[Federal Register Volume 90, Number 119 (Tuesday, June 24, 2025)]
[Proposed Rules]
[Pages 26776-26778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11583]
[[Page 26776]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 157
[Docket No. RM25-12-000]
Blanket Certificate Cost Limitations
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Notice of inquiry.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission (Commission) seeks
information and stakeholder perspectives to help the Commission explore
whether, and if so how, to revise its Part 157, Subpart F blanket
certificate regulations to adjust the cost limitations for projects
that interstate natural gas pipelines may construct without a case-
specific authorization order.
DATES: Comments are due August 25, 2025.
ADDRESSES: Comments, identified by docket number, may be filed in the
following ways. Electronic filing through http://www.ferc.gov, is
preferred.
Electronic Filing: Documents must be filed in acceptable
native applications and print-to-PDF, but not in scanned or picture
format.
For those unable to file electronically, comments may be
filed by USPS mail or by hand (including courier) delivery.
[cir] Mail via U.S. Postal Service Only: Addressed to: Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street NE, Washington, DC 20426.
[cir] Hand (including courier) delivery: Deliver to: Federal Energy
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
The Comment Procedures Section of this document contains more
detailed filing procedures.
FOR FURTHER INFORMATION CONTACT:
Danielle Elefritz (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, (202) 502-8767
Nicole Huang (Technical Information), Office of Energy Projects,
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, (202) 502-8410
SUPPLEMENTARY INFORMATION: In this notice of inquiry, the Commission
seeks information and stakeholder perspectives to help the Commission
explore whether, and if so how, it should revise its Part 157, Subpart
F blanket certificate regulations \1\ to adjust the cost limitations
for projects that interstate natural gas pipelines may construct
without a case-specific authorization order.
---------------------------------------------------------------------------
\1\ 18 CFR pt. 157, subpt. F.
---------------------------------------------------------------------------
I. Background
1. Interstate pipelines that hold a certificate of public
convenience and necessity pursuant to section 7(c) of the Natural Gas
Act (NGA) \2\ may obtain a blanket certificate under Part 157, Subpart
F of the Commission's regulations to undertake, without a case-specific
authorization order, certain activities automatically and certain other
activities after prior notice. Currently, blanket certificate
activities are limited to a maximum cost of $14,500,000 per project
undertaken without prior notice (also referred to as automatic
authorization projects) and $41,100,000 per project undertaken subject
to prior notice.\3\ Additionally, a certificate holder may undertake
certain natural gas storage activities without prior notice for the
testing or development of underground storage reservoirs if the total
cost during the calendar year does not exceed $7,900,000.\4\ The cost
limitations are adjusted each year to reflect the ``GDP implicit price
deflator'' published by the Department of Commerce for the previous
calendar year.\5\
---------------------------------------------------------------------------
\2\ 15 U.S.C. 717f(c).
\3\ 18 CFR 157.208(d).
\4\ Id. Sec. 157.215(a)(5).
\5\ Id. Sec. 157.208(d).
---------------------------------------------------------------------------
2. The blanket certificate program was designed ``provide
streamlined procedures which increase flexibility and reduce regulatory
burden'' for a generic class of routine activities with constraints for
consistency with the Commission's statutory obligations under the NGA
and environmental statutes.\6\ In 1982, in instituting the blanket
certificate program, the Commission explained the new program as
follows:
---------------------------------------------------------------------------
\6\ Interstate Pipeline Certificates for Routine Transactions,
Order No. 234, 47 FR 24254, at 24256, 24263 (June 4, 1982), FERC
Stats. & Regs. ] 30,368, at 30,201 (1982) (cross-referenced at 19
FERC ] 61,216); see also Revisions to the Blanket Certificate
Reguls. & Clarification Regarding Rates, Order No. 686, 71 FR 63680
(Oct. 31, 2006), 117 FERC ] 61,074, at P 7 (2006) (``The blanket
certificate program was designed to provide an administratively
efficient means to authorize a generic class of routine activities,
without subjecting each minor project to a full, case-specific NGA
section 7 certificate proceeding.'').
[T]he final regulations divide the various actions that the
Commission certificates into several categories. The first category
applies to certain activities performed by interstate pipelines that
either have relatively little impact on ratepayers, or little effect
on pipeline operations. This first category also includes minor
investments in facilities which are so well understood as an
established industry practice that little scrutiny is required to
determine their compatibility with the public convenience and
necessity. The second category of activities provides for a notice
and protest procedure and comprises certain activities in which
various interested parties might have a concern. In such cases there
is a need to provide an opportunity for a greater degree of review
and to provide for possible adjudication of controversial aspects.
Activities not authorized under the blanket certificate are those
activities which may have a major potential impact on ratepayers, or
which propose such important considerations that close scrutiny and
case-specific deliberation by the Commission is warranted prior to
the issuance of a certificate.\7\
---------------------------------------------------------------------------
\7\ Order No. 234, FERC Stats. & Regs. ] 30,368 at 30,200.
3. Since the 1982 rulemaking, the Commission has relied on the
Department of Commerce's gross domestic product (GDP) implicit price
deflator as a measure to make annual adjustments to the blanket cost
limits.\8\ In that rulemaking, the Commission declined to base annual
adjustments on the Handy-Whitman Index, an alternative price tracker
that is focused more narrowly on gas utility construction costs,
finding the GDP implicit price deflator to be preferable to ``an index
based on a private collection of data not easily susceptible to
governmental verification.'' \9\ In 2006, the Commission revised its
regulations to increase the cost limitations above the then-inflation
adjusted cost cap to address concerns that construction costs had risen
faster than the overall rate of inflation.\10\ To do so, the Commission
compared the rate of cost increase derived from the Handy-Whitman Index
to that resulting from the GDP implicit price deflator and raised the
cost limitations on a one-time basis from $8,200,000 to $9,600,000 for
automatic authorization projects and from $22,700,000 to $27,400,000
for prior notice projects to account for the discrepancy between the
two different inflation indicators.\11\ The Commission did not
otherwise revise its cost
[[Page 26777]]
limitation regulations, thus the annual inflation adjustment is based
on the Department of Commerce's GDP implicit price deflator.
---------------------------------------------------------------------------
\8\ Id. at 30,206.
\9\ Id.
\10\ Order No. 686, 117 FERC ] 61,074 at P 33. The 2006
rulemaking also expanded the scope of blanket certificate activities
to include certain mainline, liquified natural gas and synthetic
gas, and storage facilities, subject to the prior notice provisions
of our regulations regardless of their estimated costs to protect
from adverse impacts to existing customers' rates and services and
environmental, safety, and security concerns. Id. P 11.
\11\ Id. P 34.
---------------------------------------------------------------------------
4. Services using capacity constructed under blanket certificate
authorization are provided at a certificate holder's existing Part 284
rates, and blanket project costs are afforded the presumption that they
will qualify for rolled-in rate treatment in a future NGA section 4
proceeding. The 1982 rulemaking explained that the rates that would be
charged for service over blanket facilities would already have been
approved in a previous rate proceeding.\12\ The Commission has applied
a presumption in favor of rolled-in rate treatment for the costs of
blanket certificate projects because of the expected de minimis impact
on a pipeline system's overall rates, i.e., the expectation that
blanket certificate projects will not be subsidized by existing
customers.\13\ The Commission specifically adopted this presumption in
its 1995 Pricing Policy Statement,\14\ and continued the approach in
its 1999 Certificate Policy Statement.\15\ In the 2006 rulemaking,
which in part raised the bases from which the cost ceilings for blanket
certificate projects are increased on an annual basis to reflect
inflation, the Commission declined to allow project sponsors to request
incremental rates for blanket certificate projects, reasoning that the
additional time necessary to complete such a review would delay the
otherwise expedited project authorization available under the blanket
certificate program.\16\
---------------------------------------------------------------------------
\12\ Order No. 234, FERC Stats. & Regs. ] 30,368 at 30,201.
\13\ See, e.g., Fla. Se. Connection, LLC, 163 FERC ] 61,158, at
P 20 (2018).
\14\ Pricing Policy for New & Existing Facilities Constructed by
Interstate Pipelines, 71 FERC ] 61,241, at 61,917 (1995) (Pricing
Policy Statement).
\15\ Certification of New Interstate Nat. Gas Pipeline
Facilities, 61 FR 21540 (May 10, 1996), 88 FERC ] 61,227, corrected,
89 FERC ] 61,040, at 61,746 n.12 (1999), clarified, 90 FERC ]
61,128, further clarified, 92 FERC ] 61,094 (2000) (Certificate
Policy Statement) (explaining that it is not a subsidy for existing
customers to pay for projects designed to replace existing capacity
or improve the reliability or flexibility of existing service).
\16\ Order No. 686, 117 FERC ] 61,074 at P 38. The Commission
explained that the validity of the presumption could be addressed in
an NGA section 4 rate proceeding. Id.
---------------------------------------------------------------------------
II. Discussion
5. The Commission is issuing this notice of inquiry to consider
whether, and if so, how our Part 157, Subpart F blanket certificate
cost limitation regulations should be modified to address potential
increases in the cost of constructing pipeline facilities.
6. On April 14, 2025, as modified on June 11, 2025, the Interstate
Natural Gas Association of America (INGAA) filed a petition for
temporary waiver of the Commission's regulations to increase the
blanket certificate cost limitations for prior notice projects.
Specifically, INGAA requested a two-year waiver of the cost limitation
regulations to double the prior notice authorization cost limit from
$41,100,000 to $82,200,000 and that the Commission initiate a notice of
inquiry to assess whether a permanent revision to the blanket
certificate cost limits is warranted.\17\ In support of its request,
INGAA avers that ``barriers to infrastructure construction have
ballooned infrastructure development costs in the United States'' and
``[i]nflation alone cannot account for the disproportionate cost
increase.'' \18\ INGAA states that the cost of pipeline construction in
the United States has risen from an average of $84,788 per inch-mile in
2006 to $221,713 per inch-mile in 2015, with that value expected to
reach to $312,466 per inch-mile by 2025.\19\
---------------------------------------------------------------------------
\17\ Interstate Nat. Gas Ass'n of Am., Petition, Docket No.
CP25-208-000, at 9 (filed Apr. 14, 2025) (Petition); Interstate Nat.
Gas Ass'n of Am., Modified Petition, Docket No. CP25-208-000, at 1
(filed June 11, 2025).
\18\ Petition at 10-11 (citing Zachary Liscow, Getting
Infrastructure Built: The Law and Economics of Permitting, 39 J.
Econ. Persps. 151, 155-59, 161-63 (2025)).
\19\ Id. at 11 (citing The INGAA Foundation, Inc., North America
Midstream Infrastructure through 2035 app. F (2018), https://ingaa.org/foundation/resources/north-america-midstream-infrastructure-through-2035-significant-development-continues/
(accessed May 12, 2025)).
---------------------------------------------------------------------------
7. On June 18, 2025, the Commission issued an order granting in
part INGAA's petition and waiving, on a temporary basis, our
regulations to increase the cost limitations for prior notice blanket
certificate projects constructed and placed in service by May 31,
2027.\20\ The Commission wants to ensure that routine and relatively
minor infrastructure projects can continue to be developed in a timely
manner to ensure energy reliability, affordability, and resource
adequacy, even after the end of the temporary waiver period.
---------------------------------------------------------------------------
\20\ Interstate Nat. Gas Ass'n of Am., 191 FERC ] 61,206 (2025).
---------------------------------------------------------------------------
8. Accordingly, the Commission seeks comment on the following
questions. Comments should address whether any proposal therein aligns
with any Commission policy and precedent, and if so, how.
(1) What types of projects, including their rate, operational,
or environmental impacts, should be included under either of the two
categories of blanket certificate projects?
(2) Recognizing that natural gas pipelines vary in size, what is
the cost of projects that are ``minor investments'' or which may not
``have a major potential impact on ratepayers? ''
(3) What types of projects warrant ``close scrutiny and case-
specific deliberation by the Commission'' and how much do such
projects cost on average? Please provide any data supporting such
costs estimates.
(4) What effect have input costs, including labor, materials,
equipment, and project financing had on natural gas project costs
since the Commission's 2006 rulemaking amending the cost
limitations, if any? If these factors have deviated from the
Commission's existing cost escalator, how should the Commission
amend its blanket certificate cost limitations to reflect the rise
in costs of future projects that represent ``minor investments'' or
which may not ``have a major potential impact on ratepayers'' ?
(5) Is there an alternative price metric or inflation tracker or
combination of trackers (e.g., pipeline construction labor and
capital costs) that the Commission should use to annually adjust the
blanket certificate cost limitations moving forward that better
reflects the changes in natural gas project construction costs than
the Department of Commerce's GDP implicit price deflator?
(6) Should the Commission extend its current practice of
requiring project sponsors that receive a predetermination of
rolled-in rate treatment in NGA section 7(c) case-specific
authorizations to keep separate books and accounting of costs and
revenues attributable to the project in the same manner as required
by Sec. 154.309 of our regulations to projects authorized by the
blanket certificate program? What other measures, if any, should the
Commission require, in the blanket certificate application or
subsequent to the authorization of the blanket project, to ensure
the appropriate rate treatment of blanket certificate projects?
(7) Should the Commission allow project sponsors to request
incremental rates for prior notice blanket projects? How might that
be implemented in a manner that would maintain the goal of
streamlining procedures and reducing regulatory burdens while
ensuring that there are no adverse impacts on existing rates and
services?
(8) What additional measures, if any, should the Commission
consider to limit any potentially adverse impacts, including impacts
to affected communities or environmental impacts, which might be
associated with adjusting the blanket certificate cost limitations?
III. Comment Procedures
9. The Commission invites interested persons to submit comments on
the matters and issues identified in this notice. Comments are due
August 25, 2025. Comments must refer to Docket No. RM25-12-000, and
must include the commenter's name, the organization they represent, if
applicable, and their address in their comments. All comments will be
placed in the
[[Page 26778]]
Commission's public files and may be viewed, printed, or downloaded
remotely as described in the Document Availability section below.
Commenters on this proposal are not required to serve copies of their
comments on other commenters.
10. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's website at http://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software must be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
11. Commenters that are not able to file comments electronically
may file an original of their comment by USPS mail or by courier-or
other delivery services. For submission sent via USPS only, filings
should be mailed to: Federal Energy Regulatory Commission, Office of
the Secretary, 888 First Street NE, Washington, DC 20426. Submission of
filings other than by USPS should be delivered to: Federal Energy
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
IV. Document Availability
12. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov).
13. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
14. User assistance is available for eLibrary and the Commission's
website during normal business hours from the Commission's Online
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at
[email protected].
Issued: June 18, 2025.
Debbie-Anne A. Reese,
Secretary.
[FR Doc. 2025-11583 Filed 6-23-25; 8:45 am]
BILLING CODE 6717-01-P