Rule2021-11353
Interstate and Intrastate Natural Gas Pipelines; Rate Changes Relating to Federal Income Tax Rate American Forest & Paper Association
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Published
June 2, 2021
Effective
August 2, 2021
Issuing agencies
Energy DepartmentFederal Energy Regulatory Commission
Abstract
Order No. 849 adopted procedures for determining which jurisdictional natural gas pipelines may be collecting unjust and unreasonable rates in light of the income tax reductions provided by the Tax Cuts and Jobs Act and the Commission's revised policy and precedent concerning tax allowances to address the double recovery issue identified by United Airlines, Inc. v. FERC. These procedures also allowed interstate natural gas pipelines to voluntarily reduce their rates. In this final rule, the Commission finds that there are no more expected filings that will make use of these special procedures, which are uniquely tied to the Tax Cuts and Jobs Act, and that all existing proceedings under these procedures have closed. Therefore, the Commission removes the procedures from the Code of Federal Regulations as obsolete.
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<title>Federal Register, Volume 86 Issue 104 (Wednesday, June 2, 2021)</title>
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[Federal Register Volume 86, Number 104 (Wednesday, June 2, 2021)]
[Rules and Regulations]
[Pages 29503-29506]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-11353]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 154, 260, and 284
[Docket Nos. RM18-11-002 and RP18-415-002; Order No. 849-B]
Interstate and Intrastate Natural Gas Pipelines; Rate Changes
Relating to Federal Income Tax Rate American Forest & Paper Association
AGENCY: Federal Energy Regulatory Commission, Department of Energy.
ACTION: Final rule.
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SUMMARY: Order No. 849 adopted procedures for determining which
jurisdictional natural gas pipelines may be collecting unjust and
unreasonable rates in light of the income tax reductions provided by
the Tax Cuts and Jobs Act and the Commission's revised policy and
precedent concerning tax allowances to address the double recovery
issue identified by United Airlines, Inc. v. FERC. These procedures
also allowed interstate natural gas pipelines to voluntarily reduce
their rates. In this final rule, the Commission finds that there are no
more expected filings that will make use of these special procedures,
which are uniquely tied to the Tax Cuts and Jobs Act, and that all
existing proceedings under these procedures have closed. Therefore, the
Commission removes the procedures from the Code of Federal Regulations
as obsolete.
DATES: This rule is effective August 2, 2021.
FOR FURTHER INFORMATION CONTACT:
Vince Mareino (Legal Information), Office of the General Counsel,
888 First Street NE, Washington, DC 20426, (202) 502-6167,
<a href="/cdn-cgi/l/email-protection#4a1c2324292f64072b382f2324250a2c2f3829642d253c"><span class="__cf_email__" data-cfemail="aff9c6c1ccca81e2ceddcac6c1c0efc9caddcc81c8c0d9">[email protected]</span></a>.
Laura Kane (Technical Information), Office of Energy Market
Regulation, 888 First Street NE, Washington, DC 20426, (202) 502-8653,
<a href="/cdn-cgi/l/email-protection#abe7caded9ca85e0cac5ceebcdced9c885ccc4dd"><span class="__cf_email__" data-cfemail="3a765b4f485b14715b545f7a5c5f4859145d554c">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
1. On July 18, 2018, the Commission issued a final rule \1\ (Order
No. 849) adopting procedures for determining which jurisdictional
natural gas pipelines may be collecting unjust and unreasonable rates
in light of the income tax reductions provided by the Tax Cuts and Jobs
Act \2\ and the Commission's Revised Policy
[[Page 29504]]
Statement \3\ and precedent \4\ concerning tax allowances to address
the double recovery issue identified by United Airlines, Inc. v.
FERC.\5\ These procedures also allowed interstate natural gas pipelines
to voluntarily reduce their rates. On April 18, 2019, the Commission
denied all outstanding requests for rehearing and reaffirmed the
Commission's determinations in Order No. 849 (Order No. 849-A).\6\
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\1\ Interstate & Intrastate Nat. Gas Pipelines; Rate Changes
Relating to Fed. Income Tax Rate, Order No. 849, 83 FR 36672 (July
30, 2018), 164 FERC ] 61,031 (2018).
\2\ An Act to provide for reconciliation pursuant to titles II
and V of the concurrent resolution on the budget for fiscal year
2018, Public Law 115-97, 131 Stat. 2054 (2017) (Tax Cuts and Jobs
Act).
\3\ Inquiry Regarding the Commission's Policy for Recovery of
Income Tax Costs, 81 FR 94366 (Dec. 23, 2016), 162 FERC ] 61,227
(Revised Policy Statement), order on reh'g, 83 FR 12362 (March 21,
2018), 164 FERC ] 61,030 (2018) (Revised Policy Statement
Rehearing).
\4\ SFPP, L.P., Opinion No. 511-C, 162 FERC ] 61,228, at P 9
(2018).
\5\ 827 F.3d 122 (D.C. Cir. 2016) (United Airlines). For
purposes of this order, the Revised Policy Statement, United
Airlines, and Opinion No. 511-C will collectively be referred to as
``United Airlines Issuances.''
\6\ Interstate & Intrastate Nat. Gas Pipelines; Rate Changes
Relating to Fed. Income Tax Rate, Order No. 849-A, 84 FR 17739
(April 26, 2019), 167 FERC ] 61,051 (2019).
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2. Order No. 849 established a requirement, pursuant to sections 10
and 14(a) of the Natural Gas Act (NGA),\7\ that all interstate natural
gas companies with cost-based stated rates that filed a 2017 FERC Form
No. 2 or 2-A must file the FERC Form No. 501-G informational filing for
the purpose of evaluating the impact of the Tax Cuts and Jobs Act and
the United Airlines Issuances on interstate natural gas pipelines'
revenue requirements. In addition to the FERC Form No. 501-G filing
requirement, the Commission provided four options for each interstate
natural gas pipeline to make a filing to address the changes to the
pipeline's recovery of tax costs or explain why no action is needed:
(1) A limited NGA section 4 \8\ rate reduction filing (Option 1), (2) a
commitment to file a general section 4 rate case or prepackaged
settlement in the near future (Option 2), (3) an explanation why no
rate change is needed (Option 3), and (4) no action (Option 4). These
procedures were intended to encourage natural gas pipelines to
voluntarily reduce their rates to the extent the tax changes result in
their over-recovering their cost of service, while also providing the
Commission and stakeholders information necessary to take targeted
actions under NGA section 5 \9\ where necessary to achieve just and
reasonable rates.
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\7\ 15 U.S.C. 717i(a), 717m(a).
\8\ 15 U.S.C. 717c.
\9\ 15 U.S.C. 717d.
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3. Order No. 849 made three changes to the Code of Federal
Regulations. First, new Sec. 260.402 of the Commission's regulations
established the FERC Form No. 501-G filing requirement described
above.\10\ Second, new Sec. 154.404 of the Commission's regulations
established the regulations necessary to govern Option 1, the limited
NGA section 4 rate reduction filings.\11\ Options 2, 3, and 4 above did
not require any change in regulations, as they could proceed under
preexisting regulatory authority. Third, new Sec. 284.123(i) of the
Commission's regulations provided procedures for section 311 of the
National Gas Policy Act of 1978 (NGPA) \12\ and Hinshaw \13\ pipelines
to establish fair and equitable rates for their interstate
services.\14\
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\10\ 18 CFR 260.402.
\11\ 18 CFR 154.404.
\12\ 15 U.S.C. 3371.
\13\ Section 1(c) of the NGA, 15 U.S.C. 717(c), exempts from the
Commission's NGA jurisdiction those pipelines which transport gas in
interstate commerce if: (1) They receive natural gas at or within
the boundary of a state, (2) all the gas is consumed within that
state, and (3) the pipeline is regulated by a state Commission. This
is known as the Hinshaw exemption.
\14\ 18 CFR 284.123(i).
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II. Discussion
4. In Order No. 849, the Commission identified 129 interstate
natural gas pipelines with cost-based rates that were required to file
the FERC Form No. 501-G, codified in Sec. 260.402. As of the date of
Order No. 849-A, the Commission had received filings from all 129
identified pipelines.\15\ As of April 15, 2021, all of these FERC Form
No. 501-G filings have been accepted for filing, and the proceedings
terminated. Because Order No. 849 established a one-time reporting
requirement tied to a past event, it would not apply to any new
pipelines that may enter the market in the future. Therefore, the
regulations implemented in Order No. 849 are no longer needed, and we
hereby remove Sec. 260.402 from the Commission's regulations.
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\15\ Order No. 849-A, 167 FERC ] 61,051 at P 4.
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5. Eleven pipelines chose Option 1, codified in Sec. 154.404.
Under Option 1, pipelines could only choose to make these limited NGA
section 4 rate reduction filings at the time of their FERC Form No.
501-G filings. Just as no new FERC Form No. 501-G filings are possible,
likewise no new filings under Sec. 154.404 are possible.
6. For any of these limited NGA section 4 rate reduction filings
that proceeded to hearing, Sec. 154.404 also governs the process by
which these hearings are adjudicated, so it would not have been
reasonable to remove Sec. 154.404 before all the existing hearings
concluded, either with the acceptance of a settlement or with the
publication of an Initial Decision. There are no remaining dockets that
are either in an Option 1 hearing or eligible to be set for an Option 1
hearing. As a result, the regulations governing this type of limited
NGA section 4 rate reduction filings are no longer needed. We shall
therefore remove Sec. 154.404 of the Commission's regulations.
7. Order No. 849 also established separate regulations under Sec.
284.123(i) to address the unique jurisdictional situation of section
311 and Hinshaw pipelines, which have their interstate rates regulated
by the Commission, but which are primarily regulated at the state
level. Under pre-existing policy, the Commission reviews the rates of
section 311 and Hinshaw pipelines every five years on a rolling
basis.\16\ Section 284.123(i), in brief, provided a mechanism to lower
these pipelines' interstate rates prior to their five-year review, in
the event that state government regulators also adjusted their rates in
light of the recent changes in tax code and tax policy. In the three-
and-a-half years from the passage of the Tax Cuts and Jobs Act in
November 2017 until the present, almost all section 311 and Hinshaw
pipelines have either come before the Commission for their five-year
review, or have come before the Commission for an out-of-cycle rate
review, whether due to Sec. 284.123(i), voluntary action, or the other
requirements of section 284 of the Commission's regulations that can
compel an out-of-cycle rate review. The Commission, through its own
review, finds it is unlikely that the remaining section 311 and Hinshaw
pipelines will trigger Sec. 284.123(i), and in any event all are due
for their five-year review in the near future under the Commission's
pre-existing policy. As a result, the special circumstances presented
by the Tax Cuts and Jobs Act that required Sec. 284.123(i) are no
longer present. We shall therefore remove Sec. 284.123(i) of the
Commission's regulations.
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\16\ Contract Reporting Requirements of Intrastate Nat. Gas
Cos., Order No. 735, 75 FR 29404 (May 26, 2010), 131 FERC ] 61,150,
at P 96, order on reh'g, Order No. 735-A, 75 FR 80685 (Dec. 23,
2010), 133 FERC ] 61,216 (2010); see also Hattiesburg Indus. Gas
Sales, L.L.C., 134 FERC ] 61,236 (2011) (imposing a five-year rate
review requirement on Hattiesburg Industrial Gas Sales, L.L.C.).
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III. Regulatory Requirements
A. Information Collection Statement
8. The Paperwork Reduction Act \17\ requires each Federal agency to
seek and obtain the Office of Management and Budget's (OMB) approval
before undertaking a collection of information (including reporting,
record keeping, and public disclosure requirements)
[[Page 29505]]
directed to ten or more persons or contained in a rule of general
applicability. OMB regulations require approval of certain information
collection requirements contemplated by final rules (including
deletion, revision, or implementation of new requirements). Upon
approval of a collection of information, OMB will assign an OMB control
number and an expiration date. Respondents subject to the filing
requirements of a rule will not be penalized for failing to respond to
the collection of information unless the collection of information
displays a valid OMB control number. The following discussion describes
and analyzes the collection of information to be deleted by this final
rule.
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\17\ 44 U.S.C. 3501-3521.
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9. Public Reporting Burden: In this final rule, the Commission
eliminates FERC Form No. 501-G \18\ (One-time Report on Rate Effect of
the Tax Cuts and Jobs Act). This final rule eliminates an existing data
collection, FERC-501G (OMB Control No. 1902-0302). Order No. 849 (in
Docket No. RM18-11-000) allowed the Commission to determine which
jurisdictional natural gas pipelines may be collecting unjust and
unreasonable rates in light of the recent reduction in the corporate
income tax rate in the Tax Cuts and Jobs Act and changes to the
Commission's income tax allowance policies following the United
Airlines decision. FERC Form No. 501-G collected information as to
whether the pipeline was a pass-through entity. FERC Form No. 501-G
collected income and balance sheet statement financial data from all
NGA pipelines that have stated cost-based rates on file with the
Commission. NGA pipelines whose rates were examined in a general rate
case under section 4 of the NGA or in an investigation under section 5
of the NGA were not required to file FERC Form No. 501-G.
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\18\ FERC-501G has also been referenced as FERC Form No. 501-G.
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10. The Commission identified 129 interstate natural gas pipelines
with cost-based rates that were required to file the adopted FERC Form
No. 501-G. Interstate natural gas pipelines had four options as to how
to address the results of the formula contained in the FERC Form No.
501-G. Each option has a different burden profile and a different cost
per response. Companies made their own business decisions as to which
option they selected. This final rule eliminates FERC Form No. 501-G
which reduces burden on all applicants.
11. All burden from FERC Form No. 501-G has already been incurred.
For informational purposes, the previous estimate of burden and cost
for the now-complete FERC Form No. 501-G collection follows.
FERC-501G--Rate Changes Relating to Federal Corporate Income Tax Rate for Interstate Natural Gas Pipelines, To Be Eliminated by the Final Rule in Docket
No. RM18-11-002
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Average burden
Respondents Responses per Total hour per Average cost Total burden Total cost ($)
respondent responses response per response hours
(1) (2) (1) * (2) = (4) (5) (1) * (4) = (1) * (5) =
(3) (6) (7)
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Interstate Natural Gas Pipelines With Cost-Based Rates
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FERC Form No. 501-G, One-time Report 129 1 * 129 * 9 hrs. * $756 * 1,161 * $97,524
(reduction) 19.........................
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Optional Response
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No Response (reduction)................. 51 0 0 0 0 0 0
Case for no change (reduction).......... 62 1 62 5 420 310 26,040
Limited Sec 4 filing (reduction) 20..... 15 1 15 6 504 90 7,560
General Sec. 4 filing (reduction) 21.... 1 1 1 22 512 42,968 512 42,968
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NGPA Section 311 and Hinshaw Pipelines With Cost-Based Rates
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NGPA rate filing (reduction) 23......... 24 15 1 15 24 2,015 360 30,225
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Total, To Be Eliminated by RM18-11- 25 144 .............. * 222 .............. .............. * 2,433 * 204,317
002................................
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* (reduction).
12. This final rule eliminates all information collection and
recordkeeping requirements associated with RM18-11-000. The removal of
the FERC-501G eliminates the estimated annual information collection
burden (2,433 hours) and cost ($204,317) associated with FERC-501G (OMB
Control No. 1902-0302).
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\19\ 18 CFR 260.402 (as revised).
\20\ 18 CFR 154.404 (as revised).
\21\ 18 CFR 154.312.
\22\ The estimate for hours is based on the estimated average
hours per response for the FERC-545 (OMB Control No. 1902-0154),
with general NGA section 4, 18 CFR 154.312 filings weighted at a
ratio of 20 to one.
\23\ 18 CFR 284.123(i) (as revised).
\24\ Estimate of number of respondents assumes that states will
act within one year to reduce NGPA section 311 and Hinshaw pipeline
rates to reflect the Tax Cuts and Jobs Act.
\25\ Number of unique respondents = (One-time Report) + (NGPA
rate filing).
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B. Environmental Analysis
13. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement
[[Page 29506]]
for any action that may have a significant adverse effect on the human
environment.\26\ The actions taken here fall within categorical
exclusions in the Commission's regulations for rules regarding
information gathering, analysis, and dissemination.\27\ Therefore, an
environmental review is unnecessary and has not been prepared in this
rulemaking.
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\26\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats.
& Regs. ] 30,783 (1987) (cross-referenced at 41 FERC ] 61,284).
\27\ See 18 CFR 380.4(a)(2)(ii) and (a)(5).
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C. Regulatory Flexibility Act
14. The Regulatory Flexibility Act of 1980 (RFA) \28\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The RFA mandates consideration of regulatory alternatives that
accomplish the stated objectives of a rulemaking while minimizing any
significant economic impact on a substantial number of small entities.
In lieu of preparing a regulatory flexibility analysis, an agency may
certify that a final rule will not have a significant economic impact
on a substantial number of small entities.\29\ In Order No. 849, the
Commission found that the institution of the new regulations would not
have a significant impact on a substantial number of small
entities.\30\ Most of the natural gas pipelines regulated by the
Commission do not fall within the RFA's definition of a small
entity.\31\ For the same reasons, removing these regulations will not
have a significant impact on a substantial number of small entities.
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\28\ 5 U.S.C. 601-612.
\29\ 5 U.S.C. 605(b).
\30\ Order No. 849, 164 FERC ] 61,031 at P 296.
\31\ In Order No. 849, the Commission determined 3.9% of the
total potential NGA respondents and 5.1% of the total NGPA section
311 and Hinshaw pipelines could be considered a small entity.
Eliminating the filing requirement would eliminate any burden and
cost from FERC-501G for small and large entities.
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D. Document Availability
15. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (<a href="http://www.ferc.gov">http://www.ferc.gov</a>). At
this time, the Commission has suspended access to the Commission's
Public Reference Room due to the President's March 13, 2020
proclamation declaring a National Emergency concerning the Novel
Coronavirus Disease (COVID-19).
16. From the Commission's Home Page on the internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
17. User assistance is available for eLibrary and the Commission's
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at
<a href="/cdn-cgi/l/email-protection#197f7c6b7a76777570777c6a6c6969766b6d597f7c6b7a377e766f"><span class="__cf_email__" data-cfemail="395f5c4b5a56575550575c4a4c4949564b4d795f5c4b5a175e564f">[email protected]</span></a>, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
<a href="/cdn-cgi/l/email-protection#f18184939d9892df8394979483949f9294839e9e9cb197948392df969e87"><span class="__cf_email__" data-cfemail="64141106080d074a1601020116010a0701160b0b0924020116074a030b12">[email protected]</span></a>.
E. Effective Date and Congressional Notification
18. These regulations are effective August 2, 2021. This rule does
not alter the substantive rights or interests of any interested
persons, and it merely removes certain outdated and nonessential
natural gas regulations from the Commission's body of regulations on a
prospective basis. Therefore, prior notice and comment under section 4
of the Administrative Procedure Act (APA) \32\ are unnecessary. The
Commission has determined that this rule is not a ``major rule'' as
defined in section 351 of the Small Business Regulatory Enforcement
Fairness Act of 1996.
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\32\ 5 U.S.C. 553(b).
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List of Subjects
18 CFR Part 154
Natural gas, Pipelines, Reporting and recordkeeping requirements.
18 CFR Part 260
Natural gas, Reporting and recordkeeping requirements.
18 CFR Part 284
Continental shelf, Natural gas, Reporting and recordkeeping
requirements.
By the Commission.
Issued: May 20, 2021.
Kimberly D. Bose,
Secretary.
In consideration of the foregoing, the Commission amends parts 154,
260, & 284, chapter I, title 18, Code of Federal Regulations, as
follows:
PART 154--RATE SCHEDULES AND TARIFFS
0
1. The authority citation for part 154 continues to read as follows:
Authority: 15 U.S.C. 717-717w; 31 U.S.C. 9701; 42 U.S.C. 7102-
7352.
Sec. 154.404 [Removed]
0
2. Remove Sec. 154.404.
PART 260--STATEMENTS AND REPORTS (SCHEDULES)
0
3. The authority citation for part 260 continues to read as follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
Sec. 260.402 [Removed]
0
4. Remove Sec. 260.402.
PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES
0
5. The authority citation for part 284 continues to read as follows:
Authority: 15 U.S.C. 717-717z, 3301-3432; 42 U.S.C. 7101-7352;
43 U.S.C. 1331-1356.
Sec. 284.123 [Amended]
0
6. In Sec. 284.123, remove paragraph (i).
[FR Doc. 2021-11353 Filed 6-1-21; 8:45 am]
BILLING CODE 6717-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.