[Federal Register Volume 86, Number 77 (Friday, April 23, 2021)]
[Notices]
[Pages 21714-21722]
[FR Doc No: 2021-08218]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. AD20-14-000]

Carbon Pricing in Organized Wholesale Electricity Markets

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of policy statement.

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SUMMARY: The Commission is issuing this Policy Statement to clarify how
it will approach filings under section 205 of the Federal Power Act
that seek to incorporate a state-determined carbon price in organized
wholesale electricity markets.

DATES: This Policy Statement is effective April 15, 2021.

FOR FURTHER INFORMATION CONTACT:
John Miller (Technical Information) Office of Energy Market Regulation,
(202) 502-6016<EMAIL_ADDRESS>Adam Pan (Legal Information) Office of the General Counsel, (202) 502-
6023<EMAIL_ADDRESS>Alan Rukin (Legal Information) Office of the General Counsel, (202)
502-8502<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    1. On September 30, 2020, the Commission convened a technical
conference on state-determined carbon pricing in organized wholesale
electricity markets operated by regional transmission organizations and
independent system operators (RTO/ISO) (Carbon Pricing Technical
Conference). As discussed further below, the record in this proceeding
identified numerous potential benefits of incorporating a carbon price
set by one or more states into RTO/ISO markets.\1\ On October 15, 2020,
the Commission issued a Proposed Policy Statement, and sought comments
on whether the information and considerations discussed in the Proposed
Policy Statement are appropriate for the Commission to take into
account or whether the

Commission should consider different or additional considerations.\2\
After considering those comments, we issue this Policy Statement to
explain how the Commission will approach filings submitted pursuant to
Federal Power Act (FPA) section 205 \3\ that propose RTO/ISO market
rules that incorporate a state-determined carbon price.
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    \1\ Panelists that participated in the Carbon Pricing Technical
Conference were invited to submit for the record before the
conference their choice of testimony in the form of prepared opening
remarks, detailed written comments, or both. Any submitted panelist
testimony was posted to eLibrary in this docket on October 5, 2020,
and a transcript of the conference was posted on October 30, 2020.
    \2\ Carbon Pricing in Organized Wholesale Electricity Markets,
85 FR 66965 (Oct. 21, 2020), 173 FERC ] 61,062 (2020) (Proposed
Policy Statement).
    \3\ 16 U.S.C. 824d.
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I. Proposed Policy Statement and Comments

    2. On October 15, 2020, the Commission issued the Proposed Policy
Statement. In the Proposed Policy Statement, the Commission identified
certain information and considerations that the Commission believed,
based on the record of the Carbon Pricing Technical Conference, may be
germane to the Commission's evaluation of an FPA section 205 filing to
determine whether an RTO/ISO's market rules that incorporate a state-
determined carbon price into RTO/ISO markets are just, reasonable and
not unduly discriminatory or preferential. The Commission sought
comments on whether the information and considerations discussed in the
Proposed Policy Statement are appropriate for the Commission to examine
or whether the Commission should consider different or additional
considerations.\4\
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    \4\ Proposed Policy Statement, 173 FERC ] 61,062 at P 16.
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    3. Initial comments were due on November 16, 2020, and reply
comments were due on December 1, 2020. The attached Appendix identifies
the names of those that submitted comments.\5\
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    \5\ This Appendix will not be published in the Federal Register.
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II. Policy Statement

    4. This Policy Statement explains how the Commission will approach
rate filings submitted under FPA section 205 to establish market rules
for incorporating a state-determined carbon price into RTO/ISO
markets.\6\ In so doing, we identify a non-binding list of potential
considerations that the Commission may use to evaluate such a filing to
establish market rules for incorporating a state-determined carbon
price into an RTO/ISO market. The Policy Statement makes clear that the
Commission will determine whether the filing meets the FPA section 205
standard based on the particular facts and circumstances presented in
that proceeding. We believe that this discussion will help RTOs/ISOs
and stakeholders considering the value of establishing wholesale market
rules that incorporate a state-determined carbon price and help RTOs/
ISOs to make appropriate filings with the Commission if they seek to
implement such rules.
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    \6\ While RTOs/ISOs typically hold FPA section 205 filing rights
to change RTO/ISO market rules, the Commission recognizes that in
some regions other entities may hold such FPA section 205 filing
rights. The Commission intends for this Policy Statement to apply to
FPA section 205 filings submitted by any holders of FPA section 205
rights to change RTO/ISO market rules.
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    5. This Policy Statement addresses only filings pursuant to FPA
section 205.\7\ In addition, as this is a policy statement, it provides
only a general expression of our policy. It does not establish any
binding rule, regulation, or other precedent.\8\ When this Policy
Statement is applied in specific cases, parties can challenge or
support the application of this Policy Statement in those
proceedings.\9\
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    \7\ This limitation is unchanged from the Proposed Policy
Statement, but we reiterate this point here in response to certain
comments requesting clarity on whether the Policy Statement has any
bearing on proceedings initiated pursuant to FPA section 206. See,
e.g., MISO Nov. 16, 2020 Comments at 5; R Street Nov. 16, 2020
Comments at 1-2.
    \8\ See Pac. Gas & Elec. Co. v. FPC, 506 F.2d 33, 38 (D.C. Cir.
1974) (``A general statement of policy is the outcome of neither a
rulemaking nor an adjudication; it is neither a rule nor a precedent
but is merely an announcement to the public of the policy which the
agency hopes to implement in future rulemakings or adjudications.'')
(footnote omitted).
    \9\ See Inquiry Regarding the Commission's Policy for Recovery
of Income Tax Costs, 164 FERC ] 61,030, at P 6 (2018), order
dismissing clarific'n, 168 FERC ] 61,136 (2019).
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A. Background on State Emissions-Reduction Policies and Commission-
Jurisdictional RTO/ISO Markets

    6. States are currently taking a leading role in efforts to address
climate change by adopting policies to reduce greenhouse gas (GHG)
emissions. The electricity sector is a frequent focus of those
policies. Several states have adopted laws or regulations that require
substantial or total decarbonization of the electricity sector in the
coming decades.\10\ Many others have adopted goals or targets to the
same effect.\11\
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    \10\ Thirteen states--California, Hawaii, Maine, Maryland,
Massachusetts, Nevada, New Jersey, New Mexico, New York, Oregon,
Vermont, Virginia, and Washington--and the District of Columbia have
adopted clean energy or renewable portfolio standards of 50% or
greater. See C2ES, U.S. State Electricity Portfolio Standards,
https://www.c2es.org/document/renewable-and-alternate-energy-portfolio-standards/; see also Database of State Incentives for
Renewables and Efficiency, https://programs.dsireusa.org/system/program?type=38&.
    \11\ For example, a number of states--including Colorado,
Connecticut, Nevada, Rhode Island, and Wisconsin--have established
100% clean electricity goals or targets by executive order or other
non-binding commitment. See Natural Resources Defense Council, 100%
Clean Electricity Targets, https://www.nrdc.org/resources/race-100-clean.
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    7. Placing a value on GHG emissions has emerged as an important
market-based tool in state efforts to reduce GHG emissions, including
efforts to reduce GHG emissions from the electricity sector. In this
Policy Statement, we use the term ``carbon pricing'' to include both
``price-based'' methods adopted by states that establish a specific
price on GHG emissions as well as ``quantity-based'' approaches adopted
by states that do so indirectly through, for example, a cap-and-trade
system.\12\ Currently, 12 states impose some version of carbon
pricing.\13\ Those programs include the 11-state RGGI \14\ in the
Northeast and the cap-and-trade program administered by CARBMultiple
other states are considering adopting a carbon pricing regime,\15\ or
currently

use a carbon price to inform state agency actions.\16\ In addition,
numerous entities, including RTOs and ISOs, have begun examining
approaches to incorporating state-determined carbon prices into
wholesale electricity markets.\17\
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    \12\ ``Price-based'' methods, such as a carbon fee, use an
explicit charge on each ton of GHG emitted. ``Quantity-based''
methods, such as a cap-and-trade system, limit the amount of
permissible GHG emissions. Cap-and-trade systems establish a total
quantity of GHGs that can be emitted collectively by all entities
covered by the policy within a fixed period (a cap). ``Allowances''
are created for each ton of GHG emissions that can be emitted.
Covered entities must obtain one allowance for each ton of GHG
emitted. Covered entities obtain allowances from either: (1) Initial
allocation or auctioning of allowances; or (2) trading of
allowances. Carbon prices thus emerge from the initial allocation of
allowances and the trading of allowances on the secondary market.
The term ``state-determined carbon price'' refers to any state
mechanism to place a value on GHG emissions, including but not
limited to a charge directly imposed on emissions, and may refer to
either a single state or multi-state initiative (e.g., the Regional
Greenhouse Gas Initiative (RGGI)). For example, a ``state-determined
carbon price'' may refer to a value on GHG emissions, set by a state
regulation or law, to be applied consistently throughout the
electricity industry.
    \13\ State carbon pricing programs that are currently
implemented include: (1) California's cap-and-trade program (see
California Air Resources Board (CARB), Cap-and-Trade Program,
https://ww2.arb.ca.gov/our-work/programs/cap-and-trade-program/about); (2) Massachusetts' cap-and-trade program (see Mass. Dept. of
Env. Protection, Reducing GHG Emissions under Section 3(d) of the
Global Warming Solutions Act, https://www.mass.gov/guides/reducing-ghg-emissions-under-section-3d-of-the-global-warming-solutions-act);
and (3) the 11-state RGGI, infra n.14 (see RGGI, Inc., Elements of
RGGI, https://www.rggi.org/program-overview-and-design/elements).
See C2ES, U.S. State Carbon Pricing Policies, https://www.c2es.org/document/us-state-carbon-pricing-policies/.
    \14\ Those states are: Connecticut; Delaware; Maine; Maryland;
Massachusetts; New Hampshire; New Jersey; New York; Rhode Island;
Vermont; and Virginia. RGGI, Inc., https://www.rggi.org.
    \15\ Pennsylvania and Washington are pursuing carbon pricing
through rulemakings. Pennsylvania intends to join RGGI (see Penn.
Dept. of Env. Protection, RGGI, https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx), and Washington is seeking to adopt a
statewide cap-and-trade program (see State of Washington, Dept. of
Ecology, Clean Air Rule, https://ecology.wa.gov/Air-Climate/Climate-change/Greenhouse-gases/Reducing-greenhouse-gases/Clean-Air-Rule).
Fourteen states are currently considering carbon pricing
legislation: Connecticut, Georgia, Hawaii, Indiana, Kansas,
Maryland, Massachusetts, Montana, New Hampshire, New York, Oregon,
Rhode Island, Texas, and Washington (see National Conference of
Energy Legislators, Carbon Pricing, State Information, https://www.ncel.net/carbon-pricing/#stateinfo).
    \16\ At least 11 states--California, Colorado, Illinois, Maine,
Maryland, Minnesota, Nevada, New Jersey, New York, Virginia, and
Washington--use a state-determined carbon price as a decision-making
tool in various contexts, such as policy analysis, utility
integrated resource planning, and retail ratemaking for distributed
energy resources. See Policy Integrity, The Cost of Carbon
Pollution, States Using the SCC, https://costofcarbon.org/states.
    \17\ This includes, for example, ISO-NE's stakeholder
discussions regarding carbon pricing (see van Welie Oct. 5, 2020
Opening Comments at 2-3; Tr. 100:1-6 (van Welie); ISO-NE Oct. 5,
2020 Pre-Technical Conference Statement at 6-7); NYISO's carbon
pricing draft proposal (see Dewey Oct. 5, 2020 Opening Remarks at 3-
5; Tr. 89:20-90:3 (Dewey); NYISO, Carbon Pricing, https://www.nyiso.com/carbonpricing); and PJM's Carbon Pricing Senior Task
Force (see Giacomoni Oct. 5, 2020 Comments at 2-3; Tr. 146:13-147:3
(Giacomoni); PJM, Carbon Pricing Senior Task Force, https://www.pjm.com/committees-and-groups/task-forces/cpstf.aspx).
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    8. As with any state regulation of electricity generation
facilities, state efforts to reduce GHG emissions in the electricity
sector may affect matters subject to the Commission's jurisdiction.\18\
And while the Commission does not directly administer environmental
statutes, the Commission may be called upon to review proposals
submitted under FPA section 205 \19\ that address rules that
incorporate a state-determined carbon price into RTO/ISO markets.
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    \18\ See, e.g., Coal. for Competitive Elec., Dynegy Inc. v.
Zibelman, 906 F.3d 41, 57 (2d Cir. 2018), cert. denied sub nom.
Elec. Power Supply Ass'n v. Rhodes, 139 S. Ct. 1547 (2019)
(explaining that the state payments to address environmental
externalities at issue in that case had ``(at best) an incidental
effect'' on RTO/ISO markets); see also FERC v. Elec. Power Supply
Ass'n, 136 S. Ct. 760, 776 (2016), as revised (Jan. 28, 2016) (EPSA)
(noting that the federal and state spheres of jurisdiction under the
FPA ``are not hermetically sealed from each other'').
    \19\ 16 U.S.C. 824d(a) (``All rates and charges made, demanded,
or received by any public utility for or in connection with the
transmission or sale of electric energy subject to the jurisdiction
of the Commission, and all rules and regulations affecting or
pertaining to such rates or charges shall be just and reasonable.'')
(emphasis added).
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    9. RTO/ISO markets already address various matters related to
federal and state environmental regulations. For example, the
Commission has long permitted generating resources to recover through
wholesale rates the costs of complying with environmental regulations,
including the costs of emissions pricing regimes.\20\ Permitting
generating resources to recover through wholesale rates in the RTO/ISO
markets the costs associated with a state-determined carbon price is
consistent with that precedent.\21\
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    \20\ See Policy Statement and Interim Rule Regarding Ratemaking
Treatment of the Cost of Emissions Allowances in Coordination Rates,
59 FR 65,930, at 65,935 (Dec. 22, 1994) FERC Stats. & Regs. ]
31,009, at 31,207 (1994) (cross-referenced at 69 FERC ] 61,346)
(Policy Statement on Costs of Emissions Allowances) (Policy
Statement on Costs of Emissions Allowances) (``We will allow the
recovery of incremental costs of emission allowances in coordination
rates whenever the coordination rate also provides for recovery of
other variable costs on an incremental basis.''); see also Grand
Council of Crees v. FERC, 198 F.3d 950, 957 (D.C. Cir. 2000)
(holding that just and reasonable rates may account for a seller's
``need to meet environmental requirements,'' which ``may affect the
firm's costs''); see generally Peskoe Oct. 5, 2020 Pre-Conference
Filing at 1-2 (discussing these orders in greater detail); Konschnik
Oct. 5, 2020 Opening Statement at 1; Tr. 25:5-18 (Konschnik)
(similar).
    \21\ See Peskoe Oct. 5, 2020 Pre-Conference Filing at 1 (``The
Commission has recognized that environmental compliance costs are
appropriately included in wholesale rates, and there is no basis for
the Commission to treat carbon price costs any differently.'').
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    10. The Commission has also accepted filings to establish wholesale
market rules that address how a state-determined carbon price operates
within markets that encompass more than one state. As one example, CARB
administers a multi-sector cap-and-trade program that includes the
electricity sector.\22\ As part of its Western Energy Imbalance Market
(EIM), California Independent System Operator Corporation (CAISO)
proposed, and the Commission has accepted, tariff provisions to address
how resources located outside California offer into the EIM in light of
California's carbon pricing regime.\23\ Those rules permit a resource
to fashion its offers into the EIM such that they include a carbon
price if they are dispatched to serve load in California and not
include a carbon price if they are dispatched to serve load in the rest
of the EIM.\24\ Similarly, CAISO proposed, and the Commission has
accepted, measures for addressing resource shuffling in the EIM \25\ by
more accurately assessing which resources are dispatched to serve load
in California.\26\
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    \22\ See supra n.13. Nineteen other states--Colorado,
Connecticut, Hawaii, Louisiana, Maine, Massachusetts, Michigan,
Minnesota, Montana, Nevada, New Hampshire, New Jersey, New York,
Oregon, Pennsylvania, Rhode Island, Virginia, Vermont, and
Washington--and the District of Columbia have adopted economy-wide
decarbonization goals or targets of 50% or greater. See C2ES, U.S.
State Greenhouse Gas Emissions Targets, https://www.c2es.org/document/greenhouse-gas-emissions-targets/.
    \23\ Cal. Indep. Sys. Operator Corp., 153 FERC ] 61,087, at PP
9-11, 57 (2015).
    \24\ Id.
    \25\ In this context, CARB determined that CAISO's initial
method for accounting for emissions from EIM resources that serve
California load incorrectly assumed that the least-emitting
resources served California load, when instead some of those
resources would have already been dispatched to serve load outside
of California. Therefore, there was a ``backfill'' of higher-
emitting resources to serve non-California load, or a ``shuffling''
of resources. CARB concluded that, but for California's demand in
the EIM, those higher-emitting resources would not have been
dispatched at all and therefore those emissions should be attributed
to serving California load. See, e.g., Wolak Oct. 5, 2020 Comments
at 2-3; Hogan Oct. 5, 2020 Comments at 4-5; Tr. 101:16-24 (Wolak).
    \26\ Cal. Indep. Sys. Operator Corp., 165 FERC ] 61,050, at PP
7, 17 (2018).
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B. Discussion

1. Incorporating a State-Determined Carbon Price Into RTO/ISO Markets
    11. In this section, we explain the Commission's jurisdiction to
review RTO/ISO market rules that would incorporate a state-determined
carbon price filed under FPA section 205. We also explain that it is
the policy of this Commission to encourage efforts of RTOs/ISOs and
their stakeholders to explore and consider the value of incorporating a
state-determined carbon price into RTO/ISO markets.\27\
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    \27\ Certain commenters recommend that we refer more broadly to
``emissions pricing'' or state environmental policies more
generally, rather than limiting it to ``carbon pricing.'' See, e.g.,
Public Interest Orgs. Nov. 16, 2020 Comments at 2. This Policy
Statement is a response to specific issues raised in the record
developed at and after the Carbon Pricing Technical Conference. As
that record was limited to the specific issue of carbon pricing, we
decline to address other state environmental policies as outside the
scope of this proceeding.
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a. Commission Jurisdiction Regarding Rules That Incorporate a State-
Determined Carbon Price Into RTO/ISO Markets
    12. Wholesale market rules that incorporate a state-determined
carbon price into RTO/ISO markets can fall within the Commission's
jurisdiction as a practice affecting wholesale rates. Whether the rules
proposed in any particular FPA section 205 filing do, in fact, fall
under the Commission's jurisdiction, or whether any such proposal is
consistent with FPA section 205, is a determination we will make based
on the facts and circumstances in any such proceeding. Accordingly,
rather than make any jurisdictional or merits determination in this
Policy Statement, we present a framework for exercising our FPA section
205 jurisdiction.\28\
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    \28\ For these reasons, we reject the suggestion that we are
``prejudg[ing] the jurisdictional merits of any future section 205
proposals.'' See Danly Concurrence in Part and Dissent in Part at PP
2-3.

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    13. In EPSA, the Supreme Court articulated a two-part test for
evaluating whether a Commission action is within its jurisdiction to
regulate practices affecting wholesale rates. First, the activity being
regulated must ``directly affect'' wholesale rates.\29\ Although the
Court did not exhaustively define what it means to ``directly affect''
wholesale rates, it noted that the wholesale market rules established
in Order No. 745 \30\ ``meet that standard with room to spare.'' \31\
As the Court explained, those rules address how demand response
resources participate in the RTO/ISO markets, including the levels at
which they bid and are compensated.\32\
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    \29\ EPSA, 136 S. Ct. at 774 (citing Cal. Indep. Sys. Operator
Corp. v. FERC, 372 F.3d 395, 403 (2004)).
    \30\ Demand Response Compensation in Organized Wholesale Energy
Markets, Order No. 745, 76 FR 16,657 (Mar 24, 2011), 134 FERC ]
61,187, order on reh'g & clarification, Order No. 745-A, 137 FERC ]
61,215 (2011), reh'g denied, Order No. 745-B, 138 FERC ] 61,148
(2012), vacated sub nom. Elec. Power Supply Ass'n v. FERC, 753 F.3d
216 (D.C. Cir. 2014), rev'd & remanded sub nom. EPSA, 136 S. Ct.
760.
    \31\ EPSA, 136 S. Ct. at 774.
    \32\ Id. at 774-75.
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    14. Wholesale market rules that incorporate a state-determined
carbon price into RTO/ISO markets can satisfy that ``directly affect''
standard. Like the rules at issue in Order No. 745, wholesale market
rules that incorporate a state-determined carbon price could, depending
on the particular circumstances, govern how resources participate in
the RTO/ISO market, how market operators dispatch those resources, and
how those resources are ultimately compensated.\33\ As such, those
wholesale market rules can affect wholesale rates in essentially the
same way described in EPSA.
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    \33\ See, e.g., Tr. 23:3-22 (D. Hill); 28:24-29:8, 52:24-53:13
(Peskoe); D. Hill Oct. 5, 2020 Comments at 5-7; Peskoe Oct. 5, 2020
Pre-Conference Filing at 2-3; Price Oct. 5, 2020 Comments at 8-9;
Rossi Oct. 5, 2020 Pre-Conference Filing at 3. See generally
Transmission Planning and Cost Allocation by Transmission Owning and
Operating Public Utilities, Order No. 1000, 76 FERC 49,842 (Aug. 11,
2011), 136 FERC ] 61,051, at PP 203-224 (2011), order on reh'g,
Order No. 1000-A, 139 FERC ] 61,132, order on reh'g and
clarification, Order No. 1000-B, 141 FERC ] 61,044 (2012), aff'd sub
nom. S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014)
(requiring that regional transmission planning processes consider
transmission needs driven by public policy requirements (which can
include state public policies)).
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    15. Second, EPSA explained that the Commission cannot regulate a
matter that FPA section 201(b) reserves for exclusive state
jurisdiction, ``no matter how direct, or dramatic, its impact on
wholesale rates.'' \34\ The Court explained, however, that the effects
that wholesale market rules have on retail rates or other matters
subject to exclusive state jurisdiction do not, in and of themselves,
cause the Commission to exceed its jurisdiction.\35\ Instead, those
effects are the inevitable result of the fact that the FPA divides
jurisdiction over the electricity sector between the Commission and the
states.\36\ In turning to the specifics of Order No. 745, the Court
concluded that the rule did not regulate retail rates because ``every
aspect of [the rule] happens exclusively on the wholesale market and
governs exclusively that market's rules'' and ``the Commission's
justifications for regulating demand response are all about, and only
about, improving the wholesale market.'' \37\ Under those
circumstances, the Court explained, ``[section 201(b)] imposes no bar''
on Commission authority.\38\
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    \34\ EPSA, 136 S. Ct. at 775.
    \35\ Id. at 776 (``[A] FERC regulation does not run afoul of
[section 201](b)'s proscription just because it affects--even
substantially--the quantity or terms of retail sales.'').
    \36\ Id. (``It is a fact of economic life that the wholesale and
retail markets in electricity, as in every other known product, are
not hermetically sealed from each other. To the contrary,
transactions that occur on the wholesale market have natural
consequences at the retail level. And so too, of necessity, will
FERC's regulation of those wholesale matters.'').
    \37\ Id. (citing Oneok, Inc. v. Learjet, Inc., 575 U.S. 373, 385
(2015)).
    \38\ Id.
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    16. Wholesale market rules that incorporate a state-determined
carbon price into RTO/ISO markets can satisfy this standard as well.
Such rules would not regulate a matter reserved exclusively to the
states under the FPA, or otherwise displace state authority, including
state authority over generation facilities.\39\ Instead, wholesale
market rules that incorporate a state-determined carbon price into RTO/
ISO markets can ``govern exclusively'' the wholesale market and do so
for the purpose of improving that market.\40\ Rules that meet that
standard could affect matters within state jurisdiction, including a
state's regulation of generation facilities, without running afoul of
section 201(b)'s limitation on the Commission's jurisdiction.\41\ Under
those circumstances, the state would retain authority over that carbon
price as well as other measures for regulating generation facilities,
as in the CAISO EIM example discussed above.\42\ For these reasons,
incorporating a state-determined carbon price into RTO/ISO markets
would not in any way diminish state authority to establish a carbon
price or modify an existing state carbon price.\43\
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    \39\ See 16 U.S.C. 824(b).
    \40\ EPSA, 136 S. Ct. at 776.
    \41\ Id.
    \42\ See supra P 10.
    \43\ This position is unchanged from the Proposed Policy
Statement, but we clarify this point here in response to certain
comments that expressed concern that the Policy Statement could
serve to diminish existing state authority. See, e.g., EKPC Dec. 1,
2020 Comments at 2-10; Joint NY Consumers Nov. 16, 2020 Comments at
2; NESCOE Nov. 16, 2020 Comments at 5-6; Ohio Commission Nov. 16,
2020 Comments at 6-7.
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    17. Finally, we note that incorporating a state-determined carbon
price into RTO/ISO markets could represent another example of the type
of ``program of cooperative federalism'' that the Court noted with
approval in EPSA.\44\ RTO/ISO market rules that incorporate a state-
determined carbon price could, as discussed above, improve the
efficiency and transparency of the organized wholesale markets under
Commission jurisdiction by providing a market-based method to
incorporate state efforts to reduce GHG emissions, a matter self-
evidently under state jurisdiction.
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    \44\ Id. at 779-80.
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b. Commission Encouragement of Efforts of RTOs/ISOs and Their
Stakeholders To Explore and Consider the Value of Incorporating a
State-Determined Carbon Price Into RTO/ISO Markets
    18. Participants at the Carbon Pricing Technical Conference
identified a diverse range of potential benefits that could arise from
incorporating a state-determined carbon price into RTO/ISO markets.
Those benefits include the development of technology-neutral,
transparent price signals within RTO/ISO markets and market certainty
to support investment.\45\ In addition, participants explained that
carbon pricing is one example of an efficient market-based tool that
incorporates state public policies into RTO/ISO markets without in any
way diminishing state authority.\46\
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    \45\ See Tr. 24:1-3 (D. Hill), 85:17-21 (Bowring), 95:14-16
(Olson), 171:1-10 (White), 177:1-3 (Mukerji), 219:6-25 (Wadsworth),
261:24-262:5 (``From a pure business perspective, clarity and
certainty are so important. And for those of us that are involved in
making these long-term capital-intensive investments in energy
infrastructure, having this mechanism that can provide long-term
price signals for investment would be hugely valuable.'') (Beane),
264:17-19 (Crane), 278:8-10, 279:10-15 (Segal), 283:17-19 (Wiggins),
300:20-301:12 (Beane), 312:22-313:15 (Beane), 314:14-22 (Crane),
317:11-20 (Segal), 326:17-327:7 (Wiggins).
    \46\ See, e.g., Tr. 27:7-11, 29:9-24 (Peskoe), 31:15-32:12
(Price), 85:9-21 (Bowring), 200:11-23 (Breidenich).
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    19. We agree that proposals to incorporate a state-determined
carbon price into RTO/ISO markets could potentially improve the
efficiency of

those markets.\47\ Accordingly, it is the policy of this Commission to
encourage efforts of RTOs/ISOs and their stakeholders--including
States, market participants, and consumers--to explore and consider the
value of incorporating state-determined carbon prices into RTO/ISO
markets.\48\ That encouragement does not indicate a preference for a
state-determined carbon pricing approach over other state policies.
Whether and how a state chooses to address GHG emissions is a matter
exclusively within that state's jurisdiction. Instead, our intention is
only to encourage discussions among RTOs/ISOs and their stakeholders
regarding wholesale market rules that would incorporate state-
determined carbon pricing, in light of what we view as the potential
benefits of carbon pricing.
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    \47\ See, e.g., Tr. 31:15-25 (Price), 99:16-22 (van Welie),
150:6-23 (Mukerji), 169:5-12. (Hogan), 170:1-15 (Mukerji), 170:20-
171:10 (White), 175:5-20 (Rothleder), 219:1-221:4 (Wadsworth),
265:4-21 (Crane), 271:1-5 (T. Hill), 282:15-22 (Tierney).
    \48\ See Proposed Policy Statement, 173 FERC ] 61,062 at P 15
(proposing ``to make it the policy of this Commission to encourage
efforts by RTOs/ISOs and their stakeholders--including States,
market participants, and consumers--to explore establishing
wholesale market rules that incorporate state-determined carbon
prices in RTO/ISO markets''); see also id. PP 1, 7.
---------------------------------------------------------------------------

2. Considerations for Evaluating an FPA Section 205 Proposal To
Incorporate a State-Determined Carbon Price Into RTO/ISO Markets
    20. The Commission will review any FPA section 205 filing that
proposes to establish wholesale market rules that incorporate a state-
determined carbon price into RTO/ISO markets based on the particular
facts and circumstances presented in that proceeding, with the filer
bearing the burden of demonstrating that the proposal meets the FPA
section 205 standard.\49\
---------------------------------------------------------------------------

    \49\ See, e.g., Ala. Power Co. v. FERC, 993 F.2d 1557, 1571
(D.C. Cir. 1993) (stating that ``the party filing a rate adjustment
with the Commission under Sec.  205 bears the burden of proving the
adjustment is lawful'') (citation omitted).
---------------------------------------------------------------------------

    21. Nevertheless, based on our review of the record in this
proceeding, we believe that certain questions and issues are likely to
arise in any such filing. Below, we identify considerations that we
believe may be germane to the Commission's evaluation of an FPA section
205 filing, which filers should consider including, as appropriate, in
any FPA section 205 filing to incorporate a state-determined carbon
price into RTO/ISO markets.
    a. How, if at all, do the relevant market design considerations
change depending on the manner in which the state or states determine
the carbon price (e.g., price-based or quantity-based methods)? How
would state-determined carbon prices, including any changes to these
prices, be reflected in RTO/ISO tariffs or market designs?
    b. How would the FPA section 205 proposal provide adequate price
transparency and enhance price formation?
    c. How would the carbon price or prices be reflected in locational
marginal prices (LMP)?
    d. How would the incorporation of the state-determined carbon price
into the RTO/ISO market affect dispatch? Would the state-determined
carbon price affect how the RTO/ISO co-optimizes energy and ancillary
services? Would any reforms to RTO/ISO co-optimization rules be
necessary in light of the state-determined carbon price? Would any
reforms to other market design elements be necessary, such as to market
power mitigation rules or other rules that affect whether the market
produces just and reasonable rates?
    e. Would the filer's proposal result in economic or environmental
leakage? \50\ If so, how might the proposal address any such leakage?
---------------------------------------------------------------------------

    \50\ See Hogan Oct. 5, 2020 Comments at 4; Wolak Oct. 5, 2020
Comments at 2; Singh Oct. 5, 2020 Comments at 2-3. See also Tr.
56:12-57:10 (Price) (generally discussing economic and environmental
leakage), Tr. 46:2-18 (Peskoe) (discussing the Commission's
jurisdiction over proposals from public utilities to address
leakage).
---------------------------------------------------------------------------

    f. What elements of the proposal affect the wholesale rates paid by
customers? How does the proposal consider this impact and the impact on
consumers overall?
    22. These considerations are intended to provide guidance to RTO/
ISOs and their stakeholders regarding the kinds of issues that the
Commission may consider when evaluating FPA section 205 filings that
seek to incorporate a state-determined carbon price in RTOs/ISOs. We
emphasize that this list is intended to provide guidance but does not
alter the Commission's intention to consider the facts and
circumstances presented in each proceeding and does not bind or limit
the Commission with respect to which considerations the Commission will
weigh in applying the legal standard articulated in FPA section 205.

III. Document Availability

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

    Issued: April 15, 2021.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    Note: the following appendix will not appear in the Federal
Register.

Appendix: List of Commenters

------------------------------------------------------------------------
          Short name                           Full name
------------------------------------------------------------------------
ACORE........................  American Council on Renewable Energy.
AEE..........................  Advanced Energy Economy.

Americans for Prosperity, et   Americans for Prosperity, Alliance for
 al.                            Wise Energy Decisions, Americans for Tax
                                Reform, Caesar Rodney Institute,
                                Citizens Against Government Waste,
                                Committee for a Constructive Tomorrow,
                                Competitive Enterprise Institute, Energy
                                & Environment Legal Institute, Heritage
                                Action for America, Mississippi Center
                                for Public Policy, National Center for
                                Public Policy Research, Roughrider
                                Policy Center, Texas Public Policy
                                Foundation, The Heartland Institute, and
                                60 Plus Association.
America's Power..............  America's Power.
API..........................  American Petroleum Institute.
AWEA, et al..................  American Wind Energy Association and the
                                Alliance for Clean Energy--New York.
BCSE.........................  Business Council for Sustainable Energy.
Brookfield Renewable.........  Brookfield Renewable Trading and
                                Marketing LP.
Buckeye Power................  Buckeye Power, Inc.
CAISO........................  California Independent System Operator
                                Corporation.
CAISO Market Monitor.........  CAISO Department of Market Monitoring.
Calpine......................  Calpine Corporation.
CARB.........................  California Air Resources Board.
Carbon Free NY...............  Carbon Free New York.
CEA..........................  Canadian Electricity Association.
CEI..........................  Competitive Enterprise Institute.
Covanta......................  Covanta Holding Corporation.
Cricket Valley...............  Cricket Valley Energy Center, LLC.
David Hill...................  David R. Hill, Columbia Univ. Center on
                                Global Energy Policy.
EDF..........................  Environmental Defense Fund.
EEI..........................  Edison Electric Institute.
EKPC.........................  East Kentucky Power Cooperative, Inc.
ELCON........................  Electricity Consumers Resource Council.
EPSA.........................  Electric Power Supply Association.
ETI..........................  Energy Trading Institute.
Eversource...................  Eversource Energy Service Company, The
                                Connecticut Light and Power Company,
                                NSTAR Electric Company, and Public
                                Service Company of New Hampshire.
Exelon.......................  Exelon Corporation.
Heritage Foundation..........  Katie Tubb and Nicolas Loris of The
                                Heritage Foundation.
HQUS.........................  H.Q. Energy Services (U.S.) Inc.
IER..........................  Institute for Energy Research.
Industrial Customer Orgs.....  American Forest & Paper Association and
                                Industrial Energy Consumers of America.
Int'l. Energy Credit Ass'n...  International Energy Credit Association.
IPPNY........................  Independent Power Producers of New York,
                                Inc.
ITC Companies................  International Transmission Company,
                                Michigan Electric Transmission Company,
                                LLC, ITC Midwest LLC, and ITC Great
                                Plains, LLC.
Joint Attys. Gen.............  Attorneys General of Massachusetts,
                                California, Delaware, Maryland,
                                Michigan, Minnesota, New Mexico,
                                Pennsylvania, Rhode Island, Wisconsin,
                                and the District of Columbia.
Joint California Parties.....  Pacific Gas & Electric Company, San Diego
                                Gas & Electric Company, and Southern
                                California Edison.
Joint Consumer Advocates.....  Office of the People's Counsel for the
                                District of Columbia, Delaware Division
                                of the Public Advocate, Citizens Utility
                                Board, Maryland Office of People's
                                Counsel, New Jersey Division of Rate
                                Counsel, and Pennsylvania Office of
                                Consumer Advocate.
Joint NY Consumers...........  New York Energy Consumers Council, Inc.,
                                Real Estate Board of New York, and
                                Building Owners and Managers Association
                                of Greater New York.
LS Power.....................  LS Power Development, LLC.
Mass. Atty. Gen..............  Massachusetts Attorney General Maura
                                Healey.
Michigan Commission..........  Michigan Public Service Commission.
Microsoft....................  Microsoft Corporation.
MISO.........................  Midcontinent Independent System Operator,
                                Inc.
National Grid................  National Grid.
NEI..........................  Nuclear Energy Institute.
NEPGA........................  New England Power Generators Association,
                                Inc.
NEPOOL.......................  New England Power Pool Participants
                                Committee.
NESCOE.......................  New England States Committee on
                                Electricity.
NY State Entities............  New York State Public Service Commission,
                                New York State Energy Research and
                                Development Authority, and New York
                                Power Authority.
NGSA.........................  Natural Gas Supply Association.
NMA..........................  National Mining Association.
NRG..........................  NRG Energy, Inc.
Nucor Gallatin...............  Nucor Steel Gallatin, LLC.
NYISO........................  New York Independent System Operator,
                                Inc.
ODEC.........................  Old Dominion Electric Cooperative.
Ohio Commission..............  Public Utilities Commission of Ohio's
                                Office of the Federal Energy Advocate.
PJM..........................  PJM Interconnection, L.L.C.
PJM Power Providers..........  PJM Power Providers Group.
Policy Integrity.............  Institute for Policy Integrity, New York
                                Univ. School of Law.
Public Interest Orgs.........  Sustainable FERC Project, Clean Air Task
                                Force, Natural Resources Defense
                                Council, Union of Concerned Scientists,
                                Southern Environmental Law Center,
                                Conservation Law Foundation, and Acadia
                                Center.
R Street.....................  R Street Institute.
Real Estate Roundtable.......  The Real Estate Roundtable.
RFF..........................  Karen Palmer, Dallas Burtraw, Todd
                                Aagaard, and Kathryne Cleary of
                                Resources for the Future.
Roger Caiazza................  Roger Caiazza, Private Citizen.

Roy Shanker..................  Roy J. Shanker, Ph.D., Independent
                                Consultant.
SAFE.........................  Securing America's Future Energy.
SEIA.........................  Solar Energy Industries Association.
Shell Energy.................  Shell Energy North America (US), L.P.
Trane........................  Trane Technologies plc.
Utah Dept. of Commerce.......  Utah Department of Commerce.
Vistra.......................  Vistra Corp.
WPTF.........................  Western Power Trading Forum.
------------------------------------------------------------------------

Department of Energy; Federal Energy Regulatory Commission

Carbon Pricing in Organized Wholesale Electricity Markets

    DANLY, Commissioner, concurring in part and dissenting in part:
    1. Any party with a rate on file can submit a Federal Power Act
section 205 \1\ filing at any time. I therefore cannot oppose the
policy statement's effective acknowledgement that section 205 has yet
to be repealed and thus the Commission is obligated to consider such
filings, including those related to carbon pricing initiatives.\2\ So,
as seemingly unnecessary as it may be to announce a policy of ``non-
binding . . . potential considerations,'' I see no basis upon which to
oppose that aspect of the policy statement.\3\
---------------------------------------------------------------------------

    \1\ 16 U.S.C. 824d.
    \2\ See Carbon Pricing in Organized Wholesale Elec. Mkts., 175
FERC ] 61,036, at P 4 (2021).
    \3\ Id.
---------------------------------------------------------------------------

    2. Also ``non-binding'' is the majority's view of our
jurisdictional powers as they memorialize them in this policy
statement.\4\ I accordingly dissent from the policy statement to the
extent it attempts to prejudge the jurisdictional merits of any future
section 205 proposals. Congress grants our jurisdiction, and the courts
decree its limits when we overstep it. Anyone considering a section 205
filing following this issuance would be well-advised to read the
courts' decisions in order to inform themselves as to the proper bounds
of a legitimate tariff proposal; interested parties should do the same
when formulating protests.
---------------------------------------------------------------------------

    \4\ See id. PP 8-17.
---------------------------------------------------------------------------

    3. Finally, my prior statement in this proceeding that the
Commission ``ha[s] jurisdiction to entertain section 205 filings that
seek to accommodate state carbon-pricing policies'' meant no more and
no less than that.\5\ The Commission has the duty ``to entertain'' any
section 205 filing. I reiterate now in case any party wishes to
disregard my plain meaning: The Commission cannot prejudge whether
future section 205 filings designed to accommodate state carbon-pricing
initiatives will pass jurisdictional muster.\6\
---------------------------------------------------------------------------

    \5\ Compare Carbon Pricing in Organized Wholesale Elec. Mkts.,
173 FERC ] 61,062 (2020) (Danly, Comm'r, concurring in part and
dissenting in part at P 1), with Exelon Corporation December 1, 2020
Reply Comments, Docket No. AD20-14-000, at 7-8.
    \6\ See Carbon Pricing in Organized Wholesale Elec. Mkts., 173
FERC ] 61,062 (Danly, Comm'r, concurring in part and dissenting in
part at P 4) (``I would have waited until we had an actual 205
filing before us rather than pre-judging the issue based on unstated
assumptions about how such programs might work. It is easy to
imagine any number of RTO/ISO carbon-pricing proposals that would
violate the Federal Power Act . . . .'').
---------------------------------------------------------------------------

    For these reasons, I respectfully concur in part and dissent in
part.

James P. Danly,
Commissioner.

Department of Energy; Federal Energy Regulatory Commission

Carbon Pricing in Organized Wholesale Electricity Markets

    CHRISTIE, Commissioner, concurring in part and dissenting in part:
    1. I concur that any filing under Section 205 proposing some form
of carbon pricing will be evaluated on the facts and circumstances
attendant to that filing.\1\
---------------------------------------------------------------------------

    \1\ See Policy Statement at PP 20 and 22.
---------------------------------------------------------------------------

    2. I dissent from those parts of the Policy Statement \2\ to the
extent those provisions may be interpreted to appear to invite
proposals for carbon pricing that are inconsistent with the following
general principles.\3\
---------------------------------------------------------------------------

    \2\ See, e.g., id. PP 11, 17-19.
    \3\ Any future filing will come with its own evidentiary record
and be considered individually.
---------------------------------------------------------------------------

    3. First, it's important to be straightforward with the public
about what is being considered in this proceeding. For a government to
retain the trust of the people, it is imperative to avoid what George
Orwell criticized as language that disguises the truth about government
actions behind euphemisms and other distortions.\4\
---------------------------------------------------------------------------

    \4\ See, e.g., George Orwell, Animal Farm (1945); George Orwell,
Nineteen Eighty-Four (1949).
---------------------------------------------------------------------------

    4. So let's be clear: the term carbon ``price'' as used in this
docket,\5\ and by many commenters advocating for it, is a carbon tax.
This is not just a matter of semantics. Using terms accurately will not
only better serve and inform the public, but is essential to clarify,
and avoid obfuscating, the legal--including constitutional--questions
regarding this Commission's authority, as discussed further below.
---------------------------------------------------------------------------

    \5\ See Policy Statement at P. 7.
---------------------------------------------------------------------------

    5. As advocated by many commenters herein, a carbon ``price'' is
intended--just like the tax it is--to raise the price to consumers of a
product, in this case an energy resource based on its carbon
attributes. Raising the price, of course, is the whole point of the
policy.\6\ Whether in the form of an ad valorem add-on to the market
price, similar to a sales tax, or a price floor set above the market
price, or a cap-and-trade system, such as the Regional Greenhouse Gas
Initiative (RGGI), the term carbon ``price'' as used in this Policy
Statement and advocated by many in this docket means carbon tax.\7\ As
one commenter quite accurately describes it:
---------------------------------------------------------------------------

    \6\ See, e.g., Public Interest Organizations November 16, 2020
Comments at 3 (``Taxes and supports are equal but opposite measures:
A tax (or fee) increases costs and thus reduces the quantity of a
good or activity the state deems undesirable, while a support lowers
costs and increases the quantity of those the state deems desirable.
Both are economic policy tools intended to move a market away from
the equilibrium it would have achieved absent policy intervention.''
(emphasis added)).
    \7\ I would also note that while RTO/ISO markets may be more
administrative constructs than true markets, the goal of these
markets is to use the operation of supply and demand to produce
prices that reflect the competitive results obtainable in a true
market. A carbon ``price'' is imposed with the obvious intent to
increase the prices of certain energy resources above those that
reflect competitive results, based on a single criterion, carbon
content. See, e.g., Institute for Policy Integrity at New York
University School of Law November 16, 2020 Comments at 6 (``Because
a carbon price would increase the production costs of covered
sources relative to the production costs of uncovered sources, some
production will shift to uncovered sources.'' (citation omitted)
(emphasis added)).
---------------------------------------------------------------------------

    Regardless of the program design, the carbon price will likely
increase periodically, either administratively through a pre-set carbon
price schedule or through periodic contraction of the number of
emissions allowances introduced into the market, which will tend to
drive up the price.

. . .

    Incorporating a carbon price in wholesale electricity markets will
raise [Locational Marginal Prices] . . . .\8\
---------------------------------------------------------------------------

    \8\ Resources for the Future November 16, 2020 Comments at 6, 7
(emphasis added).
---------------------------------------------------------------------------

    6. Of course, use of the euphemism carbon ``price'' meshes with
what may be called the ``nothing to see here'' argument, which goes
something like this: FERC's sanctioning of carbon ``prices'' in RTO/ISO
markets is part of the natural evolution in the long continuum of
FERC's regulation of wholesale rates under the Federal Power Act,\9\
and carbon ``pricing'' is simply part of and will improve price
formation \10\ in FERC-regulated wholesale markets, with the carbon
``price'' properly added to address an externality.\11\
---------------------------------------------------------------------------

    \9\ See, e.g., Exelon Corporation December 1, 2020 Reply
Comments at 7, n.27 (``At the outset, we note that the Commission is
responsible under the [Federal Power Act] to ensure rates, terms and
conditions of service are just, reasonable and not unduly
discriminatory.''). See also David R. Hill Columbia University
Center on Global Energy Policy October 5, 2020 [filed] Statement at
6 (``It is only an incremental additional step to determining that
an RTO/ISO rate design may incorporate a price for carbon in
recognition of a state-established carbon control program.''); see
generally Matthew E. Price October 5, 2020 [filed] Technical
Conference Comments (October 2020 Price Comments) at 2 (for example,
``so long as the ultimate decision is reached in accordance with the
RTO's internal governance requirements, the Commission's task is
simply to review the outcome of that internal process--the proposed
tariff--and decide whether it is reasonable.'').
    \10\ See, e.g., Resources for the Future November 16, 2020
Comments at 6 (``In general, carbon pricing policies will help
improve price formation by increasing the offer prices of emitting
generators to supply energy and capacity in wholesale markets. Thus,
when a carbon-emitting generator is at the margin in these markets,
prices will be higher than they would be without the carbon
policy.'' (emphasis added)).
    \11\ See, e.g., Exelon Corporation May 21, 2020 Comments on
Request for Technical Conference at 3, 4 (``Pollutants such as
carbon dioxide are negative externalities because they impose costs
on society, yet the polluter does not have to internalize those
costs in its production . . . . Carbon pricing is simply the mirror
image of [state policies that subsidize certain resources based on
environmental attributes], imposing a cost on emitting generation
for their negative environmental attributes.''(citation omitted));
The American Wind Energy Association and the Alliance for Clean
Energy--New York November 16, 2020 Initial Comments at 3 (``A carbon
price would cause market participants to internalize what is
currently an externality in wholesale electricity markets, resulting
in prices that more accurately reflect the true and total costs of
generating electricity at a particular location.''); October 2020
Price Comments at 1.
---------------------------------------------------------------------------

    7. A carbon tax, however, does not cease being a tax just because
its ostensible purpose is to address a single externality (while
ignoring the universe of other relevant externalities, both positive
and negative). Just like litter and bottle taxes enacted by many states
and localities to defray the costs of roadside trash pick-up, it's
still a tax, not just a minor element of price formation.
    8. So let's be honest with the public about what this proceeding is
really about and not hide behind the euphemism carbon ``price.''
    9. At this point let me emphasize that simply labeling a carbon tax
proposal accurately does not determine whether it is good or bad public
policy, at either federal or state levels. Indeed, that's not for an
administrative agency to decide.
    10. At the federal level, Congress could conclude that from an
economic standpoint a federal carbon tax is a more transparent and less
harmful way to decarbonize the economy than a rent-seekers' paradise of
subsidies (the euphemism is ``policy support''), mandates, wealth
transfers and regulatory actions that threaten both reliability and
affordable consumer costs.\12\ Congress could couple it with rebates to
the consumers and taxpayers who will pay it. But those are questions
for Congress to consider.
---------------------------------------------------------------------------

    \12\ See, e.g., David R. Hill, Columbia University Center on
Global Energy Policy December 1, 2020 Reply Comments at 5 (``These
[set-asides, subsidies and mandates] can serve both to mask the cost
of the carbon control measures being enacted, and also make carbon
emissions reduction more expensive for consumers than it can be and
should be.'').
---------------------------------------------------------------------------

    11. Some may even call a federal carbon tax the `textbook solution'
to achieving decarbonization. And it may be, if the textbook is an
economics textbook. In the United States, however, there is always
another textbook that must be consulted when deciding major questions
of public policy, and that is the textbook of constitutional law and
government.
    12. The power to tax is one of the most important powers any
government can exercise.\13\ If democracy and self-government mean
anything, they mean that only those elected by the people should have
the power to make the major policy decisions that affect people's lives
in such important ways, and the power to tax clearly falls under any
concept of major policy decision.\14\
---------------------------------------------------------------------------

    \13\ McCulloch v. Maryland, 17 U.S. 316, 439 (1819) (``The power
to tax, involves, the power to destroy. . . .'').
    \14\ See, e.g., Food and Drug Administration v. Brown &
Williamson Tobacco Corp., 529 U.S. 120, 159 (2000) (``Finally, our
inquiry into whether Congress has directly spoken to the precise
question at issue is shaped, at least in some measure, by the nature
of the question presented. Deference under Chevron to an agency's
construction of a statute that it administers is premised on the
theory that a statute's ambiguity constitutes an implicit delegation
from Congress to the agency to fill in the statutory gaps. . . . In
extraordinary cases, however, there may be reason to hesitate before
concluding that Congress has intended such an implicit delegation.
Cf. Breyer, Judicial Review of Questions of Law and Policy, 38
Admin. L. Rev. 363, 370 (1986) (``A court may also ask whether the
legal question is an important one. Congress is more likely to have
focused upon, and answered, major questions, while leaving
interstitial matters to answer themselves in the course of the
statute's daily administration'') (citation omitted)).
---------------------------------------------------------------------------

    13. So the broader question providing context for this and future
proceedings goes to the heart of democratic government itself and, that
is: Who should have the power to tax?
    14. And we don't have to answer that question because the
Constitution already has. It makes it clear that only those elected by
the people to the legislative branch have this power.\15\ Congress can
legislate to grant this power to an administrative agency through a
clear and specific statute--and take accountability for its decision--
but in the case of taxing carbon no one has made a convincing case that
Congress has granted this power to FERC.
---------------------------------------------------------------------------

    \15\ U.S. Const. Art. 1, Sec.  8.
---------------------------------------------------------------------------

    15. With the above general principles in mind, let's look at four
general questions pertinent to this proceeding that are implicitly
raised by the Policy Statement and which have been alluded to by the
many commenters:
    16. Can states impose carbon taxes? As the Policy Statement notes,
the answer is clearly yes, under their plenary police powers, as long
as they don't attempt to tax transactions where federal law has
explicitly pre-empted them. They don't need FERC's permission to impose
carbon taxes on retail sales or energy production, if they choose; they
can do it now. Several states have already used their sovereign powers
to impose carbon taxes, either directly or indirectly.\16\ RGGI,
adopted by several eastern states, is an example of an indirect carbon
tax.\17\
---------------------------------------------------------------------------

    \16\ See, e.g., Policy Statement at nn.12-13.
    \17\ See id. n.12.
---------------------------------------------------------------------------

    17. Can FERC impose a carbon tax at the wholesale level through its
power to regulate RTOs/ISOs? As noted above, Congress would have to
empower FERC by a clear and specific statute to impose carbon taxes in
RTO/ISO markets and no one in this record has presented a convincing
argument that Congress has done so.
    18. Can FERC allow an RTO/ISO to impose a carbon tax on wholesale
sales of power? To a certain extent, this question implicates the
broader question about the nature of RTOs/ISOs. Some argue that they
are merely private utilities and FERC's only role is to review a rate
filing from an RTO/ISO and to approve the filing unless FERC

finds it to be ``unjust, unreasonable or unduly discriminatory.'' \18\
---------------------------------------------------------------------------

    \18\ See, e.g., October 2020 Price Comments at 2 (``To reject
such a Section 205 filing, the Commission would need to conclude
that it is unreasonable for a private party--the RTO, after all, is
not a public regulator--to make these choices.'' (emphasis added)).
---------------------------------------------------------------------------

    19. Rather than being little more than private utilities, however,
RTOs/ISOs in their present incarnation were essentially created by
FERC, as part of the ``restructuring'' era of the late 1990s/early
2000s, to carry out FERC-driven rate policies.\19\ In form, substance
and practice, not to mention in their complex governing structures and
processes (especially in multi-state organizations), RTOs/ISOs have
evolved to resemble somewhat more the hybrid entities that the British
not so lovingly call ``QANGOs'' (quasi-autonomous non-governmental
organizations) than they do purely private utilities. This is
especially true with regard to multi-state RTOs/ISOs, in which
utilities from many different states participate and in which the
interests and policies of those multiple states are implicated. Over
the past two decades these organizations have taken on various
regulatory roles that are more governmental in nature than private, in
some cases literally displacing state regulatory authority.\20\
---------------------------------------------------------------------------

    \19\ See, e.g., Regional Transmission Organizations, Order No.
2000, FERC Stats. & Regs. ] 31,089 (1999) (cross-referenced at 89
FERC ] 61,285), order on reh'g, Order No. 2000-A, FERC Stats. &
Regs. ] 31,092 (2000) (cross-referenced at 90 FERC ] 61,201), aff'd
sub nom. Pub. Util. Dist. No. 1 of Snohomish Cty. v. FERC, 272 F.3d
607 (D.C. Cir. 2001); Promoting Wholesale Competition Through Open
Access Non-Discriminatory Transmission Services by Public Utilities;
Recovery of Stranded Costs by Public Utilities and Transmitting
Utilities, Order No. 888, FERC Stats. & Regs. ] 31,036 (1996)
(cross-referenced at 75 FERC ] 61,080), order on reh'g, Order No.
888-A, FERC Stats. & Regs. ] 31,048 (cross-referenced at 78 FERC ]
61,220), order on reh'g, Order No. 888-B, 81 FERC ] 61,248 (1997),
order on reh'g, Order No. 888-C, 82 FERC ] 61,046 (1998), aff'd in
relevant part sub nom. Transmission Access Policy Study Group v.
FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. New York v.
FERC, 535 U.S. 1 (2002).
    \20\ FERC Order Nos. 2222 and 2222-A are the two most recent
examples where the RTOs/ISOs displace state regulatory authority, in
these examples at FERC's explicit direction. See Participation of
Distributed Energy Resource Aggregations in Markets Operated by
Regional Transmission Organizations and Independent System
Operators, Order No. 2222, 85 FR 67094, 172 FERC ] 61,247, on reh'g,
Order No. 2222-A, 174 FERC ] 61,197 (2021).
---------------------------------------------------------------------------

    20. So, just as FERC cannot directly impose a carbon tax without a
clear grant of congressional authorization, arguably it would be a
distinction without a difference for FERC to approve a proposal from an
RTO/ISO to impose a carbon tax (as opposed simply to recognizing an
individual state's carbon tax, as discussed below.)
    21. This would include efforts by a multi-state RTO/ISO (and its
market participants \21\) to address ``leakage'' (a euphemism for
``states that won't impose carbon taxes'') \22\ by penalizing resources
in states within the RTO that have not imposed a carbon tax; \23\ such
as, for example, attempting to levelize the costs of state-imposed
carbon taxes by imposing a higher offer floor (MOPR anyone?) on untaxed
resources from the non-conforming ``leakage'' states in the RTO/ISO.
---------------------------------------------------------------------------

    \21\ For example, Exelon argues that ``[f]ailure to address
emissions leakage in a coordinated manner is causing wholesale rates
to become unjust, unreasonable and unduly discriminatory.'' Exelon
Corporation November 16, 2020 Comments at 8.
    \22\ See, e.g., Exelon Corporation December 1, 2020 Reply
Comments at 6 (``Instead, resources in states with no carbon price
seek to preserve the artificial and unintended advantage that they
currently enjoy as a result of other states joining RGGI by opposing
Commission action. Thus, their positions in this proceeding are
efforts to throw carpet tacks in the path of progress toward
properly functioning carbon pricing mechanism(s) that include
leakage mitigation.'').
    \23\ See, e.g., id. at 10 (``[T]he Commission must act under
section 206 to rectify the [leakage] situation--such as by requiring
RTO/ISOs that have states with carbon pricing to implement a leakage
mitigation mechanism . . . . In other words, the intent and effect
of leakage mitigation is to remove the impact of an unwanted carbon
price from states with no carbon pricing.'' (citation omitted)
(emphasis in original)).
---------------------------------------------------------------------------

    22. Can FERC allow an RTO/ISO to recognize carbon taxes imposed by
one or more states? If a state has used its sovereign authority to
impose a carbon tax, directly or indirectly, and that tax is simply
incorporated into the production costs of a resource from that state
offered into the RTO/ISO markets, there is no reason for FERC to
intervene.\24\ State-imposed regulatory costs, which of course differ
from state to state, are already ``baked in'' to a bidder's costs and
present no cause for FERC's concern.
---------------------------------------------------------------------------

    \24\ See, e.g., Ari Peskoe October 5, 2020 [filed] Opening
Statement at 1 (``The Commission allows sellers to recover in
wholesale rates compliance costs associated with emissions
regulations, and the Commission would have no basis to prevent
regulated entities from passing through the costs of a state-set
carbon price.'').
---------------------------------------------------------------------------

    23. Just as with proposals to accommodate other state policies,
however, consideration of each specific proposal will be highly fact-
intensive and one key question will be to determine whether the line
has been crossed between simply recognizing an individual state's
carbon tax versus imposing that state's tax on generating resources--
and consumers--in other states that have not consented to be taxed, an
especially salient question in multi-state RTOs/ISOs.
    24. All future proceedings under Section 205, 206 or other
statutory provisions will, of course, come with their own individual
evidentiary records and will be judged individually at that future
time. To the extent, however, the Policy Statement may be interpreted
to invite proposals inconsistent with the general principles stated
above, I respectfully dissent.
    For these reasons, I respectfully concur in part and dissent in
part.

Mark C. Christie,
Commissioner.

[FR Doc. 2021-08218 Filed 4-22-21; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 85, Number 139 (Monday, July 20, 2020)]
[Notices]
[Pages 43831-43832]
[FR Doc No: 2020-15577]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. IC20-10-000]

Commission Information Collection Activities (FERC Form Nos. 2
and 2A); Comment Request; Extension

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of information collection and request for comments.

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

SUMMARY: In compliance with the requirements of the Paperwork Reduction
Act of 1995, the Federal Energy Regulatory Commission (Commission or
FERC) is soliciting public comment on the currently approved
information collection, FERC Form No. 2 (Annual Report for Major
Natural Gas Companies) and FERC Form No. 2-A (Annual Report for Non-
Major Natural Gas Companies).\1\
---------------------------------------------------------------------------

    \1\ FERC Form Nos. 2 and 2-A are part of the ``Forms Refresh''
effort, which is a separate activity and not addressed here. See
Revisions to the Filing Process for Commission Forms, 166 FERC ]
61,027 (2019) (started in Docket No. AD15-11-000 and ongoing in
Docket No. RM19-12-000). OMB issued its decisions on the proposed
changes in the Forms Refresh Notice of Proposed Rulemaking in Docket
No. RM19-12-000 on March 14, 2019.

DATES: Comments on the collection of information are due August 19,
---------------------------------------------------------------------------
2020.

ADDRESSES: You may submit written comments on FERC Form Nos. 2 and 2-A
to the Office of Management and Budget (OMB) through www.reginfo.gov/public/do/PRAMain, Attention: Federal Energy Regulatory Commission Desk
Officer. Please identify the OMB control numbers (1902-0028 and 1902-
0030) in the subject line. Your comments should be sent within 30 days
of publication of this notice in the Federal Register.
    Please submit copies of your comments to the Commission (identified
by Docket No. IC20-10-000) by either of the following methods:
     eFiling at Commission's website: http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Express Services: Persons unable to file
electronically may mail similar pleadings to the Federal Energy
Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand
delivered submissions in docketed proceedings should be delivered to
Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland
20852.
    Instructions: All submissions must be formatted and filed in
accordance with submission guidelines at: http://www.ferc.gov/help/submission-guide.asp. For user assistance, contact FERC Online Support
by email at<EMAIL_ADDRESS>or by phone at:<PHONE_NUMBER>
(toll-free).
    Docket: Users interested in receiving automatic notification of
activity in this docket or in viewing/downloading comments and
issuances in this docket may do so at http://www.ferc.gov/docs-filing/docs-filing.asp.

FOR FURTHER INFORMATION CONTACT: Ellen Brown may be reached by email at
<EMAIL_ADDRESS>and telephone at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:
    Title: FERC Form No. 2, Annual Report for Major Natural Gas
Companies; OMB Control No. 1902-0028.
    FERC Form No. 2-A, Annual Report for Non-Major Natural Gas
Companies; OMB Control No. 1902-0030.
    OMB Control Nos.: 1902-0028, 1902-0030.
    Type of Request: Three-year extension of the FERC Form No. 2 and
FERC Form No. 2-A information collection requirements without a change
to the current reporting and recordkeeping requirements.
    Abstract: Pursuant to sections 8, 10 and 14 of the Natural Gas Act
(NGA), (15 U.S.C. 717g, 717i, and 717m), the Commission is authorized
to conduct investigations and collect and record data, and to prescribe
rules and regulations concerning accounts, records and memoranda as
necessary or appropriate for purposes of administering the NGA. The
Commission may prescribe a system of accounts for jurisdictional
companies and, after notice and opportunity for hearing, may determine
the accounts in which particular outlays and receipts will be entered,
charged or credited.
    The Commission collects FERC Form Nos. 2 and 2-A information as
prescribed in 18 CFR 260.1 and 18 CFR 260.2. These forms provide
information concerning a company's current performance, compiled using
the Commission's Uniform System of Accounts (USofA).\2\ FERC Form No. 2
is filed by ``Major'' natural gas companies that have combined natural
gas transported or stored for a fee that exceeds 50 million Dekatherms
in each of the three previous calendar years. FERC Form No. 2-A is
filed by ``Non-Major'' natural gas companies that do not meet the
filing threshold for the FERC Form No. 2, but have total gas sales or
volume transactions that

exceeds 200,000 Dekatherms in each of the three previous calendar
years.
---------------------------------------------------------------------------

    \2\ See 18 CFR part 201 (Uniform System of Accounts Prescribed
for Natural Gas Companies Subject to the Provisions of the Natural
Gas Act).
---------------------------------------------------------------------------

    The forms provide information concerning a company's financial and
operational information. The forms contain schedules which include a
basic set of financial statements: Comparative Balance Sheet, Statement
of Income and Retained Earnings, Statement of Cash Flows, and the
Statement of Comprehensive Income and Hedging Activities. Supporting
schedules containing supplementary information are filed, including
revenues and the related quantities of products sold or transported;
account balances for various operating and maintenance expenses;
selected plant cost data; and other information.
    The information collected assists the Commission in the
administration of its jurisdictional responsibilities and is used by
Commission staff, state regulatory agencies, customers, financial
analysts and others in the review of the financial condition of
regulated companies. The information is also used in various rate
proceedings, industry analyses and in the Commission's audit programs
and as appropriate, for the computation of annual charges. The
information is made available to the public, interveners and all
interested parties to assist in the proceedings before the Commission.
For financial information to be useful to the Commission, it must be
understandable, relevant, reliable and timely. The Form Nos. 2 and 2-A
financial statements are prepared in accordance with the Commission's
USofA and related regulations, and provide data that enables the
Commission to develop and monitor cost-based rates, analyze costs of
different services and classes of assets, and compare costs across
lines of business. The use of the USofA permits natural gas companies
to account for similar transactions and events in a consistent manner,
and to communicate those results to the Commission on a periodic basis.
Comparability of data and financial statement analysis for a particular
entity from one period to the next, or between entities, within the
same industry, would be difficult to achieve if each company maintained
its own accounting records using dissimilar accounting methods and
classifications to record similar transactions and events.
    In summary, without the information collected in the forms, it
would be difficult for the Commission to ensure, as required by the
NGA, that a pipeline's rates remain just and reasonable, respond to
Congressional and outside inquires, and make decisions in a timely
manner.
    On April 30, 2020, the Commission published a Notice in the Federal
Register in Docket No. IC20-10-000 requesting public comments.\3\ The
Commission received no public comments.
---------------------------------------------------------------------------

    \3\ 85 FR 23954.
---------------------------------------------------------------------------

    Type of Respondent: Major and Non-Major Natural Gas Companies.
    Estimate of Annual Burden: \4\ The Commission estimates the annual
public reporting burden and cost \5\ for the information collection as
shown in the following table:
---------------------------------------------------------------------------

    \4\ Burden is defined as the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a Federal agency. For
further explanation of what is included in the information
collection burden, refer to 5 Code of Federal Regulations 1320.3.
    \5\ The Commission staff believes the FERC FTE (full-time
equivalent) average cost for wages plus benefits is representative
of the corresponding cost for the industry respondents. Based upon
the FERC's 2019 average cost for salary plus benefits, the average
hourly cost is $80/hour.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Annual cost
  Information collection  (FERC form      Number of     Annual number   Total number     Average burden & cost     Total annual burden          per
                 No.)                    respondents    of  responses   of responses         per response            hours & cost \6\       respondent
                                                       per respondent                                                                           ($)
                                                  (1)             (2)     (1) * (2) =  (4).....................  (3) * (4) = (5)........       (5) / (1)
                                                                                (3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2....................................             100               1             100  1,671.66 hrs.; $133,733.  167,166 hrs.;                  $133,733
                                                                                $13,373,280.
2-A..................................              81               1              81  296 hrs.; $23,680.......  23,976 hrs.; $1,918,080          23,680
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

    \6\ Every figure in this column is rounded to the nearest
dollar.
---------------------------------------------------------------------------

    Comments: Comments are invited on: (1) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information will have practical
utility; (2) the accuracy of the agency's estimate of the burden and
cost of the collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility and clarity of the information collection; and (4) ways to
minimize the burden of the collection of information on those who are
to respond, including the use of automated collection techniques or
other forms of information technology.

    Dated: July 13, 2020.
Kimberly D. Bose,
Secretary.
[FR Doc. 2020-15577 Filed 7-17-20; 8:45 am]
BILLING CODE 6717-01-P


UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on January 21, 2004

   NOTICE OF ACTION TAKEN -- DOCKET OST-2001-11034

________________________________________________________________________
_________________________________

This serves as notice to the public of the action described below, taken
by the Department official indicated (no additional confirming order
will be issued in this matter).

Application of    Aloha Airlines, Inc.          filed   9/26/2003  to:

XX Renew and amend exemption for two years under 49 U.S.C. 40109 to
provide the following service:

Scheduled foreign air transportation of persons, property, and mail
between any point or points in the United States, on the one hand, and
Majuro and Kwajalein, Republic of the Marshall Islands, on the other.

Applicant rep:   Marshall S. Sinick,<PHONE_NUMBER>   DOT Analyst:
Gerald Caolo,<PHONE_NUMBER>

D I S P O S I T I O N

XX  Granted

The above action was effective when taken:   January 21, 2004, through
January 21, 2006

Action taken by:   Paul L. Gretch, Director

		    Office of International Aviation

XX  The authority granted is consistent with the overall state of
aviation relations between the United States and the Republic of the
Marshall Islands.

Except to the extent exempted or waived, this authority is subject to
the terms, conditions, and limitations indicated:  XX Holder’s
certificates of public convenience and necessity

	   XX  Standard exemption conditions (attached)

________________________________________________________________________
______________

Remarks:

The authority for which Aloha requested renewal expired November 28,
2003, but had been kept in force pursuant to the provisions of the
Administrative Procedure Act, 5 U.S.C. 558(c), as implemented by 14 CFR
Part 377, pending action on its timely filed renewal application.

________________________________________________________________________
______________

On the basis of data officially noticeable under Rule 24(g) of the
Department's regulations, we found the applicant qualified to provide
the services authorized.

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that

(1) our action was consistent with Department policy; (2) grant of the
exemption authority was consistent with the public interest; and (3)
grant of the authority would not constitute a major regulatory action
under the Energy Policy and Conservation Act of 1975.  To the extent not
granted, we denied all requests in the referenced Docket.  We may amend,
modify, or revoke the authority granted in this Notice at any time
without hearing at our discretion.

Persons entitled to petition the Department for review of the action set
forth in this Notice under the Department’s regulations, 14 CFR
§385.30, may file their petitions within seven (7) days after the date
of issuance of this Notice.  This action was effective when taken, and
the filing of a petition for review will not alter such effectiveness.

An electronic version of this document is available on the World Wide
Web at:

http://dms.dot.gov//reports/reports_aviation.asp

U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier
applicant(s) shall:

(1) Hold at all times effective operating authority from the government
of each country served;

(2) Comply with applicable requirements concerning oversales contained
in 14 CFR 250 (for scheduled operations, if authorized);

(3) Comply with the requirements for reporting data contained in 14 CFR
241;

(4) Comply with requirements for minimum insurance coverage, and for
certifying that coverage to the Department, contained in 14 CFR 205;

(5) Except as specifically exempted or otherwise provided for in a
Department Order, comply with the requirements of 14 CFR 203, concerning
waiver of Warsaw Convention liability limits and defenses;

(6) Comply with all applicable requirements of the Federal Aviation
Administration and with all applicable U.S. Government requirements
concerning security.  To assure compliance with all applicable U.S.
Government requirements concerning security, the holder shall, before
commencing any new service (including charter flights) to or from a
foreign airport, contact its Principal Security Inspector (PSI) to
advise the PSI of its plans and to find out whether the Transportation
Security Administration has determined that security is adequate to
allow such airport(s) to be served; and

(7) Comply with such other reasonable terms, conditions, and limitations
required by the public interest as may be prescribed by the Department
of Transportation, with all applicable orders and regulations of other
U.S. agencies and courts, and with all applicable laws of the United
States.

The authority granted shall be effective only during the period when the
holder is in compliance with the conditions imposed above.

08/2003

 The carrier's exemption authority is amended to permit service between
any point or points in the United States and the foreign points instead
of between Honolulu and the foreign points.

 PAGE

 PAGE   2


[Federal Register Volume 77, Number 59 (Tuesday, March 27, 2012)]
[Notices]
[Pages 18250-18251]
[FR Doc No: 2012-7289]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2012-N-0273]

Agency Information Collection Activities; Proposed Collection;
Comment Request; Experimental Study of Graphic Cigarette Warning Labels

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is announcing an
opportunity for public comment on the proposed collection of certain
information by the Agency. Under the Paperwork Reduction Act of 1995
(the PRA), Federal Agencies are required to publish notice in the
Federal Register concerning each proposed collection of information,
including each proposed extension of an existing collection of
information, and to allow 60 days for public comment in response to the
notice. This notice solicits comments on the Experimental Study of
Graphic Cigarette Warning Labels that is being conducted in support of
the graphic label provision of the Family Smoking Prevention and
Tobacco Control Act (the Tobacco Control Act).

DATES: Submit either electronic or written comments on the collection
of information by May 29, 2012.

ADDRESSES: Submit electronic comments on the collection of information
to http://www.regulations.gov. Submit written comments on the
collection of information to the Division of Dockets Management (HFA-
305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,
Rockville, MD 20852. All comments should be identified with the docket
number found in brackets in the heading of this document.

FOR FURTHER INFORMATION CONTACT: Daniel Gittleson, Office of
Information Management, Food and Drug Administration, 1350 Piccard Dr.,
PI50-400B, Rockville, MD 20850,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal
Agencies must obtain approval from the Office of Management and Budget
(OMB) for each collection of information they conduct or sponsor.
``Collection of information'' is defined in 44 U.S.C. 3502(3) and 5 CFR
1320.3(c) and includes Agency requests or requirements that members of
the public submit reports, keep records, or provide information to a
third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A))
requires Federal Agencies to provide a 60-day notice in the Federal
Register concerning each proposed collection of information, including
each proposed extension of an existing collection of information,
before submitting the collection to OMB for approval. To comply with
this requirement, FDA is publishing notice of the proposed collection
of information set forth in this document.
    With respect to the following collection of information, FDA
invites comments on these topics: (1) Whether the proposed collection
of information is necessary for the proper performance of FDA's
functions, including whether the information will have practical
utility; (2) the accuracy of FDA's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility, and clarity of the information to be collected; and (4) ways
to minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques, when
appropriate, and other forms of information technology.

Experimental Study of Graphic Cigarette Warning Labels--(OMB Control
Number 0910-0668)--Extension

    Tobacco products are responsible for more than 400,000 deaths each
year. The Centers for Disease Control and Prevention report that
approximately 46 million adults smoke cigarettes in the United States,
even though this behavior will result in death or disability for half
of all regular users. Paralleling this enormous health burden is the
economic burden of tobacco use, which is estimated to total $193
billion annually in medical expenditures and lost productivity. Curbing
the significant adverse consequences of tobacco use is one of the most
important public health goals of our time. One way to do this is
through health warnings that describe and graphically depict the harm
caused by cigarette use causing individuals to think harder about the
choice to use tobacco.
    On June 22, 2009, the President signed the Tobacco Control Act
(Public Law 111-31) into law. The Tobacco Control Act granted FDA
authority to regulate the manufacture, marketing, and distribution of
tobacco products to protect the public health generally and to reduce
tobacco use by minors. Section 201 of the Tobacco Control Act, which
amends section 4 of the Federal Cigarette Labeling and Advertising Act
(15 U.S.C. 1333), requires FDA to issue ``regulations that require
color graphics depicting the negative health consequences of smoking to
accompany the label statements specified in subsection (a)(1).'' FDA
conducts research relating to tobacco products under its statutory
authority in section 1003(d)(2)(C) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 393(d)(2)(C)), as amended by the Tobacco
Control Act, to conduct research ``relating to foods, drugs, cosmetics,
devices, and tobacco products in carrying out the act.'' The study
proposed here is an effort by FDA to collect data concerning graphic
warnings on cigarette packages and their impact on consumer
perceptions, attitudes, and behavior with respect to smoking.
    On June 22, 2011, FDA issued a final rule in the Federal Register
of June 22, 2011 (76 FR 36628) entitled ``Required Warnings for
Cigarette Packages and Advertisements,'' which specified nine graphic
images to accompany the new textual warnings for cigarettes. Although
the rule was scheduled to become effective 15 months after it issued, a
federal district court has permanently enjoined FDA from implementing
the rule in its current form. FDA has appealed this decision to the
U.S. Court of Appeals of the District of Columbia. FDA expects that the
information that FDA proposes to collect will be relevant to FDA's
regulation of cigarette warnings no matter the outcome of the current
litigation.
    The study, the Experimental Study of Graphic Cigarette Warning
Labels, is a voluntary annual experimental survey of consumers. The
purpose of the study is to assess the effectiveness of various graphic
warnings on cigarette packs for achieving three communication goals:
(1) Conveying information about various health risks of smoking, (2)
encouraging cessation of smoking among current smokers, and (3)
discouraging initiation of smoking among youth and former smokers. The
study will collect data from various groups of consumers, including
current smokers aged 13 years and older, former smokers aged 13 years
and older, and non-smokers aged between 13 and 25 years who may be
susceptible to initiation of smoking. The

study goals are to: (1) Measure consumer attitudes, beliefs, and
intended behaviors related to cigarette smoking in response to graphic
warning labels; (2) determine whether consumer responses to graphic
warning labels differ across various groups based on smoking status,
age, or other demographic variables; and (3) evaluate the relative
effectiveness of various graphic images associated with each of the
nine warning statements specified in the Tobacco Control Act for
achieving each of the communication goals. The information collected
from the study is necessary to inform the Agency's efforts to implement
the mandatory graphic warnings required by the Tobacco Control Act.
    The experimental study data will be collected from participants of
an Internet panel of approximately 43,000 people. Participation in the
experimental study is voluntary.
    FDA estimates the burden of this collection of information as
follows:

                                 Table 1--Estimated Annual Reporting Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                     Number of
        Portion of study             Number of     responses per   Total annual   Average burden    Total hours
                                    respondents     respondent       responses     per response
----------------------------------------------------------------------------------------------------------------
Pretest.........................              60               1              60           0.5                30
Screener........................          15,000               1          15,000           0.016             240
Experimental Survey.............           5,400               1           5,400           0.5             2,700
                                 -------------------------------------------------------------------------------
    Total.......................  ..............  ..............  ..............  ..............           2,970
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

    FDA's burden estimate is based on prior experience with Internet
panel experiments similar to the study proposed here. Sixty panel
members will take part in a pretest of the study, estimated to last 30
minutes (0.5 hours), for a total of 30 hours. Approximately 15,000
respondents will complete a screener to determine eligibility for
participation in the study, estimated to take 1 minute (0.016 hours),
for a total of 240 hours. Fifty-four hundred respondents will complete
the full study, estimated to last 30 minutes, for a total of 2,700
hours. The total estimated burden is 2,970 hours (30 hours plus 240
hours plus 2,700 hours).

    Dated: March 21, 2012.
Leslie Kux,
Acting Assistant Commissioner for Policy.
[FR Doc. 2012-7289 Filed 3-26-12; 8:45 am]
BILLING CODE 4160-01-P