[Federal Register Volume 83, Number 154 (Thursday, August 9, 2018)]
[Notices]
[Pages 39507-39508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17053]


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

DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2017-0129]


Pipeline Safety: Underground Natural Gas Storage Facility User 
Fee

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 
DOT.

ACTION: Notice of agency action.

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

SUMMARY: On December 8, 2017, PHMSA published a notice and request for 
comments in the Federal Register titled: ``Underground Natural Gas 
Storage Facility User Fee'' seeking comments from underground natural 
gas storage facility (UNGS) operators on a proposal to use UNGS annual 
report data in the user fee rate structure. PHMSA received two comments 
in the docket. We are publishing this notice to address the comments 
received and to announce that PHMSA has used UNGS annual report data 
about the number of wells in the user fee rate structure for the 
Pipeline Safety Fund's Underground Natural Gas Storage Facility Safety 
Account.

FOR FURTHER INFORMATION CONTACT: Crystal Stewart by telephone at 202-
366-1524, by fax at 202-366-4566, by email at [email protected], 
or by mail at U.S. Department of Transportation, PHMSA, 1200 New Jersey 
Avenue SE., PHP-2, Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION: 

Background

    The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) 
(Pub. L. 99-272, sec. 7005), codified in part at section 60301 of title 
49, United States Code, authorizes the assessment and collection of 
user fees to fund the pipeline safety activities conducted under 
chapter 601 of title 49. On June 22, 2016, President Obama signed into 
law the ``Protecting our Infrastructure of Pipelines and Enhancing 
Safety Act of 2016'' (Pub. L. 114-183) (PIPES Act of 2016). Section 12 
of the PIPES Act of 2016 mandates that PHMSA issue regulations for UNGS 
facilities, authorizes user fees on operators of these facilities, and 
directs PHMSA to prescribe procedures to collect those fees upon 
appropriation. Section 2 of the PIPES Act of 2016 authorizes $8 million 
per year to be appropriated from those fees for each of FY 2017-2019 
for the newly established Underground Natural Gas Storage Facility 
Safety Account in the Pipeline Safety Fund. After Congress appropriates 
funds to this account for fiscal year (FY) 2018 and beyond, PHMSA will 
collect user fees from the operators of the facilities.

Summary of Comments

    The December 8, 2017 notice advised all UNGS facility operators of 
a proposed PHMSA pipeline user fee assessment and rate structure (82 FR 
58045). During the one-month response period, PHMSA received comments 
from two commenters on the proposed UNGS user fee billing methodology: 
WBI Energy Transmission Inc., and National Fuel Gas Supply Corporation.
    The comments can be found at http://www.regulations.gov in Docket 
Number PHMSA-2017-0129. WBI Energy Transmission Inc., submitted 
comments supporting the rate structure proposed by PHMSA in the 
December 8, 2017 notice. The remaining comment is summarized below with 
PHMSA's response:
    Comment: National Fuel Gas Supply Corporation stated that well 
count alone is not an appropriate measure for determining a user fee 
since larger wells will require more regulatory oversight than smaller 
wells.
    Response: Each well penetrating an underground natural gas storage 
reservoir represents a risk. Currently, PHMSA intends to apply a 
consistent level of regulatory oversight to all wells, regardless of 
size. As PHMSA implements its underground storage inspection program, 
we may gain insights leading to a user fee methodology more reflective 
of regulatory oversight effort.

Underground Natural Gas Storage Facility User Fee Plan

    During the FY 2018 user fee process, PHMSA has used calendar year 
(CY) 2016 annual report data for gas transmission pipelines, hazardous 
liquid pipelines, and liquefied natural gas facilities. Using CY 2016 
data ensures adequate time to verify annual report data quality and 
still be able to send user fee assessments promptly after 
appropriation. PHMSA does not have CY 2016 annual report data for 
underground natural gas storage facilities. Congress appropriated UNGS 
funds for FY 2018, and PHMSA has

[[Page 39508]]

used the CY 2017 UNGS annual report data to develop the UNGS user fee 
rate structure for FY 2018. If Congress appropriates UNGS funds for FY 
2019, PHMSA plans to use the CY 2017 UNGS annual report data to develop 
the UNGS user fee rate structure for FY 2019. Specifically, PHMSA will 
use the number of injection/withdraw wells (section C7) and monitoring/
observation wells (section C8) in the rate structure. For the FY 2020 
user fee rate structure, PHMSA would use the CY 2018 UNGS annual report 
data.
    For FY 2018, Congress has appropriated $8 million to the 
Underground Natural Gas Storage Facility Safety Account in the Pipeline 
Safety Fund. PHMSA has used the following steps to develop the user fee 
rate structure. PHMSA summed the number of wells from sections C7 and 
C8 of the annual report for each operator. Once PHMSA determined the 
number of wells for all UNGS operators, each operator was parsed into 
one of 10 tiers, based on an ordinal ranking of its well counts 
compared to other UNGS operators. The operators with the lowest well-
count values were placed in tier 1, with the highest operator well-
count values in tier 10. The minimum and maximum well counts for each 
tier were then selected so that an equal number of operators were 
placed in each tier. This tiered fee structure is designed to place a 
larger share of the user fee on operators with higher well counts.
    Using CY 2017 UNGS annual report data as of May 9, 2018, the 
following table shows the tier boundaries and user fee for each 
operator in the tier. When the tier boundary spans two tiers, PHMSA 
randomly selected operators for the lower tier. For example, four wells 
is the boundary between Tiers 1 and 2. Seven operators have four wells, 
but only two operators were randomly selected and placed in Tier 1. The 
remaining five operators with four wells were placed in Tier 2.

----------------------------------------------------------------------------------------------------------------
                                                                                     Number of     User fee per
               Tier                  Amount  (% of total)     Tier boundaries        operators       operator
----------------------------------------------------------------------------------------------------------------
1.................................  $160,000 (2%)........  4 wells or less......              13         $12,308
2.................................  $320,000 (4%)........  4 to 7 wells.........              13          24,615
3.................................  $400,000 (5%)........  7 to 12 wells........              13          30,769
4.................................  $480,000 (6%)........  13 to 19 wells.......              13          36,923
5.................................  $640,000 (8%)........  19 to 27 wells.......              13          49,231
6.................................  $800,000 (10%).......  28 to 45 wells.......              13          61,538
7.................................  $960,000 (12%).......  46 to 68 wells.......              13          73,846
8.................................  $1,040,000 (13%).....  69 to 100 wells......              12          86,667
9.................................  $1,200,000 (15%).....  101 to 377 wells.....              12         100,000
10................................  $2,000,000 (25%).....  378 wells or more....              12         166,667
----------------------------------------------------------------------------------------------------------------

    In summary, PHMSA has used UNGS annual report data about the number 
of wells in the FY 2018 user fee rate structure for the Pipeline Safety 
Fund's Underground Natural Gas Storage Facility Safety Account. In 
future years, the final tier boundaries and user fee per operator may 
differ slightly from those listed above based on the annual report data 
at the time the rate structure is established.

    Issued in Washington, DC, on August 3, 2018, under authority 
delegated in 49 CFR 1.97.
Alan K. Mayberry,
Associate Administrator for Pipeline Safety.
[FR Doc. 2018-17053 Filed 8-8-18; 8:45 am]
BILLING CODE 4910-60-P


