[Federal Register: October 31, 2006 (Volume 71, Number 210)]
[Rules and Regulations]
[Page 63680-63694]
[DOCID:fr31oc06-6]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 157

[Docket No. RM06-7-000; Order No. 686]

Revisions to the Blanket Certificate Regulations and
Clarification Regarding Rates

October 19, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
amending its blanket certification regulations to expand the scope and
scale of activities that may be undertaken pursuant to blanket
certificate authority. The Commission is expanding the types of natural
gas projects permitted under blanket certificate authority and
increasing the cost limits that apply to blanket projects. In addition,
the Commission clarifies that a natural gas company is not necessarily
engaged in an unduly discriminatory practice if it charges different
customers different rates for the same service based on the date that
customers commit to service. Rather than rely on the more demanding
process of submitting an application under section 7(c) of the Natural
Gas Act for certificate authorization for every project, the revised
regulations will allow interstate natural gas pipelines to employ the
streamlined blanket certificate procedures for larger projects and for
a wider variety of types of projects, thereby increasing efficiencies,
and decreasing time and costs, associated with the construction and
maintenance of the nation's natural gas infrastructure.

DATES: The rule will become effective January 2, 2007.

FOR FURTHER INFORMATION CONTACT:

Gordon Wagner, Office of the General Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.
<EMAIL_ADDRESS>(202) 502-8947.

Michael McGehee, Office of Energy Projects, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.
<EMAIL_ADDRESS>(202) 502-8962.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.

    1. On June 16, 2006, the Federal Energy Regulatory Commission
(Commission) issued a Notice of Proposed Rulemaking (NOPR) in this
proceeding.\1\ In the NOPR, the Commission proposed to amend its Part
157, Subpart F, regulations to expand the scope and scale of activities
that

may be undertaken pursuant to blanket certificate authority and
clarified that existing Commission policies permit natural gas
companies to charge different rates to different classes of customers.
This Final Rule considers comments submitted in response to the NOPR,
and as a result, makes certain relatively minor modifications to the
regulatory revisions described in the NOPR, and affirms the
clarification regarding rate treatment described in the NOPR.
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    \1\ 71 FR 36276 (June 26, 2006); FERC Stats. & Regs. ] 32,606
(2006); 115 FERC ] 61,338 (2006).
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I. Background

    2. A natural gas company must obtain a certificate of public
convenience and necessity pursuant to section 7(c) of the Natural Gas
Act (NGA) to construct, acquire, alter, abandon, or operate
jurisdictional gas facilities or to provide jurisdictional gas
services. Once issued a case-specific NGA section 7(c) certificate, a
gas company may also obtain a blanket certificate under NGA section
7(c) and Part 157, Subpart F, of the Commission's regulations to
construct, acquire, alter, or abandon certain types of facilities
without the need for further case-by-case certificate authorization for
each particular project.\2\ Currently, blanket activities are limited
to a maximum cost of $8,200,000 per project undertaken without prior
notice (also referred to as self-implementing or automatic
authorization projects) and $22,700,000 per project undertaken subject
to prior notice.\3\ Blanket certificate authority only applies to a
restricted set of facilities and services, and currently does not
extend to mainlines, storage field facilities, and facilities receiving
gas from a liquefied natural gas (LNG) plant or a synthetic gas plant.
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    \2\ Certain activities are exempted from the certificate
requirements of NGA section 7(c). For example, 18 CFR 2.55 in the
Commission's regulations exempts auxiliary installations and the
replacement of physically deteriorated or obsolete facilities, and
Part 284, Subpart I, of the regulations provides for the
construction and operation of facilities needed to alleviate a gas
emergency.
    \3\ These are the current cost limits for calendar year 2006.
Cost limits are adjusted annually. See 18 CFR 157.208(d), Table I
(2006), as updated. As noted in the NOPR, in response to the impacts
of hurricanes Katrina and Rita, these cost limits have been
temporarily doubled for blanket projects that are built and placed
into service between November 2005 and February 2007 to increase
access to gas supplies. In addition, blanket certificate authority
has been temporarily extended to cover facilities that would
otherwise require case-specific authorization, namely, an extension
of a mainline; a facility, including compression and looping, that
alters the capacity of a mainline; and temporary compression that
raises the capacity of a mainline. See Expediting Infrastructure
Construction To Speed Hurricane Recovery, 113 FERC ] 61,179 (2005)
and 114 FERC ] 61,186 (2006).
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    3. This Final Rule expands the scope of activities that can be
undertaken pursuant to blanket authority by (1) increasing the project
cost limit to $9,600,000 for an automatic authorization project and
$27,400,000 for a prior notice project \4\ and (2) expanding the types
of facilities that may be acquired, constructed, modified, replaced,
abandoned, and operated under blanket certificate authority to include
mainline facilities, certain LNG and synthetic gas facilities, and
certain storage facilities. In addition, the Commission clarifies that
a natural gas company is not necessarily engaged in an unduly
discriminatory practice if it charges different customers different
rates for the same service based on the date that customers commit to
service.
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    \4\ Upon the effective date of this Final Rule, these higher
project cost limits will be substituted for the amounts that now
appear for the current calendar year in 18 CFR 157.208(d), Table I,
with these higher amounts then subject to the annual inflation
adjustment.
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II. Notice and Comment

A. Petition To Expand the Blanket Certificate Program and Clarify
Criteria Defining Just and Reasonable Rates

    4. On November 22, 2005, the Interstate Natural Gas Association of
America (INGAA) and the Natural Gas Supply Association (NGSA) jointly
filed a petition under Sec.  385.207(a) of the Commission's regulations
proposing that the blanket certificate provisions be expanded to
include mainline facilities, LNG takeaway facilities, and certain
underground storage field facilities which are currently excluded from
the blanket certificate program, and that the cost limits for all
categories of blanket projects be raised. Petitioners also argue in
favor of preferential rate treatment for ``foundation shippers,'' i.e.,
customers that sign up early for firm service and thereby establish the
financial foundation for a new project, and seek assurance that
providing customers that commit early to a proposed project a more
favorable rate than customers that seek service later will not be
viewed as unduly discriminatory.
    5. Notice of the INGAA/NGSA petition was published in the Federal
Register on December 9, 2005,\5\ and comments on the petition were
filed by the American Gas Association (AGA); American Public Gas
Association (APGA); Anadarko Petroleum Corporation (Anadarko); Devon
Energy Corporation (Devon); Duke Energy Gas Transmission Corporation
(Duke); Enstor Operating Company, LLC (Enstor); Honeoye Storage
Corporation (Honeoye Storage); Illinois Municipal Gas Agency (Illinois
Municipal); Independent Petroleum Association of America (IPAA); Kinder
Morgan Interstate Gas Transmission, LLC (Kinder Morgan); NiSource Inc.
(NiSource); Process Gas Consumers Group (Process Gas Consumers); Public
Service Commission of New York (PSCNY); and Sempra Global (Sempra).
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    \5\ 70 FR 73232 (Dec. 9, 2005).
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B. Notice of Proposed Rulemaking

    6. After consideration of the petition and comments thereto, the
Commission issued a NOPR that (1) proposed adopting the petitioners'
requested regulatory revisions, with relatively minor modifications,
and (2) clarified that the petitioners' hypothetical tiered rate
structure for a new project could be accepted under the Commission's
current policies. Notice of the NOPR was published in the Federal
Register on June 29, 2006.\6\ Comments on the NOPR were filed by the
AGA; APGA; Boardwalk Pipeline Partners, LP (Boardwalk); Consolidated
Edison Company of New York, Inc. (Con Ed) jointly with Orange and
Rockland Utilities, Inc. (Orange and Rockland); Dominion Transmission,
Inc., Dominion Cove Point LNG, LP, and Dominion South Pipeline Company,
LP (Dominion); Duke; HFP Acoustical Consultants Inc. (HFP Acoustical);
INGAA; IPAA; NGSA; Process Gas Consumers; Sempra; and Williston Basin
Interstate Pipeline Company (Williston). Further comments were filed by
INGAA jointly with NGSA, and by AGA.
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    \6\ 71 FR 36276 (June 26, 2006).
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III. Discussion

    7. The blanket certificate program was designed to provide an
administratively efficient means to authorize a generic class of
routine activities, without subjecting each minor project to a full,
case-specific NGA section 7 certificate proceeding. In 1982, in
instituting the blanket certificate program, the Commission explained
the new program as follows:

    [T]he final regulations divide the various actions that the
Commission certificates into several categories. The first category
applies to certain activities performed by interstate pipelines that
either have relatively little impact on ratepayers, or little effect
on pipeline operations. This first category also includes minor
investments in facilities which are so well understood as an
established industry practice that little scrutiny is required to
determine their compatibility with the public convenience and
necessity. The second category of activities provides for a notice
and protest procedure and comprises certain activities in which
various interested parties might have a concern. In such cases there
is a need to

provide an opportunity for a greater degree of review and to provide
for possible adjudication of controversial aspects. Activities not
authorized under the blanket certificate are those activities which
may have a major potential impact on ratepayers, or which propose
such important considerations that close scrutiny and case-specific
deliberation by the Commission is warranted prior to the issuance of
a certificate.\7\

    \7\ 47 FR 24254 (June 4, 1982).
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    8. The Commission continues to apply the above criteria in an
effort to distinguish those types of activities that may appropriately
be constructed under blanket certificate authority from those projects
that merit closer, case-specific scrutiny due to their potentially
significant impact on rates, services, safety, security, competing
natural gas companies or their customers, or on the environment. The
Commission believes the regulatory revisions put in place by this Final
Rule are consistent with the above-described rationale for and
constraints on the blanket certificate program.
    9. In addition, ``[u]nder section 7 of the NGA, pursuant to which
the blanket certificate rule is promulgated,'' the Commission has ``an
obligation to issue certificates only where they are required by the
public convenience and necessity. The blanket certificate rules set out
a class of transactions, subject to specific conditions, that the
Commission has determined to be in the public convenience and
necessity.'' \8\ As discussed in the NOPR, and as further explained
below, the Commission believes that the class of blanket-eligible
transactions can be enlarged consistent with its statutory obligation
to affirm that each new project or service is required by the public
convenience and necessity.
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    \8\ Regulation of Natural Gas Pipelines After Partial Wellhead
Decontrol, Order No. 436, 50 FR 42408 (Oct. 18, 1985), FERC Stats. &
Regs. ] 30,665 at 31,554 (1985), vacated and remanded, Associated
Gas Distributors v. FERC, 824 F.2d 981 (D.C. Cir. 1987), cert.
denied, 485 U.S. 1006 (1988), readopted on an interim basis, Order
No. 500, 52 FR 30334 (Aug. 14, 1987), FERC Stats. & Regs. ] 30,761
(1987), remanded, American Gas Association v. FERC, 888 F.2d 136
(D.C. Cir. 1989), readopted, Order No. 500-H, 54 FR 52344 (Dec. 21,
1989), FERC Stats. & Regs. ] 30,867 (1989), reh'g granted in part
and denied in part, Order No. 500-I, 55 FR 6605 (Feb. 26, 1990),
FERC Stats. & Regs. ] 30,880 (1990), aff'd in part and remanded in
part, American Gas Association v. FERC, 912 F.2d 1496 (D.C. Cir.
1990), cert. denied, 111 S.Ct. 957 (1991).
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A. Proposed Regulatory Revisions, Comments, and Commission Response

    10. The Commission proposes to expand the scope of blanket
certificate activities to include facilities and services that have
heretofore been excluded from the blanket program and to expand the
scale of blanket certificate activities by raising the current project
cost limits.

B. Expanding Blanket Authority to Cover Currently Excluded Facilities

    11. The Final Rule adds Sec. Sec.  157.210, .212, and .213 to
include, respectively, certain mainline, LNG and synthetic gas, and
storage facilities within the blanket certificate program. As discussed
in the NOPR, these facilities were initially barred from the blanket
program out of concern that their cost and operation could adversely
impact existing customers' rates and services. These concerns remain
valid, and in addition, there has been increased attention to the
environmental, safety, and security implications of all natural gas
facilities. To ensure these matters receive appropriate review, all
projects involving the additional types of facilities now permitted
under the expanded blanket certificate program (with the exception of
the remediation and maintenance of underground storage field
facilities) will be subject to the prior notice provisions of the
regulations regardless of their estimated costs. As explained in the
NOPR, the Commission expects that by requiring prior public notice for
blanket projects involving these previously excluded facilities, and by
providing for more information to be included in notices to affected
landowners and the public, and by providing additional time to assess
proposed blanket projects, the Commission, affected landowners, and
others will be afforded a reasonable opportunity to review the
potential impacts of proposed projects prior to construction.
    12. APGA asks that the Commission affirm these measures will ensure
adequate staff review of prior notice submissions. The Commission
expects that the revised regulations will enable staff to make a
meaningful assessment of proposed blanket projects--and as appropriate,
protest pursuant to Sec.  157.205(e) of the Commission's regulations--
prior to a project going forward.
1. Section 157.210, Mainline Natural Gas Facilities
    13. The Final Rule adds Sec.  157.210 to allow blanket certificate
holders to acquire, construct, modify, replace, and operate mainline
gas facilities. The Final Rule makes the following modifications. At
the end of the first sentence of this section, the phrase ``natural gas
mainline facilities,'' is qualified by adding ``including compression
and looping, that are not eligible facilities under Sec.
157.202(b)(2)(i).'' This clarifies that blanket certificate authority
can be employed for mainline projects that include compression and loop
line facilities, and also clarifies, in response to INGAA's request,
that this new section does not displace, but is in addition to, the
existing provisions which state that certain mainline facilities are
eligible to be replaced or rearranged under blanket authority. In
addition, the reference in the NOPR to the authority to ``abandon'' is
removed, since as Williston observes, blanket abandonment provisions
are described in Sec.  157.216 of the Commission's regulations.
Instead, a cross-reference to Sec.  157.210 will be added to Sec.
157.216, so that the blanket abandonment authority and procedure now in
place will be extended to new mainline facilities and services.
    14. INGAA, Duke, and Dominion insist there is no need for prior
notice for mainline projects that come under the automatic
authorization cost limit, asserting that the Commission already has the
capability to monitor mainline projects for adverse impacts, abuses,
and segmenting by means of a review of annual reports and post-
construction audits. On the other hand, APGA and IPAA argue in favor of
prior notice for all Sec.  157.210 mainline activity, regardless of
cost.
    15. Although the Commission is comfortable with its capability to
assess and monitor the variety of activities currently included within
the blanket certificate program, this Final Rule draws into the blanket
program facilities which heretofore have been deliberately excluded due
to the expectation that the limited regulatory oversight provided under
the blanket program would be inadequate to properly review such
facilities. Oversight via review of annual reports and post-
construction audits, as suggested in comments, would only identify
transgressions after the fact, whereas prior notice functions as a
preventive measure. Given the Commission's lack of experience under the
blanket program in supervising mainline, LNG and synthetic gas, and
storage facility projects, the NOPR reasoned it would be prudent to
provide prior notice for all projects involving these newly blanket-
enfranchised facilities. The Commission affirms that reasoning here,
with an exception described below for certain storage facilities.
    16. In the NOPR, in response to a query by Kinder Morgan Interstate
Gas Transmission, LLC (Kinder Morgan), the Commission stated its
expectation that the proposed regulatory revisions would provide
certificate holders with the

option to construct mainline facilities under blanket certificate
authority. This Final Rule does so. Accordingly, this rule renders moot
Kinder Morgan's and Northern Natural Gas Company's joint petition in
Docket No. CP06-418-000 for a temporary waiver of the blanket
certificate program's exclusion of mainline facilities pending revision
of the blanket regulations to permit the construction of mainline
projects.\9\ As of the effective date of this rule, mainline facilities
may be constructed pursuant to a project sponsor's blanket certificate
authority, provided the proposed facilities comply with the cost limits
and other requirements of the blanket certificate program.
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    \9\ The Commission will issue a separate notice to dismiss
Kinder Morgan's and Northern Natural Gas Company's petition in
Docket No. CP06-418-000.
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2. Section 157.212, LNG and Synthetic Natural Gas Facilities
    17. The Final Rule adds Sec.  157.212 to allow certificate holders
to acquire, construct, modify, replace, and operate facilities used to
transport LNG or synthetic gas. The Final Rule removes the reference in
the NOPR to the authority to ``abandon,'' and instead adds a cross-
reference to the blanket abandonment authority described in Sec.
157.216 of the Commission's regulations. In addition, Sec.  157.212
will be revised to clarify that it applies to facilities that transport
a mix of synthetic and natural gas and to facilities that transport
exclusively revaporized LNG.\10\
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    \10\ The Commission's jurisdiction over the interstate
transportation of natural gas does not extend to facilities that
transport exclusively synthetic gas. See, e.g., Henry v. FPC, 513
F.2d 395 (D.C. Cir. 1975).
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    18. As was the case regarding the issue of prior notice for
mainline facilities, comments both favor and oppose applying prior
notice to all LNG and synthetic gas facilities that are now newly
subject to authorization under the blanket program. In accord with the
above discussion regarding mainline facilities, the Commission will
retain the prior notice requirement. In the NOPR, the Commission added
that automatic authorization was unsuited to LNG and synthetic gas
facilities because these projects raised fact-specific issues of
safety, security, and gas interchangeability.
    19. In opting for prior notice, INGAA contends the Commission is
being ``unduly cautious,'' since ``LNG supplies are not new to the
natural gas industry and have been flowing into the U.S. grid for a
long time now.'' \11\ INGAA's observation, while not wrong, overlooks
the difficulties developers, producers, pipelines, LDCs, and gas
consumers have encountered in trying to reach consensus on national
natural gas quality and interchangeability standards. The concerted
effort by representatives of these sectors of the gas industry to
establish such standards, ongoing since 2004, was prompted by the
prospect of increasing supplies of LNG, leading the industry and the
Commission to consider whether revaporized LNG could contribute to the
physical deterioration of existing gas lines and whether the
substitution of one gaseous fuel for another in a combustion
application could materially change operational safety, efficiency,
performance, or air pollution emissions. In June 2006, the Commission
denied an NGSA petition to establish natural gas quality and
interchangeability standards \12\ and issued a policy statement
declaring its intent to address disputes over gas quality and
interchangeability on a case-by-case basis.\13\ Given the potential
impact that a change in the makeup of a longstanding gas supply profile
could have, the Commission believes that to the extent requiring prior
notice for Sec.  157.212 facilities may be characterized as cautious,
caution is in order. Thus, the Commission will adopt the prior notice
requirement for all LNG and synthetic gas facilities.\14\
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    \11\ INGAA's Comments at 9 (Aug. 25, 2006).
    \12\ 115 FERC ] 61,327 (2006).
    \13\ 115 FERC ] 61,325 (2006).
    \14\ In view of the issues that have arisen in the Commission
proceeding regarding gas quality and interchangeability standards,
Duke is incorrect in stating that ``there are no construction,
environmental, operational, or safety considerations that
distinguish regasified LNG pipelines from other natural gas
pipelines.'' Duke's Comments at 9 (Aug. 25, 2006).
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    20. The NOPR states that ``blanket certificate authority will not
apply to the outlet pipe of an LNG or synthetic gas plant, but only to
those facilities that attach to the directly interconnected pipe.''
\15\ APGA endorses this approach. INGAA, NGSA, Duke, and Dominion do
not, and advocate extending blanket certificate authority to include
takeaway lateral lines that connect directly to existing LNG terminals.
AGA seeks clarification on this point. NGSA asserts that if a new
lateral from an existing LNG terminal does not require modifying the
terminal to accommodate the new lateral, the new lateral should not be
subject to the mandatory prefiling specified in Sec.  157.21 of the
Commission's regulations. Dominion goes further, and recommends
enlarging the blanket certificate program to include improvements and
modifications to existing LNG terminals and LNG storage facilities that
do not alter the facility's capacity. Duke goes further still, and
claims that ``if the Commission continues to believe that it is
necessary to evaluate an LNG terminal and take-away pipeline in tandem,
there is no reason why such pipeline facilities could not be both
constructed pursuant to blanket authority and evaluated in connection
with the construction of a new LNG terminal or expansion of an existing
LNG terminal.'' \16\
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    \15\ 71 FR 36276 at 36279 (June 26, 2006); FERC Stats. & Regs. ]
32,606 at 32,876 (2006); 115 FERC ] 61,338 at P 28 (2006).
    \16\ Duke's Comments at 10 (Aug. 25, 2006).
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    21. The Commission views Duke's suggestion as incompatible with the
statutory and regulatory requirements applicable to LNG terminal
facilities. In the NOPR, the Commission explained that:

    LNG plant facilities are not within the class of minor, well-
understood, routine activities that the blanket certificate program
is intended to embrace; LNG plant facilities necessarily require a
review of engineering, environmental, safety, and security issues
that the Commission believes only can be properly considered on a
case-by-case basis.\17\ [Thus, b]ecause an LNG terminal and the
facilities that attach directly to it are interdependent--
inextricably bound in design and operation--a terminal and its
takeaway facilities must be evaluated in tandem; both merit a
similar degree of regulatory scrutiny.'' \18\

    \17\ 71 FR 36276 at 36279-80 (June 26, 2006); FERC Stats. &
Regs. ] 32,606 at 32,877 (2006); 115 FERC ] 61,338 at PP 29-30
(2006).
    \18\ Id.
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    22. In view of the complexity of the issues raised by LNG
terminals, Sec.  157.21 requires that proposals to construct a new LNG
terminal, or to make certain modifications to an existing LNG terminal,
be subject to a mandatory 180-day prefiling procedure. The 180-day
prefiling procedure conflicts with the expedited nature of the blanket
certificate program. Thus, facilities subject to mandatory prefiling
cannot be authorized under the blanket certificate program.
    23. For example, in the case of a planned, but not yet authorized,
LNG terminal, if the facilities that attach directly to the new
terminal are ``related jurisdictional natural gas facilities,'' as
defined by Sec.  153.2(e)(1) of the Commission's regulations, they must
be considered in conjunction with the LNG terminal in a 180-day
mandatory prefiling procedure. In the case of an existing LNG terminal,
if the construction or modification of facilities that attach directly
to the terminal will result in modifications to the terminal, and those
modifications to the terminal

are subject to mandatory prefiling under Sec.  157.21(e)(2), then the
facilities that attach directly to the terminal are ``related
jurisdictional natural gas facilities'' and must be considered along
with the terminal modifications as part of a mandatory 180-day
prefiling procedure. Because ``related jurisdictional natural gas
facilities'' are to be reviewed in tandem with LNG terminals in a 180-
day prefiling, these facilities are excluded from the blanket
certificate program.
    24. However, blanket certificate authority can be applied to
facilities that attach directly to an existing LNG terminal if the
construction and operation of the attached facilities will not involve
any modifications to the terminal, or if there are modifications to the
terminal, they are not significant modifications that trigger the 180-
day mandatory prefiling process. In view of this latter category of
facilities, the Commission qualifies its description in the NOPR on the
applicability of the blanket program. Provided the construction and
operation of facilities that attach directly to an existing LNG
terminal do not involve modifications to the terminal that result in a
mandatory prefiling process, blanket certificate authority extends to
such facilities.
    25. Sempra complains that an existing blanket certificate holder,
in seeking to build a pipeline to attach to an LNG terminal, would have
a competitive advantage over a new entrant compelled to seek case-
specific authority. Sempra asks the Commission to preclude any project
sponsor from using blanket certificate authority to gain a timing
advantage over a new entrant in seeking to serve the same LNG supply
source or market.
    26. As discussed above, a new line to a new LNG terminal could not
be built under the expanded blanket certificate authority, and
depending on circumstances, neither could a new line to an existing LNG
terminal. That notwithstanding, the Commission acknowledges that, to
the extent proceeding under the blanket program provides an expedited
authorization compared to a case-specific applicant, new entrants could
be placed at a competitive disadvantage. However, the Commission notes
that any timing-related advantage is diminished because a blanket-
eligible line interconnecting directly with an LNG terminal will be
subject to prior notice, and thus to protest, and an unresolved protest
would cause the prior notice blanket application to be treated as an
application for case-specific NGA section 7(c) authorization.\19\
Further, while this Final Rule increases cost limits under the blanket
certificate regulations, the cost limits nevertheless will continue to
ensure that blanket authority extends only to relatively modest
projects; hence, there would not necessarily be a substantial disparity
in time in building under a blanket certificate and obtaining case-
specific authorization for a modest proposal. The Commission concludes
that the benefit the blanket certificate program provides in terms of
administrative efficiency and cost savings outweigh any accompanying
market distortion. Accordingly, Sempra's request to selectively revoke
blanket certificate authority is denied.
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    \19\ See 18 CFR 157.205(f) (2006).
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3. Section 157.213, Underground Storage Field Facilities
    27. The Final Rule adds Sec.  157.213 to allow certificate holders
to acquire, construct, modify, replace, and operate certain underground
storage facilities. As with Sec.  157.210 and Sec.  157.212, Sec.
157.213 is revised to remove the reference in the NOPR to the authority
to ``abandon,'' and instead a cross-reference is added to the blanket
abandonment authority described in Sec.  157.216 of the Commission's
regulations. The Commission will further revise this section as
described below.
    28. Comments again both favor and oppose applying prior notice to
all underground storage projects. However, in this instance, the
Commission finds it appropriate to permit automatic authorization for
certain types of storage projects. Dominion contends that automatic
authorization should be allowed for storage projects limited to
remediation and maintenance, on the grounds that such activities have
little impact on customers or operations compared to projects to
improve a storage facility. The Commission concurs and will provide for
automatic authorization for storage remediation and maintenance
activities under revised Sec.  157.213(a).\20\
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    \20\ The Commission consequently will modify 18 CFR 157.207 to
include storage remediation and maintenance as an activity subject
to the annual reporting requirements applicable to blanket projects
undertaken pursuant to automatic authorization.
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    29. The NOPR states that ``the proposed expanded blanket
certificate authority is not intended to include storage reservoirs
that are still under development or reservoirs which have yet to reach
their inventory and pressure levels as determined from their original
certificated construction parameters.'' \21\ Dominion asks the
Commission to extend blanket certificate authority to activities at
existing storage reservoirs that are not operated at their originally
certificated maximum inventory and projected performance levels.
Dominion argues that unlike a new storage reservoir, reliable
operational data are available for existing storage facilities, even if
an existing field has yet to reach its certificated maximum capacity or
original projected performance.
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    \21\ 71 FR 36276 at 362782 (June 26, 2006); FERC Stats. & Regs.
] 32,606 at 32,880 (2006); 115 FERC ] 61,338 at P 43 (2006).
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    30. The Commission disagrees. While it may be true that reliable
operational data are available for some existing fields that have yet
to reach capacity, this is not always the case. Thus, the Commission
does not believe that the blanket program, which permits an expedited
and generic approval following a limited prior notice period, is the
appropriate means to review and approve such projects. As stated in the
NOPR, storage reservoirs that are still under development or reservoirs
which have yet to reach their inventory:

May or may not have reliable information available on geological
confinement or operational parameters via data gathered throughout
the life of a storage field, whereas new storage zones lack data
collected over time on physical and operational aspects of a field.
Therefore, for such facilities, the Commission finds it necessary to
individually examine each reservoir to determine its potential
operating parameters (capacity, cushion and working gas, operational
limits, well locations, etc.) and to review data essential to
understand and predict how modifications might affect the integrity,
safety, and certificated parameters of the facility.\22\

    \22\ Id.
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    31. Dominion questions whether the Commission needs an inventory
verification study, shut-in reservoir pressures, and cumulative gas-in-
place data, which would be required for blanket projects under proposed
Sec. Sec.  157.213(b)(7) and (8), since the Commission does not
currently require submission of this information in case-specific NGA
section 7(c) applications for storage projects.\23\ Dominion requests
the Commission either remove these information requirements or require
the data described in Sec. Sec.  157.213(c)(1) through (9) only to the
extent necessary to demonstrate that the proposed project will not
alter a storage

reservoir's total inventory, maximum pressure, or buffer boundaries.
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    \23\ Note the regulatory revisions proposed in the NOPR as 18
CFR 157.213(b)(1) through (9), are codified in this Final Rule, and
referred to hereafter, as 18 CFR 157.213(c)(1) through (9).
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    32. Dominion is correct in observing that the information specified
in Sec. Sec.  157.213(c)(1) through (9) is not now required to be
submitted under the existing regulations for case-specific certificate
applications. However, the Commission considers this information
necessary to make an informed decision on storage projects. Therefore,
when this information is not included in a case-specific application,
Commission staff, as a matter of routine practice, will request the
data from the project sponsor. Section 157.213(c)(1) through (9) merely
codifies this practice. Were this information not included in a prior
notice filing, in all likelihood, Commission staff would request this
data from the project sponsor, and in the event the response was
incomplete or staff lacked time to assess the information by the
conclusion of the prior notice period, staff could be compelled to
protest the filing. Thus, to ensure the timely consideration of a prior
notice request for a storage project, the filing must contain the
information specified in Sec. Sec.  157.213(c)(1) through (9). However,
the Commission acknowledges that not all the information specified in
Sec. Sec.  157.213(c)(1) through (9) will be relevant in all cases, and
will thus adopt Dominion's suggestion and qualify Sec.  157.213(c) to
state that the information requirements apply ``to the extent necessary
to demonstrate that the proposed project will not alter a storage
reservoir's total inventory, reservoir pressure, reservoir or buffer
boundaries, or certificated capacity, including injection and
withdrawal capacity.''
4. Blanket Project Cost Limits
    33. The NOPR proposes raising the blanket certificate program's
2006 cost limits from $8,200,000 to $9,600,000 for each automatic
authorization project and from $22,700,000 to $27,400,000 for each
prior notice project. AGA, APGA, Con Ed, and Orange and Rockland urge
the Commission not to raise the cost limits, cautioning that permitting
more expensive projects would risk transforming the nature of the
blanket program from one intended to cover small and routine
construction activities into a program under which projects with
potentially significant rate and environmental impacts could be
built.\24\ On the other hand, INGAA, NGSA, and pipelines propose to
raise the cost limits to $16,000,000 for an automatic authorization
project and $50,000,000 for a prior notice project, repeating the claim
that construction costs have risen faster than the overall rate of
inflation, and noting that these higher cost limits have been in effect
since November 2005, as a post-hurricane relief measure, with no
apparent adverse impact.
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    \24\ AGA stresses that if a certificate holder with a relatively
modest rate base relies on blanket certificate authority to
undertake additional construction, then even a project that falls
well within the blanket cost limits has the potential to alter
existing customers' rates. AGA, Con Ed, and Orange and Rockland
speculate that in the case of a large company, a blanket project
could have a disproportionate impact if project costs are assigned
to a limited number of customers, e.g., customers in a single rate
zone. The Commission expects such concerns to be raised in protest
to the notice of a proposed blanket project. If concerns regarding
disproportionate rate impacts are not resolved, the proposed project
and its rate impacts would then be treated as a case-specific NGA
section 7(c) certificate proceeding. For blanket projects which
qualify for automatic authorization, and as a result, do not require
public notice prior to construction, concerns about rate treatment
can be raised when the certificate holder seeks to roll in the cost
of the automatically authorized project in a future NGA section 4
rate proceeding.
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    34. While gas project costs, including environmental compliance and
public outreach, have trended up since 1982, so have the blanket
program cost limits, almost doubling since 1982.\25\ Since 1982, the
Commission has relied on the Department of Commerce's GDP implicit
price deflator as a measure to make annual adjustments to the blanket
cost limits. In the NOPR, the Commission applied an alternative price
tracker that is focused more narrowly on gas utility construction
costs,\26\ and as a result proposed to raise the cost limits to account
for the discrepancy between the two different inflation indicators. The
comments do not propose any alternative criteria or methodology for
affirming or altering the blanket project cost limits.
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    \25\ In considering how to gauge project costs over time, the
NOPR observed that recently ``certain project components--notably
the price of steel pipe--have risen far faster than any measure of
overall inflation. However, although steel prices have run up over
the past several years, in looking back to 1982, there were periods
during which steel prices fell substantially. Further, changing
regulatory requirements and construction techniques, to which
Petitioners attribute cost increases, do not always add to project
costs, and may well contribute to cost reductions and
efficiencies.'' 71 FR 36276 at 36283 (June 26, 2006); FERC Stats. &
Regs. ] 32,606 at 32,884 (2006); 115 FERC ] 61,338 at P 57 (2006).
    \26\ The Commission employed the Handy-Whitman Index of Public
Utility Construction Costs, Trends of Construction Costs, Bulletin
No. 162, 1912 to July 1, 2005. In doing so, the Commission
cautioned, and reiterates here, that even if it were possible to
mirror 1982 costs to costs today, the dollar amounts would not
reflect proportionate impacts on pipeline customers' rates, since in
1982 the commodity cost of gas was a significant portion of pipeline
customers' merchant service rate, whereas today, gas sales costs are
no longer bundled with transportation service costs.
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    35. INGAA and NGSA propose making permanent the doubled project
cost limits that are currently in place temporarily.\27\ However, the
currently effective cost limits for the blanket certificate program
were put in place temporarily to expedite construction of projects that
would increase access to gas supply to respond to the damage to gas
production, processing, and transportation brought about by hurricanes
Katrina and Rita. In temporarily doubling blanket project cost limits,
the Commission did not assess alternative inflation trackers or the
costs associated with construction. Rather, the decision to expand the
blanket program was based on the Commission's assessment of the damage
done by the hurricanes and the magnitude of the effort that would be
required to recover. There was no expectation that the temporary
expansion of the blanket certificate program might be made permanent.
If the blanket certificate program were expanded by approximately
doubling the project cost limits as requested, the nature of the
program would be changed such that the Commission could not be
confident that far more expensive and extensive projects would not have
adverse impacts on existing customers, existing services, competitors,
landowners, or the environment. Accordingly, the Commission adopts an
increase to $9,600,000 for each automatic authorization project and
$27,400,000 for each prior notice project, and denies requests for a
further increase at this time, other than annual inflation adjustments
as provided for under Sec.  157.208(d) of the Commission's regulations.
---------------------------------------------------------------------------

    \27\ The current temporary increase in blanket cost limits
expires on February 28, 2007.
---------------------------------------------------------------------------

5. Rate Treatment for Blanket Project Costs
    36. Blanket services are provided at a certificate holder's
existing Part 284 rates, and blanket project costs are afforded the
presumption that they will qualify for rolled-in rate treatment in a
future NGA section 4 proceeding. Since blanket costs are presumed to be
so small as to have no more than a de minimis rate impact, the proposal
to increase cost limits calls this presumption into question.
Therefore, the NOPR sought comment on whether to permit project
sponsors the option of requesting an incremental rate for a particular
blanket certificate project.
    37. Commenters generally support this option, and note that
applying an incremental rate to blanket projects would address the
worry that existing customers might be made to subsidize new projects.
INGAA argues that

because most incremental rate proposals are consensual, there is no
need for the Commission to review an agreed-upon rate. To preclude
existing customers from making unwarranted contributions to cover the
costs of blanket projects, NGSA suggests requiring a project sponsor to
file a tariff sheet in a limited NGA section 4 filing proposing an
incremental rate, which the Commission will then act on as a normal
tariff matter by accepting, rejecting, or suspending the rate at the
end of the 30-day tariff notice period. In considering an incremental
rate for a proposed blanket project, AGA, Con Ed, and Orange and
Rockland urge the Commission to verify that each project will be
consistent with the Policy Statement on New Facilities.\28\
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    \28\ Certification of New Interstate Natural Gas Pipeline
Facilities, 88 FERC ] 61,227 (1999), orders clarifying statement of
policy, 90 FERC ] 61,128 and 92 FERC ] 61,094 (2000), order further
clarifying statement of policy, 92 FERC ] 61,094 (2000).
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    38. Commenters present no compelling reason to modify the current
practice of presuming, initially, that blanket project costs will
qualify for rolled-in rate treatment, then evaluating the validity of
this presumption, subsequently, in an NGA section 4 rate proceeding.
Accordingly, for the time being, the Commission will continue to apply
a presumption that blanket costs will qualify for rolled-in rate
treatment. However, the Commission will revisit this question if there
is evidence that the enlargement of the blanket certificate program to
permit additional facilities and higher cost limits materially alters
the manner in which project sponsors employ their blanket certificate
authority or otherwise undermines the basis for the presumption of
rolled-in rate treatment. Absent any such indication, the Commission
hesitates to put in place a procedure to assess and approve initial
rates for proposed blanket projects, since the additional time
necessary to complete such a review will inevitably stretch the span
between notice of a project and commencement of construction. To the
extent practicable, the Commission aims to retain the benefit of an
expedited project authorization available under the current blanket
certificate program.
    39. Emphasizing that revised blanket certificate regulations do not
require project sponsors to demonstrate that a proposal conforms to the
Policy Statement on New Facilities, Con Ed and Orange and Rockland
request that the Commission (1) require that the prior notice of a
proposed blanket project quantify impacts on existing customers and
verify that the project will be fully functional without any additional
construction; (2) allow protests to a blanket project that raise
legitimate rate-related issues to be resolved in a case-specific
proceeding; (3) extend the presumption of rolled-in rate treatment to a
blanket project's costs only if the blanket project sponsor
demonstrates the project will be fully subscribed or provide benefits
to existing customers; and (4) find that the presumption favoring
rolled-in rate treatment is rebutted if a blanket project is
subsequently determined to be a segmented portion of a larger
undertaking. Sempra suggests requiring project sponsors that undertake
blanket storage projects and that have an existing cost-based recourse
rate to discuss the rate implications of a proposed project in the
prior notice of the project in order to demonstrate that existing
customers will not subsidize the new facilities.
    40. The Commission believes that the existing blanket certificate
regulations are adequate to address the matters Con Ed, Orange and
Rockland, and Sempra raise. The existing prohibition against
segmentation is intended to preclude projects that would not be
functional without additional construction. The rate impacts of a
blanket project, while not now reviewed in advance, are considered in a
future rate proceeding--and in the rate proceeding, the issues of
subsidization and system benefits can be addressed. The regulations
permit any interested person to protest a blanket project subject to
the prior notice provisions; each protest, whether rate related or
otherwise, will be considered on its merits on a case-by-case basis.
    41. Con Ed, Orange and Rockland complain that the presumption
favoring rolling in blanket costs is rarely rebutted.\29\ APGA contends
certificate holders resist filing rate cases ``due primarily to the
fact that they are permitted under the current regime to over-recover
their costs with impunity, [thus] by the time that most pipelines do
file for increased rates, the cumulative dollar impact of the numerous
no-notice and prior notice projects will be quite substantial, with no
viable customer recourse.'' \30\ APGA requests the Commission compel
certificate holders to file rate cases regularly, suggesting a three-
year cycle.
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    \29\ The parties assert that the Commission is reluctant to
reverse a presumption in favor of rolled-in rate treatment, citing
Transcontinental Gas Pipe Line Corp. (Transco), 106 FERC ] 61,299
(2004) and 112 FERC ] 61,170 (2005). Transco did not focus on
blanket project costs, but on the impact of a change in Commission
rate policy, and how the changed policy should apply in an NGA
section 4 proceeding to case-specific expansion projects built under
the Commission's prior rate policy regime. In Transco, and in its
policy statements, the Commission discussed its aspiration to
provide as much up-front assurance as possible of how an expansion
would be priced so that the pipeline and prospective shippers could
make informed investment decisions. This holds true regardless of
whether a project is constructed under blanket or case-specific
authority; consequently, the Commission is reluctant to reverse
either a predetermination or a presumption regarding future rate
treatment. Nevertheless, in a subsequent NGA section 4 rate
proceeding, the Commission may determine that its initial,
provisional assessment of what the appropriate rate treatment would
be was in error, and so reverse the predetermination or presumption.
    \30\ APGA's Comments at 8 (Aug. 25, 2006).
---------------------------------------------------------------------------

    42. The Commission acknowledges that in the vast majority of rate
proceedings, the outcome affirms the presumption favoring rolling in
blanket costs. The Commission notes that in rate proceedings, there is
rarely any effort to rebut the presumption, which the Commission takes
to be an indication of the legitimacy of the presumption. The
Commission recognizes that a certificate holder is likely to weigh its
own self interest when considering whether to initiate an NGA section 4
rate proceeding. However, if a company fails to initiate a rate
proceeding in a timely manner, such that distortions over time have
rendered its rates unjust and unreasonable, a complaint can be filed
under NGA section 5.

C. Changes in the Notice Procedures, Environmental Compliance
Conditions, and Reporting Requirements

    43. In initiating the blanket certificate program in 1982, the
Commission explained that Sec.  157.206(a)(1) was intended to ``reserve
the Commission's right to amend Subpart F so as to add, delete or
modify the standard conditions and any procedural requirements * * * if
changing circumstances or experience so warrant.'' \31\ In this case,
increasing the scope and scale of the blanket certificate program
increases the odds that projects authorized under the expanded blanket
certificate program could have significant adverse impacts on the
quality of the human environment. In view of this, the Commission
proposed in the NOPR, and is adopting in this Final Rule, additional
procedures and mitigation measures to adequately ensure against the
potential for adverse environmental impacts due to the enlargement of
the blanket certificate program. The current environmental requirements
described in Sec.  157.206(b), and the revisions to the environmental
requirements implemented by this Final

Rule, apply to all projects authorized under the blanket certificate
program.
---------------------------------------------------------------------------

    \31\ Interstate Pipeline Certificates for Routine Transactions,
Order No. 234-A, 47 FR 38871 (Sept. 3 1982); FERC Stats. & Regs. ]
30,389 (1982).
---------------------------------------------------------------------------

1. Notification Requirements
a. Content of Landowner Notification
    44. The NOPR proposed revising Sec.  157.203(d)(2)(iv) to state
that in the notice to affected landowners of a proposed project, the
project sponsor include the most recent edition of the Commission
pamphlet titled ``An Interstate Natural Gas Facility on My Land? What
Do I Need to Know?'' INGAA and Williston point out that the current
edition of the pamphlet describes the Part 157, Subpart A, case-
specific certificate process generally, but does not describe the Part
157, Subpart F, blanket program specifically, and suggest the pamphlet
be revised or a separate pamphlet be prepared to cover the blanket
certificate procedures. The Commission will adopt the latter approach,
and to enhance administrative efficiency and ensure information remains
up-to-date, rather than a pamphlet, the Commission will require that
notice include blanket-specific information that will be available on
the Commission's Web site. Accordingly, Sec.  157.203(d)(2)(iv) of the
Commission's regulations is revised to read as follows: ``A general
description of the blanket certificate program and procedures, as
posted on the Commission's website at the time the landowner
notification is prepared, and the link to the information on the
Commission's website.''
    45. In response to Williston, the Commission clarifies that the
information requirements stated in Sec.  157.203(d)(1), including the
additional requirements of revised Sec.  157.203(d)(1)(iii), are
applicable to landowner notification for proposed blanket certificate
projects that qualify for automatic authorization. The information
requirements stated in Sec.  157.203(d)(2), including the additional
requirements of revised Sec.  157.203(d)(2)(i), (ii), (iv), (v), and
(vii), are applicable to public notice for proposed blanket certificate
projects that do not qualify for automatic authorization.
Summary of Rights
    46. Revised Sec.  157.203(d)(2)(v) requires that in the notice to
affected landowners of a proposed project, the project sponsor include
a brief summary of the rights the landowner has in Commission
proceedings and in proceedings under the eminent domain rules of the
relevant state(s). INGAA contends affected landowners will perceive any
discussion of eminent domain ``as a threat that their property will be
condemned if they do not consent to an easement agreement,'' an
interpretation that ``could cause more harm than good,'' \32\ and
comments that the description of state eminent domain rules may prove
misleading if a project sponsor proceeds with condemnation actions
under federal eminent domain law. Duke worries discussing landowner
rights would ``constitute the provision of legal advice in most
jurisdictions,'' and because ``[m]any bar associations prohibit lawyers
from giving advice to unrepresented third parties,'' this could create
a ``potential legal conflict for natural gas companies.'' \33\ Duke
recommends the contents of the notice be limited to informing affected
landowners of their right to obtain local counsel.
---------------------------------------------------------------------------

    \32\ INGAA's Comments at 16 (Aug. 25, 2006).
    \33\ Duke's Comments at 15 (Aug. 25, 2006).
---------------------------------------------------------------------------

    47. As INGAA recognizes, discussions concerning the potential to
acquire property rights by means of eminent domain can be disconcerting
to affected landowners. It has been the Commission's experience that
such discussions are most prone to be perceived as threatening when the
initial contact with landowners is made in person by a project
sponsor's representative seeking physical access to the property. The
Commission believes a far less provocative means to inform affected
landowners is to present them with a brief, clear, and candid
description of the eminent domain process in written form. Landowners
cannot be expected to engage in negotiations and reach decisions
regarding their property without such information. The Commission
concurs with INGAA's apprehension that landowners may be confused by a
description of state condemnation if federal condemnation is employed;
accordingly, Sec.  157.203(d)(2)(v) of the Commission's regulations is
revised to omit the reference to state proceedings and to instead
require a ``brief summary of the rights the landowner has in Commission
proceedings and in proceedings under the relevant eminent domain
rules.''
    48. The Commission agrees with Duke's observation that affected
landowners ought to be informed of their right to obtain counsel, and
this fact should be included in the required summary of landowner
rights. In response to Duke's concern that complying with Sec.
157.203(d)(2)(v) could constitute the practice of law or place project
sponsors with an ethical quandary, the Commission clarifies that the
required brief summary of rights and procedures is descriptive, not
interpretative. Project sponsors are expected to summarize or recite
applicable law, and no more. Not only need no advice be proffered, none
should be. Finally, the Commission notes similar arguments were
presented when the original landowner notification rule was instituted
in 1999;\34\ subsequently, there has been no evidence of significant
difficulties in complying with the requirements of the rule.
---------------------------------------------------------------------------

    \34\Landowner Notification, Expanded Categorical Exclusions, and
Other Environmental Filing Requirements, Order No. 609, 64 FR 57374
(Oct. 25, 1999); FERC Stats. & Regs. ]31,082 (1999).
---------------------------------------------------------------------------

c. Landowner Contact
    49. As proposed, Sec.  157.203(d)(1)(B) requires that in a notice
to affected landowners of a proposed project, the project sponsor
include a local contact to call first with problems or concerns. INGAA
points out that for certain projects, the personnel best able to
respond to problems or concerns may be remotely located, e.g., at a
company's central office. Therefore, INGAA asks that the ``local''
specification be removed, and in its place, project sponsors be
required to include the toll-free telephone number of a company
representative responsible for responding to affected landowners. The
Commission accepts INGAA's argument that its alternative procedure will
provide the same protections for landowners. Therefore, Sec.
157.203(d)(1)(B) of the Commission's regulations is revised to read as
follows: ``Provide a local or toll-free phone number and a name of a
specific person to be contacted by landowners and with responsibility
for responding to landowner problems and concerns, and who will
indicate when a landowner should expect a response.''
2. Notification Times
    50. Currently, under Sec.  157.203(d)(1) of the Commission's
regulations, before commencing construction of an automatically
authorized blanket project, project sponsors are required to give
affected landowners 30 days notice in advance of construction. For
blanket projects that do not qualify for automatic authorization, under
Sec.  157.203(d)(2), project sponsors are required to provide a 45-day
prior notice to the public, during which any person, or the Commission,
can protest the proposal. The Final Rule extends each of these time
frames by 15 days. INGAA, NGSA, and pipelines object to offering
additional notice time, arguing that (1) the proposed increase in
project

costs should not change the nature of the projects undertaken pursuant
to blanket authority; (2) there is no evidence the current notice
periods are too short; and (3) affected landowners and the public
should be able to reach a decision on whether to protest well within
the current notice periods.\35\
---------------------------------------------------------------------------

    \35\ As an alternative, Williston proposes that blanket projects
that qualify for automatic authorization retain a 30-day landowner
notification time period, with only larger, prior notice projects
subject to a 45-day notice. Williston claims its suggestion will
ensure that those parties affected by major projects, which are more
likely to raise landowner concerns, will be afforded additional
time, while minor and routine projects will be permitted to move
forward faster.
---------------------------------------------------------------------------

    51. The NOPR stated:

    In view of the proposed expanded scope and scale of blanket
certificate authority, which can be expected to increase the number
of automatic authorization projects undertaken and the number of
people impacted, an additional 15 days offers greater assurance that
there will be adequate time for landowners to state their concerns
and for project sponsors and the Commission to respond * * * [T]he
additional time will provide the Commission with a more reasonable
period of time to conduct and conclude its environmental assessment
(EA) of a proposal. This NOPR contemplates an increase in the
number, extent, kind, and complexity of facilities subject to
blanket certificate authority, yet even for the types of projects
currently permitted, 45 days has proved to be, on occasion, an
unrealistically short time for the consultation and analysis
required to complete an EA. The additional time will ensure the
Commission is not forced to protest a prior notice project merely as
a means to gain time to finish an EA. The Commission does not expect
the extended landowner and public notice periods to unduly delay
blanket certificate projects, since natural gas companies, in large
part, can dictate when a blanket certificate project may begin
construction by when the company elects to initiate the notice
process.

    52. It is not only the increase in project costs, i.e., an
expansion in scale of blanket authorized activities, it is also the far
wider range in the types of projects permitted under the blanket
authority that warrant adding time to allow for adequate consideration
of what the Commission anticipates will be blanket proposals that are
both more complex and more numerous. The Commission notes that to the
extent issues raised by a prior notice proposal cannot be addressed in
the time provided, a protest is the probable outcome, which if not
resolved, would result in the proposal being treated as a case-specific
NGA section 7(c) application necessitating the preparation and issuance
of a Commission order on the merits. The Commission affirms the need to
add 15 days to the notice periods, for the reasons stated in the NOPR.
3. Annual Report on Automatic Authorization Projects
    53. Revised Sec. Sec.  157.208(e)(4)(ii) and (iii) require that the
annual report filed for automatic authorization projects document the
progress toward restoration and discuss problems or unusual
construction issues and corrective actions. INGAA, Duke, and Williston
contend that providing this information will be burdensome, especially
for large pipelines that might rely on automatic authorization for
numerous projects each year, and may require placing additional
personnel on site to monitor progress on each project.
    54. The Commission has a different perspective. Certificate holders
are currently required to comply with all the conditions in Sec.
157.206(b) of the Commission's blanket certificate regulations. Section
157.206(b), in addition to setting forth specific conditions, makes
blanket certificate activities subject to the conditions in Sec.
380.15 of the Commission's regulations implementing NEPA, as well as
requiring that all blanket certificate activities be consistent with
all applicable law implementing the Clean Water Act, the Clean Air Act,
and other statutes relating to environmental concerns. Consequently, in
order to satisfy all the conditions applicable to blanket certificate
activities, it is already necessary for project sponsors (1) to have
plans and procedures in place to ensure compliance with environmental
conditions, and (2) to have environmental inspectors in place to record
a project's construction's compliance with environmental conditions.
Hence, the Commission does not view the new Sec.  157.208(e)(4)(ii) and
(iii) requirements as asking companies to gather and report new
information, but rather, as having companies submit information that
they are already obliged to compile. Similarly, to the extent project
sponsors find they have to place personnel at construction sites to
monitor a project's progress, this does not constitute a new
requirement, but rather, is a means to fulfill an ongoing obligation to
verify that projects are built in accord with all applicable
environmental conditions. Consequently, the Commission adopts the
expanded annual reporting requirements.
4. Environmental Conditions
(a). Noise Levels
(1). Compressor Station Site Property Boundary
    55. Revised Sec.  157.206(b)(5)(i) states that noise attributable
to a compressor station ``must not exceed a day-night level
(Ldn) of 55 dBA at the site property boundary.'' In
contrast, the current regulations specify that noise attributable to a
compressor station is to be measured ``at any pre-existing noise-
sensitive area.''
    56. Duke contends this new noise criterion could compel companies
to expand compressor site boundaries, which would add to the cost of
new or additional compression and, potentially, an increase in
environmental impacts associated with adding acreage to existing and
new sites. INGAA argues that compressors were installed in anticipation
of meeting noise level requirements as measured at the nearest noise
sensitive area, and that it is inequitable to institute this change and
compel ratepayers to bear the cost of compliance. Boardwalk objects to
the revision. HFP Acoustical asks if compressor noise is to be measured
as an average of noise levels at several spots on the perimeter of the
property line or if every point on a site's property boundary must meet
the 55 dBA standard. HFP Acoustical seeks clarification on whether
there will be any acknowledgment of existing sources of noise unrelated
to compressor operations.
    57. The Commission clarifies that this new noise measurement
criterion only applies to facilities placed in service after the
effective date of this rule;\36\ thus, existing compressor stations
continue to be required to meet the 55 dBA standard as measured at pre-
existing noise-sensitive areas, not at the site's property boundary.
However, any increase in noise due to additions or modifications to an
existing compressor station undertaken subsequent to the effective date
of this rule will require that the noise attributable to additions or
modifications be measured at the site's boundary. The Commission
further clarifies that when measuring noise at new stations, the 55 dBA
standard must be met at every point on

a site's property boundary.\37\ Finally, with respect to existing noise
levels at the property boundary, the certificate holder will only be
responsible for taking measures to reduce noise in excess of the 55 dBA
standard that is attributable to the operation of the compressor
station.
---------------------------------------------------------------------------

    \36\ In enacting the blanket certificate program, the Commission
expressed its expectation that any ``amendments would most likely
not affect facilities constructed or service undertaken before the
effective date of an amendment, but would apply prospectively.''
Order No. 234-A, 47 FR 38871 (Sept. 3, 1982); FERC Stats. & Regs. ]
30,389; 20 FERC ] 61,271 (1982).
    \37\ As a practical matter, the Commission expects noise
readings to be taken at the boundary closest to the compressors or
where noise is estimated to be loudest and at the site's ordinal
points.
---------------------------------------------------------------------------

    58. Although existing compressor stations are grandfathered, the
Commission concurs with comments that anticipate the new standard may
compel companies to extend existing compressor station boundaries if
additions or modifications are made that increase noise at the site
boundary. However, while this may entail additional costs, the
Commission does not view it as adding to adverse environmental impacts.
Indeed, overall environmental impacts may diminish, since land within a
station boundary is frequently set aside for benign environmental use.
Further, the Commission does not accept the contention that this
revision will induce the development of new compressor stations, since
the cost to mitigate noise attributable to adding compression at an
existing site is likely to be less than acquiring a new site.
(2). Noise Attributable to Drilling
    59. In Sec.  157.206(5)(ii), the Commission establishes the goal
that perceived noise from drilling in between 10 p.m. and 6 a.m. be
kept at or below 55dBA in any preexisting noise-sensitive area. INGAA
contends adherence to this goal would be impractical and costly. In
particular, INGAA contends that suspending a horizontal directional
drill (HDD) at night to adhere to noise restrictions would be a poor
engineering practice, creating a substantial risk of failure. INGAA
asks that the Commission (1) clarify the 55 dBA standard only applies
if ambient noise at night is below that level; (2) clarify that where
the existing noise level is 55 dBA or more, the noise standard be that
a new project produces no appreciable increase in the ambient noise;
and (3) clarify that mitigation measures may be employed to meet the 55
dBA noise level, such as temporarily relocating occupants of a noise
sensitive area.
    60. HFP Acoustical asks the Commission to clarify (1) whether the
nighttime noise constraint impacts daytime drilling noise standards;
(2) whether recirculation or other stabilizing activities could proceed
at night; and (3) whether the reference to nighttime as from 10 p.m. to
6 a.m. should be changed to 10 p.m. to 7 a.m. to conform to the period
during which a 10 dBA penalty currently applies. HFP Acoustical
suggests that if the Commission intends to set a nighttime noise level
limit, it state the limit in terms of the Leq night or
Ln value, rather than the Ldn value, which covers
a 24-hour period.
    61. In response to a request by Williston, the Commission clarifies
that the noise standard for drilling at night is a goal, not a
regulatory requirement. The Commission also clarifies that the Sec.
157.206(5)(ii) reference to ``perceived noise from the drilling'' has
the same meaning as the Sec.  157.206(5)(i) reference to ``noise
attributable to'' compression. Consequently, where the existing ambient
noise level at night is below 55 dBA, and drilling activity boosts it
above that threshold, the goal is to reduce the level down to 55 dBA;
where the ambient noise level at night is above 55 dBA, and drilling
activity causes that level to rise, the goal to take action to bring
noise back to its pre-drilling level. As an alternative to reducing the
noise from drilling, the Commission agrees that appropriate mitigation
measures can include temporarily relocating or compensating people
residing in areas affected by drilling activities.
    62. The Commission acknowledges that reaching the stated goal may
involve incurring additional costs, and recognizes that at times the
goal may be impractical. Further, reaching the goal should not be
achieved at the expense of adding to a project's risk. For example, the
Commission does not necessarily expect an ongoing HDD to be suspended
at night if the interruption could cause the drill to fail, but does
expect project sponsors to explore mitigation measures, such as
erecting barriers so that continuous drilling can meet the 55 dBA goal.
In response to HFP Acoustical, the Commission clarifies that all
activities associated with drilling, such as recirculation or other
stabilizing activities, are subject to the noise level goal; the
Commission leaves it to the project sponsor's discretion when, during a
24-hour cycle, to undertake a particular activity. The Commission will
adopt HFP Acoustical's suggestion and clarify that the nighttime noise
goal will apply between the hours of 10 p.m. and 7 a.m., and will be
expressed as a nighttime level, Ln, of 55 dBA.
b. Environmental Inspector Report
    63. Revised Sec.  157.208(c)(10) requires the project sponsor to
commit to have the Environmental Inspector's report filed weekly with
the Commission for prior notice projects. INGAA, Duke, and Williston
maintain this is unnecessary given blanket projects' relatively short
construction time, and is impractical given that inspectors may not be
on site on a weekly basis. INGAA proposes compliance be ensured by
having a completion report filed within 30 days of a project's in-
service date. INGAA believes this is adequate since the Commission
``hotline'' is available during construction to resolve allegations of
improprieties. Williston suggests weekly reporting only be required
when the Commission determines a particular blanket project merits such
scrutiny.
    64. The Commission does not believe that it can judge whether a
particular project merits weekly reporting before the fact, or that its
hotline can serve as a means to monitor ongoing construction progress,
or that an after-the-fact summary can identify, prevent, or remedy
irregularities in construction. The only practical means to monitor
compliance with environmental requirements is to monitor progress
during construction, hence the existing requirement that an
Environmental Inspector be on site during a project's construction. The
Commission views revised Sec.  157.208(c)(10) as a clarification of how
certificate holders are to verify their fulfillment of this existing
obligation. Neither the additional cost or inconvenience of having an
inspector available to review construction at multiple small project
sites, nor the length of the construction phase of a project, has any
bearing on the need for the regulatory requirement that a project
sponsor have an inspector present. The Commission notes that an
Environmental Inspector need not be an additional individual brought in
to review a construction site; this function can be performed by
someone on site, provided that individual has been properly trained and
charged with inspecting and reporting on compliance with environmental
plans and procedures and can perform all the Environmental Inspector's
responsibilities.

D. Different Rates for Different Customers for the Same Service

    65. In the NOPR, the Commission expressed the belief that its
existing policies permit a project sponsor to offer a rate incentive as
an inducement to get customers to commit to a proposed project early
(i.e., ``foundation shippers''), while offering a less favorable rate
to customers that commit later. Few comments take issue with the
Commission's conclusion.

    66. However, Process Gas Consumers stress the need for procedural
fairness, e.g., that all prospective customers receive the same notice
of a proposal, so as to preclude parties from making private bi-lateral
agreements in advance of a public offer of new capacity. Boardwalk asks
that pipelines be permitted to set rules for open seasons, provided
there is no discrimination in the announcement and application of the
rules. The Commission affirms that there must be no discrimination in
announcing an open season for new capacity and in accepting bids--all
potential customers must have an equal opportunity to obtain firm
capacity. Provided this condition holds, a project sponsor has the
flexibility to set the parameters of the open season.
    67. In the NOPR, the Commission observed that:

[u]nder the Petitioners' proposal, the rate incentives a project
sponsor offers to obtain early commitments to a project will be
based solely on the timing of each shipper's contractual commitment
to the project. However, the Commission can envision that different
project sponsors may prefer to offer rate incentives based on
something other than the timing of contractual commitments. Because
Commission policies permit rate differentials among customers based
on a number of grounds--including differing elasticities of demand,
volumes to be transported, and length of service commitments--a
project sponsor might wish to offer preferential rates to shippers
who contract for larger volumes of service.\38\

    \38\ 71 FR 36276 at 36289 (June 26, 2006); FERC Stats. & Regs. ]
32,606 at 32,894 (2006); 115 FERC 61,338 at P 101 (2006) (footnote
omitted). See, e.g., Rockies Express Pipeline LLC, 116 FERC ] 61,272
at P 69-73 (2006).
---------------------------------------------------------------------------

    APGA challenges the Commission's conclusion that it is appropriate
to permit project sponsors to offer preferential rates to customers
willing to commit to greater capacity. APGA argues this is unfair
because ``a large LDC that gets a preferential rate can, for example,
compete for new loads by offering lower delivery rates than the smaller
LDC despite that fact that both entities committed for capacity at the
same time.''\39\
---------------------------------------------------------------------------

    \39\ APGA's Comments at 12 (Aug. 25, 2006).
---------------------------------------------------------------------------

    68. The Commission stresses that the foregoing discussion in the
NOPR regarding rates constitutes a statement of the Commission's
existing policies and practices and this rulemaking proceeding does not
contemplate altering existing policies, practices, or regulations
affecting rates. Indeed, with respect to rates, the Commission
emphasized it did not intend to disturb the status quo, stating that:

[g]iven the variety of rate incentives that might be offered
consistent with Commission policy, the Commission believes it would
be premature to go beyond our general finding above and seek to
itemize every rate incentive that might be offered in an open season
without risk of undue discrimination. Instead, the Commission
prefers to review different rate incentives on a case-by-case
basis.\40\
---------------------------------------------------------------------------

    \40\ 71 FR 36276 at 36289 (June 26, 2006); FERC Stats. & Regs. ]
32,606 at 32,894 (2006); 115 FERC ] 61,338 at P 102 (2006).

    Thus, in the NOPR, the Commission made no determination beyond its
general observation that currently there are a variety of rate
incentives available to project sponsors to induce potential customers
to commit to a new proposal. As one such incentive, quantity can be a
legitimate basis for awarding new capacity at a lower rate during an
open season. When a project sponsor is weighing market conditions in
order to determine whether to invest in the construction of a new
pipeline or storage field, a lower rate bid by a potential customer can
nevertheless represent a significant incentive for the company to go
forward with the project if the customer is willing to commit at an
early stage to a large quantity.
    69. Given the fact-specific circumstances associated with a
particular project proposal, the Commission stated its intent to review
rate incentives on a case-by-case basis. If APGA believes a project
sponsor has employed an unduly discriminatory rate preference in a
particular case, APGA may raise this issue in the case in question, and
the Commission will address the merits of the matter in the context of
that case.
    70. As a general observation, a project sponsor can diminish its
risk of being charged with undue discrimination if its announcement of
an open season clearly specifies the parameters of the bidding
provisions and the available rate options so that all potential
customers have an equal opportunity to sign up for new service. For
example, in their petition, INGAA and NGSA describe the eligibility
standard for Group I foundation shippers variously as (1) the date
established in the open season for executing contracts or (2) the date
the project sponsor makes a ``go/no go'' decision for the project. The
first date would appear to involve less risk of discrimination, since
it would be announced and set at the start of the open season, whereas
the second date appears to give the project sponsor considerable
discretion as to when to terminate eligibility for Group I.

E. Additional Regulatory Revisions

    71. To implement the above revisions, the Commission will make the
following minor conforming revisions: (1) Sec.  157.203(b) of the
Commission's regulations is expanded to reference automatically
authorized storage remediation and maintenance projects under Sec.
157.213(a); (2) Sec.  157.203(c) of the Commission's regulations is
expanded to reference prior notice blanket projects under Sec. Sec.
157.210, .212. and 213(b); \41\ (3) Sec.  157.205(a) of the
Commission's regulations is expanded to reference prior notice blanket
projects under Sec. Sec.  157.210, .212. and 213(b); (4) Sec.  157.207
of the Commission's regulations is expanded to reference automatically
authorized storage remediation and maintenance projects under Sec.
157.213(a); and (5) Sec.  157.216 of the Commission's regulations is
expanded to provide for abandonment of facilities described by the
expanded blanket certificate authority.
---------------------------------------------------------------------------

    \41\ The revisions to 18 CFR 157.203 clarify, in response to a
question raised by Dominion, that all the provisions of this section
apply to projects proceeding under 18 CFR 157.210, .212. and .213.
---------------------------------------------------------------------------

IV. Information Collection Statement

    72. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting, record keeping, and public
disclosure requirements (collections of information) imposed by an
agency.\42\ Therefore, the Commission is providing notice of its
information collections to OMB for review in accordance with section
3507(d) of the Paperwork Reduction Act of 1995.\43\ Upon approval of a
collection of information, OMB will assign an OMB control number and an
expiration date. The only entities affected by this rule would be the
natural gas companies under the Commission's jurisdiction. The
information collection requirements in this Final Rule are identified
as follows:
---------------------------------------------------------------------------

    \42\ 5 CFR 1320.11 (2006).
    \43\ 44 U.S.C. 3507(d) (2005).
---------------------------------------------------------------------------

    73. FERC-537, ``Gas Pipeline Certificates: Construction,
Acquisition and Abandonment,'' identifies the Commission's information
collections relating to Part 157 of its regulations, which apply to
natural gas facilities for which authorization under NGA section 7 is
required, and includes all blanket certificate projects.
    74. FERC-577, ``Gas Pipeline Certificates: Environmental Impact
Statements,'' identifies the Commission's information collections
relating to the requirements set forth in NEPA and Parts 2, 157, 284,
and 380 of the Commission's regulations. Applicants have to conduct
appropriate studies which are necessary to determine the impact of the
construction and operation of proposed

jurisdictional facilities on human and natural resources, and the
measures which may be necessary to protect the values of the affected
area. These information collection requirements are mandatory.
    75. Because the expansion of the blanket certificate program will
permit projects that are now processed under the case-specific NGA
section 7(c) procedures to go forward under the streamlined blanket
certificate program, although the burden under the expanded blanket
certificate program will increase, the overall burden on the industry
will decrease. The Commission estimates that the total annual hours for
the blanket certificate program burden will increase by 7,727, whereas
the total annual hours associated with case-specific application
projects will decrease by 11,997. This represents an overall reduction
of 4,270 hours. The Commission did not receive specific comments
concerning the burden estimates in the NOPR, and uses the same
estimates in this Final Rule. Several commenters did indicate that
providing information for the Annual Report on Automatic Authorization
Projects would be burdensome. However, as explained herein, the
Commission believes that much of this information is already required
to be compiled and therefore to report it to the Commission will not
result in additional burdens to certificate holders.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of       Number of
                 Data collection                     Number of      responses/       hours per     Total annual
                                                    respondents       filings        response          hours
----------------------------------------------------------------------------------------------------------------
FERC-537 (Part 157).............................              76             206          -42.02           7,727
FERC-577 (Part 380).............................              76             -62          193.50         -11,997
----------------------------------------------------------------------------------------------------------------

    Information Collection Costs: The above hours reflect the total
blanket certificate program reporting burden as expanded. Because of
the regional differences and the various staffing levels that will be
involved in preparing the documentation (legal, technical and support)
the Commission is using an hourly rate of $150 to estimate the costs
for filing and other administrative processes (reviewing instructions,
searching data sources, completing and transmitting the collection of
information). The estimated cost is anticipated to be $2,748,900, an
amount that is $640,500 less than the current estimated cost.
    Title: FERC-537 and FERC-577.
    Action: Proposed Data Collection.
    OMB Control Nos.: 1902-0060 and 1902-0128.
    Respondents: Natural gas pipeline companies.
    Frequency of Responses: On occasion.
    Necessity of Information: Submission of the information is
necessary for the Commission to carry out its NGA statutory
responsibilities and meet the Commission's objectives of expediting
appropriate infrastructure development to ensure sufficient energy
supplies while addressing landowner and environmental concerns fairly.
The information is expected to permit the Commission to meet the
request of the natural gas industry, as expressed in the INGAA and NGSA
petition, to improve the industry's ability to ensure adequate
infrastructure is added in time to meet increased market demands. By
expanding the scope and scale of the blanket certificate program, the
industry is provided a streamlined means to build new and maintain
existing infrastructure.
    76. Interested persons may obtain information on the reporting
requirements or submit comments by contacting the Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC 20426
(Attention: Michael Miller, Office of the Executive Director, 202-502-
8415, or by e-mail to michael.miller@ferc.gov). Comments may also be
sent to the Office of Management and Budget (Attention: Desk Officer
for the Federal Energy Regulatory Commission, by fax to<PHONE_NUMBER>,
or by e-mail to<EMAIL_ADDRESS>(Re: OMB control nos.
1902-0060 and 1902-0128.)

V. Environmental Analysis

    77. The Commission is required to prepare an environmental
assessment (EA) or an environmental impact statement (EIS) for any
action that may have a significant adverse effect on the human
environment.\44\ In 1982, in promulgating the blanket certificate
program, the Commission prepared an EA in which it determined that,
subject to compliance with the standard environmental conditions,
projects under the blanket program would not have a significant
environmental impact. As a result, the Commission determined that
automatic authorization projects would be categorically excluded from
the need for an EA or EIS under Sec.  380.4 of the Commission's
regulations. However, the Commission specified that prior notice
projects should be subject an EA to ensure each individual project
would be environmentally benign. For the reasons set forth below, the
Commission continues to believe this would be the case under the
blanket certificate program as modified by this rule.
---------------------------------------------------------------------------

    \44\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.
] 30,783 (1987).
---------------------------------------------------------------------------

    78. First, the monetary limits on projects are simply being
adjusted to account for inflationary effects which were not completely
captured under the mechanism specified in the regulations (the gross
domestic product implicit price deflator as determined by the
Department of Commerce). As a result, the scale of projects which will
be within the new cost limits will be comparable to those projects that
were allowed when the blanket program was first created. Second, but
for certain storage remediation and maintenance projects, all the
additional types of projects permitted under the expanded blanket
program will be subject to the prior notice provisions and will be
subject to an EA. Finally, this Final Rule strengthens the standard
environmental conditions applicable to all blanket projects. Therefore,
the rule does not constitute a major federal action that may have a
significant adverse effect on the human environment.

VI. Regulatory Flexibility Act Analysis

    79. The Regulatory Flexibility Act of 1980 (RFA) \45\ generally
requires a description and analysis of regulations that will have
significant economic impact on a substantial number of small entities.
The Commission is not required to make such an analysis if regulations
would not have such an effect.\46 \Under the industry standards used
for purposes of the RFA, a natural gas pipeline company qualifies as
``a small entity'' if it has annual revenues of $6.5 million or less.
Most companies regulated by the Commission do not fall

within the RFA's definition of a small entity.\47\
---------------------------------------------------------------------------

    \45\ 5 U.S.C. 601-612 (2005).
    \46\ 5 U.S.C. 605(b) (2005).
    \47\ 5 U.S.C. 601(3) (2005) citing to section 3 of the Small
Business Act, 15 U.S.C. 623 (2005). Section 3 of the Small Business
Act defines a ``small-business concern'' as a business which is
independently owned and operated and which is not dominant in its
field of operation.
---------------------------------------------------------------------------

    80. The procedural modifications should have no significant
economic impact on those entities--be they large or small--subject to
the Commission's regulatory jurisdiction under NGA section 3 or 7, and
no significant economic impact on state agencies. Accordingly, the
Commission certifies that the revised regulations will not have a
significant economic impact on a substantial number of small entities.

VII. Document Availability

    81. 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 print the contents of this document via the
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's

Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington DC 20426.
From FERC's Home Page on the Internet, this information is available in
the Commission's document management system, eLibrary. The full text of
this document is available in eLibrary in PDF and Microsoft Word format
for viewing, printing, and downloading. To access this document in
eLibrary, type RM06-7 in the docket number field.
    82. User assistance is available for eLibrary and the Commission's
Web site during normal business hours at<PHONE_NUMBER> or the Public
Reference Room at<PHONE_NUMBER> Press 0, TTY<PHONE_NUMBER>. E-Mail
the Public Reference Room at<EMAIL_ADDRESS>
VIII. Effective Date and Congressional Notification

    This Final Rule will take effect January 2, 2007. The Commission
has determined with the concurrence of the Administrator of the Office
of Information and Regulatory Affairs, Office of Management and Budget,
that this rule is not a major rule within the meaning of section 251 of
the Small Business Regulatory Enforcement Fairness Act of 1996.\48\ The
Commission will submit this Final Rule to both houses of Congress and
the Government Accountability Office.\49\
---------------------------------------------------------------------------

    \48\ See 5 U.S.C. 804(2) (2005).
    \49\ See 5 U.S.C. 801(a)(1)(A) (2005).
---------------------------------------------------------------------------

List of Subjects in 18 CFR Part 157

    Administrative practice and procedure, Natural gas, Reporting and
recordkeeping requirements

    By the Commission.
Magalie R. Salas,
Secretary.

0
In consideration of the foregoing, the Commission amends part 157,
Chapter I, Title 18, Code of Federal Regulations, as follows:

PART 157--APPLICATIONS FOR CERTIFICATES OF PUBLIC CONVENIENCE AND
NECESSITY AND FOR ORDERS PERMITTING AND APPROVING ABANDONMENT UNDER
SECTION 7 OF THE NATURAL GAS ACT

0
1. The authority citation for part 157 continues to read as follows:

    Authority: 15 U.S.C. 717-717w.

0
2. In Sec.  157.6, paragraph (d)(2)(i) is revised to read as follows:

Sec.  157.6  Applications; general requirements.

* * * * *
    (d) * * *
    (2) * * *
    (i) Is directly affected (i.e., crossed or used) by the proposed
activity, including all facility sites (including compressor stations,
well sites, and all above-ground facilities), rights of way, access
roads, pipe and contractor yards, and temporary workspace;
* * * * *

0
3. In Sec.  157.203,
0
a. In paragraph (b), the phrase ``Sec.  157.213(a),'' is added
immediately after the phrase ``Sec.  157.211(a)(1),'';
0
b. In paragraph (c), the phrase ``Sec.  157.210,'' is added immediately
after the phrase ``Sec.  157.208(b),'' and the phrase ``Sec.  157.212,
Sec.  157.213(b),'' is added immediately after the phrase ``Sec.
157.211(a)(2),'';
0
c. In paragraph (d)(1) introductory text, the phrase ``30 days'' is
removed and the phrase ``45 days'' is added in its place, and the
phrase ``30-day'' is removed and the phrase ``45-day'' is added in its
place;
0
d. In paragraph (d)(1)(ii), the phrase ``; and'' is removed and a semi-
colon is added in its place;
0
e. Paragraph (d)(1)(iii) is redesignated as paragraph (d)(1)(iv) and a
new paragraph (d)(1)(iii) is added;
0
f. Paragraphs (d)(2)(i) and (d)(2)(ii) are revised;
0
g. In paragraph (d)(2)(iii), the word ``and'' is removed;
0
h. Paragraph (d)(2)(iv) is redesignated as paragraph (d)(2)(vi), and
the phrase ``45 days'' is removed and the phrase ``60 days'' is added
its place, and the final period is removed and the phrase ``; and'' is
added in its place;
0
i. Paragraphs (d)(2)(iv) and (d)(2)(v) are added; and
0
j. A new paragraph (d)(2)(vii) is added to read as follows:

Sec.  157.203  Blanket certification.

* * * * *
    (d) * * *
    (1) * * *
    (iii) A description of the company's environmental complaint
resolution procedure that must:
    (A) Provide landowners with clear and simple directions for
identifying and resolving their environmental mitigation problems and
concerns during construction of the project and restoration of the
right-of way;
    (B) Provide a local or toll-free phone number and a name of a
specific person to be contacted by landowners and with responsibility
for responding to landowner problems and concerns, and who will
indicate when a landowner should expect a response;
    (C) Instruct landowners that if they are not satisfied with the
response, they should call the company's Hotline; and
    (D) Instruct landowners that, if they are still not satisfied with
the response, they should contact the Commission's Enforcement Hotline.
* * * * *
    (2) * * *
    (i) A brief description of the company and the proposed project,
including the facilities to be constructed or replaced and the location
(including a general location map), the purpose, and the timing of the
project and the effect the construction activity will have on the
landowner's property;
    (ii) A general description of what the company will need from the
landowner if the project is approved, and how the landowner may contact
the company, including a local or toll-free phone number and a name of
a specific person to contact who is knowledgeable about the project;
* * * * *
    (iv) A general description of the blanket certificate program and
procedures, as posted on the Commission's Web site at the time the
landowner notification is prepared, and the link to the information on
the Commission's Web site;
    (v) A brief summary of the rights the landowner has in Commission
proceedings and in proceedings under the relevant eminent domain rules;
and
* * * * *
    (vii) The description of the company's environmental complaint
resolution

procedure as described in paragraph (d)(1)(iii) of this section.
* * * * *

0
4. In Sec.  157.205:
0
a. In paragraph (a) introductory text, the phrase ``Sec.  157.210,'' is
added immediately after the phrase ``Sec.  157.208(b),'' and the phrase
``Sec.  157.212, Sec.  157.213(b),'' is added immediately after the
phrase ``Sec.  157.211(a)(2),''and
0
b. In paragraph (d)(1), the phrase ``45 days'' is removed and the
phrase ``60 days'' is added in its place.

0
5. In Sec.  157.206, paragraph (b)(5) is revised to read as follows:

Sec.  157.206  Standard conditions.

* * * * *
    (b) * * *
    (5)(i) The noise attributable to any new compressor station,
compression added to an existing station, or any modification, upgrade
or update of an existing station, must not exceed a day-night level
(Ldn) of 55 dBA at the site property boundary.
    (ii) Any horizontal directional drilling or drilling of wells which
will occur between 10 p.m. and 7 a.m. local time must be conducted with
the goal of keeping the perceived noise from the drilling at any pre-
existing noise-sensitive area (such as schools, hospitals, or
residences) at or below a night level (Ln) of 55 dBA.
* * * * *

0
6. In Sec.  157.207, paragraphs (c), (d), (e), (f), (g), and (h) are
redesignated, respectively, as paragraphs (d), (e), (f), (g), (h), and
(i), and a new paragraph (c) is added to read as follows:

Sec.  157.207  General reporting requirements.

* * * * *
    (c) For each underground natural gas storage facility remediation
and maintenance activity authorized under Sec.  157.213(a), the
information required by Sec.  157.213(d);
* * * * *

0
7. In Sec.  157.208,
0
a. Paragraph (c)(9) is revised;
0
b. Paragraph (c)(10) is added;
0
c. In paragraph (d), Table I, ``Year 2006,'' in column 1, titled
``Automatic project cost limit,'' the phrase ``8,200,000'' is removed
and the phrase ``9,600,000'' is added in its place, and in column 2,
titled ``Prior notice project cost limit,'' the phrase ``22,700,000''
is removed and the phrase ``27,400,000'' is added in its place; and
0
d. Paragraph (e)(4) is redesignated as (e)(4)(i) and paragraphs
(e)(4)(ii) through (e)(4)(iv) are added to read as follows:

Sec.  157.208  Construction, acquisition, operation, replacement, and
miscellaneous rearrangement of facilities.

* * * * *
    (c) * * *
    (9) A concise analysis discussing the relevant issues outlined in
Sec.  380.12 of this chapter. The analysis must identify the existing
environmental conditions and the expected significant impacts that the
proposed action, including proposed mitigation measures, will cause to
the quality of the human environment, including impact expected to
occur to sensitive environmental areas. When compressor facilities are
proposed, the analysis must also describe how the proposed action will
be made to comply with applicable State Implementation Plans developed
under the Clean Air Act. The analysis must also include a description
of the contacts made, reports produced, and results of consultations
which took place to ensure compliance with the Endangered Species Act,
National Historic Preservation Act and the Coastal Zone Management Act.
Include a copy of the agreements received for compliance with the
Endangered Species Act, National Historic Preservation Act, and Coastal
Zone Management Act, or if no written concurrence is issued, a
description of how the agency relayed its opinion to the company.
Describe how drilling for wells or horizontal direction drilling would
be designed to meet the goal of limiting the perceived noise at NSAs to
an Ldn of 55 dBA or what mitigation would be offered to
landowners.
    (10) A commitment to having the Environmental Inspector's report
filed every week.
* * * * *
    (e) * * *
    (4) * * *
    (ii) Documentation, including images, that restoration of work
areas is progressing appropriately;
    (iii) A discussion of problems or unusual construction issues,
including those identified by affected landowners, and corrective
actions taken or planned; and
    (iv) For new or modified compression, a noise survey verifying
compliance with Sec.  157.206(b)(5).
* * * * *

0
8. Section 157.210 is added to read as follows:

Sec.  157.210  Mainline natural gas facilities.

    Subject to the notice requirements of Sec. Sec.  157.205(b) and
157.208(c), the certificate holder is authorized to acquire, construct,
modify, replace, and operate natural gas mainline facilities, including
compression and looping, that are not eligible facilities under Sec.
157.202(b)(2)(i). The cost of a project may not exceed the cost
limitation provided in column 2 of Table I of Sec.  157.208(d). The
certificate holder must not segment projects in order to meet this cost
limitation.

0
9. Sections 157.212 and 157.213 are added to read as follows:

Sec.  157.212  Synthetic and liquefied natural gas facilities.

    Subject to the notice requirements of Sec. Sec.  157.205(b) and
157.208(c), the certificate holder is authorized to acquire, construct,
modify, replace, and operate natural gas facilities that are used to
transport either a mix of synthetic and natural gas or exclusively
revaporized liquefied natural gas and that are not ``related
jurisdictional natural gas facilities'' as defined in Sec.  153.2(e) of
this chapter. The cost of a project may not exceed the cost limitation
provided in column 2 of Table I in Sec.  157.208(d). The certificate
holder must not segment projects in order to meet this cost limitation.

Sec.  157.213  Underground storage field facilities.

    (a) Automatic authorization. If the project cost does not exceed
the cost limitations provided in column 1 of Table I in Sec.
157.208(d), the certificate holder may acquire, construct, modify,
replace, and operate facilities for the remediation and maintenance of
an existing underground storage facility, provided the storage
facility's certificated physical parameters--including total inventory,
reservoir pressure, reservoir and buffer boundaries, and certificated
capacity remain unchanged--and provided compliance with environmental
and safety provisions is not affected. The certificate holder must not
alter the function of any well that is drilled into or is active in the
management of the storage facility. The certificate holder must not
segment projects in order to meet this cost limitation.
    (b) Prior Notice. Subject to the notice requirements of Sec. Sec.
157.205(b) and 157.208(c), the certificate holder is authorized to
acquire, construct, modify, replace, and operate natural gas
underground storage facilities, provided the storage facility's
certificated physical parameters--including total inventory, reservoir
pressure, reservoir and buffer boundaries, and certificated capacity,
including injection and withdrawal capacity, remain unchanged--and
provided compliance with environmental and safety provisions is not
affected unchanged.

The cost of a project may not exceed the cost limitation provided in
column 2 of Table I in Sec.  157.208(d). The certificate holder must
not segment projects in order to meet this cost limitation.
    (c) Contents of request. In addition to the requirements of
Sec. Sec.  157.206(b) and 157.208(c), requests for activities
authorized under paragraph (b) of this section must contain, to the
extent necessary to demonstrate that the proposed project will not
alter a storage reservoir's total inventory, reservoir pressure,
reservoir or buffer boundaries, or certificated capacity, including
injection and withdrawal capacity:
    (1) A description of the current geological interpretation of the
storage reservoir, including both the storage formation and the
caprock, including summary analysis of any recent cross-sections, well
logs, quantitative porosity and permeability data, and any other
relevant data for both the storage reservoir and caprock;
    (2) The latest isopach and structural maps of the storage field,
showing the storage reservoir boundary, as defined by fluid contacts or
natural geological barriers; the protective buffer boundary; the
surface and bottomhole locations of the existing and proposed
injection/withdrawal wells and observation wells; and the lengths of
open-hole sections of existing and proposed injection/withdrawal wells;
    (3) Isobaric maps (data from the end of each injection and
withdrawal cycle) for the last three injection/withdrawal seasons,
which include all wells, both inside and outside the storage reservoir
and within the buffer area;
    (4) A detailed description of present storage operations and how
they may change as a result of the new facilities or modifications.
Include a detailed discussion of all existing operational problems for
the storage field, including but not limited to gas migration and gas
loss;
    (5) Current and proposed working gas volume, cushion gas volume,
native gas volume, deliverability (at maximum and minimum pressure),
maximum and minimum storage pressures, at the present certificated
maximum capacity or pressure, with volumes and rates in MMcf and
pressures in psia;
    (6) The latest field injection/withdrawal capability studies
including curves at present and proposed working gas capacity,
including average field back pressure curves and all other related
data;
    (7) The latest inventory verification study for the storage field,
including methodology, data, and work papers;
    (8) The shut-in reservoir pressures (average) and cumulative gas-
in-place (including native gas) at the beginning of each injection and
withdrawal season for the last 10 years; and
    (9) A detailed analysis, including data and work papers, to support
the need for additional facilities (wells, gathering lines, headers,
compression, dehydration, or other appurtenant facilities) for the
modification of working gas/cushion gas ratio and/or to improve the
capability of the storage field.

0
10. In Sec.  157.216:
0
a. Paragraph (a)(2) is amended by adding the phrase ``or Sec.
157.213(a)'' immediately after the phrase ``Sec.  157.211'';
0
b. Paragraph (b)(2) is amended by adding the phrase ``or a facility
constructed under Sec.  157.210, Sec.  157.212, or Sec.  157.213(b),''
immediately after the phrase ``paragraph (a)(2) of this section,''; and
0
c. Paragraph (c)(5) is amended by adding, at the end, the phrase ``and
a concise analysis discussing the relevant issues outlined in Sec.
380.12 of this chapter.''
[FR Doc. E6-18027 Filed 10-30-06; 8:45 am]

BILLING CODE 6717-01-P