[Federal Register: October 18, 2005 (Volume 70, Number 200)]
[Rules and Regulations]
[Page 60426-60443]
[DOCID:fr18oc05-7]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 153, 157 and 375

[Docket No. RM05-31-000; Order No. 665]

Regulations Implementing Energy Policy Act of 2005; Pre-Filing
Procedures for Review of LNG Terminals and Other Natural Gas Facilities

Issued October 7, 2005.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
amending its regulations in accordance with section 311(d) of the
Energy Policy Act of 2005 (EPAct 2005) to establish mandatory
procedures requiring prospective applicants to begin the Commission's
pre-filing review process at least six months prior to filing an
application for authorization to site and construct a liquefied natural
gas (LNG) terminal. Section 311(d) of EPAct 2005, enacted on August 8,
2005, directs the Commission to promulgate such regulations within 60
days after enactment of EPAct 2005. The regulations' mandatory
procedures are designed to encourage applicants for LNG terminal siting
and construction authority to cooperate with state and local officials,
as required by EPAct 2005. The regulations also make the pre-filing
process mandatory for prospective applicants for authority to construct
related jurisdictional pipeline and other natural gas facilities, as
defined in the regulations. The regulations also require a prospective
applicant to comply with the pre-filing procedures prior to filing an
application to make modifications to an existing or authorized LNG
terminal if such modifications involve significant state and local
safety considerations that have not been previously addressed. Under
this Final Rule, prospective applicants may elect on a voluntary basis
to undertake the pre-filing process prior to filing applications for
other facilities subject to the Commission's jurisdiction under the
Natural Gas Act (NGA).

EFFECTIVE DATE: The rule will become effective November 17, 2005.

FOR FURTHER INFORMATION CONTACT:

Richard Hoffmann, Office of Energy Projects, 888 First Street, NE.,
Washington, DC 20426,<PHONE_NUMBER><EMAIL_ADDRESS>John Leiss, Office of Energy Projects, 888 First Street, NE.,
Washington, DC 20426,<PHONE_NUMBER><EMAIL_ADDRESS>Whit Holden, Office of the General Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
8089<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead
Brownell, and Suedeen G. Kelly.

I. Introduction

    1. Pursuant to section 311(d) of the Energy Policy Act of 2005
(EPAct 2005),\1\ enacted on August 8, 2005, the Commission is required,
by October 7, 2005, to promulgate regulations requiring prospective
applicants for authorization for the siting and construction of
liquefied natural gas (LNG) terminals (as defined in EPAct 2005) to
comply with the Commission's pre-filing review process, beginning at
least six months prior to filing an application. As further required by
EPAct 2005, the proposed regulations are designed to encourage
applicants to cooperate with state and local officials, a goal also
contemplated by the National Environmental Policy Act of 1969
(NEPA).\2\ This Final Rule fulfills the Commission's responsibilities
under section 311(d) of EPAct 2005.
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    \1\ Public Law 109-58, 119 Stat. 594.
    \2\ 42 U.S.C. 4321, et seq.
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    2. The mandatory procedures established in this Final Rule require
that a prospective applicant for authority to site and construct an LNG
terminal submit information necessary for NEPA pre-filing review of the
LNG terminal, as defined in EPAct 2005. A prospective applicant for
authority to construct related jurisdictional pipeline and other
natural gas facilities, as defined in the regulations, is also required
to undertake the mandatory pre-filing review process. A prospective
applicant is also required to comply with the pre-filing procedures
prior to filing an application to make modifications to an existing LNG
terminal if such modifications involve significant state and local
safety considerations that have not been previously addressed. This
Final Rule provides that prospective applicants may elect on a
voluntary basis to undertake the pre-filing process prior to filing
applications for other facilities subject to the Commission's
jurisdiction under the Natural Gas Act (NGA).

II. Notice of Proposed Rulemaking

    3. In response to EPAct 2005's directive with respect to LNG
terminals, the Commission issued a Notice of Proposed Rulemaking (NOPR)
on August 26, 2005, in Docket No. RM05-31-000 setting forth proposed
regulations to implement a mandatory pre-filing process for prospective
applicants for authority under section 3 of the NGA for the siting and
construction of new LNG terminals.\3\ As explained in the NOPR, it was
already the Commission's policy prior to enactment of EPAct 2005 to
encourage prospective applicants' use of the Commission's optional pre-
filing process for LNG terminal projects, as well as interstate gas
pipeline projects in appropriate cases, to encourage early involvement
by the public and governmental agencies, as contemplated by NEPA and
Council on Environmental Quality (CEQ) regulations. Further, because it
is desirable to maximize early public involvement to promote the wide-
spread dissemination of information about proposed projects and to
reduce the amount of time required to issue an environmental impact
statement (EIS) or environmental assessment (EA) once an application is
filed, the Commission's Office of Energy Projects (OEP) developed its
current guidelines for going beyond informal discussions into a more
formal pre-filing process.\4\
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    \3\ 112 FERC ] 61,232 (2005); 70 FR 52328 (September 2, 2005).
    \4\ Under the Commission's optional pre-filing process, the
Commission's staff provides prospective applicants guidelines which
are described at length in the NOPR. As explained in the NOPR, the
current guidelines were developed because in certain respects the
collaborative pre-filing procedures set forth in section 157.22 of
the Commission's regulations, 18 CFR 157.22 (2005), have proven to
be impracticable. Therefore, as proposed in the NOPR, the Commission
is eliminating the collaborative process procedures of section
157.22 in conjunction with the promulgation of new regulations in
this rulemaking proceeding.
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    4. As explained in the NOPR, the Commission's experience with the
current pre-filing process is that it has been used with much success
since its introduction several years ago. It is a process with which
the natural gas industry, governmental entities and the public are
familiar. However, the current pre-filing process is optional, and
EPAct 2005 requires that the Commission implement a mandatory, rather
than elective, pre-filing process

for review of a planned LNG terminal prior to the filing of an
application pursuant to section 3 of the NGA for authorization of the
siting and construction of the new LNG terminal. Therefore, the
Commission's NOPR used the existing guidelines as the basis for
proposing regulations to establish the mandatory pre-filing process for
new LNG terminals.
    5. Although EPAct 2005 requires a mandatory pre-filing process only
for prospective applicants for new LNG terminals, the Commission must
consider in one NEPA document the environmental impacts of the LNG
terminal and related facilities. Therefore, the Commission also
proposed in the NOPR to make the mandatory pre-filing process
applicable to prospective applicants for authority to construct related
jurisdictional pipeline and other natural gas facilities. Further, in
recognition that the safety concerns raised by modifications to
existing LNG terminals in some instances can be largely the same as
those addressed by EPAct 2005's provisions relating to the siting and
construction of new LNG terminals, the Commission proposed in the NOPR
to make the pre-filing process mandatory in those instances as well.

III. Comments

    6. The NOPR stated that comments were to be filed by September 14,
2005, and that the Commission intended to issue final regulations by
October 7, 2005, in order to comply with EPAct 2005's 60-day deadline.
Comments were filed by 24 interested parties.\5\
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    \5\ The commenters are listed in the Appendix to this Final
Rule.
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    7. The largest group of commenters consists of current and
prospective owners, operators and developers of LNG terminal
facilities. Another group is comprised of natural gas pipeline
companies. A third definable group includes the Public Utilities
Commission of the State of California (California PUC), the California
Energy Commission and the Office of the Governor of the State of Maine
(Maine Governor's Office), all representing state and local interests.
The Interstate Natural Gas Association of America (INGAA), American Gas
Association (AGA), Maryland Conservation Council, Center for Liquefied
Natural Gas (Center for LNG) and National Association of Regulatory
Utility Commissioners (NARUC) also submitted comments in line with
their respective interests.
    8. The comments filed in response to the NOPR are discussed at
length below, broken down by specific issues. Broadly speaking,
however, the comments primarily focused on the NOPR's proposal that the
pre-filing process also be mandatory for prospective applicants for
authorization of other jurisdictional natural gas facilities necessary
to transport regasified LNG from an LNG terminal and for prospective
applicants for authorization of modifications to existing LNG
terminals; the need for flexibility in the substance and timing of many
of the pre-filing requirements; and implementation of EPAct 2005's
directive that the mandatory pre-filing process for new LNG terminals
encourage prospective applicants' cooperation with state and local
officials. Numerous clarifications of the proposed regulations were
also requested.

Related Jurisdictional Pipeline Facilities

    9. El Paso Pipeline Corporation Pipeline Group (El Paso),\6\ Exxon
Mobil Corporation (ExxonMobil), Dominion Cove Point LNG, LP (Cove
Point), Cheniere LNG, Inc. (Cheniere), Duke Energy Gas Transmission
(Duke Energy),\7\ and INGAA state that the NOPR's proposal that the
mandatory pre-filing procedures apply to prospective applicants for
authorization for jurisdictional natural gas facilities related to LNG
terminals is inconsistent with, if not contrary to, the mandate of
Congress as expressed in section 311(d) of EPAct 2005. These commenters
point out that EPAct 2005's definition of an LNG terminal specifically
excludes ``any pipeline or storage facility subject to the jurisdiction
of the Commission under section 7 [of the NGA].'' \8\
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    \6\ The El Paso Pipeline Corporation Group includes ANR Pipeline
Company, ANR Storage Company, Bear Creek Storage Company, Blue Lake
Gas Storage Company, Cheyenne Plains Gas Pipeline Company, Colorado
Interstate Gas Company, El Paso Natural Gas Company, Mojave Pipeline
Company, Southern LNG Inc., Southern Natural Gas Company, Tennessee
Gas Pipeline Company and Wyoming Interstate Company, Ltd.
    \7\ Duke Energy owns Texas Eastern Transmission, L.P., Egan Hub
Storage, L.L.C., Algonquin Gas Transmission, L.L.C., East Tennessee
Natural Gas, L.L.C. and Saltville Gas Storage Company, L.L.C. Duke
Energy is a part owner of Maritimes & Northeast Pipeline, L.L.C. and
Gulfstream Natural Gas System, L.L.C.
    \8\ EPAct 2005, section 311(b).
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    10. ExxonMobil asserts that requiring prospective applicants for
related pipeline facilities to undergo a mandatory ``180-day stand-down
period'' could prevent the timely expansion of the related LNG project.
El Paso contends that the establishment of a minimum six-month pre-
filing process for such facilities is inconsistent with the notion of
flexibility. Similarly, Duke Energy contends that because LNG terminal
proposals have longer lead times, a rigid, six-month pre-filing process
for some related pipeline projects will be inappropriate and
unworkable.
    11. Duke Energy also argues that extending the mandatory pre-filing
process to prospective applicants for construction authorization under
section 7 of the NGA is inconsistent with that section, since section 7
does not place any qualifications on when a natural gas company may
file a certificate application. Duke Energy and Cove Point take the
position that the Commission's authority pursuant to EPAct 2005 to
compel a pre-filing process for pipeline facilities is limited to
pipeline facilities which are properly viewed as part of the LNG
terminal and for which authorization must be obtained under section 3,
rather than section 7, of the NGA. Sempra Global argues that the public
interest could be harmed by delaying the construction of other gas
facilities needed to serve other customers.
    12. ExxonMobil and Duke Energy contend that while the Commission
may be required to evaluate the impacts of both the LNG terminal and
related natural gas facilities in a single NEPA document, it does not
follow that both the LNG terminal project and a related pipeline
project must initiate their respective environmental review processes
at the same time or follow the same procedures for developing and
submitting all of the information necessary to prepare the EA or EIS.
    13. A number of commenters seek clarification of the types of LNG-
related pipeline projects that might be subject to the mandatory pre-
filing procedures. At a minimum, Cove Point asks the Commission to
clarify that applicability of the mandatory pre-filing process extends
only to pipeline construction to be undertaken contemporaneously with
construction or expansion of an LNG terminal. North Baja Pipeline, LLC
(North Baja) maintains that the Commission should clarify that the
mandatory pre-filing process will apply only to other natural gas
facilities that will interconnect directly with a new LNG terminal.
    14. BP Energy asks the Commission to clarify that the pre-filing
requirement will be satisfied for minor pipeline facilities to
interconnect with a new LNG terminal if the interconnecting pipeline
facilities are addressed sufficiently in the LNG project developer's
resource reports for purposes of the NEPA document. BP Energy does not
believe a pipeline company should have to undertake the pre-filing
process for minor interconnecting facilities if adequate

information regarding the pipeline facilities is provided by the
prospective LNG applicant during the pre-filing process.
    15. Duke Power requests clarification that the pre-filing process
will not be mandatory for prospective applicants for NGA section 7
authority for capacity expansion projects on existing pipeline systems
in order to accommodate throughput originating from a new LNG terminal.
INGAA maintains the Commission should clarify that applicants seeking
to modify existing pipeline facilities related to existing LNG
facilities may continue to use the pre-filing process on a voluntary
basis.

Commission Response

    16. The Commission recognizes that the definition of ``LNG
terminal'' adopted by EPAct 2005 specifically excludes ``[a]ny pipeline
or storage facility subject to the jurisdiction of the Commission under
section 7 of the Natural Gas Act.'' However, the Commission does not
agree that this is an expression of Congressional intent that the
Commission cannot or should not require a mandatory pre-filing process
for jurisdictional gas facilities to be constructed in connection with
LNG terminal facilities. Rather, the Commission believes the exclusion
of section 7 facilities from EPAct 2005's definition of LNG terminal is
better explained by other practical considerations. First, take-away
pipelines or other related gas facilities do not involve the state and
local safety concerns involved with the siting and construction of an
LNG terminal. In addition, the exclusion of section 7 facilities from
the definition of LNG terminal avoids making section 7 facilities
subject to the provisions of new NGA section 3(e)(3)(B), added by
section 311(c) of EPAct 2005, which provides that the Commission (1)
shall not deny an LNG terminal application because the applicant
proposes to use the LNG terminal exclusively or partially for its own
gas or an affiliate's gas, and (2) shall not condition an order to
require that an LNG terminal offer service to other customers or to
regulate the rates or terms of service of the LNG terminal or to
require the filing of rate schedules or contracts. In view of these
considerations, the Commission concludes that, while EPAct 2005
mandates the pre-filing process only for prospective applicants for
authority to site and construct new LNG terminals, nothing in EPAct
2005 limits the Commission's previous discretion under the NGA to
require participation in the pre-filing process by prospective
applicants for authority under section 7 of the NGA for related
jurisdictional natural gas facilities.
    17. The Commission has discussed above and in the NOPR that it
needs to evaluate in a single NEPA document the environmental impacts
of LNG projects and projects to construct related facilities. Further,
an LNG project may prove infeasible if a take-away pipeline or other
facilities cannot be approved or will not be constructed. Thus, to
ensure the efficient utilization of the Commission's resources as well
as to avoid unnecessary burden on other agencies and stakeholders, it
has been Commission staff's practice to initiate the pre-filing process
for new LNG facilities only when the prospective applicants for other
necessary jurisdictional facilities are ready and willing to
participate in the pre-filing process. For the same reasons, it is
appropriate to make the pre-filing process mandatory for related
jurisdictional facilities now that Congress has mandated a pre-filing
process for new LNG terminals.\9\
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    \9\ On some occasions, it is necessary for the NEPA document to
evaluate the environmental impacts of related facilities which will
be non-jurisdictional facilities. The Commission applies a four-
prong procedure to determine the need to include non-jurisdictional
facilities in an environmental review. See, e.g., Southern Natural
Gas Company, 119 FERC ] 61,052 at P 80 (2005). The necessary
analysis of non-jurisdictional facilities may depend on the
jurisdictional applicant's ability to provide sufficient
information, since the Commission does not have the authority to
compel non-jurisdictional companies' participation in the pre-filing
process. However, the Commission does have the discretion to adopt
and implement a policy to facilitate environmental review of an LNG
project by establishing regulations under which an application for
related jurisdictional facilities may be deemed deficient if the
applicant did not participate in the pre-filing process.
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    18. To date, in every LNG project that has utilized the formal pre-
filing process, the Commission's staff has required that the pre-filing
process cover any related jurisdictional natural gas facilities. The
Commission also reiterates that in its experience the current practice
has been very successful, and there is a sense of familiarity with the
process. Indeed, the Commission has seen no evidence that requiring the
environmental analysis for an LNG terminal project to cover related
pipeline facilities has impeded the timetable for the LNG terminal,
regardless of whether the environmental review for the entire project
was conducted during a pre-filing process or after the filing of an LNG
terminal application.
    19. In view of the above considerations, the Commission is not
swayed by arguments that is inappropriate or infeasible to require that
the mandatory pre-filing procedures require the participation of
prospective applicants for related jurisdictional gas facilities. The
prospective applicants for authority to construct necessary related
facilities generally are known at the time a prospective LNG applicant
initiates the pre-filing process. Therefore, the prospective LNG
applicant and the prospective applicants for other related facilities
should be able to commence the pre-filing process at the same time.
Further, in view of the above-discussed reasons for why it is important
that prospective applicants for LNG and related projects undertake the
pre-filing process at the same time, the Commission expects there to be
few instances where the circumstances justify the exercise of the
Director's discretion to approve initiation of the pre-filing process
for an LNG terminal project before the prospective applicants for
related facilities are known and ready to begin the pre-filing process.
    20. The Commission agrees with the commenters, however, that it is
important to maintain flexibility in both the substantive and
procedural requirements embodied in the pre-filing procedures.
Therefore, as proposed in the NOPR, the Commission is providing in new
section 375.308(z) of the regulations authority for the Director to
act, on a case-specific basis, to make decisions and grant approvals,
waivers and modifications, as well as issue guidance, as may be
necessary in connection with the use of the pre-filing procedures set
forth new in section 157.21. Thus, for example, a prospective applicant
engaged in the pre-filing process for either LNG facilities or other
facilities may request that the Director adjust the schedule for filing
resources report or waive certain requirements if they are not
applicable or unnecessary in view of the previously filed information.
    21. In response to those commenters seeking clarification of the
types of projects for natural gas facilities related to LNG facilities
which will be subject to the mandatory pre-filing procedures, the
Commission is providing a definition in section 153.2, Definitions, in
Part 153, Applications for Authorization to Construct, Operate, or
Modiy Facilities used for the Export or Import of Natural Gas. The
definition provides:
    (e) For purposes of this part and section 157.21, related
jurisdictional natural gas facilities means any pipeline or other
natural gas facilities which are subject to section 7 of the NGA; will
directly interconnect with the facilities of an LNG terminal, as
defined in paragraph (d) of this section; and which

are necessary to transport gas to or regasified LNG from:
    (1) A planned but not yet authorized LNG terminal; or
    (2) An existing or authorized LNG terminal for which prospective
modifications are subject pursuant to section 157.21(e) to a mandatory
pre-filing process.
    22. This definition clarifies that for facilities related to LNG
facilities the mandatory pre-filing process will be mandatory only for
prospective applicants for authority under section 7 of the NGA for the
construction or expansion of the capacity of gas facilities directly
interconnecting with and related to the construction or expansion of an
LNG terminal to import or export LNG. Thus, for example, if a take-away
pipeline that directly interconnects with an existing LNG import
terminal plans to seek authority under section 7 of the NGA to increase
the pipeline's capacity, the pre-filing process will be mandatory for
the pipeline's expansion project if it is related to a project to
expand the LNG terminal's capacity. In the event additional capacity is
needed on an existing take-away pipeline because the LNG terminal
operator determines that it can increase its send-out volumes without
making any modifications to its existing LNG facilities, the pre-filing
process would not be a mandatory prerequisite to the Commission's
approval of an application by the pipeline for expansion authority
under section 7 of the NGA. However, the Commission encourages
pipelines to consider in all instances whether undertaking the pre-
filing process voluntarily might expedite approval of a contemplated
project to expand the capacity of the pipeline's facilities that are
directly interconnected with an LNG terminal.
    23. In response to the request for clarification regarding
``minor'' interconnecting pipeline facilities, the Commission clarifies
that the pre-filing requirement will be mandatory for prospective
applicants for construction authority under section 7 of the NGA to
construct pipeline facilities that will directly interconnect with a
new LNG terminal. However, as discussed above, the Director OEP may
find it appropriate to waive certain filing requirements for a
prospective applicant for such related pipeline facilities to the
extent the requirements are unnecessary or the information provided by
the prospective LNG terminal applicant in its resource reports is
adequate to cover the related pipeline facilities in the NEPA document.
    24. If a pipeline plans to seek construction authority under
section 7 of the NGA to construct a new direct interconnection with an
existing LNG terminal,\10\ the LNG terminal operator will need to seek
authority under section 3 of the NGA to modify its LNG facilities to
accommodate the new pipeline interconnection. In such instances, it
will be necessary for the LNG terminal operator to obtain a finding by
the Director of OEP as to whether the proposed modifications to the LNG
facilities involve significant safety considerations warranting
invocation of the mandatory pre-filing procedures. If the Director
finds that the mandatory process should apply, it will be necessary for
the prospective pipeline applicant for the direct interconnection to
participate in the pre-filing process. Again, however, the Director may
determine, based on the LNG project developer's resource reports and
any other information in the record, that certain filing or other
requirements can be waived for the prospective pipeline applicant
seeking to construct the direct interconnection with the LNG terminal.
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    \10\ As several commenters point out, pipeline facilities
directly interconnecting with an LNG terminal in order to receive
regasified LNG are excluded from the definition of ``eligible
facilities'' for purposes of an interstate pipeline's Part 157
blanket certificate authorizing certain construction activities. See
18 CFR 157.202(b)(2)(ii)(D) (2005).
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Modifications to Existing LNG Terminal Facilities

    25. The NOPR's proposed new section 157.21(a) provided that the
mandatory pre-filing procedures shall apply: When the Director of OEP
finds in accordance with paragraph (e)(2) of this section that
prospective modifications to an existing LNG terminal are significant
modifications that involve state and local safety considerations.
    26. Proposed section 157.21(e)(2) provided: The Director shall
issue a notice making a determination whether prospective modifications
to an existing LNG terminal shall be subject to this section's pre-
filing procedures and review process. If the Director determines that
the prospective modifications are significant modifications that
involve state and local safety considerations, the Director's notice
will state that the pre-filing procedures shall apply, and the pre-
filing process shall be deemed to have commenced on the date of the
Director's notice in determining whether the date an application is
filed is at least 180 days after commencement of the pre-filing
process.
    27. ExxonMobil, Cove Point, Cheniere and the Center for LNG state
that the NOPR's requirement that the mandatory pre-filing procedures
apply to ``significant'' modifications to existing LNG terminals is
inconsistent with, if not contrary to, the mandate of Congress as
expressed in EPAct 2005. These commenters assert that section 311(d) of
EPAct 2005 clearly reflects Congress' intent that the mandatory
procedures should apply only to the siting and construction of new LNG
terminals.
    28. ExxonMobil, Cove Point and Distrigas of Massachusetts LLC
(DOMAC) express concern because ``significant modifications involving
state and local safety considerations'' are not defined and the
criteria by which the Director would assess any modifications are not
clearly set out. DOMAC believes the Director of OEP is given too much
discretion.
    29. Cove Point asserts that state and local safety considerations
are not useful criteria, since they are involved, to some extent, in
virtually all LNG terminal applications. ExxonMobil emphasizes that the
role of local and state safety officials is not clearly explained and
argues that under EPAct 2005 section 311(d), considerations regarding
the need for consultation on safety issues only come into play for new
LNG terminals. ExxonMobil also claims that when dealing with
modifications to existing LNG facilities or to LNG facilities approved
but not yet constructed, the need for resubmission of all 13 resource
reports originally filed by the applicant is questionable, since not
all of the resource reports deal with safety issues.
    30. DOMAC states that the regulations should include the specific
guidelines to be used by the Director in making determinations
regarding whether modifications to an existing LNG terminal will be
subject to a mandatory pre-filing process. ExxonMobil asserts that the
NOPR's mandatory 180-day stand-down period for significant
modifications could interfere with timely approval of an expansion of
the capacity of an already approved but unconstructed LNG project. Cove
Point and other commenters emphasize that modifications at existing LNG
terminals generally involve relatively less environmental impact and
shorter time periods.
    31. Cove Point adds that if the Commission maintains the
requirement that significant modifications follow the mandatory pre-
filing process, then prospective applicants should be permitted to
submit draft EAs. ExxonMobil argues that if Commission retains this
requirement, the regulations

should clearly provide that only new safety issues being raised for the
first time will justify requiring another pre-filing process for
existing and approved LNG projects.
    32. DOMAC believes that modifications should be deemed significant
only if they are primarily intended to significantly increase an
existing LNG terminal's throughput capacity on a sustained basis. As a
threshold, DOMAC suggests that the prospective modifications result in
at least a 10 percent increase in annual throughput to warrant
requiring an existing LNG terminal operator to undertake a 6-month pre-
filing process before it can file an application. Similarly, Trunkline
LNG Company, L.L.C. (Trunkline LNG) requests that the Commission
clarify that the mandatory pre-filing process will not be required for
modifications to existing LNG terminals unless the current storage or
send out capability is significantly increased.
    33. El Paso requests that the final regulations set forth certain
modifications to existing LNG terminals which it asserts involve no
significant impacts or state and local safety concerns and therefore
should qualify as categorical exclusions because there is no need for
an EA. Specifically, El Paso recommends that categorical exclusions be
codified for miscellaneous rearrangement and replacement of facilities
at existing LNG terminals; new facilities installed within an existing
structure at an existing LNG terminal; and new facilities installed
within an existing disturbed area and with an estimated cost ceiling
under the current cost ceiling for activities under pipelines' Part 157
blanket certificates.
    34. In order to prevent 6-month delays of simple modifications to
LNG projects that are already approved but not yet constructed, Sempra
Global contends the Commission should clarify that modifications
appearing to simply require a supplemental EA should not be deemed to
be ``significant.'' Moreover, Sempra Global suggests that the pre-
filing process regulations should provide that proposed projects be
allowed to exit the pre-filing process before the end of six months if
the Director subsequently determines that the proposal appears to
require no more than an EA.

Commission Response

    35. As discussed, proposed section 157.21(a) provided that in
addition to new LNG terminals and related jurisdictional natural gas
facilities, the mandatory pre-filing procedures would apply to any
modifications of existing LNG facilities that the Director finds to be
``significant modifications that involve state and local safety
considerations.'' After considering the comments seeking clarification
of that provision or an explanation of the criteria by which the
Director will evaluate any prospective modification, the Commission
agrees the proposed regulatory text needs to be revised.
    36. A more precise description of the sort of modifications that
the Commission intends to be subject to the mandatory pre-filing
process is ``modifications that involve significant state and local
safety considerations that have not been previously addressed.'' The
regulatory text in this Final Rule is revised accordingly. It should be
clear from this revision that, when dealing with prospective
modifications to existing or approved LNG projects, the emphasis is not
on the nature or scale of the modification itself, but rather the
significance or scale of the modification's impact on state or local
safety considerations.
    37. As discussed above, the Commission recognizes that section
311(d) of EPAct 2005 mandates the minimum 6-month pre-filing process
only in connection with applications for the siting, construction and
operation of new LNG facilities. However, as in the case of related
jurisdictional natural gas facilities, nothing in EPAct 2005 or the NGA
in any way limits the Commission's authority to include within the
purview of the mandatory pre-filing rules modifications to an existing
or approved LNG terminal that involve significant state and local
safety considerations that have not been previously addressed.
    38. Further, section 311(d) of EPAct 2005 adds a new section 3A(b)
to the NGA which defines state and local safety considerations to
include: (1) The kind and use of the facility; (2) the existing and
projected population and demographic characteristics of the location;
(3) the existing and proposed land use near the location; (4) the
natural and physical aspects of the location; (5) the emergency
response capabilities near the facility location; and (6) the need to
encourage remote siting. Although not all of these factors may have
application to a given project to make prospective modifications to an
existing or approved LNG terminal, they provide the Director with
specific criteria for evaluating any proposed modifications.\11\
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    \11\ Section 385.1902(a) of the Commission's regulations, 18 CFR
385.1902(a) (2005), provides that any action by the Director under
delegated authority is a final agency action subject to a request
for rehearing under Rule 713 of the Commission's Rules of Practice
and Procedure, 18 CFR 385.713 (2005). Thus, in any instance where
the Director finds that prospective modifications at an existing LNG
terminal does or does not involve significant state or local safety
concerns warranting a requirement that the prospective applicant
undertake the pre-filing process, the Director's finding would be
subject to a request for rehearing by the Commission.
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    39. In addition, in section 157.21(e)(2) of the final regulations,
the Commission has identified certain prospective modifications that
will be subject to the mandatory pre-filing process. As examples, the
new regulatory text cites the addition of LNG storage tanks; increased
throughput which will require additional tanker arrivals or the use of
larger vessels; and changing the purpose of the facility from peaking
to base load.
    40. In any instance where the Director determines that proposed
modifications warrant application of the mandatory pre-filing
procedures, the Director can determine during the informal consultation
required under paragraph 157.21(c) if an applicant-prepared EA will be
appropriate.
    41. In view of the clarification and regulatory text revisions
discussed above, the Commission does not believe that it is necessary
to include in the final regulations additional criteria or definitions
for the Director's use in reaching a determination whether prospective
modifications to an existing or approved LNG terminal should be subject
to a mandatory pre-filing process. However, the Commission believes
that it may be possible in the future to identify modifications to
existing or approved LNG terminals that can be categorically excluded,
as suggested by some commenters, from the need for an environmental
assessment and the scope of the mandatory pre-filing procedures. It
also may be possible in the future to adopt regulations, as suggested
by a number of commenters, to provide blanket authority for LNG
terminal operators to undertake certain routine activities subject to
standard environmental conditions, as pipelines can under their Part
157 blanket certificates. However, in order to undertake any such
initiatives, the Commission first needs the benefit of the experience
that will come with application of this Final Rule's procedures.

Prospective Applicants Already Engaged in the Pre-Filing Process

    42. Broadwater Energy (Broadwater) and North Baja ask that the
Commission clarify in the final rule that the mandatory pre-filing
process regulations are to be implemented prospectively and shall not
apply to prospective

applicants for LNG projects already engaged in the voluntary pre-filing
process prior to the effective date of the pre-filing process
regulations.

Commission Response

    43. The Commission denies Broadwater's and North Baja's requested
clarification. New section 3A(a) of the NGA, as added by section 311(d)
of EPAct 2005, provides that the Commission's ``regulations shall
require that the pre-filing process commence at least 6 months prior to
the filing of an application for authorization to construct an LNG
terminal * * *.'' In any case where a prospective applicant for
authority to site and construct a new LNG terminal was already engaged
in the Commission's pre-filing process on the date of enactment of
EPAct 2005, the Commission believes that it is consistent with
Congressional intent to require at least a 6-month pre-filing process
to ensure that there has been opportunity for the thorough exploration
of state and local safety considerations, as envisioned by the section
311 of EPAct 2005. However, the Commission does not believe that it is
inconsistent with this objective to take into account the time which a
prospective applicant has already been involved in the pre-filing
process. Therefore, the Commission will consider the 6-month period to
have begun on the date on which the prospective applicant for authority
to site and construct a new LNG terminal or related facilities was
authorized to engage in the pre-filing process.

Jurisdiction Over Facilities Used To ``Process'' Gas

    44. Trunkline LNG and INGAA request the Commission to clarify that
it is not seeking through the LNG pre-filing process regulations to
assert jurisdiction over the processing of natural gas. This
clarification request is spurred by the fact that EPAct 2005 defines
``LNG terminal'' to include all natural gas facilities that are used to
``process'' natural gas.\12\ According to Trunkline LNG and INGAA, the
intent of Congress, in including as part of an LNG terminal those
facilities that process gas, was to describe the ``process'' of
converting liquid natural gas back to its gaseous state, rather than,
for example, the non-jurisdictional processing of natural gas where
liquids are removed from a raw gas stream for their economic value.
---------------------------------------------------------------------------

    \12\ See EPAct 2005 section 311(b)(11).
---------------------------------------------------------------------------

Commission Response

    45. Section 311 of EPAct 2005 adds a definition of ``LNG terminal''
to section 2 of the NGA. The definition states, in pertinent part, that
``LNG Terminal means all natural gas facilities located onshore or in
state waters that are used to receive, unload, load, store, transport,
gasify, liquefy, or process natural gas * * *.''
    46. New section 3(e)(1) of the NGA, as added by section 311 of
EPAct 2005, states that ``[t]he Commission shall have the exclusive
authority to approve or deny an application for the siting,
construction, expansion, or operation of an LNG terminal.''
    47. Congress specifically provided for the new NGA definition of
LNG terminal to include facilities to ``gasify, liquefy, or process
natural gas.'' There would seem to be no purpose for the inclusion of
the term ``process'' if the Commission were to interpret it, as urged
by the commenters, as necessarily having exactly the same meaning as
the term ``gasify''. However, the Commission agrees that its
jurisdiction under the legislation with respect to processing of
natural gas is limited to the siting, construction and operation of
processing facilities that are part of an LNG import or export terminal
and therefore included in the facilities for which a prospective
applicant must seek authorization under section 3 of the NGA.
    48. The Commission does not view EPAct 2005 as having in any way
expanded the scope of section 7 of the NGA to processing facilities or
processing as an activity. Thus, for example, if a company plans to
construct facilities in proximity to a planned LNG terminal in order to
remove liquids from regasified LNG sent out from the LNG terminal, the
processing facilities will be neither import facilities for which NGA
section 3 authorization is necessary nor facilities for the interstate
transportation of gas for which NGA section 7 authority would be
necessary. That being the case, the Commission will have no authority
to authorize the siting or construction of facilities to process LNG or
regasified LNG except to the extent such facilities are part of an LNG
terminal. However, notwithstanding the non-jurisdictional status of any
processing facilities, the environmental review of the LNG terminal
project would have to include any facilities to be constructed for the
purpose of processing regasified LNG from a new LNG terminal.

Pipeline Facilities To Receive Regasified LNG From Terminals in Federal
Waters

    49. Woodside Natural Gas, Inc. requests that the Commission clarify
application of the mandatory pre-filing process to companies that may
have filed permit applications pursuant to the Deepwater Port Act with
other federal agencies for pipelines and other facilities that will be
located in state waters but will be used to transport regasified LNG
from a terminal located in federal or deepwaters.

Commission Response

    50. A prospective applicant to construct a pipeline that will
transport regasified LNG from an LNG terminal in federal or deepwater
will not be subject to the Commission's mandatory pre-filing process.
To the extent authorization under section 7 of the NGA is necessary for
a portion of a pipeline to access an LNG terminal in federal or
deepwater, the Commission encourages prospective applicants to
undertake the pre-filing process on a voluntary basis. The Commission
notes, however, that the U.S. Coast Guard is the agency responsible for
approving the siting and construction of an LNG terminal located in
federal waters, and it is for the U.S. Coast Guard, not the Commission,
to consider in a single NEPA document the environmental impacts of such
an LNG terminal and any related pipeline facilities, including
pipelines over which the Commission retains jurisdiction under the NGA.

Need for Flexibility--Time Requirements

    51. Cheniere, Cove Point, Nisource, Inc. (Nisource Pipelines),\13\
Duke Energy, and INGAA are concerned that the NOPR's approach is in one
way or another too rigid and too sharp a departure from the voluntary
pre-filing program heretofore in place. A number of commenters state
that they believe a more flexible pre-filing process is necessary and
appropriate. Duke Energy states that the regulations should expressly
provide that the Director has ability to modify procedures and
deadlines to reflect unique circumstances.
---------------------------------------------------------------------------

    \13\ Nisource, Inc. owns and operates four interstate pipelines:
Columbia Gas Transmission Corporation, Columbia Gulf Transmission
Company, Crossroads Pipeline Company and Granite State Gas
Transmission, Inc.
---------------------------------------------------------------------------

    52. Cove Point and Duke Energy assert that, unlike the flexible
pre-filing process currently in use, many of the timelines and
requirements proposed in the NOPR are unreasonable and unduly rigid,
which could substantially

lengthen the pre-filing process. Duke Energy comments that the
inflexibility of the pre-filing process could have a ``chilling
effect'' on prospective applicants who might shy away from voluntarily
participating in the pre-filing process because they will not find it
suitable to the circumstances of their proposed project. According to
Cove Point, many of the deadlines should be established on a case-by-
case basis, not on a rigid, tight schedule. Cheniere states that the
Commission should consider a more flexible timeline for filing the
application. Williston Basin Interstate Pipeline Company (Williston
Basin) also comments that certain requirements may not be necessary in
a given case, yet the regulations seem to eliminate discretion in the
submittal of certain information. As an example, Williston Basin offers
the requirement that a prospective applicant set up a Web site,
regardless of the fact that public participation in a given case might
not justify the time and expense involved.
    53. Several commenters direct their attention to specific time
requirements. INGAA, for example, states that the most onerous part of
the pre-filing process is the preparation of Resource Reports 1 through
12, and therefore, the time for filing those reports should be extended
from 60 to 120 days. ExxonMobil states that since decisions by the
Director are triggering events for deadlines that a prospective
applicant must meet, the Commission should impose in the regulations a
time limit for the Director to act on requests to commence the pre-
filing process and requests for findings on whether proposed
modifications to existing or previously approved LNG terminals must be
subject to the pre-filing process. Williston Basin is concerned that
the timing requirements of proposed sections 157.21(f)(9) and
157.21(f)(10) are tied to the end of the scoping comment period, but
the regulations do not state when the scoping period will begin or end.

Commission Response

    54. The Commission acknowledged in the NOPR that, heretofore, when
a prospective applicant has submitted a request to undertake the
Commission's optional pre-filing process, it generally has been seven
to eight months before an application was filed.\14\ However, the
minimum pre-filing period mandated by Congress for new LNG terminals is
six months. Therefore, the NOPR proposed filing specifications in
section 157.21(f) structured so that the potential exists for the pre-
filing process to be completed in six months.
---------------------------------------------------------------------------

    \14\ 112 FERC ]61,232 at P 6 (2005).
---------------------------------------------------------------------------

    55. As discussed above, the Commission recognizes the need for
flexibility in the application of the substantive and procedural
requirements of the pre-filing procedures, in both mandatory and
elective situations. The success of the pre-filing guidelines used by
the Commission's staff and prospective applicants in recent years is
attributable in significant measure to their flexibility. It is obvious
that more time may be needed for the pre-filing process for some
projects than for others. Further, in situations where the prospective
applicant is not required to undertake the pre-filing process, there
should be discretion for shortening the pre-filing process, if it can
be completed in less than six months. The Commission also recognizes
that in some instances certain required filings may not be applicable
or may not need to be filed again, if sufficiently up-to-date
information has been filed in a previous proceeding or by another
prospective applicant in its resources reports for a contemporaneous
related project.
    56. In recognition of the above considerations, the Commission
proposed in the NOPR to revise section 375.309(z) of the regulations to
delegate to the OEP Director the authority to ``[a]pprove, on a case-
specific basis, and make such decisions and issue guidance as may be
necessary in connection with the use of the pre-filing procedures in
Sec.  157.21, Pre-filing procedures and review process for LNG terminal
facilities and other natural gas facilities prior to filing of
applications. The commenters' concerns that the pre-filing procedures
may be too rigid may be due to the Commission's failure to emphasize in
the NOPR the discretion that the Director will have in the pre-filing
process to make appropriate adjustments to schedules and modifications
or waivers of filing requirements. Based on experience with the pre-
filing procedures in recent years, the Commission sees no need for the
regulations to establish time limits, as suggested by some commenters,
for the Director to take certain actions, such as granting or denying
requests to commence the pre-filing process and reaching findings on
whether proposed modifications to an existing or previously approved
LNG terminal must be subject to the pre-filing process.

Waterway Suitability Assessment (WSA)

    57. Proposed section 157.21(f)(13) of the regulations would have
required a prospective applicant to certify at the commencement of the
mandatory pre-filing process that a Follow-on WSA will be submitted to
the U.S. Coast Guard no later than when the application for LNG
terminal facilities authorization is filed with the Commission.
Cheniere and Cove Point point out that, heretofore, a WSA has not been
mandatory for all proposed projects. Cheniere observes that a WSA has
no application where there are no marine issues, and Cove Point adds
that the requirement in proposed section 157.21(a)(1) that a
prospective applicant file a preliminary WSA with the U.S. Coast Guard
when it files its initial filing seeking initiation of the pre-filing
process effectively lengthens the process well beyond six months.

Commission Response

    58. In response, the Commission is adding section 157.21(d)(12) to
require that a prospective applicant certify in its initial filing
seeking initiation of the pre-filing process that a Letter of Intent
(LOI) and a Preliminary WSA have been submitted to the U. S. Coast
Guard. In addition, the Commission is revising proposed 157.21(f)(13)
to require that a prospective applicant file, upon the Director's
issuance of a notice commencing the prospective applicant's pre-filing
process, a certification that a Follow-On WSA will be submitted at the
time the application is filed or that no LOI or WSA is required by the
U.S. Coast Guard.

Cooperation With State and Local Officials and Other State and Local
Issues

    59. The California PUC and the California Energy Commission assert
that the NOPR's proposed regulations fail to adequately ensure that
prospective applicants for LNG facilities will cooperate with state and
local officials. The Maine Governor's Office states that objective,
timely, accurate and project-specific information is essential in order
to ensure that all pertinent federal, state and local decisions are
made only after a thorough identification and evaluation of all
environmental, public safety and other issues. The California PUC
states that while the proposed regulations ensure that Commission staff
receives all needed information, the only requirement regarding state
and local agencies is that the prospective applicant provide in its
initial filing a list of relevant state and local agencies in the
project area with permitting requirements and a statement indicating
whether these agencies are aware of applicant's intent to use the pre-
filing

process and have agreed to participate in the process.
    60. The California PUC emphasizes that EPAct 2005 added several new
provisions to the NGA to ensure the opportunity for participation by a
state commission and, if not the same, the agency appointed by the
governor pursuant to new section 3(A)(b) of the NGA added by section
311(d) of EPAct 2005.\15\ The California PUC asserts that the
Commission should require that prospective applicants provide such
state agencies notice of the pre-filing process and all information
provided to Commission staff during the process. In addition, the
California PUC states that to ensure state and local officials'
meaningful participation in the proceeding, prospective applicants
should be required to serve their formal applications upon the
appropriate state commission and, if not the same, the governor-
designated agency. The California Energy Commission urges the
Commission to ensure in the final rule that state and local governments
will have timely access to non-internet public (NIP) and critical
energy infrastructure (CEII) information.
---------------------------------------------------------------------------

    \15\ As amended by EPAct 2005, new section 3(A)(b) of the NGA
provides that the governor of a state in which an LNG terminal is
proposed to be located shall designate a state agency and that the
Commission shall consult with such state agency regarding state and
local safety considerations prior to acting on the application for
the proposed LNG terminal. New section 3(A)(c) of the NGA provides
that the state agency may furnish an advisory report on state and
local safety considerations to the Commission not later than 30 days
after an application for LNG facilities is filed with the Commission
and that the Commission shall respond specifically to the issues
raised by the state agency. New section 3(A)(d) of the NGA provides
that after an LNG terminal is operational, the state agency may
conduct safety inspections, report any alleged safety violations to
the Commission, and the Commission shall transmit information
regarding such allegations to the appropriate federal agency. New
section 3(e)(2)(B) of the NGA requires the Commission to give notice
of the hearing on an application for the siting and construction or
expansion of an LNG terminal to the state commission and, if not the
same, the governor-appointed state agency.
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    61. In particular, the California PUC and California Energy
Commission assert that prospective applicants should be required to
file information specifically addressing state and local safety
concerns that need to be addressed in the safety advisory report, which
section 311(d) of EPAct 2005 requires the governor-appointed agency to
submit within 30 days after an application is filed. As proposed,
states the California PUC, there is no regulation requiring that a
prospective applicant notify the state commissions and governor-
designated agencies recognized by EPAct as having substantial roles in
the pre-filing process for LNG projects.
    62. The California Energy Commission also argues that the deadlines
for prospective applicants to file draft Resource Report 13 and a WSA
do not provide adequate opportunity for state and local agencies to
review these safety-related materials before a state's safety advisory
report is due. The Maine Governor's Office states that in addition to
needing more time for state and local officials to assess these
reports, the final rule should require that Resource Report 13 contain
information needed to facilitate local and state officials' assessments
of public safety issues and preparation of states' advisory safety
reports.
    63. The Maine Governor's Office also states that the Commission
should clarify the Commission staff's role in the pre-filing process
expressly includes cooperation with the applicant and state and local
agencies to facilitate development of the state-local public safety
plan and other reviews. In addition, the Maine Governor's Office
contends that the Commission should revise proposed section 157.21(d)
to require the prospective applicant to describe the specific means and
actions by which it intends to coordinate with state and local
officials to facilitate development of the safety plan. Moreover, the
Maine Governor's Office states that section 157.21(f) should establish
milestones regarding consultation with state and local officials to
facilitate safety studies and development of safety plans; section
157.21(d) should be amended to require a prospective applicant to
indicate its schedule and plans for addressing compliance with
permitting and other local land use requirements; the Commission's
staff should consult with applicants and state and local officials
regarding the nature and contents of resource reports; and the final
rule should specify that a prospective applicant's project Web site
provide download access to project-related information submitted during
the pre-filing process and that the project applicant make hard copies
of such documents available for inspection in the community in which
the LNG terminal will be located.

Commission Response

    64. In response to the comments, the Commission has revised the
regulatory text in section 157.21(d)(5) to require, in the case of
prospective applicants for LNG facilities, that the list of relevant
federal and state agencies (1) identify the agency designated by the
governor of a state for purposes of consulting with the Commission
regarding a new LNG terminal project to be located in the state or
regarding modifications to an existing or approved LNG terminal which
would raise significant new safety concerns, and (2) state that the
governor-designated agency is aware of the prospective applicant's
intention to use the pre-filing process. In addition, the Commission
has revised the regulatory text in section 157.21(d)(11) to require
that a prospective applicant's Public Participation Plan describe how
the prospective applicant intends to respond to requests for
information from the governor's designated agency for consultation
regarding state and local safety considerations with respect to LNG
facilities.
    65. Once the pre-filing process is under way it is the
responsibility of each stakeholder, including a state agency, to make
the prospective applicant aware early in the process of the information
it needs to perform its functions. State agencies' officials can make
known at the beginning or early in the pre-filing process what
materials they wish to receive. Of course, a state agency may adopt its
own regulations to require that prospective applicants also file
information with the state agency. However, the Commission does not
believe this is necessary. If a prospective applicant is not
forthcoming in providing requested information, a state agency may
request that the Commission's staff or OEP Director provide assistance
to ensure that the state agency receives in a timely manner the
information needed to fulfill its responsibilities.\16\
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    \16\ The Commission also notes that much, if not most, of the
information and materials filed by a prospective applicant during
the pre-filing process will be in the Commission's eLibrary and
accessible and downloadable via the Commission's Home Page on the
Internet (http://www.ferc.gov), as well the Commission's Public

Reference Room. The majority of filings with the Commission are
available on eLibrary within 2 days. An agency also may register for
an eSubscription to be notified of filings in a particular docket
number and may contact the Administrative Law Section of the
Commission's Office of the General Counsel regarding CEII and other
non-Internet public (NIP) information.
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    66. The Commission emphasizes that is not aware of there being a
problem in past pre-filing processes of prospective applicants' failing
to cooperate in providing state agencies with such materials in a
timely manner. Prospective applicants generally appreciate the fact
that it is in their own best interests to cooperate with state and
local agencies during the pre-filing process in order to expedite
completion of the pre-filing process and the ultimate success of their
planned projects. Further, since the Commission

believes that EPAct 2005's mandate that the Commission's regulations
must require that prospective applicants for authority to site and
construct new LNG terminals cooperate with state agencies, the
Commission believes that this objective is significantly promoted by
its implementation of a mandatory pre-filing process for new LNG
terminals, as required by EPAct 2005. In any event, however, the
Commission wishes to make clear from the outset that it does not read
the legislation as obligating the prospective applicant to provide
state agencies with material that is not clearly required by those
state agencies' regulations for the permits or purposes in which those
agencies are involved. Not all state agencies may want to receive all
of the information filed by a prospective applicant with the
Commission, and prospective applicants likely would be unnecessarily
burdened by a rigid requirement that they provide state agencies with
pre-filing materials that a state agency has not specifically indicated
that it wants to receive.
    67. As discussed in the NOPR, the pre-filing procedures set forth
in the new regulations, like the current pre-filing procedures, require
that prospective applicants engaged in the pre-filing process comply
with the environmental conditions in Part 380 of the Commission's
regulations. The Part 380 regulations admonish prospective applicants
to file with appropriate state agencies as early as possible to avoid
having the various permitting processes run consecutively rather than
concurrently. The Part 380 regulations also require that prospective
applicants submit extensive information and documentation which will be
in the public record for the pre-filing process.\17\ Much of this
record information is relevant to agencies with responsibilities
relating to state and local safety concerns and can be requested by
such agencies. Given that longer lead times may be required for certain
state authorizations which are required under federal mandate, it is in
the prospective applicant's best interest to file as soon as possible
all information that relevant state agencies will want to consider.\18\
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    \17\ During the pre-filing process under the existing guidelines
and under the new regulations codified by this Final Rule,
prospective applicants have to comply with a number of regulations
that require the submission of information relevant to state
agencies' responsibilities or cooperation with such agencies.
Section 380.3(b)(3) requires that a prospective applicant consult
with appropriate federal, regional, state, and local agencies during
the planning stages of a project to ensure that all potential
environmental impacts are identified. Section 380.3(b)(4) requires
that the prospective applicant submit applications for all federal
and state approvals as early as possible in the planning process.
Section 380.3(b)(5) requires that the prospective applicant notify
the Commission's staff of all other federal actions required for
completion of a project so that the Commission' s staff may
coordinate with other interested federal agencies. Section
380.12(c)(2)(i)(D) requires that the prospective applicant provide
any correspondence with the appropriate State Historic Preservation
Officer or duly authorized Tribal Historic Preservation Officer for
tribal lands regarding whether properties eligible for listing on
the National Register of Historic Places would be affected by the
project. Section 380.12(c)(2)(i)(E) requires that the prospective
applicant provide correspondence with the U.S. Fish and Wildlife
Service and National Marine Fisheries Service regarding the
potential impact of facilities on federally listed threatened and
endangered species. Section 380.12(c)(2)(i)(F) requires, in the case
of facilities that will be located in a designated coastal zone
management area, that a prospective applicant provide a consistency
determination or evidence that the owner has requested a consistency
determination from the state's coastal zone management program.
Section 380.12(j)(12) requires that a prospective applicant
demonstrate that applications for rights-of-way or other land use
for a project will be filed with federal land-management agencies
with jurisdiction over land that would be affected by the project.
    \18\ The California Energy Commission raises the need for
appropriate state agencies to have timely access to critical energy
infrastructure information (CEII). Section 388.112 of the
Commission's regulations, 18 CFR Sec.  388.112 (2005), sets forth
procedures to be followed by any person submitting documents
containing CEII. These procedures apply only to submissions of CEII
to the Commission. CEII, as defined in section 388.113 of the
regulations, includes information about proposed or existing natural
gas facilities that could be used by a person planning an attack on
critical energy infrastructure. The Commission's procedures in
section 388.112 are designed to ensure that CEII is not placed in
the Commission's public records. Section 157.21(h) of this Final
Rule's regulations provides that a prospective applicant using the
pre-filing procedures of this section shall comply with the
procedures in Sec.  388.112 for the submission of documents
containing critical energy infrastructure information, as defined in
Sec.  388.113. However, the Commission strongly encourages
prospective applicants to ensure that CEII information is made
available at the same time to the Commission and the state agency
designated by the Governor pursuant to new section 3(A)(b), as added
by section 311(d) of EPAct 2005, for consultation with the
Commission for purposes of EPAct 2005's provisions relating to LNG
terminal facilities. The Commission's regulations in no way hinder a
prospective applicant providing CEII information as is required by
permitting agencies as part of their normal deliberations.
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    68. Based on the Commission's experience in recent years, the pre-
filing process has allowed opportunity and time for state agencies to
participate, request information and formulate and present their views.
However, the Commission will monitor the operation of the pre-filing
procedures and regulations adopted by this Final Rule in order to
determine whether further action is needed to address issues or
problems relating to the pre-filing process. State agencies as well as
other stakeholders may at any time bring to the Commission's attention
perceived problems in how the pre-filing procedures are working.

Section 153.12

    69. The NOPR proposed to remove section 153.12 because it refers to
the collaborative procedures in section 157.22, which the Commission is
eliminating in view of the new pre-filing procedures in section 157.21.
BP Energy states that to avoid any confusion as to the applicability of
the mandatory pre-filing regulations of Part 157 to applications under
NGA section 3 for authorization to site, construct, modify and operate
LNG terminals, an express statement to that effect, such as is included
in section 153.12 needs to be retained. Consequently, states BP Energy,
the Commission should not remove section 152.12 in its entirety as
proposed in the NOPR.

Commission Response

    70. The Commission agrees that it will be useful to preserve
section 153.12's reference to the applicability of the definitions in
section 157.1, as well as expressly confirm the applicability of the
mandatory pre-filing procedures contained in section 157.21 to
applications under section 3 of the NGA filed under subpart B of Part
153. Accordingly, the Commission will revise section 153.12 as
suggested by BP Energy.

Section 157.21(d)(2)

    71. Reacting to the requirement in proposed section 157.21(d)(2)
that the prospective applicant's initial filing requesting the pre-
filing process include a ``description of the zoning and availability
of the proposed site and marine facility location,'' Keyspan LNG, L.P.
(Keyspan) seeks clarification confirming that state and local zoning
laws are preempted by the NGA and that the Commission will not be
controlled by state and local administration of zoning laws in making
its determination with respect to an application to construct LNG
facilities pursuant to NGA section 3.

Commission Response

    72. Proposed section 157.21(d) requires a prospective applicant's
submission of information of the type heretofore included in a written
request to use the voluntary pre-filing process. The Commission
considers this information essential to its staff being able to fulfill
its role in the pre-filing process. As described in the NOPR, that role
includes: (1) Assisting the prospective applicant in developing initial
information about the proposal and identifying affected parties
(including landowners and agencies); (2) issuing a Scoping Notice and
conducting scoping for the proposal; (3)

facilitating issue identification and resolution; (4) conducting site
visits, examining alternatives, meeting with relevant federal, state
and local and other stakeholders, and participating in the prospective
applicant's public information meetings; (5) initiating the preparation
of a preliminary EA or preliminary DEIS, which may include cooperating
agency review; and (6) reviewing draft resource reports for the
application that is to be filed with the Commission.
    73. Proposed section 157.21(d)(2)'s request for ``a description of
the zoning and availability of the proposed site and marine facility
location'' should be viewed with only the above-described purposes in
mind. While current zoning and availability are considerations that the
Commission will take into account in weighing the public interest,
section 157.21(d)(2) should not be interpreted as suggesting that the
Commission will ultimately be controlled by state and local
administration of zoning laws in making its determination regarding
whether approval of a proposed site for LNG terminal facilities is in
the public interest.

Section 157.21(f)(2)

    74. BP Energy states that proposed section 157.21(f)(2) appears to
assume but is not clear that the Director will identify the third-party
contractor at the time that the Director issues its notice commencing
the applicant's pre-filing process. BP Energy asks that the Commission
clarify this section.

Commission Response

    75. The Commission clarifies that, consistent with current practice
under the pre-filing procedures, the Director's notice will identify
the third-party contractor. The Final Rule reflects that practice in
section 157.21(e)(2).

Section 157.21(f)(3)

    76. Section 157.21(f)(3) requires a prospective applicant using the
pre-filing procedures to inform ``stakeholders'' of the proposed
project within 14 days of the Director's issuance of a notice
commencing the pre-filing process. INGAA and Cove Point ask the
Commission to clarify the term ``stakeholder.'' INGAA recommends that
the prospective applicant be required to contact affected agencies,
public officials and known interest groups. The Maryland Conservation
Council, stressing the benefits of non-governmental organization (NGO)
participation, urges the Commission to require prospective applicants
to contact regionally active NGOs prior to initiation of the pre-filing
process and scoping process. The Maryland Conservation Council contends
that environmental NGO stakeholders can put forward alternative points
of view and distribute accurate information, thereby ensuring against
rumors and uncertainties surrounding the proposed project and the pre-
filing process. As a result, the Maryland Conservation Council asserts
that changes to the engineering and design can occur early in the
project's timetable, citing the Cove Point LNG facility situation as an
example of the benefits of NGO involvement.

Commission Response

    77. Stakeholder means any agency or identifiable individual who may
have a stake in the outcome of the project. This would include federal
permitting agencies, state commissions and, if not the same, agencies
designated by governors for purposes of consulting with the Commission
on state and local safety considerations, state and local permitting
agencies (especially those for federal authorizations as defined in
federal legislation), local responders, affected tribes, appropriate
NGOs, and affected landowners as defined in section 157.6(d) of the
regulations. The Commission believes it is sufficient that appropriate
NGOs be informed in the same manner and at the same time as all other
stakeholders.

Applicability of Commission's Ex Parte Rules

    78. Cove Point states that the Final Rule should clarify that the
Commission's ex parte rules do not prohibit communications with the
Commission's staff during the pre-filing process phase of a project.

Commission Response

    79. Since there is no right under the Commission's regulations for
interested persons to intervene in the pre-filing process, the process
is not subject to Rule 2201 of the Commission's Rules of Practice and
Procedure, 18 CFR 385.2201, which governs off-the-record
communications.

Gas Interchangeability Issues

    80. AGA urges the Commission to address the issue of gas
interchangeability by requiring that a ``gas supply resource report''
assessing the impact of the imported LNG be incorporated into the pre-
filing process. Furthermore, AGA contends that stakeholders to be
contacted at the pre-filing stage should include those utilities that
might receive imported LNG in their market areas, so that they might be
able to resolve any gas interchangeability issues.

Commission Response

    81. On May 19, 2005, the Commission issued a notice in Docket No.
PL04-3-000 to seek comments on issues relating to gas
interchangeability and the need to assure interchangeability of gas
supplies in situations where regasified LNG is introduced into the
market. The Commission is considering the comments and what regulatory
steps it should take relating to gas interchangeability issues. Pending
further action in Docket No. PL04-3-000, the Commission finds that it
is premature to determine the extent to which it will be necessary or
appropriate for such issues to be raised in a pre-filing proceeding
under this Final Rule's procedures. The OEP Director, however, will
have the discretion to determine whether gas interchangeability issues
need to be addressed in a particular pre-filing proceeding. If the
Director finds that such issues should be addressed in the pre-filing
proceeding, local utilities concerned about such issues will be
stakeholders.

II. Summary of Regulations

    82. As discussed above and proposed in the NOPR, this Final Rule,
in large measure, adopts the formal pre-filing process that the
Commission currently utilizes when prospective applicants voluntarily
elect to use the process. However, in this Final Rule, the Commission
is making several revisions to the regulatory text set forth in the
NOPR. First, section 153.2 of the regulations is amended by a new
paragraph setting forth the definition of ``LNG terminal'' in the new
section 3A of the NGA added by section 311(d) of EPAct 2005:
    (d) LNG Terminal means all natural gas facilities located onshore
or in State waters that are used to receive, unload, load, store,
transport, gasify, liquefy, or process natural gas that is imported to
the United States from a foreign country, exported to a foreign country
from the United States, or transported in interstate commerce by a
waterborne vessel, but does not include:
    (1) Waterborne vessels used to deliver natural gas to or from any
such facility; or
    (2) Any pipeline or storage facility subject to the jurisdiction of
the Commission under section 7 of the Natural Gas Act.
    83. Section 153.2 of the regulations is amended by also adding the
following definitions:

    (e) For purposes of this part and section 157.21, related
jurisdictional natural gas facilities means any pipeline or other
natural gas facilities which are subject to section 7 of the NGA; will
directly interconnect with the facilities of an LNG terminal, as
defined in paragraph (d) of this section; and which are necessary to
transport gas to or regasified LNG from:
    (1) A planned but not yet authorized LNG terminal; or
    (2) An existing or authorized LNG terminal for which prospective
modifications are subject pursuant to section 157.21(e) to a mandatory
pre-filing process.
    (f) Waterway Suitability Assessment (WSA) means a document used by
the U.S. Coast guard in assessing the suitability of a waterway for LNG
marine traffic pursuant to 33 CFR 127.007. The Preliminary WSA
initiates the process of analyzing the safety and security risks posed
by proposed LNG tanker operations to a port and waterways, and the
Follow-On WSA provides a detailed analysis of the same issues.
    84. A new paragraph (c) is added to section 153.6 to state that no
application for a new LNG terminal, modifications to an existing or
approved LNG terminal found by the Director to involve significant, new
safety considerations, or related jurisdictional gas facilities may be
made before 180 days after the date of a notice by the OEP Director
announcing commencement of a prospective applicant's pre-filing process
under the procedures of section 157.21, as discussed above and
described below. A new definition is added to section 157.1 to provide
that, for the purposes of section 157.21, ``Director'' means the
Director of the Commission's Office of Energy Projects.
    85. New section 157.21 establishes the pre-filing process for LNG
terminal facilities, as well as other natural gas facilities. The
procedures are mandatory for any prospective applicant for
authorization to site, construct and operate facilities included within
the definition of ``LNG terminal,'' as defined in proposed section
153.2(d), and for any related jurisdictional natural gas facilities.
The pre-filing procedures also are mandatory in cases where the
Director finds that modifications to existing LNG terminal facilities
involve significant state and local safety considerations that have not
been previously addressed. As discussed below, the pre-filing review
process remains voluntary for natural gas facilities not directly
interconnected with LNG terminals.
    86. To initiate the pre-filing review process under new section
157.21, a prospective applicant for LNG terminal facilities is required
to make a filing containing certain material, as described below. New
section 157.21(a)(2) provides that an application for LNG terminal
facilities or related jurisdictional gas facilities (1) shall not be
filed until at least 180 days after the date that the Director issues
notice of the commencement of the prospective applicant's pre-filing
process, and (2) shall contain all the information specified by
Commission staff.
    87. The information that a prospective applicant is required to
submit pursuant to section 157.21(a)(2) includes draft environmental
material in accordance with the provisions of Part 380 of the
regulations implementing the Commission's procedures under NEPA. The
requirements in Part 380 of the Commission's regulations supplement
CEQ's regulations.\19\ The procedures in Part 380 essentially follow
CEQ procedures concerning early and efficient review of environmental
issues, public notice and participation, scoping, interagency
cooperation, comments, and timing of decisions on proposals.
---------------------------------------------------------------------------

    \19\ The CEQ's regulations are set at 40 CFR Parts 1500 through
1508 (2005).
---------------------------------------------------------------------------

    88. The environmental material required by the Part 380 regulations
is embodied in sections 380.12, 380.13, 380.14 and 380.15 and Appendix
A to Part 380. Section 380.12 describes resource reports which list, in
detail, the information the Commission needs to conduct an
environmental review of a proposal under NEPA. It consists of 13
resource reports ranging from a detailed project description to
descriptions of the existing environment and potential impacts on
environmental resources such as water use and quality, fish, wildlife
and vegetation, cultural resources, land use and aesthetics, and air
and noise and, for LNG terminal facilities, engineering and design
material.
    89. Sections 380.13 and 380.14 provide procedures and detailed
descriptions of what the prospective applicant is expected to do to
help the Commission comply with its obligations under the Endangered
Species Act and the National Historic Preservation Act. Section 380.15
identifies best practices for the prospective applicant to follow when
siting and maintaining facilities. Appendix A to Part 380 is a
checklist of minimum environmental filing requirements.
    90. Currently, when a prospective applicant elects to undertake the
Commission's voluntary pre-filing procedures, it is required to use or
file, as appropriate, all of the above-described Part 380 materials as
it formulates its project and then files the application with the
Commission. The procedures require that prospective applicants required
or requesting to use the pre-filing process file draft environmental
material in accordance with the provisions of Part 380 of the
regulations implementing the Commission's procedures under NEPA, as
described above. This will allow the Commission to review the
environmental materials and make suggestions on how they can be
improved before the filing of the application.
    91. Section 157.21(a)(3) requires that prospective applicants for
LNG terminal facilities and any related jurisdictional gas facilities
provide any necessary information for the environmental review.
Information also may be required for facilities not subject to the
Commission's NGA jurisdiction, such as intrastate pipeline and Hinshaw
pipeline facilities that will be interconnected with the LNG terminal.
    92. Section 157.21(b) also states that a prospective applicant
approved to use the pre-filing procedures for facilities not related to
LNG terminal facilities should not file an application until at least
180 days after the date that the Director issues a notice approving use
of the pre-filing procedures. However, whereas a prospective applicant
for LNG facilities would be precluded from filing an application before
the 180-day period has ended, the regulations do not preclude a
prospective applicant for facilities not related to LNG facilities from
filing an application within 180 days.
    93. Any prospective applicant required or potentially required to
use the pre-filing process for LNG terminal facilities and related
facilities or any prospective applicant requesting to use the pre-
filing process for non-LNG related facilities is required by section
157.21(c) to first consult with the Director on the nature of the
project, the content of the pre-filing request, and the status of the
prospective applicant's progress toward obtaining the information
required for the pre-filing request described in paragraph (d) of this
section. This consultation will also include discussion of the
specifications for the applicant's solicitation for prospective third-
party contractors to prepare the environmental documentation for the
project.
    94. Section 157.21(d) identifies the information that a prospective
applicant's initial filing to initiate the pre-filing process must
include. For

LNG terminal facilities, the initial filing must include a description
of the schedule desired for the project, including the expected
application filing date and the desired date for Commission approval,
and a description of the zoning and availability of the proposed site
and marine facility location.
    95. For natural gas facilities not related to LNG terminal
facilities, section 157.21(d) provides that a prospective applicant's
initial filing must include an explanation of why the prospective
applicant wants to use the process, including any critical timing
considerations, the expected application filing date and the desired
date for Commission approval.
    96. Filings by all prospective applicants to initiate the pre-
filing process are required by section 157.21(d) to include:
     A detailed description of the project, including location
maps and plot plans to scale showing all major plant components, that
will serve as the initial discussion point for stakeholder review;
     A list of the relevant federal and state agencies in the
project area with permitting requirements, and a statement indicating
that those agencies are aware of the prospective applicant's intention
to use the pre-filing process (including contact names and telephone
numbers) and whether the agencies have agreed to participate in the
process. For LNG terminal facilities, the list shall identify the
agency designated by the governor of the state in which the project
will be located to consult with the Commission regarding state and
local safety considerations. The filing also shall describe how the
applicant has accounted for agency schedules for issuance of federal
authorizations and when the applicant proposes to file with these
agencies for their respective permits or other authorizations;
     A list and description of the interest of other persons
and organizations who have been contacted about the project (including
contact names and telephone numbers);
     A description of what work has already been done, e.g.,
contacting stakeholders, agency consultations, project engineering,
route planning, environmental and engineering contractor engagement,
environmental surveys/studies, and open houses. This description shall
also include the identification of the environmental and engineering
firms and sub-contractors under contract to develop the project.;
     For natural gas facilities other than LNG terminal
facilities and related jurisdictional natural gas facilities, proposals
for at least three prospective third-party contractors from which
Commission staff may make a selection to assist in the preparation of
the requisite NEPA document, or a proposal for the submission of an
applicant-prepared draft Environmental Assessment as determined during
the initial consultation described in paragraph (c) of this section;
     Acknowledgement that a complete Environmental Report and
complete application are required at the time of filing;
     A description of a Public Participation Plan which
identifies specific tools and actions to facilitate stakeholder
communications and public information, including a project website and
a single point of contact. This plan shall also describe how the
applicant intends to respond to requests for information from federal
and state permitting agencies, including, if applicable, the governor's
designated agency for consultation regarding state and local safety
considerations with respect to LNG facilities; and
     Certification that an LOI and Preliminary WSA have been
submitted to the U. S. Coast Guard or, for modifications to an existing
or approved LNG terminal, that the U. S. Coast Guard did not require
such information.
    97. Section 157.21(e) states that the pre-filing process for a
prospective applicant will be deemed to have commenced on the date the
Director issues a notice setting forth a finding that the prospective
applicant has adequately addressed the requirements of section
157.21.\20\ The date of such notice shall be used in determining
whether the date an application is filed is at least 180 days after
commencement of the pre-filing process. Section 157.21(e) also provides
for the Director to make determinations whether prospective
modifications to an existing LNG terminal will involve significant
state and local safety considerations that have not been previously
addressed. Prospective applicants for such modifications to existing
LNG facilities are required to undertake the pre-filing review process.
---------------------------------------------------------------------------

    \20\ The Commission recognizes that there will be instances
where prospective modifications to existing or approved LNG
terminals will not involve significant state and local safety
considerations that have not been previously addressed.
Nevertheless, it generally will be necessary for prospective
applicants to substantially comply with the requirements of
subsections (a), (c) and (d) of section 157.21 in order for the
Director to make a finding on whether prospective modifications will
involve significant new or additional safety considerations.
However, the Director will have discretion in determining whether
the information supplied by a prospective applicant is adequate.
---------------------------------------------------------------------------

    98. Existing section 375.308(z) describes the Director's delegated
authority with respect to the collaborative pre-filing procedures in
section 157.22. This Final Rule removes existing section 157.22 from
the regulations since the Final Rule implements the pre-filing
procedures and review provided for in new section 157.21. Therefore,
the existing text in paragraph (z) of section 375.208 is replaced with
new text which provides for the Director's issuance of notices to
commence the pre-filing process under new section 157.21, after the
Director has found that a prospective applicant has adequately
addressed the above-described requirements. The new text in section
375.308(z) also provides for the Director to post guidance on the
Commission's website to clarify the procedures and on how prospective
applicants can achieve compliance with the pre-filing process and
regulations.
    99. Section 157.21(f) provides that, upon the Director's issuance
of a notice commencing a prospective applicant's pre-filing process,
the prospective applicant must:
     Within seven days \21\ and after consultation with
Commission staff, establish and notify Commission staff of the dates
and locations at which the prospective applicant will conduct open
houses and meetings with stakeholders (including agencies) and
Commission staff.
     Within 14 days, conclude the contract with the selected
third-party contractor.
     Within 14 days, contact all stakeholders not already
informed about the project.
---------------------------------------------------------------------------

    \21\ As provided in Rule 2007 of the Commission's Rules of
Practice and Procedure, 18 CFR 385.2007 (2005), the day on which the
Director's notice is issued will be excluded in counting days for
purposes of determining the date a filing is due. Further, if the
due date for a filing would fall on a Saturday, Sunday, holiday, or
day on which the Commission closes early due to adverse conditions,
the following business day becomes the due date.
---------------------------------------------------------------------------

     Within 30 days, submit a stakeholder mailing list to
Commission staff.
     Within 30 days, file a draft of Resource Report 1 in
accordance with section 380.12(c) of the regulations and a summary of
the alternatives considered or under consideration.
     On a monthly basis, file status reports detailing the
applicant's project activities including surveys, stakeholder
communications, and agency meetings.
     Be prepared to provide a description of the proposed
project and to answer questions from the public at

the scoping meetings held by Commission staff.
     Be prepared to attend site visits and other stakeholder
and agency meetings arranged by the Commission staff, as required.
     Within 14 days of the end of the scoping comment period,
respond to issues raised during scoping.
     Within 60 days of the end of the scoping comment period,
file draft Resource Reports 1 through 12.
     At least 60 days prior to filing an application, file
revised draft Resource Reports, if requested by Commission staff.
     At least 90 days prior to filing an application, file
draft Resource Report 13 (for LNG terminal facilities).
     Certify that a Follow-on WSA will be submitted to the U.
S. Coast Guard no later than the filing of an application with the
Commission (for LNG terminal facilities and modifications thereto, if
appropriate). If appropriate, the applicant shall certify that the U.
S. Coast Guard has indicated that a Follow-On WSA is not required.
    100. Section 157.21(g) provides that Commission staff and third-
party contractor involvement during the pre-filing process will be
designed to fit each project and will include some or all of the
following:
     Assisting the prospective applicant in developing initial
information about the proposal and identifying affected parties
(including landowners, agencies, and other interested parties).
     Issuing an environmental scoping notice and conducting
scoping for the proposal.
     Facilitating issue identification and resolution.
     Conducting site visits, examining alternatives, meeting
with agencies and stakeholders, and participating in the prospective
applicant's public information meetings.
     Reviewing draft Resource Reports.
     Initiating the preparation of a preliminary EA or draft
EIS, which may include cooperating agency review.
    101. Paragraph (h) of section 157.21 provides that a prospective
applicant using the pre-filing procedures shall comply with the
procedures in section 388.112 of the regulations for the submission of
documents containing CEII, as defined in Sec.  388.113 of the
regulations.
    102. Once an application is accepted by the Commission, whether the
environmental analysis can proceed will be highly dependent on how well
the applicant responded to issues raised by Commission staff and the
stakeholders during the pre-filing process described above.

III. Environmental Analysis

    103. The Commission is required to prepare an EA or EIS for any
action that may have a significant adverse effect on the human
environment.\22\ No environmental consideration is raised by the
promulgation of a rule that is procedural in nature or does not
substantially change the effect of legislation or regulations being
amended.\23\
---------------------------------------------------------------------------

    \22\ Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs. Preambles 1986-1990 ] 30,783 (1987).
    \23\ 18 CFR 380.4(a)(2)(ii) (2005).
---------------------------------------------------------------------------

    104. The Final Rule establishes pre-filing review procedures which
are mandatory for prospective applicants for new LNG terminal
facilities, certain modifications to existing or approved LNG terminals
and related jurisdictional gas facilities. The Final Rule's pre-filing
procedures are elective for prospective applicants for natural gas
facilities not related to LNG terminals. In neither case do the
procedures substantially change the regulatory requirements to which
applications for such facilities are subject. Rather, the Final Rule
will result in certain regulatory requirements being satisfied prior to
the filing of an application, as opposed to being satisfied at the
time, or after the filing, of the application. The use of the
procedures generally will affect the timing of the filing of
applications, not when regulatory requirements are met. Further, the
Final Rule implements regulatory changes mandated by Congress in EPAct
2005 for new LNG terminals.

IV. Regulatory Flexibility Act Statement

    105. The Regulatory Flexibility Act of 1980 (RFA) \24\ generally
requires a description and analysis of proposed 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
proposed regulations would not have such an effect. 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 million
or less.
---------------------------------------------------------------------------

    \24\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

    106. Most companies regulated by the Commission do not fall within
the RFA's definition of a small entity.\25\ Based on the Commission's
experience using the proposed pre-filing procedures, they will only be
used for major construction projects. Most, if not all, LNG-related
projects subject to mandatory pre-filing review would be projects
costing millions of dollars. Most, if not all, non-LNG related projects
for which prospective applicants will elect to use the proposed pre-
filing procedures will be projects costing millions of dollars. Because
of the scale and nature of projects likely to be reviewed under the
pre-filing procedures, the Commission doubts that any existing or new
company using the pre-filing procedures will be a small entity under
the RFA's standards. In addition, the RFA directs agencies to consider
four regulatory alternatives in a rulemaking to lessen the impact on
small entities: (1) Tiering or establishment of different compliance or
reporting requirements; (2) classification, consolidation,
clarification or simplification of compliance and reporting
requirements; (3) performance rather than design standards; and (4)
exemptions. In this Final Rule the Commission has adopted an
alternative by delegating to the OEP Director authority with the
discretion to grant waivers and make modifications as appropriate for
the use of pre-filing procedures as in section 157.21.
---------------------------------------------------------------------------

    \25\ 5 U.S.C. 601(3), citing to section 3 of the Small Business
Act, 15 U.S.C. 623. 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.
---------------------------------------------------------------------------

    107. Accordingly, the Commission hereby certifies that this Final
Rule will not have a significant economic impact on a substantial
number of small entities. 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 section 7 of the NGA is required.

V. Information Collection Statement

     108. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting, record keeping, and public
disclosure (collections of information) imposed by an agency.\26\
Accordingly, pursuant to OMB regulations, the Commission is providing
notice of its proposed information collections to OMB for review under
section 3507(d) of the Paperwork Reduction Act of 1995.\27\ Upon
approval of a collection(s) of information, OMB will assign an OMB
control number and an expiration date. Interim OMB approval of the
information collections contained in the NOPR was received on September
26, 2005 in response to the Commission's

request for OMB review under emergency clearance procedures. The
requirements in the subject rulemaking will be submitted to OMB for
review and final approval.
---------------------------------------------------------------------------

    \26\ 5 CFR 1320.11 (2005).
    \27\ 44 U.S.C. 3507(d) (2005).
---------------------------------------------------------------------------

    109. The Final Rule will affect the following existing information
collections:
    110. FERC-539, ``Gas Pipeline Certificates: Import/Export
Related,'' identifies the Commission's information collections relating
to Part 153 of its regulations, which apply to facilities to import or
export natural gas and for which authorization under section of the NGA
is necessary. 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 section 7 of the
NGA is required.
    111. FERC-577, ``Gas Pipeline Certificates: Environmental Impact
Statement,'' identifies the Commission's information collections
relating to Part 380 implementing NEPA requirements relating to the
construction of natural gas facilities.
    112. Interested persons may obtain information on the reporting
requirements or submit comments on the collections of information and
the associated burden estimates including suggestions for reducing this
burden by contacting the Federal Energy Regulatory Commission, 888
First Street, N.E., Washington, D.C. 20426 (Attention: Michael Miller,
Office of the Executive Director,<PHONE_NUMBER> or e-mail
<EMAIL_ADDRESS>Comments may also be sent to the Office of

Management and Budget (Attention: Desk Officer for the Federal Energy
Regulatory Commission, fax:<PHONE_NUMBER> or e-mail:
<EMAIL_ADDRESS>
    113. Public Reporting Burden: The Commission did not receive
specific comments concerning its burden estimates and uses the same
estimates here in the Final Rule. Comments on the substantive issues
raised in the NOPR are addressed elsewhere in the Final Rule.
    114. The burden estimates for complying with the additional filing
requirements contained in this rule pursuant to the procedures in new
section 157.21 are set forth below. As reflected, the burden estimates
are higher for a respondent/prospective applicant for LNG terminal
facilities than for a respondent/prospective applicant for other
natural gas facilities.

----------------------------------------------------------------------------------------------------------------
                                                     Number of       Number of       Hours per     Total annual
                 Data collection                    respondents      responses       response          hours
----------------------------------------------------------------------------------------------------------------
FERC-537........................................              10               1              47             470
FERC-539........................................              10               1             103           1,030
FERC-577........................................              20               1           1,402          28,040
                                                 -----------------
    Totals......................................  ..............  ..............  ..............          29,540
----------------------------------------------------------------------------------------------------------------

    115. From these burden estimates there must be subtracted the
original data collection requirements in OMB's record relating to
section 157.22 which this rulemaking proposes to remove from the
Commission's regulations. The numbers in OMB's record for section
157.22 are:

FERC-537..............................................      13,230 hours
FERC-539..............................................         270 hours
FERC-577..............................................      13,580 hours

    116. When the burden estimates for proposed section 157.21 are
reduced to reflect the removal of section 157.22, the net data
collection estimates for this rule are:

FERC-537..............................................      12,760 hours
FERC-539..............................................         760 hours
FERC-577..............................................      14,460 hours
                                                       -----------------
    Total.............................................  \1\ 2,460 hours

\1\ Net increase.

    Total Annual Hours for Collection: 2,460 hours. For LNG terminal
facilities and LNG-related pipeline facilities, these are mandatory
information collection requirements. For non-LNG related natural gas
facilities, these information collection requirements are voluntary but
are still subject to OMB review.
    Information Collection Costs: The Commission sought comments on the
cost to comply with these requirements. No comments were received. The
Commission has projected the average annualized cost for all
respondents to be $4,920,000 (2,460 hours x $100.00 per hour x 20
respondents).
    Title: FERC-537 ``Gas Pipeline Certificates: Construction,
Acquisition and Abandonment''; FERC-539, ``Gas Pipeline Certificates:
Import/Export Related''; FERC-577, ``Gas Pipeline Certificates:
Environmental Impact Statement.''
    Action: Proposed Information Collection.
    OMB Control Nos.: 1902-0060 (FERC-537); 1902-0062 (FERC-539); 1902-
0128 (FERC-577).
    The applicant shall not be penalized for failure to respond to
these collections of information unless the collections of information
display valid OMB control numbers.
    Respondents: Business or other for profit.
    Frequency of Responses: One-time implementation.
    Necessity of Information: On August 8, 2005, Congress enacted EPAct
2005. Section 311(d) of EPAct 2005 amends the NGA to insert a new
section, section 3A, which requires that the Commission shall
promulgate regulations on the pre-filing process for LNG terminals
within 60 days from enactment of EPAct 2005. Congress and the
Commission consider the promulgation of these regulations to be a
matter of critical importance to the state and local safety concerns
regarding the construction and development of LNG terminals. The
Commission must issue a final rule by October 7, 2005. The Commission
seeks emergency processing of this proposed information collection
because the use of normal clearance procedures is reasonably likely to
cause a statutory ordered deadline to be missed. The Final Rule revises
the requirements contained in 18 CFR Parts 157 and 153 to add a
requirement that applicants for authorization to construct LNG
terminals must comply with a pre-filing process and that such process
must commence at least 6 months prior to the filing of any application
with the Commission for authorization to construct such facilities.

VI. Document Availability

    117. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through 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, N.E., Room 2A, Washington DC 20426.

    118. 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 on eLibrary in PDF and
Microsoft Word format for viewing, printing, and/or downloading. To
access this document in eLibrary, type the docket number excluding the
last three digits of this document in the docket number field.
    119. User assistance is available for eLibrary and the FERC's
website during normal business hours. For assistance, please contact
FERC Online Support at 1-866-208-3676 (toll free) or<PHONE_NUMBER> (e-
mail at FERCOnlineSupport@FERC.gov), or the Public Reference Room at
202-502-8371, TTY<PHONE_NUMBER> (e-mail at
public.referenceroom@ferc.gov).

Effective Date

    120. These regulations are effective November 17, 2005.
    121. The Commission has determined with the concurrence of the
Administrator of the Office of Information and Regulatory Affairs of
OMB, received on October 4, 2005, that this Final Rule is not a major
rule as defined in section 351 of the Small Business Regulatory
Enforcement Fairness Act of 1996.\28\ The Commission will submit the
Final Rule to both houses of Congress and the General Accounting
Office.\29\
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    \28\ 5 U.S.C. 804(2) (2005).
    \29\ 5 U.S.C. 801(a)(A) (2005).
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List of Subjects

CFR Part 153

    Exports; Imports; Natural gas; Reporting and recordkeeping
requirements.

CFR Part 157

    Administrative practice and procedure; Natural gas; Reporting and
recordkeeping requirements.

CFR Part 375

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

    By the Commission.
Magalie R. Salas,
Secretary.

0
In consideration of the foregoing, the Commission proposes to amend
Parts 153, 157 and 375 of Chapter I, Title 18, Code of Federal
Regulations, as follows:

PART 153--APPLICATIONS FOR AUTHORIZATION TO CONSTRUCT, OPERATE, OR
MODIFY FACILITIES USED FOR THE EXPORT OR IMPORT OF NATURAL GAS

0
1. The authority citation for Part 153 continues to read as follows:

    Authority: 15 U.S.C. 717b, 717o; E.O. 10485, 3 CFR, 1949-1953
Comp., p. 970, as amended by E.O. 12038, 3 CFR, 1978 Comp., p. 136,
DOE Delegation Order No. 0204-112, 49 FR 6684 (February 22, 1984).

0
2. In Sec.  153.2, new paragraphs (d), (e) and (f) are added, to read
as follows:

Sec.  153.2  Definitions.

* * * * *
    (d) LNG Terminal means all natural gas facilities located onshore
or in state waters that are used to receive, unload, load, store,
transport, gasify, liquefy, or process natural gas that is imported to
the United States from a foreign country, exported to a foreign country
from the United States, or transported in interstate commerce by a
waterborne vessel, but does not include:
    (1) Waterborne vessels used to deliver natural gas to or from any
such facility; or
    (2) Any pipeline or storage facility subject to the jurisdiction of
the Commission under section 7 of the Natural Gas Act.
    (e) For purposes of this part and Sec.  157.21, related
jurisdictional natural gas facilities means any pipeline or other
natural gas facilities which are subject to section 7 of the NGA; will
directly interconnect with the facilities of an LNG terminal, as
defined in paragraph (d) of this section; and which are necessary to
transport gas to or regasified LNG from:
    (1) A planned but not yet authorized LNG terminal; or
    (2) An existing or authorized LNG terminal for which prospective
modifications are subject pursuant to section 157.21(e)(2) to a
mandatory pre-filing process.
    (f) Waterway Suitability Assessment (WSA) means a document used by
the U.S. Coast Guard in assessing the suitability of a waterway for LNG
marine traffic pursuant to 33 CFR 127.007. The Preliminary WSA
initiates the process of analyzing the safety and security risks posed
by proposed LNG tanker operations to a port and waterways, and the
Follow-On WSA provides a detailed analysis of the same issues.

0
3. In Sec.  153.6, a new paragraph (c) is added, to read as follows:

Sec.  153.6  Time of filing.

* * * * *
    (c) When a prospective applicant for authorization for LNG terminal
facilities, related jurisdictional natural gas facilities or
modifications to existing LNG terminal facilities is required by Sec.
157.21(a) to comply with that section's pre-filing procedures, no
application for such authorization may be made before 180 days after
the date of issuance of the notice by the Director of the Office of
Energy Projects, as provided in Sec.  157.21(e), of the commencement of
the prospective applicant's pre-filing process under Sec.  157.21.

0
4. The title and text of Sec.  153.12 are revised to read as follows:

Sec.  153.12  Pre-filing procedures for applications for authorization
to site, construct, maintain, connect or modify facilities to be used
for the export or import of natural gas.

    The definitions in Sec.  157.1 and the pre-filing procedures in
Sec.  157.21 of this chapter are applicable to applications under
section 3 of the Natural Gas Act filed pursuant to subpart B of this
part.

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
5. The authority citation for Part 157 continues to read as follows:

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

0
6. In Sec.  157.1, add the definition for ``Director'' in alphabetical
order to read as follows:

Sec.  157.1  Definitions.

* * * * *
    For the purposes of Sec.  157.21 of this part, Director means the
Director of the Commission's Office of Energy Projects.
0
7. Section 157.21 is added, to read as follows:

Sec.  157.21  Pre-filing procedures and review process for LNG terminal
facilities and other natural gas facilities prior to filing of
applications.

    (a) LNG terminal facilities and related jurisdictional natural gas
facilities. A prospective applicant for authorization to site,
construct and operate facilities included within the definition of
``LNG terminal,'' as defined in Sec.  153.2(d), and any prospective
applicant for related jurisdictional natural gas facilities must comply
with this section's pre-filing procedures and review process. These
mandatory pre-filing procedures also shall apply when the Director
finds in accordance with paragraph (e)(2) of this section that
prospective modifications

to an existing LNG terminal are modifications that involve significant
state and local safety considerations that have not been previously
addressed. Examples of such modifications include, but are not limited
to, the addition of LNG storage tanks; increasing throughput requiring
additional tanker arrivals or the use of larger vessels; or changing
the purpose of the facility from peaking to base load. When a
prospective applicant is required by this paragraph to comply with this
section's pre-filing procedures:
    (1) The prospective applicant must make a filing containing the
material identified in paragraph (d) of this section and concurrently
file a Letter of Intent pursuant to 33 U.S.C. 127.007, and a
Preliminary Waterway Suitability Assessment (WSA) with the U.S. Coast
Guard (Captain of the Port/Federal Maritime Security Coordinator). The
latest information concerning the documents to be filed with the Coast
Guard should be requested from the U.S. Coast Guard. For modifications
to an existing or approved LNG terminal, this requirement can be
satisfied by the prospective applicant's certifying that the U.S. Coast
Guard did not require such information.
    (2) An application:
    (i) Shall not be filed until at least 180 days after the date that
the Director issues notice pursuant to paragraph (e) of this section of
the commencement of the prospective applicant's pre-filing process; and
    (ii) Shall contain all the information specified by the Commission
staff after reviewing the draft materials filed by the prospective
applicant during the pre-filing process, including required
environmental material in accordance with the provisions of part 380 of
this chapter, ``Regulations Implementing the National Environmental
Policy Act.''
    (3) The prospective applicant must provide sufficient information
for the pre-filing review of any pipeline or other natural gas
facilities, including facilities not subject to the Commission's
Natural Gas Act jurisdiction, which are necessary to transport
regassified LNG from the subject LNG terminal facilities to the
existing natural gas pipeline infrastructure.
    (b) Other natural gas facilities. When a prospective applicant for
authorization for natural gas facilities is not required by paragraph
(a) of this section to comply with this section's pre-filing
procedures, the prospective applicant may file a request seeking
approval to use the pre-filing procedures.
    (1) A request to use the pre-filing procedures must contain the
material identified in paragraph (d) of this section unless otherwise
specified by the Director as a result of the Initial Consultation
required pursuant to paragraph (c) of this subsection; and
    (2) If a prospective applicant for non-LNG terminal facilities is
approved to use this section's pre-filing procedures:
    (i) The application will normally not be filed until at least 180
days after the date that the Director issues notice pursuant to
paragraph (e)(3) of this section approving the prospective applicant's
request to use the pre-filing procedures under this section and
commencing the prospective applicant's pre-filing process. However, a
prospective applicant approved by the Director pursuant to paragraph
(e)(3) of this section to undertake the pre-filing process is not
prohibited from filing an application at an earlier date, if necessary;
and
    (ii) The application shall contain all the information specified by
the Commission staff after reviewing the draft materials filed by the
prospective applicant during the pre-filing process, including required
environmental material in accordance with the provisions of part 380 of
this chapter, ``Regulations Implementing the National Environmental
Policy Act.''
    (c) Initial consultation. A prospective applicant required or
potentially required or requesting to use the pre-filing process must
first consult with the Director on the nature of the project, the
content of the pre-filing request, and the status of the prospective
applicant's progress toward obtaining the information required for the
pre-filing request described in paragraph (d) of this section. This
consultation will also include discussion of the specifications for the
applicant's solicitation for prospective third-party contractors to
prepare the environmental documentation for the project, and whether a
third-party contractor is likely to be needed for the project.
    (d) Contents of the initial filing. A prospective applicant's
initial filing pursuant to paragraph (a)(1) of the section for LNG
terminal facilities and related jurisdictional natural gas facilities
or paragraph (b)(1) of this section for other natural gas facilities
shall include the following information:
    (1) A description of the schedule desired for the project including
the expected application filing date and the desired date for
Commission approval.
    (2) For LNG terminal facilities, a description of the zoning and
availability of the proposed site and marine facility location.
    (3) For natural gas facilities other than LNG terminal facilities
and related jurisdictional natural gas facilities, an explanation of
why the prospective applicant is requesting to use the pre-filing
process under this section.
    (4) A detailed description of the project, including location maps
and plot plans to scale showing all major plant components, that will
serve as the initial discussion point for stakeholder review.
    (5) A list of the relevant federal and state agencies in the
project area with permitting requirements. For LNG terminal facilities,
the list shall identify the agency designated by the governor of the
state in which the project will be located to consult with the
Commission regarding state and local safety considerations. The filing
shall include a statement indicating:
    (i) That those agencies are aware of the prospective applicant's
intention to use the pre-filing process (including contact names and
telephone numbers);
    (ii) Whether the agencies have agreed to participate in the
process;
    (iii) How the applicant has accounted for agency schedules for
issuance of federal authorizations; and
    (iv) When the applicant proposes to file with these agencies for
their respective permits or other authorizations.
    (6) A list and description of the interest of other persons and
organizations who have been contacted about the project (including
contact names and telephone numbers).
    (7) A description of what work has already been done, e.g.,
contacting stakeholders, agency consultations, project engineering,
route planning, environmental and engineering contractor engagement,
environmental surveys/studies, and open houses. This description shall
also include the identification of the environmental and engineering
firms and sub-contractors under contract to develop the project.
    (8) For LNG terminal projects, proposals for at least three
prospective third-party contractors from which Commission staff may
make a selection to assist in the preparation of the requisite NEPA
document.
    (9) For natural gas facilities other than LNG terminal facilities
and related jurisdictional natural gas facilities, proposals for at
least three prospective third-party contractors from which Commission
staff may make a selection to assist in the preparation of the
requisite NEPA document, or a proposal for the submission of an
applicant-prepared draft Environmental Assessment as determined during
the

initial consultation described in paragraph (c) of this section.
    (10) Acknowledgement that a complete Environmental Report and
complete application are required at the time of filing.
    (11) A description of a Public Participation Plan which identifies
specific tools and actions to facilitate stakeholder communications and
public information, including a project website and a single point of
contact. This plan shall also describe how the applicant intends to
respond to requests for information from federal and state permitting
agencies, including, if applicable, the governor's designated agency
for consultation regarding state and local safety considerations with
respect to LNG facilities.
    (12) Certification that a Letter of Intent and a Preliminary WSA
have been submitted to the U.S. Coast Guard or, for modifications to an
existing or approved LNG terminal, that the U.S. Coast Guard did not
require such information.
    (e) Director's notices. (1) When the Director finds that a
prospective applicant for authority to site and construct a new LNG
terminal has adequately addressed the requirements of paragraphs (a),
(c) and (d) of this section, the Director shall issue a notice of such
finding. Such notice shall designate the third-party contractor. The
pre-filing process shall be deemed to have commenced on the date of the
Director's notice, and the date of such notice shall be used in
determining whether the date an application is filed is at least 180
days after commencement of the pre-filing process.
    (2) When the Director finds that a prospective applicant for
authority to make modifications to an existing or approved LNG terminal
has adequately addressed the requirements of paragraphs (a), (c) and
(d) of this section, the Director shall issue a notice making a
determination whether prospective modifications to an existing LNG
terminal shall be subject to this section's pre-filing procedures and
review process. Such notice shall designate the third-party contractor,
if appropriate. If the Director determines that the prospective
modifications are significant modifications that involve state and
local safety considerations, the Director's notice will state that the
pre-filing procedures shall apply, and the pre-filing process shall be
deemed to have commenced on the date of the Director's notice in
determining whether the date an application is filed is at least 180
days after commencement of the pre-filing process.
    (3) When a prospective applicant requests to use this section's
pre-filing procedures and review for facilities not potentially subject
to this section's mandatory requirements, the Director shall issue a
notice approving or disapproving use of the pre-filing procedures of
this section and determining whether the prospective applicant has