299. Public Interest Organizations assert that the Commission's
decision not to grant more extensive legacy treatment for existing
facilities whose owners have reasonably relied on the longstanding one-
mile rule sets a precedent of dramatic regulatory uncertainty that will
have a chilling effect on the market.\560\ Public Interest
Organizations contend that, going forward, entrepreneurs will question
whether the Commission will further change the regulatory structure,
despite longstanding precedent and reliance interests.\561\
---------------------------------------------------------------------------

    \560\ Id. at 115.
    \561\ Id.
---------------------------------------------------------------------------

    300. Northwest Coalition claims that, the Administrative Procedures
Act (APA), pursuant to which the Commission acted, does not authorize
retroactive rules; however, the new rebuttable presumption will have
the retroactive effect of applying to existing facilities seeking
recertification.\562\ Northwest Coalition asserts that the failure to
exempt existing facilities is a significant change from the
Commission's past practice of applying new certification criteria only
to new facilities, not existing facilities seeking
recertification.\563\ Northwest Coalition notes that, when the
Commission revised section 292.205(d) of its regulations regarding the
new operation and efficiency certification criteria required by the
Energy Policy Act of 2005 (EPAct 2005) for cogeneration facilities,
those new criteria applied only to ``any cogeneration facility that was
either not a qualifying cogeneration facility on or before August 8,
2005, or that had not filed a notice of self-certification or an
application for Commission certification as a qualifying cogeneration
facility under [18 CFR] 292.207 of this chapter prior to February 2,
2006. . . .'' \564\ Northwest Coalition further notes that the
Commission clarified ``that there is a rebuttable presumption that an
existing QF does not become a `new cogeneration facility' for purposes
of the requirements of newly added section 210(n) of PURPA merely
because it files for recertification.'' \565\ Northwest Coalition also
points out that, in Order No. 671, the Commission found that only
changes to the facility that lead it to be a whole new facility, ``such
as an increase in capacity from 50 MW to 350 MW,'' could trigger the
applicability of the new qualification criteria.\566\
---------------------------------------------------------------------------

    \562\ Northwest Coalition Request for Rehearing at 55 (citing
Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208-09 (1988)).
    \563\ Id.
    \564\ Id. at 55-56 (citing 18 CFR 292.205(d)).
    \565\ Id. at 56 (citing Order No. 671, 114 FERC ] 61,102 at P
115).
    \566\ Id. (citing Order No. 671, 114 FERC ] 61,102 at P 115).
---------------------------------------------------------------------------

    301. Northwest Coalition argues that the Commission did not respond
to the precedent on this issue that NIPPC, CREA, REC, and Solar Energy
Industries provided in their NOPR comments.\567\ Northwest Coalition
asserts that the Commission's failure to respond to legitimate
objections renders its decision arbitrary and capricious.\568\
---------------------------------------------------------------------------

    \567\ Id. (citing NIPPC, CREA, REC, and OSEIA Comments, Docket
No. RM19-15-000, at 76 (Dec. 3, 2019)).
    \568\ Id. (citing PPL Wallingford, 419 F.3d at 1198).
---------------------------------------------------------------------------

    302. Public Interest Organizations state that several commenters
provided data, maps, and information to show that the application of
the new ``[10]-mile rule'' to existing projects has potentially
widespread implications for states with significant QF
development.\569\ For example, Public Interest Organizations point out
Southeast Public Interest Organizations' comment that the change to the
one-mile rule would have implications for nearly every existing QF in
North Carolina and map that shows that facilities in compliance with
the original one-mile rule are within 10 miles from other QFs and could
trigger the new rule on recertification.\570\
---------------------------------------------------------------------------

    \569\ Public Interest Organizations Request for Rehearing at 130
(citing Southeast Public Interest Organizations Comments, Docket No.
RM19-15-000, at 29-33 (Dec. 3, 2019); SC Solar Alliance Comments,
Docket No. RM19-15-000, at 18 (Dec. 3, 2019); North Carolina DOJ
Comments, Docket No. RM19-15-000, at 8 (Dec. 3, 2019)).
    \570\ Id. at 130-31 (citing Southeast Public Interest
Organizations Comments, Docket No. RM19-15-000, at 31 (Dec. 3,
2019)).
---------------------------------------------------------------------------

    303. Public Interest Organizations complain that, although the
Commission responded to these concerns by limiting protests to
recertifications to instances in which a substantive change is made to
an existing certification, it provided no further explanation or
rationale as to how the ``substantive change'' limitation would
specifically address the concerns raised.\571\ Public Interest
Organizations add that the Commission failed to consider the valid
concerns because the term ``substantive changes'' is vague and
undefined and is unlikely to meaningfully limit protests.\572\
---------------------------------------------------------------------------

    \571\ Id. at 131.
    \572\ Id. at 131-32.
---------------------------------------------------------------------------

    304. Solar Energy Industries argue that, if the Commission does not
grant rehearing of the ``10-mile rule,'' then the Commission must
establish a grandfathering provision for facilities that are already
installed.\573\ Solar Energy Industries ask the Commission to clarify
that all existing facilities will retain their QF status unless a
recertification filing is made that changes the maximum net output or
qualifying technologies of the QF.\574\ Solar Energy Industries assert
that, unless there is a change in the output of the facilities or
another change in circumstance that has economic consequences to the
utility-purchaser, then the facility's status should be beyond
challenge.\575\ Solar Energy Industries contend that failing to offer
grandfathering to existing facilities is arbitrary, capricious,
inconsistent with Commission precedent that preserves contractual
expectations between parties in the event of regulatory

change, and does not encourage QFs as the statute requires.\576\
---------------------------------------------------------------------------

    \573\ Solar Energy Industries Request for Rehearing and/or
Clarification at 34.
    \574\ Id. at 35.
    \575\ Id.
    \576\ Id.
---------------------------------------------------------------------------

    305. Solar Energy Industries state that, if the Commission does not
grant rehearing and grandfather existing facilities, then they seek
clarification that challenges to recertification filings can only be
brought ``in circumstance that has economic consequences to the
utility-purchaser and its ratepayers.'' \577\ Solar Energy Industries
argue that, by limiting challenges to existing facilities to situations
where there is a change in output of the facilities or other change in
circumstances that has economic consequences to the utility-purchaser
and its ratepayers, the final rule will more closely align with the
direction of the statute.\578\
---------------------------------------------------------------------------

    \577\ Id. (citing Zond-PanAero Windsystem Partners I, 76 FERC ]
61,137 (1996)).
    \578\ Id. at 36.
---------------------------------------------------------------------------

2. Commission Determination
    306. As explained in the final rule (and also above), the record
shows that large facilities were disaggregating into smaller facilities
and spacing themselves at a distance sufficient to be able to qualify
as QFs. PURPA provides advantages for small power production
facilities, and the final rule, consistent with the statute, limits
those advantages to small power production facilities. To that end, the
purpose of the new rules regarding the same site determination is to
ensure compliance with PURPA.
    307. We disagree with Solar Energy Industries' arguments that the
``[10]-mile rule'' adds unnecessary regulatory burdens, making the
self-certification process no longer ``quick and not unduly
burdensome.'' The changes to the one-mile rule and the corresponding
changes to the Form No. 556 are necessary to provide the Commission the
information it needs to determine whether a facility qualifies to be a
QF, consistent with the standards laid out in the statute. In
particular, the new requirement to list affiliated small power
production QFs using the same energy resource whose nearest electrical
generating equipment is less than 10 miles from the electrical
generating equipment of the entity seeking small power production QF
status, both on initial certification and recertification, is needed to
assess whether the applicant facility and other affiliated facilities
using the same energy resource are located at the same site and
ultimately whether they meet the statutory 80 MW limit. Moreover, the
requirement is to list affiliated small power production QFs; thus,
only facilities with affiliates will be affected by this information
requirement--single, unaffiliated QFs will face no additional burden.
Similarly, for QF applicants with few affiliated facilities less than
10 miles from the applicant facility, this listing requirement should
be only minimally burdensome. The requirement to list affiliates less
than 10 miles from the applicant facility would likely require more
time when a project owner owns many QFs less than 10 miles from the
applicant facility, which will likely be a larger, more sophisticated
QF developer that has resources to prepare the form. Even then, it is a
necessary burden in order to ensure compliance with PURPA.
    308. Additionally, in response to Solar Energy Industries' argument
that the final rule adds unnecessary regulatory burden ``on QFs,''
\579\ the final rule was responsive to comments on the burden of the
proposed rule and, as an example of the Commission taking care to
ascertain that the rules are not unduly burdensome, specifically
lessened the burden on rooftop solar PV developers.\580\
---------------------------------------------------------------------------

    \579\ Solar Energy Industries Comments, Docket No. RM19-15-000,
at 51 (Dec. 3, 2019).
    \580\ See Order No. 872, 172 FERC ] 61,041 at P 560.
---------------------------------------------------------------------------

    309. However, in light of Public Interest Organizations' and Solar
Energy Industries' renewed assertion that the regulatory burden on QFs
is substantial,\581\ we modify and clarify our requirements regarding
the identification of affiliated small power production QFs, in order
to further ensure that the regulatory burden on small power production
facilities is within reasonable limits. The new Form No. 556, as
revised by the final rule, requires that a facility filing a
certification or recertification after the effective date of the final
rule identify, in item 8a of the Form No. 556, any affiliated small
power production QFs that use the same energy resource and are located
less than 10 miles from the electrical generating equipment of the
applicant facility, by including in the Form No. 556 each affiliated
facility's: (1) Location, including geographic coordinates; (2) root
docket number, if any; (3) maximum net power production capacity; and
(4) common owners. Section 292.207(d) of the Commission's regulations,
which the final rule renumbered to 18 CFR 292.207(f), states that if a
QF fails to conform with any material facts or representations
presented in the certification the QF status of the facility may no
longer be relied upon.\582\
---------------------------------------------------------------------------

    \581\ Public Interest Organizations Request for Rehearing at
127-29; see Solar Energy Industries Request for Rehearing and/or
Clarification at 34.
    \582\ 18 CFR 292.207(d), which the final rule renumbered to 18
CFR 292.207(f).
---------------------------------------------------------------------------

    310. As a result, when any of a small power production QF's
affiliated facilities less than 10 miles away changes any of the items
listed above, the final rule would require a small power production QF
to recertify its own Form No. 556 to reflect its affiliated facility's
updated information. This represents an expansion from the requirement
prior to the final rule that a small power production QF reflect the
updated information of its affiliated small power production facilities
one mile or less away.\583\ Moreover, in order to maintain an up-to-
date Form No. 556 and recertify with the correct affiliated facility
information, under the final rule a small power production QF would
need to monitor continually all of its affiliated small power
production QFs that are less than 10 miles away for changes. This also
is an expansion from the requirement, prior to the final rule, that a
small power production QF monitor its affiliated small power production
QFs one mile or less away for changes.\584\ We conclude that it may be
overly burdensome that a small power production QF monitor continually
all of its affiliated facilities less than 10 miles away for changes,
and that the small power production QF recertify its own facility
whenever an affiliated small power production QF less than 10 miles
away changes.
---------------------------------------------------------------------------

    \583\ Item 8a of the Form No. 556 effective prior to the final
rule required an applicant to ``[i]dentify any facilities with
electrical generating equipment located within 1 mile of the
electrical generating equipment of the instant facility . . .''
Section 292.207(d) of the Commission's regulations, which the final
rule renumbered to 18 CFR 292.207(f), states that if a QF fails to
conform with any material facts or representations presented in the
certification the QF status of the facility may no longer be relied
upon. While the requirement, prior to the final rule, that a small
power production QF update its Form No. 556 with the updated
information of its affiliated small power production facilities one
mile or less away, is not explicit, we believe that this requirement
is the logical result of the intersection of the above.
    \584\ See supra note 583.
---------------------------------------------------------------------------

    311. We therefore modify the final rule to state that a small power
production QF evaluating whether it needs to recertify does not need to
recertify due to a change in the information it has previously reported
regarding its affiliated small power production QFs that are more than
one mile but less than 10 miles from its electrical generating
equipment, including adding or removing an affiliated small power
production QF more than one mile but less than 10 miles away, or if an
affiliated small

power production QF more than one mile but less than 10 miles away and
previously reported in item 8a makes a modification, unless that change
also impacts any other entries on the evaluating small power production
QF's Form No. 556.
    312. We will continue to require that a small power production QF,
as it was prior to the final rule, recertify its Form No. 556 to update
item 8a due to a change at any of its affiliated small power production
facilities that use the same energy resource and are located one mile
or less from its electrical generating equipment.\585\ We will also
still require that a small power production QF recertify due to a
change in material fact or representation to its own facility.
---------------------------------------------------------------------------

    \585\ See supra note 583.
---------------------------------------------------------------------------

    313. At such time as the small power production QF makes a
recertification due to a change in material fact or representation to
its own facility or at any of its affiliated small power production
facilities that use the same energy resource and are located one mile
or less from its electrical generating equipment, we will require that
the small power production QF update item 8a for all of its affiliated
small power production QFs within 10 miles, including adding or
deleting affiliated small power production QFs, and recording changes
to previously listed small power production QFs, so that the
information in its Form No. 556 is complete, accurate, and up-to-
date.\586\
---------------------------------------------------------------------------

    \586\ If a small power production QF that was certified prior to
the effective date of this final rule is required to recertify due
to a material change to its own facility, then at that time it will
be required to identify affiliates less than 10 miles from the
applicant facility.
---------------------------------------------------------------------------

    314. We believe that this modification reduces the burden on small
power production QFs because they will not be required to continually
monitor their affiliated small power production QFs more than one mile
but less than 10 miles away for changes, nor will we require a small
power production QF that is evaluating whether it must recertify its
facility to recertify to update item 8a due to a change at its
affiliated small power production facilities more than one mile but
less than 10 miles from the evaluating facility's electrical generating
equipment.\587\ However, the affiliated QF of that evaluating small
power production QF will need to recertify if the affiliated QF makes a
material change to its information in its Form No. 556. In providing
this modification, we reiterate that the rule providing for a
rebuttable presumption for affiliated small power production QFs
located more than one but less than 10 miles apart is necessary to
address allegations of improper circumvention of the one-mile rule that
had been presented to the Commission.\588\ We emphasize that
identifying affiliated facilities, and updating affiliated facility
information, are necessary for the Commission to assess whether small
power production facilities located more than one but less than 10
miles apart should be considered to be at the same site. However, we
note that for affiliated small powder production QFs more than one mile
but less than 10 miles apart, the presumption is that they are at
separate sites. Therefore, we modify the recertification requirement as
to a small power production QF's affiliated small power production QFs
more than one mile but less than 10 miles away, because we believe this
modification strikes an appropriate balance between the need to address
improper circumvention and the need to avoid unduly burdening small
power production QFs consistent with the presumption that QFs more than
one mile but less than 10 miles apart are located at separate sites.
---------------------------------------------------------------------------

    \587\ We note that we are maintaining the final rule's
alternative option for rooftop solar PV developers to file their
recertification applications. See Order No. 872, 172 FERC ] 61,041
at P 560.
    \588\ Id. P 495.
---------------------------------------------------------------------------

    315. We note that, when a small power production QF makes a
material change to its own facility, or when any of its affiliated
small power production facilities that use the same energy resource and
are one mile or less from of its electrical generating equipment makes
a material change, it needs to recertify, at which point it would also
be required to update item 8a for all of its affiliated small power
production QFs within 10 miles. If any of the changes made are
substantive, including substantive changes at any of its affiliates
less than 10 miles away, the recertification will be subject to
protests.\589\
---------------------------------------------------------------------------

    \589\ Id. P 550.
---------------------------------------------------------------------------

    316. In response to Public Interest Organizations' concerns that
existing facilities will lose their certification any time they make a
change requiring a recertification, we note that protests may only be
made to recertification making substantive changes, and if a
substantive change is made, both the entity filing the QF certification
and any protesters will be allowed to present evidence supporting their
respective positions. The Commission will examine any such evidence
presented on a case-by-case basis to determine whether the facility in
question does not actually meet the qualifications for QF status under
PURPA. For a same site determination, the Commission will examine the
relevant factors as discussed above. The Commission will decertify only
if, after a review of the evidence, the Commission determines that the
facility in question should be considered at the same site with
affiliated facilities and their combined power production capacity
exceeds 80 MW. The Commission's decision will be based on the evidence
of whether the entity continues to comply with PURPA.
    317. In response to Public Interest Organizations' assertion that
several commenters provided data, maps, and information showing that
the application of the new ``[10]-mile rule'' to existing projects has
potentially widespread implications for states with significant QF
development \590\ and argument that litigation risk will effectively
establish a 10-mile exclusion zone for a developer around each small
power production facility,\591\ we note that the Commission anticipated
that most protests filed pursuant to the new 18 CFR 292.207(a) will
relate to the new more-than-one-but-less-than-10-miles rebuttable
presumption.\592\ If two facilities are not owned by the same person(s)
or its affiliates, then the facilities are definitionally not located
at the same site.\593\ Thus, protests cannot assert that two facilities
are at the same site, unless those facilities are affiliates using the
same energy resource (and more than one mile but less than 10 miles
apart). Conversely only entities that have affiliates will be subject
to protests regarding the same site determination. Single, unaffiliated
facilities will not be subject to protests on the new same site
determination.\594\ Furthermore, facilities with nearby affiliates
whose combined capacity does not exceed 80 MW also will not be
decertified because of the new same site determination. The only
facilities that will have concerns under the new same site
determination are those that are affiliated with other facilities using
the same energy resource, are relatively near each other, have a total
combined capacity with such affiliated facilities exceeding 80 MW, and
are considered at

the same site by the Commission after a consideration of the evidence.
---------------------------------------------------------------------------

    \590\ Public Interest Organizations Request for Rehearing at 130
(citing Southeast Public Interest Organizations Comments, Docket No.
RM19-15-000, at 29-33 (Dec. 3, 2019); SC Solar Alliance Comments,
Docket No. RM19-15-000, at 18 (Dec. 3, 2019); North Carolina DOJ
Comments, Docket No. RM19-15-000, at 8 (Dec. 3, 2019)).
    \591\ Id. at 107, 112.
    \592\ Order No. 872, 172 FERC ] 61,041 at P 533 & n.877.
    \593\ Id. P 286 n.797.
    \594\ See id. P 553.
---------------------------------------------------------------------------

    318. Therefore, assertions that existing QFs risk decertification
almost any time they recertify and that the new rule decreases
marketability or discourages QF development are overstated. To the
extent that the new same site determination decertifies particular QFs,
decreases their marketability, or discourages their development, it
only does so because such entities do not comply with PURPA. To the
extent that large facilities disaggregated in order to qualify as small
power production facilities, or strategically built facilities just
over one mile apart, in reliance on the old one-mile rule, we note that
rules can and do change. In fact, Congress specifically directed the
Commission to revise its PURPA rules from time to time.\595\ Moreover,
we note that the new regulations do not apply to an existing facility
unless and until it makes substantive changes. When the existing QF
makes a substantive change, it is no longer the same facility it was
before, and it is only then that the new regulations should apply.
Additionally, we note that the facilities more than one but less than
10 miles from affiliated facilities continue to enjoy the presumption
that they are at separate sites; only now the presumption is
rebuttable.
---------------------------------------------------------------------------

    \595\ See 16 U.S.C. 824a-3(a).
---------------------------------------------------------------------------

    319. The Commission provided examples of factors it may consider
when determining whether affiliated facilities using the same resource
and more than one mile but less than 10 miles apart should be
considered to be at the same site, and stated that it will make a case-
by-case determination on whether such facilities are indeed at the same
site.\596\ In response to Solar Energy Industries' argument that
Congress did not give the Commission authority to undertake a detailed
case-specific review, we find that Congress delegated to the Commission
the authority to determine the ``same site'' and did not limit the way
in which the Commission can do so, nor did Congress specify that the
Commission cannot conduct a case-by-case analysis.\597\
---------------------------------------------------------------------------

    \596\ Order No. 872, 172 FERC ] 61,041 at P 511.
    \597\ 16 U.S.C. 796(17)(A).
---------------------------------------------------------------------------

    320. Regarding Public Interest Organizations and Solar Energy
Industries' arguments that there is no need for the new protest
procedure because any interested person could file a petition for
declaratory order to challenge a certification, we further explain the
rationale for implementing the new protest structure. First, allowing
protests will bring the certification process more in line with other
Commission procedures, where protests to filings do not require a
petition for a declaratory order and associated filing fee. Second,
while self-certifications themselves are free, prior to the final rule,
the only way to protest a self-certification was via paying the fee for
a declaratory order, which today is $30,060. Consequently, it was
possible for a facility owner to file multiple certifications with
minor changes effectively shutting out a protester who could not afford
to repeatedly pay the declaratory order fee for every QF submission.
Allowing protests equalizes the opportunity for both facility owners
and opponents to weigh in on the certification of a facility as a
QF.\598\
---------------------------------------------------------------------------

    \598\ The Commission notes that if the Commission issues an
order in response to a self-certification that is protested, or in
response to an application for Commission certification, the order
issued by the Commission will continue to be a declaratory order
which determines whether or not a project, as described by the
applicant and protester, meets the technical and ownership standards
for QFs, and serves only to establish eligibility for benefits of
PURPA.
---------------------------------------------------------------------------

    321. While petitioners are correct that purchasing electric
utilities, competitors, and local project opponents now may file
protests, we believe that a more robust protest system encourages
transparency and allows for better oversight by the Commission, as well
as by states and other stakeholders. To the extent that petitioners
imply that such entities may file frivolous protests for the purposes
of delaying or otherwise hindering QF development or certification, the
Commission has limited protests to within 30 days of the date of the
filing of an initial certification or of a recertification making a
substantive change.\599\ For a facility that meets the standards to
qualify as a QF, the only effect is the potential for an exchange of
filings immediately after the certification is filed and some limited
uncertainty while awaiting the Commission's decision. Additionally, we
note that quite often QF developers file for certification even before
construction of the facility has commenced; in such a case, the
potential for some limited uncertainty during the exchange of filings
will have minimal impact. The Commission also has determined that self-
certifications will be effective upon filing and will remain effective
after a protest has been filed, until such time as the Commission
issues an order revoking the certification.\600\
---------------------------------------------------------------------------

    \599\ Order No. 872, 172 FERC ] 61,041 at P 554.
    \600\ Id. P 527.
---------------------------------------------------------------------------

    322. In response to Public Interest Organizations' argument that
the final rule does the opposite of exempting QFs from the FPA, PUHCA,
and state laws and regulations, the Commission is not removing or
amending the exemptions provided by the regulations implementing PURPA
section 210(e).\601\
---------------------------------------------------------------------------

    \601\ Id. P 514.
---------------------------------------------------------------------------

    323. We also disagree with Public Interest Organizations' arguments
that ``substantive change'' is vague and does not limit challenges. In
the final rule, the Commission explained that ``substantive changes
that may be subject to a protest may include, for example, a change in
electrical generating equipment that increases power production
capacity by the greater of 1 MW or 5 percent of the previously
certified capacity of the QF, or a change in ownership in which an
owner increases its equity interest by at least 10% from the equity
interest previously reported.'' \602\ The Commission provided examples
of what it may consider to be a substantive change because it intends
to make a case-by-case determination. The Commission will be able to
reject a protest to a recertification that the Commission does not
believe rises to the level of a substantive change.
---------------------------------------------------------------------------

    \602\ Id. P 550.
---------------------------------------------------------------------------

    324. Regarding Northwest Coalition's argument that the APA does not
authorize retroactive rules, we disagree with Northwest Coalition's
premise that the new rebuttable presumption for affiliated facilities
more than one mile but less than 10 miles apart will have retroactive
effect when applied to existing facilities seeking recertification. The
new regulations do not apply to an existing facility unless and until
it must recertify because of changes to the material facts and
representations at its facility or that of an affiliated facility one
mile or less away. When the existing QF makes a change to the material
facts and circumstances of its certification, it very well may no
longer be the same facility it was when originally certified. Due to
the change in material facts, the new regulations should apply. Thus,
the rule is prospective, and applied only if and when new facts have
prompted a recertification.\603\
---------------------------------------------------------------------------

    \603\ Furthermore, no commenter has explained how and why
applying the new rules to new recertifications make them retroactive
rules.
---------------------------------------------------------------------------

    325. Northwest Coalition argues that the Commission's past practice
in developing new certification criteria is to apply the new criteria
only to new facilities, not existing facilities seeking

recertification.\604\ We disagree. Northwest Coalition relies on
Commission Order No. 671, which implemented section 210(n) following
EPAct 2005. However, Northwest Coalition overlooks that section 210(n)
of PURPA required the Commission to issue a rule revising the criteria
for new cogeneration facilities, and therefore the Commission in Order
No. 671 focused on defining what is a new facility.\605\ In contrast,
here the Commission was not implementing 210(n) and therefore was not
revising the criteria solely for new facilities.
---------------------------------------------------------------------------

    \604\ Northwest Coalition Request for Rehearing at 55.
    \605\ 16 U.S.C. 824a-3(n).
---------------------------------------------------------------------------

    326. For the foregoing reasons, we decline to establish further
legacy treatment for existing facilities, as requested. Existing QFs
that seek to recertify due to substantive changes will be subject to
protests. The Commission can determine, on a case-by-case basis,
whether the evidence presented represents a substantive change or
whether the change is non-substantive and thus not subject to protests,
in which case the Commission will dismiss any protests submitted. We
decline to specify, as Solar Energy Industries request, that only
changes to the maximum net output or the qualifying technology, or in
circumstances that have economic consequences to the utility-purchaser
and its ratepayers, will make an existing QF's recertification subject
to challenge. We likewise disagree with Solar Energy Industries'
contention that failing to offer grandfathering to existing facilities
is arbitrary, capricious, and inconsistent with Commission precedent.
We continue to believe that conducting a case-by-case analysis is the
best way to determine whether the change that prompted recertification
is substantive, will avoid arbitrary outcomes, and is necessary to
comply with the intent of PURPA to provide advantages only to small
power production facilities.

E. Corresponding Changes to the FERC Form No. 556

    327. In the final rule, the Commission adopted the NOPR proposals
regarding changes to the Form No. 556, with some further clarifications
and additions. The Commission found that the added information
collected through these changes was necessary to implement the changes
made to the regulations in the final rule and thus justified the
increase in reporting burden.\606\
---------------------------------------------------------------------------

    \606\ See Order No. 872, 172 FERC ] 61,041 at P 584.
---------------------------------------------------------------------------

    328. The final rule revised the ``Who Must File'' section to
include a ``Recertification'' section which provides the text of
revised 18 CFR 292.207(f) (previously 18 CFR 292.207(d)), which states
that a QF must file for recertification whenever the QF ``fails to
conform with any material facts or representations presented . . . in
its submittals to the Commission.'' \607\ The Commission stated that
this addition does not alter our recertification requirements, and the
Commission included it on the Form No. 556 simply to make the Form No.
556 clearer in its application.\608\
---------------------------------------------------------------------------

    \607\ 18 CFR 292.207(d), which the final rule renumbered to
292.207(f).
    \608\ Order No. 872, 172 FERC ] 61,041 at P 586.
---------------------------------------------------------------------------

    329. The Commission stated that the total burden estimates in the
``Paperwork Reduction Act Notice'' section of Form No. 556 would be
updated based on the changes in the final rule, to provide the
following estimates: 1.5 hours for self-certifications of facilities of
1 MW or less; 1.5 hours for self-certifications of a cogeneration
facility over 1 MW; 50 hours for applications for Commission
certification of a cogeneration facility; 3.5 hours for self-
certifications of small power producers over 1 MW and less than a mile
or more than 10 miles from affiliated small power production QFs that
use the same energy resource; 56 hours for an application for
Commission certification of a small power production facility over 1 MW
and less than a mile or more than 10 miles from affiliated small power
production QFs that use the same energy resource; 9.5 hours for self-
certifications of small power producers over 1 MW with affiliated small
power production QFs more than one but less than 10 miles that use the
same energy resource; 62 hours for an application for Commission
certification of a small power production facility over 1 MW with
affiliated small power production QFs more than one but less than 10
miles that use the same energy resource.\609\
---------------------------------------------------------------------------

    \609\ See Order No. 872, 172 FERC ] 61,041 at P 587.
---------------------------------------------------------------------------

1. Requests for Rehearing
    330. Public Interest Organizations state that the final rule would
impose 62 hours of administrative work on every small power production
facility over 1 MW with affiliated facilities between one and 10 miles
away and the basis for this calculation is not clear.\610\
---------------------------------------------------------------------------

    \610\ Public Interest Organizations Request for Rehearing at 117
(citing Order No. 872, 172 FERC ] 61,041 at P 587).
---------------------------------------------------------------------------

2. Commission Determination
    331. Public Interest Organizations misread the final rule on this
point. The final rule provided a total burden estimate of 9.5 hours for
self-certifications of small power producers over 1 MW with affiliated
small power production QFs more than one but less than 10 miles apart
that use the same energy resource, but 62 hours for an application for
Commission certification of a small power production facility over 1 MW
with affiliated small power production QFs more than one but less than
10 miles that use the same energy resource.\611\ The estimate is not
that every small power production facility over 1 MW with affiliated
facilities between one and 10 miles away will have a total burden of 62
hours, but only those who chose to apply for Commission certification
(as opposed to use the self-certification process). For those who self-
certify, the burden estimate is 9.5 hours.
---------------------------------------------------------------------------

    \611\ See Order No. 872, 172 FERC ] 61,041 at P 587. The
majority of QFs choose the less burdensome option to self-certify
pursuant to 18 CFR 292.207(a), by filing a Form No. 556. An
application for Commission certification pursuant to 18 CFR
292.207(b) also requires filing the Form No. 556, but applicants for
Commission certification typically additionally prepare a written
petition arguing why the Commission should grant QF status.
---------------------------------------------------------------------------

    332. In response to Public Interest Organizations' assertion that
the basis for the calculation is not clear, below we explain the
calculation. Prior to the final rule, ``[t]he estimated burden for
completing the Form No. 556, including gathering and reporting
information, [was] as follows: 1.5 hours for self-certification of a
small power production facility . . . 50 hours for an application for
Commission certification of a small power production facility. . . .''
\612\ The Information Collection Section of the final rule showed
changes due to the final rule and estimated an additional 8 hours for
the category ``self-certifications'' and 12 hours for the category
``applications for Commission certification'' of small power production
facilities greater than 1 MW that are more than one but less than 10
miles from affiliated small power production QFs. Therefore, the total
burden estimate as provided in the final rule is as follows: 1.5 hours
plus 8 hours for a total of 9.5 hours for self-certifications and 50
hours plus 12 hours for a total of 62 hours for applications for
Commission certification.
---------------------------------------------------------------------------

    \612\ Commission Information Collection Activities (FERC-556);
Comment Request; Extension, Docket No. IC19-16-000, at 5 (issued May
15, 2019).
---------------------------------------------------------------------------

    333. In light of the modification to the final rule described in
section III.D, we

further modify the ``Recertification'' section in page one of the
instructions of the Form No. 556, which was added by the final rule.
The ``Recertification'' section currently reads ``A QF must file a
recertification whenever the qualifying facility `fails to conform with
any material facts or representations presented . . . in its submittals
to the Commission.' 18 CFR 292.207(f).'' To this, we will add ``Among
other possible changes in material facts that would necessitate
recertification, a small power production QF is required to recertify
to update item 8a due to a change at an affiliated facility(ies) one
mile or less from its electrical generating equipment. A small power
production QF is not required to recertify due to a change at an
affiliated facility(ies) listed in item 8a that is more than one mile
but less than 10 miles away from its electrical generating equipment,
unless that change also impacts any other entries on the Form 556.''

F. PURPA Section 210(m) Rebuttable Presumption of Nondiscriminatory
Access to Markets

    334. In the final rule, the Commission acknowledged that, when
Order Nos. 688 and 688-A were issued, the Commission decided that small
QFs may not have nondiscriminatory access to markets.\613\ In Order
Nos. 688 and 688-A, based on factors present at that time, the
Commission decided to draw the line for small entities at 20 MW.\614\
However, as stated in the final rule, energy markets have matured and
market participants have gained a better understanding of the mechanics
of such markets.\615\ In the final rule, the Commission stated that,
since Order Nos. 688 and 688-A, the Commission recognized multiple
examples of small power production facilities under 20 MW participating
in RTO/ISO energy markets.\616\ The Commission stated that it had found
that the electric utilities in those proceedings rebutted the
presumption of no market access and therefore terminated the mandatory
purchase obligation.\617\
---------------------------------------------------------------------------

    \613\ Order No. 688, 117 FERC ] 61,078 at P 72; Order No. 688-A,
119 FERC ] 61,305 at PP 94-96; N. States Power Co., 151 FERC ]
61,110, at PP 31-36 (2015); PPL Elec. Utilities Corp., 145 FERC ]
61,053, at PP 21-24 (2013).
    \614\ Order No. 688, 117 FERC ] 61,078 at PP 74, 76; Order No.
688-A, 119 FERC ] 61,305 at P 103.
    \615\ Order No. 872, 172 FERC ] 61,041 at P 629.
    \616\ Id. P 624.
    \617\ Id. (citing Fitchburg Gas and Elec. Light Co., 146 FERC ]
61,186, at P 33 (2014); City of Burlington, Vt., 145 FERC ] 61,121,
at P 33 (2013)).
---------------------------------------------------------------------------

    335. The Commission adopted the proposal to revise 18 CFR
292.309(d) to update the net power production capacity level at which
the presumption of nondiscriminatory access to a market attaches for
small power production facilities, but not for cogeneration facilities.
After reviewing commenters' concerns, the Commission updated the
rebuttable presumption from 20 MW to 5 MW, rather than from 20 MW to 1
MW as originally proposed in the NOPR. The Commission explained that
small power production facilities with a net power production capacity
at or below 5 MW will be presumed not to have nondiscriminatory access
to markets and, conversely, small power production facilities with a
net power production capacity over 5 MW will be presumed to have
nondiscriminatory access to markets.
    336. The Commission disagreed with commenters who argued that a
lack of record evidence existed to support the proposed reduction below
20 MW. The Commission explained that, in Order Nos. 688 and 688-A, the
Commission had determined that small QFs may not have nondiscriminatory
access to wholesale markets and, therefore, it was reasonable to
establish a presumption for small QFs. The Commission explained that,
at that time, the Commission had found that it was ``reasonable and
administratively workable'' to define ``small'' for purposes of this
regulation to be QFs below 20 MW.\618\ The Commission noted that a
number of commenters, including state entities which are charged with
applying PURPA in their jurisdictions, supported revising the
definition of small QFs eligible for the presumption in reducing the 20
MW threshold.
---------------------------------------------------------------------------

    \618\ Id. PP 626-29 (citing Order No. 688, 117 FERC ] 61,078 at
PP 74-78 (establishing rebuttable presumption); Order No. 688-A, 119
FERC ] 61,305 at P 95 (``There is no perfect bright line that can be
drawn and we have reasonably exercised our discretion in adopting a
20 MW or below demarcation for purposes of determining which QFs are
unlikely to have nondiscriminatory access to markets.'')).
---------------------------------------------------------------------------

    337. The Commission again acknowledged that there is no unique
number to draw a line for determining what is a small entity.\619\ The
Commission explained that, in establishing the 20 MW presumption as the
line between large and small QFs for purposes of section 210(m), the
Commission had looked at other non-QF rulemaking orders in which it had
considered what constituted a small entity and those orders showed 20
MW was a reasonable number at which to draw the line.\620\ The
Commission explained that it had since determined, based on changed
circumstances since the issuance of Order Nos. 688 and 688-A, that
entities with capacity lower than 20 MW have nondiscriminatory access
to the markets and, therefore, a capacity level of 20 MW may no longer
be a reasonable place to establish the presumption on what constitutes
a smaller entity under our regulations.
---------------------------------------------------------------------------

    \619\ Order No. 872, 172 FERC ] 61,041 at P 627 (citing Order
No. 688-A, 119 FERC ] 61,305 at P 97 (``Although there is no unique
and distinct megawatt size that uniquely determines if a generator
is small, in other contexts the Commission has used 20 MW, based on
similar considerations to those presented here, to determine the
applicability of its rules and policies.'')).
    \620\ Id. PP 628-29 (citing Order No. 688, 117 FERC ] 61,078 at
P 76; Order No. 688-A, 119 FERC ] 61,305 at PP 96-97).
---------------------------------------------------------------------------

    338. The Commission explained that it was updating the rebuttable
presumption based on industry changes since Order No. 688. The
Commission stated that it was reasonable to update the rebuttable
presumption as the markets defined in PURPA section 210(m)(1)(A), (B),
and (C) evolve because the statute itself does not establish a
presumption and the statue requires the Commission to update the rules
from time to time to ensure it complies with PURPA.
    339. The Commission explained that, over the last 15 years, the
RTO/ISO markets have matured and market participants have gained a
better understanding of the mechanics of such markets. As a result, the
Commission found that it is reasonable to presume that access to the
RTO/ISO markets has improved and that it is appropriate to update the
presumption for smaller production facilities. The Commission further
explained that, as in Order No. 688, it looked to indicia in other
orders to determine where the presumption should be set.\621\
---------------------------------------------------------------------------

    \621\ Id. P 629.
---------------------------------------------------------------------------

    340. The Commission found that market rules are inclusive of power
producers below 20 MW participating in markets. The Commission
explained that, for example, since the issuance of Order No. 688, the
Commission has required public utilities to increase the availability
of a Fast-Track interconnection process for projects up to 5 MW.\622\
---------------------------------------------------------------------------

    \622\ Id. P 630 (citing Small Generator Interconnection
Agreements and Procedures, Order No. 792, 78 FR 73240 (Dec. 5,
2013), 145 FERC ] 61,159, at P 103 (2013), clarifying, Order No.
792-A, 146 FERC ] 61,214 (2014)).
---------------------------------------------------------------------------

    341. The Commission found that, while the existence of Fast-Track
interconnection processes does not on its own demonstrate
nondiscriminatory access for resources under 20 MW, it does indicate
that entities smaller than 20 MW have access to the market. The
Commission found that presuming that QFs above 5 MW have such access is

therefore a reasonable approach to identifying a capacity level at
which to update the rebuttable presumption of nondiscriminatory market
access.\623\
---------------------------------------------------------------------------

    \623\ Id. P 631.
---------------------------------------------------------------------------

    342. The Commission explained that, since the issuance of Order No.
688 the Commission has required each RTO/ISO to update its tariff to
include a participation model for electric storage resources that
established a minimum size requirement for participation in the RTO/ISO
markets that does not exceed 100 kW.\624\ The Commission explained that
these proposals require RTO/ISOs to revise their tariffs to provide
easier access for smaller resources. The Commission determined that
requiring markets to accommodate storage resources as low as 100 kW
also supports this finding that resources smaller than 20 MW have
nondiscriminatory access to those RTO/ISO markets. The Commission
stated that it believed that these developments support updating the 20
MW presumption to a lower number.
---------------------------------------------------------------------------

    \624\ Id. P 632 (citing Elec. Storage Participation in Mkts.
Operated by Reg'l Transmission Orgs. and Indep. Sys. Operators, 83
FR 9580 (Mar. 6, 2018), Order No. 841, 162 FERC ] 61,127, at P 265
(2018)).
---------------------------------------------------------------------------

    343. The Commission found that, when these changes are viewed
together, their cumulative effect demonstrates that it is reasonable
for the Commission to maintain a small entity presumption but update
its determination of what is a small entity under this presumption
under the PURPA Regulations. The Commission found that the prospect of
increased participation of distributed energy resources in energy
markets further supports the proposition that wholesale markets are
accommodating resources with smaller capacities.\625\
---------------------------------------------------------------------------

    \625\ Id. P 633 (citing Elec. Participation in Mkts Operated by
Reg'l Transmission Orgs and Indep. Sys. Operators, 157 FERC ]
61,121, at P 129 (2016) (footnote omitted) (``The costs of
distributed energy resources have decreased significantly, which
when paired with alternative revenue streams and innovative
financing solutions, is increasing these resources' potential to
compete in and deliver value to the organized wholesale electric
markets.'')).
---------------------------------------------------------------------------

    344. The Commission recognized that certain of these precedents
would support reducing the presumption below 5 MW and perhaps even
lower than 1 MW. The Commission explained that it carefully considered
the comments detailing the problems that QFs have had in participating
in RTO/ISO markets, problems that necessarily are more acute for
smaller QFs at or near the 1 MW threshold proposed in the NOPR.\626\
The Commission therefore determined that 5 MW is a more reasonable
threshold of non-discriminatory access to RTO/ISO markets.
---------------------------------------------------------------------------

    \626\ Id. P 634 (referencing Allco Comments, Docket No. RM19-15-
000, at 17-19 (Dec. 3, 2019); Advanced Energy Economy Comments,
Docket No. RM19-15-000, at 10-11 (Dec. 3, 2019); DC Commission
Comments, Docket No. RM19-15-000, at 5 (Dec. 3, 2019); Public
Interest Organizations Comments, Docket No. RM19-15-000, at 89-90
(Dec. 3, 2019); Solar Energy Industries Comments, Docket No. RM19-
15-000, at 45-49 (Dec. 3, 2019)).
---------------------------------------------------------------------------

    345. The Commission therefore found it reasonable to update the
presumption under these regulations as to what constitutes a small
entity that is presumed to have non-discriminatory access to RTO/ISO
markets and markets of comparable competitive quality below 20 MW, and
that 5 MW represents a reasonable new threshold that accounts for the
change of circumstances indicating that 20 MW no longer is appropriate
but also accommodates commenters' concerns that a 1 MW threshold would
be too low. The Commission acknowledged that ``there is no unique and
distinct megawatt size that uniquely determines if a generator is
small.'' \627\ The Commission found that a 5 MW threshold accords with
PURPA's mandate to encourage small power production facilities,
recognizes the progress made in wholesale markets as discussed above,
and balances the competing claims of those seeking a lower threshold
and those seeking a higher threshold.\628\
---------------------------------------------------------------------------

    \627\ Order No. 688-A, 119 FERC ] 61,305 at P 97.
    \628\ Order No. 872, 172 FERC ] 61,041 at P 635.
---------------------------------------------------------------------------

    346. The Commission explained that individual small power
production QFs that are over 5 MW and less than 20 MW can seek to make
the case; however, they do not truly have nondiscriminatory access to a
market and should still be entitled to a mandatory purchase
obligation.\629\
---------------------------------------------------------------------------

    \629\ Id. P 636.
---------------------------------------------------------------------------

    347. The Commission disagreed with Advanced Energy Economy's
argument that the Commission failed to sufficiently justify its change
in policy.\630\ The Commission noted that, in FCC v. Fox Television,
the court stated that, when an agency makes a change in policy, the
agency must show that there are good reasons for the change, ``[b]ut it
need not demonstrate to a court's satisfaction that the reasons for the
new policy are better than the reasons for the old one; it suffices
that the new policy is permissible under the statute, that there are
good reasons for it, and that the agency believes it to be better,
which the conscious change of course adequately indicates.'' \631\
---------------------------------------------------------------------------

    \630\ Id. P 639 (referencing Advanced Energy Economy Comments,
Docket No. RM19-15-000, at 6 (Dec. 3, 2019) (citing FCC v. Fox
Television, 556 U.S. at 515)).
    \631\ FCC v. Fox Television, 556 U.S. at 515.
---------------------------------------------------------------------------

    348. The Commission clarified that it was maintaining its
determination from Order No. 688 that small entities potentially may
not have non-discriminatory access for purposes of PURPA section
210(m). The Commission explained that it had determined that using 20
MW as an indicator of what constitutes a small entity is no longer
valid. The Commission found that entities below 20 MW increasingly have
access to the markets and become familiar with practices and procedures
and that markets have since implemented changes to provide easier
access to smaller facilities, including small power production QFs,
storage facilities, and distributed energy resources. The Commission
found that these changes demonstrate a change in facts since the time
it issued Order No. 688, which supports updating what constitutes a
small entity for purposes of PURPA section 210(m).\632\
---------------------------------------------------------------------------

    \632\ Order No. 872, 172 FERC ] 61,041 at P 638.
---------------------------------------------------------------------------

    349. The Commission explained that, while it found that it is
reasonable to update the rebuttable presumption from 20 MW to 5 MW, it
recognized commenters' concerns regarding specific barriers to
participation in RTO markets that may affect the nondiscriminatory
access to those markets of some individual small power production
facilities between 5 MW and 20 MW. The Commission explained that, to
address these concerns, it was revising 18 CFR 292.309(c)(2)(i)-(vi) to
include factors that small power production facilities between 5 MW and
20 MW can point to in seeking to rebut the presumption that they have
nondiscriminatory access. The Commission clarified that these factors
are in addition to the existing ability, pursuant to 18 CFR 292.309(c),
to rebut the presumption of access to the market by demonstrating,
inter alia, operational characteristics or transmission
constraints.\633\
---------------------------------------------------------------------------

    \633\ Id. P 640.
---------------------------------------------------------------------------

    350. The Commission added to 18 CFR 292.309(c) the following
factors: (1) Specific barriers to connecting to the interstate
transmission grid, such as excessively high costs and pancaked delivery
rates; (2) the unique circumstances impacting the time/length of
interconnection studies/queue to process small power QF interconnection
requests; (3) a lack of affiliation with entities that participate in
RTO/ISO markets; (4) a predominant purpose other than selling
electricity which would warrant the small power QF being treated
similarly to cogenerators (e.g., municipal solid waste

facilities, biogas facilities, run-of-river hydro facilities, and non-
powered dams); (5) the QF has certain operational characteristics that
effectively prevent the QF's participation in a market; and (6) the QF
lacks access to markets due to transmission constraints, including that
it is located in an area where persistent transmission constraints in
effect cause the QF not to have access to markets outside a
persistently congested area to sell the QF output or capacity. The
Commission explained that this list was not intended to be an
exhaustive list of the factors that a QF could rely upon in seeking to
rebut the presumption. The Commission further explained that these
factors, among other indicia of lack of nondiscriminatory access, would
be assessed by the Commission on a case-by-case basis when considering
a claim that the presumption of nondiscriminatory access to the defined
markets should be considered rebutted for a specific QF.\634\
---------------------------------------------------------------------------

    \634\ Id. P 641.
---------------------------------------------------------------------------

    351. The Commission found that the addition of these factors
addressed commenters' concern that not all small power production
facilities between 5 and 20 MW may have nondiscriminatory access to
competitive markets and facilitates the ability of small power
production facilities facing barriers to participation in RTO markets
to demonstrate their lack of access.\635\ The Commission explained, for
example, that, while a small power production facility between 5 MW and
20 MW does not need to be physically interconnected to transmission
facilities to be considered as having access to the statutorily-defined
wholesale electricity markets, there are some small power production
facilities between 5 MW and 20 MW that may face additional barriers,
such as excessively high costs and pancaked delivery rates, to access
wholesale markets.\636\
---------------------------------------------------------------------------

    \635\ Id. P 642.
    \636\ Id.
---------------------------------------------------------------------------

    352. The Commission further explained that, for example, several
commenters expressed concern over the resources or administrative
burden for some small power QFs that lack the necessary experience or
expertise to participate in energy markets. Recognizing these concerns,
the Commission added consideration of both the fact that some small
power production facilities will face additional difficulties due to
costs, administrative burdens, length of the interconnection study
process and the size of the queues and the fact that some small power
production QFs do not have access to the expertise of affiliated
entities.\637\
---------------------------------------------------------------------------

    \637\ Id. P 643.
---------------------------------------------------------------------------

    353. The Commission agreed with commenters that some small power
production facilities are similar to cogeneration facilities because
their predominant purpose is not power production. The Commission found
that, like cogeneration facilities, the sale of electricity from these
small power production facilities is a byproduct of another purpose and
these facilities might not be as familiar with energy markets and the
technical requirements for such sales. The Commission therefore allowed
the small subset of small power production facilities that are between
20 MW and 5 MW to rebut the presumption of access to markets when the
predominant purpose of the facility is other than selling electricity,
and the sale of electricity is simply a byproduct of that purpose. The
Commission recognized that, like all QFs over 20 MW, there may be
particular small power production facilities with certain operational
characteristics or that are located in an area where persistent
transmission constraints in effect cause the QF not to have access to
markets outside a persistently congested area to sell the QF output or
capacity.\638\
---------------------------------------------------------------------------

    \638\ Id. P 644.
---------------------------------------------------------------------------

1. Requests for Rehearing and Clarification
    354. Northwest Coalition, Public Interest Organizations, and Solar
Energy Industries contend that the Commission erred in revising the
rebuttable presumption for QFs between 5 MW and 20 MW, arguing that the
Commission failed to demonstrate that QFs between 5 MW and 20 MW have
nondiscriminatory access to markets prior to shifting the burden from
requiring utilities to demonstrate QFs 20 MW and under have non-
discriminatory access to markets to requiring QFs between 5 MW and 20
MW to prove that they do not have access.\639\ Public Interest
Organizations, Northwest Coalition and Solar Energy Industries argue
that, under the terms of section 210(m), a utility must ``set forth the
factual basis'' showing that QFs have non-discriminatory access to the
market, and the Commission is statutorily required to determine if the
record sufficiently demonstrates that QFs have non-discriminatory
access to the market before terminating the mandatory purchase
obligation.\640\ Public Interest Organizations argue that general
presumptions that conditions are improving for small QFs to access
competitive markets is insufficient justification.\641\
---------------------------------------------------------------------------

    \639\ Public Interest Organizations Request for Rehearing and
Clarification at 136-37 (citing 5 U.S.C. 556(d); Nat'l Min. Ass'n v.
Babbitt, 172 F.3d 906, 910 (D.C. Cir. 1999); United Scenic Artists
v. NLRB, 762 F.2d 1027, 1034 (D.C. Cir. 1985)); Northwest Coalition
Request for Rehearing at 47-48; Solar Energy Industries Request for
Rehearing and/or Clarification at 38-41.
    \640\ Public Interest Organizations Request for Rehearing at 136
(citing 16 U.S.C. 824a-3(m)(3)).
    \641\ Solar Energy Industries Request for Rehearing and/or
Clarification at 38-39; Public Interest Organizations Request for
Rehearing and Clarification at 40.
---------------------------------------------------------------------------

    355. Northwest Coalition and Public Interest Organizations assert
that there is no evidence that circumstances have changed since Order
No. 688, arguing that most QFs 20 MW and under (1) are still connected
to lower-voltage distribution facilities that are subject to state
regulations instead of Commission-regulated interconnection procedures;
and (2) require technical enhancements, face pancaked rates, and
additional administrative burdens.\642\ Public Interest Organizations
contend that the Commission has repeatedly concluded that QFs below 20
MW face obstacles to transmission access in RTO/ISO regions that
prevent them from participating in competitive markets.\643\ Northwest
Coalition and Public Interest Organizations claim that the only two
examples of small QFs selling into wholesale markets that the
Commission included in the final rule did so with a larger, more
experienced company acting on their behalf.\644\ Public Interest
Organizations and Northwest Coalition contend that there is no evidence
that small QFs are actually participating in regional markets,
therefore, it is impossible to conclude that small QFs do so
regularly.\645\
---------------------------------------------------------------------------

    \642\ Public Interest Organizations Request for Rehearing at
138-140.
    \643\ Id. at 138-39.
    \644\ Id. at 140.
    \645\ Id. at 139; Northwest Coalition Request for Rehearing at
49-50.
---------------------------------------------------------------------------

    356. Northwestern Coalition and Public Interest Organizations
dispute the Commission's claims that (1) small QFs have gained a better
understanding of the markets; (2) changes to interconnection rules
indirectly support small QFs' access to markets; and (3) changes in
RTO/ISO market rules to accommodate energy storage resources support
the Commission's finding that QFs between 5 and 20 MW have non-
discriminatory access to markets.\646\ Northwestern Coalition and
Public Interest Organizations argue that the Commission provided no
evidence that

small QFs have gained a better understanding or how that understanding
helped them overcome the obstacles small QFs face in accessing
markets.\647\ Northwestern Coalition and Public Interest Organizations
assert that the adoption of fast-track procedures for facilities under
5 MW or accommodations for energy storage resources do nothing to
support access by QFs between 5 and 20 MW to markets.\648\ Northwest
Coalition contends that the Commission also ignored evidence that
smaller resources face unique barriers to accessing competitive
markets, such as that the standard trading block in wholesale markets
is 25 MW, or that requiring transmission be scheduled in 1 MW blocks
place a disproportionate burden on small generators.\649\
---------------------------------------------------------------------------

    \646\ Northwest Coalition Request for Rehearing at 50; Public
Interest Organizations Request for Rehearing at 137-140.
    \647\ Northwest Coalition Request for Rehearing at 49; Public
Interest Organizations Request for Rehearing at 139.
    \648\ Northwest Coalition Request for Rehearing at 51-52; Public
Interest Organizations Request for Rehearing at 140.
    \649\ Northwest Coalition Request for Rehearing at 52-53.
---------------------------------------------------------------------------

    357. One Energy claims that behind-the-meter distributed energy
resources (DERs) are more like cogeneration than small power production
because their primary purpose is to directly power homes and business
and not to sell energy at wholesale.\650\ Therefore, One Energy argues
that the final rule was ``unduly discriminatory'' in finding that
behind-the-meter DERs between 5 and 20 MW have non-discriminatory
access to markets. One Energy asserts that behind-the-meter resources
should be exempted from the reduction like cogeneration facilities.
Further, One Energy contends that the Commission cited QFs that are
similar to cogeneration facilities, such as solid waste facilities and
biogas facilities, but did not specifically include behind-the-meter
DERs. One Energy argues that at a minimum the Commission should list
behind-the-meter DERs like other categories of small power production
facilities that are entitled to rebut the presumption of
nondiscriminatory market access.\651\
---------------------------------------------------------------------------

    \650\ One Energy Request for Rehearing and Clarification at 5-7.
    \651\ Id. at 7.
---------------------------------------------------------------------------

    358. One Energy also seeks clarification as to how the new same
site determination rules will affect the PURPA section 210(m)
presumption that small power production facilities with a net power
production capacity at or below 5 MW do not have nondiscriminatory
access to markets. One Energy states that it has three behind-the-meter
wind projects with three separate off-takers, within one mile of each
other. One Energy is concerned that, if one of the off-takers no longer
takes service, the Commission would aggregate the formerly behind-the-
meter facility with the other facilities within one mile, find that the
three together are 15 MW and consequently find that the formerly
behind-the-meter facility is not eligible for the below 5 MW
presumption.\652\
---------------------------------------------------------------------------

    \652\ Id. at 8-9.
---------------------------------------------------------------------------

    359. Public Interest Organizations assert that the rebuttable list
of factors is only included in 18 CFR 292.309(c) and was not added to
18 CFR 292.309(e) that applies to QFs in ISO-NE, MISO, NYISO and PJM
nor in 18 CFR 292.309(f) that applies to QFs in ERCOT. Public Interest
Organizations request that, to prevent unnecessary confusion, the
Commission incorporate the factors listed in 18 CFR 292.309(c) into
both (e) and (f).\653\
---------------------------------------------------------------------------

    \653\ Public Interest Organizations Request for Rehearing at
143-44.
---------------------------------------------------------------------------

2. Commission Determination
    360. We disagree with parties' arguments and reaffirm the finding
that market conditions have changed since the issuance of Order No.
688. In establishing the original rebuttable presumption of 20 MW in
Order No. 688, the Commission relied on the market conditions at that
time. As the Commission stated, markets have matured and the markets
have provided, and continue to provide, increased access to smaller
resources demonstrating the need for the Commission to reconsider its
definition of small power production QFs. In the final rule, the
Commission updated the relevant definition of a small power production
facility for purposes of 292.309 to be 5 MW and, despite the arguments
on rehearing, we affirm that finding here.\654\
---------------------------------------------------------------------------

    \654\ Order No. 872, 172 FERC ] 61,041 at PP 629-633.
---------------------------------------------------------------------------

    361. We disagree with arguments that the Commission did not provide
sufficient support for its finding that QFs between 5 and 20 MW can be
presumed to have non-discriminatory access competitive markets.
Specifically, the Commission explained that, since the issuance of
Order No. 688, the Commission has required each RTO/ISO to update its
tariff to include a participation model for electric storage resources
that established a minimum size requirement for participation in the
RTO/ISO markets that does not exceed 100 kW.\655\ The Commission
explained that these proposals require RTO/ISOs to revise their tariffs
to provide easier access for smaller resources. The Commission
determined that requiring markets to accommodate storage resources as
low as 100 kW also supports this finding that resources smaller than 20
MW have nondiscriminatory access to those RTO/ISO markets. Further,
that the Commission chose a 5 MW cut-off for eligibility for the fast-
track procedures represents an implicit judgment by the Commission that
facilities larger than 5 MW do not need such procedures to be able to
interconnect to the grid.\656\ The Commission stated that it believed
that these developments support updating the 20 MW presumption to a
lower number.\657\
---------------------------------------------------------------------------

    \655\ Id. P 632 (citing Order No. 841, 162 FERC ] 61,127 at P
265).
    \656\ Id. PP 630-31.
    \657\ Id. P 632.
---------------------------------------------------------------------------

    362. While these factors were a sufficient basis to support the
Commission's action, they were by no means an exhaustive recitation of
relevant developments in competitive markets since Order Nos. 688. For
example, as the Commission noted in another recent rulemaking, all of
the RTOs/ISOs have at least one participation model that allows
resources as small as 100 kW to participate in their markets.\658\
Indeed, even since the final rule, the Commission has continued to
provide greater opportunities for small power production facilities to
participate in wholesale organized markets.\659\
---------------------------------------------------------------------------

    \658\ Order No. 841, 162 FERC ] 61,127 at P 272.
    \659\ See Participation of Distributed Energy Resource
Aggregations in Markets Operated by Regional Transmission
Organizations and Independent System Operators, Order No. 2222, 172
FERC ] 61,247 (2020). While Order No. 2222 will not become effective
until after the effective date of the rulemaking in the instant
proceeding and applies only to Commission-jurisdictional RTOs/ISOs,
we find it appropriate to mention it here to provide another example
of the greater opportunities for small power producer participation
in organized electric markets.
---------------------------------------------------------------------------

    363. Regarding arguments from Public Interest Organizations and
Northwest Coalition that the final rule failed to consider that smaller
resources face unique barriers to accessing competitive markets, we
disagree. In the final rule, the Commission carefully considered such
concerns and amended 18 CFR 292.309(c) to include factors that small
power production QFs between 5 and 20 MW can use to rebut the
presumption of non-discriminatory access to markets.\660\ These factors
include (1) specific barriers to connecting to the interstate
transmission grid, such as excessively high costs and pancaked delivery
rates; (2) unique circumstances impacting the time/

length of interconnection studies/queue to process small power QF
interconnection requests; (3) lack of affiliation with entities that
participate in RTO/ISO markets; (4) predominant purpose other than
selling electricity which would warrant the small power QF being
treated similarly to cogenerators (e.g., municipal solid waste
facilities, biogas facilities, run-of-river hydro facilities, and non-
powered dams); (5) having certain operational characteristics that
effectively prevent the qualifying facility's participation in a
market; and (6) lack of access to markets due to transmission
constraints, including that it is located in an area where persistent
transmission constraints in effect cause the QF not to have access to
markets outside a persistently congested area to sell the QF output or
capacity.\661\ The Commission adopted the first four of these factors
recognizing that some small power production facilities between 5 and
20 MW may lack nondiscriminatory access to markets.\662\ The first four
factors address concerns that a small power production QF may lack
expertise, either directly or within its corporate family, to access
markets defined in PURPA section 210(m)(1) or has operational
characteristics or is remotely located such that it faces additional
transmission obstacles to reach such markets. Additionally, the
Commission applied the last two factors on the list, i.e.,
``operational characteristics'' and ``transmission constraints,'' which
were originally adopted in Order No. 688 for QFs between 20 and 80 MW,
to permit QFs between 5 and 20 MW to rebut the presumption that they
have non-discriminatory access to markets. This list of factors, we
stress, is not exclusive but was adopted in the final rule to address
the specific concerns commenters raised in responding to the NOPR.
---------------------------------------------------------------------------

    \660\ Order No. 872, 172 FERC ] 61,041 at P 640.
    \661\ Id. P 641.
    \662\ Id. PP 640, 642.
---------------------------------------------------------------------------

    364. Like the initial regulations implementing PURPA section
210(m), the final rule's revision to the rebuttable presumption merely
provides a framework for evaluating whether individual small power
production facilities have nondiscriminatory access to the markets
defined in PURPA section 210(m); it does not decide that every small
power producer QF between 5 MW and 20 MW in fact has nondiscriminatory
access. The D.C. Circuit has held that ``[t]he fact that FERC chose to
adopt certain rebuttable presumptions via rulemaking, rather than by
case-by-case adjudication, does not violate any of the statute's
requirements.'' \663\ Contrary to Public Interest Organizations'
argument,\664\ the rebuttable presumption, if applicable, provides the
requisite ``factual basis'' for a utility to invoke. Conversely, the
corresponding factors for rebutting this presumption, if applicable,
provide a ``factual basis'' that a QF may invoke to rebut that
presumption.
---------------------------------------------------------------------------

    \663\ AFPA v. FERC, 550 F.3d at 1183.
    \664\ Public Interest Organizations Request for Rehearing at 136
(citing 16 U.S.C. 824a-3(m)(3)).
---------------------------------------------------------------------------

    365. In undertaking this rulemaking, the Commission stated its
intent to modify PURPA in light of changed circumstances since it first
implemented PURPA section 210(m).\665\ During the rulemaking process,
the Commission appropriately reviewed the MW level at which to set a
presumption of nondiscriminatory market access for small power
production qualifying facilities. As discussed above, a variety of
factors have led to the increased ability to access wholesale markets
by small power production qualifying facilities, and in supporting this
trend of an increased ability to access the energy market, the
Commission has established policies and procedures such as the fast-
track interconnection process, among others, to accommodate and
encourage smaller energy resources' participation in organized
electricity markets.\666\ Thus, as the Commission stated in the final
rule, 20 MW is no longer the appropriate threshold to presume
nondiscriminatory access to markets for small power production QFs
under PURPA section 210(m).\667\
---------------------------------------------------------------------------

    \665\ See NOPR, 168 FERC ] 61,184 at P 127.
    \666\ See Order No. 872, 172 FERC ] 61,041 at PP 628-33.
    \667\ See id. P 627.
---------------------------------------------------------------------------

    366. In the final rule, as noted above, the Commission addressed
commenters' concerns by establishing a list of established specific
factors that QFs between 5 and 20 MW can utilize, among others, to
rebut nondiscriminatory access.\668\ Commenters stated that small power
production QFs 20 MW and less are often located on local distribution
systems and have additional hurdles to gain transmission access to
energy markets. To address this concern, the Commission established the
first factor: Specific barriers to connecting to the interstate
transmission grid, such as excessively high costs and pancaked delivery
rates.\669\
---------------------------------------------------------------------------

    \668\ Id. PP 641-42.
    \669\ Id.
---------------------------------------------------------------------------

    367. In response to commenters' concerns over the potential
disproportionate high costs and delays a small power production QF
between 5 and 20 MW could face, the Commission added the second factor:
The unique circumstances impacting the time or length of
interconnection studies or queue to process small power producer QF
interconnection requests.\670\
---------------------------------------------------------------------------

    \670\ Id. PP 641, 643.
---------------------------------------------------------------------------

    368. Commenters asserted that those QFs between 5 and 20 MW that
have larger energy affiliates could access the knowledge and expertise
needed to participate in such markets, whereas other QFs could not,
which led the Commission to adopt the third factor: A lack of
affiliation with entities that participate in RTO/ISO markets.\671\
---------------------------------------------------------------------------

    \671\ Id.
---------------------------------------------------------------------------

    369. Commenters representing solid waste, biogas, and hydro
facilities claimed that some small power production QFs between 5 and
20 MW were more similar to cogeneration QFs than small power production
QFs in that their primary purpose was not the sale of electricity. In
response, the Commission included the fourth factor: A predominant
purpose other than selling electricity, which would warrant the small
power QF being treated similarly to cogenerators (e.g., municipal solid
waste facilities, biogas facilities, run-of-river hydro facilities, and
non-powered dams).\672\
---------------------------------------------------------------------------

    \672\ Id. PP 641, 644.
---------------------------------------------------------------------------

    370. As the Commission explained in the final rule (and reiterated
above), this is not intended to be an exhaustive list but is intended
to provide a framework for the Commission to evaluate small power
producer QFs between 5 and 20 MW who wish to rebut the presumption of
nondiscriminatory access.\673\ Any small power producer QF may use
these factors (or other evidence) to rebut the presumption that a
specific QF between 5 MW and 20 MW has non-discriminatory access to
markets, and the Commission will review each request on a case-by-case
basis.
---------------------------------------------------------------------------

    \673\ Id. P 641.
---------------------------------------------------------------------------

    371. One Energy argues that a behind-the-meter DER's primary
purpose is to generate electricity for its host and any potential sale
is secondary like cogeneration facilities. While not ruling on the
validity of this argument with respect to any behind-the-meter DER, we
clarify that small power production QFs that are behind-the-meter DERs
are permitted to argue that the fourth factor which states ``a
predominant purpose other than selling electricity which would warrant
the small power QF being treated similarly to cogenerators (e.g.,
municipal solid waste facilities, biogas facilities, run-of-river hydro
facilities, and non-power dams)'' supports their argument that they
lack

nondiscriminatory access to markets.\674\ We will rule on any such
arguments on a case-by-case basis taking into account the specific
facts of the DER making the argument.
---------------------------------------------------------------------------

    \674\ Id.
---------------------------------------------------------------------------

    372. We grant Public Interest Organizations request for
clarification that the list of factors in section 18 CFR 292.309(c)
that small power production facilities between 5 MW and 20 MW can point
to in seeking to rebut the presumption that they have nondiscriminatory
access was not--but should be--added to 18 CFR 292.309(e) that applies
to QFs in ISO-NE, MISO, NYISO, and PJM, and also to 18 CFR 292.309(f)
that applies to QFs in ERCOT. In order to avoid confusion, we hereby
incorporate the factors listed in 18 CFR 292.309(c) into both (e) and
(f).
    373. In response to One Energy's request for clarification as to
how the new same site determination rules will affect the PURPA section
210(m) presumption, in determining whether a QF is eligible for the
rebuttable presumption that a qualifying small power production
facility with a capacity at or below 5 MW does not have
nondiscriminatory access to the market, the Commission will look
primarily at the net certified capacity of each QF. We note that the
regulations state that, for the purposes of implementing the rebuttable
presumption of nondiscriminatory access, the Commission will not be
bound by the standards (i.e., the new ten-mile rule) of section
292.204(a)(2). The Commission will review, on a case-by-case basis, any
question that involves applying both 18 CFR 292.309 and 292.204 to the
same entity. We further note that, while we will look primarily at the
net certified capacity of each QF, we may consider, inter alia, the new
``ten-mile rule.''

G. Legally Enforceable Obligation

    374. In the final rule, the Commission adopted the NOPR proposal to
require QFs to demonstrate that a proposed project is commercially
viable and that the QF has a financial commitment to construct the
proposed project, pursuant to objective, reasonable, state-determined
criteria in order to be eligible for a LEO.\675\ The Commission
affirmed that the states have flexibility in determining what
constitutes an acceptable showing of commercial viability and financial
commitment, albeit subject to the criteria being objective and
reasonable. The Commission found that requiring a showing of commercial
viability and financial commitment, based on objective and reasonable
criteria, would ensure that no electric utility obligation is triggered
for those QF projects that are not sufficiently advanced in their
development and, therefore, for which it would be unreasonable for a
utility to include in its resource planning. At the same time, the
Commission found, the criteria also ensure that the purchasing utility
does not unilaterally and unreasonably decide when its obligation
arises. The Commission believed that this struck the right balance for
QF developers and purchasing utilities and should encourage development
of QFs.\676\
---------------------------------------------------------------------------

    \675\ Id. P 684.
    \676\ Id.
---------------------------------------------------------------------------

    375. The Commission explained that examples of factors a state
could reasonably require are that a QF demonstrate that it is in the
process of at least some of the following prerequisites: (1) Taking
meaningful steps to obtain site control adequate to commence
construction of the project at the proposed location and (2) filing an
interconnection application with the appropriate entity. The Commission
found that the state could also require that the QF show that it has
submitted all applications, including filing fees, to obtain all
necessary local permitting and zoning approvals. The Commission also
clarified that it is appropriate for states to require a QF to
demonstrate that it is in the process of obtaining site control or has
applied for all local permitting and zoning approvals, rather than
requiring a QF to show that it has obtained site control or secured
local permitting and zoning. Moreover, the Commission noted that the
factors that the state requires must be factors that are within the
control of the QF.\677\
---------------------------------------------------------------------------

    \677\ Id. P 685.
---------------------------------------------------------------------------

    376. The Commission clarified that demonstrating the required
financial commitment does not require a demonstration of having
obtained financing. The Commission explained that requiring QFs to, for
example, apply for all relevant permits, take meaningful steps to seek
site control, or meet other objective and reasonable milestones in the
QF's development can sufficiently demonstrate QF developers' financial
commitment to the QFs' development and allows utilities to reasonably
rely on the LEO in planning for system resource adequacy.\678\
---------------------------------------------------------------------------

    \678\ Id. P 687.
---------------------------------------------------------------------------

    377. The Commission explained that the intent of these factors is
to provide a reasonable balance between providing QFs with objective
and transparent milestones up front that are needed to obtain a LEO,
allowing states the flexibility to establish factors that address the
individual circumstances of each state, and increasing utilities'
ability to accurately plan their systems.\679\ The Commission further
explained that establishing objective and reasonable factors is
intended to limit the number of unviable QFs obtaining LEOs and
unnecessarily burdening utilities that currently have to plan for QFs
that obtain a LEO very early in the process but ultimately are never
developed.\680\ The Commission explained that, in adopting this
provision, the Commission was raising the bar to prevent speculative
QFs from obtaining LEOs, with an associated burden on purchasing
utilities, but was not establishing a barrier for financially committed
developers seeking to develop commercially viable QFs.
---------------------------------------------------------------------------

    \679\ Id. P 688.
    \680\ Id.
---------------------------------------------------------------------------

    378. The Commission disagreed that establishing reasonable,
transparent factors is an onerous barrier or will cause a substantial
reduction in QFs. The Commission found that the objective and
reasonable criteria it had established would protect QFs against
onerous requirements for LEOs that hinder financing, such as a
requirement for a utility's execution of an interconnection agreement
\681\ or power purchase agreement,\682\ requiring that QFs file a
formal complaint with the state commission,\683\ limiting LEOs to only
those QFs capable of supplying firm power,\684\ or requiring the QF to
be able to deliver power in 90 days.\685\ The Commission found that, by
making clear that such conditions are not permitted, and by instead
providing objective criteria to clarify when a LEO commences, the LEO
provisions it adopted would encourage the development of QFs.
---------------------------------------------------------------------------

    \681\ Id. P 689 (citing FLS, 157 FERC ] 61,211 at P 26 (stating
that requiring signed interconnection agreement as prerequisite to
LEO is inconsistent with PURPA Regulations)).
    \682\ Id. (citing Murphy Flat Power, LLC, 141 FERC ] 61,145, at
P 24 (2012) (finding that requiring a signed and executed contract
with an electric utility as a prerequisite to a LEO is inconsistent
with PURPA Regulations)).
    \683\ Id. (citing Grouse Creek Wind Park, LLC, 142 FERC ]
61,187, at P 40 (2013)).
    \684\ Id. (citing Exelon Wind 1, L.L.C. v. Nelson, 766 F.3d at
400).
    \685\ Id. (citing Power Resource Group, Inc. v. Public Utility
Comm'n of Texas, 422 F.3d 231 (5th Cir. 2005)).
---------------------------------------------------------------------------

    379. The Commission, however, declined to establish specific
factors for the states to adopt, to establish a baseline for eligible
factors, or to otherwise limit states' flexibility. The Commission
found that states are in the best position to determine, in the first
instance, what specific factors would

best suit the specific circumstances of each state so long as they are
objective and reasonable and provided the suggested prerequisites above
as examples of objective and reasonable factors.\686\
---------------------------------------------------------------------------

    \686\ Id. P 690.
---------------------------------------------------------------------------

    380. The Commission explained that the concept of a LEO was
specifically adopted to prevent utilities from circumventing the
mandatory purchase requirement under PURPA by refusing to enter into
contracts.\687\ The Commission stated that it had found that requiring
a QF to have a utility-executed contract or interconnection agreement
or requiring the completion of a utility-controlled study places too
much control over the LEO in the hands of the utility and defeats the
purpose of a LEO and is inconsistent with PURPA.\688\ The Commission
stated that, when reviewing factors to demonstrate commercial viability
and financial commitment, states thus should place emphasis on those
factors that show that the QF has taken meaningful steps to develop the
QF that are within the QF's control to complete, and not on those
factors that a utility controls. The Commission explained, for example,
that requiring a QF to make a deposit or whether the QF has applied for
system impact, interconnection or other needed studies are the types of
factors that may show that the QF has taken meaningful steps to develop
the QF that are within the QF's control and the type of objective and
reasonable standards that states can consider in their
implementation.\689\
---------------------------------------------------------------------------

    \687\ Id. P 695 (citing JD Wind 1, LLC, 129 FERC ] 61,148 at P
25, reh'g denied, 130 FERC ] 61,127 (citing Order No. 69, FERC
Stats. & Regs. ] 30,128 at 30,880); see also Midwest Renewable
Energy Projects, LLC, 116 FERC ] 61,017 (2006)).
    \688\ Id. (citing FLS, 157 FERC ] 61,211 at P 23 (finding such
requirements ``allows a utility to control whether and when a
legally enforceable obligation exists--e.g., by delaying the
facilities study'')).
    \689\ Id.
---------------------------------------------------------------------------

1. Requests for Rehearing
    381. Public Interest Organizations argue that the final rule's
provision allowing states to require a showing of commercial viability
and financially commitment results in additional barriers to QFs
without sufficient safeguards to protect QFs from states' abuses.
Public Interest Organizations contend that the Commission erred in
failing to justify how these factors are consistent with PURPA's
purpose of encouraging QFs. Public Interest Organizations assert that
the Commission ignored the evidence that utilities adopt requirements
to avoid their mandatory purchase obligation and states often
acquiesce. Public Interest Organizations contend that the requirement
that the factors be reasonable and objective are insufficient to
protect QFs in seeking to establish a LEO and reiterate their request
that the Commission establish specific limits on the kind of showing
that is required before a LEO is established.\690\
---------------------------------------------------------------------------

    \690\ Public Interest Organizations Request for Rehearing at
145.
---------------------------------------------------------------------------

    382. Public Interest Organizations argue that the Commission has
repeatedly issued declaratory orders showing the unlawfulness of
several LEO restrictions adopted by states but has repeatedly declined
to initiate enforcement actions. They add that state regulators and
courts have dismissed the Commission's declaratory orders as advisory
and states have supported utilities' efforts to restrict LEOs. Public
Interest Organizations assert that the Commission erred in considering
the potential benefits to the utility's planning process of imposing
new burdens on QFs. Instead, they contend that Congress directed the
Commission to develop rules that would encourage QFs, not impose new
burdens on QFs to benefit a utility's planning process.\691\
---------------------------------------------------------------------------

    \691\ Id. at 147-49.
---------------------------------------------------------------------------

    383. Mr. Mattson argues that requiring financing as a factor to
obtain a LEO is problematic because a LEO is needed to obtain
financing.\692\
---------------------------------------------------------------------------

    \692\ Mr. Mattson Motion for Time, Reconsideration, and Request
Answers at 2.
---------------------------------------------------------------------------

2. Commission Determination
    384. We disagree with the arguments raised on rehearing. The
Commission created the LEO concept in Order No. 69 and has the
authority to refine its contours in a way that continues to encourage
QF development. The final rule achieves that result. Therefore, we
reaffirm the Commission's finding in the final rule that requiring a
showing of commercial viability and financial commitment based on
objective and reasonable criteria encourages the development of
QFs.\693\ It also strikes an appropriate balance between the needs of
the QFs and the needs of the purchasing utilities.
---------------------------------------------------------------------------

    \693\ Order No. 872, 172 FERC ] 61,041 at P 684.
---------------------------------------------------------------------------

    385. That the revisions to the LEO eligibility requirements
encourage the development of QFs is clear. In the past, purchasing
utilities impeded the development of QFs by unilaterally erecting
barriers to QFs establishing an obligation, such as by requiring a QF
to have entered into an interconnection agreement or a power purchase
agreement with the purchasing utility. It would then be up to the
purchasing utility to decide whether and when to enter into such an
agreement. The Commission changed that dynamic in the final rule by
adopting regulations formalizing Commission precedent that takes away
from the purchasing utility the unilateral ability to determine when
the purchasing utility's obligation arises. Under the final rule,
state-established objective and reasonable criteria would clarify when
an obligation arises, rather than leave it to the purchasing
utility.\694\ What is more, the criteria should be such that the
ability to meet the criteria is in the hands of the QF and not in the
hands of the purchasing utility. For example, it is the QF, and not the
purchasing utility, that decides when it will apply for necessary
permits or when it will apply for an interconnection agreement.\695\
Therefore, providing guidelines for establishing reasonable and
objective criteria will prevent purchasing utilities from unilaterally
and unreasonably deciding when its obligation to purchase arises and
provides guidance to QFs seeking to establish a LEO. Moreover, to meet
the needs of the purchasing utility, requiring a showing of commercial
viability and financial commitment will ensure that no electric utility
obligation is triggered for those QF projects that are not sufficiently
advanced in their development and, therefore, for which it would be
unreasonable for a utility to include in its resource planning.
---------------------------------------------------------------------------

    \694\ Id. P 690.
    \695\ Id. P 694.

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

    386. The criteria the Commission provided under the final rule are
different from the prerequisites that the Commission in the past has
found inconsistent with PURPA or that courts have permitted despite
such Commission precedent.\696\ Objective and reasonable criteria for
demonstrating commercial viability and financial commitment to proceed
give a better sense to a state and a purchasing utility that a QF is
more likely to be built. In comparison, requiring that a utility
execute an interconnection agreement \697\ or power purchase
agreement,\698\ a QF file a formal complaint with the state
commission,\699\ a QF be capable of supplying firm power,\700\ or a QF
be able to deliver power in 90 days \701\ are likely beyond the control
of a QF or procedural requirements that do not reveal the likelihood
that a QF will be developed and are therefore inappropriate obstacles
to QF development.
---------------------------------------------------------------------------

    \696\ See id. P 34 (citing examples of state-established
prerequisites to obtaining LEOs that are inconsistent with PURPA
Regulations because they hinder QF financing).
    \697\ Id. P 689 (citing FLS, 157 FERC ] 61,211 at P 26 (stating
that requiring signed interconnection agreement as prerequisite to
LEO is inconsistent with PURPA Regulations)).
    \698\ Id. (citing Murphy Flat Power, LLC, 141 FERC ] 61,145 at P
24 (finding that requiring a signed and executed contract with an
electric utility as a prerequisite to a LEO is inconsistent with
PURPA Regulations)).
    \699\ Id. (citing Grouse Creek Wind Park, LLC, 142 FERC ] 61,187
at P 40).
    \700\ Id. (citing Exelon Wind 1, L.L.C. v. Nelson, 766 F.3d at
400 (requiring that only QFs capable of providing firm power are
entitled to an LEO)).
    \701\ Id. (citing Power Resource Group, Inc. v. Pub. Util.
Comm'n of Texas, 422 F.3d 231, 237-39 (5th Cir. 2005) (requiring
that only QFs capable of delivering power within 90 days are
entitled to an LEO)).
---------------------------------------------------------------------------

    387. Allowing states to require a showing of commercial viability
and financial commitment from QFs will enable utilities and states to
know which QFs are more likely to be built, thus enabling them to
better plan their systems and accommodate all sources of QF power, and
are just and reasonable to the consumers of the electric utility.
States are not required to adopt specific criteria, but, as with other
PURPA Regulations, the Commission has established the boundaries within
which each state can adopt appropriate criteria that address each
states' unique characteristics. As explained in the final rule,
providing guidance as to how QFs can establish commercial viability and
a financial commitment will provide certainty that QF developers can
rely upon, thereby encouraging QF development.\702\ We believe that
providing clear, objective, and reasonable guidelines for establishing
a LEO will also reduce disputes between state commissions, utilities,
and QF developers.
---------------------------------------------------------------------------

    \702\ Id. P 684.
---------------------------------------------------------------------------

    388. Finally, the final rule explicitly provided that ``obtaining a
PPA or financing cannot be required to show proof of financial
commitment.'' \703\
---------------------------------------------------------------------------

    \703\ Id. P 687 (emphasis added).
---------------------------------------------------------------------------

III. Information Collection Statement

    389. The Paperwork Reduction Act \704\ 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 10 or
more persons or contained in a rule of general applicability. OMB
regulations require approval of certain information collection
requirements contained in rulemakings (including deletion, revision, or
implementation of new requirements).\705\ Upon approval of a collection
of information, OMB will assign an OMB control number and an expiration
date. Respondents subject to the information collection 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.
---------------------------------------------------------------------------

    \704\ 44 U.S.C. 3501-21.
    \705\ See 5 CFR 1320.11.
---------------------------------------------------------------------------

    390. With respect to the Form No. 556 information collection
(Certification of Qualifying Facility (QF) Status for a Small Power
Production or Cogeneration Facility, OMB Control No. 1902-0075), in the
final rule, the Commission affirmed that the relevant burdens derive
from the change from the Commission's current ``one-mile rule'' for
determining whether generation facilities should be considered to be at
the same site for purposes of determining qualification as a qualifying
small power production facility, to allowing an interested person or
other entity challenging a QF certification the opportunity to file a
protest, without a fee, to rebut the presumption that affiliated small
power production QFs using the same energy resource and located more
than one mile and less than 10 miles from the applicant facility are
considered to be at separate sites. The Commission stated that it was
making the following changes to the Form No. 556 which affect the
burden of the information collection:
     Allow an interested person or other entity challenging a
QF certification the opportunity to file a protest, without a fee, to
an initial certification (both self-certification and application for
Commission certification) filed on or after the effective date of the
final rule, or to a recertification (self-recertification or
application for Commission recertification) that makes substantive
changes to the existing certification that is filed on or after the
effective date of the final rule.
     Require all applicants to report the applicant facility's
geographic coordinates, rather than only for applications where there
is no street address.
     Change the current requirement to identify any affiliated
facilities with electrical generating equipment within one mile of the
applicant facility's electrical generating equipment to instead require
applicants to list only affiliated small power production QFs using the
same energy resource one mile or less from the applicant facility.
     Additionally require applicants to list affiliated small
power production QFs using the same energy resource whose nearest
electrical generating equipment is greater than one mile and less than
10 miles from the electrical generating equipment of the applicant
facility.
     Require the applicant to list the geographic coordinates
of the nearest ``electrical generating equipment'' of both its own
facility and the affiliated small power production QF in question based
on the definitions adopted in the final rule.
     Provide space for the applicant to explain, if it chooses
to do so, why the affiliated small power production QFs using the same
energy resource, that are more than one mile and less than 10 miles
from the electrical generating equipment of the applicant facility,
should be considered to be at separate sites from the applicant's
facility, considering the relevant physical and ownership factors
identified in the final rule.
    The Commission stated that these changes in burden are appropriate
because they are necessary to meet the statutory requirements contained
in PURPA.

    391. The Commission included the following table (shown below)
which provided estimated changes to the burden and cost of the Form No.
556 due to the final rule.\706\ (The estimates have not changed from
the final rule.)
---------------------------------------------------------------------------

    \706\ There were no rehearing requests related to the estimated
burden changes for the FERC-912 (PURPA Section 210(m) Notification
Requirements Applicable to Cogeneration and Small Power Production
Facilities; OMB Control No. 1902-0237), so it is not addressed
further.

                                   FERC-556, Changes Due to Final Rule in Docket Nos. RM19-15-000 and AD16-16-000 \707\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Increased total
                                                                    Annual  number                         Increased      annual burden      Increased
        Facility type             Filing type        Number of       of  responses    Total number of   average  burden   hours & total    annual  cost
                                                    respondents     per  respondent      responses     hours & cost per    annual cost          per
                                                                                response  ($)         ($)        respondent ($)
                                                 (1).............  (2).............  (1) * (2) = (3).  (4).............  (3) * (4) = (5)     (5) / (1) =
                                                                                (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cogeneration and Small Power   Self-             no change (692).  no change (1.25)  no change (865).  no change (1.5    no change                    $0
 Production Facility <=1 MW     certification.                                                          hrs.); $0.        (1,297.5
 \708\.                                                                                hrs.); $0.
Cogeneration Facility >1 MW..  Self-             no change (63)..  no change (1.25)  no change         no change (1.5    no change                     0
                                certification.                                        (78.75).          hrs.); $0.        (118.125
                                                                                hrs.); $0.
Cogeneration Facility >1 MW..  Application for   no change (1)...  no change (1.25)  no change (1.25)  no change (50     no change (62.5               0
                                FERC                                                                    hrs.); $0.        hrs.); $0.
                                certification.
Small Power Production         Self-             no change (899)   no change (1.25)  no change         2 hrs.; $166....  2,247.5 hrs.;             207.5
 Facility >1 MW, <=1 Mile       certification.    \709\.                              (1,123.75).                         $186,542.5.
 from Affiliated Small Power
 Production QF.
Small Power Production         Application for   no change (0)...  no change (1.25)  no change (0)...  6 hrs.; $498....  no change (0                  0
 Facility >1 MW, <=1 Mile       FERC                                                                                hrs.); $0.
 from Affiliated Small Power    certification.
 Production QF.
Small Power Production         Self-             no change (900).  no change (1.25)  no change         8 hrs.; $664....  9,000 hrs.;                 830
 Facility >1 MW, >1 Mile, <10   certification.                                        (1,125).                            $747,000.
 Miles from Affiliated Small
 Power Production QF.
Small Power Production         Application for   no change (0)...  no change (1.25)  no change (0)...  12 hrs.; $996...  no change (0                  0
 Facility >1 MW, >1 Mile, <10   FERC                                                                                hrs.); $0.
 Miles from Affiliated Small    certification.
 Power Production QF.
Small Power Production         Self-             no change (899).  no change (1.25)  no change         2 hrs.; $166....  2,247.5 hrs.;             207.5
 Facility >1 MW, >=10 Miles     certification.                                        (1,123.75).                         $186,542.5.
 from Affiliated Small Power
 Production QF.
Small Power Production         Application for   no change (0)...  no change (1.25)  no change (0)...  6 hrs.; $498....  no change (0                  0
 Facility >1 MW, >=10 Miles     FERC                                                                                hrs.); $0.
 from Affiliated Small Power    certification.
 Production QF.
                                                --------------------------------------------------------------------------------------------------------
    FERC-556, Total            ................  no change         ................  no change         ................  13,495 hrs.;     ..............
     Additional Burden and                        (3,454).                            (4,317.5).                          $1,120,085.
     Cost Due to Final Rule.
--------------------------------------------------------------------------------------------------------------------------------------------------------

A. Request for Rehearing
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    \707\ The figures in this table reflect estimated changes to the
current OMB-approved inventory for the Form No. 556 (approved by the
Office of Management and Budget (OMB) on November 18, 2019). As of
October 21, 2020, the Paperwork Reduction Act (PRA) packages for the
reporting requirements in the final rule in Docket Nos. RM19-15 and
AD16-16 are still pending review at OMB.
    Where ``no change'' is indicated, the current figure is included
parenthetically for information only. Those parenthetical figures
are not included in the final total for column 5.
    Commission staff believes that the industry is similarly
situated in terms of wages and benefits. Therefore, cost estimates
are based on FERC's 2020 average hourly wage (and benefits) of
$83.00/hour. (The submittal to and approval of OMB in 2019 for Form
No. 556 was based on FERC's 2018 average annual wage hourly rate of
$79.00/hour. Because the change from the $79.00 hourly rate to the
current $83.00 hourly rate was not due to the final rule, this chart
does not depict this increase.)
    \708\ Not required to file.
    \709\ In the Form No. 556 approved by OMB in 2019, for the
category ``Small Power Production Facility > 1 MW, Self-
certification,'' we estimated the number of respondents at 2,698. We
have now divided that category into three categories: ``Small Power
Production Facility >1 MW, <=1 Mile from Affiliated Small Power
Production QF,'' ``Small Power Production Facility >1 MW, >1 Mile,
<10 Miles from Affiliated Small Power Production QF,'' ``Small Power
Production Facility >1 MW, >=10 Miles from Affiliated Small Power
Production QF.'' In this column, the numbers 899, 900, and 899 are a
distribution of those same estimated 2,698 respondents across the
three categories.
---------------------------------------------------------------------------

    392. Public Interest Organizations state that Solar Energy
Industries questioned the Commission's burden estimate in the NOPR,
anticipating that the actual burden will be far higher.\710\ Public
Interest Organizations assert that the Commission dismissed Solar
Energy Industries' estimates that the new rule would require an
additional 90 to 120 hours per year to comply \711\ without providing
additional justification or explanation for the Commission's time and
expense estimates, which is arbitrary and capricious.\712\
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    \710\ Public Interest Organizations Request for Rehearing at
129.
    \711\ Id. (citing Solar Energy Industries Comments, Docket No.
RM19-15-000, at 52 (Dec. 3, 2019)).
    \712\ Id. at 129-30.
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B. Commission Determination

    393. The Commission in the final rule directly addressed Solar
Energy Industries comments and explained why it did not agree with
Solar Energy Industries' estimates.\713\ Additionally, we note that
while other commenters agreed that the NOPR's proposals would result in
increased administrative

burden and expense,\714\ Solar Energy Industries was the only commenter
to provide a numerical estimate to challenge the Commission's proposed
estimates. The Commission nevertheless increased its burden estimates
in the final rule in response to the comments received.\715\ We also
note that Solar Energy Industries did not independently support its
estimate of increased burden of 90 to 120 hours. Rather, Solar Energy
Industries relied on a separate rulemaking proceeding for a different
regulatory program administered by the Commission,\716\ and stated,
without justification, that it believed the estimates for an ultimately
withdrawn portion of that rulemaking (the proposed Connected Entity
Information requirement) are a reasonable approximation of the burden
that QFs would face in complying with the new requirements in the final
rule.\717\ While both rulemakings require the disclosure of affiliate
information, the withdrawn Connected Entity Information proposal would
have also required reporting of certain employee information.\718\
Furthermore, the final rule limits the information geographically to
require the listing of only those affiliated entities that are less
than 10 miles away, whereas the withdrawn Connected Entity Information
requirement from the other proceeding would not have limited its
information collection geographically.
---------------------------------------------------------------------------

    \713\ Order No. 872, 172 FERC ] 61,041 at PP 552-56.
    \714\ Ares EIF Management, LLC Comments, Docket No. RM19-15-000,
at 6 (Dec. 2, 2019); Borrego Solar Systems, Inc. Comments, Docket
No. RM19-15-000, at 4 (Dec. 3, 2019); Consolidated Edison
Development, Inc. Comments, Docket No. RM19-15-000, at 5 (Nov. 15,
2019); Public Interest Organizations Comments, Docket No. RM19-15-
000, at 97-98 (Dec. 3, 2019); Solar Energy Industries Comments,
Docket No. RM19-15-000, at 51-52, 54, 57-58 (Dec. 3, 2019); South
Carolina Solar Business Alliance Comments, Docket No. RM19-15-000,
at 15-18 (Dec. 3, 2019); Southern Environmental Law Center, et al.
Comments, Docket No. RM19-15-000, at 29, 35 (Dec. 3, 2019); sPower
Development Company, LLC Comments, Docket No. RM19-15-000, at 14
(Dec. 3, 2019).
    \715\ For example, in the NOPR, the Commission estimated that a
small power production facility greater than 1 MW, but less than one
mile from an affiliated facility, that submits a self-certification
would not change the annual burden or cost. However, the Commission
in the final rule estimated that such a small power production
facility would need two additional hours to complete the Form No.
556; thus, the total annual burden hours and cost per response for
this category would increase by two hours and by $166. Moreover, in
the NOPR, the Commission estimated that a small power production
facility greater than 1 MW, and greater than 10 miles from an
affiliated facility, that submits an application for Commission
certification would not change the annual burden or cost. However,
Commission in the final rule estimated that such a small power
production facility would need six additional hours to complete the
Form No. 556; thus, the total annual burden hours and cost per
response for this category would increase by six hours and by $498.
    \716\ See Data Collection for Analytics and Surveillance and
Market-Based Rate Purposes, Order No. 860, 168 FERC ] 61,039 (2019)
(adopting rules concerning data collection for public utilities with
market-based rates).
    \717\ Solar Energy Industries Comments, Docket No. RM19-15-000,
at 57-58 (Dec. 3, 2019).
    \718\ See Data Collection for Analytics and Surveillance and
Market-Based Rate Purposes, Notice of Proposed Rulemaking, 156 FERC
] 61,045, at P 52 (2016).
---------------------------------------------------------------------------

    394. Moreover, we believe that Solar Energy Industries' estimate
vastly overstates the regulatory burden. First, the Commission
explained in the final rule that 18 CFR 292.207(d) (which the
Commission did not alter in the final rule except to renumber as 18 CFR
292.207(f)) already states that if a QF fails to conform with any
material facts or representations presented in the certification, the
QF status of the facility may no longer be relied upon,\719\ and hence
it is long-standing practice that a QF must recertify when material
facts or representations in the Form No. 556 change.
---------------------------------------------------------------------------

    \719\ 18 CFR 292.207(d), which the final rule renumbered to 18
CFR 292.207(f).
---------------------------------------------------------------------------

    395. Second, with regard to the new Form No. 556 requirement to
identify all affiliated small power production QFs using the same
energy resource that are less than 10 miles from the electrical
generating equipment of the certifying facility, we note that the final
rule expanded the requirement to identify such facilities to less than
10 miles away, but the requirement to identify such facilities less
than one mile already existed.
    396. Third, we note that not all QFs will be affected by this
expanded requirement. Only small power production QFs that have an
affiliated small power production QF more than one but less than 10
miles away that uses the same energy resource will be subject to the
new requirement to list the affiliated small power production QF. QFs
that have no affiliated small power production QFs will not be
affected, nor will those whose only affiliates are more than 10 miles
away. Moreover, those QFs that have only a few affiliated small power
production QFs more than one but less than 10 miles away will only
suffer a small increase in burden to list these affiliated facilities.
The only facilities that may suffer a more significant burden--from the
new requirement to identify affiliated facilities that use the same
energy resource more than one and less than 10 miles away--are
facilities with multiple facilities close together, and it is precisely
this group of facilities from whom the Commission needs this
information, in order to determine whether those facilities should be
considered to be at the same site.
    397. However, in light of Public Interest Organizations' and Solar
Energy Industries' renewed assertion that the regulatory burden on QFs
is substantial,\720\ we modify and clarify our requirements regarding
the identification of affiliated small power production QFs, in order
to further ensure that the regulatory burden on small power production
facilities is within reasonable limits as described in section III.D.
Specifically, as explained more fully in section III.D above, we modify
the final rule to state that a small power production QF evaluating
whether it needs to recertify does not need to recertify due to a
change in the information it has previously reported regarding its
affiliated small power production QFs that are more than one mile but
less than 10 miles from its electrical generating equipment, including
adding or removing an affiliated small power production QF more than
one mile but less than 10 miles away, or if an affiliated small power
production QF more than one mile but less than 10 miles away and
previously reported in item 8a makes a modification, unless that change
also impacts any other entries on the evaluating small power production
QF's Form No. 556.
---------------------------------------------------------------------------

    \720\ Public Interest Organizations Request for Rehearing at
127-29; see Solar Energy Industries Request for Rehearing and/or
Clarification at 34.
---------------------------------------------------------------------------

    398. We will continue to require that a small power production QF,
as it was prior to the final rule, recertify its Form No. 556 to update
item 8a due to a change at any of its affiliated small power production
facilities located one mile or less from of its electrical generating
equipment.\721\ We will also still require that a small power
production QF recertify due to a change in material fact or
representation to its own facility.
---------------------------------------------------------------------------

    \721\ See supra note 583.
---------------------------------------------------------------------------

    399. At such time as the small power production QF makes a
recertification due to a change in material fact or representation to
its own facility or at any of its affiliated small power production
facilities that use the same energy resource and are located one mile