[Federal Register Volume 86, Number 22 (Thursday, February 4, 2021)]
[Rules and Regulations]
[Pages 8133-8140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-01988]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 292

[Docket Nos. RM21-2-000 and RM20-20-000; Order No. 874]


Fuel Cell Thermal Energy Output; Bloom Energy Corporation

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Final rule.

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SUMMARY: In this final rule, the Federal Energy Regulatory Commission 
amends the definition of useful thermal energy output in its 
regulations implementing the Public Utility Regulatory Policies Act of 
1978 to recognize the technical evolution of cogeneration.

DATES: This rule is effective April 5, 2021.

FOR FURTHER INFORMATION CONTACT: 
Lawrence R. Greenfield (Legal Information), Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, (202) 502-6415, lawrence.greenfield@ferc.gov
Helen Shepherd (Technical Information), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, (202) 502-6176, helen.shepherd@ferc.gov
Thomas Dautel (Technical Information), Office of Energy Policy and 
Innovation, Federal Energy Regulatory

[[Page 8134]]

Commission, 888 First Street NE, Washington, DC 20426, (202) 502-6196, 
thomas.dautel@ferc.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction

    1. In this final rule, the Federal Energy Regulatory Commission 
(Commission) revises its regulations (PURPA Regulations) \1\ 
implementing sections 201 and 210 of the Public Utility Regulatory 
Policies Act of 1978 (PURPA) \2\ in light of the development of fuel 
cell systems with integrated hydrocarbon reformation equipment as a 
technical evolution of cogeneration.
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    \1\ 18 CFR part 292.
    \2\ 16 U.S.C. 796, 824a-3.
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    2. On October 15, 2020, the Commission issued a notice of proposed 
rulemaking (NOPR) proposing to modify the PURPA Regulations.\3\ Bloom 
Energy, Edison Electric Institute (EEI), and FuelCell Energy, Inc. 
(FuelCell Energy) responded with comments and the California Public 
Utilities Commission filed a notice of intervention. Bloom Energy also 
filed a motion to submit reply comments, and reply comments, to the 
comments of FuelCell Energy and EEI.
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    \3\ Fuel Cell Thermal Energy Output, Notice of Proposed 
Rulemaking, 85 FR 67,699 (Oct. 26, 2020), 175 FERC ] 61,050 (2020) 
(NOPR).
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    3. This final rule addresses the comments received in response to 
the NOPR. With one modification, we adopt the proposed revisions in the 
NOPR.

II. Background

    4. PURPA was part of a legislative package Congress enacted in 1978 
to address the energy crisis then facing the country.\4\ As the Supreme 
Court explained in FERC v. Mississippi,\5\ Congress was aware that 
domestic oil production had lagged behind demand, and the country had 
become increasingly dependent on foreign oil--which could jeopardize 
the country's economy and undermine its independence.\6\ Roughly a 
third of the nation's electricity was generated using oil and natural 
gas,\7\ and Congress concluded that increased reliance on cogeneration 
and small power production could significantly contribute to conserving 
this energy.\8\ As recognized by the Supreme Court, Congress passed 
PURPA to address the impacts of oil and natural gas shortages (and 
electric utilities' decreasing efficiency in their generating 
capacities) on customer rates and the economy as a whole.\9\
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    \4\ See Public Law 95-617, 92 Stat. 3117 (1978). In addition to 
PURPA, that legislative package included: The Energy Tax Act of 
1978, Public Law 95-618, 92 Stat. 3174; the National Energy 
Conservation Policy Act, Public Law 95-619, 92 Stat. 3206; the 
Powerplant and Industrial Fuel Use Act of 1978, Public Law 95-620, 
92 Stat. 3289; and the Natural Gas Policy Act of 1978, Public Law 
95-621, 92 Stat. 3351.
    \5\ 456 U.S. 742 (1982).
    \6\ Id. at 756.
    \7\ Id. at 745.
    \8\ Id. at 757.
    \9\ Id. at 745-46.
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    5. PURPA section 210 was intended to address the energy crisis by 
encouraging the development of QFs and thereby reducing the country's 
demand for traditional fossil fuels.\10\ PURPA section 210(a) thus 
directed that the Commission ``prescribe, and from time to time 
thereafter revise, such rules as [the Commission] determines necessary 
to encourage cogeneration and small power production.'' \11\
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    \10\ Id. at 750.
    \11\ 16 U.S.C. 824a-3(a).
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    6. In 1980, the Commission issued Order No. 70, which promulgated 
rules that, as relevant here, largely remain in effect today.\12\ Order 
No. 70 established the ``criteria and procedures by which small power 
producers and cogeneration facilities can obtain qualifying status to 
receive the rate benefits and exemptions'' contained in PURPA section 
210.\13\ As relevant here, the Commission established criteria for a 
cogeneration QF, a facility that, as required by the statute, 
``produces (i) electric energy, and (ii) steam or forms of useful 
energy (such as heat) which are used for industrial, commercial, 
heating or cooling purposes.'' \14\
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    \12\ Small Power Production and Cogeneration Facilities--
Qualifying Status, Order No. 70, 45 FR 17959 (Mar. 20, 1980), FERC 
Stats. & Regs. ] 30,134 (cross-referenced at 10 FERC ] 61,230), 
order on reh'g, Order No. 70-A, 45 FR 33603 (May 20, 1980), FERC 
Stats. & Regs. ] 30,159 (cross-referenced at 11 FERC ] 61,119), 
order on reh'g, Order No. 70-B, 45 FR 52779 (Aug. 4, 1980), FERC 
Stats. & Regs. ] 30,176 (cross-referenced at 12 FERC ] 61,128), 
order on reh'g, 45 FR 66784 (Oct. 8, 1980) FERC Stats. & Regs. ] 
30,192 (1980) (cross-referenced at 12 FERC ] 61,306), amending 
regulations, Order No. 70-D, 46 FR 11251 (Feb. 6, 1981), FERC Stats. 
& Regs. ] 30,234 (cross-referenced at 14 FERC ] 61,076), amending 
regulations, Order No. 70-E, 46 FR 33025 (Jun. 26, 1981) FERC Stats. 
& Regs. ] 30,274 (1981) (cross-referenced at 15 FERC ] 61,281).
    \13\ Order No. 70, FERC Stats. & Regs. ] 30,134 at 30,933.
    \14\ 16 U.S.C. 796(18); accord 18 CFR 292.202(c).
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    7. In enacting PURPA, Congress could not, and did not, predict 
specific technological developments that would occur in future years 
but instead recognized the Commission's discretion by directing the 
Commission to ``from time to time thereafter revise such rules as it 
determines necessary to encourage cogeneration.'' \15\ Although in 1978 
the predominant form of cogeneration was a more traditional combined 
heat and power, Congress did not limit the definition of qualifying 
cogeneration facilities to the particular technologies then in 
existence. Instead, as described above, Congress defined a cogeneration 
facility as a facility that produces: (1) Electric energy; and (2) 
steam or forms of useful energy, such as heat, which are used for 
industrial, commercial, heating or cooling purpose.\16\ Congress 
otherwise left it for the Commission, from time to time, to determine 
the types of facilities that would qualify as cogeneration facilities 
under the statute.
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    \15\ 16 U.S.C. 824a-3(a).
    \16\ See supra note 14.
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    8. Unlike more traditional electric generation that relies on 
combustion of fossil fuels to produce electric energy, fuel cells 
convert the chemical energy in hydrogen to electric energy without 
combustion. This conversion has been characterized as a significant 
improvement in the efficiency of electric generation.\17\ More 
specifically, hydrogen fuel--which can be produced from the application 
of heat and steam to hydrocarbons such as natural gas--enters the anode 
side of the fuel cell. Simultaneously, ambient air enters the cathode 
side of the fuel cell. The hydrogen fuel on the anode attracts oxygen 
ions from the cathode. The resulting electrochemical reaction produces 
electricity plus heat and steam that can be used up front to reform 
natural gas on-site to produce the hydrogen that fuels the fuel 
cell.\18\
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    \17\ Bloom Energy Petition at 8.
    \18\ Id.
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    9. If the natural gas reformation equipment were instead located 
offsite, then waste heat (in the form of steam) from the electricity 
production by the fuel cell would not be available to aid the 
reformation process to fuel the cell. In this offsite reformation 
scenario, we would expect the external reformation process to require 
additional natural gas to be burned to create steam so that the 
remainder of the input natural gas could be reformed into hydrogen.\19\ 
This would be inefficient and inconsistent with Congress's goal in 
enacting PURPA, as discussed above.
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    \19\ Furthermore, because hydrogen is frequently compressed or 
liquified for shipment to the point of consumption, more energy 
would be needed for these activities. Id. at 8 & App. B.
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    10. Stated another way, integrating the natural gas reformation 
process into a fuel cell generating facility results in significant 
``progress in the development of efficient electric energy generating 
technology.'' \20\
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    \20\ Id. at 1, 3, 7, 16 (citing 16 U.S.C. 824a-3(n)(1)(A)(iii)).
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III. NOPR Proposal

    11. In the NOPR, the Commission stated that the statutory 
definition of

[[Page 8135]]

cogeneration facilities requires that a cogeneration facility produce 
``(i) electric energy, and (ii) steam or forms of useful energy (such 
as heat) which are used for industrial, commercial, heating or cooling 
purposes.'' \21\ This definition provides for steam or other forms of 
useful energy to be used for, e.g., an industrial purpose. The creation 
by a fuel cell system with an integrated natural gas reformation 
process of a commercially valuable fuel, as described in the NOPR, 
would fit within the scope of this statutory definition. Consistent 
with the PURPA Regulations, fuel cell systems with integrated natural 
gas reformation equipment produce two forms of energy: Electricity, and 
the heat/steam (thermal energy) used to create the hydrogen that fuels 
the fuel cell system (a chemical energy).
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    \21\ 16 U.S.C. 796(18)(A).
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    12. The Commission's PURPA Regulations define a topping-cycle 
cogeneration facility as a cogeneration facility in which the energy 
input to the facility is first used to produce useful power output and 
at least some of the reject heat from the power production process is 
then used to provide useful thermal energy.\22\
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    \22\ 18 CFR 292.202(d).
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    13. Fuel cell systems with integrated natural gas reformation 
equipment convert the chemical energy within natural gas into 
electricity using a steam-methane reformation process,\23\ which 
essentially converts the methane in the natural gas input to hydrogen, 
which then reacts with oxygen in the fuel cell to produce electricity. 
The by-product of the fuel cell's production of electricity is heat and 
steam, some of which can be used in the steam-methane reformation 
process to convert more methane into hydrogen, which the fuel cells 
use, in combination with oxygen from the air, to produce electricity.
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    \23\ Industrial gas manufacturers also produce hydrogen from 
natural gas using a steam-methane reformation process, but must 
produce their own steam, usually through combustion of some of the 
input natural gas. Because the buyers of the resulting hydrogen are 
usually remote from the industrial gas manufacturer, this hydrogen 
is either compressed or liquified in order to transport the hydrogen 
to the end user. Integrating the natural gas steam reformation 
process into a fuel cell system increases efficiency and avoids the 
energy loss of external reformation, and compression or liquefaction 
for surface transportation. Bloom Energy Petition at 8 & App. B.
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    14. As a cogeneration QF is one that ``produces electric energy as 
well as steam or forms of useful energy (such as heat) which are used 
for industrial, commercial, heating or cooling purposes,'' \24\ 
consistent with the PURPA Regulations, fuel cell systems with 
integrated natural gas reformation equipment generate two forms of 
useful energy--electricity, and heat/steam (thermal energy) that is 
used to produce hydrogen (a chemical energy).
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    \24\ 16 U.S.C. 796(18).
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    15. The PURPA Regulations identify three categories of useful 
thermal output from a topping-cycle cogenerator. They are thermal 
energy (1) that is ``made available to an industrial or commercial 
process . . .; (2) that is used in a heating application . . .; or (3) 
that is used in a space cooling application.'' \25\ In the NOPR, the 
Commission proposed to amend its regulations to provide that the 
production of heat/steam by a solid oxide fuel cell system for use in 
an integrated natural gas reformation process to produce hydrogen 
yields a useful thermal energy output made available to an industrial 
process that, as described in the NOPR, entitles such a system to be 
considered a topping cycle cogeneration facility that qualifies, 
subject to meeting the other relevant requirements,\26\ to be a QF. The 
Commission stated that the recent technological advances in utilizing 
the thermal energy from a solid oxide fuel cell in an integrated steam 
hydrocarbon reformation process were not known or anticipated when the 
Commission adopted its original definitions for useful thermal energy, 
but that fact should not stand in the way of the Commission now 
recognizing such advances and responding accordingly.\27\
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    \25\ 18 CFR 292.202(h).
    \26\ See 18 CFR 292.203(b), 292.205. If the cogeneration 
facility is a ``new'' qualifying cogeneration facility ``seeking to 
sell electric energy pursuant to [PURPA section 210],'' such 
facility must meet certain additional requirements. 16 U.S.C. 824a-
3(n); accord 18 CFR 292.205(d) (implementing PURPA section 210(n), 
by requiring an additional showing for certain cogeneration 
facilities that are ``seeking to sell electric energy pursuant to 
[PURPA] section 210'').
    \27\ See infra note 53.
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    16. In recognition of technological advancements over the past 40 
years and Congress's commitment to ``continuing progress in the 
development of efficient electric energy generating technology,'' \28\ 
and in light of the development and commercialization of fuel cell 
systems with integrated natural gas reformation equipment since the 
original adoption of the PURPA Regulations, the Commission proposed in 
the NOPR to amend section 292.202(h) of the PURPA Regulations by adding 
a new paragraph providing that useful thermal energy output include the 
thermal energy that is used by a solid oxide fuel cell system with an 
integrated steam hydrocarbon reformation process for production of fuel 
for electricity generation.\29\
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    \28\ 16 U.S.C. 824a-3(n)(1)(A)(iii).
    \29\ NOPR, 175 FERC ] 61,050 at PP 1, 3, 7, 10-11.
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    17. In proposing this change to its regulations, the Commission did 
not propose to revise section 292.205(d) of the PURPA Regulations, 
which establishes additional criteria for, in particular, new 
cogeneration facilities seeking to sell electric energy pursuant to 
PURPA section 210.\30\ The Commission proposed that any new 
cogeneration facility that is a solid oxide fuel cell system with an 
integrated steam hydrocarbon reformation process would be required to 
satisfy the existing criteria of section 292.205(d) of the PURPA 
Regulations if it seeks to make sales of electric energy pursuant to 
PURPA section 210.
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    \30\ 18 CFR 292.205(d); see also 18 CFR 292.205(d)(4) (``For 
purposes of paragraphs (d)(1) and (2) of this section, a new 
cogeneration facility of 5 MW or smaller will be presumed to satisfy 
the requirements of those paragraphs.''). That presumption for 5 MW 
or smaller facilities is a rebuttable presumption, though.
    Revised Regulations Governing Small Power Production and 
Cogeneration Facilities, Order No. 671, 114 FERC  61,102, 
at PP 26, 60, order on reh'g, Order No. 671-A, 115 FERC ] 61,225 
(2006).
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IV. Comments

    18. FuelCell Energy, which explains that it operates fuel cell 
systems on three continents that have generated over 10 billion kWh of 
power, asks the Commission to revise its regulations to encompass more 
than just solid oxide fuel cell systems. FuelCell Energy asserts that 
Bloom Energy requested that the Commission expand its current 
definition of a cogeneration facility so that Bloom Energy's solid 
oxide fuel cells qualify as a QF. FuelCell Energy argues that the 
Commission should revise the definition, so it can apply more broadly 
to any fuel cell systems that use waste heat for the reforming of fuel 
to produce hydrogen, and not just Bloom Energy's solid oxide fuel cell 
system.\31\
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    \31\ FuelCell Energy Comments at 5, 7.
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    19. FuelCell Energy asserts that its carbonate fuel cells use waste 
heat in an integrated fuel reforming process to produce hydrogen,\32\ 
just as Bloom Energy's solid oxide fuel cells do. FuelCell Energy 
contends that, as long as fuel cell systems use waste heat for the 
reforming of hydrocarbon fuel to produce hydrogen, the particular fuel 
cell technology should not be exclusive or exclusionary; so long as 
there is no efficiency tradeoffs or additional negative environmental 
impacts, the type of fuel cell technology (whether

[[Page 8136]]

carbonate or solid oxide) should be irrelevant.\33\
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    \32\ Id. at 6.
    \33\ Id. at 5.
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    20. EEI requests that the Commission not move forward with this 
final rule, arguing that the Commission cannot expand the statutory 
definition of a cogeneration facility.\34\ EEI asserts that fuel cell 
technology does not meet the statutory requirements to be certified as 
a cogeneration facility. EEI agrees that the Commission is charged with 
implementing PURPA through adoption of regulations but argues that, in 
doing so, the Commission is limited by the statutory requirements. EEI 
states that, to qualify as a QF, a cogeneration facility must meet the 
statutory definition of a cogeneration facility, i.e., it must be a 
facility which produces: (1) Electric energy and (2) steam or forms of 
useful energy (such as heat) which are used for industrial, commercial, 
heating or cooling purposes.\35\
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    \34\ EEI Comments at 2.
    \35\ Id. at 4 (quoting 16 U.S.C. 796(18)).
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    21. EEI also points out that the statute requires that the 
Commission establish regulations that ensure that:

    (i) The thermal energy output of a new qualifying cogeneration 
facility is used in a productive and beneficial manner;
    (ii) the electrical, thermal, and chemical output of the 
cogeneration facility is used fundamentally for industrial, 
commercial, or institutional purposes and is not intended 
fundamentally for sale to an electric utility, taking into account 
technological, efficiency, economic, and variable thermal energy 
requirements, as well as State laws applicable to sales of electric 
energy from a qualifying facility to its host facility; and
    (iii) continuing progress in the development of efficient 
electric energy generating technology.\36\
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    \36\ Id. (quoting16 U.S.C. 824a-3(n)).

    22. EEI argues that this statutory language indicates that, 
contrary to the Commission's statement in the NOPR, the definition of 
cogeneration is not ``open-ended.'' \37\ EEI recognizes that other 
technologies may qualify as cogeneration facilities under the statute 
but argues that the fuel cell technology described in the NOPR does not 
meet the statutory requirement.\38\
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    \37\ Id. (referencing NOPR, 175 FERC ] 61,050 at P 3).
    \38\ Id.
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    23. EEI explains that the solid oxide fuel cell system described in 
the NOPR appears to be a self-contained reaction that is designed to 
produce electricity and thus is inconsistent with the statutory 
requirement.\39\ EEI explains that, in Order No. 70, the Commission 
defined a cogeneration facility as one that
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    \39\ Id. at 6.

produces electric energy and steam or forms of useful energy (such 
as heat) which are used for industrial, commercial, heating, or 
cooling purposes. Thus, cogeneration facilities simultaneously 
produce two forms of useful energy, namely electric power and heat. 
Cogeneration facilities can use significantly less fuel to produce 
electricity and steam (or other forms of energy) than would be 
needed to produce the two separately. By using the fuels more 
efficiently cogeneration facilities can make a significant 
contribution to the Nation's effort to conserve its energy 
resources.\40\
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    \40\ Id. (quoting Order No. 70, FERC Stats. & Regs. ] 30,134 at 
30,931-32).

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    24. Further, EEI explains that there is

an explicit requirement for the sequential use of energy in 
cogeneration facilities. This means that rejected heat from a power 
production or heating process is used in another power production or 
heating process. It is precisely this ``cascading'' use of energy in 
sequential processes that gives rise to the energy conserving 
characteristics of cogeneration.\41\
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    \41\ Id. (quoting Order No. 70, FERC Stats. & Regs. ] 30,134 at 
30,934).

    25. EEI explains that, in adopting this provision in Order No. 70, 
the Commission clarified the facilities eligible for QF status did not 
include natural gas-fired combined-cycle combustion plants even though 
the sequential use of heat is used to produce more electricity.\42\ EEI 
argues that the main difference between a solid oxide fuel cell and a 
natural gas-fired combined-cycle facility is that the solid oxide fuel 
cell produces electricity from natural gas through a chemical reaction 
instead of combustion, which is not a meaningful distinction because 
``[i]f the thermal energy uses were not required to be completely 
independent of the power production processes many conventional 
generating facilities could be considered cogeneration facilities and 
may be eligible for the benefits of section 210 of PURPA.'' \43\
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    \42\ Id. at 6-7.
    \43\ Id. at 7 (quoting EG&G, Inc., 16 FERC ] 61,060, at 61,104 
(1981)).
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    26. EEI argues that allowing solid oxide fuel cells to now qualify 
as cogeneration is inconsistent with the rationale behind encouraging 
cogeneration under PURPA. EEI explains that, in Order No. 70, the 
Commission recognized that the goal was to promote conservation by 
recognizing that the production of electricity often creates a 
byproduct, thermal energy, and with minimal additional fuel the 
cogenerators could produce large amounts of thermal energy that could 
be used in other processes.\44\ EEI asserts that solid oxide fuel 
cells' primary purpose is to produce more electricity instead of using 
the thermal energy for another, independent purpose.
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    \44\ Id.
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    27. Finally, EEI argues that, in the past, the Commission has 
remained technology neutral; yet, here, the Commission is proposing to 
change its PURPA Regulations to endorse a specific technology. EEI 
requests that, instead of changing the regulations to accommodate 
specific technologies, the Commission evaluate new technologies under 
statutory criteria and the goals of PURPA to ensure a level playing 
field for all technologies.
    28. Bloom Energy filed comments reiterating its support for the 
revision of the Commission's PURPA Regulations, contending that the 
revised definition ``represents a narrow, targeted form of regulatory 
relief necessary to ensure `continuing progress in the development of 
efficient electric energy generating technology' and . . . would not 
impact the application of the `fundamental use test' or the existing 
operating standards applicable to cogeneration facilities.'' \45\ Bloom 
Energy asserts that fuel cells provide several public policy benefits 
such as grid reliability and resiliency of electric supply. Bloom 
Energy includes a Joint Declaration from former Commissioners Vicky A. 
Bailey, Norman C. Bay, Nora Mead Brownell, Suedeen G. Kelly, and 
William L. Massey, who note their support of the NOPR and state that 
the ``proposed change is consistent with the statutory text of PURPA 
and the definition of `cogeneration facility' in the [FPA]. . . .'' 
\46\ Subsequently, Bloom Energy filed reply comments in response to the 
comments of FuelCell Energy and EEI.
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    \45\ Bloom Energy Comments at 7 (referencing Bloom Energy 
Petition at 1-2) (internal quotations omitted).
    \46\ Bloom Energy Comments, Joint Declaration at 3.
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V. Discussion

    29. In this final rule, we adopt a revision to the definition of a 
topping-cycle cogeneration facility in section 292.202(h) of the PURPA 
Regulations, as proposed in the NOPR, with one modification, to include 
all fuel cells that use waste heat in an integrated fuel reforming 
process, instead of limiting the type of eligible fuel cells to only 
solid oxide fuel cells.\47\
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    \47\ We recognize that the integrated fuel reforming process can 
use hydrocarbons other than just natural gas but also, e.g., bio-
gas. The regulatory text's reference to ``an integrated steam 
hydrocarbon reformation process'' thus encompasses not only use of 
natural gas in the reformation process but also use of other 
hydrocarbons such as bio-gas.

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[[Page 8137]]

    30. The statutory definition of cogeneration facilities requires 
only that a cogeneration facility produce ``(i) electric energy, and 
(ii) steam or forms of useful energy (such as heat) which are used for 
industrial, commercial, heating or cooling purposes . . . .'' \48\ This 
definition explicitly provides for steam or other forms of useful 
energy to be used for an industrial purpose. Because, as described 
above, a fuel cell system with an integrated hydrocarbon reformation 
process creates useful thermal energy in that it is used for an 
industrial purpose--here, producing a commercially valuable fuel, 
hydrogen--it fits within this statutory definition. Phrased 
differently, fuel cell systems with integrated hydrocarbon reformation 
equipment produce two forms of useful energy: Electric energy and heat/
steam (thermal energy) which can be used to produce hydrogen (from 
which chemical energy can be used to produce electric energy).
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    \48\ 16 U.S.C. 796(18)(A).
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    31. Currently, the Commission's PURPA Regulations as adopted in 
1980 provide that a topping-cycle cogeneration facility is a 
cogeneration facility in which the energy input to the facility is 
first used to produce useful power output and at least some of the 
reject heat from the power production process is then used to provide 
useful thermal energy.\49\ Fuel cell systems with integrated 
hydrocarbon reformation equipment convert the chemical energy of the 
methane within natural gas into hydrogen and, ultimately, electricity 
using a steam-methane reformation process,\50\ which converts the 
natural gas input to hydrogen, which reacts with oxygen in the fuel 
cell to produce electricity. The by-product of the fuel cell's 
production of electricity is heat and steam, some of which is used in 
the integrated hydrocarbon reformation process to convert more natural 
gas into hydrogen, which the fuel cells use, in combination with oxygen 
from the air, to produce electricity.
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    \49\ 18 CFR 292.202(d).
    \50\ As explained in the NOPR, and described again above, 
industrial gas manufacturers also produce hydrogen from natural gas 
using a steam-methane reformation process but must produce their own 
steam, usually through combustion of some of the input natural gas. 
Because the buyers of the resulting hydrogen are usually remote from 
the industrial gas manufacturer, this hydrogen is either compressed 
or liquified in order to transport the hydrogen to the end user. 
Integrating the hydrocarbon reformation process into a fuel cell 
system increases efficiency and avoids the energy loss of external 
reformation and compression or liquefaction for surface 
transportation.
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    32. A cogeneration facility is, per the statute, one that 
``produces electric energy as well as steam or forms of useful energy 
(such as heat) which are used for industrial, commercial, heating or 
cooling purposes.'' \51\ Consistent with this language, fuel cell 
systems with integrated hydrocarbon reformation equipment do exactly 
that and thus can be cogeneration facilities. Fuel cells, as noted 
above, generate two forms of useful energy--electricity and the heat/
steam (thermal energy) that is used to produce hydrogen. The Commission 
thus amends its PURPA Regulations to provide that the production of 
heat/steam by a fuel cell system with an integrated hydrocarbon 
reformation process to produce hydrogen yields a ``useful thermal 
energy output'' made available to an industrial process that entitles 
such a system, consistent with the statute's requirements for a 
cogeneration facility, to be considered a topping cycle cogeneration 
facility that can qualify, subject to meeting the other relevant 
requirements,\52\ to be a QF. The technological advances in fuel cells 
that have occurred since 1980 were neither known nor anticipated when 
the Commission adopted its original definitions for useful thermal 
energy, but that fact should not stand in the way of the Commission now 
recognizing such advances and responding accordingly.\53\
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    \51\ 16 U.S.C. 796(18).
    \52\ See 18 CFR 292.203(b), 292.205. If the facility is a 
``new'' cogeneration facility that seeks to sell electric energy 
pursuant to PURPA section 210, it will also need to meet the 
additional requirements applicable to such facilities. 16 U.S.C. 
824a-3(n); 18 CFR 292.205(d).
    \53\ We recognize that, in EG&G, Inc., the Commission stated 
that, for cogeneration, ``the use of thermal energy must be 
completely independent of the power production process.'' EG&G, 
Inc., 16 FERC at 61,104. Even aside from the fact that that order 
did not involve fuel cells, it was issued under the regulations then 
effective, which we revise here. See id. at 61,103-04. In short, it 
was based on the regulations as adopted in 1980, and it has now been 
overtaken by the change in the PURPA Regulations adopted today.
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    33. In sum, recognizing technological advancements over the past 40 
years and Congress's commitment to ``continuing progress in the 
development of efficient electric energy generating technology,'' \54\ 
and in light of the development and commercialization of fuel cell 
systems with integrated hydrocarbon reformation equipment since the 
original adoption of the PURPA Regulations, we amend section 292.202(h) 
of the PURPA Regulations by adding a new paragraph to provide that 
``useful thermal energy output'' includes the thermal energy that is 
used by a fuel cell system with an integrated steam hydrocarbon 
reformation process for production of hydrogen to be used, ultimately, 
as fuel for electricity generation.
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    \54\ 16 U.S.C. 824a-3(n)(1)(A)(iii).
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    34. We also note that the thermal energy output, i.e., the waste 
heat, from the fuel cell that is used to reform natural gas into 
hydrogen fuel is used in a sequential process to create additional 
electricity and is more efficient and uses less fuel than fuel cells 
without integrated fuel reforming systems. This technology did not 
exist when the Commission established the regulations in Order No. 70. 
In this final rule, we now update our cogeneration regulations to 
include fuel cells with an integrated steam hydrocarbon reformation 
process. Combined-cycle electric generation, while admittedly a more 
efficient form of electric generation than, for example, a combustion 
turbine, is still not the same thing as a fuel cell system with an 
integrated steam hydrocarbon reformation process and does not warrant 
being identified as a qualifying facility.
    35. FuelCell Energy argues that the NOPR proposal endorsed a 
specific technology, solid oxide fuel cells, instead of establishing 
standards that would apply to all similar fuel cells. We agree. The 
Commission has not endorsed specific types of solar panels, for 
example, in defining small power production facilities. Here, as 
FuelCell Energy recognizes, the focus should be on the integrated use 
of waste heat for reforming hydrocarbons to produce hydrogen to fuel a 
fuel cell, instead of the specific fuel cell technology utilized to 
accomplish that goal (i.e., solid oxide or carbonate). As such, we 
modify the proposed definition in the NOPR to state that useful thermal 
energy output includes the thermal energy that is used by a fuel cell 
system with an integrated steam hydrocarbon reformation process for 
production of fuel for electricity generation.
    36. Finally, as we have noted above, we reiterate that ``new'' 
cogeneration facilities seeking to sell electric energy pursuant to 
PURPA section 210 must meet the additional requirements imposed by 
PURPA section 210 and the implementing regulations, that the ``thermal 
energy output . . . is used in a productive and beneficial manner'' 
\55\ and that ``[t]he electrical, thermal, chemical and mechanical 
output of the cogeneration facility is used fundamentally for 
industrial, commercial, residential or institutional purposes and is 
not intended fundamentally for sale to an electric

[[Page 8138]]

utility.'' \56\ These requirements apply to fuel cell systems subject 
to the revised regulations adopted in this final rule.
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    \55\ 18 CFR 292.205(d)(1).
    \56\ 18 CFR 292.205(d)(2). See also Energy Policy Act of 2005, 
Public Law 109-58, 1253, 119 Stat. 594, 967-70 (2005); Order No. 
671, 114 FERC ] 61,102, order on reh'g, Order No. 671-A, 115 FERC ] 
61,225.
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VI. Information Collection Statement

    37. The Paperwork Reduction Act \57\ requires each federal agency 
to seek and obtain the Office of Management and Budget's (OMB) approval 
before undertaking a collection of information (including reporting, 
record keeping, and public disclosure requirements) directed to ten or 
more persons or contained in a rule of general applicability. OMB 
regulations require approval of certain information collection 
requirements contemplated by proposed rules (including deletion, 
revision, or implementation of new requirements).\58\ Upon approval of 
a collection of information, OMB will assign an OMB control number and 
an expiration date. Respondents subject to the filing requirements of a 
rule will not be penalized for failing to respond to the collection of 
information unless the collection of information displays a valid OMB 
control number.
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    \57\ 44 U.S.C. 3501-21.
    \58\ See 5 CFR 1320.11.
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    Public Reporting Burden: The Commission is revising its regulations 
implementing PURPA. The revision provides that useful thermal energy 
outputs will now include the thermal energy ``that is used by a fuel 
cell system with an integrated steam hydrocarbon reformation process 
for production of fuel for electricity generation.'' Below, the table 
includes estimated changes to the burden and cost of the FERC Form No. 
556A \59\ due to this final rule. As demonstrated by the table, we 
believe that some respondents may file multiple Form No. 556As in order 
to avail themselves of the revision in the regulations adopted 
above.\60\
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    \59\ The change to the FERC-556 to reflect the change in the 
regulations adopted by this final rule is being submitted under a 
temporary interim information collection number, FERC-556A (OMB 
Control No. 1902-0316) because another change to FERC-556 (OMB 
Control No. 1902-0075) is pending OMB review and only one change per 
OMB Control No. can be pending for OMB review at a time.
    \60\ The changes to the FERC Form No. 556 adopted in Order No. 
872 are pending OMB review (under ICR #202006-1902-004). Those 
changes are separate and are not affected by or addressed in this 
final rule.

      FERC-556A, Certification of Qualifying Facility Status for a Small Power Production or Cogeneration Facility,Changes Due to Final Rule in Docket Nos. RM21-2-000 and RM20-20-000 \61\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                     Annual cost
                                                                  Number of     Annual number   Total number    Average burden hours & cost per   Total annual burden hours & total      per
            Facility type                   Filing type          respondents    of responses    of responses                response                         annual cost              respondent
                                                                               per respondent                                                                                            ($)
                                                                          (1)             (2)     (1) * (2) =  (4)..............................  (3) * (4) = (5)..................    (5) / (1)
                                                                                                          (3)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cogeneration Facility <= 1 MW \62\..  Self-certification.....               5        \63\ 600           3,000  1.5 hrs.; $124.50................  4,500 hrs.; $373,500.............      $74,700
Cogeneration Facility > 1 MW........  Self-certification.....               5              20             100  1.5 hrs.; $124.50................  1,500 hrs.; $12,450..............        2,490
Cogeneration Facility > 1 MW........  Application for FERC                  5               1               5  50 hrs.; $4,150..................  250 hrs.; $20,750................        4,150
                                       certification.
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
    FERC-556A, TOTAL ADDITIONAL       .......................              15  ..............           3,105  .................................  6,250 hrs.; $406,700.............  ...........
     BURDEN AND COST DUE TO final
     rule in RM21-2 and RM20-20.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Title: FERC-556A (Certification of Qualifying Facility (QF) Status 
for a Small Power Production or Cogeneration Facility)
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    \61\ The figures in this table reflect estimated changes to the 
current OMB-approved inventory for the FERC Form No. 556. Commission 
Information Collection Activities (FERC-556); Comment Request; 
Extension, Docket No. IC19-16-000 (issued May 15, 2019 and approved 
by OMB on November 18, 2019). The above table only reflects 
cogeneration facilities because small power production facilities 
will not be affected by the changes in this final rule. The 
Commission staff believes that the industry is similarly situated to 
the Commission in terms of wages and benefits. Therefore, cost 
estimates are based on FERC's 2020 average hourly wage (and 
benefits) of $83.00/hour.
    \62\ Such facilities are not required to file but have the 
choice whether to do so.
    \63\ Bloom Energy has stated they have 600 facilities, each with 
an average size of 0.6 MW, see Bloom Energy Petition at 14, which, 
if they all were in fact to file, would result in as many as 600 
self-certifications of below-1 MW facilities. The Commission 
accordingly will adopt a conservative approach and estimate 600 such 
responses over the course of a year, which is especially 
conservative given that the Commission's regulations do not require 
below-1 MW facilities to submit self-certifications.
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    While FuelCell Energy also states that, to date, it has over 250 MW 
of fuel cells

[[Page 8139]]

(but of unknown size) installed, in backlog, or under award on three 
continents, our burden estimate of as many as five respondents self-
certifying up to 600 units annually each is sufficiently large to 
encompass any such self-certifications.
    Action: Revisions to existing information collection FERC-556-
A.\64\
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    \64\ The FERC Form No. 556 is not being revised, but respondents 
with fuel cell systems with integrated natural gas reformation 
equipment who are self-certifying or requesting Commission 
certification as a cogenerator will use the FERC Form No. 556. On 
page 8, item 6a of the FERC Form No. 556, those respondents should 
indicate ``Fossil fuel, natural gas (not waste).''
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    OMB Control No.: 1902-0316.
    Respondents: Facilities that are self-certifying their status as a 
cogenerator or that are submitting an application for Commission 
certification of their status as a cogenerator.
    Frequency of Information: Ongoing.
    Necessity of Information: The Commission directs the changes in 
this final rule in order to revise its implementation of PURPA in light 
of technological advancements in electric generation since the 
enactment of PURPA in 1978.
    Internal Review: The Commission has reviewed the proposed changes 
and has determined that such changes are necessary. These requirements 
conform to the Commission's ongoing need for efficient information 
collection, communication, and management within the energy industry, 
in light of technological advancements in electric generation.
    Interested persons may obtain information on the reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
888 First Street NE, Washington, DC 20426 [Attention: Ellen Brown, 
Office of the Executive Director], by email to DataClearance@ferc.gov, 
or by phone (202) 502-8663.
    Please send comments concerning the collection of information and 
the associated burden estimates to: Office of Information and 
Regulatory Affairs, Office of Management and Budget [Attention: Federal 
Energy Regulatory Commission Desk Officer]. Due to security concerns, 
comments should be sent directly to www.reginfo.gov/public/do/PRAMain. 
Comments submitted to OMB should be sent within 30 days of publication 
of this notice in the Federal Register and should refer to FERC-556 
(OMB Control No. 1902-0075).

VII. Environmental Analysis

    38. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\65\ Whether 
and how the changes adopted here, however, would affect QF development 
and the environment is speculative.
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    \65\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47,897 (Dec. 17, 1987), FERC Stats. & 
Regs. ] 30,783 (1987)) (cross-referenced at 41 FERC ] 61,284).
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    39. The changes to the PURPA Regulations do not authorize or fund 
particular generation that may happen to qualify as QFs, nor do they 
license or issue permits for operation of generation that may happen to 
qualify as QFs; such generation can be built and operated independent 
of, i.e., without, QF certification. They do not authorize or prohibit 
a generator's use of any particular technologies or fuels, nor do they 
mandate or limit where QFs should or should not be built. They do not 
exempt QFs from any Federal, state or local environmental, siting, or 
other similar laws or regulatory requirements. Given these facts any 
environmental impact analysis of the revisions proposed here would be 
speculative and not meaningfully inform the Commission or the public of 
the revisions' impact on QF development or, correspondingly, of any 
associated potential impacts on the environment; there are, in short, 
no reasonably foreseeable environmental impacts for the Commission to 
consider.\66\ Moreover, the revisions proposed here would apply only to 
a limited number of QFs: Fuel cell systems with integrated hydrocarbon 
reformation equipment. Therefore, the Commission will not prepare an 
environmental document.
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    \66\ While courts have held that NEPA requires ``reasonable 
forecasting,'' an agency is not required ``to engage in speculative 
analysis'' or ``to do the impractical, if not enough information is 
available to permit meaningful consideration.'' N. Plains Res. 
Council v. Surface Transp. Board, 668 F.3d 1067, 1078 (9th Cir. 
2011).
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VIII. Regulatory Flexibility Act

    40. The Regulatory Flexibility Act of 1980 (RFA) \67\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
In lieu of preparing a regulatory flexibility analysis, an agency may 
certify that a proposed rule will not have a significant economic 
impact on a substantial number of small entities.\68\
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    \67\ 5 U.S.C. 601-12.
    \68\ 5 U.S.C. 605(b).
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    41. The Small Business Administration's (SBA) Office of Size 
Standards develops the numerical definition of a small business.\69\ 
The SBA size standard for electric utilities is based on the number of 
employees, including affiliates.\70\ Under SBA's current size 
standards, the threshold for a small entity (including its affiliates) 
is 250 employees for cogeneration in the NAICS \71\ category: NAICS 
code 221118 for Other Electric Power Generation.
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    \69\ 13 CFR 121.101.
    \70\ SBA final rule on ``Small Business Size Standards: 
Utilities,'' 78 FR 77,343 (Dec. 23, 2013).
    \71\ The North American Industry Classification System (NAICS) 
is an industry classification system that Federal statistical 
agencies use to categorize businesses for the purpose of collecting, 
analyzing, and publishing statistical data related to the U.S. 
economy. United States Census Bureau, North American Industry 
Classification System, https://www.census.gov/eos/www/naics/ 
(accessed October 4, 2020).
---------------------------------------------------------------------------

    42. This rule directly affects cogeneration facilities, the 
majority of which the Commission estimates are small businesses. 
However, the Commission does not expect the revision to affect a 
substantial number of small entities. This final rule directly affects 
only certain QFs, i.e., those that are fuel cell systems with 
integrated steam hydrocarbon reformation equipment; this rule is 
voluntary. That is, this final rule expands the types of cogenerators 
that would be eligible to qualify as QFs to include fuel cell systems 
with integrated steam hydrocarbon reformation equipment, but this final 
rule does not require fuel cell systems with integrated steam 
hydrocarbon reformation equipment to file for QF certification. The 
Commission does not anticipate that the number of affected small 
entities would be substantial, nor does the Commission expect that any 
additional reporting burden or cost imposed on QFs, regardless of their 
status as a small or large business, would be significant.\72\ The 
Commission estimates that annual additional compliance costs on 
industry (detailed above) will be approximately $406,700 to comply with 
these requirements.
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    \72\ The average cost per response is estimated to vary from 
$124.50 for self-certifications to $4,150 for applications for FERC 
certification. The cost per respondent will vary based on the 
respondent's number of facilities and related requests for self-
certification and applications for Commission certification (with an 
estimated cost ranging from $2,490 to $74,700 per respondent).
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    43. Accordingly, pursuant to section 605(b) of the RFA, the 
Commission certifies that this rule will not have a significant 
economic impact on a substantial number of small entities.

IX. Document Availability

    44. 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

[[Page 8140]]

document via the internet through the Commission's Home Page (http://www.ferc.gov). At this time, the Commission has suspended access to the 
Commission's Public Reference Room due to the President's March 13, 
2020 proclamation declaring a National Emergency concerning the Novel 
Coronavirus Disease (COVID-19).
    45. 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.
    46. User assistance is available for eLibrary and the Commission's 
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202)502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

X. Effective Date and Congressional Notification

    47. These regulations are effective April 5, 2021. The Commission 
has determined, with the concurrence of the Administrator of the Office 
of Information and Regulatory Affairs of OMB, that this rule is not a 
``major rule'' as defined in section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996. This final rule is being 
submitted to the Senate, House, Government Accountability Office, and 
Small Business Administration.

List of Subjects in 18 CFR Part 292

    Electric power plants, Electric utilities, Reporting and 
recordkeeping requirements.

    By the Commission. Commissioner Clements is not participating.
    Issued: December 17, 2020.
Kimberly D. Bose,
Secretary.

    In consideration of the foregoing, the Commission amends part 292, 
chapter I, title 18, Code of Federal Regulations, as follows:

PART 292--REGULATIONS UNDER SECTIONS 201 AND 210 OF THE PUBLIC 
UTILITY REGULATORY POLICIES ACT OF 1978 WITH REGARD TO SMALL POWER 
PRODUCTION AND COGENERATION

0
1. The authority citation for part 292 continues to read as follows:

    Authority:  16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 
U.S.C. 7101-7352.


0
2. Amend Sec.  292.202 by revising paragraphs (h)(2) and (3) and adding 
paragraph (h)(4) to read as follows:


Sec.  292.202  Definitions.

* * * * *
    (h) * * * :
    (2) That is used in a heating application (e.g., space heating, 
domestic hot water heating);
    (3) That is used in a space cooling application (i.e., thermal 
energy used by an absorption chiller); or
    (4) That is used by a fuel cell system with an integrated steam 
hydrocarbon reformation process for production of fuel for electricity 
generation.
* * * * *
[FR Doc. 2021-01988 Filed 2-3-21; 8:45 am]
BILLING CODE 6717-01-P


