mandatory purchase obligation for small power production QFs between 20
MW and 5 MW, then we would expect the following burdens and cost
estimates to apply.
---------------------------------------------------------------------------

    \1050\ The figures in this table reflect estimated changes to
the current OMB-approved inventory for the FERC Form No. 556
(approved by the Office of Management and Budget (OMB) on November
18, 2019).
    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 FERC
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.)
    \1051\ Not required to file.
    \1052\ In the FERC 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.
    \1053\ This information was not included in the burden estimates
in the NOPR.

                                     FERC-912, Changes Due to Final Rule in Docket Nos. RM19-15-000 and AD16-16-000
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Increased
                                                        Annual number                   Increased average hours  Increased total  annual   annual  cost
    (Termination of obligation to         Number of      of responses    Total number    and cost  per response   burden hours and total        per
              purchase)                  respondents    per respondent   of responses             ($)                annual cost  ($)       respondent
                                                                                (at $83/hr.)
                                                  (1)              (2)     (1) x (2) =  (4)....................  (3) * (4) = (5)........   (5)/(1) = (6)
                                                                                (3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electric utility burden of reducing                30                1              30  12 hrs.; $996..........  360 hrs.; $29,880......            $996
 210(m) rebuttable presumption from
 20 MW to 5 MW \1054\.
                                      ------------------------------------------------------------------------------------------------------------------
    Total............................              30                1              30  12 hrs.; $996..........  360 hrs.; $29,880......             996
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Title: FERC-556 (Certification of Qualifying Facility (QF) Status
for a Small Power Production or Cogeneration Facility), and FERC-912
(PURPA Section 210(m) Notification Requirements Applicable to
Cogeneration and Small Power Production Facilities).
---------------------------------------------------------------------------

    \1054\ The staff estimates a total of 90 discretionary responses
may be submitted in Years 1-3, with an annual average of 30.
---------------------------------------------------------------------------

    Action: Revisions to existing information collections FERC-556 and
FERC-912.
    OMB Control No.: 1902-0075 (FERC-556) and 1902-0237 (FERC-912).
    Respondents: Facilities that are self-certifying their status as a
cogenerator or small power producer or that are submitting an
application for Commission certification of their status as a
cogenerator or small power producer; electric utilities filing to
terminate their obligation to purchase, at avoided cost rates, the
output of small power production QFs between 5 MW and 20 MW.
    Frequency of Information: Ongoing.
    Necessity of Information: The Commission directs the changes in
this final rule revising its implementation of PURPA in order to
continue to meet PURPA's statutory requirements.
    Internal Review: The Commission has reviewed the changes and has
determined that such changes are necessary. These requirements conform
to the Commission's need for efficient information collection,
communication, and management within the energy industry.
    701. Interested persons may obtain information on the reporting
requirements by contacting the Federal Energy Regulatory Commission,
888 First Street NE, Washington, DC 20426 [Attention: Ellen Brown,
Office of the Executive Director], by email to<EMAIL_ADDRESS>or by phone<PHONE_NUMBER>].
    Please send comments concerning the collection of information and
the associated burden estimates to: Office of Information and
Regulatory Affairs, Office of Management and Budget [Attention: Federal
Energy Regulatory Commission Desk Officer]. Due to security concerns,
comments should be sent directly to www.reginfo.gov/public/do/PRAMain.
Comments submitted to OMB should be sent within 30 days of publication
of this notice in the Federal Register and should refer to FERC-556
(OMB Control No. 1902-0075) and FERC-912 (OMB Control No. 1902-0237).

VI. Environmental Analysis

    702. The Commission in the NOPR explained that it was not possible
to determine the environmental effects of the changes proposed, given
the numerous uncertainties regarding the potential effects of the
changes proposed. The Commission in the NOPR stated that, given these
uncertainties, the National Environmental Policy Act of 1969 (NEPA)
\1055\ does not require that the Commission conduct an environmental
review of the proposed revised PURPA Regulations.\1056\
---------------------------------------------------------------------------

    \1055\ 42 U.S.C. 4321 et seq.
    \1056\ NOPR, 169 FERC ] 61,184 at PP 154-55.
---------------------------------------------------------------------------

A. Comments

    703. Several commenters argue that the Commission erred in failing
to conduct such a review.\1057\
---------------------------------------------------------------------------

    \1057\ Allco Comments at 21-22; Biological Diversity Comments at
14; NIPPC, CREA, REC, and OSEIA Comments at 83; Public Interest
Organizations Comments at 21.
---------------------------------------------------------------------------

    704. Biological Diversity asserts an urgent need to take measures
to reduce greenhouse gas emissions to address climate change.\1058\
Biological Diversity states that the Commission's rationale for
revising the PURPA Regulations, namely the increased availability of
``fossil gas,'' requires the Commission to consider the reasonably
foreseeable impacts on climate and the environment, including on
threatened and endangered species, in order to fulfill its
responsibilities under NEPA and the Endangered Species Act (ESA).\1059\
Biological Diversity includes a list of what it alleges are reasonably
foreseeable impacts from increased use of ``fossil gas.'' \1060\
Biological Diversity maintains that the proposed revised PURPA
Regulations would prevent renewable energy development and lock in
``fossil gas'' development and supply, thereby requiring the Commission
to prepare an environmental impact statement and to obtain a biological
opinion before proceeding to a final rule.\1061\
---------------------------------------------------------------------------

    \1058\ Biological Diversity Comments at 2-7.
    \1059\ Id. at 14.
    \1060\ Id. at 15-17.
    \1061\ Id. at 17.
---------------------------------------------------------------------------

    705. NIPPC, CREA, REC, and OSEIA state that ``the Commission must,
at a minimum, complete the requisite scoping and other process
associated with an EA and then revise and reissue, or abandon, the NOPR
after considering the issues developed in the EA.'' \1062\ NIPPC, CREA,
REC, and OSEIA argue that it would not be too speculative for the
Commission to undertake a NEPA analysis.\1063\ NIPPC, CREA, REC, and
OSEIA state that it is possible to study the environmental effects of
the NOPR proposals because the Commission undertook a NEPA analysis
when it first implemented PURPA, imposing a moratorium on certifying
cogeneration facilities as QFs until it completed an

Environmental Impact Statement (EIS) and recognizing the environmental
benefits from encouraging the development of QFs, and also studied the
environmental impacts for Order No. 888.\1064\
---------------------------------------------------------------------------

    \1062\ NIPPC, CREA, REC, and OSEIA Comments at 83-85 (citing,
e.g., 42 U.S.C. 4332(A); 18 CFR 380.5, 380.4, 380.11; 40 CFR 1500.1,
1502.5; LaFlamme v. FERC, 852 F.2d 389, 397 (9th Cir. 1988); Am.
Bird Conservancy, Inc. v. FCC, 516 F.3d 1027, 1033-34 (D.C. Cir.
2008); N. Plains Res. Council, Inc. v. Surface Transp. Bd., 668 F.3d
1067, 1075 (9th Cir. 2011) (N. Plains Res. Council)).
    \1063\ NIPPC, CREA, REC, and OSEIA Comments at 92-94 (citing,
e.g., Am. Bird Conservancy, Inc. v. FCC, 516 F.3d 1033); N. Plains
Res. Council, 668 F.3d at 1076, 1078-79.
    \1064\ Id. at 94-96.
---------------------------------------------------------------------------

    706. Public Interest Organizations state that the Commission must
prepare an Environmental Assessment (EA) in order to support its
position that this rulemaking may not have any significant foreseeable
environmental impacts.\1065\ Public Interest Organizations describe the
NOPR's ``cursory treatment of the Commission's environmental review
obligations'' as undermining NEPA's purposes ``that agencies give due
consideration to environmental impacts when making major environmental
decisions, and guaranteeing that the public is informed of such
impacts.'' \1066\ Public Interest Organizations argue that states'
exercise of new flexibility granted by the proposed revised PURPA
Regulations are reasonably foreseeable indirect and cumulative impacts
that the Commission must study. Public Interest Organizations assert
that the Commission likely will ``need to prepare a full EIS to
evaluate the serious environmental impacts that will result from
dismantling regulations that continue to play an important role in
development of renewable generation resources across the country.''
\1067\
---------------------------------------------------------------------------

    \1065\ Public Interest Organizations Comments at 21.
    \1066\ Id.
    \1067\ Id. at 26.
---------------------------------------------------------------------------

    707. NIPPC, CREA, REC, and OSEIA argue that the Commission has
failed to explain how eliminating the market for at least 10% to 20% of
renewable energy facilities would have no impact on the human
environment.\1068\ NIPPC, CREA, REC, and OSEIA contend that the
Commission has failed to analyze how the proposals would impact regions
like the Northwest that lack robust implementation of PURPA, the 21
states without renewable power standards (such as the Idaho, whose
Legislature affirmatively refused to adopt a renewable power standard),
or the one third of the country that is not located in an RTO or
ISO.\1069\
---------------------------------------------------------------------------

    \1068\ NIPPC, CREA, REC, and OSEIA Comments at 86-87.
    \1069\ Id. at 87-88.
---------------------------------------------------------------------------

    708. Allco argues that it is reasonably foreseeable that the
proposed revisions to the PURPA Regulations and resulting increased
fossil fuels use could add significant levels of greenhouse gas
emissions to the atmosphere and endanger the climate.\1070\ The effects
of such endangerment to the climate from fossil fuel use and reduced
renewable energy QF generation, according to Allco, include mass
extinction of species, in violation of the ESA.\1071\ Allco contends
that the Commission's failure to consult with the U.S. Fish and
Wildlife Service and the National Marine Fisheries Service
(collectively, the Services) prior to issuing the NOPR constituted a
violation of its obligations under the ESA, ``to insure that its
actions are not likely to jeopardize the continued existence of
endangered or threatened species, or result in the destruction or
adverse modification of critical habitat.'' \1072\
---------------------------------------------------------------------------

    \1070\ Allco Comments at 31.
    \1071\ Id.
    \1072\ Id. at 34 (quoting 16 U.S.C. 1536(a)(2)) (internal
quotations omitted).
---------------------------------------------------------------------------

    709. According to Allco, the PURPA NOPR triggered the ESA's
consultation requirement because the proposed changes will increase
fossil fuel generation that will, in turn, displace ``over 2 [terawatts
(TWs)] of solar generation over the next 20 years as compared to the
baseline scenario of application and faithful adherence to existing
PURPA rules.'' \1073\ Allco alleges that increased fossil-fuel
generation will ``increase land and ocean temperatures above what they
would have been, . . . resulting in increased pollution to the waters
of the United States, and harming federally endangered and threatened
species, including, without limitation, the Piping plover and the Right
whale.'' \1074\
---------------------------------------------------------------------------

    \1073\ Id.
    \1074\ Id. at 34-35.
---------------------------------------------------------------------------

B. Commission Determination

    710. We find that no EA or EIS of the final rule is required. NEPA
requires federal agencies to prepare a detailed statement on the
environmental impact of ``major Federal actions significantly affecting
the quality of the human environment.'' \1075\ The Council on
Environmental Quality's (CEQ) regulations implementing NEPA provide
that federal agencies can comply with NEPA by preparing: (a) An
Environmental Impact Statement (EIS); or (b) an Environmental
Assessment (EA) to determine whether the proposed action significantly
affects the quality of the human environment and requires the
preparation of an EIS.\1076\ CEQ regulations also state that federal
agencies are not obligated to prepare either an EIS or an EA if they
find that a categorical exclusion applies.\1077\ Additionally, courts
have held that an EIS or EA is not required under NEPA ``unless there
is a particular project that `define[s] fairly precisely the scope and
limits of the proposed development.' '' \1078\
---------------------------------------------------------------------------

    \1075\ 42 U.S.C. 4332(C) (2018); see also Regulations
Implementing the National Environmental Policy Act, Order No. 486,
FERC Stats. & Regs. ] 30,783 (1987) (cross-referenced at 41 FERC ]
61,284).
    \1076\ 40 CFR 1501.4 (2019).
    \1077\ CEQ regulations state that a categorical exclusion
``means a category of actions which do not individually or
cumulatively have a significant effect on the human environment and
which have been found to have no such effect in procedures adopted
by a federal agency in implementation of these regulations and for
which, therefore, neither an environmental assessment nor an
environmental impact statement is required.'' 40 CFR 1508.4 (2019).
    \1078\ Center for Biological Diversity v. Ilano, 928 F.3d 774,
780 (9th Cir. 2019) (Center for Biological Diversity) (quoting
Kleppe v. Sierra Club, 427 U.S. 390, 402 (1976)).
---------------------------------------------------------------------------

    711. No EA or EIS of the final rule is required because, as
discussed below, the final rule does not propose or authorize, much
less define, the scope and limits of any potential energy
infrastructure and, as a result, there is no way to determine whether
issuance of the rule will significantly affect the quality of the human
environment. In the alternative, a categorical exclusion applies so
that an EA or EIS need not be prepared. For similar reasons, there is
no requirement that the Commission engage in consultation pursuant to
the ESA with respect to this action.
1. No EIS or EA Is Required
a. There Is No Project That Defines the Scope and Limits of QF
Development
    712. In Center for Biological Diversity, the court held that no
NEPA review was required with respect to actions taken by the United
States Forest Service that were similar in all relevant respects to the
action taken here by the Commission in promulgating the final rule.
That case involved the designation by the Forest Service, pursuant to
the Healthy Forests Restoration Act (HFRA), of certain forests as
``landscape-scale areas.'' Such designation meant that specific
treatments could be proposed to address insect infestation in those
designated ``landscape-scale areas.'' \1079\ The court held that no
NEPA review was required for the designations, noting that no specific
projects were proposed for any of the landscape-scale areas and stating
that ``[i]n such circumstances, `any attempt to produce an [EIS] would
be little more than a study . . . containing estimates of potential
development and attendant environmental consequences.' '' \1080\ The
court concluded that ``unless there is a particular project that
`define[s] fairly

precisely the scope and limits of the proposed development of the
region,' there can be `no factual predicate for the production of an
[EIS] of the type envisioned by NEPA.' '' \1081\
---------------------------------------------------------------------------

    \1079\ Center for Biological Diversity, 928 F.3d at 778.
    \1080\ Id. at 780 (quoting Kleppe v. Sierra Club, 427 U.S. 390,
402 (1976)).
    \1081\ Id. (quoting Kleppe, 427 U.S. at 402); see also
Northcoast Environmental Center v. Glickman, 136 F.3d 660, 668 (9th
Cir. 1998) (citing Kleppe in support of its holding that NEPA does
not require agency to complete environmental analysis where
environmental effects are speculative or hypothetical).
---------------------------------------------------------------------------

    713. Similarly, here, the final rule does not authorize the
development or construction of any facilities, but simply addresses the
rates that QFs can charge and certain requirements under which proposed
facilities may qualify as a QF.\1082\ The final rule does not fund any
particular QFs, or issue permits for their construction or operation
(neither of which the Commission has jurisdiction to do). The
Commission does not, in its regulations or in this final rule,
authorize or prohibit the use of any particular technology or fuel, nor
does it mandate or prohibit where QFs should be or are built. This
final rule does not exempt QFs from any Federal, state, or local
environmental, siting, or similar laws or regulatory requirements,
(again something the Commission has no authority to do).
---------------------------------------------------------------------------

    \1082\ See Sugarloaf Citizens Ass'n v. FERC, 959 F.2d 508, 514
n.29 (4th Cir. 1992) (finding that in the QF certification context
``FERC does little more than regulate the rates paid by utilities to
the qualifying facility and does not control the financing,
construction or operation of the project. Although the Facility
receives an economic benefit, no direct federal funding or other
substantial federal assistance is provided, and no licensing action
is involved.'').
---------------------------------------------------------------------------

    714. Even with respect to rates, while the Commission has
established and here revises the factors and approaches that states can
take into account when they set QF rates, it is ultimately the states
and not the Commission that set those rates. The final rule continues
to give states wide discretion and it is impossible to know what the
states may choose to do in response to this final rule, whether they
will make changes in their current practices or not, and how those
state choices would impact QF development and the environment in any
particular state, let along any particular locale.
    715. Moreover, the scope of this final rule is even less defined
than the landscape-scale area designations at issue in the Center for
Biological Diversity case. PURPA applies throughout the entire United
States, and the revisions implemented by the final rule theoretically
could affect future QF development anywhere in the country.
    716. While courts have held that NEPA requires ``reasonable
forecasting,'' ``NEPA does not require a `crystal ball' inquiry.''
\1083\ Further, an agency ``is not required to engage in speculative
analysis'' or ``to do the impractical, if not enough information is
available to permit meaningful consideration'' \1084\ or to ``foresee
the unforeseeable.'' \1085\ In that vein, ``[i]n determining what
effects are `reasonably foreseeable,' an agency must engage in
`reasonable forecasting and speculation,' . . . with reasonable being
the operative word.'' \1086\ Environmental impacts are not reasonably
foreseeable if the impacts would result only through a lengthy causal
chain of highly uncertain or unknowable events.\1087\
---------------------------------------------------------------------------

    \1083\ Vt. Yankee Nuclear Power Corp. v. Nat. Res. Def. Council,
Inc., 435 U.S. 519, 534 (1978) (quoting Nat. Res. Def. Council, Inc.
v. Morton, 458 F.2d 827, 837 (D.C. Cir. 1972)).
    \1084\ N. Plains Res. Council v. Surface Transp. Board, 668 F.3d
1067, 1078-79 (9th Cir. 2011) (citation omitted).
    \1085\ Concerned About Trident v. Rumsfeld, 555 F.2d 817, 830
(D.C. Cir. 1976) (citation omitted).
    \1086\ Sierra Club v. U.S. Dep't of Energy, 867 F.3d 189, 198
(D.C. Cir. 2017) (emphasis in original) (citation omitted).
    \1087\ See Dep't of Transp. v. Pub. Citizen, 541 U.S. 752, 767
(2004) (``NEPA requires a `reasonably close causal relationship'
between the environmental effect and the alleged cause.''); Metro.
Edison Co. v. People Against Nuclear Energy, 460 U.S. 766, 774
(1983) (noting effects may not fall within section 102 of NEPA
because ``the causal chain is too attenuated'').
---------------------------------------------------------------------------

    717. Commenters' allegations regarding potentially reduced QF
development hinge on the claim that the NOPR proposed to ``repeal'' or
``eliminate'' critical PURPA Regulations, which is not true. The
Commission proposed in the NOPR, which this final rule generally
affirms, to clarify some existing PURPA regulations and modify other
PURPA Regulations to make them consistent with the statute, based on
changed circumstances since the time those regulations originally were
promulgated. Any consideration of whether the revised rules could
potentially result in significant new environmental impacts due to less
QF development and increased development of coal, nuclear, and combined
cycle natural gas plants, would be highly speculative, based on the
difficulty in determining which additional flexibilities the final rule
provides to the states that each state will adopt, if any; how such
state rules would impact QF development going forward; and whether any
reduction in QF renewables would be replaced by the much greater amount
of non-QF renewable resources with similar environmental
characteristics.\1088\
---------------------------------------------------------------------------

    \1088\ See infra VI.B.2.
---------------------------------------------------------------------------

    718. As was the case in Center for Biological Diversity, any
attempt to evaluate the environmental effects of the final rule by
necessity would involve nothing less than hypothesizing the potential
development of QFs and the resultant environmental consequences.
Indeed, any attempt by the Commission to estimate the potential
environmental effects of the final rule would be considerably more
speculative than the estimates of potential development and attendant
environmental consequences that the court in Center for Biological
Diversity held are not required under NEPA. That case involved limited
zones in which some projects to treat insect infestation almost
certainly would be proposed. Here, it simply is not possible to provide
any reasonable forecast of the effects of the final rule on future QF
development, whether any affected potential QF would be a renewable
resource (such as solar or wind) or employ carbon-emitting technology
(e.g., a fossil-fuel-burning cogenerator or a waste-coal-burning small
power production facility). Moreover, environmental effects on land
use, vegetation, water quality, etc. are all dependent on location,
which are unknown and could be anywhere in the United States.
    719. Because, even more so than in Center for Biological Diversity,
the final rule does not authorize, or define any limit on the scope of,
any potential QF or other infrastructure development, any attempt to
prepare an analysis of the potential effects of the final rule on
future QF development would be so speculative as to render meaningless
any environmental analysis of these impacts. Therefore, no such
analysis is required by NEPA.
b. A Categorical Exclusion Applies
    720. There is a separate and independent alternative reason why no
environmental analysis is warranted: the final rule falls within a
categorical exclusion promulgated by the Commission pursuant to the
CEQ's NEPA regulations.\1089\ Specifically, the final rule falls within
the categorical exclusion for rules that: (1) Are clarifying in nature,
(2) are corrective in nature, (3) are procedural in nature, or (4) do
not substantially change the effect of the regulation being
amended.\1090\ Here, each of the revisions to the PURPA Regulations
implemented by the

final rule fits into one of these categories:
---------------------------------------------------------------------------

    \1089\ CEQ regulations provide that agencies shall issue
procedures that provide specific criteria for classes of action
which ``normally do not require either an environmental impact
statement or an environmental assessment (categorical exclusion)''.
40 CFR 1507.3 (2019).
    \1090\ See 18 CFR 380.4(a)(2)(ii) (categorical exclusion applies
to ``promulgation of rules that are clarifying, corrective, or
procedural, or that do not substantially change the effect of . . .
regulations being amended.'').
---------------------------------------------------------------------------

i. Changes That Are Clarifying in Nature
    721. Several of the changes to the PURPA Regulations are clarifying
in nature. These include the changes clarifying how market prices can
be used to set as-available energy rates,\1091\ the changes clarifying
how fixed energy rates in contracts or LEOs may be determined,\1092\
and the changes clarifying how competitive solicitations can be used to
set avoided cost rates.\1093\ Other non-rate related clarifying
revisions in the final rule include a clarification regarding the
relationship between avoided costs and decreases in a purchasing
utility's load as a consequence of retail competition,\1094\ a
clarification as to how electric generating equipment should be defined
for purposes of determining whether small power production facilities
are located at the same site,\1095\ and a clarification as to when a
LEO is established.\1096\
---------------------------------------------------------------------------

    \1091\ See Sections IV.B.2-5.
    \1092\ See Section IV.B.6.
    \1093\ See Section IV.B.8.
    \1094\ See Section IV.C.
    \1095\ See Section IV.D.2.
    \1096\ See Section IV.H.
---------------------------------------------------------------------------

ii. Changes That Are Corrective in Nature
    722. The Commission interprets the categorical exclusion for
changes to its regulations that are corrective in nature as including
changes needed in order to ensure that a regulation conforms to the
requirements of the statutory provisions being implemented by the
regulation.\1097\ To be clear, the Commission does not find that its
existing PURPA Regulations were inconsistent with the statutory
requirements of PURPA when promulgated. Rather, the Commission finds
that the changes adopted in this final rule are required to ensure
continued future compliance of the PURPA Regulations with PURPA, based
on the changed circumstances found by the Commission in this final
rule.
---------------------------------------------------------------------------

    \1097\ For example, the Commission relied on this categorical
exclusion when it revised the PURPA Regulations in 2006 to comply
with the amendments to PURPA enacted as part of EPAct 2005. See
Revised Regulations Governing Small Power Production and
Cogeneration Facilities, Order No. 671, 114 FERC ] 61,102 at P 118.
Further, this interpretation is also consistent with the Supreme
Court's holding that NEPA review is not required when an agency's
action is required by statute. See Dep't of Transp. v. Pub. Citizen,
541 U.S. 752, 770 (2004) (``where an agency has no ability to
prevent a certain effect due to its limited statutory authority over
the relevant actions, the agency cannot be considered a legally
relevant ``cause'' of the effect [and] . . . under NEPA and the
implementing CEQ regulations, the agency need not consider these
effects in its EA.''); see also Safari Club Intern. v. Jewell, 960
F.Supp.2d 17, 79-80 (D.D.C. 2013) (relying on Dep't of Transp. v.
Pub. Citizen to hold that NEPA review is not required for an agency
rule issued to comply with a statutory requirement).
---------------------------------------------------------------------------

    723. Three aspects of the final rule are corrective in nature. The
first is the change allowing states to require variable energy rates in
QF contracts.\1098\ As the Commission explains above, this change is
required based on the Commission's finding that, contrary to the
Commission's expectation in 1980, there have been numerous instances
where overestimates and underestimates of energy avoided costs used in
fixed energy rate contracts have not balanced out, causing the contract
rate to not violate the statutory avoided cost rate cap. Giving states
the ability to require energy rates in QF contracts to vary based on
the purchasing utility's avoided cost of energy at the time of delivery
ensures that QF rates do not exceed the avoided cost rate cap imposed
by PURPA.\1099\
---------------------------------------------------------------------------

    \1098\ See Section IV.B.7.
    \1099\ Id.
---------------------------------------------------------------------------

    724. The second corrective aspect is the change in the PURPA
Regulations regarding the determination of what facilities are located
at the same site for purposes of complying with the statutory 80 MW
limit on small power production facilities located at the same
site.\1100\ As explained above, the Commission found, based on changed
circumstances, that the current one-mile rule is inadequate to
determine which facilities are located at the same site. Based on this
finding, the Commission was obligated by PURPA to revise its definition
of when facilities are located at the same site.\1101\
---------------------------------------------------------------------------

    \1100\ See Section IV.D.
    \1101\ See Section IV.D.1.c.
---------------------------------------------------------------------------

    725. The third corrective aspect of the final rule relates to the
implementation of PURPA section 210(m). That statutory provision allows
purchasing utilities to terminate their obligation to purchase from QFs
that have nondiscriminatory access to certain statutorily-defined
markets, which the Commission has determined to be the RTO/ISO markets.
The final rule revises the presumption in the PURPA Regulations that
QFs with a capacity of 20 MW or less do not have non-discriminatory
access to such markets, reducing the threshold for such presumption to
5 MW.\1102\
---------------------------------------------------------------------------

    \1102\ See Section IV.G.1.
---------------------------------------------------------------------------

    726. The Commission has determined in the final rule that, since
the 20 MW threshold was established in 2005, the RTO/ISO markets have
matured and the industry has developed a better understanding of the
mechanics of market participation. This determination has rendered
inaccurate the presumption currently reflected in the PURPA Regulations
that QFs 20 MW and below do not have non-discriminatory access to the
relevant markets. Once the Commission made this determination, it was
appropriate for the Commission to update the 20 MW threshold to comply
with the requirements of PURPA section 210(m).\1103\
---------------------------------------------------------------------------

    \1103\ Id.
---------------------------------------------------------------------------

i. Changes That Are Procedural in Nature
    727. The remaining two revisions implemented by the final rule are
procedural in nature. The first is a revision to the procedures that
apply to QF certification.\1104\ The second is a revision to the
Commission's Form 556, used by QFs seeking certification.\1105\
---------------------------------------------------------------------------

    \1104\ See Section IV.E.
    \1105\ See Section IV.F
---------------------------------------------------------------------------

2. The NEPA Analysis for Promulgation of the Original PURPA Regulations
in 1980 Cannot Be Replicated Here
    728. As commenters note, in 1980 the Commission conducted an EA and
later an EIS for its initial rules implementing PURPA. Initially, the
Commission found (and the Final EIS also found) that new diesel
cogeneration, and dual-fuel cogeneration particularly, in New York
City, could cause significant environmental effects on air
quality.\1106\ In Order No. 70-E, however, the Commission ultimately
opted to treat such cogeneration the same as all other cogeneration
given, among other things, that the PURPA Regulations were not the
driving force behind the development of such cogeneration in New York
City.\1107\ In doing so, the Commission emphasized that QF status was
not a license nor a permit to operate but instead only entitled the QF
to a rate for purchases and to certain exemptions from regulation.
Moreover, QFs were not exempted from any Federal, state, or local
environmental, siting or other similar requirements.\1108\
---------------------------------------------------------------------------

    \1106\ Final EIS at I-7a.
    \1107\ See Order No. 70-E, 46 FR 33025, 33026 (June 18, 1981).
    \1108\ Id. The Commission stated in its EA that:
    The rules provide encouragement to the development of certain
types of facilities. They do not prevent any facility which does not
qualify from using cogeneration or small power production, or from
using any type of fuel. The rules merely grant or deny certain
benefits to certain facilities.
    In this environmental assessment, the environmental effects of
these rules are limited to the effects resulting from the
construction and/or operation of facilities which occur as a result
of the granting of these benefits, or from changes in the operating
characteristics of existing facilities which results from the
granting of these benefits. If a cogeneration or small power
production facility would be constructed or operated without the
incentives of these rules, the environmental effects resulting
therefrom cannot properly be described as environmental effects of
these rules. However, a technical and environmental discussion of
each technology is provided whether or not its use is expected to be
encouraged by these rules.
    Small Power Production and Cogeneration Facilities--
Environmental Findings; No Significant Impact and Notice of Intent
To Prepare Environmental Impact Statement, 45 FR 23661, 23664 (Apr.
8, 1980) (Original PURPA EA).

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

    729. The original PURPA EA for the pre-existing PURPA Regulations
was based on a market penetration study of PURPA-induced facilities. In
order to carry out that market penetration study, the original PURPA EA
had to make the simplifying assumption that the mere implementation of
PURPA would necessarily result in the development and operation of
certain types of generation facilities that would not otherwise be
developed.\1109\ Based on these types of facilities, that EA identified
specific resource conflicts related to each type of facility, which
were nothing more than a generalized listing of potential
impacts.\1110\ That EA found that, because the various types of
facilities operate differently, there would be no cumulative impacts
and this finding, coupled with the geographic distribution of facility
development from the market penetration study, resulted in a finding of
no significant impact for all types of facilities except diesel and
dual-fueled cogeneration facilities in the Mid-Atlantic, which that EA
found could cause significant environmental impacts on air
quality.\1111\
---------------------------------------------------------------------------

    \1109\ Id. at 23,665.
    \1110\ Id. at 23,675-82.
    \1111\ Id. at 23,679, 23,682-83.
---------------------------------------------------------------------------

    730. Subsequently, an EIS was prepared that addressed only air
quality in New York City and the broader Mid-Atlantic region. The bulk
of the EIS focused on how national, state, and local air pollution
regimes would address air quality surrounding the construction and
operation of such facilities.\1112\
---------------------------------------------------------------------------

    \1112\ Order No. 70-E, 46 FR at 33026.
---------------------------------------------------------------------------

    731. Several commenters cite to this previous NEPA analysis
conducted in connection with the original PURPA Regulations to support
their assertion that a NEPA analysis similarly should be possible for
this rulemaking. However, those assertions are undermined by the fact
that circumstances have changed significantly since the promulgation of
the original PURPA Regulations in 1980. Prior to 1980, essentially no
QF generation technologies or other independent generation facilities
(other than those used to supply the loads of the owners rather than to
sell at wholesale) had been constructed. By contrast, today QF
generation technologies and other independent generation facilities are
common, and they are predominantly built and operated outside of
PURPA.\1113\
---------------------------------------------------------------------------

    \1113\ See supra P 240.
---------------------------------------------------------------------------

    732. Because there was virtually no QF or independent power
development in 1980, the original PURPA EA could reasonably project
that the incentives created by PURPA and the original PURPA Regulations
would lead to increased development of power generated by QF
technologies. The market penetration study conducted by the Commission,
and the Commission's conclusion that the PURPA Regulations could lead
to an increase in diesel-fired cogeneration in New York City, were
based on these projections.
    733. By contrast, it is not possible here to make simplifying
assumptions that the mere implementation of the revised regulations
necessarily would result in specific changes in the development of
particular generation technologies compared to the status quo. First,
the revisions to the PURPA regulations are premised on a finding that,
even after the revisions, the PURPA regulations will continue to
encourage QFs. Consequently, there is no way to estimate whether any
reduction in QF development, as opposed to the status quo, will be
focused on one or more of the many different types of QF technologies,
some of which are renewable resources and some of which are fueled by
fossil fuels \1114\ and have emissions comparable to non-QF fossil
fueled generators. Moreover, because the rule primarily increases state
flexibility in setting QF rates, including giving states the option of
not changing their current rate-setting approaches, there is no way to
develop any estimate of the location or size of any hypothetical
reduction in QF development.
---------------------------------------------------------------------------

    \1114\ This would include both cogeneration, which typically is
fossil fueled, and those small power production facilities that are
fueled by waste, which would include a range of fossil fuel-based
waste. See 18 CFR 292.202(b), 292.204(b)(1).
---------------------------------------------------------------------------

    734. In addition, as mentioned above, renewable generation
technologies today are commonly, and even predominantly, built and
operated outside of PURPA. Current projections show that most new
generation construction will be of renewable resources.\1115\ Indeed,
the cost of renewables has declined so much that in some regions
renewables are the most cost effective new generation technology
available.\1116\ Thus, even if the final rule was to result in reduced
renewable QF development, there is little likelihood today that
hypothetical, unbuilt QFs necessarily would be replaced by new
conventional fossil fuel generation.
---------------------------------------------------------------------------

    \1115\ EIA, Annual Energy Outlook 2020, at tbl. 9 (Jan. 29,
2020) (in table see rows labeled Cumulative Planned Additions and
Cumulative Unplanned Additions in the reference case) (Annual Energy
Outlook 2020), https://www.eia.gov/outlooks/aeo/.
    \1116\ See supra P 240.
---------------------------------------------------------------------------

    735. Alternatively, in the absence of these hypothetical, unbuilt
QFs, existing generation units--whose current emissions, if any, would
already be part of the baseline for any environmental analysis of the
impacts of the final rule--might continue to operate without any change
in their emissions; in sum, in the absence of these hypothetical,
unbuilt QFs, emissions would remain at the baseline and might not
increase at all. Indeed, in the current environment where stagnant load
growth has prevailed in recent years, this would seem to be a more
likely scenario than an alternative where these hypothetical, unbuilt
QFs are replaced by brand new fossil fuel generation that would
increase emissions over the baseline.
    736. Given these facts, it would not be possible to perform a
market penetration study of the effects of the final rule that would
not be wholly speculative. Without such a study, there could be no
analysis defining the types and geographic location of facilities that
could serve as the basis for any NEPA analysis similar to that
performed in 1980.
3. This Proceeding Does Not Trigger Any ESA Consultation Requirement
    737. Similar to our finding that it would be nearly impossible to
conduct a meaningful NEPA review, we disagree with Biological Diversity
and Allco that either the PURPA NOPR or this final rule trigger any
consultation requirement under the ESA.
    The ESA requires that agencies consult with the Secretary of the
Interior or the Secretary of Commerce to ``insure that any action
authorized, funded, or carried out by such agency . . . is not likely
to jeopardize the continued existence of any endangered species or
threatened species or result in the destruction or adverse modification
of [critical] habitat of such species.'' \1117\
---------------------------------------------------------------------------

    \1117\ 16 U.S.C. 1536(a)(2).
---------------------------------------------------------------------------

    738. The ESA regulations require consultation only if the
Commission determines that a proposed action may affect listed species
or critical habitat.\1118\ We find that there are no

effects from the final rule for which the Commission could consult with
the Services. Under the ESA regulations, as recently revised, the
effects of an agency's action are
---------------------------------------------------------------------------

    \1118\ 50 CFR 402.14(a).

all consequences to listed species and critical habitat that are
caused by the proposed action. A consequence is caused by the
proposed action if it would not occur but for the proposed action
and it is reasonably certain to occur.\1119\
---------------------------------------------------------------------------

    \1119\ 50 CFR 402.2 (emphasis added).

    The ESA regulations also state that a consequence is not considered
to be caused by a proposed action if ``[t]he consequence is only
reached through a lengthy causal chain that involves so many steps as
to make the consequence not reasonably certain to occur.'' \1120\ This
determination must be made ``based on clear and substantial
information,'' \1121\ and ``should not be based on speculation or
conjecture.'' \1122\ In addition to the above, the same ESA regulation
states that factors for the agency to consider when determining whether
a consequence is not caused by the proposed agency action include:
``(1) The consequence is so remote in time from the action under
consultation that it is not reasonably certain to occur; or (2) [t]he
consequence is so geographically remote from the immediate area
involved in the action that it is not reasonably certain to occur[.]''
\1123\
---------------------------------------------------------------------------

    \1120\ 50 CFR 402.17(b)(3) (emphasis added).
    \1121\ Id.
    \1122\ Endangered and Threatened Wildlife and Plants;
Regulations for Interagency Cooperation, 84 FR 44976, 44993 (Aug.
27, 2019).
    \1123\ 50 CFR 402.17(b).
---------------------------------------------------------------------------

    739. Because the NOPR was a proposed rule that in and of itself had
no legal effect, the NOPR is not an agency ``action'' under the
regulations implementing the ESA, which define agency action as the
``the promulgation of regulations.'' \1124\ Because the NOPR did not
constitute agency action, the Commission was not required to engage in
consultation under the ESA prior to the NOPR's issuance.
---------------------------------------------------------------------------

    \1124\ 50 CFR 402.2 (emphasis added).
---------------------------------------------------------------------------

    740. In this final rule, we are promulgating regulations, which
does constitute agency action. Nevertheless, for the same reasons that
an environmental review of the impacts of this final rule under NEPA
would be impossible to conduct, there is similarly no basis to conclude
that harm to endangered species is reasonably certain to occur as a
result of this final rule.
    741. We find that the effects on endangered and threatened species
alleged by Allco are not reasonably certain to occur, not only because
any such harm is completely speculative, but also because it could
result only through a lengthy causal chain of highly uncertain or
unknowable events, none of which are within the Commission's authority
to authorize or preclude: (1) That the final rule causes a reduction in
the aggregate amount of QF capacity constructed in the future; (2) that
any reduction in renewable resource QFs would not be offset by
increased construction of renewable resources outside of PURPA,
resulting from either other incentive programs or simply the increased
cost-competitiveness of such resources; (3) that construction of such
non-QF renewable resources would yield an increase in carbon emissions
resulting from the reduction in renewable resource QFs that is not
offset by other renewable resources; and (4) that such increase in
carbon emissions would have an adverse effect on endangered and
threatened species. Furthermore, the consequences of this rule would be
remote in time and geographically remote because it would require
action by individual generators, QF or non-QF, to propose, site,
permit, construct, and operate a facility, in underdetermined locations
potentially anywhere in the United States. In addition, many of these
generators, QF and non-QF, would be subject to state approval and
permitting requirements over which the Commission has no control.
    742. Further, there is no support in the record for Allco's claim
that the changes proposed in the PURPA NOPR would displace over 2 TWs
of solar generation over the next 20 years.\1125\ Allco provides no
citation or other support whatsoever for this assertion but simply
makes the claim with no elaboration. We find that such speculation or
conjecture provides no basis upon which to either initiate or conduct
any meaningful consultation with the Services on the impacts to
endangered species from this final rule.
---------------------------------------------------------------------------

    \1125\ Allco Comments at 34.
---------------------------------------------------------------------------

VII. Regulatory Flexibility Act Certification

    743. The Regulatory Flexibility Act of 1980 (RFA) \1126\ generally
requires a description and analysis of rules that will have significant
economic impact on a substantial number of small entities. In lieu of
preparing a regulatory flexibility analysis, an agency may certify that
a rule will not have a significant economic impact on a substantial
number of small entities.\1127\ The Commission in the NOPR stated that
the proposed rule would not significantly impact a substantial number
of small entities. Some commenters argue otherwise.\1128\
---------------------------------------------------------------------------

    \1126\ 5 U.S.C. 601-12.
    \1127\ 5 U.S.C. 605(b).
    \1128\ See Allco Comments at 33.
---------------------------------------------------------------------------

    744. The Small Business Administration's (SBA) Office of Size
Standards develops the numerical definition of a small business.\1129\
The SBA size standard for electric utilities is based on the number of
employees, including affiliates.\1130\ Under SBA's current size
standards, the threshold for a small entity (including its affiliates)
is 250 employees for cogeneration and small power production applicants
in the following NAICS \1131\ categories:
---------------------------------------------------------------------------

    \1129\ 13 CFR 121.101.
    \1130\ SBA final rule on ``Small Business Size Standards:
Utilities,'' 78 FR 77343 (Dec. 23, 2013).
    \1131\ The North American Industry Classification System (NAICS)
is an industry classification system that Federal statistical
agencies use to categorize businesses for the purpose of collecting,
analyzing, and publishing statistical data related to the U.S.
economy. United States Census Bureau, North American Industry
Classification System, https://www.census.gov/eos/www/naics/
(accessed April 11, 2018).

 NAICS code 221114 for Solar Electric Power Generation
 NAICS code 221115 for Wind Electric Power Generation
 NAICS code 221116 for Geothermal Electric Power Generation
 NAICS code 221117 for Biomass Electric Power Generation
 NAICS code 221118 for Other Electric Power Generation

    The threshold for a small entity (including its affiliates) is 500
employees for NAICS code 221111 for Hydroelectric Power Generation.
    745. This rule directly affects qualifying small power production
facilities and cogeneration facilities, the majority of which the
Commission estimates are small businesses. With respect to the changes
related to the Form No. 556 and new protests allowed pursuant to this
rule, as reflected in the burden and cost estimates provided above, the
Commission does not anticipate that any additional reporting burden or
cost imposed on QFs, regardless of their status as a small or large
business, would be significant. Those revisions may result in
additional information being submitted by some small power production
QF applicants (especially those with affiliated small power production
qualifying facilities using the same energy resource located over one
and less than 10 miles away). The Commission estimates that less than
10 percent of QF applications and self-certifications meet these
criteria.

    746. In the final analysis, the other changes in this final rule
\1132\ largely impact payments to QFs by electric utilities. More
accurate avoided cost rates may result in lower payments from certain
electric utilities to certain QFs. In this regard, the final rule
provides states greater flexibility than they have today to set the
rate that electric utilities will pay QFs, but there is no way to know
in advance which new flexibility state regulatory authorities and
nonregulated electric utilities will exercise, or what impact that new
flexibility might have given the different circumstances likely to
apply to each determination of avoided cost. Under the final rule,
additionally, states also have the discretion to continue setting the
rate as they do today and not to adopt the Commission' proposed greater
rate flexibilities. Therefore, it is not possible to estimate what the
dollar impact might be. However, because of the way PURPA is
structured, whatever the potential dollar impacts of these changes on
small QFs may be, to the extent that they reduce the amounts paid to
certain QFs, such reductions could be matched dollar-for-dollar by
savings experienced by purchasing electric utilities, which should be
flowed through to their retail ratepayers, some of whom would also tend
to qualify as small entities.\1133\
---------------------------------------------------------------------------

    \1132\ I.e., use of locational marginal prices, competitive
market price, and use of forecasted stream of market revenues for
energy rate component of QF contracts or legally enforceable
obligations; use of variable energy rates in QF contracts or legally
enforceable obligations; use of competitive solicitations to set
avoided energy and capacity rates; reducing the PURPA section 210(m)
rebuttable presumption regarding access to markets from 20 MW to 5
MW; and the commercial viability and financial commitment to
construct demonstration necessary to obtaining a legally enforceable
obligation.
    \1133\ While this potential beneficial impact on retail
ratepayers would be an indirect impact of this final rule, the Small
Business Administration Office of Advocacy encourages such indirect
costs to be analyzed as well: ``Although it is not required by the
RFA, the Office of Advocacy believes that it is good public policy
for the agency to perform a regulatory flexibility analysis even
when the impacts of its regulation are indirect.'' SBA, Office of
Advocacy, A Guide for Government Agencies: How to Comply with the
Regulatory Flexibility Act at 23 (Aug. 2017), https://www.sba.gov/sites/default/files/advocacy/How-to-Comply-with-the-RFA-WEB.pdf. But
see Mid-Tex Elec. Co-op., Inc. v. FERC, 773 F.2d 327, 343 (D.C. Cir.
1985) (``Congress did not intend to require that every agency
consider every indirect effect that any regulation might have on
small businesses in any stratum of the national economy.'').
---------------------------------------------------------------------------

    747. While Allco argues that the Commission should have attempted
to minimize the impacts on small renewable energy producers and
consider alternative structures, the fact is that these offsetting
impacts result from changes that are necessary to ensure the
Commission's regulations continue to meet PURPA's statutory
requirements. For example, allowing states to use competitive prices
may benefit small QFs inasmuch as the rate-setting process for
purchases of energy from these entities would be more straightforward
and efficient than the administrative processes currently in use.
Furthermore, providing flexibility in setting energy rates may result
in state entities approving longer duration contracts for capacity (at
fixed rates) and energy. The impacts of these changes, therefore, are
reasonable alternatives to the status quo while adhering to the
requirements of PURPA.
    748. This final rule establishes a rebuttable presumption that a
qualifying small power production facility whose electrical generating
equipment is more than one but less than 10 miles from affiliated
electrical generating equipment using the same energy resource is at a
separate site. The Commission finds that this rebuttable presumption
imposes a lower burden than imposing a rule that any affiliated
electrical generating equipment less than 10 miles apart is presumed to
be at the same site. Similarly, the Commission, while removing the
rebuttable presumption that qualifying small power production
facilities more than 5 MW but under 20 MW lack nondiscriminatory
access, has provided factors that such facilities could use to
demonstrate lack of such access--allowing them to retain the mandatory
purchase obligation. The Commission estimates that annual additional
compliance costs on industry (detailed above) will be approximately
$1,149,965 (or an average additional burden and cost per response, of
3.187 hrs. and the corresponding $264.51) to comply with these
requirements.\1134\
---------------------------------------------------------------------------

    \1134\ Annual additional cost of $1,149,965 [($1,120,085 for
FERC-556) + (29,880 for FERC-912)] and average additional burden of
13,855 hours [(13,495 hrs. for FERC-556) + (360 hrs. for FERC-912)]
divided by the number of affected responses of 4,347.5 [(4,317.5 for
FERC-556) + (30 responses for FERC-912)].
---------------------------------------------------------------------------

    749. Accordingly, pursuant to section 605(b) of the RFA, the
Commission certifies that this rule will not have a significant
economic impact on a substantial number of small entities.

VIII. Document Availability

    750. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov). At
this time, the Commission has suspended access to the Commission's
Public Reference Room due to the President's March 13, 2020
proclamation declaring a National Emergency concerning the Novel
Coronavirus Disease (COVID-19).
    751. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
    752. User assistance is available for eLibrary and the Commission's
website during normal business hours from the Commission's Online
Support at<PHONE_NUMBER> (toll free at 1-866-208-3676) or email at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. Email the Public Reference Room at
<EMAIL_ADDRESS>
IX. Effective Dates and Congressional Notification

    753. These regulations are effective December 31, 2020. The
Commission has determined, with the concurrence of the Administrator of
the Office of Information and Regulatory Affairs of OMB, that this rule
is not a ``major rule'' as defined in section 351 of the Small Business
Regulatory Enforcement Fairness Act of 1996. This final rule is being
submitted to the Senate, House, Government Accountability Office, and
Small Business Administration.

List of Subjects in 18 CFR Part 292

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

List of Subjects in 18 CFR Part 375

    Authority delegations (Government agencies); Seals and insignia;
Sunshine Act.

    By the Commission. Commissioner Glick is dissenting in part with a
separate statement attached.

    Issued: July 16, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission amends parts 292
and 375, chapter I, title 18, Code of Federal Regulations, as follows.

SUBCHAPTER K--REGULATIONS UNDER THE PUBLIC UTILITY REGULATORY
POLICIES ACT OF 1978

* * * * *

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

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

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

0
2. Amend Sec.  292.101 by adding paragraphs (b)(12) through (16) to
read as follows:

Sec.  292.101   Definitions.

* * * * *
    (12) Locational marginal price means the price for energy at a
particular location as determined in a market defined in Sec.
292.309(e), (f), or (g).
    (13) Competitive Price means a Market Hub Price or a Combined Cycle
Price.
    (14) Market Hub Price means a price for as-delivered energy
determined pursuant to Sec.  292.304(b)(7)(i).
    (15) Combined Cycle Price means a price for as-delivered energy
determined pursuant to Sec.  292.304(b)(7)(ii).
    (16) Competitive Solicitation Price means a price for energy and/or
capacity determined pursuant to Sec.  292.304(b)(8).

0
3. Amend Sec.  292.202 by adding paragraph (t) to read as follows:

Sec.  292.202  Definitions.

* * * * *
    (t) Electrical generating equipment means all boilers, heat
recovery steam generators, prime movers (any mechanical equipment
driving an electric generator), electrical generators, photovoltaic
solar panels, inverters, fuel cell equipment and/or other primary power
generation equipment used in the facility, excluding equipment for
gathering energy to be used in the facility.

0
4. Amend Sec.  292.204 by revising paragraph (a) to read as follows:

Sec.  292.204   Criteria for qualifying small power production
facilities.

    (a) Size of the facility--(1) Maximum size. Except as provided in
paragraph (a)(4) of this section, the power production capacity of a
facility for which qualification is sought, together with the power
production capacity of any other small power production qualifying
facilities that use the same energy resource, are owned by the same
person(s) or its affiliates, and are located at the same site, may not
exceed 80 megawatts.
    (2) Method of calculation. (i)(A) For purposes of this paragraph
(a)(2), there is an irrebuttable presumption that affiliated small
power production qualifying facilities that use the same energy
resource and are located one mile or less from the facility for which
qualification or recertification is sought are located at the same site
as the facility for which qualification or recertification is sought.
    (B) For purposes of this paragraph (a)(2), for facilities for which
qualification or recertification is filed on or after December 31, 2020
there is an irrebuttable presumption that affiliated small power
production qualifying facilities that use the same energy resource and
are located 10 miles or more from the facility for which qualification
or recertification is sought are located at separate sites from the
facility for which qualification or recertification is sought.
    (C) For purposes of this paragraph (a)(2), for facilities for which
qualification or recertification is filed on or after December 31,
2020, there is a rebuttable presumption that affiliated small power
production qualifying facilities that use the same energy resource and
are located more than one mile and less than 10 miles from the facility
for which qualification or recertification is sought are located at
separate sites from the facility for which qualification or
recertification is sought.
    (D) For hydroelectric facilities, facilities are considered to be
located at the same site as the facility for which qualification or
recertification is sought if they are located within one mile of the
facility for which qualification or recertification is sought and use
water from the same impoundment for power generation.
    (ii) For purposes of making the determinations in paragraph
(a)(2)(i), the distance between two facilities shall be measured from
the edge of the closest electrical generating equipment for which
qualification or recertification is sought to the edge of the nearest
electrical generating equipment of the other affiliated small power
production qualifying facility using the same energy resource.
    (3) Waiver. The Commission may modify the application of paragraph
(a)(2) of this section, for good cause.
    (4) Exception. Facilities meeting the criteria in section 3(17)(E)
of the Federal Power Act (16 U.S.C. 796(17)(E)) have no maximum size,
and the power production capacity of such facilities shall be excluded
from consideration when determining the size of other small power
production facilities less than 10 miles from such facilities.
* * * * *

0
5. Amend Sec.  292.207 by:
0
a. Revising paragraphs (a), (b) intructory text, (b)(2), (c), and (d);
0
b. Adding paragraphs (e) and (f).
    The revisions and additions read as follows:

Sec.  292.207   Procedures for obtaining qualifying status.

    (a) Self-certification. (1) FERC Form No. 556. The qualifying
facility status of an existing or a proposed facility that meets the
requirements of Sec.  292.203 may be self-certified by the owner or
operator of the facility or its representative by properly completing a
FERC Form No. 556 and filing that form with the Commission, pursuant to
Sec.  131.80 of this chapter, and complying with paragraph (e) of this
section.
    (2) Factors. For small power production facilities pursuant to
Sec.  292.204, the owner or operator of the facility or its
representative may, when completing the FERC Form No. 556, provide
information asserting factors showing that the facility for which
qualification or recertification is sought is at a separate site from
other facilities using the same energy resource and owned by the same
person(s) or its affiliates.
    (3) Commission action. Self-certification and self-recertification
are effective upon filing. If no protests to a self-certification or
self-recertification are timely filed pursuant to paragraph (c) of this
section, no further action by the Commission is required for a self-
certification or self-recertification to be effective. If protests to a
self-certification or self-recertification are timely filed pursuant to
paragraph (c) of this section, a self-certification or self-
recertification will remain effective until the Commission issues an
order revoking QF certification. The Commission will act on the protest
within 90 days from the date the protest is filed; provided that, if
the Commission requests more information from the protester, the entity
seeking qualification or recertification, or both, the time for the
Commission to act will be extended to 60 days from the filing of a
complete answer to the information request. In addition to any
extension resulting from a request for information, the Commission also
may toll the 90-day period for one additional 60-day period if so
required to rule on a protest. Authority to toll the 90-day period for
this purpose is delegated to the Secretary or the Secretary's designee.
Absent Commission action before the expiration of the tolling period, a
protest will be deemed denied, and the self-certification or self-
recertification will remain effective.

    (b) Optional procedure--Commission certification. * * *
    (2) General contents of application. The application must include a
properly completed FERC Form No. 556 pursuant to Sec.  131.80 of this
chapter. For small power production facilities pursuant to Sec.
292.204, the owner or operator of the facility or its representative
may, when completing the FERC Form No. 556, provide information
asserting factors showing that the facility for which qualification is
sought is at a separate site from other facilities using the same
energy resource and owned by the same person(s) or its affiliates.
* * * * *
    (c) Protests and Interventions. (1) Filing a Protest. Any person,
as defined in Sec.  385.102(d) of this chapter, who opposes either a
self-certification or self-recertification making substantive changes
to the existing certification filed pursuant to paragraph (a) of this
section or an application for Commission certification or Commission
recertification making substantive changes to the existing
certification filed pursuant to paragraph (b) of this section for which
qualification or recertification is filed on or after December 31,
2020, may file a protest with the Commission. Any protest to and any
intervention in a self-certification or self-recertification must be
filed in accordance with Sec. Sec.  385.211 and 385.214 of this
chapter, on or before 30 days from the date the self-certification or
self-recertification is filed. Any protestor must concurrently serve a
copy of such filing pursuant to Sec.  385.211 of this chapter. Any
protest must be adequately supported, and provide any supporting
documents, contracts, or affidavits to substantiate the claims in the
protest.
    (2) Limitations on protest. Protests may be filed to any initial
self-certification or application for Commission certification filed on
or after the effective date of this final rule, and to any self-
recertification or application for Commission recertification that are
filed on or after December 31, 2020 that makes substantive changes to
the existing certification. Once the Commission has certified an
applicant's qualifying facility status either in response to a protest
opposing a self-certification or self-recertification, or in response
to an application for Commission certification or Commission
recertification, any later protest to a self-recertification or
application for Commission recertification making substantive changes
to a qualifying facility's certification must demonstrate changed
circumstances that call into question the continued validity of the
certification.
    (d) Response to protests. Any response to a protest must be filed
on or before 30 days from the date of filing of that protest and will
be allowed under Sec.  385.213(a)(2) of this chapter.
    (e) Notice requirements. (1) General. An applicant filing a self-
certification, self-recertification, application for Commission
certification or application for Commission recertification of the
qualifying status of its facility must concurrently serve a copy of
such filing on each electric utility with which it expects to
interconnect, transmit or sell electric energy to, or purchase
supplementary, standby, back-up or maintenance power from, and the
State regulatory authority of each state where the facility and each
affected electric utility is located. The Commission will publish a
notice in the Federal Register for each application for Commission
certification and for each self-certification of a cogeneration
facility that is subject to the requirements of Sec.  292.205(d).
    (2) Facilities of 500 kW or more. An electric utility is not
required to purchase electric energy from a facility with a net power
production capacity of 500 kW or more until 90 days after the facility
notifies the facility that it is a qualifying facility or 90 days after
the utility meets the notice requirements in paragraph (c)(1) of this
section.
    (f) Revocation of qualifying status. (1)(i) If a qualifying
facility fails to conform with any material facts or representations
presented by the cogenerator or small power producer in its submittals
to the Commission, the notice of self-certification or Commission order
certifying the qualifying status of the facility may no longer be
relied upon. At that point, if the facility continues to conform to the
Commission's qualifying criteria under this part, the cogenerator or
small power producer may file either a notice of self-recertification
of qualifying status pursuant to the requirements of paragraph (a) of
this section, or an application for Commission recertification pursuant
to the requirements of paragraph (b) of this section, as appropriate.
    (ii) The Commission may, on its own motion or on the motion of any
person, revoke the qualifying status of a facility that has been
certified under paragraph (b) of this section, if the facility fails to
conform to any of the Commission's qualifying facility criteria under
this part.
    (iii) The Commission may, on its own motion or on the motion of any
person, revoke the qualifying status of a self-certified or self-
recertified qualifying facility if it finds that the self-certified or
self-recertified qualifying facility does not meet the applicable
requirements for qualifying facilities.
    (2) Prior to undertaking any substantial alteration or modification
of a qualifying facility which has been certified under paragraph (b)
of this section, a small power producer or cogenerator may apply to the
Commission for a determination that the proposed alteration or
modification will not result in a revocation of qualifying status. This
application for Commission recertification of qualifying status should
be submitted in accordance with paragraph (b) of this section.

0
6. Amend Sec.  292.304 by:
0
a. Adding paragraph (b)(6) through (8); and
0
b. Revising paragraphs (d) and (e).
    The additions and revisions read as follows:

Sec.  292.304  Rates for purchases.

* * * * *
    (b) Relationship to avoided costs.
    * * *
    (6) Locational Marginal Price. There is a rebuttable presumption
that a state regulatory authority or nonregulated electric utility may
use a Locational Marginal Price as a rate for as-available qualifying
facility energy sales to electric utilities located in a market defined
in Sec.  292.309(e), (f), or (g).
    (7) Competitive Price. A state regulatory authority or nonregulated
electric utility may use a Competitive Price as a rate for as-available
qualifying facility energy sales to electric utilities located outside
a market defined in Sec.  292.309(e), (f), or (g). A Competitive Price
may be either a Market Hub Price or a Combined Cycle Price, determined
as follows:
    (i) A Market Hub Price is a price established at a liquid market
hub which a state regulatory authority or nonregulated electric utility
determines represents an appropriate measure of the electric utility's
avoided cost for as-available energy, and is a hub to which the
electric utility has reasonable access, based on an evaluation by the
state regulatory authority or nonregulated electric utility of the
relevant factors, including but not limited to the following:
    (A) Whether the hub is sufficiently liquid that prices at the hub
represent a competitive price;
    (B) Whether prices developed at the hub are sufficiently
transparent;
    (C) Whether the electric utility has the ability to deliver power
from such hub to its load, even if its load is not directly connected
to the hub; and

    (D) Whether the hub represents an appropriate market to derive an
energy price for the electric utility's purchases from the relevant
qualifying facility given the electric utility's physical proximity to
the hub or other factors.
    (ii) A Combined Cycle Price is a price determined pursuant to a
formula established by a state regulatory authority or nonregulated
electric utility using published natural gas price indices, a proxy
heat rate, and variable operations and maintenance costs for an
efficient natural gas combined-cycle generating facility. Before
establishing such a formula rate, a state regulatory authority or
nonregulated electric utility must determine that the resulting
Combined Cycle Price represents an appropriate measure of the
purchasing electric utility's avoided cost for energy, based on its
evaluation of the relevant factors, including but not limited to the
following:

    (A) Whether the cost of energy from an efficient natural gas
combined cycle generating facility represents a reasonable measure of a
competitive price in the purchasing electric utility's region;
    (B) Whether natural gas priced pursuant to particular proposed
natural gas price indices would be available in the relevant market;
    (C) Whether there should be an adjustment to the natural gas price
to appropriately reflect the cost of transporting natural gas to the
relevant market; and
    (D) Whether the proxy heat rate used in the formula should be
updated regularly to reflect improvements in generation technology.
    (8) Competitive Solicitation Price. (i) A state regulatory
authority or nonregulated electric utility may use a price determined
pursuant to a competitive solicitation process to establish qualifying
facility energy and/or capacity rates for sales to electric utilities,
provided that such competitive solicitation process is conducted
pursuant to procedures ensuring the solicitation is conducted in a
transparent and non-discriminatory manner including, but not limited
to, the following:

    (A) The solicitation process is an open and transparent process
that includes, but is not limited to, providing equally to all
potential bidders substantial and meaningful information regarding
transmission constraints, levels of congestion, and interconnections,
subject to appropriate confidentiality safeguards;
    (B) Solicitations are open to all sources, to satisfy that electric
utility's capacity needs, taking into account the required operating
characteristics of the needed capacity;
    (C) Solicitations are conducted at regular intervals;
    (D) Solicitations are subject to oversight by an independent
administrator; and
    (E) Solicitations are certified as fulfilling the above criteria by
the relevant state regulatory authority or nonregulated electric
utility through a post-solicitation report.
    (ii) To the extent that the electric utility procures all of its
capacity, including capacity resources constructed or otherwise
acquired by the electric utility, through a competitive solicitation
process conducted pursuant to paragraph (b)(8)(i) of this section, the
electric utility shall be presumed to have no avoided capacity costs
unless and until it determines to acquire capacity outside of such
competitive solicitation process. However, the electric utility shall
nevertheless be required to purchase energy from qualifying small power
producers and qualifying cogeneration facilities.
    (iii) To the extent that the electric utility does not procure all
of its capacity through a competitive solicitation process conducted
pursuant to paragraph (b)(8)(i) of this section, then there shall be no
presumption that the electric utility has no avoided capacity costs.
* * * * *
    (d) Purchases ``as available'' or pursuant to a legally enforceable
obligation. (1) Each qualifying facility shall have the option either:
    (i) To provide energy as the qualifying facility determines such
energy to be available for such purchases, in which case the rates for
such purchases shall be based on the electric utility's avoided cost
for energy calculated at the time of delivery; or
    (ii) To provide energy or capacity pursuant to a legally
enforceable obligation for the delivery of energy or capacity over a
specified term, in which case the rates for such purchases shall,
except as provided in paragraph (d)(2) of this section, be based on
either:
    (A) The avoided costs calculated at the time of delivery; or
    (B) The avoided costs calculated at the time the obligation is
incurred.
    (iii) The rate for delivery of energy calculated at the time the
obligation is incurred may be based on estimates of the present value
of the stream of revenue flows of future locational marginal prices, or
Competitive Prices during the anticipated period of delivery.
    (2) Notwithstanding paragraph (d)(1)(ii)(B) of this section, a
state regulatory authority or nonregulated electric utility may require
that rates for purchases of energy from a qualifying facility pursuant
to a legally enforceable obligation vary through the life of the
obligation, and be set at the electric utility's avoided cost for
energy calculated at the time of delivery.
    (3) Obtaining a legally enforceable obligation. A qualifying
facility must demonstrate commercial viability and financial commitment
to construct its facility pursuant to criteria determined by the state
regulatory authority or nonregulated electric utility as a prerequisite
to a qualifying facility obtaining a legally enforceable obligation.
Such criteria must be objective and reasonable.
    (e) Factors affecting rates for purchases. (1) A state regulatory
authority or nonregulated electric utility may establish rates for
purchases of energy from a qualifying facility based on a purchasing
electric utility's locational marginal price calculated by the
applicable market defined in Sec.  292.309(e), (f), or (g), or the
purchasing electric utility's applicable Competitive Price.
Alternatively, a state regulatory authority or nonregulated electric
utility may establish rates for purchases of energy and/or capacity
from a qualifying facility based on a Competitive Solicitation Price.
To the extent that capacity rates are not set pursuant to this section,
capacity rates shall be set pursuant to subsection (2).
    (2) To the extent that a state regulatory authority or nonregulated
electric utility does not set energy and/or capacity rates pursuant to
paragraph (e)(1) of this section, the following factors shall, to the
extent practicable, be taken into account in determining rates for
purchases from a qualifying facility:
    (i) The data provided pursuant to Sec.  292.302(b), (c), or (d),
including State review of any such data;
    (ii) The availability of capacity or energy from a qualifying
facility during the system daily and seasonal peak periods, including:
    (A) The ability of the electric utility to dispatch the qualifying
facility;
    (B) The expected or demonstrated reliability of the qualifying
facility;
    (C) The terms of any contract or other legally enforceable
obligation, including the duration of the obligation, termination
notice requirement and sanctions for non-compliance;
    (D) The extent to which scheduled outages of the qualifying
facility can be usefully coordinated with scheduled outages of the
electric utility's facilities;

    (E) The usefulness of energy and capacity supplied from a
qualifying facility during system emergencies, including its ability to
separate its load from its generation;
    (F) The individual and aggregate value of energy and capacity from
qualifying facilities on the electric utility's system; and
    (G) The smaller capacity increments and the shorter lead times
available with additions of capacity from qualifying facilities; and
    (iii) The relationship of the availability of energy or capacity
from the qualifying facility as derived in paragraph (e)(2)(ii) of this
section, to the ability of the electric utility to avoid costs,
including the deferral of capacity additions and the reduction of
fossil fuel use; and
    (iv) The costs or savings resulting from variations in line losses
from those that would have existed in the absence of purchases from a
qualifying facility, if the purchasing electric utility generated an
equivalent amount of energy itself or purchased an equivalent amount of
electric energy or capacity.
* * * * *

0
7. Amend Sec.  292.309 by revising paragraphs (c), (d), (e), and (f) to
read as follows:

Sec.  292.309  Termination of obligation to purchase from qualifying
facilities.

* * * * *
    (c) For purposes of paragraphs (a)(1), (2) and (3) of this section,
with the exception of paragraph (d) of this section, there is a
rebuttable presumption that a qualifying facility has nondiscriminatory
access to the market if it is eligible for service under a Commission-
approved open access transmission tariff or Commission-filed
reciprocity tariff, and Commission-approved interconnection rules.
    (1) If the Commission determines that a market meets the criteria
of paragraphs (a)(1), (2) or (3) of this section, and if a qualifying
facility in the relevant market is eligible for service under a
Commission-approved open access transmission tariff or Commission-filed
reciprocity tariff, a qualifying facility may seek to rebut the
presumption of access to the market by demonstrating, inter alia, that
it does not have access to the market because of operational
characteristics or transmission constraints.
    (2) For purposes of paragraphs (a)(1), (2), and (3) of this
section, a qualifying small power production facility with a capacity
between 5 megawatts and 20 megawatts may additionally seek to rebut the
presumption of access to the market by demonstrating that it does not
have access to the market in light of consideration of other factors,
including, but not limited to:
    (i) Specific barriers to connecting to the interstate transmission
grid, such as excessively high costs and pancaked delivery rates;
    (ii) Unique circumstances impacting the time or length of
interconnection studies or queues to process the small power production
facility's interconnection request;
    (iii) A lack of affiliation with entities that participate in the
markets in paragraphs (a)(1), (2), and (3) of this section;
    (iv) The qualifying small power production facility has a
predominant purpose other than selling electricity and should be
treated similarly to qualifying cogeneration facilities;
    (v) The qualifying small power production facility has certain
operational characteristics that effectively prevent the qualifying
facility's participation in a market; or
    (vi) The qualifying small power production facility lacks access to
markets due to transmission constraints. The qualifying small power
production facility may show that it is located in an area where
persistent transmission constraints in effect cause the qualifying
facility not to have access to markets outside a persistently congested
area to sell the qualifying facility output or capacity.
    (d)(1) For purposes of paragraphs (a)(1), (2), and (3) of this
section, there is a rebuttable presumption that a qualifying
cogeneration facility with a capacity at or below 20 megawatts does not
have nondiscriminatory access to the market.
    (2) For purposes of paragraphs (a)(1), (2), and (3) of this
section, there is a rebuttable presumption that a qualifying small
power production facility with a capacity at or below 5 megawatts does
not have nondiscriminatory access to the market.
    (3) Nothing in paragraphs (d)(1) through (3) of this section
affects the rights the rights or remedies of any party under any
contract or obligation, in effect or pending approval before the
appropriate State regulatory authority or non-regulated electric
utility on or before December 31, 2020, to purchase electric energy or
capacity from or to sell electric energy or capacity to a small power
production facility between 5 megawatts and 20 megawatts under this Act
(including the right to recover costs of purchasing electric energy or
capacity).
    (4) For purposes of implementing paragraphs (d)(1) and (2) of this
section, the Commission will not be bound by the standards set forth in
Sec.  292.204(a)(2).
    (e) Midcontinent Independent System Operator, Inc. (MISO), PJM
Interconnection, L.L.C. (PJM), ISO New England Inc. (ISO-NE), and New
York Independent System Operator, Inc. (NYISO) qualify as markets
described in paragraphs (a)(1)(i) and (ii) of this section, and there
is a rebuttable presumption that small power production facilities with
a capacity greater than 5 megawatts and cogeneration facilities with a
capacity greater than 20 megawatts have nondiscriminatory access to
those markets through Commission-approved open access transmission
tariffs and interconnection rules, and that electric utilities that are
members of such regional transmission organizations or independent
system operators (RTO/ISOs) should be relieved of the obligation to
purchase electric energy from the qualifying facilities. A qualifying
facility may seek to rebut this presumption by demonstrating, inter
alia, that:
    (1) The qualifying facility has certain operational characteristics
that effectively prevent the qualifying facility's participation in a
market; or
    (2) The qualifying facility lacks access to markets due to
transmission constraints. The qualifying facility may show that it is
located in an area where persistent transmission constraints in effect
cause the qualifying facility not to have access to markets outside a
persistently congested area to sell the qualifying facility output or
capacity.
    (f) The Electric Reliability Council of Texas (ERCOT) qualifies as
a market described in paragraph (a)(3) of this section, and there is a
rebuttable presumption that small power production facilities with a
capacity greater than five megawatts and cogeneration facilities with a
capacity greater than 20 megawatts have nondiscriminatory access to
that market through Public Utility Commission of Texas (PUCT) approved
open access protocols, and that electric utilities that operate within
ERCOT should be relieved of the obligation to purchase electric energy
from the qualifying facilities. A qualifying facility may seek to rebut
this presumption by demonstrating, inter alia, that:
    (1) The qualifying facility has certain operational characteristics
that effectively prevent the qualifying facility's participation in a
market; or
    (2) The qualifying facility lacks access to markets due to
transmission constraints. The qualifying facility may show that it is
located in an area where persistent transmission constraints in

effect cause the qualifying facility not to have access to markets
outside a persistently congested area to sell the qualifying facility
output or capacity.
* * * * *

PART 375--THE COMMISSION

0
8. The authority citation for part 375 continues to read as follows:

    Authority:  5 U.S.C. 551-557; 15 U.S.C. 717-717w, 3301-3432; 16
U.S.C. 791-825r, 2601-2645; 42 U.S.C. 7101-7352.

0
9. Amend Sec.  375.302 by revising paragraph (v) to read as follows:

Sec.  375.302  Delegations to the Secretary.

* * * * *
    (v) Toll the time for action on requests for rehearing, and toll
the time for action on protested self-certifications and self-
recertifications of qualifying facilities.
    The following will not appear in the Code of Federal Regulations.

      United States of America Federal Energy Regulatory Commission
------------------------------------------------------------------------
                                                           Docket Nos.
------------------------------------------------------------------------
Qualifying Facility Rates and Requirements............       RM19-15-000
Implementation Issues Under the Public Utility               AD16-16-000
 Regulatory Policies Act of 1978......................
------------------------------------------------------------------------

(Issued July 16, 2020)

GLICK, Commissioner, dissenting in part:

    1. I dissent in part from today's final rule (Final Rule \1\)
because it effectively guts the Commission's implementation of the
Public Utility Regulatory Policies Act (PURPA).\2\ The Commission's
basic responsibilities under PURPA are three-fold: (1) To encourage the
development of qualifying facilities (QFs); (2) to prevent
discrimination against QFs by incumbent utilities; and (3) to ensure
that the resulting rates paid by electricity customers remain just and
reasonable, in the public interest, and do not exceed the incremental
costs to the utility of alternative energy.\3\ I do not believe that
today's Final Rule satisfies those responsibilities. Instead, the Final
Rule raises as many questions as it answers, not least of which is the
long-term legal viability of an approach that does so little to
encourage QF development.
---------------------------------------------------------------------------

    \1\ Qualifying Facility Rates and Requirements Implementation
Issues Under the Public Utility Regulatory Policies Act of 1978,
Order No. 872, 172 FERC ] 61,041 (2020) (Final Rule).
    \2\ Public Law 95-617, 92 Stat. 3117 (1978).
    \3\ See 16 U.S.C. 824a-3(a)-(b) (2018).
---------------------------------------------------------------------------

    2. Although I have concerns about many of the individual changes
imposed by the Final Rule,\4\ I remain, on a broader level, dismayed
that the Commission is attempting to accomplish via administrative fiat
what Congress has repeatedly declined to do via legislation. I am
especially disappointed because Congress expressly provided the
Commission with a different avenue for ``modernizing'' our
administration of PURPA. The Energy Policy Act of 2005 gave the
Commission the authority to excuse utilities from their obligations
under PURPA where QFs have non-discriminatory access to competitive
wholesale markets.\5\ Had we pursued reforms based on those provisions,
rather than gutting our longstanding regulations, I believe we could
have reached a durable, consensus solution that would ultimately have
done more for all interested parties, even those that may celebrate the
immediate effects of this Final Rule.
---------------------------------------------------------------------------

    \4\ Notwithstanding those concerns, I support certain aspects of
this Final Rule. First and foremost, I agree with the update to the
``one-mile'' rule, which prior to today provided an irrebuttable
presumption that resources located more than one mile apart are
separate QFs. In addition, I support requiring that QFs demonstrate
commercial viability before securing a legally enforceable
obligation with the relevant utility. Finally, I also support the
revision to allow stakeholders to protest a QF's self-certification.
    \5\ Public Law 109-58, 1253, 119 Stat. 594 (2005).
---------------------------------------------------------------------------

I. PURPA's Continuing Relevance Is an Issue for Congress To Decide

    3. This proceeding began with a bang. My colleagues championed the
proposed rule as a ``truly significant'' action that would
fundamentally overhaul the Commission's implementation of PURPA.\6\ And
so it was. The NOPR proposed to alter almost every significant aspect
of the Commission's PURPA regulations, thereby transforming the
foundation on which the Commission had carried out its statutory
responsibility to ``encourage'' the development of QFs.
---------------------------------------------------------------------------

    \6\ Sept. 2019 Commission Meeting Tr. at 8.
---------------------------------------------------------------------------

    4. I dissented from the NOPR in large part because I believe that
it is not the Commission's role to sit in judgment of a duly enacted
statute and determine whether it has outlived its usefulness. As I
explained, ``almost from the moment PURPA was passed, Congress began to
hear many of the arguments being used today to justify scaling the law
back.'' \7\ Congress, however, has seen fit to significantly amend
PURPA only once in its more-than-forty-year lifespan. As part of the
Energy Policy Act of 2005, Congress amended PURPA, leaving in place the
law's basic framework, while adding a series of provisions that allowed
the Commission to excuse utilities from its requirements in regions of
the country with sufficiently competitive wholesale energy markets.\8\
And while Congress considered numerous proposals to further reform the
law, it never saw fit to act on them.\9\ Against that background, I
could not support my colleagues' willingness to ``remove[ ] an
important debate from the halls of Congress and isolate[] it within the
Commission.'' \10\ Whatever your position on PURPA--and I recognize
views vary widely--``what should concern all of us is that resolving
these sorts of questions by regulatory edict rather than congressional
legislation is neither a durable nor desirable approach for developing
energy policy.'' \11\
---------------------------------------------------------------------------

    \7\ Qualifying Facility Rates and Requirements Implementation
Issues Under the Public Utility Regulatory Policies Act of 1978,
Notice of Proposed Rulemaking, 168 FERC ] 61,184 (2019) (NOPR)
(Glick, Comm'r, dissenting in part at P 3).
    \8\ Public Law 109-58, 1253, 119 Stat. 594 (2005).
    \9\ See Solar Energy Industries Association (SEIA) Comments at
11.
    \10\ NOPR, 168 FERC ] 61,184 (Glick, Comm'r, dissenting in part
at P 4).
    \11\ Id.
---------------------------------------------------------------------------

    5. Today's Final Rule retreats from much of the original rationale
used to support the NOPR, but the effect is the same: The Commission is
administratively gutting PURPA. Make no mistake, although the
Commission has dropped much of the NOPR preamble's opening screed
against PURPA's continuing relevance, this Final Rule is a full-
throated endorsement of the conclusion that PURPA has outlived its
usefulness. And while walking back the argument that PURPA is
antiquated may reduce the risk that this Final Rule is overturned on
appeal, that does not change the fact that today's Final Rule usurps
what should be Congress's proper role.
    6. Throughout this proceeding, the Commission has been quick to
point to Congress's directive to from time to time

amend our regulations implementing PURPA.\12\ This Final Rule, however,
is a wholesale overhaul of the Commission's PURPA regulations that
reflects a deep skepticism of the need for the law we are charged with
implementing. I doubt that is what Congress had in mind when it gave us
responsibility for periodically updating our implementing regulations.
---------------------------------------------------------------------------

    \12\ Final Rule, 172 FERC ] 61,041 at PP 24, 48, 54, 67, 296,
628; NOPR, 168 FERC ] 61,184 at PP 4, 16, 29, 155.
---------------------------------------------------------------------------

II. The Commission's Proposed Reforms Are Inconsistent With Our
Statutory Mandate

    7. PURPA directs the Commission to adopt such regulations as are
``necessary to encourage'' QFs,\13\ including by establishing rates for
sales by QFs that are just and reasonable and by ensuring that such
rates ``shall not discriminate'' against QFs.\14\ As explained below,
many of the changes adopted by the Commission in the Final Rule fail to
meet that standard. In addition, many of the reforms are unsupported--
or, in many cases, contradicted--by the evidence in the record.\15\
Accordingly, I believe today's Final Rule is not just poor public
policy, but also arbitrary and capricious agency action.
---------------------------------------------------------------------------

    \13\ A QF is a cogeneration facility or a small power production
facility. See 18 CFR 292.101(b)(1) (2019).
    \14\ 16 U.S.C. 824a-3(a)-(b).
    \15\ Genuine Parts Co. v. EPA, 890 F.3d 304, 312 (D.C. Cir.
2018) (``[A]n agency cannot ignore evidence that undercuts its
judgment; and it may not minimize such evidence without adequate
explanation.'') (citations omitted); id. (``Conclusory explanations
for matters involving a central factual dispute where there is
considerable evidence in conflict do not suffice to meet the
deferential standards of our review.'' (quoting Int'l Union, United
Mine Workers v. Mine Safety & Health Admin., 626 F.3d 84, 94 (D.C.
Cir. 2010)).
---------------------------------------------------------------------------

A. Avoided Cost

    8. The Final Rule adopts two fundamental changes to how QF rates
are determined. First, and most importantly, it eliminates the
requirement that a utility must afford a QF the option to enter a
contract at a rate for energy that is either fixed for the duration of
the contract or determined at the outset--e.g., based on a forward
curve reflecting estimated prices over the term of the contract.\16\
Second, it presumptively allows states to set the rate for as-available
energy at the relevant locational marginal price (LMP) or a similarly
``competitive market price.'' \17\ The record in this proceeding does
not support either of those changes.
---------------------------------------------------------------------------

    \16\ Final Rule, 172 FERC ] 61,041 at P 253.
    \17\ Id. PP 151, 189, 211.
---------------------------------------------------------------------------

i. Elimination of Fixed Energy Rate
    9. Prior to today's Final Rule, a QF generally had two options for
selling its output to a utility. Under the first option, the QF could
sell its energy on an as-available basis and receive an avoided cost
rate calculated at the time of delivery. This is generally known as the
as-available option. Under the second option, a QF could enter into a
fixed-duration contract at an avoided cost rate that was fixed either
at the time the QF established a legally enforceable obligation (LEO)
or at the time of delivery. This is generally known as the contract
option. The ability to choose between both types of sale options played
an important role in fostering the development of a variety of QFs. For
example, the as-available option provided a way for QFs whose principal
business was not generating electricity, such as industrial
cogeneration facilities, to monetize their excess electricity
generation. The contract option, by contrast, provided QFs who were
principally in the business of generating electricity, such as small
renewable electricity generators, a stable option that would allow them
to secure financing. Together, the presence of these two options
allowed the Commission to satisfy its statutory mandate to encourage
the development of QFs and ensured that the rates they received were
non-discriminatory.
    10. The Final Rule eliminates the requirement that states provide a
contract option that includes a fixed energy rate.\18\ Prior to this
proceeding, the Commission recognized time and again that fixed-price
contracts play an essential role in the financing of QF facilities,
making them a necessary element of any effort to encourage QF
development, at least in certain regions of the country.\19\ In
addition, fixed-price contracts have helped prevent discrimination
against QFs by ensuring that they are not structurally disadvantaged
relative to vertically integrated utilities that are guaranteed to
recover the costs of their prudently incurred investments through
retail rates.\20\
---------------------------------------------------------------------------

    \18\ Id. P 253.
    \19\ See, e.g., Small Power Production and Cogeneration
Facilities; Regulations Implementing Section 210 of the Public
Utility Regulatory Policies Act of 1978, Order No. 69, FERC Stats. &
Regs. ] 30,128, at 30,880, order on reh'g sub nom. Order No. 69-A,
FERC Stats. & Regs. ] 30,160 (1980), aff'd in part vacated in part,
Am. Elec. Power Serv. Corp. v. FERC, 675 F.2d 1226 (D.C. Cir. 1982),
rev'd in part sub nom. Am. Paper Inst. v. Am. Elec. Power Serv.
Corp., 461 U.S. 402 (1983). (justifying the rule on the basis of
``the need for certainty with regard to return on investment in new
technologies''); NOPR, 168 FERC ] 61,184 at P 63 (``The Commission's
justification for allowing QFs to fix their rate at the time of the
LEO for the entire term of a contract was that fixing the rate
provides certainty necessary for the QF to obtain financing.'');
Windham Solar LLC, 157 FERC ] 61,134, at P 8 (2016).
    \20\ See, e.g., ELCON Comments at 21-22 (``More varible avoided
cost rates will result in unintended consequences that result in
less competitive conditions and may leave consumers worse off, as
utility self-builds do not face the same market risk exposure.
Pushing more market risk to QFs while utility assets remain
insulated from markets creates an investment risk asymmetry. This
puts QFs at a competitive disadvantage''); South Carolina Solar
Business Association Comments at 8 (``[A]s-available rates for QFs
in vertically-integrated states therefore discriminate against QFs
by requiring QFs to enter into contracts at substantially and
unjustifiably different terms than incumbent utilities.''); Southern
Environmental Law Center Supplement Comments, Docket No. AD16-16-
000, at 6-8 (Oct. 17, 2018) (explaining that vertically integrated
utilities in Indiana, Alabama, Virginia and Tennessee only offer
short-term rates to QFs); sPower Comments at 13; see also Statement
of Travis Kavulla, Docket No. AD16-16-000, at 2 (June 29, 2016).
---------------------------------------------------------------------------

    11. If anything, the record before us confirms the continuing
importance of fixed-price contracts. Numerous entities with experience
financing and developing QFs explain that a fixed revenue stream of
some sort is necessary to obtain the financing needed to develop a new
QF.\21\ The fixed revenue stream is particularly important because QFs
are overwhelmingly developed outside of the organized markets, meaning
that developers cannot necessarily obtain hedging contracts to create
the revenue predictability needed to obtain financing.\22\ And that is
why the Final Rule's parade of statistics about the growth of
renewables misses the point.\23\ It is true that, primarily in

organized markets, independently developed renewables are able to
develop without the entitlement to a fixed-price contract for energy
from the relevant utility.\24\ But the growth of renewables and their
financeability in organized markets tells us almost nothing about what
is required to sufficiently encourage QFs outside those markets.\25\
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    \21\ See, e.g., SEIA Comments at 29; North Carolina Attorney
General's Office Comments at 5; Con Ed Development Comments at 3;
South Carolina Solar Business Association Comments at 6; sPower
Comments at 11; Resources for the Future Comments at 6-7.
    \22\ See, e.g., SEIA Comments at 29-30 (``As both Mr. Shem and
Mr. McConnell explain, financial hedge products are not available
outside of ISO/RTO markets.''); Resources for the Future Comments at
6-7 (``[W]hile hedge products do support wind and solar project
financing, they would not be suited for most QF projects. To hedge
energy prices, wind projects have used three products: bank hedges,
synthetic power purchase agreements (synthetic PPAs), and proxy
revenue swaps . . . . From U.S. project data for 2017 and 2018, the
smallest wind project securing such a hedge was 78 MW, and most
projects were well over 100 MW. Additionally, as hedges rely on
wholesale market access and liquid electricity trading, all of the
projects were in ISO regions.'') (emphasis added).
    \23\ Harvard Electricity Law Comments at 22 (referring to a
similar statistical parade in the NOPR and observing that ``[a]ll
[the Commission] can actually conclude from this loosely connected
array of facts, data, and speculation is that some non-QF generators
are developed with variable-rate energy contracts. That unremarkable
conclusion has no bearing on whether repeal will discourage QF
development by `materially affect[ing] the ability of QFs to obtain
financing.' '' (citing NOPR, 168 FERC ] 61,184 at P 69)); SEIA
Comments at 30.
    \24\ See Final Rule, 172 FERC ] 61,041 at P 340 (``EIA data
demonstrates that net generation of energy by non-utility owned
renewable resources in the United States grew by almost 700% between
2005 and 2018.''). Although independent power producers, renewable
or otherwise, within the RTO/ISO markets are not entitled to fixed
price contracts for energy as a matter of law, they generally do
rely on alternative tools, such as commodity hedges, to lock-in
energy revenue streams. See, e.g., EEI Comments at 36; sPower
Comments at 12.
    \25\ In the logical leap of the year, the Commission notes that
in some areas of the country, unspecified resources are developed
with a fixed-price contract for capacity and a variable price for
energy and, separately, that renewables have grown nationwide more
than seven-fold between 2005 and 2018. Final Rule, 172 FERC ] 61,041
at P 340. From those disparate observations, the Commission
concludes that ``renewable resources are able to acquire financing
even without the right to require long-term fixed energy rates.''
Id. But nothing in the record suggests that that phenomenal growth
in renewables was at all the result of that bifurcated contract
structure. That, it should be clear, is not reasoned decisionmaking.
Cf. Nat'l Ass'n of Recycling Indus., Inc. v. Fed. Mar. Comm'n, 658
F.2d 816, 820 n.10 (D.C. Cir. 1980) (``We do not want, after all,
blithely to compare apples and oranges. Likewise, an agency should
also avoid unavailing comparisons of nonsubstitutes.''); see also
Commissioner Slaughter Comments at 4 (noting the ``widespread
geographic differentiation'' in renewable energy progress and
``barriers to independent renewable energy-based power producers'').
---------------------------------------------------------------------------

    12. It would be one thing to eliminate the requirement to provide a
fixed-price option for energy rates for QFs that are entitled to a
fixed price for capacity. Although reasonable minds might disagree
about whether a fixed price for capacity alone is sufficient
encouragement, combining one with a variable price for energy would
provide at least some guaranteed revenue stream with which to finance
new development.\26\ Indeed, much of the Commission's justification for
eliminating the fixed-price contract option for energy rests on the
availability of a fixed-price contract option for capacity.\27\
Commission precedent, however, permits utilities to offer a capacity
rate of zero to QFs when the utility does not need incremental
capacity.\28\ That means that, as a result of this Final Rule, QF
developers will face the very real prospect of not receiving any fixed
revenue stream, whether for energy or capacity, in areas where they
also cannot secure hedging products or other mechanisms needed to
finance a new QF.\29\ It is hard for me to understand how the
Commission can, with a straight face, claim to be encouraging QF
development while at the same time eliminating the conditions necessary
to develop QFs in the regions where they are being built.\30\
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    \26\ See, e.g., SEIA Comments at 29 (``While securing financing
based on an As-Available Energy rate and a fixed capacity rate may
be a rare possibility in a few sub-markets across the country, as
Mr. Shem explains, it certainly is not the case in any state that
does not participate in an ISO/RTO market.'').
    \27\ See Final Rule, 172 FERC ] 61,041 at P 36 (``This assertion
that the Commission has eliminated fixed rates for QFs is not
correct . . . . The NOPR thus made clear: under the proposed
revisions to Sec.  292.304(d), a QF would continue to be entitled to
a contract with avoided capacity costs calculated and fixed at the
time the LEO is incurred.'') (internal quotation marks omitted); id.
P 237 (``The Commission stated that these fixed capacity and
variable energy payments have been sufficient to permit the
financing of significant amounts of new capacity in the RTOs and
ISOs.'').
    \28\ See, e.g., id. P 422 (citing to City of Ketchikan, Alaska,
94 FERC ] 61,293, at 62,061 (2001)).
    \29\ See, e.g., Resources for the Future Comments at 6; SEIA
Comments at 30; Southeast Public Interest Organizations Comments at
12.
    \30\ See Public Interest Organizations Comments at 10-11
(``Obviously, rules that have an effect of discouraging QFs cannot
be 'necessary to' encouraging them.''); see also Massachusetts
Attorney General Maura Healey Comments at 6 (``This action may
reduce investor confidence and discourage future development. That
outcome is a negative one for the Commonwealth and its
ratepayers.'').
---------------------------------------------------------------------------

    13. The Commission sidesteps this point in responding that PURPA
does not require that QFs be financeable. That is true in a literal
sense; nothing in PURPA directs the Commission to ensure that at least
some QFs be financeable. But it does require the Commission to
encourage their development, which we have previously equated with
financeability.\31\ If the Commission is going to abandon that
standard, it must then explain why what is left of its regulations
provides the requisite encouragement--an explanation that is lacking
from this Final Rule, notwithstanding the Commission's repeated
assertions to the contrary.
---------------------------------------------------------------------------

    \31\ See, e.g., Order No. 69, FERC Stats. & Regs. ] 30,128 at
30,880 (justifying the rule on the basis of ``the need for certainty
with regard to return on investment in new technologies''); NOPR,
168 FERC ] 61,184 at P 63 (``The Commission's justification for
allowing QFs to fix their rate at the time of the LEO for the entire
term of a contract was that fixing the rate provides certainty
necessary for the QF to obtain financing.'').
---------------------------------------------------------------------------

    14. The Commission also does not sufficiently explain how
eliminating the fixed-price contract requirement is consistent with
PURPA's requirement that rates ``shall not discriminate against''
QFs.\32\ Vertically integrated utilities effectively receive guaranteed
fixed-price contracts through their rights to recover prudently
incurred investments. The equivalent right to receive fixed-price
contracts has to date proved an integral element of the Commission's
ability to satisfy PURPA's prohibition on discriminatory rates.\33\
---------------------------------------------------------------------------

    \32\ 16 U.S. Code Sec.  824a-3(b)(2). Unlike provisions of the
Federal Power Act, PURPA prohibits any discrimination against QFs,
not just undue discrimination. See ELCON Comments at 21-22; South
Carolina Solar Business Alliance Comments at 7-8; sPower Comments at
13.
    \33\ See supra n.20; Commissioner Slaughter Comments at 4.
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    15. And yet this Final Rule fails to explain how eliminating the
fixed-price option is consistent with that prohibition or, moreover,
how permitting QFs to receive variable contract rates while vertically
integrated utilities receive fixed ones is consistent with the
Commission's obligation to promote QFs.\34\ Instead, the Commission
notes that, through so-called fuel adjustment clauses, vertically
integrated utilities' rates change as the price of fuel changes.\35\
The idea that those clauses, which ensure that utilities recover a
specific variable cost (i.e., their cost of fuel), is the same thing as
having your entire revenue exposed to variations in prevailing market
conditions is hogwash. The presence of fuel adjustment clauses in no
way suggests that vertically integrated utilities are subject to
anything remotely close to the level of revenue variation contemplated
in this Final Rule.
---------------------------------------------------------------------------

    \34\ Public Interest Organizations Comments at 51 (``[L]imiting
QFs to contracts providing no price certainty for energy values,
while non-QF generation regularly obtains fixed price contracts and
utility-owned generation receives guaranteed cost recovery from
captive ratepayers, constitutes discrimination.'').
    \35\ Final Rule, 172 FERC ] 61,041 at P 122.
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    16. Finally, the Commission fails to explain why allegations of QF
rates exceeding a utility's actual avoided cost requires us to abandon
the Commission's long-held principles regarding certainty and
financing.\36\ As an initial matter, the Commission has recognized that
QF rates may exceed actual avoided costs, but, at the same time,
recognized that avoided cost rates might also turn out to be lower than
the electric utility's avoided costs over the course of the contract.
The Commission has reasoned that, ``in the long run, `overestimations'
and `underestimations' of avoided costs will balance out.'' \37\
However, when presented with a couple allegations that avoided costs
were overestimated,\38\ the Commission now concludes that that
possibility suggests it must abandon the fixed-energy rate

contract altogether. The Commission, however, makes no effort to
validate these allegations,\39\ or assess whether the overestimations
of avoided cost were, in fact, balanced out.\40\ It is arbitrary and
capricious to point to only half the picture in abandoning a forty-
year-old principle.
---------------------------------------------------------------------------

    \36\ See supra n.19.
    \37\ Order No. 69, FERC Stats. & Regs. ] 30,128 at 30,880.
    \38\ Final Rule, 172 FERC ] 61,041 at PP 265, 268.
    \39\ Id. PP 291, 293.
    \40\ The Commission is quick to point to ``the precipitous
decline in natural gas prices'' starting in 2008 that may have
caused QF contracts fixed prior to that period to underestimate the
actual cost of energy. See, e.g., Final Rule, 172 FERC ] 61,041 at P
287). However, PURPA has been in place for forty years, and the
Commission does not wrestle with the magnitude of potential savings
conveyed to consumers from the fixed-price energy contracts that
locked-in low rates for consumers during the decades prior when
natural gas prices were several times higher. See Energy Information
Administration Total Energy, tbl. 9.10 (last viewed July 15, 2020),
https://www.eia.gov/totalenergy/data/browser/.
---------------------------------------------------------------------------

ii. Rebuttable Presumption for Setting Avoided Cost at LMP and Similar
Measures
    17. I also do not support the Commission's decision to treat LMP or
other ``competitive market prices'' as a presumptively reasonable
measure of an as-available avoided cost for energy.\41\ Liquid price
signals can be useful and transparent inputs and ought to be considered
in calculating an appropriate avoided-cost figure. But considering
those price signals in setting avoided cost is not the same thing as
presuming that LMP or similar measures are alone sufficient to
establish avoided cost. Many regions of the country--often the same
regions where the debates about PURPA are most heated--have not
established sufficiently competitive markets. In these regions it is
not clear from the record that the prices in, for example, a
neighboring RTO, are a representative measure of a utility's avoided
cost. In those less competitive markets, it simply does not make sense
to presume that LMP or other ``competitive market prices'' are a
representative measure of avoided cost, rather than one of many
criteria that should go into that determination.\42\
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    \41\ Final Rule, 172 FERC ] 61,041 at PP 151, 189, 211.
    \42\ Congress itself seems to have contemplated that states
would not rely solely on spot market prices when establishing
avoided cost. H.R. Rep. No. 95-1750, at 7833 (1978) (``In
interpreting the term `incremental cost of alternative energy,' the
conferees expect that the Commission and the states may look beyond
the cost of alternative sources which are instantaneously available
to the utility.'').
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    18. For similar reasons, I share the concern of many commenters
that short-term or spot prices, such as LMP, may not reflect the long-
term marginal energy costs avoided by purchasing utilities, especially
outside of organized markets.\43\ Although the Commission revises the
NOPR's per se rule to be a rebuttable presumption, it nevertheless
plows ahead with the conclusion that LMP, and similar measures, reflect
a utility's avoided cost of energy. Where there is good reason to
believe that those measures do not actually reflect the long-term value
of energy that they are supposed to represent, it makes no sense to put
the burden on QFs to prove the point,\44\ rather than leaving the
burden with the proponents of using such measures.
---------------------------------------------------------------------------

    \43\ Final Rule, 172 FERC ] 61,041 at n.163; Hydro Comments at
11; Southeast Public Interest Organizations Comments at 19; NIPPC,
CREA, REC, and OSEIA Comments at 52, 55; Union of Concerned
Scientists Comments at 6. Take, for example, the Commission's
approval of the Mid-Columbia market hub price as presumptively
reflecting a utility's avoided cost for energy. See Final Rule, 172
FERC ] 61,041 at PP 180, 189. Notwithstanding explicit support for
this approach from the regulated utility industry, the Washington
Utilities and Transportation Commission which, when addressing Puget
Sound Energy's plan to increase wholesale purchases from the Mid-
Columbia market ``liquid hub'' to 1,600 MW, expressed a concern
about the regulated utility's overreliance on such wholesale market
pricing and directed them to pursue an alternative plan to eliminate
this ``excessive risk.'' That is the exact type of tension conveyed
in the record--i.e, that such competitive market prices may not
accurately reflect a utility's avoided cost, as approved by
regulators. See Washington UTC, Acknowledgment Letter Attachment,
Puget Sound Energy's 2017 Electric and Natural Gas Integrated
Resource Plan, Wash. UTC Docket Nos. UE-160918, UG-160919 (Revised
June 19, 2018); see NIPPC, CREA, REC, and OSEIA Comments at 56.
    \44\ Final Rule, 172 FERC ] 61,041 at P 152.
---------------------------------------------------------------------------

    19. The Commission's presumptive approval of LMP and similar
measures is even more problematic when combined with the decision to
allow utilities to eliminate the fixed-price contract option. Following
this Final Rule, QFs may be reduced to relying solely on some synthetic
and highly variable measure of what spot prices should be in a
competitive market based on gas prices and heat rates, all while the
utilities whose costs the QF is avoiding recovers an effectively
guaranteed rate potentially in excess of this representative
``competitive market price.'' I am not persuaded that this approach
will satisfy our obligation to encourage QFs and to do so using rates
that are non-discriminatory across all regions of the country.

B. Rebuttable Presumption 20 MW to 5 MW

    20. Following the Energy Policy Act of 2005, the Commission
established a rebuttable presumption that QFs with a capacity greater
than 20 MW operating in RTOs and ISOs have non-discriminatory access to
competitive markets, eliminating utilities' must-purchase obligation
from those resources.\45\ The Final Rule reduces the threshold for that
presumption from 20 MW to 5 MW. \46\ That is an improvement over the
NOPR, which--without any support whatsoever--proposed to lower that
threshold to 1 MW.\47\ But, even so, the reduced 5 MW threshold is
unsupported by the record and inadequately justified in today's Final
Rule.
---------------------------------------------------------------------------

    \45\ New PURPA Section 210(m) Regulations Applicable to Small
Power Production and Cogeneration Facilities, Order No. 688, 117
FERC ] 61,078, at P 72 (2006), order on reh'g, Order No. 688-A, 119
FERC ] 61,305 (2007), aff'd sub nom. Am. Forest & Paper Ass'n v.
FERC, 550 F.3d 1179 (D.C. Cir. 2008); see 16 U.S.C. Sec.  824a-3(m).
    \46\ Final Rule, 172 FERC ] 61,041 at P 625.
    \47\ NOPR, 168 FERC ] 61,184 at P 126.
---------------------------------------------------------------------------

    21. When it originally established the 20 MW threshold, the
Commission pointed to an array of barriers that prevented resources
below that level from having truly non-discriminatory access to RTO/ISO
markets. Those barriers included complications associated with
accessing the transmission system through the distribution system (a
common occurrence for such small resources), challenges with reaching
distant off-takers, as well as ``jurisdictional differences, pancaked
delivery rates, and additional administrative procedures'' that
complicate those resources' ability to participate in those markets on
a level playing field.\48\ In just the last few years, the Commission
has recognized the persistence of those barriers ``that gave rise to