

[Federal Register: September 27, 2007 (Volume 72, Number 187)]
[Rules and Regulations]
[Page 54818-54820]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27se07-6]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 157

[Docket No. RM06-7-002; Order No. 686-B]


Revisions to the Blanket Certificate Regulations and
Clarification Regarding Rates

Issued September 20, 2007.
AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Final rule; order on rehearing.

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

SUMMARY: On June 22, 2007, the Commission issued an Order on Rehearing
and Clarification in response to motions seeking rehearing and
clarification of an October 19, 2006 Final Rule. The Final Rule
expanded the scope and scale of activities that may be undertaken
pursuant to blanket certificate authority and clarified Commission rate
policy. The revised regulations allow interstate natural gas pipelines
to employ the streamlined blanket certificate procedures for larger
projects and for a wider variety of projects, thereby increasing
efficiencies, and decreasing the time and cost associated with the
construction and maintenance of the nation's natural gas
infrastructure. This order grants a request for rehearing of the June
22, 2007 Order.

DATES: Effective Date: This final rule will become effective October
29, 2007.

FOR FURTHER INFORMATION CONTACT:
Gordon Wagner, Office of the General Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, 
gordon.wagner@ferc.gov, (202) 502-8947.

Michael McGehee, Office of Energy Projects, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, 
michael.mcgehee@ferc.gov, (202) 502-8962.

Lonnie Lister, Office of Energy Projects, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, 
lonnie.lister@ferc.gov, 202-502-8587.


SUPPLEMENTARY INFORMATION:
    Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.

Revisions to the Blanket Certificate Regulations and Clarification
Regarding Rates; Order on Rehearing

I. Introduction

    1. On October 19, 2006, the Federal Energy Regulatory Commission
(Commission) issued a Final Rule in Order No. 686 \1\ amending Part
157, Subpart F, of its regulations to expand the scope and scale of
activities that may be undertaken pursuant to blanket certificate
authority by (1) Broadening the types of natural gas projects permitted
under blanket certificate authority to include certain mainline,
storage, and liquefied natural gas (LNG) and synthetic gas pipeline
facilities, and (2) increasing the blanket certificate project cost
limits 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.\2\ In addition, Order No. 686 clarified that a natural gas
company is not necessarily engaged in an unduly discriminatory practice
if it charges different customers different rates for the same service
when those customers commit to service on different dates. The revised
blanket certificate regulations are intended to allow interstate
natural gas companies to employ the streamlined blanket certificate
procedures for larger projects and additional types of projects,
thereby increasing efficiencies and decreasing the time and cost
associated with the construction and maintenance of the nation's
natural gas infrastructure. On June 22, 2007, the Commission issued an
order in response to motions seeking rehearing and clarification of the
October 2006 Final Rule.\3\ In this order, for the reasons discussed
below, the Commission grants a request for rehearing of the June 2007
Order.
---------------------------------------------------------------------------

    \1\ Order No. 686, Revisions to the Blanket Certificate
Regulations and Clarification Regarding Rates, 71 FR 63680 (October
31, 2006), FERC Stats & Regs ] 31,231 (2006). This rulemaking
proceeding was initiated in response to a petition submitted under
18 CFR 385.207(a) (2007) of the Commission's regulations by the
Interstate Natural Gas Association of America jointly with the
Natural Gas Supply Association.
    \2\ These cost limits now stand at $9,900,000 for an automatic
authorization project and $28,200,000 for a prior notice project.
See Natural Gas Pipelines; Project Cost and Annual Limits, 72 FR
5614 (Feb. 7, 2007).
    \3\ Order No. 686-A, Order on Rehearing and Clarification, 72 FR
37431 (July 10, 2007), FERC Statutes and Regulations ] 31,249 (2007)
(June 2007 Order).
---------------------------------------------------------------------------

II. Request for Rehearing

    2. New Sec.  157.210 permits companies to rely on blanket
certificate authority to ``acquire, construct, modify, replace, and
operate natural gas mainline facilities, including compression and

[[Page 54819]]

looping.'' Revised Sec.  157.216(b)(2) provides for the abandonment of
such facilities. The Interstate Natural Gas Association of America
(INGAA) asked the Commission to clarify whether the Final Rule's
revised Sec.  157.216(b)(2) abandonment provisions would apply
exclusively to mainline facilities put in place under the new Sec.
157.210 or would also apply to mainline facilities already in place.
    3. In its June 2007 Order, the Commission stated that facilities
which were constructed under case-specific certificate authorization,
but which would have met the criteria for construction under the
current blanket certificate program, may be abandoned pursuant to the
provisions Sec.  157.216(b). The Commission stated that in considering
whether existing facilities would have met the criteria for blanket
certificate authorization, ``the facilities must have been installed
subsequent to the Commission's implementation of the blanket
certificate program and the facilities' original cost must have met the
Sec.  157.208 project cost cap in effect at the time of their
construction.''
    4. INGAA requests rehearing of the June 2007 Order to ask the
Commission to remove this qualification because it precludes Sec.
157.216 abandonment of facilities put in place prior to 1982, i.e., the
year the blanket certificate program was initiated. INGAA notes that
the Commission did not impose the qualification that the project cost
not exceed the blanket certificate cost cap in effect at the time of
construction with respect to its 1999 expansion of the blanket
certificate abandonment provisions to cover gas supply facilities and
services.\4\ INGAA contends rather than comparing the per project cost
cap in effect at the time a facility was constructed with the
facility's actual original cost, to determine whether the blanket
certificate abandonment provisions might apply to an existing facility,
the Commission should compare the per project cost cap currently in
effect with the estimated cost to duplicate the facility today. INGAA
states this approach will permit facilities put in place prior to the
1982 initiation of the blanket certificate program to qualify for
abandonment under the blanket program.
---------------------------------------------------------------------------

    \4\ See Order No. 603, Revision of Existing Regulations under
the Natural Gas Act, 64 FR 26572 (May 14, 1999), FERC Stats. & Regs.
] 31,073 (1999); Order No. 603-A, 64 FR 54522 at 54532-34 (Oct. 7,
1999), FERC Stats. & Regs. ] 31,081 at 30,936 (1999), adopting a
similar approach with respect to automatic abandonments under 18 CFR
157.216(a) (2007).
---------------------------------------------------------------------------

    5. The Commission will grant INGAA's request for rehearing. Instead
of restricting Sec.  157.216 abandonments to facilities put in place
after the effective date of the blanket certificate program and
comparing a facility's original cost to the cost cap in effect at the
time the facility was placed in service, companies will be required to
compare the estimated current cost to replicate an existing facility to
the current Sec.  157.208(d) per project cost cap. This will permit
companies to employ blanket certificate authority to abandon a facility
put in place under case-specific authority, provided the existing
facility could qualify for authorization under the current blanket
program
    6. To effect this expansion of abandonment authority, the
Commission will revise Sec.  157.216(c)(1) and (d)(1) to specify that a
company seeking to rely on its blanket certificate to abandon a
facility which was not initially constructed or acquired under blanket
certificate authority must estimate the current cost to replicate the
facility. Provided the estimated current cost to replicate the facility
would not exceed the currently-effective Sec.  157.208(d) project cost
cap, and provided the existing facility would qualify for authorization
under the currently-effective blanket regulations, the company may rely
on abandonment authority under Sec.  157.216. Note that in calculating
an estimated cost, the Commission anticipates a company will account
for the current values of a facility's various component costs, such as
land acquisition, public outreach, agency involvement, materials,
labor, and environmental mitigation and remediation.\5\ In addition,
the Commission will revise Sec.  157.216(a)(2) and (b)(2) to clarify
that any existing facility that could be constructed or acquired under
the currently-effective blanket certificate program criteria can be
abandoned under blanket certificate authority, provided that, as is
currently the case, the blanket certificate holder obtains the written
consent of each customer served using the facility during the past 12
months.
---------------------------------------------------------------------------

    \5\ See, e.g., the reporting requirements for describing a
project's costs in 18 CFR 157.208(e)(3) (2007). The Commission
suggests a blanket certificate holder contemplating action under 18
CFR 157.216 review the record in this proceeding, which includes
comments on past and present project cost comparisons.
---------------------------------------------------------------------------

    7. In view of the above described revisions to the June 2007 order
and blanket certificate abandonment regulations, INGAA's request for
rehearing is granted.

III. Information Collection Statement

    8. The Office of Management and Budget (OMB) regulations require
that OMB approve certain information collection requirements imposed by
an agency.\6\ The Final Rule's revisions to the information collection
requirements for blanket certificate projects were approved under OMB
Control Nos. 1902-0128 and 1902-0060. While this order on rehearing
clarifies aspects of the existing information collection requirements
for the blanket certificate program, it does not add to these
requirements. Accordingly, a copy of this order will be sent to OMB for
informational purposes only.
---------------------------------------------------------------------------

    \6\ 5 CFR 1320.11 (2007).
---------------------------------------------------------------------------

IV. Document Availability

    9. 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 print the contents of this document via the
Internet through FERC's Web site (http://www.ferc.gov) and in FERC's

Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington DC 20426.
User assistance is available for FERC's Web site during normal business
hours (8:30 a.m. to 5 p.m. Eastern time, Monday to Friday) from FERC's
Online Support at 202-502-6652, toll free at 1-866-208-3676, or by e-
mail at ferconlinesupport@ferc.gov, and from the Public Reference Room
at 202-502-8371, TTY at 202-502-8659, or by e-mail at 
public.referenceroom@ferc.gov.


V. Effective Date and Congressional Notification

    10. The modifications made in this request for rehearing will
become effective October 29, 2007. The provisions of 5 U.S.C. 801
regarding Congressional review of rulemaking do not apply to this order
on rehearing, since it clarifies agency procedure and practice.

List of Subjects in 18 CFR Part 157

    Administrative practice and procedure, Natural gas, Reporting and
recordkeeping requirements.

    By the Commission.
Kimberly D. Bose,
Secretary.

0
In consideration of the foregoing, the Commission amends part 157,
Chapter I, Title 18, Code of Federal Regulations, as follows:

[[Page 54820]]

PART 157--APPLICATIONS FOR CERTIFICATES OF PUBLIC CONVENIENCE AND
NECESSITY AND FOR ORDERS PERMITTING AND APPROVING ABANDONMENT UNDER
SECTION 7 OF THE NATURAL GAS ACT

0
1. The authority citation for part 157 continues to read as follows:

    Authority: 15 U.S.C. 717-717w.


0
2. In Sec.  157.216, paragraphs (a)(2), (b)(2), (c)(1), and (d)(1) are
revised to read as follows:


Sec.  157.216  Abandonment.

    (a) * * *
    (2) A facility that did or could now qualify for automatic
authorization as described in Sec.  157.203(b), provided the
certificate holder obtains the written consent of each customer served
using the facility during the past 12 months.
    (b) * * *
    (2) Any other facility that did or could now qualify for prior
notice authorization as described in Sec.  157.203(c), provided the
certificate holder obtains the written consent of each customer served
using the facility during the past 12 months.
    (c) * * *
    (1) The location, type, size, and length of the subject facilities.
For facilities not constructed or acquired under blanket certificate
authority, an estimate of the current cost to replicate such
facilities;
* * * * *
    (d) * * *
    (1) A description of the facilities abandoned under this section.
For facilities not constructed or acquired under blanket certificate
authority, an estimate of the current cost to replicate such
facilities;
* * * * *
[FR Doc. E7-18904 Filed 9-26-07; 8:45 am]

BILLING CODE 6717-01-P
