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Rule

Interstate and Intrastate Natural Gas Pipelines; Rate Changes Relating to Federal Income Tax Rate American Forest & Paper Association

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Start Preamble

AGENCY:

Federal Energy Regulatory Commission, Department of Energy.

ACTION:

Final rule.

SUMMARY:

Order No. 849 adopted procedures for determining which jurisdictional natural gas pipelines may be collecting unjust and unreasonable rates in light of the income tax reductions provided by the Tax Cuts and Jobs Act and the Commission's revised policy and precedent concerning tax allowances to address the double recovery issue identified by United Airlines, Inc. v. FERC. These procedures also allowed interstate natural gas pipelines to voluntarily reduce their rates. In this final rule, the Commission finds that there are no more expected filings that will make use of these special procedures, which are uniquely tied to the Tax Cuts and Jobs Act, and that all existing proceedings under these procedures have closed. Therefore, the Commission removes the procedures from the Code of Federal Regulations as obsolete.

DATES:

This rule is effective August 2, 2021.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Vince Mareino (Legal Information), Office of the General Counsel, 888 First Street NE, Washington, DC 20426, (202) 502-6167, Vince.Mareino@ferc.gov.

Laura Kane (Technical Information), Office of Energy Market Regulation, 888 First Street NE, Washington, DC 20426, (202) 502-8653, Laura.Kane@ferc.gov.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

I. Background

1. On July 18, 2018, the Commission issued a final rule [1] (Order No. 849) adopting procedures for determining which jurisdictional natural gas pipelines may be collecting unjust and unreasonable rates in light of the income tax reductions provided by the Tax Cuts and Jobs Act [2] and the Commission's Revised Policy Start Printed Page 29504Statement [3] and precedent [4] concerning tax allowances to address the double recovery issue identified by United Airlines, Inc. v. FERC.[5] These procedures also allowed interstate natural gas pipelines to voluntarily reduce their rates. On April 18, 2019, the Commission denied all outstanding requests for rehearing and reaffirmed the Commission's determinations in Order No. 849 (Order No. 849-A).[6]

2. Order No. 849 established a requirement, pursuant to sections 10 and 14(a) of the Natural Gas Act (NGA),[7] that all interstate natural gas companies with cost-based stated rates that filed a 2017 FERC Form No. 2 or 2-A must file the FERC Form No. 501-G informational filing for the purpose of evaluating the impact of the Tax Cuts and Jobs Act and the United Airlines Issuances on interstate natural gas pipelines' revenue requirements. In addition to the FERC Form No. 501-G filing requirement, the Commission provided four options for each interstate natural gas pipeline to make a filing to address the changes to the pipeline's recovery of tax costs or explain why no action is needed: (1) A limited NGA section 4 [8] rate reduction filing (Option 1), (2) a commitment to file a general section 4 rate case or prepackaged settlement in the near future (Option 2), (3) an explanation why no rate change is needed (Option 3), and (4) no action (Option 4). These procedures were intended to encourage natural gas pipelines to voluntarily reduce their rates to the extent the tax changes result in their over-recovering their cost of service, while also providing the Commission and stakeholders information necessary to take targeted actions under NGA section 5 [9] where necessary to achieve just and reasonable rates.

3. Order No. 849 made three changes to the Code of Federal Regulations. First, new § 260.402 of the Commission's regulations established the FERC Form No. 501-G filing requirement described above.[10] Second, new § 154.404 of the Commission's regulations established the regulations necessary to govern Option 1, the limited NGA section 4 rate reduction filings.[11] Options 2, 3, and 4 above did not require any change in regulations, as they could proceed under preexisting regulatory authority. Third, new § 284.123(i) of the Commission's regulations provided procedures for section 311 of the National Gas Policy Act of 1978 (NGPA) [12] and Hinshaw [13] pipelines to establish fair and equitable rates for their interstate services.[14]

II. Discussion

4. In Order No. 849, the Commission identified 129 interstate natural gas pipelines with cost-based rates that were required to file the FERC Form No. 501-G, codified in § 260.402. As of the date of Order No. 849-A, the Commission had received filings from all 129 identified pipelines.[15] As of April 15, 2021, all of these FERC Form No. 501-G filings have been accepted for filing, and the proceedings terminated. Because Order No. 849 established a one-time reporting requirement tied to a past event, it would not apply to any new pipelines that may enter the market in the future. Therefore, the regulations implemented in Order No. 849 are no longer needed, and we hereby remove § 260.402 from the Commission's regulations.

5. Eleven pipelines chose Option 1, codified in § 154.404. Under Option 1, pipelines could only choose to make these limited NGA section 4 rate reduction filings at the time of their FERC Form No. 501-G filings. Just as no new FERC Form No. 501-G filings are possible, likewise no new filings under § 154.404 are possible.

6. For any of these limited NGA section 4 rate reduction filings that proceeded to hearing, § 154.404 also governs the process by which these hearings are adjudicated, so it would not have been reasonable to remove § 154.404 before all the existing hearings concluded, either with the acceptance of a settlement or with the publication of an Initial Decision. There are no remaining dockets that are either in an Option 1 hearing or eligible to be set for an Option 1 hearing. As a result, the regulations governing this type of limited NGA section 4 rate reduction filings are no longer needed. We shall therefore remove § 154.404 of the Commission's regulations.

7. Order No. 849 also established separate regulations under § 284.123(i) to address the unique jurisdictional situation of section 311 and Hinshaw pipelines, which have their interstate rates regulated by the Commission, but which are primarily regulated at the state level. Under pre-existing policy, the Commission reviews the rates of section 311 and Hinshaw pipelines every five years on a rolling basis.[16] Section 284.123(i), in brief, provided a mechanism to lower these pipelines' interstate rates prior to their five-year review, in the event that state government regulators also adjusted their rates in light of the recent changes in tax code and tax policy. In the three-and-a-half years from the passage of the Tax Cuts and Jobs Act in November 2017 until the present, almost all section 311 and Hinshaw pipelines have either come before the Commission for their five-year review, or have come before the Commission for an out-of-cycle rate review, whether due to § 284.123(i), voluntary action, or the other requirements of section 284 of the Commission's regulations that can compel an out-of-cycle rate review. The Commission, through its own review, finds it is unlikely that the remaining section 311 and Hinshaw pipelines will trigger § 284.123(i), and in any event all are due for their five-year review in the near future under the Commission's pre-existing policy. As a result, the special circumstances presented by the Tax Cuts and Jobs Act that required § 284.123(i) are no longer present. We shall therefore remove § 284.123(i) of the Commission's regulations.

III. Regulatory Requirements

A. Information Collection Statement

8. The Paperwork Reduction Act [17] 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) Start Printed Page 29505directed to ten or more persons or contained in a rule of general applicability. OMB regulations require approval of certain information collection requirements contemplated by final rules (including deletion, revision, or implementation of new requirements). 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. The following discussion describes and analyzes the collection of information to be deleted by this final rule.

9. Public Reporting Burden: In this final rule, the Commission eliminates FERC Form No. 501-G [18] (One-time Report on Rate Effect of the Tax Cuts and Jobs Act). This final rule eliminates an existing data collection, FERC-501G (OMB Control No. 1902-0302). Order No. 849 (in Docket No. RM18-11-000) allowed the Commission to determine which jurisdictional natural gas pipelines may be collecting unjust and unreasonable rates in light of the recent reduction in the corporate income tax rate in the Tax Cuts and Jobs Act and changes to the Commission's income tax allowance policies following the United Airlines decision. FERC Form No. 501-G collected information as to whether the pipeline was a pass-through entity. FERC Form No. 501-G collected income and balance sheet statement financial data from all NGA pipelines that have stated cost-based rates on file with the Commission. NGA pipelines whose rates were examined in a general rate case under section 4 of the NGA or in an investigation under section 5 of the NGA were not required to file FERC Form No. 501-G.

10. The Commission identified 129 interstate natural gas pipelines with cost-based rates that were required to file the adopted FERC Form No. 501-G. Interstate natural gas pipelines had four options as to how to address the results of the formula contained in the FERC Form No. 501-G. Each option has a different burden profile and a different cost per response. Companies made their own business decisions as to which option they selected. This final rule eliminates FERC Form No. 501-G which reduces burden on all applicants.

11. All burden from FERC Form No. 501-G has already been incurred. For informational purposes, the previous estimate of burden and cost for the now-complete FERC Form No. 501-G collection follows.

FERC-501G—Rate Changes Relating to Federal Corporate Income Tax Rate for Interstate Natural Gas Pipelines, To Be Eliminated by the Final Rule in Docket No. RM18-11-002

RespondentsResponses per respondentTotal responsesAverage burden hour per responseAverage cost per responseTotal burden hoursTotal cost ($)
(1)(2)(1) * (2) = (3)(4)(5)(1) * (4) = (6)(1) * (5) = (7)
Interstate Natural Gas Pipelines With Cost-Based Rates
FERC Form No. 501-G, One-time Report (reduction) 191291* 129* 9 hrs.* $756* 1,161* $97,524
Optional Response
No Response (reduction)51000000
Case for no change (reduction)62162542031026,040
Limited Sec 4 filing (reduction) 20151156504907,560
General Sec. 4 filing (reduction) 2111122 51242,96851242,968
NGPA Section 311 and Hinshaw Pipelines With Cost-Based Rates
NGPA rate filing (reduction) 2324 15115242,01536030,225
Total, To Be Eliminated by RM18-11-00225 144* 222* 2,433* 204,317
* (reduction).

12. This final rule eliminates all information collection and recordkeeping requirements associated with RM18-11-000. The removal of the FERC-501G eliminates the estimated annual information collection burden (2,433 hours) and cost ($204,317) associated with FERC-501G (OMB Control No. 1902-0302).

B. Environmental Analysis

13. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement Start Printed Page 29506for any action that may have a significant adverse effect on the human environment.[26] The actions taken here fall within categorical exclusions in the Commission's regulations for rules regarding information gathering, analysis, and dissemination.[27] Therefore, an environmental review is unnecessary and has not been prepared in this rulemaking.

C. Regulatory Flexibility Act

14. The Regulatory Flexibility Act of 1980 (RFA) [28] generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. The RFA mandates consideration of regulatory alternatives that accomplish the stated objectives of a rulemaking while minimizing any significant economic impact on a substantial number of small entities. In lieu of preparing a regulatory flexibility analysis, an agency may certify that a final rule will not have a significant economic impact on a substantial number of small entities.[29] In Order No. 849, the Commission found that the institution of the new regulations would not have a significant impact on a substantial number of small entities.[30] Most of the natural gas pipelines regulated by the Commission do not fall within the RFA's definition of a small entity.[31] For the same reasons, removing these regulations will not have a significant impact on a substantial number of small entities.

D. Document Availability

15. 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). 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).

16. 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.

17. 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.

E. Effective Date and Congressional Notification

18. These regulations are effective August 2, 2021. This rule does not alter the substantive rights or interests of any interested persons, and it merely removes certain outdated and nonessential natural gas regulations from the Commission's body of regulations on a prospective basis. Therefore, prior notice and comment under section 4 of the Administrative Procedure Act (APA) [32] are unnecessary. The Commission has determined that this rule is not a “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.

Start List of Subjects

List of Subjects

18 CFR Part 154

  • Natural gas
  • Pipelines
  • Reporting and recordkeeping requirements

18 CFR Part 260

  • Natural gas
  • Reporting and recordkeeping requirements

18 CFR Part 284

  • Continental shelf
  • Natural gas
  • Reporting and recordkeeping requirements
End List of Subjects Start Signature

By the Commission.

Issued: May 20, 2021.

Kimberly D. Bose,

Secretary.

End Signature

In consideration of the foregoing, the Commission amends parts 154, 260, & 284, chapter I, title 18, Code of Federal Regulations, as follows:

Start Part

PART 154—RATE SCHEDULES AND TARIFFS

End Part Start Amendment Part

1. The authority citation for part 154 continues to read as follows:

End Amendment Part Start Authority

Authority: 15 U.S.C. 717-717w; 31 U.S.C. 9701; 42 U.S.C. 7102-7352.

End Authority
[Removed]
Start Amendment Part

2. Remove § 154.404.

End Amendment Part Start Part

PART 260—STATEMENTS AND REPORTS (SCHEDULES)

End Part Start Amendment Part

3. The authority citation for part 260 continues to read as follows:

End Amendment Part Start Authority

Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.

End Authority
[Removed]
Start Amendment Part

4. Remove § 260.402.

End Amendment Part Start Part

PART 284—CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES

End Part Start Amendment Part

5. The authority citation for part 284 continues to read as follows:

End Amendment Part Start Authority

Authority: 15 U.S.C. 717-717z, 3301-3432; 42 U.S.C. 7101-7352; 43 U.S.C. 1331-1356.

End Authority
[Amended]
Start Amendment Part

6. In § 284.123, remove paragraph (i).

End Amendment Part End Supplemental Information

Footnotes

1.  Interstate & Intrastate Nat. Gas Pipelines; Rate Changes Relating to Fed. Income Tax Rate, Order No. 849, 83 FR 36672 (July 30, 2018), 164 FERC ¶ 61,031 (2018).

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2.  An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, Public Law 115-97, 131 Stat. 2054 (2017) (Tax Cuts and Jobs Act).

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3.  Inquiry Regarding the Commission's Policy for Recovery of Income Tax Costs, 81 FR 94366 (Dec. 23, 2016), 162 FERC ¶ 61,227 (Revised Policy Statement), order on reh'g, 83 FR 12362 (March 21, 2018), 164 FERC ¶ 61,030 (2018) (Revised Policy Statement Rehearing).

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4.  SFPP, L.P., Opinion No. 511-C, 162 FERC ¶ 61,228, at P 9 (2018).

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5.  827 F.3d 122 (D.C. Cir. 2016) (United Airlines). For purposes of this order, the Revised Policy Statement, United Airlines, and Opinion No. 511-C will collectively be referred to as “United Airlines Issuances.”

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6.  Interstate & Intrastate Nat. Gas Pipelines; Rate Changes Relating to Fed. Income Tax Rate, Order No. 849-A, 84 FR 17739 (April 26, 2019), 167 FERC ¶ 61,051 (2019).

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7.  15 U.S.C. 717i(a), 717m(a).

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13.  Section 1(c) of the NGA, 15 U.S.C. 717(c), exempts from the Commission's NGA jurisdiction those pipelines which transport gas in interstate commerce if: (1) They receive natural gas at or within the boundary of a state, (2) all the gas is consumed within that state, and (3) the pipeline is regulated by a state Commission. This is known as the Hinshaw exemption.

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15.  Order No. 849-A, 167 FERC ¶ 61,051 at P 4.

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16.  Contract Reporting Requirements of Intrastate Nat. Gas Cos., Order No. 735, 75 FR 29404 (May 26, 2010), 131 FERC ¶ 61,150, at P 96, order on reh'g, Order No. 735-A, 75 FR 80685 (Dec. 23, 2010), 133 FERC ¶ 61,216 (2010); see also Hattiesburg Indus. Gas Sales, L.L.C., 134 FERC ¶ 61,236 (2011) (imposing a five-year rate review requirement on Hattiesburg Industrial Gas Sales, L.L.C.).

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18.  FERC-501G has also been referenced as FERC Form No. 501-G.

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19.  18 CFR 260.402 (as revised).

20.  18 CFR 154.404 (as revised).

21.  18 CFR 154.312.

22.  The estimate for hours is based on the estimated average hours per response for the FERC-545 (OMB Control No. 1902-0154), with general NGA section 4, 18 CFR 154.312 filings weighted at a ratio of 20 to one.

23.  18 CFR 284.123(i) (as revised).

24.  Estimate of number of respondents assumes that states will act within one year to reduce NGPA section 311 and Hinshaw pipeline rates to reflect the Tax Cuts and Jobs Act.

25.  Number of unique respondents = (One-time Report) + (NGPA rate filing).

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26.  Regulations Implementing the National Environmental Policy Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783 (1987) (cross-referenced at 41 FERC ¶ 61,284).

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27.  See 18 CFR 380.4(a)(2)(ii) and (a)(5).

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30.  Order No. 849, 164 FERC ¶ 61,031 at P 296.

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31.  In Order No. 849, the Commission determined 3.9% of the total potential NGA respondents and 5.1% of the total NGPA section 311 and Hinshaw pipelines could be considered a small entity. Eliminating the filing requirement would eliminate any burden and cost from FERC-501G for small and large entities.

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[FR Doc. 2021-11353 Filed 6-1-21; 8:45 am]

BILLING CODE 6717-01-P