU) https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/docs/news/64706/ferc-phmsa-mou.pdf. The
Interagency Agreement was extended several times before expiring in
September 2022.
\4\ Absent action by Congress, the funds appropriated by the
2023 Act will expire at the end of FY2025 (Oct. 1, 2025).
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Therefore, PHMSA proposes in this NPRM to implement the section 103
mandate in the PIPES Act of 2020 by amending its existing cost recovery
regulations at part 190, subpart E, to establish procedures for
assessment and recovery of its necessary expenses in performing part
193, subpart B, siting reviews for applications for large ($2.5 billion
or more) projects for new or expanded LNG facilities. PHMSA understands
that codification of those procedures within its regulations is a
prerequisite for PHMSA accessing funds appropriated by Congress for
such reviews in the 2023 Act and any future appropriations legislation.
Cost recovery of LNG facility siting reviews also ensures the
beneficiaries of those reviews (some of whom may not pay PHMSA any user
fees pursuant to 49 U.S.C. 60301) bear the costs, rather than other
pipeline operators via their own annual user fee obligations. PHMSA
also notes that its access to funds recovering the costs of its part
193, subpart B, siting reviews is critically important given the
increasing strain placed on its limited resources by such reviews. Many
of the same PHMSA personnel performing part 193, subpart B, siting
reviews are also responsible for other regulatory oversight activities
(e.g., design safety reviews, inspections, enforcement, and guidance
and regulation development) related to LNG facilities and other
jurisdictional pipeline facilities. This challenge has become
increasingly pressing in recent years, as PHMSA has performed part 193,
subpart B, siting reviews in connection with dozens of new or expanded
LNG facilities of different sizes and project costs. OPS reports that
among those facilities, large projects (in particular, those projects
with design and construction costs of $2.5 billion or more) have proven
the most challenging. OPS estimates that PHMSA engineers and support
personnel have historically spent an aggregate of around 550 person-
hours--roughly equivalent to a quarter of the total working hours a
single PHMSA engineer works in a year--on each part 193, subpart B,
siting review conducted for those projects.\5\ Lastly, the demands on
PHMSA personnel resources in performing LNG facility siting reviews
comes at the same moment as PHMSA's jurisdictional responsibilities
have increased. PHMSA has recently expanded the scope of pipeline
facilities for which it provides regulatory oversight to include Type C
gas gathering pipelines, and in a forthcoming rulemaking consider
expanding the scope of its part 195 regulations to address increased
interest in expansion of pipeline infrastructure supporting carbon
capture, use, and sequestration applications.\6\
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\5\ PHMSA also notes that many of the large LNG facility
projects in fact involve two part 193, subpart B, siting reviews,
each consisting of nearly identical work efforts--one in advance of
issuance of a FERC certificate authorizing construction and
operation of a facility, and another in response to material changes
in the design of the facility during the construction phase.
\6\ PHMSA, ``Final Rule--Safety of Gas Gathering Pipelines:
Extension of Reporting Requirements, Regulation of Large, High-
Pressure Lines, and Other Related Amendments,'' 86 FR 63266 (Nov.
15, 2021); see also n.1 above.
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III. Proposed Amendments
The existing regulations in 49 CFR part 190, subpart E, prescribe a
fee structure and assessment methodology for recovering costs from
design safety reviews of applications to FERC for new or expanded gas,
LNG, hazardous liquid, and carbon dioxide pipeline facility projects
with either project design and construction costs totaling at least
$2.5 billion, or that contain new or novel technologies and designs.
PHMSA proposes to revise part 190, subpart E, to also prescribe a fee
structure and assessment methodology for recovering costs associated
with its 49 CFR part 193, subpart B, siting reviews of applications for
new or expanded LNG facility projects with design and construction
costs totaling at least $2.5 billion. This proposal will execute
PHMSA's authority granted in section 103 of the PIPES Act of 2020;
PHMSA expects the commercial, public safety, and environmental benefits
of this NPRM's proposed regulatory amendments described herein will
outweigh any associated costs and support PHMSA's proposed rule
compared to alternatives.
PHMSA's proposed regulatory amendments are expected to improve
public safety and reduce threats to the environment by ensuring that
PHMSA has adequate funding to perform high-quality part 193, subpart B,
LNG facility siting reviews without diverting resources from other
critical regulatory
[[Page 67043]]
oversight functions over jurisdictional gas (including LNG), hazardous
liquid, and carbon dioxide pipeline facilities. The proposed amendments
also ensure that the costs of performing siting reviews are borne by
the project applicants rather than through annual user fees paid by all
pipeline facility operators. PHMSA also expects its proposed amendments
would be technically feasible, reasonable, cost-effective, and
practicable for affected entities seeking FERC authorization for large
($2.5 billion or more) LNG facility project applications. PHMSA's
proposed requirement that applicants provide notice and supporting
documentation to PHMSA in parallel with submission of their certificate
application to FERC is an incremental addition on existing FERC
procedural requirements. And although PHMSA's proposed fees for LNG
facility part 193, subpart B, siting reviews would be a new line item
cost for such applicants, PHMSA's projections for those fees for each
review (found in section V.B below) would be trivial (roughly 0.0024
percent) compared to the $2.5 billion minimum design and construction
costs of pertinent project applications. Further, PHMSA has designed
its proposed approach to imposing fees in a way that maximizes
regulatory certainty for affected entities. Specifically, PHMSA is
proposing each part 193, subpart B, siting review fee to consist of (1)
an up-front fee for estimated costs calculated from historical
personnel costs involved in performing siting reviews for LNG facility
project applications with design and construction costs of $2.5 billion
or more; and (2) a true-up payment to PHMSA at conclusion of that
review should PHMSA's costs exceed the fee paid up-front based on
PHMSA's estimated historical personnel costs. PHMSA's timely access to
adequate financial resources to perform part 193, subpart B, siting
reviews as those reviews initiate also benefits project applicants by
facilitating timely completion of such reviews, while ensuring that
PHMSA complies with the applicable legal requirements under
appropriations law and 49 U.S.C. 60303. Viewed against those
considerations and the compliance costs estimated in section V.A of
this NPRM, PHMSA expects its proposed amendments will be a cost-
effective approach to achieving the commercial, public safety, and
environmental benefits discussed herein. Lastly, PHMSA believes that
its proposed compliance timelines--based on an effective date of the
proposed requirement of 120 days after publication of a final rule in
this proceeding (which would be in addition to the time since issuance
of this NPRM)--would provide affected project applicants ample time to
manage any related compliance costs.
A. Expand the Scope of and Criteria for Cost Recovery To Include LNG
Facility Siting Reviews (Sec. Sec. 190.401 and 190.403)
Section 190.401 describes the scope of the part 190, subpart E,
cost recovery requirements, which currently do not allow for cost
recovery for part 193, subpart B, siting reviews for LNG facility
project applications. PHMSA proposes to amend the scope of its cost
recovery regulation at Sec. 190.401 to add a new paragraph (b)
extending that provision's scope to include siting reviews for large
($2.5 billion or more design and construction costs) LNG facility
project applications, and require the applicant proposing a project to
pay fees for the costs incurred by PHMSA relating to such reviews. This
amendment would execute the mandate in section 103 of the PIPES Act of
2020 that PHMSA collect costs incurred for performing those LNG
facility siting reviews of applications for new or expanded LNG
facility projects with project design and construction costs totaling
at least $2.5 billion. This change would also clarify that cost
recovery for those LNG facility siting reviews must meet the criteria
for applicability specified in Sec. 190.403. PHMSA also proposes a
clerical amendment to existing language listing pipeline facilities
subject to cost recovery to better align the existing text of Sec.
190.401 (relocated within a new paragraph (a)) with the applicability
requirements in Sec. 190.403.
Section 190.403 specifies which applications \7\ for pipeline
facility projects are subject to cost recovery requirements. PHMSA has
reviewed the current regulatory language in paragraph (a) of that
provision and has concluded that much of that language is expansive
enough that it does not need amendment to allow for cost recovery of
PHMSA's part 193, subpart B, siting reviews. The language in paragraph
(a) refers broadly to ``applications'' for ``projects'' without
explicitly limiting those projects in terms of the type of review
(e.g., those governing design safety reviews or LNG facility siting
reviews) PHMSA conducts. Paragraph (a) also employs a monetary
threshold for each project application subject to PHMSA cost recovery
(project design and construction costs of least $2.5 billion) that is
identical to the threshold identified in the statutory authorization
for part 193, subpart B, siting review cost recovery in section 103 of
the PIPES Act of 2020. However, because PHMSA understands that
applications to FERC for LNG facilities do not always contain estimated
design and construction costs for those facilities,\8\ PHMSA proposes
amendment of existing paragraph (a)(ii) to provide for forwarding to
PHMSA of a good faith estimate of design and construction costs for
those projects that do not include such estimated costs in their FERC
application. PHMSA has also revised and relocated within a new
paragraph (a)(1)(iii) other language within existing paragraph
(a)(1)(ii) describing the cost elements informing development of such
good faith estimates. PHMSA also proposes a conforming revision to
paragraph (c) clarifying that the estimated costs of design and
construction of a pipeline facility is among the ``related materials''
applicants should submit to PHMSA pursuant to Sec. 190.403.
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\7\ PHMSA does not expect that entities engaging in mandatory or
discretionary pre-filing processes with FERC or those other
authorities need to notify PHMSA until formal submission of their
project application.
\8\ PHMSA also understands that applicants for FERC certificates
for LNG facility projects will often submit with their application
for the LNG facility an application for the gas supply pipeline
connecting the LNG facility to the interstate gas transmission
system. Because PHMSA understands its $2.5 billion monetary
threshold applies only to the design and construction costs for the
LNG facility itself (and not its natural gas supply pipeline), PHMSA
expects that applicants will distinguish between the costs of those
facilities when submitting notifications to PHMSA as proposed in
this NPRM.
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Paragraph (b) of Sec. 190.403 also currently contains language
codifying in regulation the statutory language at 49 U.S.C.
60117(o)(1)(A) barring PHMSA from ``double-dipping'' to recover costs
for the same design/construction reviews via both its cost recovery
authority pursuant to 49 U.S.C. 60117(o) and its authority to impose
user fees pursuant to 49 U.S.C. 60301. Specifically, paragraph (b)
states that ``[t]he Associate Administrator may not collect design
safety review fees under this section [implementing 49 U.S.C. 60117(o)]
and 49 U.S.C. 60301 for the same design safety review.'' The PIPES Act
of 2020 codified at 49 U.S.C. 60303(a)(2) an analogous prohibition
preventing PHMSA from ``double-dipping'' to recover costs associated
with its part 193, subpart B, siting reviews for LNG facilities
pursuant to both 49 U.S.C. 60303 and either of its 49 U.S.C. 60117(o)
design/construction cost recovery authority or its 49 U.S.C.
[[Page 67044]]
60301 user fee authority.\9\ PHMSA therefore proposes to amend Sec.
190.403(b) to incorporate that new statutory prohibition into
regulation. PHMSA has also made clerical amendments to the existing
Sec. 190.403(b) to accommodate the addition of that new statutory
prohibition.
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\9\ Should an applicant for an LNG facility project voluntarily
request PHMSA consider design and construction elements within
PHMSA's part 193, subpart B, siting review, PHMSA reserves
discretion to recover costs for review of those elements during one
or both of its part 193, subparts B (siting) or C and D (design &
construction) safety reviews.
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Lastly, PHMSA's proposal would make changes in Sec. 190.403 to
identify materials it reviews when performing a part 193, subpart B,
LNG facility siting review. Specifically, PHMSA proposes a new
paragraph (d)--modeled on existing paragraph (c) identifying materials
PHMSA reviews in connection with its design safety reviews for gas
(including LNG), hazardous liquid, and carbon dioxide pipelines--for
part 193, subpart B, LNG facility siting reviews. From those materials,
the Associate Administrator shall develop and provide, as soon as
practicable after notification of an application pursuant to Sec.
190.405, an estimated cost for performing that review. PHMSA has chosen
this approach for cost recovery for LNG facility siting reviews to
ensure it has adequate resources in place to perform such reviews on
initiation, thereby avoiding the need for protracted negotiation of a
Master Agreement as provided by existing part 190, subpart E, cost
recovery for design safety reviews.
B. Expand Notification Requirements To Include Applications for LNG
Facility Projects With Design and Construction Costs Totaling or
Exceeding $2.5 Billion (Sec. 190.405)
Section 190.405 requires the applicant for any new pipeline
facility project in which PHMSA will conduct a design safety review to
notify PHMSA and provide with that notification specific materials that
(including the design specifications and construction plans and
procedures) PHMSA will typically examine during such reviews. Section
190.405 also identifies a 90-day target for PHMSA to provide the
applicant its written feedback on those materials.
PHMSA now proposes a handful of amendments of Sec. 190.405 for
improved cost recovery procedural mechanics and to accommodate
extension of that provision's notification requirements to part 193,
subpart B, siting reviews for LNG facility project applications.
Specifically, PHMSA proposes redesignating the existing text in Sec.
190.405 as a new paragraph (a), and amending that language to
explicitly address part 193, subpart B, LNG facility siting reviews.
Consistent with its proposed expansion of the Sec. 193.405
notification requirement, PHMSA also proposes adding examples of
additional siting-related activities (e.g., site preparation) that are
important milestones related to siting of an LNG facility within the
list of existing design/construction-focused activities triggering the
Sec. 193.405 documentation requirement. PHMSA also proposes a new
paragraph (b) stating that it reserves discretion to delay initiation
of its part 193, subpart B, LNG facility siting reviews until receipt
of payment in full of the estimated review costs provided for a project
application pursuant to proposed Sec. 190.403(d).
PHMSA also proposes a new paragraph (c) stating explicitly that LNG
facility project applicants seeking part 193, subpart B, LNG facility
siting reviews must provide PHMSA timely notification of both material
changes to an application (i.e., changes to project applications
resulting in significant changes to the materials submitted to PHMSA
pursuant to Sec. 190.405(a)) and any change in the estimated design
and construction costs for the project (e.g., as a result of those
changes to the design and construction of the facilities, or increased
labor, material, or financing costs) that would result in the project
meeting or exceeding the monetary threshold in Sec. 190.403(a)(1).\10\
LNG facilities are time, capital, labor, and material-intensive
projects--changes in the cost of one or more of those factors may
result in design and construction costs rising significantly between
submission of a FERC application and completion of construction.
PHMSA's proposed change would ensure that PHMSA will be able to recover
its costs in conducting part 193, subpart B, LNG facility siting
reviews as project costs increase above the $2.5 billion monetary
threshold for cost recovery. Similarly, design changes during the
construction phase of an LNG facility project (i.e., after issuance of
the FERC certificate) may materially affect assumptions supporting the
analysis within PHMSA's part 193, subpart B, siting review,
necessitating PHMSA perform that review again. Notification of those
design changes will facilitate PHMSA's recovery of its costs in
performing any additional part 193, subpart B, siting reviews required
by material changes to facility design during construction.
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\10\ PHMSA expects that cost recovery for part 193, subpart B,
siting reviews proposed herein will attach to any notification--
whether an initial notification per proposed paragraph (a), or a
later notification per proposed paragraph (c)--submitted to PHMSA
after the effective date of a final rule in this proceeding.
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C. Conform Amendments to Master Agreement Requirements for Facility
Design Safety Reviews (Sec. 190.407)
Section 190.407 describes the content of Master Agreements entered
into between PHMSA and applicants for those projects the Associate
Administrator has determined recovery of PHMSA's costs in performing
facility design safety reviews is necessary. PHMSA proposes clarifying
revisions to the prefatory language of this provision to reflect the
expansion of part 190, subpart E, cost recovery procedures to allow for
cost recovery for part 193, subpart B, LNG facility siting reviews.
D. Expand Fee Structure To Include LNG Siting Reviews (Sec. 190.409)
Section 190.409 describes the cost recovery fee structure for
design reviews of gas (including LNG), hazardous liquid, and carbon
dioxide pipeline facilities with overall design and construction costs
totaling at least $2.5 billion, or that contain new or novel
technologies and designs. PHMSA proposes adding LNG siting reviews to
Sec. 190.409 with no change to the species of qualifying costs
identified in this provision. PHMSA proposes revising the introductory
text to codify that the basis of the fees that PHMSA will charge is to
recover the costs for LNG facility siting reviews.
Applicable to all facilities, PHMSA is also proposing to remove the
definition of ``necessary for'' in Sec. 190.409. In the context of the
fee structure, Sec. 190.409 currently states that the costs will be
based only on costs ``necessary for'' conducting the facility design
safety review. Section 190.409 goes on to state that ``necessary for''
means ``that but for the facility design safety review, the costs would
not have been incurred and that the costs cover only those activities
and items without which the facility design safety review cannot be
completed.'' PHMSA is proposing to remove this definition from this
section to improve the readability of Sec. 190.409, and to avoid
confusion regarding what is or is not a cost that would not have been
incurred ``but for'' a design safety or LNG facility siting review.
PHMSA notes that some of the same PHMSA personnel may continue to
perform regulatory oversight of compliance with pipeline safety
regulations before and after reviews subject to part 190, subpart E,
cost recovery are completed such that attribution of personnel costs
exclusively to that review will prove impracticable in practice. That
said,
[[Page 67045]]
PHMSA notes that other existing or proposed procedural mechanics in
part 190, subpart E, will serve the same purpose as the deleted
reference to ``necessary'' costs by addressing the double-dipping
concern that had motivated introduction of that language in Sec.
190.409. First, the language at Sec. 190.409(b) would codify in
regulation the statutory prohibitions against double-dipping at 49
U.S.C. 60117(o)(1)(A) and 49 U.S.C. 60303(a)(2). Second, the
negotiation of Master Agreements (to include audit rights) for design
safety reviews pursuant to Sec. 190.407(a)(3) would provide
opportunities for applicants to ensure PHMSA's cost recovery is focused
on its bona fide costs in performing those reviews. Third, and lastly,
PHMSA has designed the fee structure for LNG facility siting reviews
proposed herein based on historical personnel costs in performing those
reviews.
E. Modify Billing and Payment Procedures To Require Payment Upon
Receipt (Sec. 190.411)
Section 190.411 describes the procedural mechanics for billing and
payment of facility design safety reviews for which the Associate
Administrator has determined that cost recovery is necessary. PHMSA
proposes several amendments to this provision to introduce procedures
specific to billing and payment of fees for PHMSA's costs in performing
part 193, subpart B, LNG facility siting reviews. First, PHMSA proposes
to redesignate the current prefatory text governing billing and payment
of fees for design safety reviews as a new paragraph (a); current
paragraphs (a) through (d) will be redesignated as paragraphs (a)(1)
through (4).
Second, PHMSA proposes redesignating as a new paragraph (c) current
language at paragraph (e) asserting its discretion to exercise
regulatory oversight notwithstanding any receipt of fees for recovery
of its costs for facility design safety reviews. PHMSA also proposes
amendments to newly designated paragraph (c) for clarity, and to
reflect the proposed amendment of part 190, subpart E, cost recovery
procedures to include cost recovery for LNG facility siting reviews.
Third, PHMSA proposes a new paragraph (b) establishing billing and
payment procedures for each part 193, subpart B, LNG facility siting
review. Specifically, before initiation of each review, PHMSA will
provide applicants a bill for its estimated costs and will not begin
its review until payment of the fee for those estimated costs.\11\ The
up-front fee for PHMSA's estimated costs has been calculated as $65,000
for calendar year 2024. That value is derived from the personnel costs
associated with historical work efforts (measured in hours and set
forth in the table below) by PHMSA personnel involved in performing
siting reviews for LNG facility project applications with design and
construction costs of $2.5 billion or more.
---------------------------------------------------------------------------
\11\ As explained in sections II and III.B above, over the
course of its lifecycle from initial application to completion of
construction, an LNG facility project may require PHMSA to perform
more than one part 193, subpart B, siting review. Therefore, PHMSA
notes that each time it has to perform this review (largely
identical in terms of work effort), it will impose a separate up-
front fee pursuant to Sec. 190.411(b).
Table 1--Hours Associated With Historical Work Efforts
------------------------------------------------------------------------
Estimated number
of hours
contributing to
Title Pay grade complete part 193
siting review for
$2.5 billion
project
------------------------------------------------------------------------
Deputy Associate Administrator....... SES 5
Director............................. GS-15 10
Supervisory General Engineer......... GS-14 68
General Engineer (Lead).............. GS-14 420
General Engineer (Support)........... GS-9 40
Technical Writer..................... GS-9 1
Attorney Advisor Manager............. GS-15 1
Staff Attorney Advisor............... GS-14 8
------------------------------------------------------------------------
PHMSA then multiplied those historical work efforts by hourly rates
derived from annual salaries for Senior Executive Service (SES) and
General Schedule (GS) employees in the Baltimore/Washington area (the
location of PHMSA's headquarters) published within salary tables on the
Office of Personnel Management's (OPM) website.\12\ PHMSA used these
calculated wages to estimate total personnel costs, including
miscellaneous benefits (e.g., FICA, FERS contribution, health
insurance, etc.) not accounted for in OPM salary tables.\13\ PHMSA's
up-front fee for its estimated costs billed to project applicants will
automatically change in future calendar years to reflect OPM's
adjustments to those salary tables.
---------------------------------------------------------------------------
\12\ OPM, ``Salaries and Wages--2024,'' https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/ (last visited Mar.
4, 2024). PHMSA further notes that in using those salary tables it
has--to yield more conservative numbers regarding the compliance
costs for this rulemaking--employed in its calculations salaries
corresponding to (1) the fifth step for each grade on the GS scale,
and (2) the high end of the range for SES salaries.
\13\ Bureau of Labor Statistics, Press Release No. USDL-23-2567,
``Employer Costs for Employee Compensation'' (Dec. 15, 2023),
https://www.bls.gov/news.release/pdf/ecec.pdf (noting that non-
salary employee compensation for state and local government
employees--which PHMSA believes is a reasonable proxy for federal
government employee compensation--makes up 38 percent of total
compensation).
---------------------------------------------------------------------------
At the conclusion of each part 193, subpart B, LNG facility siting
review--but before it issues a finding on compliance--PHMSA will
calculate the difference between the fee paid for estimated costs and
its actual costs for those costs identified in Sec. 190.409, and then
bill the applicant for the balance. PHMSA also proposes that it would
be able to withhold its finding of compliance with part 193, subpart B,
requirements until the applicant has paid any outstanding fees. PHMSA
does not contemplate that an applicant would be entitled to refund of
fees for LNG facility siting reviews paid pursuant to part 190, subpart
E, should PHMSA's actual costs either not meet the up-front fee for
estimated costs, or the applicant withdraws or amends an
[[Page 67046]]
application for its project such that it no longer meets the monetary
threshold at Sec. 190.403(a).
PHMSA expects the two-stage approach proposed in the new paragraph
(b) will ensure it has timely access to funds needed to verify
compliance with part 193, subpart B, LNG facility siting requirements.
PHMSA notes that those reviews are inputs to decision-making by another
agency (FERC); by avoiding potentially protracted negotiation of a
Master Agreement as contemplated by current part 190, subpart E,
procedures, PHMSA can ensure that, at the initiation of its review, it
will have adequate resources to begin and complete those reviews
without introducing significant delay in FERC's review of certificate
applications for LNG facility projects. And should those estimated
costs ultimately prove lower than PHMSA's actual costs, PHMSA proposes
a ``true-up'' mechanism employed at the conclusion of each review to
ensure that PHMSA is made whole, thereby reducing the risk of diversion
of its limited personnel resources from other jurisdictional oversight
activities. Additionally, PHMSA's proposal to condition its issuance of
a determination regarding compliance with part 193, subpart B, LNG
facility siting review upon receipt of any outstanding fees would avoid
scenarios whereby an applicant delays or avoids payment either because
they are unhappy with PHMSA's determination or because they have
already obtained the benefit of that determination within FERC's
certificate review.
IV. Section-by-Section Analysis
Subpart E Title
PHMSA proposes to amend the heading of part 190, subpart E to read,
``Cost Recovery for Design Reviews and LNG Siting Reviews.'' This
proposal would clarify that LNG siting reviews are included in the cost
recovery requirements in 49 CFR part 190, subpart E.
Section 190.401--Scope
This section describes PHMSA review activities for which the
provisions at part 190, subpart E, allow cost recovery. Currently, such
cost recovery is limited to recovery of costs associated with PHMSA's
design safety review of applications for certain projects involving new
or expanded, large gas (including LNG), hazardous liquid, or carbon
dioxide pipeline facilities. PHMSA proposes to amend this section by
redesignating the current regulatory text as paragraph (a); adding a
new paragraph (b) to codify that PHMSA will recover its costs in
conducting LNG facility siting reviews under part 193, subpart B; and
making a clerical revision within paragraph (a) to better align Sec.
190.401 with Sec. 190.403 applicability requirements.
Section 190.403--Applicability
This section describes criteria (including a $2.5 billion project
monetary threshold) for project applications of gas (including LNG),
hazardous liquid, or carbon dioxide pipeline facilities in which PHMSA
may recover its review costs as contemplated by Sec. 190.401. PHMSA
proposes to amend the language in existing paragraph (a)(ii) to provide
for application of part 190, subpart E, cost recovery monetary
threshold requirements to LNG facility projects whose FERC applications
may not contain an estimate of project design and construction costs.
PHMSA also proposes to relocate within a new paragraph (a)(1)(iii)
existing text at Sec. 190.403(a)(1)(ii) describing the cost elements
informing development of such good faith estimates. PHMSA also proposes
to introduce a new Sec. 190.403(b) mirroring a statutory prohibition
in the PIPES Act of 2020 barring PHMSA from collecting fees under
multiple statutory authorities (and their implementing regulations) for
the same LNG facility siting review. PHMSA also proposes a conforming
revision to paragraph (c) clarifying that the estimated costs of design
and construction of a pipeline facility are among the ``related
materials'' applicants should submit to PHMSA pursuant to Sec.
190.403. Lastly, PHMSA proposes to introduce a new paragraph (d)
identifying application materials PHMSA will review in connection with
its part 193, subpart B, LNG facility siting reviews.
Section 190.405--Notification
This section identifies notification and documentation submission
requirements for applicants for large ($2.5 billion or more design and
construction costs) projects on gas, LNG, hazardous liquid, and carbon
dioxide pipelines facilities. PHMSA proposes to modify Sec. 190.405 by
redesignating the existing text as a new paragraph (a), and amending
that text to accommodate expanded application of those notification
requirements to LNG facility siting reviews under part 193, subpart B.
PHMSA also proposes to introduce a new paragraph (b) reserving
discretion to delay review of submitted materials for LNG facility
siting reviews until payment in full of the fee of the estimated costs
for such review. Lastly, PHMSA proposes a new paragraph (c) requiring
applicants for new or expanded LNG facility projects to notify PHMSA of
any material changes to documentation submitted to PHMSA pursuant to
Sec. 195.405, or changes to estimated project design and construction
costs that would cause the project to exceed the monetary threshold in
Sec. 195.403(a).
Section 190.407--Master Agreement
Section 190.407 describes the content of Master Agreements entered
into between PHMSA and applicants for those projects the Associate
Administrator has determined recovery of PHMSA's costs in performing
facility design safety reviews is necessary. PHMSA proposes clarifying
revisions to the prefatory language of this provisions to distinguish
between procedures for cost recovery in connection with design safety
reviews (which will involve applicants entering into Master Agreements
for such cost recovery) and part 193, subpart B, LNG facility siting
reviews (which will not require applicants to enter into Master
Agreements for such cost recovery).
Section 190.409--Fee Structure
PHMSA proposes revising the introductory text to codify the basis
of the fees PHMSA will charge to recover the costs for LNG siting
reviews. PHMSA also proposes removing the definition of ``necessary
for'' and all uses of ``necessary for'' in this section, as this
language has not served to clarify the regulations as PHMSA intended.
Section 190.411--Procedures for Billing and Payment of Fee
Section 190.411 describes procedures for billing and payment of
fees for cost recovery of PHMSA's design safety reviews. PHMSA proposes
a series of amendments to this provision to accommodate procedural
mechanisms for cost recovery of part 193, subpart B, LNG facility
siting reviews.
[[Page 67047]]
First, PHMSA proposes to redesignate the current prefatory text
governing fees for cost recovery in connection with facility design
safety reviews as a new paragraph (a); existing paragraphs (a)-(d) will
then be redesignated as paragraphs (1)-(4) within the new paragraph
(a).
Second, PHMSA proposes introduction of a new paragraph (b)
establishing the procedural mechanism for billing and payment of fees
for estimated costs for each LNG facility siting review before PHMSA
initiates each review, as well as subsequent adjustment of those fees
based on PHMSA's actual costs in performing each review. PHMSA proposes
those up-front fees for its estimated costs will be derived from the
personnel costs associated with historical work efforts by PHMSA
personnel involved in performing siting reviews for LNG facility
project applications with design and construction costs of $2.5 billion
or more, and will automatically change in future calendar years to
reflect changes in the salaries of pertinent employees memorialized on
OPM's website. PHMSA also proposes that, before issuance of a finding
of compliance with its part 193, subpart B, requirements, it will bill
the project applicant for any difference in the actual costs incurred
by PHMSA and the up-front fee for its estimated costs; issuance of
PHMSA's compliance determination will be contingent on an applicant's
payment of any outstanding fees as a result of that adjustment process.
Third, and lastly, PHMSA proposes redesignating and clarifying the
disclaimer at existing paragraph (e) regarding PHMSA's discretion to
exercise its authorities under law to protect public safety and the
environment as a new paragraph (c).
V. Regulatory Analyses and Notices
A. Statutory/Legal Authority for This Rule
This proposed rule is published under the authority of the
Secretary of Transportation (Secretary) delegated to the PHMSA
Administrator pursuant to 49 CFR 1.97. Among the statutory authorities
delegated to PHMSA are those set forth in the federal pipeline safety
statutes (49 U.S.C. 60101 et seq.). Section 60102 authorizes the
Secretary to issue regulations governing the design, installation,
inspection, emergency plans and procedures, testing, construction,
extension, operation, replacement, and maintenance of pipeline
facilities. Section 60117(o) directs the Secretary to prescribe
procedures for fees recovering PHMSA's costs in performing design
safety reviews for jurisdictional pipeline facilities. Lastly, section
103 of the PIPES Act of 2020 (codified at 49 U.S.C. 60303) requires the
Secretary to establish procedures for recovering PHMSA's costs in
performing LNG facility siting reviews pursuant to 49 CFR part 193,
subpart B.
B. Executive Order 12866 and 14094; DOT Regulatory Policies and
Procedures
Executive Order 12866 (``Regulatory Planning and Review''), as
amended by Executive Order 14094 (``Modernizing Regulatory Review''),
requires that agencies ``assess all costs and benefits of available
regulatory alternatives, including the alternative of not regulating.''
\14\ Agencies should consider quantifiable measures and qualitative
measures of costs and benefits that are difficult to quantify. Further,
Executive Order 12866 requires that agencies select those regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety, and other advantages;
distributive impacts; and equity), unless a statute requires another
regulatory approach. Similarly, DOT Order 2100.6A (``Rulemaking and
Guidance Procedures'') requires that regulations issued by PHMSA and
other DOT Operating Administrations consider an assessment of the
potential benefits, costs, and other important impacts of the proposed
action, and should quantify (to the extent practicable) the benefits,
costs, and any significant distributional impacts, including any
environmental impacts.
---------------------------------------------------------------------------
\14\ Executive Order 12866 is available at 58 FR 51735 (Oct. 4,
1993); Executive Order 14094 is available at 88 FR 21879 (Apr. 6,
2023).
---------------------------------------------------------------------------
Executive Order 12866 (as amended by Executive Order 14094) and DOT
Order 2100.6A require that PHMSA submit ``significant regulatory
actions'' to the Office of Management and Budget (OMB) for review. NPRM
is not a significant regulatory action under section 3(f) of Executive
Order 12866 (``Regulatory Planning and Review'') and, therefore, was
not reviewed by OMB; nor is this NPRM considered a significant
rulemaking under DOT Order 2100.6A.
Executive Order 12866 (as amended) and DOT Order 2100.6A also
require PHMSA to provide a meaningful opportunity for public
participation, which reinforces requirements for notice and comment in
the Administrative Procedure Act (APA, 5 U.S.C. 551 et seq.). In accord
with the requirement, PHMSA seeks public comment on the proposals in
the NPRM (including preliminary cost and cost savings analyses
pertaining to those proposals, as well as discussions of the public
safety, environmental, and equity benefits), as well as any information
that could assist in evaluating the benefits and costs of PHMSA's NPRM.
Consistent with Executive Order 12866 (as amended by Executive
Order 14094) and DOT Order 2100.6A, PHMSA has assessed the benefits and
costs of the proposed rule as well as reasonable alternatives. As
discussed in section II above, this rulemaking implements a mandate by
Congress in section 103 of the PIPES Act of 2020 for the establishment
of procedures for recovery of PHMSA's costs in performing part 193,
subpart B, design reviews of large ($2.5 billion or more design and
construction costs) LNG facility project applications to FERC. PHMSA
expects the proposed rule could result in unquantified public safety
and environmental benefits by preventing the potential diversion of
PHMSA's limited resources from the Agency's other pipeline safety
regulatory oversight responsibilities to cover costs associated with
PHMSA's LNG facility siting reviews for those projects. However,
because it is not clear which activities would go unfunded due to the
costs of conducting LNG facility siting reviews, PHMSA is unable to
quantify those benefits with a meaningful degree of certainty.
PHMSA acknowledges that its proposed new fees providing cost
recovery for its part 193, subpart B, LNG facility siting reviews will
impose a new line item cost on affected applicants seeking FERC
authorization to construct and operate certain LNG facilities. Pursuant
to an August 2018 Memorandum of Understanding (MOU) between FERC and
PHMSA, FERC agreed to reimburse PHMSA for direct costs that PHMSA
incurred performing LNG facility siting reviews that are considered in
FERC's authorization certificate application process. FERC and PHMSA
subsequently entered into an interagency agreement whereby FERC
reimbursed PHMSA for time spent by PHMSA staff to complete siting
reviews for LNG facilities. The funds FERC used for those
reimbursements were not passed along as a cost to applicants. The fees
proposed herein will, therefore, be a new cost for affected applicants.
Since the August 2018 FERC/PHMSA MOU, PHMSA has on average
completed seven siting reviews for LNG facility applications of any
size per year, with a typical breakdown of labor required from PHMSA
employees for large facilities (design and construction
[[Page 67048]]
costs of $2.5 billion or more) as laid out in the table below.\15\
---------------------------------------------------------------------------
\15\ From September 2018 through October 2022, PHMSA performed
siting reviews on a total of 38 active projects of any size.
Table 2--Typical Labor Required From PHMSA Employees for Large LNG Facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated number of hours
contributing to complete Hourly rate (assuming 2024
Title Pay grade + step part 193 siting review from WDC, step 5 for each pay
beginning to end for $2.5 scale)
billion project
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deputy Associate Administrator................................ SES 5 $107
Director...................................................... GS-15 10 89
Supervisory General Engineer.................................. GS-14 68 76
General Engineer (Lead)....................................... GS-14 420 76
General Engineer (Support).................................... GS-9 40 37
Technical Writer.............................................. GS-9 1 37
Attorney Advisor Manager...................................... GS-15 1 89
Staff Attorney Advisor........................................ GS-14 8 76
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total base salary of personnel for each review: $41,000.............................................................................................
Aggregate personnel costs for each review (assuming non-salary benefits make up 38% of employee compensation): \16\ $65,000.........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Hourly rates based on step 5 for each GS level (per OPM's 2024 WDC pay scale) and 2024 maximum SES pay level. See https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/.
\16\ PHMSA uses BLS estimates for state and local government employee compensation as a proxy for federal government employee compensation (obtained
from https://www.bls.gov/news.release/pdf/ecec.pdf, last accessed March 15, 2024). Wages are estimated to make up 62 percent of employee compensation,
with non-wage benefits making up the remaining 38 percent. Equivalently, non-wage benefits are valued at approximately 61 percent of wages (1/0.62 =
1.61).
PHMSA calculates the cost of an average siting review to include
approximately $41,000 in wages, and an additional $14,000 in non-wage
benefits, for an average per siting review cost of $65,000.\17\ PHMSA
projects that, notwithstanding continued demand for LNG worldwide, the
volume of its review of applications for new, large LNG facility
projects of the sort that would be subject to the fees proposed herein
will decrease going forward, given reduced interest in building new LNG
facilities due to large-scale LNG export terminals that have already
been built or authorized, and a wave of recently announced LNG export
projects in other exporting countries.\18\ PHMSA has therefore
conservatively estimated that (1) the current average of seven reviews
for facilities of any size per year would reduce to six over the next
three years, then to five, and finally four per year over the remaining
years within a 10-year forecast period; and (2) those reviews would be
for large ($2.5 billion or more design and construction costs) projects
that would be subject to the cost recovery requirements proposed
herein. Similarly, PHMSA expects that its own personnel costs in
conducting part 193, subpart B, siting reviews for those facilities
will be at or near its historical estimated average of $65,000 per
review throughout the analysis period as that value accounts for a
range of LNG facility projects--some well in excess of, and some closer
to, the $2.5 billion monetary threshold PHMSA proposes in this
NPRM.\19\
---------------------------------------------------------------------------
\17\ PHMSA uses BLS estimates for state and local government
employee compensation as a proxy for federal government employee
compensation (obtained from https://www.bls.gov/news.release/pdf/ecec.pdf, last accessed March 15, 2024). Wages are estimated to make
up 62 percent of employee compensation, with non-wage benefits
making up the remaining 38 percent. Equivalently, non-wage benefits
are valued at approximately 61 percent of wages (1/0.62 = 1.61).
\18\ See, e.g., Reuters, ``IEA Says ``Unprecedented'' Supply
Surge Could Lead to LNG Glut from 2025'' (Oct. 24, 2023), https://www.reuters.com/markets/commodities/iea-says-unprecedented-supply-surge-could-lead-lng-glut-2025-2023-10-24/, and Reuters, ``Qatar's
LNG Bigger LNG Expansion Could Squeeze Out United States, other LNG
Rivals'' (Feb. 27, 2024), https://www.reuters.com/business/energy/qatars-new-lng-expansion-plans-squeeze-out-us-other-rivals-2024-02-27/. PHMSA notes this projection is consistent with the relatively
few U.S. LNG export terminals currently before, or anticipated by,
FERC's website. See supra note 18.
\19\ PHMSA acknowledges that it is also proposing miscellaneous
clerical revisions to various existing provisions of part 190,
subpart E (governing design safety reviews of jurisdictional
pipeline facilities), but expects those amendments will entail only
de minimis compliance costs for affected project applicants. PHMSA
has also, for the purpose of this analysis, not estimated other,
variable costs identified at Sec. 190.409 that it would recover
pursuant to this rulemaking because PHMSA's personnel costs are the
largest component (by far) of PHMSA's total costs in performing part
193, subpart B, siting reviews.
---------------------------------------------------------------------------
Given the reduced frequency of the required siting reviews and
assuming the current average cost to remain static over the 10-year
forecast period, the rule would result in an additional burden of
approximately $3.71 million over 10 years, as described in Table 3.
This is discounted to $3.43 million using a two percent rate, and
the annualized cost is $381,899. Although these costs associated with
directly itemized and billed LNG facility siting reviews are not
substantial relative to the total project costs ($2.5 billion or
greater), these costs in this proposed rulemaking will create a new
cost for affected applicants.
Table 3--Total and Annualized Costs of the NPRM
----------------------------------------------------------------------------------------------------------------
Number of siting
Year reviews Cost per review Total costs NPV at 2%
----------------------------------------------------------------------------------------------------------------
1................................... 7 $65,000 $455,000 $455,000
2................................... 7 65,000 455,000 446,627
3................................... 7 65,000 455,000 437,332
4................................... 6 65,000 390,000 367,506
5................................... 6 65,000 390,000 360,300
6................................... 6 65,000 390,000 353,235
[[Page 67049]]
7................................... 5 65,000 325,000 288,591
8................................... 5 65,000 325,000 282,932
9................................... 4 65,000 260,000 221,908
10.................................. 4 65,000 260,000 217,556
---------------------------------------------------------------------------
Total........................... 57 ................. 3,705,000 3,430,437
Annualized Cost................. ................. ................. ................. 381,899
----------------------------------------------------------------------------------------------------------------
As a sensitivity analysis, alternative costs assuming a constant
demand for siting reviews per year are presented below in Table 4, as
opposed to the moderately decreased demand presented in Table 3 above.
Table 4--Sensitivity Analysis: Total and Annualized Costs of the NPRM
----------------------------------------------------------------------------------------------------------------
Number of siting
Year reviews Cost per review Total costs NPV at 2%
----------------------------------------------------------------------------------------------------------------
1................................... 7 $65,000 $455,000 $455,000
2................................... 7 65,000 455,000 446,078
3................................... 7 65,000 455,000 437,332
4................................... 7 65,000 455,000 428,757
5................................... 7 65,000 455,000 420,350
6................................... 7 65,000 455,000 412,108
7................................... 7 65,000 455,000 404,027
8................................... 7 65,000 455,000 396,105
9................................... 7 65,000 455,000 388,338
10.................................. 7 65,000 455,000 380,724
---------------------------------------------------------------------------
Total........................... 70 ................. 4,550,000 4,168,818
Annualized Cost................. ................. ................. ................. 464,100
----------------------------------------------------------------------------------------------------------------
Under this scenario, the nominal cost over 10 years increases from
$3.71 million to $4.55 million--discounted to $4.17 million at two
percent--from the original $3.43 million. The annualized cost estimate
increases from $381,899 to $464,100 under this alternative scenario.
In both of these scenarios, the total cost to industry over the
next 10 years would be less than $5 million. For comparison, PHMSA
takes the value of a statistical life to be $12.5 million,\20\ meaning
that prevention of even one fatality by avoiding diversion of limited
PHMSA personnel resources from other regulatory oversight
responsibilities over the next 10 years would cause the benefits of
this rule to exceed the costs twice over. Similarly, when ranking
injuries on the 6-Point Maximum Abbreviated Injury Scale (MAIS), a MAIS
5 ``critical'' injury is valued at approximately $7.4 million,\21\ so
preventing even one ``critical'' injury over the next 10 years would
cause the benefits of this rule to exceed the costs. While PHMSA is not
able to estimate the benefits of this rule due to uncertainty about
which projects would go unfunded in its absence, it believes the
benefits of the rule would exceed the costs.
---------------------------------------------------------------------------
\20\ Departmental Guidance on Valuation of a Statistical Life in
Economic Analysis [verbar] US Department of Transportation.
\21\ DOT, ``Treatment of the Value of Preventing Fatalities and
Injuries in Preparing Economic Analyses'' (Mar. 2021), https://www.transportation.gov/sites/dot.gov/files/2021-03/DOT%20VSL%20Guidance%20-%202021%20Update.pdf.
---------------------------------------------------------------------------
With respect to the anticipated benefits of the rulemaking, as
discussed in section II above, PHMSA (absent a statutory change to
increase the funds appropriated to the Liquefied Natural Gas Siting
Account) would not be able to spend any collected fees for LNG facility
siting reviews in excess of $400,000 appropriated by Congress in the
2023 Act. However, PHMSA has been mandated to recover costs associated
with LNG facility siting reviews, even if it does not yet have approval
to spend the collected funds in excess of the $400,000 appropriated by
the 2023 Act. Thus, the potential safety benefits of this rule may not
be fully realized until PHMSA is authorized by Congress to spend the
fees it collects as they are received, or unless in future legislation
Congress appropriates funds commensurate with fees collected pursuant
to this rulemaking.
Lastly, PHMSA has considered and rejected alternatives to the fee
recovery procedures proposed in this NPRM. PHMSA notes that it lacks
discretion to avoid establishing fees for cost recovery as proposed
herein given that this rulemaking responds to a congressional mandate
in section 103 of the PIPES Act of 2020 to establish such procedures.
PHMSA also submits that other, alternative approaches for calculating
and assessing such fees (e.g., employing the negotiated Master
Agreement approach used for pipeline facility design review cost
recovery; assessing actual costs on completion of its LNG facility
siting review; etc.) could involve considerable delay before PHMSA
receives fees, thereby increasing the risk that PHMSA's limited
resources would be diverted from other critical regulatory oversight
functions. In contrast, PHMSA expects its approach proposed in this
NPRM appropriately balances its and projects applicants' interests. An
applicant's payment of fees at initiation of each part 193, subpart B,
LNG facility siting review will ensure the Agency has timely access to
funds needed to perform that review without diversion of PHMSA's
limited resources from other regulatory oversight activities. Moreover,
PHMSA's proposed ``true-up'' mechanism at the conclusion of that review
ensures it will be made whole by each applicant for any actual costs
incurred conducting a siting
[[Page 67050]]
review for that applicant's LNG facility project. Lastly, the flat, up-
front estimated fee PHMSA proposes to use for its estimated costs in
performing each LNG facility siting review provides certainty for
applicants in projecting costs associated with their FERC applications.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act, as amended by the Small Business
Regulatory Flexibility Fairness Act of 1996 (5 U.S.C. 601 et seq.),
generally requires federal agencies to prepare an initial regulatory
flexibility analysis (IRFA) for a proposed rule subject to notice-and-
comment rulemaking under the Administrative Procedures Act (5 U.S.C.
604(a)).\22\ Executive Order 13272 (``Proper Consideration of Small
Entities in Agency Rulemaking'') \23\ obliges agencies to establish
procedures promoting compliance with the Regulatory Flexibility Act;
DOT's implementing guidance is available on its website.\24\
---------------------------------------------------------------------------
\22\ Agencies are not required to conduct an IRFA if the head of
the agency certifies that the proposed rule will not have a
significant impact on a substantial number of small entities. 5
U.S.C. 605.
\23\ 67 FR 53461 (Aug. 16, 2002).
\24\ DOT, ``Rulemaking Requirements Concerning Small Entities'',
https://www.transportation.gov/regulations/rulemaking-requirements-concerning-small-entities (last updated May 18. 2012).
---------------------------------------------------------------------------
This NPRM was developed in accordance with Executive Order 13272
and DOT guidance to ensure compliance with the Regulatory Flexibility
Act and provide appropriate consideration of the potential impacts of
the rulemaking on small entities. The proposed fee structure and
assessment methodology will be assessed only on large-scale new
applications for LNG facility construction or expansion projects with
design and construction costs totaling or exceeding $2.5 billion. Since
the fee structure will be assessed only on large-scale new projects,
PHMSA does not expect small entities to be capable of investing in
projects of this size, and thus does not expect the rule will have a
significant economic impact on a substantial number of small entities.
D. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
PHMSA analyzed this proposed rule in accordance with the principles
and criteria contained in Executive Order 13175 (``Consultation and
Coordination with Indian Tribal Governments'') \25\ and DOT Order
5301.1A (``Department of Transportation Tribal Consultation Policy and
Procedures''). Executive Order 13175 requires agencies to ensure
meaningful and timely input from tribal government representatives in
developing rules that significantly or uniquely affect tribal
communities by imposing ``substantial direct compliance costs'' or
``substantial direct effects'' on such communities, or the relationship
and distribution of power between the Federal Government and tribes.
---------------------------------------------------------------------------
\25\ 65 FR 67249 (Nov. 6, 2000).
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PHMSA assessed the impact of the proposed rule and does not expect
it will significantly or uniquely affect tribal communities or Native
American tribal governments. The proposed rule's regulatory amendments
are facially neutral and will have broad, national scope. PHMSA,
therefore, does not expect this rule to significantly or uniquely
affect tribal communities, much less impose substantial compliance
costs on Native American tribal governments or mandate tribal action.
Therefore, PHMSA concludes that the funding and consultation
requirements of Executive Order 13175 and DOT Order 5301.1A do not
apply.
E. Paperwork Reduction Act
Pursuant to 5 CFR 1320.8(d), PHMSA is required to provide
interested members of the public and affected agencies an opportunity
to comment on information collection and recordkeeping requests.
PHMSA proposes requiring LNG facility operators submitting
applications for large ($2.5 billion or more) new or expansion projects
at their facilities to notify PHMSA officials of those applications;
thereafter, affected entities would need to pay PHMSA fees for PHMSA's
costs in performing siting reviews pursuant to part 193, subpart B.
PHMSA also proposes clarifying revisions to longstanding procedures at
part 190, subpart E, for operator notification and assessment of fees
for recovery of its costs in performing design safety reviews of
jurisdictional pipeline facilities. PHMSA plans to create a new
information collection process to cover these notification requirements
for affected facility operators. PHMSA will request a new Control
Number from OMB for this information collection. PHMSA will submit
these information collection requests to OMB for approval based on the
proposed requirements in this rule. The information collection is
contained in the pipeline safety regulations, 49 CFR parts 190-199. The
following information is provided for each information collection: (1)
title of the information collection; (2) OMB control number; (3)
current expiration date; (4) type of request; (5) abstract of the
information collection activity; (6) description of affected public;
(7) estimate of total annual reporting and recordkeeping burden; and
(8) frequency of collection. The information collection burden is
estimated as follows:
1. Title: Notifications for Siting and Design Reviews.
OMB Control Number: Will request from OMB.
Current Expiration Date: TBD.
Abstract: This mandatory information collection covers the burden
for pipeline facility owners and/or operators to notify PHMSA,
according to 49 CFR 190.405, and provide design specifications,
construction plans and procedures, project schedule, and related
materials of their prospective project. Pipeline facility owners and
operators must also notify PHMSA when costs associated with the design
and construction of new facilities for which PHMSA conducts siting
reviews exceed $2.5 billion.
Affected Public: Jurisdictional pipeline facility operators
applying for authorization to construct and operate new or expanded
facilities for which PHMSA conducts facility design safety reviews;
pipeline facility owners and operators with new facilities with design
and construction costs exceeding $2.5 billion for which PHMSA conducts
siting reviews.
Annual Reporting Burden:
Total Annual Responses: 14.
Total Annual Burden Hours: 14 hours.
Frequency of Collection: On occasion.
Requests for a copy of this information collection should be
directed to Angela Hill, Office of Pipeline Safety (PHP-30), Pipeline
Hazardous Materials Safety Administration (PHMSA), 2nd Floor, 1200 New
Jersey Avenue SE, Washington, DC 20590-0001, 202-366-4595.
Comments are invited on:
(a) The need for the proposed collection of information for the
proper performance of the functions of the agency, including whether
the information will have practical utility;
(b) The accuracy of the agency's estimate of the burden of the
revised collection of information, including the validity of the
methodology and assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the collection of information on
those who are to respond, including the use of appropriate automated,
electronic,
[[Page 67051]]
mechanical, or other technological collection techniques; and
(e) Ways the collection of this information is beneficial or not
beneficial to public safety.
Send comments directly to the Office of Management and Budget,
Office of Information and Regulatory Affairs, Attn: Desk Officer for
the Department of Transportation, 725 17th Street NW, Washington, DC
20503. Comments should be submitted on or prior to October 18, 2024.
F. Unfunded Mandates Reform Act of 1995
The Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.) requires
agencies to assess the effects of federal regulatory actions on state,
local, and tribal governments, and the private sector. For any NPRM or
final rule that includes a federal mandate that may result in the
expenditure by state, local, and tribal governments, in the aggregate
of $100 million or more (in 1996 dollars) in any given year, the agency
must prepare, amongst other things, a written statement that
qualitatively and quantitatively assesses the costs and benefits of the
federal mandate. The proposed rule pertains to operators reimbursing
PHMSA for the cost of conducting siting reviews of LNG facility project
applications where the design and construction costs total $2.5 billion
or more. It only involves such applicants and PHMSA, and does not
involve or pertain to state, local, and tribal governments. Further, as
discussed in section V.B above, PHMSA does not anticipate the proposed
rule will impose enforceable duties on state, local, and tribal
governments or on the private sector of $100 million or more (adjusted
annually for inflation) in any one year. Therefore, the requirement to
prepare a statement pursuant to UMRA does not apply.
G. National Environmental Policy Act and Environmental Justice
The National Environmental Policy Act of 1969 (NEPA), as amended
(42 U.S.C. 4321 et seq.),\26\ requires federal agencies to consider the
environmental impacts of their actions in the decision-making process.
NEPA requires federal agencies to assess the environmental effects of
proposed federal actions prior to making decisions and involve the
public in the decision-making process. Agencies must prepare an
environmental assessment (EA) for a proposed action for which a
categorical exclusion is not applicable, and is either unlikely to have
significant effects or when significance of the action is unknown. In
accordance with these requirements, an EA must briefly discuss the need
for the action; the alternatives considered; the environmental impacts
of the proposed action and alternatives; and a listing of the agencies
and persons consulted (40 CFR 1508.9(b)). If, after reviewing public
comments in response to the draft EA (DEA), an agency determines that a
proposed rule will not have a significant impact on the human or
natural environment, it can conclude the NEPA analysis with a finding
of no significant impact (FONSI).
---------------------------------------------------------------------------
\26\ Also at 40 CFR parts 1501 to 1508.
---------------------------------------------------------------------------
1. Purpose and Need
The purpose of the proposed rule is to amend existing cost recovery
regulations at part 190, subpart E, to establish procedures for
assessment and recovery of its necessary expenses in performing 49 CFR
part 193, subpart B, siting reviews of applications for new or expanded
liquefied natural gas (LNG) facilities with project design and
constructions costs totaling at least $2.5 billion, as mandated by the
PIPES Act of 2020 (Pub. L. 116-260). The codification of these
procedures within regulations is a prerequisite for PHMSA accessing
funds appropriated by Congress for such reviews in the 2023 Act and any
future appropriations legislation. The proposed rule is needed as
PHMSA's access to funds recovering the costs of its part 193, subpart
B, siting reviews is critically important given the increasing strain
placed on its limited resources by such reviews. Many of the same PHMSA
personnel performing part 193, subpart B, siting reviews are also
responsible for other regulatory oversight activities (e.g., design
safety reviews, inspections, enforcement, guidance and regulation
development, etc.) related to LNG facilities and other jurisdictional
pipeline facilities. This need has become increasingly pressing in
recent years, as PHMSA has had to perform a large number of part 193,
subpart B, siting reviews.
2. Alternatives Considered
No Action Alternative:
The no action alternative would be to not make any changes to the
current regulatory requirements. Existing regulations in 49 CFR part
190, subpart E, prescribe a fee structure and assessment methodology
for recovering costs from design safety reviews of applications to FERC
for new or expanded gas, LNG, hazardous liquid, and carbon dioxide
pipeline facility projects consisting of new or expanded LNG facilities
with project design and construction costs totaling at least $2.5
billion. In this case, PHMSA would not collect fees directly from
operators of LNG facilities to recover the necessary expenses incurred
during part 193, subpart B, reviews. Additionally, the statutory
mandate that Congress added in section 103 of the PIPES Act of 2020
would not be fulfilled.
Proposed Action Alternative (Proposed Rule):
This alternative implements the mandate in the PIPES Act of 2020 to
amend the pipeline safety regulations (49 CFR parts 190-199) to
prescribe a fee assessment methodology for PHMSA to recover its costs
in performing 49 CFR 193, subpart B, siting reviews of applications for
new or expanded LNG facilities with project design and constructions
costs totaling at least $2.5 billion. PHMSA is proposing an up-front
fee for estimated costs, derived from the personnel costs associated
with historical work effort by PHMSA personnel involved in performing
siting reviews for LNG facility project applications with design and
construction costs of $2.5 billion or more, coupled with ``true-up''
payments to PHMSA at conclusion of that review should PHMSA's costs
exceed the fee paid up-front based on PHMSA's estimated costs. The
proposed amendments are summarized below.
----------------------------------------------------------------------------------------------------------------
Section Subject Proposed changes
----------------------------------------------------------------------------------------------------------------
Part 190, Subpart E.................. Title.................. Revise heading to: ``Cost Recovery for Design
Reviews and LNG Siting Reviews.''
190.401.............................. Scope.................. Redesignate the current regulatory text as
paragraph (a), and add a new paragraph (b) to
codify that PHMSA can recover its costs in
conducting LNG facility siting reviews under
part 193, subpart B.
[[Page 67052]]
190.403.............................. Applicability.......... Introduce a new Sec. 190.403(b) mirroring a
statutory prohibition in the PIPES Act of 2020
barring PHMSA from collecting fees under
multiple statutory authorities and their
implementing regulations for the same LNG
facility siting reviews.
Add a new paragraph (d) identifying application
materials PHMSA will typically review in
connection with its part 193, subpart B, LNG
facility siting reviews.
190.405.............................. Notification........... Redesignate existing text of Sec. 190.405 as a
new paragraph (a), and amend text to
accommodate expanded application of those
notification requirements to LNG facility
siting reviews under part 193, subpart B.
Add new paragraph (b) reserving discretion to
delay review of submitted materials for LNG
facility siting reviews until payment in full
of the fee of the estimated costs for such
review.
Add new paragraph (c) requiring LNG facility
applicants submit notification of any material
changes to documentation submitted to PHMSA
pursuant to Sec. 190.405.
190.407.............................. Master Agreement....... Clarify revisions to the prefatory language of
these provisions to distinguish between
procedures for cost recovery in connection with
design safety reviews (which will involve
applicants entering into Master Agreements for
such cost recovery), and part 193, subpart B,
LNG facility siting reviews (which will not
require applicants to enter into Master
Agreements for such cost recovery).
190.409.............................. Fee Structure.......... Revise introductory text to codify the basis of
the fees PHMSA will charge to recover the costs
for LNG siting reviews.
Remove definitions of ``necessary for'' and all
uses of the phrase since it has not clarified
regulations as PHMSA intended.
190.411.............................. Procedures for Billing Redesignate current prefatory text governing
and Payment of Fees. fees for a cost recovery in connection with
facility design safety reviews as a new
paragraph (a). Existing paragraphs (a)-(d) will
then be redesignated as paragraphs (1)-(4)
within new paragraph (a).
Introduce a new paragraph (b) establishing the
procedural machinery for billing and payment of
fees for estimated costs for its LNG facility
siting reviews before PHMSA initiates those
reviews, as well as subsequent adjustment of
those fees based on PHMSA's actual costs for
that review.
Redesignate and clarify the disclaimer at
existing paragraph (e) regarding PHMSA's
discretion to exercise its authorities under
law to protect public safety and the
environment as a new paragraph (c).
----------------------------------------------------------------------------------------------------------------
3. Affected Environment
Because the proposed rule only describes modifications to the cost
recovery process, there would be no effect on environmental resources.
Therefore, the affected environment does not include any environmental
resources and only includes the existing regulatory framework related
to cost recovery regulations at part 190, subpart E.
Existing regulations in 49 CFR part 190, subpart E, prescribe a fee
structure and assessment methodology for recovering costs from design
safety reviews of applications to FERC for new or expanded gas, LNG,
hazardous liquid, and carbon dioxide pipeline facility projects
consisting of new or expanded LNG facilities with project design and
construction costs totaling at least $2.5 billion.
PHMSA is also currently responsible for the review of LNG facility
siting; that review is an input to FERC's evaluation of applications
for authorization to construct and operate a new LNG facility (or an
expansion of an existing LNG facility). During the LNG facility siting
review, PHMSA assesses the siting packages prepared by the applicants
for new or expanded LNG facility projects for compliance with siting
regulations at part 193, subpart B.
4. Environmental Impacts of Alternatives
No Action Alternative:
The No Action Alternative would have no new impact on the natural
or human environment as the status quo would remain in place. PHMSA
would continue to recover costs from design safety reviews of
applications for new or expanded gas, LNG, hazardous liquid, and carbon
dioxide pipeline facility projects consisting of new or expanded LNG
facilities with project design and construction costs totaling at least
$2.5 billion. PHMSA would not collect fees directly from operators of
LNG facilities to recover the necessary expenses incurred during part
193, subpart B, reviews, and the current and ever-increasing strain
placed on PHMSA's limited resources by such reviews would not be
alleviated.
The No Action Alternative does not include any activities, such as
ground disturbing activities, building or landscape alterations,
construction or installation of any new aboveground components, or the
introduction of visual, auditory, or atmospheric elements. Therefore,
the proposed rule would not adversely affect, either temporarily or
permanently, historic resources and/or cultural resources, ecological
resources, wetlands and waterways, or farmland.
Proposed Action Alternative (Proposed Rule):
PHMSA recognizes the difficulty in quantifying any environmental
impact of prescribing a fee assessment methodology for PHMSA to recover
its costs in performing 49 CFR 193, subpart B, siting reviews of
applications for new or expanded LNG facilities with project design and
constructions costs totaling at least $2.5 billion. The Proposed Action
Alternative would have no adverse impact on the natural or human
environment because the changes proposed would not adversely impact the
process of the part 193, subpart B, reviews, nor would it affect the
siting, construction, operations, or other management practices of LNG
facilities. The proposed rule would only affect the cost recovery
process itself.
That said, PHMSA notes that its access to funds recovering the
costs of its part 193, subpart B, siting reviews is critically
important given the increasing strain placed on its limited resources
by such reviews. Part 193, subpart B, covers siting requirements of LNG
facilities--including thermal radiation protection, flammable vapor-gas
dispersion protection, and wind forces--to ensure LNG facilities
operate at approved national safety standards. By directly recovering
costs, PHMSA could relieve some of the strain on its limited personnel
resources, allowing
[[Page 67053]]
for not only more efficient and high-quality reviews, but also ensuring
resources would not be diverted from other critical regulatory
oversight functions that advance the safety of gas, hazardous liquid,
LNG, and carbon dioxide pipeline facilities. However, because it is not
clear which activities would go unfunded due to the costs of conducting
LNG facility siting reviews, PHMSA is unable to quantify those benefits
with a meaningful degree of certainty.
The Proposed Action Alternative (proposed rule) would not include
any activities such as ground disturbing activities; building or
landscape alterations; construction or installation of any new
aboveground or belowground components; or the introduction of visual,
auditory, or atmospheric elements. Therefore, the proposed rule would
not adversely affect, either temporarily or permanently historic
resources and/or cultural resources, ecological resources, wetlands and
waterways, or farmland. Further, because this alternative only includes
procedures related to cost recovery, this alternative would have no
direct or indirect effect on greenhouse gas emissions.
PHMSA's proposed fees for LNG facility part 193, subpart B, siting
reviews would be a new line-item cost for certain applicants. Given the
reduced frequency of the required siting reviews and assuming the work
effort remains static over the 10-year forecast period, the rule would
result in an additional burden of approximately $3.48 million over 10
years, as described in Section V.B. of this NPRM. This is discounted to
$3.22 million using a two percent rate, and the annualized cost is
$358,589. However, PHMSA's projections for the fees paid by applicants
for each LNG facility siting review would be trivial (ca. 0.0024
percent) compared to the minimum design and construction costs for
pertinent projects. Further, PHMSA has designed its proposed approach
to imposing fees in a way that maximizes regulatory certainty for
affected entities. PHMSA's timely access to adequate financial
resources to perform part 193, subpart B, siting reviews as those
reviews initiate also benefits project applicants by facilitating
timely completion of such reviews. PHMSA expects these new costs would
only be shouldered by a small number of entities. Consistent with the
threshold identified in 49 U.S.C. 60303, the NPRM proposes fees for
cost recovery for only very large LNG facility new construction or
expansion projects--specifically, fees would only be assessed for LNG
facility siting reviews for project applications with design and
construction costs totaling or exceeding $2.5 billion. And PHMSA
expects continued, although decreased, demand for such reviews during
the analysis period.
5. Environmental Justice
Executive Order 12898 (``Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations'' \27\),
directs federal agencies to take appropriate and necessary steps to
identify and address disproportionately high and adverse effects of
federal actions on the health or environment of minority and low-income
populations to the greatest extent practicable and permitted by law.
DOT Order 5610.2C (``U.S. Department of Transportation Actions to
Address Environmental Justice in Minority Populations and Low-Income
Populations'') establishes departmental procedures for effectuating
Executive Order 12898 promoting the principles of environmental justice
through full consideration of environmental justice principles
throughout planning and decision-making processes in the development of
programs, policies, and activities--including PHMSA rulemaking.
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\27\ 59 FR 7629 (Feb. 16, 1994).
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Executive Order 14096 (``Revitalizing Our Nation's Commitment to
Environmental Justice for All'' \28\) was issued on April 21, 2023.
Executive Order 14096 on environmental justice does not rescind
Executive Order 12898, which has been in effect since February 11,
1994, and is currently implemented through DOT Order 5610.2C. This
implementation will continue until further guidance is provided
regarding the implementation of the new Executive Order 14096 on
environmental justice.
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\28\ 88 FR 25251.
---------------------------------------------------------------------------
Through the NEPA process, PHMSA has evaluated this NPRM under DOT
Order 5610.2C and Executive Order 12898, and has preliminarily
determined it would not cause disproportionately high and adverse human
health and environmental effects on minority and low-income
populations. The proposed rule would not result in any adverse
environmental or health impact on minority populations and low-income
populations. As explained in this DEA above, the proposed action would
not impact the technical requirements associated with the siting
requirements described at part 193, subpart B. The Proposed Action
Alternative only affects the cost recovery process, which would result
in no ground disturbance, building or landscape alterations, or
construction activities of any kind. Therefore, no impacts to
environmental justice populations would occur. This preliminary finding
is consistent with Executive Order 14096 by achieving several goals,
including continuing to deepen the Biden-Harris Administration's whole
of government approach to environmental justice and to better protect
overburdened communities from pollution and environmental harms.
6. Public Involvement
Public involvement is a key component of the NEPA process. This DEA
and the proposed rule will be released for public review and comment in
docket PHMSA-2022-0118. To access the docket, which contains background
documents and any comments that PHMSA has received, go to https://www.regulations.gov. Follow the online instructions for accessing the
docket. Alternatively, you may review the documents in person at DOT's
Docket Management Office at the address listed below.
E-Gov Web: http://www.regulations.gov. This site allows the public
to enter comments on any Federal Register notice issued by any agency.
Follow the online instructions for submitting comments.
Mail: Docket Management System: U.S. Department of Transportation,
1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140,
Washington, DC 20590-0001.
Hand Delivery: DOT Docket Management System: West Building Ground
Floor, Room W12-140, 1200 New Jersey Avenue SE, between 9:00 a.m. and
5:00 p.m. EST, Monday-Friday, except federal holidays.
7. Agencies and Persons Consulted
No other agencies or persons were consulted during development of
this Draft Environmental Assessment.
8. List of Preparers and Reviewers
Preparers: Lydia Wang, PHMSA
Reviewers: Sandy Hoover, Volpe Center
9. Proposed Finding of No Significant Impact
PHMSA is soliciting comments on the environmental and safety
impacts of the proposed rule and on this DEA. PHMSA will respond to the
comments received during the comment period and will address comments
in the final environmental assessment (FEA). If a determination of no
significant impact is made, PHMSA will prepare a FONSI, which would be
attached to the FEA
[[Page 67054]]
and would conclude the NEPA process for this rulemaking.
G. Executive Order 13132: Federalism
PHMSA has analyzed this NPRM in accordance with the principles and
criteria contained in Executive Order 13132 (``Federalism'') \29\ and
the Presidential Memorandum \30\ titled ``Preemption.'' Executive Order
13132 requires agencies to ensure meaningful and timely input by state
and local officials in the development of regulatory policies that may
have ``substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.''
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\29\ 64 FR 43255 (Aug. 10, 1999).
\30\ 74 FR 24693 (May 22, 2009).
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States are generally prohibited by 49 U.S.C. 60104(c) from
regulating the safety of interstate pipelines. States that have
submitted a current certification under 49 U.S.C. 60105(a) and that
adopt the minimum federal pipeline safety requirements may regulate
intrastate pipelines within the state. Those states may also adopt
additional or more stringent safety standards for intrastate pipelines
if those standards are compatible with the federal requirements. A
state may also regulate an intrastate pipeline facility that PHMSA does
not regulate.
In this instance, the proposed rule would not impose any regulation
that has substantial direct effects on the states, the relationship
between the national government and the states, or the distribution of
power and responsibilities among the various levels of government.
Therefore, PHMSA has determined that the consultation and funding
requirements of Executive Order 13132 do not apply.
H. Executive Order 13211: Significant Energy Actions
Executive Order 13211 (``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'') \31\
requires federal agencies to prepare a Statement of Energy Effects for
any ``significant energy action.'' Executive Order 13211 defines a
``significant energy action'' as any action by an agency (normally
published in the Federal Register) that promulgates or is expected to
lead to the promulgation of a final rule or regulation that (1)(i) is a
significant regulatory action under Executive Order 12866 or any
successor order;, and (ii) is likely to have a significant adverse
effect on the supply, distribution, or use of energy; or (2) is
designated by the Administrator of the Office of Information and
Regulatory Affairs (OIRA) as a significant energy action.
---------------------------------------------------------------------------
\31\ 66 FR 28355 (May 22, 2001).
---------------------------------------------------------------------------
This proposed rule is not anticipated to be a ``significant energy
action'' under Executive Order 13211. It is not likely to have a
significant adverse effect on the supply, distribution, or use of
energy. Further, OIRA has not designated this proposed rule as a
significant energy action.
I. Privacy Act Statement
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the
public to better inform its rulemaking process. DOT posts these
comments without edit, including any personal information the commenter
provides, to https://www.regulations.gov, as described in the system of
records notice (DOT/ALL-14 Federal Docket Management System), which can
be reviewed at https://www.dot.gov/privacy.
J. Regulation Identifier Number
A regulation identifier number (RIN) is assigned to each regulatory
action listed in the Unified Agenda of Federal Regulatory and
Deregulatory Actions (Unified Agenda). The Regulatory Information
Service Center publishes the Unified Agenda in April and October of
each year. The RIN contained in the heading of this document can be
used to cross-reference this action with the Unified Agenda.
K. Executive Order 13609 and International Trade Analysis
Executive Order 13609 (``Promoting International Regulatory
Cooperation'') \32\ requires agencies to consider whether the impacts
associated with significant variations between domestic and
international regulatory approaches are unnecessary or may impair the
ability of American business to export and compete internationally. In
meeting shared challenges involving health, safety, labor, security,
environmental, and other issues, international regulatory cooperation
can identify approaches that are at least as protective as those that
are or would be adopted in the absence of such cooperation.
International regulatory cooperation can also reduce, eliminate, or
prevent unnecessary differences in regulatory requirements.
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\32\ 77 FR 26413 (May 4, 2012).
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Similarly, the Trade Agreements Act of 1979 (Pub. L. 96-39), as
amended by the Uruguay Round Agreements Act (Pub. L. 103-465),
prohibits federal agencies from establishing any standards or engaging
in related activities that create unnecessary obstacles to the foreign
commerce of the United States. For purposes of these requirements,
federal agencies may participate in the establishment of international
standards so long as the standards have a legitimate domestic
objective, such as providing for safety, and do not operate to exclude
imports that meet this objective. The statute also requires
consideration of international standards and, where appropriate, that
they serve as the basis for U.S. standards.
PHMSA participates in the establishment of international standards
to protect the safety of the American public. PHMSA assessed the
effects of the proposed rule and determined that it will not cause
unnecessary obstacles to foreign trade.
L. Cybersecurity and Executive Order 14028
Executive Order 14028 (``Improving the Nation's Cybersecurity'')
\33\ directed the Federal Government to improve its efforts to
identify, deter, and respond to ``persistent and increasingly
sophisticated malicious cyber campaigns.'' In keeping with these
policies and directives, PHMSA has assessed the effects of this NPRM to
determine what impact the proposed regulatory amendments may have on
cybersecurity risks for LNG facilities, and has preliminarily
determined that this NPRM will not materially affect the cybersecurity
risk profile for those facilities.
---------------------------------------------------------------------------
\33\ 86 FR 26633 (May 17, 2021).
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This proposed rule will establish fee structures and assessment
methodology for recovering costs associated with siting reviews of
certain new LNG facility project applications. Those reviews occur in
the status quo; this rulemaking merely formalizes notification
practices and establishes procedures for calculation and forwarding of
(estimated and actual) fees to recover PHMSA's costs in performing
those reviews. PHMSA envisions that entities paying the fees proposed
herein will have the option of doing so by either check or the Federal
Government's centralized fee payment website (https://pay.gov). PHMSA
does not expect, therefore, that the NPRM's proposed regulatory
amendments will entail the electronic transfer of sensitive or
confidential business information of the sort that could materially
affect applicants' cybersecurity risk profiles.
[[Page 67055]]
M. Severability
The purpose of this proposed rule is to operate holistically and,
in concert with existing part 190, subpart E, requirements, provide for
cost recovery of part 193, subpart B, siting reviews for certain LNG
facility project applications. However, PHMSA recognizes that certain
provisions focus on unique topics. Therefore, PHMSA preliminarily finds
that the various provisions of this proposed rule are severable and
able to operate functionally if severed from each other. In the event a
court were to invalidate one or more of the unique provisions of any
final rule issued in this proceeding, the remaining provisions should
stand, thus allowing their continued effect. PHMSA seeks comment on
which portions of this rule should or should not be severable.
List of Subjects in 49 CFR Part 190
Cost recovery, Liquified natural gas.
For the reasons provided in the preamble, PHMSA proposes to amend
49 CFR part 190 as follows:
PART 190--PIPELINE SAFETY ENFORCEMENT AND REGULATORY PROCEDURES
0
1. The authority citation for part 190 continues to read as follows:
Authority: 33 U.S.C. 1321(b); 49 U.S.C. 60101 et seq.
0
2. Revise the subpart heading of subpart E to read as follows:
Subpart E--Cost Recovery for Design Reviews and LNG Siting Reviews
0
3. Revise Sec. 190.401 to read as follows:
Sec. 190.401 Scope.
(a) If PHMSA conducts a facility design and/or construction safety
review or inspection in connection with a proposal to construct,
expand, or operate a (gas, hazardous liquid, carbon dioxide, or a
liquefied natural gas) pipeline facility that meets the applicability
requirements in Sec. 190.403, PHMSA may require the applicant
proposing the project to pay the costs incurred by PHMSA relating to
such review, including the cost of design and construction safety
reviews or inspections.
(b) If PHMSA conducts a siting review in connection with a proposal
to construct, expand, or operate an LNG facility that meets the
applicability requirements in Sec. 190.403, PHMSA will require the
applicant proposing the project to pay the costs incurred by PHMSA
relating to such review, including the cost of LNG facility siting
reviews or related inspections.
0
4. Amend Sec. 190.403 by revising paragraphs (a)(1)(ii), (b), (c), and
adding paragraphs a(1)(iii) and (d) to read as follows:
Sec. 190.403 Applicability.
* * * * *
(a) * * *
(1) * * *
(ii) A good faith estimate developed by the applicant proposing a
gas (including LNG), hazardous liquid, or carbon dioxide pipeline
facility and submitted to the Associate Administrator.
(iii) The good faith estimates for design and construction costs
provided for in this section must include all the applicable cost items
contained in the Federal Energy Regulatory Commission application
referenced in Sec. 190.403(a)(1)(i) for a gas facility. In addition,
an applicant must take into account all survey, design, material,
permitting, right-of-way acquisition, construction, testing,
commissioning, start-up, construction financing, environmental
protection, inspection, material transportation, sales tax, project
contingency, and all other applicable costs, including all segments,
facilities, and multi-year phases of the project;
* * * * *
(b) The Associate Administrator may collect neither (i) separate
facility design safety review fees under both this section and 49
U.S.C. 60301 for the same design safety review, nor (ii) separate LNG
facility siting review fees under either this section, 49 U.S.C.
60117(o), or 49 U.S.C. 60301(b) for the same LNG facility siting
review.
(c) For facility design safety reviews, the Associate
Administrator, after receipt of the design specifications, construction
plans and procedures, project schedule, and related materials
(including estimated project design and construction costs), determines
if cost recovery is necessary. The Associate Administrator's
determination is based on the amount of PHMSA resources needed to
ensure safety and environmental protection.
(d) For LNG facility siting reviews, the Associate Administrator,
after receipt of the design specifications, siting specifications,
construction plans and procedures, project schedule, and related
materials (including estimated project design and construction costs),
shall provide the applicant PHMSA's estimated costs for each review.
The Associate Administrator's estimate will be based on the amount of
PHMSA resources needed to ensure safety and environmental protection,
and will be calculated pursuant to Sec. 190.411(b).
0
5. Revise Sec. 190.405 to read as follows:
Sec. 190.405 Notification.
(a) For new pipeline facility project application for which PHMSA
will conduct a facility design safety review or LNG facility siting
review, the applicant proposing the project must notify PHMSA and
provide the design specifications, construction plans and procedures,
siting specifications, project schedule, and related materials
(including estimated project design and construction costs) as
applicable, at least 120 days prior to the commencement of any of the
following activities: Route surveys for construction, material
manufacturing, offsite facility fabrications, construction equipment
move-in activities, onsite or offsite fabrications, personnel support
facility construction, and any offsite or onsite facility construction.
To the maximum extent practicable, but not later than 90 days after
receiving such design specifications, construction plans and
procedures, siting packages, and related materials, PHMSA will provide
written comments, feedback, and guidance on the project.
(b) For LNG facility siting reviews, PHMSA review will not commence
until receipt of payment in full of the estimated costs of each review
provided by the Associate Administrator as provided in this subpart.
(c) Applicants for LNG facility projects for which PHMSA is
performing siting reviews must promptly notify PHMSA of any material
changes to the application or estimated design and construction costs
that would cause the project to meet or exceed the monetary threshold
specified in Sec. 190.403(a). Failure to do so could result in PHMSA
requiring the operator to resubmit or revise materials provided for
PHMSA's review.
0
6. Revise Sec. 190.407 to read as follows:
Sec. 190.407 Master Agreement.
For facility design safety reviews for which the Associate
Administrator has determined cost recovery is necessary, PHMSA and the
applicant will enter into an agreement within 60 days after PHMSA
receives notification from the applicant provided in Sec. 190.405,
outlining PHMSA's recovery of the costs associated with that review.
(a) A Master Agreement, at a minimum, includes:
(1) Itemized list of costs;
(2) Statement of the scope of work for conducting the facility
design safety review and an estimated total cost;
[[Page 67056]]
(3) Description of the method of periodic billing, payment,
auditing of cost recovery fees, return of any unused fees collected;
(4) Minimum account balance which the applicant must maintain with
PHMSA at all times;
(5) Provisions for reconciling differences between total amount
billed and the final cost of the design review, including provisions
for returning any excess payments to the applicant at the conclusion of
the project;
(6) Point of contact for both PHMSA and the applicant;
(7) Provisions for terminating the agreement; and
(8) A project reimbursement cost schedule based upon the project
timing and scope.
0
7. Revise and republish Sec. 190.409 to read as follows:
Sec. 190.409 Fee structure.
The fee charged is based on, as applicable, the direct costs that
PHMSA incurs in conducting the facility design safety review (including
construction review and inspections) or LNG facility siting review
(including field verification and inspections).
(a) Costs qualifying for cost recovery include, but are not limited
to--
(1) Personnel costs;
(2) Travel, lodging, and subsistence related to the review;
(3) Vehicle mileage;
(4) Other direct services, materials, and supplies; and
(5) Other direct costs as may be specified with advanced notice.
(b) [Reserved].
0
8. Amend Sec. 190.411 by revising paragraphs (a), (b), and (c) to read
as follows:
Sec. 190.411 Procedures for billing and payment of fee.
* * * * *
(a) For Facility Design Safety Reviews:
(1) PHMSA bills an applicant for estimated design safety review
fees as specified in the Master Agreement.
(2) PHMSA bills an applicant for estimated design safety review
cost recovery fees as specified in the Master Agreement, but the
applicant will not be billed more frequently than quarterly.
(A) PHMSA will itemize design safety review bills in sufficient
detail to allow independent verification of calculations.
(B) [Reserved]
(3) PHMSA will monitor the applicant's account balance. Should the
account balance fall below the required minimum balance specified in
the Master Agreement, PHMSA may request at any time the applicant
submit payment within 30 days to maintain the minimum balance.
(4) PHMSA will provide an updated estimate of costs to the
applicant on request and when the project is completed.
(5) Payment of design safety review fees is due within 30 days of
issuance of a bill for the fees. If payment is not made within 30 days,
PHMSA may charge an annual rate of interest (as set by the Department
of Treasury's Statutory Debt Collection Authorities) on any outstanding
debt, as specified in the Master Agreement.
(b) For each LNG siting review:
(1) PHMSA will, as soon as practicable following notification
pursuant to Sec. 190.405, provide a bill for estimated LNG facility
siting review costs PHMSA will incur in performing each siting review.
That estimated cost will be the sum (rounded to the nearest thousand)
of the products of (i) the hours historically spent by PHMSA Senior
Executive Service and General Schedule personnel identified in the
table below in performing those reviews for LNG facility projects
meeting or exceeding the monetary threshold at Sec. 190.403(a)(1); and
(ii) the hourly rates of those personnel calculated from the Office of
Personnel Management Annual Salary Tables for Senior Executive Service
and General Schedule employees in the Washington/Baltimore/Arlington
area effective as of the date of the invoice, each adjusted to account
for non-salary benefits which are estimated to make up 38 percent of
total personnel costs: \34\
------------------------------------------------------------------------
Title Pay grade (step) Hours
------------------------------------------------------------------------
Deputy Associate Administrator.... SES-Max 5
Director.......................... GS-15(5) 10
Supervisory General Engineer...... GS-14(5) 68
General Engineer (Lead)........... GS-14(5) 420
General Engineer (Support)........ GS-9(5) 40
Technical Writer.................. GS-9(5) 1
Attorney Advisor Manager.......... GS-15(5) 1
Staff Attorney Advisor............ GS-14(5) 8
------------------------------------------------------------------------
Payment is due upon receipt of the bill for the estimated costs
specified. PHMSA review will not commence until receipt of payment in
full.
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\34\ PHMSA uses BLS estimates for state and local government
employee compensation as a proxy for federal government employee
compensation (obtained from https://www.bls.gov/news.release/pdf/ecec.pdf, last accessed March 15, 2024). Wages are estimated to make
up 62 percent of employee compensation, with non-wage benefits
making up the remaining 38 percent. Equivalently, non-wage benefits
are valued at approximately 61 percent of wages (1/0.62 = 1.61).
---------------------------------------------------------------------------
(2) If actual costs identified in Sec. 190.409 exceed the
estimated costs paid to PHMSA by the operator pursuant to the above
paragraph, PHMSA will, at the conclusion of each review (but before
PHMSA issues a determination regarding compliance with part 193,
subpart B, siting requirements) notify and provide the applicant an
itemized bill of the actual costs owed. The operator must pay to PHMSA
the difference between the estimated costs and actual costs upon
receipt of the itemized bill of actual costs. PHMSA may withhold its
determination regarding compliance with part 193, subpart B, siting
requirements until receipt of such payment.
(c) Payment of the review fees as provided in this subpart shall
not obligate or prevent PHMSA from exercising its authority to take
actions permitted by law to protect public safety and the environment
in response to its review of materials or inspections conducted within
its facility design safety or part 193, subpart B, LNG facility siting
reviews.
* * * * *
Issued in Washington, DC, on August 8, 2024, under authority
delegated in 49 CFR 1.97.
Alan K. Mayberry,
Associate Administrator for Pipeline Safety.
[FR Doc. 2024-18138 Filed 8-16-24; 8:45 am]
BILLING CODE 4910-60-P