Home/Federal/Federal Register/2023-23590

Notice2023-23590

Project-Area Wage Standards in the Labor Cost Component of Cost-of-Service Rates

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

October 27, 2023

Issuing agencies

Energy DepartmentFederal Energy Regulatory Commission

Abstract

The Federal Energy Regulatory Commission (Commission) proposes to clarify how the Commission will treat the use of project-area wage standards in calculating the labor cost component of jurisdictional cost-of-service rates.

Full Text

<html>
<head>
<title>Federal Register, Volume 88 Issue 207 (Friday, October 27, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 207 (Friday, October 27, 2023)]
[Notices]
[Pages 73833-73836]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-23590]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. PL24-1-000]

Project-Area Wage Standards in the Labor Cost Component of Cost-
of-Service Rates

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Proposed policy statement.

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

SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes
to clarify how the Commission will treat the use of project-area wage
standards in calculating the labor cost component of jurisdictional
cost-of-service rates.

DATES: Comments on this proposed policy statement are due on or before
December 26, 2023.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways. Electronic filing through <a href="https://www.ferc.gov">https://www.ferc.gov</a>, is
preferred.
<bullet> Electronic Filing: Documents must be filed in acceptable
native applications and print-to-PDF, but not in scanned or picture
format.
<bullet> For those unable to file electronically, comments may be
filed by USPS mail or by hand (including courier) delivery.
[cir] Mail via U.S. Postal Service Only: Addressed to: Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street, NE, Washington, DC 20426.
[cir] Hand (including courier) delivery: Deliver to: Federal Energy
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
The Comment Procedures Section of this document contains more
detailed filing procedures.

FOR FURTHER INFORMATION CONTACT:
Heidi Nielsen (Legal Information), Office of the General Counsel,
(202) 502-8435, <a href="/cdn-cgi/l/email-protection#f8909d919c91d696919d948b9d96b89e9d8a9bd69f978e">[email&#160;protected]</a>.
Adam Pollock (Technical Information), Office of Energy Market
Regulation, (202) 502-8458, <a href="/cdn-cgi/l/email-protection#e78683868ac997888b8b88848ca781829584c9808891">[email&#160;protected]</a>.
James Sarikas (Technical Information), Office of Energy Market
Regulation, (202) 502-6831, <a href="/cdn-cgi/l/email-protection#f298939f9781dc8193809b999381b294978091dc959d84">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Proposal

1. In this proposed policy statement, we clarify how the Commission
will treat the use of project-area wage standards in calculating the
labor cost component of cost-of-service rates, including under Natural
Gas Act (NGA) sections 4, 5, and 7, 15 U.S.C. 717c-d, 717f; the
Interstate Commerce Act (ICA), 49 U.S.C. app. 1(5)(a); and Federal
Power Act (FPA) sections 205 and 206, 16 U.S.C. 824d-e.\1\
---------------------------------------------------------------------------

\1\ While most interstate oil pipelines have market-based or
indexed rates, some jurisdictional pipelines have cost-of-service
rates on file with the Commission.
---------------------------------------------------------------------------

2. Project-area wage standards are the prevailing wages set by
labor markets in the locale where the associated project work (e.g.,
construction, capital repairs, decommissioning) is performed. They can
be found in data sources that indicate the basic hourly wage rates and
fringe benefit rates for labor, direct employees and/or contract
personnel that prevail in a predetermined geographic area. For example,
under the Davis-Bacon Act, the U.S. Department of Labor issues
prevailing wage determinations based on periodic surveys of union and
non-union wages paid in a particular location, which serve as the
minimum wage that must be paid by contractors and subcontractors
performing under certain federally funded or assisted construction
contracts.\2\ A number of states have enacted their own prevailing wage
laws, sometimes referred to as ``Little Davis-Bacon'' laws.\3\
---------------------------------------------------------------------------

\2\ ``By requiring the payment of minimum prevailing wages,
Congress sought to `ensure that Government construction and
federally assisted construction would not be conducted at the
expense of depressing local wage standards.' '' Dep't of Labor,
Updating the Davis-Bacon & Related Acts Reguls., 88 FR 57526, 57526
(Aug. 23, 2023) (citing Determination of Wage Rates Under the Davis-
Bacon & Serv. Cont. Acts 5 Op. O.LC. 174, 176 (1981)) (Final Rule).
\3\ Dep't of Labor, Dollar Threshold Amount for Contract
Coverage under State Prevailing Wage Laws (Jan. 1, 2023), <a href="https://www.dol.gov/agencies/whd/state/prevailing-wages">https://www.dol.gov/agencies/whd/state/prevailing-wages</a>.

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

[[Page 73834]]

3. The Commission addressed the treatment of project-area wage
rates in the cost component of natural gas pipeline cost-of-service
rates in Opinion Nos. 510 and 524.\4\ In Opinion No. 510, the
Commission rejected a pipeline operator's proposal to use union-only
wage rates from a single proxy location to estimate the labor cost of
decommissioning its pipeline that spanned four states,\5\ finding that
the pipeline operator had not carried its burden under section 4 of the
NGA to show that it would use union labor and that, based on the
evidence in that proceeding, it was accordingly reasonable to estimate
labor costs using a ``blended'' mix of average union and non-union wage
rates in the general private construction industry in the states where
the pipeline was located, ``weighted'' by the length of pipe in each
state.\6\ The Commission subsequently applied the same approach in
Opinion No. 524, finding that the same operator had again failed to
present sufficient supporting evidence for its proposal to use union-
only wage rates in its estimate of decommissioning labor costs.\7\
---------------------------------------------------------------------------

\4\ Portland Nat. Gas Transmission Sys., Opinion No. 510, 134
FERC ] 61,129 (2011), reh'g in part, 142 FERC ] 61,198 (2013), reh'g
dismissed, 150 FERC ] 61,106 (2015); Portland Nat. Gas Transmission
Sys., Opinion No. 524, 142 FERC ] 61,197 (2013), reh'g denied, 150
FERC ] 61,107 (2015). Among other things, these proceedings involved
estimating the expected costs for future pipeline retirements,
specifically, determining the labor component for decommissioning
costs to be recovered by a pipeline operator, Portland Natural Gas
Transmission System.
\5\ Opinion No. 510, 134 FERC ] 61,129 at P 124.
\6\ Id.
\7\ Opinion No. 524, 142 FERC ] 61,197 at PP 162-64.
---------------------------------------------------------------------------

4. In this proposed policy statement, we clarify that those
decisions were based on the record evidence before the Commission in
those proceedings and do not reflect a heightened standard of review
with respect to project-area wage rates. Under this proposal,
jurisdictional entities may include wages consistent with project-area
wage standards in cost-of-service rates filed with the Commission where
the record supports that outcome, as discussed below.
5. Specifically, we propose that, when a Commission-jurisdictional
entity presents evidence that it: (1) pays project-area wage standards,
or (2) is contractually obligated to pay project-area wage standards,
or (3) commits via affidavit \8\ filed in the rate proceeding that it
will pay project-area wage standards, the Commission will presume,
absent contrary evidence, that such project-area wage standards are
just and reasonable for the relevant labor-cost component.\9\
Furthermore, we propose that the Commission will reject the inclusion
of labor wages consistent with project-area wage standards in cost-of-
service rates when the evidence demonstrates that the jurisdictional
entity has not paid or will not be paying labor wages consistent with
project-area wage standards.
---------------------------------------------------------------------------

\8\ We remind filers that all information submitted in cost-of-
service filings must be truthful and accurate, see 18 CFR
35.13(d)(6) (``A utility shall include in its filing an attestation
. . . that . . . the cost of service statements and supporting data
submitted . . . are true, accurate, and current representations of
the utility's books, budgets, or other corporate documents.''),
154.308 (``The filing must include a statement . . . representing
that the cost statements, supporting data, and workpapers, that
purport to reflect the books of the company do, in fact, set forth
the results shown by such books.''), 341.1(b)(1) (``The signature on
a filing constitutes a certification that the contents are true to
the best knowledge and belief of the signer . . . .''), and that
failure to meet this requirement may result in a referral to the
Office of Enforcement for further investigation and action, as
appropriate.
\9\ Consistent with 48 CFR 22.401, this proposed policy
statement applies to employee or contract labor whose duties are
primarily manual or physical in nature, as distinguished from mental
or managerial, and does not apply to employees or contractors whose
duties are primarily executive, supervisory, administrative, or
clerical. For purposes of this proposed policy statement, ``wages''
means the basic hourly pay rate including fringe benefits, as more
fully defined in 48 CFR 22.401.
---------------------------------------------------------------------------

6. We propose that the Commission will accept as sources of
project-area wage standards: (1) Davis-Bacon Act local prevailing wage
determinations; \10\ (2) state prevailing wage determinations; \11\ (3)
applicable collective-bargaining agreements or Project Labor
Agreements; \12\ or (4) other evidence demonstrating the prevailing
wages paid in the relevant locale(s), such as an industry-accepted
database used in construction cost estimates. The Commission seeks
comment on the appropriateness of the four proposed sources of project-
area wage standards. In particular, we seek comment on the
appropriateness of using industry databases with construction cost
estimates as a source of project-area wage standards as well as whether
any project-area wage standards might not be captured in the first
three listed categories.
---------------------------------------------------------------------------

\10\ Pursuant to the Davis-Bacon Act, as amended and codified at
40 U.S.C. 3141(2), the term ``prevailing wages'' includes the basic
hourly rate of pay and fringe benefits, as determined by the
Department of Labor. See Final Rule, 88 FR at 57526 (citing 40
U.S.C. 3142, 3145), 57531, 57546, 57699, 57722-724.
\11\ The applicable state prevailing wage determination should
meet or exceed the Davis-Bacon Act local prevailing wage
determinations.
\12\ Project Labor Agreements are agreements between building
trade unions and contractors. They govern terms and conditions of
employment (including wage-related issues) on a construction project
for all craft workers--union and nonunion. Dep't of Labor, Project
Labor Agreement Res. Guide, Project Labor, Cmty. Workforce, & Cmty.
Benefits Agreements Res. Guide, ] 1, <a href="https://www.dol.gov/general/good-jobs/project-labor-agreement-resource-guide">https://www.dol.gov/general/good-jobs/project-labor-agreement-resource-guide</a>.
---------------------------------------------------------------------------

7. We further propose that jurisdictional entities seeking to
include project-area wage standards in cost-of-service rates should
maintain and preserve records, including books of account or records
for work performed by employees, contractors or subcontractors,
sufficient to demonstrate that claimed project-area wages were actually
paid.\13\
---------------------------------------------------------------------------

\13\ See supra note 8.
---------------------------------------------------------------------------

II. Comment Procedures

8. The Commission invites comments on this proposed policy
statement on or before December 26, 2023. Comments must refer to Docket
No. PL24-1-000 and must include the commenter's name, the organization
they represent, if applicable, and their address in their comments. All
comments will be placed in the Commission's public files and may be
viewed, printed, or downloaded remotely as described in the Document
Availability section below. Commenters on this proposal are not
required to serve copies of their comments on other commenters.
9. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's website at <a href="http://www.ferc.gov">http://www.ferc.gov</a>. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software must be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
10. Commenters that are not able to file comments electronically
may file an original of their comment by USPS mail or by courier-or
other delivery services. For submission sent via USPS only, filings
should be mailed to: Federal Energy Regulatory Commission, Office of
the Secretary, 888 First Street NE, Washington, DC 20426. Submission of
filings other than by USPS should be delivered to: Federal Energy
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.

III. Information Collection Statement

11. The Paperwork Reduction Act and the implementing regulations of
the Office of Management and Budget (OMB) \14\ require approval of
certain information collection requirements imposed by an agency. Upon
approval

[[Page 73835]]

of a collection of information, OMB will assign an OMB Control Number
and an expiration date. Respondents subject to the filing requirements
will not be penalized for failing to respond to the collection of
information unless the collection of information displays a valid OMB
control number.
---------------------------------------------------------------------------

\14\ 5 CFR 1320.
---------------------------------------------------------------------------

12. This proposed policy statement clarifies how the Commission
will treat the use of project-area wage standards in calculating the
labor cost component of jurisdictional cost-of-service rates filed by a
natural-gas company, interstate oil pipeline, or public utility,
pursuant to NGA sections 4, 5 and 7, 15 U.S.C. 717c-d, 717f; ICA, 49
U.S.C. app. 1(5)(a); and FPA sections 205 and 206, 16 U.S.C. 824d-e,
respectively.
13. The Commission is submitting these reporting requirements to
OMB for its review and approval under section 3507(d) of the Paperwork
Reduction Act. Comments are solicited on whether the information will
have practical utility, the accuracy of provided burden estimates, ways
to enhance the quality, utility, and clarity of the information to be
collected, and any suggested methods for minimizing the respondent's
burden, including the use of automated information techniques.
14. Please submit your comments (identified by Docket No. PL24-1-
000) by either of the following methods: (1) eFiling at Commission's
website: <a href="https://www.ferc.gov/docs-filing/efiling.asp">https://www.ferc.gov/docs-filing/efiling.asp</a> or (2) Mail/Hand
Delivery/Courier: Federal Energy Regulatory Commission, Secretary of
the Commission, at Health and Human Services, 12225 Wilkins Avenue,
Rockville, Maryland 20852. All submissions must be formatted and filed
in accordance with submission guidelines at: <a href="https://www.ferc.gov/help/submission-guide.asp">https://www.ferc.gov/help/submission-guide.asp</a>. For user assistance, contact FERC Online Support
by email at <a href="/cdn-cgi/l/email-protection#63050611000c0d0f0a0d06101613130c111723050611004d040c15">[email&#160;protected]</a>, or by phone at: (866) 208-3676
(toll-free).
15. Collection Nos., Titles and OMB Control Nos.: FERC-516
(Electric Rate Schedules and Tariff Filings, OMB Control No. 1902-
0096); FERC-537 (Gas Pipeline Certificates: Construction, Acquisition
and Abandonment; OMB Control No. 1902-0060); FERC-538 (Gas Pipeline
Certificates: Section 7(a) Mandatory Initial Service, OMB Control No.
1902-0061); FERC-545 (Gas Pipeline Rates: Rate Change (Non-formal), OMB
Control No. 1902-0154); FERC-546 (Certificated Rate Filings: Gas
Pipeline Rates, OMB Control No. 1902-0155); FERC-550 (Oil Pipeline
Rates--Tariff Filings and Depreciation Studies, OMB Control No. 1902-
0089); FERC-555 (Preservation of Records for Public Utilities and
Licensees, Natural Gas and Oil Pipeline Companies, OMB Control No.
1902-0098).
16. Action: Proposed modifications to collections of information in
accordance with the proposed policy statement.
17. Respondents: The estimate of the number of respondents that may
elect to use project-area wage standards in calculating the labor cost
component of cost-of-service rates is based upon the existing burden
inventory currently approved by OMB for filing rates cases,
depreciation studies and certificate filings, include initial rates or
seeking approval to charge existing rates for natural gas companies,
public utilities and oil pipelines. This burden estimate is based upon
one-third of the filings electing to include an additional burden by
the filer to incorporate labor costs based upon paying wages that at
minimum meet project-area wage standards.
18. Frequency of Information Collection: Utilities, when including
elements in rates reflecting future capital costs, may elect to make
the above showings in support of wages that are at or above project-
area wage standards. Such proceedings may include but are not limited
to certificates for new natural gas pipelines, general natural gas
pipeline and electric utility rate cases, proposed new or modified
depreciation rates, and proposed inclusion of asset retirement
obligation in rates. In total, utilities may make such a showing one
time per year.
19. Necessity of Information: The information would be necessary
for the utility to receive the presumption that wages for capital
projects that are at or above project-area wage standards are not just
and reasonable.
20. Internal Review: The Commission has reviewed the proposed
changes and has determined that such changes are necessary. These
requirements conform to the Commission's need for efficient information
collection, communication, and management within the energy industry in
support of the Commission's ensuring just and reasonable rates. The
Commission has specific, objective support for the burden estimates
associated with the information collection requirements. However, we
request comments with supporting background information on the
estimates for burden and cost.
---------------------------------------------------------------------------

\15\ ``Burden'' is the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a Federal agency. For
further explanation of what is included in the estimated burden,
refer to 5 CFR 1320.3.
\16\ Commission staff estimates that the respondents' skill set
(and wages and benefits) for this docket are comparable to those of
Commission employees. Based on the Commission's Fiscal Year 2023
average cost of $199,867/year (for wages plus benefits, for one
full-time employee), $96.00/hour is used.
---------------------------------------------------------------------------

21. The Commission estimates the effect of the proposed policy
statement on burden \15\ and cost \16\ as follows:

[[Page 73836]]

Estimates of the Effects Due to the Proposed Policy Statement in Docket No. PL24-1-000
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Total
C. Annual number of F. Total annual hr. G. Cost per
A. Information collection B. Number of number of responses E. Average burden hrs. burdens & total annual respondent
respondents responses per (column B x & cost per response cost (column D x column (column F /
respondent column C) E) column B)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FERC-1006 \17\
--------------------------------------------------------------------------------------------------------------------------------------------------------
FERC-537............................. 22 1 22 15 hrs. $1,440.......... 330 hrs. $31,680....... $1,440
FERC 516............................. 6 1 6 15 hrs. $1,440.......... 90 hrs. $8,640......... 1,440
FERC 545............................. 11 1 11 15 hrs. $1,440.......... 165 hrs. $15,840....... 1,440
FERC 555............................. 170 1 170 1 hr. $96............... 170 hrs. $16,320....... 96
--------------------------------------------------------------------------------------------------------------------------------------------------------
Other Affected Collections
--------------------------------------------------------------------------------------------------------------------------------------------------------
FERC-538............................. 1 1 1 15 hrs. $1,440.......... 15 hrs. $1,440......... 1,440
FERC-546............................. 16 1 16 15 hrs. $1,440.......... 240 hrs. $23,040....... 1,440
FERC-550............................. 7 1 7 15 hrs. $1,440.......... 105 hrs. $10,080....... 1,440
------------------------------------------------------------------------------------------------------------------
Total Effect of the Proposed .............. .............. 233 ........................ 1,115 hrs. $107,040.... ..............
Policy Statement.
--------------------------------------------------------------------------------------------------------------------------------------------------------

IV. Document Availability

22. 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>).
---------------------------------------------------------------------------

\17\ The FERC 1006 is a new temporary collection number that
includes the burden changes due to the proposed policy statement in
the FERC-545, -537, -516, and -555, which are pending at OMB for
unrelated purposes.
---------------------------------------------------------------------------

23. 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.
24. User assistance is available for eLibrary and the Commission's
website during normal business hours from the Commission's Online
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at
<a href="/cdn-cgi/l/email-protection#0d6b687f6e6263616463687e787d7d627f794d6b687f6e236a627b">[email&#160;protected]</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#9eeeebfcf2f7fdb0ecfbf8fbecfbf0fdfbecf1f1f3def8fbecfdb0f9f1e8">[email&#160;protected]</a>.

By direction of the Commission.
Issued: October 19, 2023.
Kimberly D. Bose,
Secretary.
[FR Doc. 2023-23590 Filed 10-26-23; 8:45 am]
BILLING CODE 6717-01-P

</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on October 27, 2023.

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.