On October 18, 2012, the Federal Energy Regulatory Commission (FERC) issued three notices of proposed rulemaking (NOPRs), intended to streamline its natural gas and oil pipeline regulations and lighten the regulatory burden arising from obsolete and duplicative regulatory requirements.
In the NOPR concerning interstate natural gas pipelines (Docket No. RM12-14), available here, FERC proposes to simplify the method by which pipelines recover their annual charges, which FERC assesses to allow it to recover the cost of administering its natural gas regulatory program. Under the current regime, pipelines recover annual charge expenses from customers through annual filings revising their annual charge adjustment (ACA) charge to match the charge calculated by FERC for that year. Under the proposed rules, those annual filings would be eliminated in favor of a tariff clause that incorporates by reference FERC’s annual charge unit rate as published on its website. Pipelines will only be authorized to collect the charge if FERC indicates on its website that they have paid their annual charge for that year.
In the intrastate natural gas NOPR (Docket No. RM12-17), available here, FERC proposes to simplify rate and operating condition filings by intrastate and Hinshaw pipelines that provide FERC-regulated service under section 311 of the Natural Gas Policy Act of 1978. The proposed procedure is similar to the “prior notice” procedure for certain activities undertaken by interstate pipelines pursuant to blanket certificates. Under the proposal, intrastate and Hinshaw pipelines would have the option to seek approval of rates or operating conditions that would be deemed approved if they are not protested within 60 days or, if protested, where the protests are resolved between the parties within an additional 30-day reconciliation period. Similar to the blanket certificate “prior notice” regulations applicable to interstate pipelines, the proposed regulations would permit FERC Staff to file protests to a pipeline’s proposal, so filings that are unopposed by any pipeline customers or other interested private parties could still be opposed by FERC Staff. If the pipeline and the protesting party settle the dispute within the reconciliation period, the protesting party would withdraw the protest and the proposal would be deemed approved without an order or the filing of an offer of settlement. If the parties are unable to resolve the dispute, FERC would establish procedures to resolve the proceeding, such as setting the matter for hearing before an administrative law judge, or requiring the parties to participate in discussions before a settlement judge.
FERC’s existing policy requires intrastate and Hinshaw pipelines to justify their rates every five years. This condition traditionally has been imposed in the order approving a specific pipeline’s rate filings. Under the proposed “prior notice” procedure, no order will issue, so FERC has proposed to impose the same requirement by generally applicable regulation. FERC does not intend for this requirement to impose an additional regulatory burden on intrastate and Hinshaw pipelines. Under the proposed regulations, within five years of the date an intrastate or Hinshaw pipeline files its application for rate approval, those pipelines that use a state-approved rate as their FERC rate would be required to file a petition for rate approval with their state regulatory agency. Other intrastate and Hinshaw pipelines would be required to file an application for rate approval with FERC. Because FERC has no authority under the Natural Gas Act to compel a Hinshaw pipeline to make a rate filing, a Hinshaw pipeline electing the “prior notice” procedure would have the option, in lieu of an application for rate approval, to file cost, throughput and revenue data to allow FERC to determine whether to institute a proceeding under section 5 of the Natural Gas Act.
In the oil pipeline NOPR (Docket No. RM12-15), available here, FERC proposes several simplifications to oil pipeline filing requirements. These revisions are intended to streamline unnecessary regulatory obligations. Specifically, FERC proposes to eliminate the requirement that pipelines post paper copies of their tariffs for public inspection, clarify that the default method of service upon shippers and tariff subscribers is service by email, and eliminate the requirement to file an index of tariffs and instead require that pipelines with more than two tariffs simply post an index on their websites. In recognition of FERC’s requirement that tariffs be filed electronically rather than on paper, FERC also proposes to delete or consolidate requirements related to tariff amendments, cancellations, corrections, adoptions and supplements.
Comments on each of the NOPRs are due within 30 days of publication in the Federal Register.