[Federal Register: March 28, 2006 (Volume 71, Number 59)]
[Rules and Regulations]
[Page 15329-15338]
[DOCID:fr28mr06-3]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 342

[Docket No. RM05-22-000]

Five-Year Review of Oil Pipeline Pricing Index

Issued March 21, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Order establishing index for oil price change ceiling levels.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
issuing this final order concluding its second five-year review of the
oil pricing index, established in Order No. 561, Revisions to Oil
Pipeline Regulations Pursuant to the Energy Policy Act of 1992, FERC
Stats. & Regs. [Regs. Preambles, 1991-1996] ] 30,985 (1993). After
consideration of all the initial, reply and supplemental comments, the
Commission has concluded that the PPI+1.3 index should be established
for the five-year period commencing July 1, 2006. At the end of this
period, in July 2011, the Commission will once again review the index
to determine whether it continues to measure adequately the cost
changes in the oil pipeline industry.

DATES: March 28, 2006.

ADDRESSES: Secretary of the Commission, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:

Harris S. Wood (Legal Information), Office of the General Counsel, 888
First Street, NE., Washington, DC 20426,<PHONE_NUMBER>.
Robert W. Fulton (Technical Information), Office of Energy Markets and
Reliability, 888 First Street, NE., Washington, DC 20426, (202) 502-
8003.

SUPPLEMENTARY INFORMATION:

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

    1. On July 6, 2005, the Commission issued a Notice of Inquiry
(NOI),\1\ in which it proposed to continue using the Producer Price
Index for Finished Goods (PPI or PPI-FG) for the next five-year period
beginning July 1, 2006, to track oil pipeline industry cost changes.
The Commission applies the index to oil pipeline transportation tariffs
to establish rate ceiling levels for pipeline rate changes. The NOI
invited interested persons to submit comments on the continued use of
PPI and to propose, justify, and fully support, as an alternative,
adjustments to PPI. Comments and reply comments were due September 13
and October 13, 2005, respectively.
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    \1\ Five-Year Review of Oil Pipeline Pricing Index, IV FERC
Stats. & Regs. [Notices] ] 35,552 (2005)
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    2. Based on our review of the comments and reply comments received,
and for the reasons discussed below, the Commission determines that the
PPI plus one point three percent (PPI+1.3) should be established for
the five-year period commencing July 1, 2006, and concludes that this
index satisfies the mandates of the Energy Policy Act of 1992 (Energy
Policy Act).\2\
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    \2\ 42 U.S.C.A. 7172 note (West Supp. 1993). The Energy Policy
Act's mandate of establishing a simplified and generally applicable
method of regulating oil transportation rates specifically excluded
the Trans-Alaska Pipeline System (TAPS), or any pipeline delivering
oil, directly or indirectly, into it.
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Background

    3. Congress, in the Energy Policy Act, required the Commission to
establish a ``simplified and generally applicable'' ratemaking
methodology for oil pipelines, consistent with the just and reasonable
standard of the Interstate Commerce Act (ICA).\3\ On October 22, 1993,
the Commission issued Order No. 561,\4\ promulgating regulations
pertaining to the Commission's jurisdiction over oil pipelines under
the ICA, and to fulfill the requirements of the Energy Policy Act. In
so doing, the Commission found that using an indexing methodology to
regulate oil pipeline rate changes, accompanied with certain
alternative rate-changing methodologies where either the pipeline or
the shipper could justify departure from the indexing methodology,
would satisfy both the mandate of Congress and comply with the
requirements of the ICA. The Commission found that the indexing
methodology adopted in the final rule would simplify, and thereby
expedite, the process of changing rates by allowing, as a general rule,
such changes to be made in accordance with a generally applicable
index, and that it would ensure compliance with the just and reasonable
standard of the ICA by subjecting the chosen index to periodic
monitoring and, if necessary,

adjustment. In determining which index to use, the Commission obtained
the views of interested parties, including industry participants,
shippers and others on its proposal to change its ratemaking
methodology for oil pipelines. Dr. Alfred E. Kahn (Dr. Kahn) supported
the establishment of an index of PPI-1 on behalf of a group of
shippers, as the index that best tracked pipeline cost changes over a
period of time. After extensive analysis of various suggested indices,
the Commission adopted the PPI-1 index for the purpose of allowing oil
pipelines to change rates without making cost-of-service filings. This
index was chosen over others because it came the closest to tracking
the historical changes in actual costs as reported in FERC Form No. 6
and was to be in effect for the five-year period July 1996 through June
2001. The Commission also committed to review every five years the
continued effectiveness of its index.
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    \3\ 49 U.S.C. app. 1 (1988).
    \4\ Revisions to Oil Pipeline Regulations Pursuant to the Energy
Policy Act, FERC Stats. & Regs. [Regs. Preambles, 1991-1996] ]
30,985 (1993), 58 FR 58753 (Nov. 4, 1993); order on reh'g, Order No.
561-A, FERC Stats. & Regs. [Regs Preambles, 1991-1996] ] 31,000
(1994), 59 FR 40243 (Aug. 8, 1994), aff'd., Association of Oil Pipe
Lines v. FERC, 83 F.3d 1424 (D.C. Cir. 1996).
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    4. In the course of establishing the appropriate index for the
first review period 2001-2006, the Commission initially deviated from
the methodology it had used in establishing the index as PPI-1 percent,
concluding that the index should be retained as PPI-1, based upon a
revision to the methodology established in Order No. 561. The
Commission's order was reviewed by the U.S. Court of Appeals and
remanded because the Commission departed from the Order No. 561
methodology. Specifically, the U.S. Court of Appeals found that the
Commission neither adequately addressed parties' concerns over using a
new methodology, nor in the alternative articulated reasons for
changing its averaging methodology applied in Order No. 561. Further,
the U.S. Court of Appeals found that the Commission failed to justify
its methodological shifts from Order No. 561 regarding outliers and the
use of net plant. Upon remand, the Commission concluded that the most
appropriate way to measure pipeline costs and rate ceilings, and to
assure that the nexus drawn between them continued, was to apply the
same methodology as it initially applied in Order No. 561. The
Commission thus returned to the method adopted in Order No. 561 in its
further analysis on remand. Utilizing the Kahn methodology which
resulted in an index of an unadjusted PPI, the Commission adopted PPI
as the appropriate index for the five-year period beginning July 2001.
This order on remand was upheld by the U.S. Court of Appeals.\5\ In the
current five-year review, we are applying that same methodology.
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    \5\ 102 FERC ] 61,195 (2003), aff'd., Flying J Inc. v. FERC, 363
F.3rd 495 (D.C. Cir. 2004).
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Initial Comments and Initial Reply Comments

    5. On September 13, 2005, the Association of Oil Pipelines (AOPL)
submitted its comments in response to the NOI. AOPL, as supported by a
study done by its consultant, Dr. Ramsey Shehadeh (Dr. Shehadeh),
contends that an index of PPI+1.3 percent rather than PPI is the
appropriate index for the next five years. AOPL avers that application
of the Commission's established, U.S. Court of Appeals-approved
methodology shows that pipeline costs over the past five years
increased at a rate of PPI+1.3 percent. AOPL maintains that the
increased pipeline costs result from imposition of new safety and
environmental regulatory obligations, voluntary security measures in
the wake of 9/11 and increased energy costs. AOPL states that an index
of PPI+1.3 percent will ensure that pipeline rates are ``just and
reasonable'' while allowing efficient pipeline carriers to recover
their increased costs over the next five years. These carriers, AOPL
argues, will also be able to expand capacity to eliminate existing
capacity constraints, and continue ongoing efforts to improve pipeline
safety, efficiency, and security.
    6. Lion Oil Company, National Cooperative Refinery Association,
Sinclair Oil Corporation and Tesoro Refining and Marketing Company
(collectively the Refiners) filed a joint response on October 13, 2005,
to AOPL's September 13 initial comments. The Refiners and the Air
Transport Association of America (ATA), whose comments are discussed
below, are both supported by the same study prepared by their
consultant, Peter K. Ashton (Mr. Ashton), who urges the Commission to
keep PPI as the index. The Refiners contend that the correct analysis
of FERC Form No. 6 data indicates that the Commission should maintain
PPI to determine annual rate increases. The Refiners state that PPI was
determined appropriately by applying the methodology described by the
Commission and the U.S. Court of Appeals for the District of Columbia
Circuit over the past 12 years. The Refiners claim that AOPL failed to
provide any sound support for its claim that PPI+1.3 percent is the
inflationary index that tracked oil pipeline cost increases the best
over the past five years. The Refiners contend that Mr. Ashton
demonstrated a sound analysis of the data whose results indicate the
Commission's initial view in its NOI was correct: The PPI without any
adjustment is the index that has best tracked oil pipeline cost
increases.
    7. On October 13, 2005, the ATA also filed a response to AOPL's
comments. ATA contends that today's economic environment requires
careful scrutiny of any proposed pipeline rate increases. ATA states
the ability of pipelines to recover costs not generally encompassed by
indexing through the cost-of-service ``safety valve'' or through the
Commission sanctioned ``security surcharge'' ensures that pipelines can
recover normal cost changes through indexing without, at the same time,
having unjustified across-the-board burdens placed on the airline
industry by implementation of an unreasonably high indexing adjustment.
As mentioned above, ATA relied upon the same Ashton study as the
Refiners. ATA states that its position, and that of its member
airlines, is that the Commission should adopt a price index of PPI for
the next five-year period.
    8. In his Sworn Declaration, Mr. Ashton claims that he employed the
same methodology in conducting his analysis of oil pipeline cost
increases in the 1999-2004 period as that used and adopted by the
Commission in its previous review of the pricing index, as well as by
Dr. Kahn. Based on his detailed analysis of historical oil pipeline
cost data from 1999-2004, employing this methodology, Mr. Ashton
concluded that the PPI, without any adjustment, closely tracked oil
pipeline cost increases for that period. He states that taking the
midpoint between the two composite averages (middle 50 percent and
middle 80 percent of the sample) yields an annual rate of increase that
is virtually identical to the increase in the PPI for the relevant time
period. Mr. Ashton concludes that there is no basis for modifying the
current PPI index since it already appropriately tracks normal industry
average costs.
    9. In addition to conducting his own analysis, Mr. Ashton reviewed
the submission of AOPL and its expert, Dr. Shehadeh. Mr. Ashton
concluded that the data and analysis employed by Dr. Shehadeh are
deficient, cannot be replicated, and therefore cannot be relied on.
Specifically, Mr. Ashton cites the fact that much of the data
pertaining to the later years of the study were compiled and supplied
by AOPL, instead of Dr. Shehadeh obtaining his sample data from FERC
Form No. 6. Mr. Ashton questions the lack of information concerning the
source of Dr. Shehadeh's data, and the apparent lack of any attempt to
validate or verify the information. Mr. Ashton states that, more
significantly, in an attempt to

increase the sample size, Dr. Shehadeh made numerous additions and
adjustments to the Form No. 6 data for ``potential omissions and
potential errors,'' much of which was based on information supplied by
AOPL. Mr. Ashton claims that Dr. Shehadeh made such adjustments without
any clear indication as to exactly what those adjustments were, or how
such adjustments affected the results of the study. As a result, Mr.
Ashton concludes that any results of Dr. Shehadeh's study are deficient
and unreliable.
    10. The U.S. Department of Transportation (DOT) also filed comments
in response to AOPL on October 13, 2005. DOT expressed no views on the
precise index the Commission should choose. DOT submitted its comments
to confirm certain points raised by AOPL with respect to oil pipeline
regulatory obligations. DOT states that it has adopted safety
regulations that impose significant obligations and costs on pipeline
operators.\6\ DOT states that it is concerned about the capacity of the
underlying infrastructure of the nation's transportation networks,
including oil pipelines, to meet growing demands placed upon them. DOT
urges the Commission to consider seriously the financial commitment
necessary for operators to maintain and expand pipeline system
capacity.
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    \6\ The DOT integrity management regulations are found at 65
Federal Register 75378, December 1, 2000 and 67 Federal Register
2136 (January 16, 2002).
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    11. DOT states that in the long run, its rules will prove
beneficial to the public and pipelines as well, but in the short run,
the ensuing costs will prove considerable, with the additional effect
of reducing or deferring operator revenues. DOT estimates that, over
the seven year period 2001 through 2007, initial baseline assessments
would cost operators more than $120 million; retesting, $14.5 million
annually; preparation of integrity plans, almost $18 million; and
related implementation costs, almost $10 million the first year and $5
million annually thereafter. DOT states it could not estimate the
repair costs incurred as a result of its required testing as it is
impossible to predict the number and kind of conditions that would be
disclosed, but given the fact that most repairs involve excavating
pipeline segments and replacing sections of pipe, along with the
requisite pressure reductions required to accommodate repairs, DOT
believes such repair costs would be considerable. DOT noted that in
2004 pipeline operators made more than 1,500 repairs posing immediate
threats to pipeline integrity, and noted that one operator reported a
single repair cost $8 million to make. DOT therefore contends that it
is imperative that the Commission factor these costs into its
deliberations in choosing the appropriate index for the next five-year
period. DOT believes that failure to do so could lead to various
outcomes inconsistent with the public interest, such as operators being
disinclined to invest in additional capacity, abandoning older or
marginally economic pipelines as a cost-cutting measure, or operators
being tempted to cut corners on safety as a way of bringing costs more
in line with revenues. DOT also cites evidence demonstrating a serious
underinvestment in petroleum pipeline infrastructure and underscoring
that several pipeline systems of national importance lack redundancy,
with consequences including higher prices and less competitive markets
for petroleum products in some regions, supply disruptions and price
spikes due to relatively minor service interruptions, and diversion of
petroleum products to other, less efficient and desirable
transportation modes.
    12. DOT claims that the extent of capacity restrictions in the
nation's pipeline infrastructure is becoming more apparent, as is the
realization that the current regulatory mechanisms may not lead to
appropriate reinvestment in the industry. DOT suggests that the
Commission consider convening a workshop or technical conference to
explore regulatory mechanisms that could facilitate critical investment
in maintaining and expanding pipeline system capacity.
    13. On October 14, 2005, the Pipeline Safety Trust (Trust), an
organization that promotes fuel transportation safety through education
and advocacy, filed to respond to AOPL's comments. The Trust agrees
with AOPL that safety requirements on the industry have significantly
increased since the last five-year review, including but not limited to
the new integrity management regulations. In addition, the Trust states
that it is persuaded by the 1999-2004 data contained in AOPL's draft
comments (which were analyzed by AOPL using a U.S. Court of Appeals-
approved methodology) that the costs on the industry have increased
enough to justify a PPI+1.3 percent as the pricing index for the next
five years. However, the Trust requests that prior to approving PPI+1.3
percent, the FERC perform its own technical review of the accuracy and
completeness of AOPL's cost data, and the reasonableness and
appropriateness of AOPL's analytical methodology.

Exchange of Supporting Data Between Parties and Filed With the
Commission

    14. To expedite the index review process, AOPL and the ATA and
Refiners (hereinafter referred to as Shippers) agreed to exchange
source data, spreadsheets, and the detail of the methodology used to
support their respective positions of PPI+1.3 percent, and PPI. On
November 15, 2005, AOPL and the Shippers filed their supporting
workpapers with the Commission.

Subsequent Reply Comments and Responses

    15. On January 10, 2006, AOPL filed comments in reply to the study
presented by the Shippers, contending that their study contains flawed
economic analysis and incomplete and erroneous sampling of pipeline
cost data. AOPL claims that, when corrected, the data presented by
Shippers support an adjustment of PPI+1.56 percent, which supports
AOPL's original position that the Commission should establish the index
at least at PPI+1.3 percent.
    16. On January 23, 2006, the Shippers filed a joint response to
AOPL's January 10 comments. Shippers claim that AOPL's comments distort
the position advocated by Shippers and present non-public data upon
which AOPL based its incorrect conclusions. Shippers contend that the
facts they are presenting for Commission consideration are supported by
a study conducted by Dr. Paul J. Smith (Dr. Smith), a prominent
mathematician and statistician, as well as by a supplemental study
performed by their consultant, Mr. Ashton. Based on new data provided
by AOPL, Mr. Ashton added some pipelines to his study, and reconciled
much of the data supplied by AOPL with that culled from FERC Form No. 6
data. Mr. Ashton concludes that the Commission should be very cautious
about establishing an index higher than the present PPI.
    17. Dr. Smith reviewed the dataset consisting of 62 firms that Mr.
Ashton originally proposed, as well as the 81firm dataset proposed by
Dr. Shehadeh in his January 10 rebuttal declaration on behalf of AOPL.
Dr. Smith recommends the use of the median or geometric mean to
estimate the five-year cost index, given the Form No. 6 data. In both
data sets analyzed, the median and geometric mean are very close
together. Dr. Smith argued that the use of the arithmetic mean is
clearly not appropriate for either of these data sets. Arithmetic means
are not representative of data from skewed distributions.

    18. Shippers conclude that, given the validation of Mr. Ashton's
methodology, use of the geometric mean and choice of sample set, the
conclusions reached by Dr. Smith, and given the real possibility of
substantial errors in the FERC Form No. 6 data, the PPI should be used
as the inflationary index for the next five years, or, in the
alternative, the Commission should maintain the PPI and institute a
rulemaking to establish new criteria and reconsider the methodology
currently being used for determining such an index. Shippers contend
that the fact that a significant number of large oil pipelines are
substantially over-recovering their cost of service lends additional
support to this conclusion.
    19. On February 9, 2006, AOPL submitted its supplemental reply
comments in response to comments made by Shippers on January 23, 2006.
AOPL claimed that Shippers, even after admitting to substantial
mistakes in their analysis of oil pipeline cost data, resulting in
flawed evidence and testimony, nevertheless urged the Commission to
adopt a new methodology for setting the price cap index or,
alternatively, to retain the PPI index pending a new rulemaking. AOPL
argued that the Commission should squarely reject the Shippers' new
position because, despite correcting errors in data and sample
selection, Shippers' position remains fundamentally flawed. AOPL argued
that Shippers' own cost evidence supports a substantial upward
adjustment to the current index. AOPL states that, in sum, it is clear
that Shippers' real complaint is not with the methodology and cost data
used by the Commission to set its price cap index, but rather with the
index level the faithful application of such methodology produces. The
Commission must, as required by law, apply its established, U.S. Court
of Appeals-approved index standard and set PPI+1.3 percent as its new
index for the next five years.
    20. AOPL argued that, while Shippers purported to apply the
Commission-approved methodology for measuring pipeline cost changes,
Shippers in fact departed from that standard in several key respects.
Even after correcting the data from their original analysis, Shippers'
data sample omitted many eligible pipelines, failed to account for
mergers, used incorrect data fields and data not reflected on FERC Form
No. 6, improperly included cost data from TAPS assets that are not
governed by the index and reflect entirely different accounting
conventions, and most damaging, performed key calculations in the wrong
order, thereby systematically understating cost changes.
    21. AOPL's comments addressed as well the report of Dr. Smith,
cited by Shippers as a source of validation of its calculations. AOPL
claimed that Dr. Smith's analysis is irrelevant to this proceeding, as
he does not purport to address Mr. Ashton's analysis and expresses no
opinion about the reasonableness of that analysis or its use of
composite measures of central tendency. Dr. Smith advocates use of an
entirely different standard, the median, does not approve of
calculating cost changes in the wrong sequence, and in fact does not
even analyze, much less endorse, use of the unweighted geometric mean
in combination with the weighted mean and median that Mr. Ashton used.
Nor, argues AOPL, did Dr. Smith analyze the middle 50 percent and
middle 80 percent data sets. As a result of all this, any reliance
Shippers placed on the report of Dr. Smith was misplaced.
    22. AOPL addressed Shippers' claims that the Commission must
abandon its U.S. Court of Appeals-approved standard because of
``manifest errors'' and because its results are sensitive to ``extreme
data points'' by pointing out that the existence and reasonable
treatment of outlier data was extensively addressed by the Commission
in prior proceedings, and the Commission's methodology was specifically
designed to take such an issue into consideration, specifically by
employing the middle 50 percent and middle 80 percent samples. As to
Shippers' claim that the Commission's methodology is flawed and it
should set the index at PPI because a small minority of oil pipelines
is over-recovering their cost of service, AOPL replied that the
Commission recognized that, in adopting a uniform index for all
pipelines, inevitably some pipelines would over-earn while others will
under-earn. If Shippers truly believe that individual pipelines are
over-earning such that rates cannot satisfy the ``just and reasonable''
requirement, they can file a complaint against those pipelines. AOPL
contends that the indexing methodology is not intended to drive rates
to cost, but instead to make sure that any rate changes were based on
expected cost changes. AOPL further states that the Commission is not
subject to a statutory duty to examine whole rates when pipelines
propose index rates; rather, its inquiry is limited to a comparison of
changes in rates and costs from one year to another.
    23. In his Supplemental Rebuttal Declaration on behalf of AOPL, Dr.
Shehadeh argues that Mr. Ashton departed from the very methodology he
purported to support, failed to implement accurately either the
methodology used by Dr. Kahn or by Dr. Smith, has no support in any of
the testimonies given in this proceeding for his findings, and for
these reasons, such findings are unreliable as a basis for selection of
an index for index-based regulation of oil pipeline tariffs. Dr.
Shehadeh states that the basis for the differences between his
conclusions and those of Mr. Ashton consist principally of errors in
Mr. Ashton's data and his flawed order of operations in implementing
the methods of Dr. Kahn. Specifically, Dr. Shehadeh cites the fact that
Mr. Ashton calculates his cost changes in incorrect order--he applied
the geometric mean over time prior to his application of the arithmetic
mean across pipelines. Dr. Kahn correctly determined annual average
change in costs by employing the geometric mean on the average
cumulative changes, as opposed to Mr. Ashton, who in contrast
determined the annual average change in costs by employing the average
of the geometric means of each pipeline's cumulative changes.
    24. Rather than addressing the validity of Dr. Shehadeh's assertion
concerning the order of his calculations, Dr. Shehadeh claims that
instead, Mr. Ashton introduced an entirely new methodology based on
measures of central tendency and composite averages, purportedly based
on Dr. Smith's report. Dr. Shehadeh further states that Mr. Ashton's
new methodology, especially as it pertains to use of sensitive data, is
flawed and therefore unreliable.
    25. In conclusion, Dr. Shehadeh continues his support of the use of
the methodology the Commission employed in its previous analysis, that
Dr. Kahn validated, and that the U.S. Court of Appeals approved.
According to Dr. Shehadah, Mr. Ashton's new methodology is completely
unsupported by factual evidence, lacks economic foundation, and is
unreliable and uninformative. Employing the same methodology used by
Dr. Kahn and the Commission and endorsed by the U.S. Court of Appeals
demonstrates that actual cost changes experienced by oil pipelines over
the last five years almost equaled PPI+1.5 percent, and consequently,
the Commission should choose as the index for the next five year period
PPI with an adjustment factor no less than 1.3 percent.
    26. On February 21, 2006, the American Trucking Association filed
letter comments in response to the Commission's NOI. The American

Trucking Association adopted the positions espoused by the Shippers and
added no new arguments. On February 28, 2006, the International Air
Transport Association filed letter comments, similar to that of the
American Trucking Association, in support of the Shippers and again
adding no new arguments.
    27. On February 24, 2006, Shippers filed additional comments,
styled ``supplemental rebuttal,'' and a ``Sworn Rebuttal Declaration''
of Mr. Ashton. The purpose of this filing is to rebut the Supplemental
Reply Comments of AOPL, which had been filed on February 9, 2006.
Shippers contend that AOPL has made two fundamental and related errors
in its Supplemental Reply Comments: AOPL incorrectly states that the
Shippers and Mr. Ashton have employed a new methodology; and, even if
Shippers have employed a different methodology, the Commission is
within its rights to rely on that methodology.

Discussion

Methodology To Calculate the Index Differential

    28. Since Order Nos. 561 and 561-A, the Commission has primarily
relied upon Dr. Kahn's testimony \7\ to develop the methodology to set
the index differential \8\, which was subsequently approved by the U.S.
Court of Appeals.\9\ Within the Commission-established method, after
each firm's unit cost changes are calculated and weighted, two trimmed
data sets are extracted from the master data set. Both parties have
constructed the trimmed data sets of the middle 50 percent and middle
80 percent. Trimming is done to remove statistical outliers, or
spurious data points that could bias the mean of the sample in either
direction. Table 1 provides a description of the statistical values of
central tendency used by both parties to develop the index. The
industry-wide cost index is calculated by averaging both composites on
Line D and then comparing that value to the PPI-FG index data over the
same period.
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    \7\ Declaration of Alfred E. Kahn, August 31, 2000, in Review of
Pipeline Pricing Index, Docket No. RM00-11-000.
    \8\ To calculate the index differential, the cost index is
compared to the PPI-FG average index for the same time period. The
remainder of this calculation [Cost Index-PPI-FG] is the index
differential.
    \9\ Association of Oil Pipe Lines v. FERC, 83 F.3d at 1437.

                                 Table 1
------------------------------------------------------------------------
       Line             Middle 80  percent         Middle 50  percent
------------------------------------------------------------------------
A.................  Median...................  Median.
B.................  Weighted Mean............  Weighted Mean.
C.................  Un-weighted Mean.........  Un-weighted Mean.
D.................  Composite of 80% =         Composite of 50% =
                     (A+B+C)/3.                 (A+B+C)/3.
------------------------------------------------------------------------

    29. Both AOPL and Shippers used the same sample (with the exception
of SFPP, L.P.\10\) to describe the central tendency of the data, in
which the cost index calculation directly follows. However, the parties
have differed in the way in which they calculated the pipelines' cost
increases. The result has been that both parties calculate a different
pipeline industry cost index; AOPL arriving at an index of PPI+1.49
percent and the Shippers arriving at an index of PPI+0.675 percent.
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    \10\ SFPP, L.P. was excluded by the Shippers because its cost as
reflected in its Form No. 6 were being challenged in a current rate
proceeding. The Commission conducted a review of the pipeline
samples submitted by both Dr. Shehadeh and Mr. Ashton and determined
that, using the Court of Appeals-approved methodology, the exclusion
of SFPP, L.P. causes only a 0.02 percent decrease in the average
annual cost difference. Thus, the exclusion of SFPP, L.P. still
supports the use of PPI+1.3 percent.
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    30. In simple terms, AOPL and the Shippers state that they apply
the same methodology but they arrive at different results. Each party
calculates total industry costs \11\ for each pipeline in the time
period between 1999 and 2004, and then estimates the central tendency
of the results, sums these amounts, and divides the result by the
number of pipelines to arrive at the industry average cumulative change
in industry costs (known as the arithmetic mean of the sample). AOPL
then derives an annual percent change in industry costs for the 1999
through 2004 period by employing the geometric mean on this industry
average cumulative change in costs. AOPL's methodology tracks the
methodology previously used by the Commission and approved by the U.S.
Court of Appeals. The Shippers, however, depart from the prior approved
methodology, in that the Shippers derive the cumulative change in costs
(between 1999 and 2004) for each pipeline, by calculating each year's
cost change for each pipeline. The year to year cost changes are
multiplied together to arrive at the cumulative cost change for that
pipeline. The average cost change is determined by taking the geometric
mean of that cumulative cost change.
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    \11\ Average total cost for an individual pipeline is the
average of the change in operating cost (weighted by the operating
ration) added to the average of the change in net plant (weighted by
the residual, one minus the operating ratio). References to
individual pipeline costs beyond this point are assumed to be
average total costs.
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    31. We base our analysis of the calculations in this proceeding
upon the U.S. Court of Appeals-approved model, and have found that the
methodology used by Dr. Shehadeh for AOPL in this proceeding conforms
to Dr. Kahn's U.S. Court of Appeals-approved methodology. Our analysis
shows that the Shippers' methodology, as represented by Mr. Ashton, is
fundamentally flawed.
    32. In delineating the index differential, Mr. Ashton, in his first
declaration,\12\ claims to have accurately applied Dr. Kahn's
methodology in calculating average annual cost changes, but our review
found that he deviates from Dr. Kahn's methodology in certain respects.
In this first attempt, Mr. Ashton determines the average annual change
in unit costs for years 1999 through 2004 by calculating the arithmetic
average of the geometric mean of each pipeline's cumulative unit cost
change, as opposed to Dr. Kahn's method of calculating the geometric
mean of the arithmetic average of cumulative unit cost change (Ashton's
Decl. at p. 14). On the basis of determining the average cost change of
each pipeline, the use of Dr. Kahn's methodology would calculate the
cost increase between end years 1999 and 2004 by this formula: (final
cost - initial cost)/(initial cost)-1. Mr. Ashton erred in this step of
the calculations by taking the geometric mean of the product of the
individual company's yearly cost increase. Furthermore, Dr. Shehadeh
has shown that Mr. Ashton's method results in the underestimation of
costs.\13\
---------------------------------------------------------------------------

    \12\ Sworn Declaration of Peter K. Ashton, October 13, 2005 (p.
3).
    \13\ Rebuttal Declaration of Ramsey D. Shehadeh, PhD at 10-11,
January 10, 2006 by use of a theorem known as Jensen's Inequality.
---------------------------------------------------------------------------

    33. Mr. Ashton responds \14\ to Dr. Shehadeh's rebuttal, and claims
that the newly added testimony of Dr. Smith supports Mr. Ashton's new
methodology.\15\ However, in examining Dr. Smith's analysis, it seems
that he has followed Dr. Kahn's approach (but not Mr. Ashton's) by
calculating percentage cost changes for individual companies, where Dr.
Smith states that ``the five-year percent differences in costs as
reported'' for individual companies ``were computed as (final

cost - initial cost)/(initial cost)-1.'' Therefore, we cannot reconcile
Dr. Smith's evidence with Mr. Ashton's statement that ``Prof. Smith
clearly points out that given the underlying characteristics of the
data and its skewed distribution, the methodology that I employ relying
on the geometric mean is the proper methodology for computing the cost
increases of individual pipeline companies'' (Supplemental Decl. at p.
2) Dr. Smith's testimony regarding his recommendation of the use of the
geometric mean, was to describe with relative accuracy the central
tendency of the data, not the calculation of the individual cost
increases themselves. Further, Dr. Smith's testimony in regard to this
proceeding is incomplete because he only trimmed the cost data by 5
percent, and he never analyzed the ``middle 50 percent'' and ``middle
80 percent'' data sets, which excluded ``outliers,'' adopted by the
Commission and approved by the U.S. Court of Appeals. As the Court of
Appeals stated, ``[t]he object of excluding outliers is to prevent
extreme and spurious data from biasing an analysis, i.e., affecting its
result adversely.'' \16\
---------------------------------------------------------------------------

    \14\ Supplemental Declaration of Peter K. Ashton, January 23,
2006.
    \15\ Analysis of Pipeline Index Data, submitted by Paul J.
Smith, January 23, 2006.
    \16\ Association of Oil Pipe Lines v. FERC, 281 F.3d 239, 246
(D.C. Cir. 2002).
---------------------------------------------------------------------------

    34. Also, in the same response, Mr. Ashton presents an ``update''
to his methodology, and supports it again with the analysis of Dr.
Smith (Supplemental Decl. at p. 7). Originally, Mr. Ashton measured the
central tendency of both of the trimmed data sets (80 percent and 50
percent) with the median, the weighted and the un-weighted arithmetic
mean (although he still wrongly calculates the cost changes for
individual companies by the geometric mean). In the update, Mr. Ashton
delineates the weighted and un-weighted means by now taking the
geometric mean \17\
[GRAPHIC] [TIFF OMITTED] TR28MR06.000

of the unit cost change. Mr. Ashton states that this update is
justified ``as Dr. Smith points out, in measuring the central tendency
it is also appropriate to take the geometric mean and the median--not
the arithmetic mean.'' The supporting evidence by Dr. Smith points out
that both data sets (untrimmed) are not normally distributed. Dr. Smith
states that, ``the data are more accurately described by a skewed
lognormal distribution than by a bell-shaped normal distribution, but
that neither distribution accurately described the data.'' Dr. Smith
then measured the arithmetic average applied to a 5 percent trimmed
sample in which he concluded in his analysis that, based on the
results, ``the trimmed mean is substantially less than the arithmetic
mean, illustrating how a few extremely large indices affect the overall
estimate'' (p.5).
---------------------------------------------------------------------------

    \17\ This geometric mean is a statistical treatment to the data
to find central tendency, as opposed to the geometric mean used
previously to calculate the index of costs over time. In this
application, the general formula (see formula above) was used, where
denotes the cost index of firm i.
---------------------------------------------------------------------------

    35. Shippers, in their Supplemental Rebuttal filing of February 24,
2006, contend that the use of the geometric mean was but a small change
and an improvement to the Commission's methodology to better suit the
underlying data.\18\ The Shippers' underlying belief in this order
seems to be that the data in the samples that are used in the
Commission's methodology are positively skewed, and therefore, Dr.
Smith never had to prove that our samples were skewed. However, Dr.
Smith never applied his alternative approach to our samples to
determine, based on his analysis, what the best measure of central
tendency would be. He contended that he proved that the geometric mean
approach would be more accurate on his 5 percent trimmed sample because
his result more closely matched the median, and therefore was ``more
robust.'' Dr. Smith, though, never proved that the geometric mean was
``more robust'' on the 50 and 80 percent samples.
---------------------------------------------------------------------------

    \18\ Supplemental Rebuttal Comments at 2; Ashton Supplemental
Rebuttal Decl. at 3.
---------------------------------------------------------------------------

    36. Based on the calculations presented by the Shippers through Mr.
Ashton's declarations, it is clear that the methodology the Shippers
use departs from the methodology presented by Dr. Kahn. Shippers have
not proven that their methodology is superior to that of Dr. Kahn.

Reconciling the Dataset of AOPL and Mr. Ashton

    37. In Shippers' January 23, 2006 joint response to comments made
on January 10, 2006 by AOPL, Mr. Ashton added some pipelines to his
study, and reconciled much of the data supplied by AOPL and culled from
FERC Form No. 6 data. Aside from a few remaining pipelines in which
discrepancies appear between the data that Mr. Ashton used and the data
that Dr. Shehadeh used, Mr. Ashton is prepared to accept the
reconciliation and changes offered by Dr. Shehadeh in his Rebuttal
Declaration. Mr. Ashton's database is comprised of 79 pipelines that
account for 92 percent of all barrel-miles transported in 1999.
    38. To investigate the data discrepancies, the Commission has
examined the hard copy FERC Form No. 6 data filed by individual
pipelines to determine whether complete data for these pipelines are
available and whether they match the data used by Mr. Ashton or Dr.
Shehadeh. We have compared, on a pipeline-by-pipeline basis, every
relevant data value in Mr. Ashton's sample with the corresponding
values in FERC Form No. 6. We then have applied to the reconciled data,
which account for the only remaining discrepancies identified by Mr.
Ashton, the methodology described by Dr. Kahn, adopted by the
Commission and approved by the U.S. Court of Appeals. We now discuss
those pipeline-by-pipeline comparisons.
    39. Navajo Pipeline Co. L.P.--Holly Energy Partners--Operating
L.P.--Dr. Shehadeh correctly points out in Exhibit A15 of his original
declaration and Exhibit 16 of his rebuttal declaration that Navajo
Pipeline Co. L.P. (Navajo) was renamed Holly Energy Partners--Operating
L.P. (Holly) in 2004. As a result, both companies filed a FERC Form No.
6 in 2004. Mr. Ashton is correct in noting that the 2004 data reported
by Dr. Shehadeh comes from only one company, Navajo, and is only
partial year data. The Commission agrees that the 2004 data for Navajo
and Holly can be aggregated to provide data for the complete year.
However, the Commission takes issue with the values Mr. Ashton reports
for carrier property and total barrel-miles. A review of Navajo's 2004
FERC Form No. 6 reveals carrier property totaling $10,186,371 and
barrel-miles totaling 4,095,048,097. Holly's 2004 FERC Form No. 6
reports carrier property totaling $22,788,803 and total barrel-miles of
3,330,670,969. Thus, the Commission will use $32,975,174 for carrier
property and 7,425,719,066 for total barrel-miles.
    40. Olympic Pipe Line Company --On March 31, 2003, Olympic Pipe
Line Company (Olympic) resubmitted its 2001 FERC Form No. 6 to report
changes to carrier property, accrued depreciation, and operating
revenue. Mr. Ashton is correct to use the data contained in the
resubmitted FERC Form No. 6. However, Mr. Ashton fails to reflect the
operating expenses provided in the updated FERC Form No. 6 and
continues to use the figure reported in Olympic's original 2001 FERC
Form No. 6. Thus, the Commission will use the updated $59,520,702 for
Olympic's 2001 operating expenses.

    41. Premcor Port Arthur Pipeline Company--Mr. Ashton states that he
did not include Premcor Port Arthur Pipeline Company (Premcor) in the
dataset he used to calculate oil pipeline costs changes because Premcor
lacked complete FERC Form No. 6 data. Dr. Shehadeh agrees with Mr.
Ashton on this point. No data is reported for accrued depreciation for
the years 2001-2004 even though Premcor did report accrued depreciation
in 1999-2000. Without complete data for all six years, a company cannot
be included in the dataset. Therefore, the Commission agrees with Mr.
Ashton's recommendation that Premcor be excluded from the analysis.
    42. Cypress Pipe Line Company, LLC--Mr. Ashton criticizes Dr.
Shehadeh's use of barrel-mile data for Cypress Pipe Line Company, LLC
(Cypress) in 1999 from page 700 of the FERC Form No. 6, rather than
data reported on page 600. Mr. Ashton states that the agreed-upon
source for barrel-mile data is page 600 of the FERC Form No. 6. Despite
this criticism, Mr. Ashton himself elects to use data from page 700,
not data from page 600 as he describes. Cypress, however, errs by
reporting the number of barrels received into the system, rather than
total barrel-miles. This is evident from comparing line 32 of page 600,
grand total of barrels received into system, with page 600 line 33a;
the numbers are identical. By contrast, line 4 of page 700 reports
total throughput in barrel-miles as 78,558,341.83. Thus, the Commission
will use 78,558,342 for Cypress's 1999 throughput in barrel-miles.
    43. Mr. Ashton raises another substantive issue with respect to the
reconciled dataset contained in Dr. Shehadeh's rebuttal declaration.
Mr. Ashton notes that there are differences between the operating
revenues for five pipelines reported on the FERC Form No. 6, page 114,
and FERC Form No. 6, page 301. Specifically, these discrepancies occur
with respect to Mobil Pipe Line Company, Mustang Pipe Line Partners,
Osage Pipe Line Company, LLC, San Pedro Bay Pipeline Company, and
SouthTex 66 Pipeline Company, Ltd.
    44. In order to rectify these differences, the Commission adjusted
its cost calculation to use the figures endorsed by Mr. Ashton.
However, the use of Mr. Ashton's figures proved immaterial as the
result still supports the use of PPI+1.3 percent as the new oil index.
When the Commission adopted the page 301 data for those pipelines for
which Mr. Ashton noted discrepancies, and applied the U.S. Court of
Appeals-approved methodology, the results changed by less than 0.01
percent.

Indexing Methodology

    45. In the January 23, 2006, response of Shippers to AOPL's January
10 comments, Shippers assert for the first time that, as an alternative
to using the current methodology for determining adjustments to PPI
after conducting a five-year review, the Commission should continue to
use the current unadjusted PPI for the time being and institute a
rulemaking to establish a new methodology for determining what the oil
pipeline rate change index should be over the next five years. Shippers
contend this is appropriate because there are serious defects in the
Commission's current index review methodology. AOPL responded to this
assertion on February 9, 2006.
    46. Notwithstanding Shippers' assertions to the contrary contained
in their Supplemental Rebuttal Comments of February 24, 2006, Shippers'
suggestion that the Commission should embark upon a new rulemaking
proceeding to establish a new method for calculating pipeline cost
changes to compare to changes in PPI is beyond the scope of our five-
year review as set forth in the NOI that instituted this proceeding. In
the NOI, the Commission asked for comments on whether and to what
extent the PPI should be adjusted to better reflect those cost changes,
not whether the method for determining pipeline costs should be
changed. The NOI specifically stated:

    The Commission proposes to continue to utilize PPI for the next
five-year period as the index to track changes to the costs of the
oil pipeline industry and to apply to rate ceiling levels for oil
pipeline rate changes. The Commission invites interested persons to
submit comments on the continued use of PPI and to propose, justify,
and fully support, as an alternative, adjustments to PPI. (NOI, ] 4)

    The parties have filed numerous comments reflecting their positions
on what adjustments should or should not be made to the PPI upon
review, and only as a last-minute item has anyone suggested that the
Commission embark on a course of discarding the Commission's current
five-year review methodology of determining pipeline cost changes to
compare to changes in the PPI-FG over the five-year review period. The
information provided by Shippers is insufficient to persuade us that
our method should be discarded. Beyond these issues, no one has
suggested that the Commission look to change to an index other than
PPI-FG as representative of oil pipeline industry-wide costs.
    47. Shippers first contend the use of FERC Form No. 6 data make
application of the cost standard inaccurate. They claim that the data
contained in the FERC Form No. 6 is sporadic, incomplete, and contain
substantial errors. Shippers point out that out of 186 FERC regulated
pipelines, only 79 pipelines have provided sufficient Form No. 6 data
to warrant being included in the database for analysis. They believe
the 42 percent sample is too small to justify the continued use of Form
No. 6 data.
    48. The FERC Form No. 6 data is the only systematic source of
information regarding the past costs and revenues of oil pipelines. As
previously mentioned, Mr. Ashton concedes his sample contains 79
pipelines that account for over 92 percent of the 1999 total barrel-
miles. In defending Order No. 561-A on appeal to the D.C. Circuit on
this very issue, the Commission stated that ``[t]here is * * * no
reason to believe that samples representing between 10% and 33% of the
industry, taken from the median range of the industry cost data, were
too small to produce reliable results.'' \19\ In addition, the Shippers
argued before the U.S. Court of Appeals that the, ``[d]ata submitted to
FERC have become increasingly accurate, thus eliminating the need for a
proxy.'' \20\ Further, the U.S. Court of Appeals agreed that it is
evidently uncontested that the reported data have become more accurate.
---------------------------------------------------------------------------

    \19\ See, Brief for Respondent Federal Energy Regulatory
Commission, Association of Oil Pipelines v. Federal Energy
Regulatory Commission, No. 94-1538, at 36 (July 24, 1995).
    \20\ See, Flying J Inc. v. FERC, 363 F.3d 495 (D.C. Cir. 2004).
---------------------------------------------------------------------------

    49. Second, Shippers express concern that a significant number of
oil pipelines are not complying with FERC Form No. 6 filing
requirements. Specifically, Shippers were concerned that the Commission
has not consistently enforced these filing requirements nor has it
examined the Form No. 6 data and required corrections of the errors
noted by Mr. Ashton in his supplemental declaration.
    50. The Commission disagrees with the Shippers' assertion that the
Commission has not consistently enforced the accurate and timely filing
of FERC Form No. 6 data. In 1994, the Commission addressed additional
revisions to the Form No. 6 in Order Nos. 571 and 571-A,\21\ including
adding

a new page 700. The information included in the Form No. 6 was
determined at the time to be the minimum necessary for Shippers to
assess filed rate changes under Order No. 561.
---------------------------------------------------------------------------

    \21\ Order No. 260, 47 FR 42327 (Sept. 27 1982); FERC Stats. &
Regs. [Regulations Preambles January 1991-June 1996] ] 31,006 (Oct.
28 1994). Order No. 571-A, 60 FR 356 (Jan. 4, 1995); FERC Stats. &
Regs. [Regulations Preambles January 1991-June 1996] ] 31,012 (Dec.
28, 1994).
---------------------------------------------------------------------------

    51. Prior to 2000, FERC Form No. 6 required that a pipeline include
its annual cost of service, operating revenues, throughput in barrels,
and throughput in barrel-miles. The Commission found that the Form No.
6 data was inadequate to monitor the reasonableness of a pipeline's
filed rates. Thus, the Commission proposed the addition of the
following reporting requirements: operating and maintenance expenses,
depreciation expense, AFUDC depreciation, amortization of deferred
earnings, rate base, rate of return, return on rate base, and income
tax allowance. Since the Form No. 6 is intended to be both a financial
and ratemaking document,\22\ these additional requirements ensured that
the Commission had the financial, operational, and ratemaking
information needed to carry out its regulatory responsibilities to
monitor the oil pipeline industry in a dynamically changing
environment.
---------------------------------------------------------------------------

    \22\ Cost of Service Reporting and Filing Requirements for Oil
Pipelines, FERC Stats. & Regs. [Regulations Preambles 1991-1996] ]
31,006 at 31,169 and FERC Form No. 6, p.i, I.
---------------------------------------------------------------------------

    52. In Order No. 620, the Commission required pipelines to maintain
workpapers that fully support the data reported on page 700 including
but not limited to the total cost-of-service calculations and all of
its associated components.\23\ In addition, Order No. 620 provides that
the Commission or its staff may request that a pipeline make its work
papers available for review.\24\
---------------------------------------------------------------------------

    \23\ FERC Stats. & Regs. [Regs. Preambles] ] 31,115 (Dec. 13,
2000); 65 FR 81335 (Dec. 26, 2000).
    \24\ Staff examined each pipeline's compliance with the
requirements for reporting additional information on page 700 of the
FERC Form No. 6. After substantial follow-up contacts by staff, with
the 183 jurisdictional oil pipelines, only 12 pipelines were not in
compliance and expressed the need for additional accounting help in
executing a complete Form No. 6. Staff referred the pipelines to
either the Association of Oil Pipelines personnel or staff resources
for advice.
---------------------------------------------------------------------------

    53. Finally, Shippers submit that the U.S. Court of Appeals-
approved methodology is no longer reliable because the results are
sensitive to small changes in the sample size. Mr. Ashton argued in his
Supplemental Declaration that the results achieved by using the
Commission's methodology accords undue weight to extreme data points at
the high and low end of the spectrum, with high cost oil pipelines
exerting a disproportionately strong impact. Using Dr. Smith's
``trimmed percent sample,'' Mr. Ashton notes that by simply removing
the four highest and lowest pipelines from the data set, the cost index
fell from a range of PPI+0.66 percent and PPI+0.69 percent to PPI+0.58
percent and PPI+0.68 percent (middle 80 percent and 50 percent
respectively).\25\
---------------------------------------------------------------------------

    \25\ Supplemental Declaration of Peter K. Ashton at 22-24.
---------------------------------------------------------------------------

    54. The sensitivity analysis Mr. Ashton includes in his
Supplemental Declaration does not provide a reasoned basis for the
Commission to abandon its current methodology because the existence and
proper treatment of ``outlier'' data were extensively addressed in
prior Commission proceedings, and the current U.S. Court of Appeals-
approved methodology was specifically designed to take this matter into
account. To minimize the risk that extreme and/or erroneous
observations bias the result, the Commission uses only the middle 50
percent and 80 percent of the relevant cost data, thus ensuring that
the index is not driven by statistical outliers.

Possible Over-Recovery of Costs-of-Service by Large Pipelines

    55. Shippers point to the fact that a significant number of large
oil pipelines are substantially over-recovering their cost-of-service
as further support for maintaining the PPI without adjustment as the
appropriate index for the subsequent five-year period. Shippers
maintain that the index methodology was designed to enable pipelines to
recover costs by permitting them to increase rates at the same pace as
they are predicted to experience cost increases. Shippers contend that
the role of the index is to accommodate normal cost changes, not to
guarantee recovery of all costs at any time and in full. Shippers state
that a concern of the Commission was that under an indexing system,
rates would diverge from actual costs and the resulting rates would
fail the just and reasonable test. According to Shippers, this concern
has proven to be well founded, as evidenced by data reported on FERC
Form No. 6 which indicate that a number of interstate pipelines have
been charging indexed rates that permit them to substantially over-
recover their cost-of-service of fourteen pipelines during the 2002-
2004 period that were subject to indexing regulation, the total
interstate operating revenues of these pipelines, and the amount by
which each of these pipelines have been over-recovering its self-
reported cost-of-service. Shippers conclude that clearly an increase in
the current index will further increase the amount of over-recoveries
by these pipelines.
    56. AOPL responds that this argument is flawed as a matter of
regulatory policy and lacks any basis in evidence. The PPI index
reflects the year-to-year changes in industry costs in general and, as
such, reflects changes in the ``average'' oil pipeline's cost of
service. Under the indexing system, existing rates remain subject to
the Commission's complaint process. If Shippers believe that individual
pipelines are over-earning such that their rates cannot satisfy the
just and reasonable requirement for oil pipeline rates, their remedy
would be to file complaints against those pipelines. AOPL further
argues that another reason why over-earning pipelines do not represent
a flaw in the Commission's index methodology is that the index governs
rate changes based on ``grandfathered'' rates. AOPL claims that the
rates of most oil pipelines are deemed to be just and reasonable,
thereby establishing a ``baseline'' for future rates. Therefore, to the
extent a carrier was over-earning in 1992, the indexing methodology was
not intended to drive those rates to cost, but instead to make sure
that any rate changes were based on expected cost changes. As to
Shippers' comparison of the cost of service to revenues for their small
sample of pipelines, AOPL points out that five of those fourteen
pipelines have, in whole or in part, ``market-based'' rates and as such
are not fully subject to the index. In addition, AOPL claims that
another of the pipelines on their list has rates based on a rate
negotiated with Shippers in 2002. For all the above reasons, AOPL
disputes the position taken by Shippers.
    57. The Commission is not subject to a statutory duty to examine
the whole rate when an oil pipeline proposes an indexed rate change.
Rather, our inquiry is limited to a comparison of the changes in the
rates and costs from year to year. We recognized in adopting a uniform
index for all pipelines that inevitably some pipelines would over-earn
while others will under-earn. It is a fact simply inherent in an
industry-wide pipeline index. Shippers' use of a sample of fourteen
pipelines culled from the entire data set of pipelines being analyzed
only serves to emphasize this point. Further, Shippers' own
calculations show that many of these pipelines actually experienced a
decrease in their over-recoveries over the short time period being
considered. In addition, even though Shippers' calculations may
accurately measure over-recovery for a few pipelines, AOPL shows that,
based on Page 700 information for 2003 and 2004, pipeline

revenues were 20 percent below booked costs of service. For the above
reasons, the Commission finds that the existence of such over-
recoveries does not mean that PPI is the most appropriate index.

Structural Changes in the Oil Industry

    58. Shippers claim that structural changes in the oil industry
ensure that adequate capital will be available to pipelines if they
charge rates determined by the PPI index level. They point to the
emergence of publicly-traded partnerships such as master limited
partnerships (MLPs) and limited liability companies that have elected
to be taxed as partnerships. According to Shippers, MLPs have resulted
in increased concentration in the pipeline industry, and are the forms
through which many pipelines subject to indexing are owned. To evaluate
the impact of indexing, Shippers state that the environment of MLPs
must be reviewed as well. According to Shippers, MLPs continue to enjoy
good access to capital markets, and the number, size and total amount
of capital raised by MLPs continues to grow. Shippers argue that MLP's
success at capital raising is being accompanied by an active
acquisitions market as well as by partnerships' continued investment in
energy infrastructure (organized growth) projects, thus proving that
raising capital is not a problem for the oil industry. Shippers also
argue that another important consideration is the use of funds
generated from pipeline operations. Shippers state that MLPs generally
distribute all available cash flow to unit-holders in the form of
quarterly distributions (similar to dividends). Thus, Shippers contend,
one cannot assume that increases in rates resulting from an increase in
the Commission's index will be used to offset any increased costs for
safety, efficiency and security, or to fund capital expansion. Shippers
conclude that no basis exists for the proposition that extraordinary
rate increases must be approved across-the-board in order to provide
sufficient capital for oil pipelines to expand and operate their
systems in a safe and secure environment. On the contrary, Shippers
contend, the available evidence suggests that more than sufficient
capital is presently available at rates determined by the PPI to
achieve these objectives.
    59. AOPL responds that the Shippers are attributing what is
occurring for only a small sample of the entire pipeline industry
(approximately 38 energy-related MLPs exist as of August 2005) to the
entire industry. AOPL states that what happens with MLPs means
absolutely nothing for the majority of oil pipelines that are not owned
and operated by MLPs. According to AOPL, the very purpose of the five-
year review of the cost index is to ensure that pipeline rates keep
pace with cost changes in the industry so that past levels of capital
investment can be maintained. AOPL argues that, to preserve adequate
capital investment, the Commission must adopt a price index consistent
with its cost standard of at least PPI+1.3 percent.
    60. The fact that oil pipelines have been able to attract capital
in the past does not establish that they would be able to do so in the
future if the Commission fails to set an index that is adequate. We
believe the continuation of the methodology used in Order No. 561 to
arrive at the new index accurately captures costs in the interstate oil
pipeline transportation sector, and will produce an index sufficient
for pipelines to maintain their capital investment. We find adherence
to the Order No. 561 methodology supports an oil index of PPI+1.3 for
the next five years. Finally, we find that no party has made a
convincing showing that the Order No. 561 methodology is no longer
adequate for computing the oil index.

Continuation of the Current PPI and Impairment of Pipeline Expansion

    61. Shippers claim that, contrary to the brief filed by DOT, the
current PPI index will not impair the ability of pipelines to expand
their systems or invest sufficient capital in environmental, safety and
security measures, and dispute AOPL's contention that failure to
increase the PPI by 1.3 percent would deter such investment. Shippers
restate their contention that the current index has in no way slowed
pipeline expansion. They argue that the rate of increase in trunk
revenues at a level greater than the increase in pipeline costs and the
PPI indicates a widening of pipeline profit margins during the 1999-
2004 period. Shippers point out as well that the Commission has
anticipated that certain costs, such as those related to environmental,
safety and security measures, might not be covered by an index and have
provided pipelines with the ability to address such issues.
Specifically, a pipeline can upon demonstration that it is affected by
uncontrollable circumstances that preclude it from recovering all of
its prudently-incurred costs under the indexing system, depart from
indexing and make a cost-of-service showing to justify a rate greater
than the index ceiling rate.
    62. The Commission disagrees with Shippers on two levels. First,
the brief filed by DOT specifically stated that DOT expresses no views
as to the precise index the Commission should choose. DOT's submittal
simply was a confirmation of certain points raised by AOPL with respect
to regulatory obligations. DOT stated that it has adopted safety
regulations that have imposed significant obligations and considerable
costs on pipelines as they moved to compliance with such regulations.
Based on concerns about the capacity of the underlying infrastructure
of the nation's transportation network, including oil pipelines, to
meet the growing demands placed upon it, DOT urged the Commission to
consider the financial commitment necessary for pipelines to maintain
and expand their system capacity in light of these new regulations.
    63. Second, we disagree with Shippers that the pipelines can expand
their systems and handle environmental, safety and security measures
based on the present PPI index, without any need to increase that
index. The ability of pipelines to accomplish what Shippers claim they
have in terms of system expansion and environmental, safety and
security measures is due in no small part to the appropriateness of the
current index level. There is no guarantee that in the future pipelines
will retain that ability unless the Commission once again adopts an
index that allows the pipelines to recover their expected cost
increases.
    64. DOT has suggested that the FERC consider convening a workshop
or technical conference to explore regulatory mechanisms that could
facilitate critical investment in maintaining and expanding pipeline
system capacity. The Commission acknowledges the potential need for
increased capacity of the nation's oil transportation system, and
appreciates the concerns expressed by DOT in this matter. The current
proceeding is limited to consideration of the appropriate index for oil
pipeline ratemaking. We will continue to monitor oil pipeline
performance, and if appropriate, at some future date, may convene such
a technical conference or workshop.
The Commission Orders
    Consistent with our review and verification of the sample pipeline
Form No. 6 data, and the application of the previously approved Order
No. 561 methodology to that data, the Commission determines that the

appropriate oil pricing index for the next five years, July 1, 2006
through June 30, 2011, should be PPI plus a 1.3 percent adjustment.

    By the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. 06-2964 Filed 3-27-06; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 225 (Monday, November 23, 2015)]
[Notices]
[Pages 72957-72958]
[FR Doc No: 2015-29762]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP16-15-000]

Tennessee Gas Pipeline Company, L.L.C.; Notice of Request Under
Blanket Authorization

    Take notice that on November 4, 2015, Tennessee Gas Pipeline
Company, L.L.C., (Tennessee), located at 1001 Louisiana Street,
Houston, Texas 77002, filed in Docket No. CP16-15-000, a prior notice
request pursuant to sections 157.205, and 157.216(b)(2) of the Federal
Energy Regulatory Commission's regulations under the Natural Gas Act
(NGA), seeking authorization to abandon two inactive supply laterals
located in St. Mary's Parish, Louisiana, extending into state waters of
Louisiana. Specifically, Line No. 519A-100 consists of approximately 20
miles of 10-inch-diameter pipeline of which 6.67 miles will be removed
and 13.3 miles will be abandoned in place. Line No. 519A-200 consists
of approximately 1.5 miles of 6-inch-diameter of pipeline and will be
abandoned in place all as more fully set forth in the application,
which is on file with the Commission and open to public inspection. The
filing may also be viewed on the web at http://www.ferc.gov using the
``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. For
assistance, contact FERC at<EMAIL_ADDRESS>or call toll-
free,<PHONE_NUMBER> or TTY,<PHONE_NUMBER>.
    Any questions regarding the Request should be directed to Ben J.
Carranza, Manager, Regulatory, Tennessee Gas Pipeline Company, L.L.C.,
1001 Louisiana Street, Houston, Texas 77002, by telephone at: 713-420-
5535, or by email at<EMAIL_ADDRESS>or Debbie Kalisek,
Regulatory Analyst, Tennessee Gas Pipeline Company, L.L.C., 1001
Louisiana Street, Houston, Texas 77002, by telephone at<PHONE_NUMBER>,
or by email at<EMAIL_ADDRESS>    Any person may, within 60 days after the issuance of the instant
notice by the Commission, file pursuant to Rule 214 of the Commission's
Procedural Rules (18 CFR 385.214) a motion to intervene or notice of
intervention. Any person filing to intervene or the Commission's staff
may, pursuant to section 157.205 of the Commission's Regulations under
the NGA (18 CFR 157.205) file a protest to the request. If no protest
is filed within the time allowed therefore, the proposed activity shall
be deemed to be authorized effective the day after the time allowed for
protest. If a protest is filed and not withdrawn within 30 days after
the time allowed for filing a protest, the instant request shall be
treated as an application for authorization pursuant to section 7 of
the NGA.
    Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding; or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is issued, it will indicate, among other
milestones, the anticipated date for the Commission staff's issuance of
the final environmental impact statement (FEIS) or EA for this
proposal. The filing of the EA in the Commission's public record for
this proceeding or the issuance of a Notice of Schedule for
Environmental Review will serve to notify federal and state agencies of
the timing for the completion of all necessary reviews, and the
subsequent need to complete all federal authorizations within 90 days
of the date of issuance of the Commission staff's FEIS or EA.
    Persons who wish to comment only on the environmental review of
this project should submit an original and two copies of their comments
to the Secretary of the Commission. Environmental commenter's will be
placed on the Commission's environmental mailing list, will receive
copies of the environmental documents, and will be notified of meetings
associated with the Commission's

environmental review process. Environmental commenter's will not be
required to serve copies of filed documents on all other parties.
However, the non-party commentary, will not receive copies of all
documents filed by other parties or issued by the Commission (except
for the mailing of environmental documents issued by the Commission)
and ill not have the right to seek court review of the Commission's
final order.
    The Commission strongly encourages electronic filings of comments,
protests, and interventions via the internet in lieu of paper. See 18
CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web
site (www.ferc.gov) under the ``e-Filing'' link. Persons unable to file
electronically should submit an original and 5 copies of the protest or
intervention to the Federal Energy regulatory Commission, 888 First
Street NE., Washington, DC 20426.

    Dated: November 16, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2015-29762 Filed 11-20-15; 8:45 am]
 BILLING CODE 6717-01-P


34962 Federal Register / Vol. 68, No. 112 / Wednesday, June 11, 2003 / Notices mammalian toxins or human allergens; is not derived from a source known to produce allergens; is not targeted to a cellular pathway for glycosylation in the plant; and is rapidly degraded upon exposure to simulated gastric and intestinal. The genetic material necessary for the production of APH4 as an inert ingredient are the nucleic acids ( DNA) which comprise genetic material encoding this protein and its regulatory regions. `` Regulatory regions'' are the genetic material that control the expression of the genetic material encoding the protein, such as promoters, terminators, and enhancers. DNA is common to all forms of plant and animal life and the Agency has previously stated that they are not aware of an instance where these nucleic acids have been associated with toxic effects related to their consumption as a component of food. These ubiquitous nucleic acids, as they appear in the subject inert ingredient, have been adequately characterized. Therefore, no mammalian toxicity is anticipated from dietary exposure to the genetic material necessary for the production of the subject inert plant pesticidal ingredient.

D. Aggregate Exposure 1. Dietary exposure   i. Food. Derivatives of cottonseed ( e. g., refined cottonseed oil) and fiber ( e. g., linters, which are essentially 100% cellulose) are used in some food products. However, APH4 was not detected in most of the samples of COT102 derived cottonseed analyzed or any of the cotton fiber samples analyzed. In the few cottonseed samples in which APH4 was detectable, the quantities were below the limit of quantification (< 137 ng APH4/ g fresh wt; < 150 ng APH4/ g dry wt). It is expected that any trace quantities of APH4 in cottonseed will be eliminated by standard seed processing methods. As demonstrated by the analysis of cottonseed products for VIP3A protein, no VIP3A was detected in refined cottonseed oil from COT102 derived plants, despite the presence of ca. 3 micrograms VIP3A/ g seed ( fresh or dry wt.). Additionally, no protein of any kind was detected in the same sample of refined cottonseed oil. It can be concluded that APH4, as produced in COT102 derived cotton plants, does not pose a risk of becoming allergenic via food, because there will be no exposure via food. Additionally, the APH4 protein shows no amino acid sequence homology to known allergens; is not derived from a source known to produce allergens; is not targeted to a cellular pathway for glycosylation in the plant; and is rapidly degraded upon exposure to simulated gastric and intestinal. ii. Drinking water. No exposure to the APH4 and the genetic material necessary for its production as an inert ingredient via drinking water are expected. The protein is incorporated into the plant and will therefore not be available to drinking water sources. 2. Non dietary exposure. Non dietary exposure is not anticipated, due to the proposed use pattern of the product. Exposure via dermal or inhalation routes is unlikely because the inert ingredient is contained within plant cells. However, if exposure were to occur by non dietary routes, no risk would be expected because the APH4 protein is not toxic to mammals.

E. Cumulative Exposure Because there is no indication of mammalian toxicity to the APH4 protein, it is reasonable to conclude that there are no cumulative effects for this inert ingredient.

F. Safety Determination 1. U. S. population. The lack of mammalian toxicity at high levels of exposure to the APH4 protein demonstrates the safety of the product at levels well above possible maximum exposure levels anticipated via consumption of processed food products produced from VIP3A cotton. Moreover, little to no human dietary exposure to APH4 protein is expected to occur via VIP3A cotton. Due to the lack of toxicity of the APH4 protein and its very low potential for allergenicity, dietary exposure is not anticipated to pose any harm for the U. S. population. No special safety provisions are applicable for consumption patterns or for any population sub groups. 2. Infants and children. Syngenta has evaluated the acute toxicity data generated on APH4, the lack of homology to known allergens or toxins, and the limited exposure to this protein based on the residue profile and limited number of food/ feed products resulting from cotton and has determined that there is ample evidence to indicate a reasonable certainty of no harm to infants and children as a result of the use of this product.

G. Effects on the Immune and Endocrine Systems The inert ingredient APH4 is a protein, derived from sources that are not known to exert an influence on the endocrine or immune systems.

H. Existing Tolerances The registrant is not aware of any known existing tolerances or exemptions for APH4 and the genetic material necessary for its production as an inert ingredient.

I. International Tolerances The registrant is not aware that any Codex maximum residue levels exist for the APH4 protein and the genetic material necessary for its production.

J. Reference 1. Sjoblad, R. D., J. T. McClintock and R. Engler ( 1992) Toxicological considerations for protein components of biological pesticide products. Regulatory Toxicol. Pharmacol. 15: 3   9.

[ FR Doc 03   14327 Filed 6   10   03; 8: 45 am]

BILLING CODE 6560   50   S ENVIRONMENTAL PROTECTION AGENCY [ OPP   2003   0187; FRL   7311   8]

Experimental Use Permit; Receipt of Application for Use of Aspergillus Flavus NRRL 21882 AGENCY: Environmental Protection Agency ( EPA). ACTION: Notice.

SUMMARY: This notice announces receipt of an application 75624 EUP R from Circle One Global, Inc. requesting an experimental use permit ( EUP) for the Aspergillus flavus NRRL 21882. The Agency has determined that the application may be of regional and national significance. Therefore, in accordance with 40 CFR 172.11( a), the Agency is soliciting comments on this application.

DATES: Comments, identified by docket ID number OPP   2003   0187, must be received on or before July 11, 2003. ADDRESSES: Comments may be submitted electronically, by mail, or through hand delivery/ courier. Follow the detailed instructions as provided in Unit I. of the SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Shanaz Bacchus, Biopesticides and Pollution Prevention Division ( 7511C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001; telephone number: ( 703) 308   8097; e mail address: bacchus. shanaz@ epa. gov.

SUPPLEMENTARY INFORMATION:

I. General Information A. Does this Action Apply to Me?

This action is directed to the public in general. This action may, however, be VerDate Jan< 31> 2003 23: 27 Jun 10, 2003 Jkt 200001 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\ FR\ FM\ 11JNN1. SGM 11JNN1 34963 Federal Register / Vol. 68, No. 112 / Wednesday, June 11, 2003 / Notices of interest to an agricultural producer, food manufacturer, pesticide manufacturer, or a person who may be required to conduct testing of chemical substances under the Federal Food, Drug and Cosmetic Act ( FFDCA), or the Federal Insecticide, Fungicide, and Rodenticide Act ( FIFRA). Since other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT.

B. How Can I Get Copies of this Document and Other Related Information? 1. Docket. EPA has established an official public docket for this action under docket identification ( ID) number OPP   2003   0187. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information ( CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch ( PIRIB), Rm. 119, Crystal Mall # 2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8: 30 a. m. to 4 p. m., Monday through Friday, excluding legal holidays. The docket telephone number is ( 703) 305   5805. 2. Electronic access. You may access this Federal Register document electronically through the EPA Internet under the `` Federal Register'' listings at http:// www. epa. gov/ fedrgstr/. An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http:// www. epa. gov/ edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Once in the system, select `` search,'' then key in the appropriate docket ID number. Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I. B. 1. EPA intends to work towards providing electronic access to all of the publicly available docket materials through EPA's electronic public docket. For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket. Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.

C. How and To Whom Do I Submit Comments? You may submit comments electronically, by mail, or through hand delivery/ courier. To ensure proper receipt by EPA, identify the appropriate docket ID number in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked `` late.'' EPA is not required to consider these late comments. If you wish to submit CBI or information that is otherwise protected by statute, please follow the instructions in Unit I. D. Do not use EPA Dockets or e mail to submit CBI or information protected by statute. 1. Electronically. If you submit an electronic comment as prescribed in this unit, EPA recommends that you include your name, mailing address, and an email address or other contact information in the body of your comment. Also include this contact information on the outside of any disk or CD ROM you submit, and in any cover letter accompanying the disk or CD ROM. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. EPA's policy is that EPA will not edit your comment, and any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. i. EPA Dockets. Your use of EPA's electronic public docket to submit comments to EPA electronically is EPA's preferred method for receiving comments. Go directly to EPA Dockets at http:// www. epa. gov/ edocket, and follow the online instructions for submitting comments. Once in the system, select `` search,'' and then key in docket ID number OPP   2003   0187. The system is an `` anonymous access'' system, which means EPA will not know your identity, e mail address, or other contact information unless you provide it in the body of your comment. ii. E mail. Comments may be sent by e mail to opp docket@ epa. gov, Attention: Docket ID Number OPP   2003   0187. In contrast to EPA's electronic public docket, EPA's e mail system is not an `` anonymous access'' system. If you send an e mail comment directly to the docket without going through EPA's electronic public docket, EPA's e mail system automatically captures your e mail address. E mail addresses that are automatically captured by EPA's e mail system are included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket. iii. Disk or CD ROM. You may submit comments on a disk or CD ROM that you mail to the mailing address identified in Unit I. C. 2. These electronic submissions will be accepted in VerDate Jan< 31> 2003 23: 27 Jun 10, 2003 Jkt 200001 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 E:\ FR\ FM\ 11JNN1. SGM 11JNN1 34964 Federal Register / Vol. 68, No. 112 / Wednesday, June 11, 2003 / Notices WordPerfect or ASCII file format. Avoid the use of special characters and any form of encryption. 2. By mail. Send your comments to: Public Information and Records Integrity Branch ( PIRIB) ( 7502C), Office of Pesticide Programs ( OPP), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001, Attention: Docket ID Number OPP   2003   0187. 3. By hand delivery or courier. Deliver your comments to: Public Information and Records Integrity Branch ( PIRIB), Office of Pesticide Programs ( OPP), Environmental Protection Agency, Rm. 119, Crystal Mall # 2, 1921 Jefferson Davis Hwy., Arlington, VA, Attention: Docket ID Number OPP   2003   0187. Such deliveries are only accepted during the docket's normal hours of operation as identified in Unit I. B. 1.

D. How Should I Submit CBI to the Agency?

Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e mail. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI ( if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person listed under FOR FURTHER INFORMATION CONTACT.

E. What Should I Consider as I Prepare My Comments for EPA?

You may find the following suggestions helpful for preparing your comments: 1. Explain your views as clearly as possible. 2. Describe any assumptions that you used. 3. Provide copies of any technical information and/ or data you used that support your views. 4. If you estimate potential burden or costs, explain how you arrived at the estimate that you provide. 5. Provide specific examples to illustrate your concerns. 6. Offer alternative ways to improve the notice. 7. Make sure to submit your comments by the deadline in this document. 8. To ensure proper receipt by EPA, be sure to identify the docket ID number assigned to this action in the subject line on the first page of your response. You may also provide the name, date, and Federal Register citation.

II. Background Circle One Global, Inc., One Arthur St., P. O. Box 28, Shellman, GA 39886   0028, has applied for an EUP for field testing of a new end use product of a microbial pesticide containing the active ingredient, Aspergillus flavus NRRL 21882, in a non crop destruct program. The product is to be ground applied and is a granular formulation. At the proposed use rate of 20 lbs/ acre, the equivalent amount of active ingredient applied is only 0.002 lbs/ acre. The requested EUP is for a total of 5,000 acres to be treated for a total application of 10 lbs of the active ingredient. Concurrent with this application, the applicant filed a pesticide petition number 3G6559 for a temporary exemption from tolerance for residues of Aspergillus flavus NRRL 21882 in/ on the food/ feed commodity peanut. Application of the pesticide is proposed to reduce aflatoxin producing colonies of Aspergillus flavus on the crop and in the soil by competitive displacement. Testing of 100 lbs of the active ingredient will occur in three States: Alabama, Florida, and Georgia.

III. What Action is the Agency Taking? Following the review of the Circle One Global, Inc. application and any comments and data received in response to this notice, EPA will decide whether to issue or deny the EUP request for this EUP program, and if issued, the conditions under which it is to be conducted. Any issuance of an EUP will be announced in the Federal Register.

IV. What is the Agency's Authority for Taking this Action? The Agency's authority for taking this action is under FIFRA section 5 List of Subjects Environmental protection, Experimental use permits. Dated: June 2, 2003. Janet L. Andersen, Director, Biopesticides and Pollution Prevention Division, Office of Pesticide Programs.

[ FR Doc. 03   14462 Filed 6   10   03; 8: 45 am]

BILLING CODE 6560   50   S ENVIRONMENTAL PROTECTION AGENCY [ FRL   7510   9]

Horseshoe Bend Dump Superfund Site; Notice of Proposed Settlement AGENCY: Environmental Protection Agency. ACTION: Notice of proposed settlement.

SUMMARY: Under section 122( h) of the Comprehensive Environmental Response, Compensation and Liability Act ( CERCLA), the Environmental Protection Agency ( EPA) has offered a settlement at the Horseshoe Bend Dump Superfund Site in Lawrenceburg, Lawrence County, Tennessee under a CERCLA 122( h) Agreement for recovery of Response Costs to settle claims for past costs at the Site. The two ( 2) parties to the agreement have returned signature pages accepting EPA's settlement offer. EPA will consider public comments on the proposed settlement until July 11, 2003. EPA may withdraw from or modify the proposed settlement should such comments disclose facts or considerations which indicate the proposed settlement is inappropriate, improper or inadequate. Copies of the proposed settlement are available from: Ms. Paula V. Batchelor, U. S. Environmental Protection Agency, Region 4, CERCLA Program Services Branch, 61 Forsyth Street, SW., Atlanta, Georgia 30303, ( 404) 562   8887. Written Comments made be submitted to Ms. Paula V. Batchelor at the above address within 30 days of the date of publication.

Dated: May 21, 2003. Archie Lee, Chief, CERCLA Program Services Branch, Waste Management Division. [ FR Doc. 03   14747 Filed 6   10   03; 8: 45 am]

BILLING CODE 6560   50   P EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Agency Information Collection Activities: Proposed Collection; Comments Request AGENCY: Equal Employment Opportunity Commission VerDate Jan< 31> 2003 23: 27 Jun 10, 2003 Jkt 200001 PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 E:\ FR\ FM\ 11JNN1. SGM 11JNN1