76 FERC  61, 078 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION 18 CFR Part 346 [Docket No. RM96-10-000; Order No. 588] Oil Pipeline Cost-of-Service Filing Requirements (Issued July 19, 1996) AGENCY: Federal Energy Regulatory Commission. ACTION: Final Rule. SUMMARY: The Federal Energy Regulatory Commission (Commission) is revising Part 346 of its regulations to make the cost-of- service filing requirements of that Part applicable to the Trans- Alaska Pipeline System (TAPS) carriers and carriers delivering oil directly or indirectly to TAPS. These carriers were inadvertently excluded from the streamlined procedural rules in Part 346 required by the Energy Policy Act of 1992. EFFECTIVE DATE: [Insert date 30 days after publication in the Federal Register.] FOR FURTHER INFORMATION CONTACT: Jacob Silverman Office of the General Counsel Federal Energy Regulatory Commission 888 First Street, N.E. Washington, DC 20426 Telephone: (202) 208-2078 SUPPLEMENTARY INFORMATION: In addition to publishing the full text of this document of the Federal Register, the Commission also provides all interested persons an opportunity to inspect or copy the contents of this document during normal business hours in Room 2-A, 888 First Street, N.E. Washington, D.C. 20426. Docket No. RM96-10-000 - 2 - The Commission Issuance Posting System (CIPS), an electronic bulletin board service, provides access to the texts of formal documents issued by the Commission. CIPS is available at no charge to the user and may be accessed using a personal computer with a modem by dialing (202) 208-1397 if dialing locally or 1- 800 856-3920 if dialing long distance. To access CIPS, set your communication software to 19200, 14400, 12000, 9600, 7200, 4800, 2400 or 1200bps, full duplex, no parity, 8 data bits, and 1 stop bit. The full text of this document will be available on CIPS indefinitely in ASCII and WordPerfect 5.1 format for one year. The complete text on diskette in WordPerfect format may also be purchased from the Commission's copy contractor, La Dorn Systems Corporation, also located in Room 2-A, 888 First Street, N.E., Washington, D.C. 20426. The Commission's bulletin board system can also be accessed through the FedWorld system directly by modem or through the Internet. To access the FedWorld system by modem: Dial (703) 321-3339 and logon to the FedWorld system. 1/2 After Logging on, type: /go FERC To access the FedWorld system, through the Internet: 1/2 Telnet to : Fedworld. gov 1/2 Select the option: [1] FedWorld UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: Elizabeth Anne Moler, Chair; Vicky A. Bailey, James J. Hoecker, William L. Massey, and Donald F. Santa, Jr. Oil Pipeline Cost-of-Service ) Docket No. RM96-10-000 Filing Requirements ) ORDER NO. 588 FINAL RULE The Federal Energy Regulatory Commission (Commission) is revising Part 346 of its regulations to make the cost-of-service filing requirements of that Part applicable to the Trans-Alaska Pipeline System (TAPS) and carriers delivering oil directly or indirectly to TAPS. The revision is necessary to correct the inadvertent exclusion of these carriers from the procedural requirements of Part 346. I. BACKGROUND The Commission issued Order No. 561 1/ to comply with the Energy Policy Act of 1992 (Act of 1992), 2/ which required the Commission to establish a simplified and generally applicable methodology for oil pipelines and to streamline its procedures relating to oil pipeline rates. The Act of 1992 excluded TAPS from its provisions for ratemaking purposes. Thus, Order No. 561 stated that TAPS and the other excluded pipelines would continue 1/ Revisions to Oil Pipeline Regulations Pursuant to the Energy Policy Act of 1992, Order No. 561, FERC Statutes & Regulations  30,985 (1993); Order on Rehearing, Order No. 561-A, FERC Statutes & Regulations  31,000 (1994). 2/ 42 U.S.C. 7172 note (West Supp. 1993). Docket No. RM96-10-000 - 2 - to be governed by their existing rate methodologies, but also would be subject to the Commission's new procedural rules. Thereafter, as a companion to Order No. 561, the Commission issued Order No. 571, establishing in Part 346 of its regulations cost-of-service filing requirements for oil pipelines. 3/ These procedural requirements include all the information that is necessary to support a rate filing under the Opinion No. 154-B methodology. 4/ The existing provisions of Part 346, however, do not apply to TAPS or its feeder lines. 5/ It has always been the Commission's intent to exclude TAPS and its feeder lines only from the simplified ratemaking methodology adopted in Order No. 561, not from the streamlined procedural rules required by the Act of 1992. Accordingly, on April 29, 1996, the Commission issued a Notice of Proposed Rulemaking (NOPR) in this docket 6/ to amend Part 346 to make it applicable to TAPS and its feeder lines. 3/ Cost-of-Service Reporting and Filing Requirements for Oil Pipelines, FERC Statutes & Regulations  31,006 (1994). 4/ Williams Pipeline Company, 31 FERC  61,377 (1985). 5/ See, Milne Point Pipeline Company, 75 FERC  61,050 (1996). 6/ Oil Pipeline Cost-of-Service Filing Requirements, FERC Statutes & Regulations  32,518, 61 FR 19878 (May 3, 1996). Docket No. RM96-10-000 - 3 - The TAPS Carriers 7/ were the only parties filing comments in response to the NOPR. II. PUBLIC REPORTING BURDEN The Commission estimates the public reporting burden for the collection of information under the final rule will remain unchanged for rate filings, since what the Commission is codifying as the information to be provided is that which the Commission's staff routinely has requested of oil pipelines for cost-of-service rate filings in the past. The information will be collected on FERC-550, "Oil Pipeline Rates: Tariff Filings." 8/ This estimate includes the time for reviewing instructions, researching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The current annual reporting burden associated with this information collection requirement was described in Order No. 571 and included the burden attributable to all oil pipelines, including TAPS and its feeder lines, as follows: FERC-550: 5,350 hours, 535 responses, and 140 respondents. Comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for 7/ The TAPS Carriers, each of which owns an undivided joint interest in the Trans Alaska Pipeline System (TAPS), are: Amerada Hess Pipeline Corporation, ARCO Transportation Alaska, Inc., BP Pipelines (Alaska) Inc., Exxon Pipeline Company, Mobil Alaska Pipeline Company, Phillips Alaska Pipeline Corporation and Unocal Pipeline Company. 8/ FERC-550 is the designation covering oil pipeline tariff filings made to the Commission. Docket No. RM96-10-000 - 4 - reducing this burden, can be sent to the Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, DC 20426 [Attention: Michael Miller, Information Services Division, (202) 208-1415]; and to the Office of Information and Regulatory Affairs of OMB (Attention: Desk Officer for Federal Energy Regulatory Commission), FAX: (202) 395-5167. III. DISCUSSION As the NOPR explained, since TAPS was excluded from the ratemaking provisions of the Act of 1992, Order No. 561 specifically stated: 9/ for ratemaking purposes, TAPS and those excluded pipelines [the TAPS feeder lines] will continue to be regulated under the ratemaking standards that are currently in effect. However, it is the Commission's judgment that such exclusion [of TAPS and its feeder lines from the provisions of the Energy Policy Act of 1992] was intended to apply only to the simplified and generally applicable rate methodology, not to the procedural rules that the Act of 1992 required the Commission to consider. Otherwise, the Commission would be required to enforce one set of procedural rules for TAPS and excluded pipelines, and another for all other pipelines under its jurisdiction under the ICA. This would not be consistent with Congress' intent for the Commission to streamline its procedures for oil pipelines. As the NOPR pointed out, the Commission meant the procedural rules of Part 346 to apply to TAPS and its feeder lines. This is the interpretation that is consistent with the mandate of the Act of 1992 that the Commission streamline its procedures in order to avoid unnecessary regulatory costs and delay, and with the Commission's explicit desire to enforce one set of the procedural rules for all pipelines. 9/ FERC Statutes & Regulations  30,985 at 30,961. Docket No. RM96-10-000 - 5 - The revision adopted here will require the TAPS Carriers and the TAPS feeder carriers to comply with the cost-of-service filing requirements of Part 346 when they seek to establish rates under the Opinion No. 154-B methodology. As the NOPR explained, these requirements are no more than a codification of the information that these carriers now must provide routinely in response to the Commission staff's requests for information to support their cost-of-service rate filings. Thus, it should not create any additional burden for carriers making cost-of-service filings. Inclusion of cost-of-service supporting information with carriers' initial filings, rather than at a later time in the regulatory process, also will satisfy the requirement of the Act of 1992 to avoid unnecessary regulatory costs and delays. In their comments, the TAPS Carriers state that they do not oppose the proposed revision to the extent it simply seeks to make the cost-of-service filing requirements consistent as between excluded and non-excluded oil pipelines. However, they seek to clarify that nothing in the proposed revision is intended to undermine or supplant the Commission-approved settlements already in place for TAPS, and certain TAPS feeder pipelines, including the TAPS Settlement Agreement. Thus, the TAPS Carriers seek assurance that, consistent with the Commission's discussion in Order Nos. 561 and 561-A, excluded pipelines, such as TAPS, can continue to file tariffs that are within the ceilings imposed by existing settlements without requiring a separate Opinion No. 154-B submission. Docket No. RM96-10-000 - 6 - The TAPS Carriers state that there is a possible ambiguity in the proposed language in the NOPR that might require TAPS Carriers that make filings under an existing settlement methodology, such as the TAPS Settlement methodology, to also include the Opinion No. 154-B schedules specified in section 346.2. The TAPS Carriers assert that no meaningful purpose would be served by such filings, since the TAPS Settlement Agreement already imposes cost-based ceilings on the TAPS rates. The TAPS Carriers have proposed language that removes that ambiguity by making clear that the filing requirement under a Commission- approved settlement remains the same. In response to the TAPS Carriers' concern, the Commission will include language in the revised regulations to make it clear that the TAPS Carriers and the TAPS feeder carriers need file the Opinion No. 154-B schedules specified in section 346.2 only if they make filings to establish or change rates under the Opinion No. 154-B methodology, and not when they file pursuant to a Commission-approved settlement. IV. ENVIRONMENTAL ANALYSIS The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment. 10/ The Commission has categorically excluded 10/ Order No. 486, Regulations Implementing the National Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Statutes & Regulations (Regulations Preambles 1986-1990)  30,783 (1987). Docket No. RM96-10-000 - 7 - certain actions from these requirements as not having a significant effect on the human environment. 11/ The action proposed here is procedural in nature and therefore falls within the categorical exclusions provided in the Commission's regulations. 12/ Therefore, neither an environmental impact statement nor an environmental assessment is necessary, and neither will be prepared in this rulemaking. V. REGULATORY FLEXIBILITY ACT CERTIFICATION The Regulatory Flexibility Act 13/ generally requires the Commission to describe the impact that a proposed rule would have on small entities or to certify that the rule will not have a significant economic impact on a substantial number of small entities. An analysis is not required if a proposed rule will not have such an impact. 14/ Pursuant to section 605(b), the Commission certifies that the proposed rules and amendments, if promulgated, will not have a significant adverse economic impact on a substantial number of small entities. VI. INFORMATION COLLECTION REQUIREMENTS Office of Management and Budget (OMB) regulations require OMB to approve certain information collection requirements 11/ 18 CFR 380.4. 12/ See, 18 CFR 380.4(a)(2)(ii). 13/ 5 U.S.C.601-612. 14/ 5 U.S.C. 605(b). Docket No. RM96-10-000 - 8 - imposed by an agency. 15/ The information collection requirements in the final rule are contained in FERC-550 "Oil Pipeline Rates: Tariff filing" (1902-0089). The Commission's Office of Pipeline Regulation uses the data collected in these information requirements filings to investigate the rates charged by oil pipeline companies subject to its jurisdiction, to determine the reasonableness of rates, and when appropriate, prescribe just and reasonable rates. The final rule will not change the reporting requirements of FERC-550. This rule therefore is not subject to OMB review. The Commission is submitting a copy of the proposed rule to OMB for information purposes. Interested persons may obtain information on these reporting requirements by contacting the Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, DC 20426 [Attention: Michael Miller, Information Services Division, (202) 208-1415]. Comments on the requirements of this rule can be sent to the Office of Information and Regulatory Affairs of OMB [Attention: Desk Officer for the Federal Energy Regulatory Commission]. VII. EFFECTIVE DATE This final rule will be effective [INSERT DATE 30 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER]. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this 15/ 5 CFR 1320.11. Docket No. RM96-10-000 - 9 - rule is not a "major rule" as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996. List of subjects 18 CFR Part 346 Pipelines, Reporting and recordkeeping requirements. By the Commission. ( S E A L ) Lois D. Cashell, Secretary. In consideration of the foregoing, Part 346, Chapter I, Title 18, Code of Federal Regulations, is amended, as set forth below. Docket No. RM96-10-000 - 10 - Part 346 - OIL PIPELINE COST-OF SERVICE FILING REQUIREMENTS 1. The authority citation for Part 346 continues to read as follows: Authority: 42 U.S.C. 7101-7352; 49 U.S.C. 60502; 49 App. U.S.C. 1-85. 2. Sections 346.1 introductory text and 346.2 introductory text are revised as follows:  346.1 Content of filing for cost-of-service rates. A carrier that seeks to establish rates pursuant to  342.2(a) of this chapter, or a carrier that seeks to change rates pursuant to  342.4(a) of this chapter, or a carrier described in  342.0(b) that seeks to establish or change rates by filing cost, revenue, and throughput data supporting such rates, other than pursuant to a Commission-approved settlement, must file: * * * * *  346.2 Material in support of initial rates or change in rates. A carrier that files for rates pursuant to  342.2(a) or  342.4(a) of this chapter, or a carrier described in  342.0(b) that files to establish or change rates by filing cost, revenue, and throughput data supporting such rates, other than pursuant to a Commission-approved settlement, must file the following statements, schedules, and supporting workpapers. The statement, schedules, and workpapers must be based upon an appropriate test period. * * * * *