Blanket Certificate Cost Limitations

DEPARTMENT OF ENERGY <SUBAGY>Federal Energy Regulatory Commission</SUBAGY> <CFR>18 CFR Part 157</CFR> <DEPDOC>[Docket No. RM25-12-000]</DEPDOC> <SUBJECT>Blanket Certificate Cost Limitations</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Energy Regulatory Commission, DOE. <HD SOURCE="HED">ACTION:</HD> Notice of inquiry. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Energy Regulatory Commission (Commission) seeks information and stakeholder perspectives to help the Commission explore whether, and if so how, to revise its Part 157, Subpart F blanket certificate regulations to adjust the cost limitations for projects that interstate natural gas pipelines may construct without a case-specific authorization order. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments are due August 25, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments, identified by docket number, may be filed in the following ways. Electronic filing through <E T="03">http://www.ferc.gov,</E> is preferred. • <E T="03">Electronic Filing:</E> Documents must be filed in acceptable native applications and print-to-PDF, but not in scanned or picture format. • For those unable to file electronically, comments may be filed by USPS mail or by hand (including courier) delivery. ○ <E T="03">Mail via U.S. Postal Service Only:</E> Addressed to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE, Washington, DC 20426. ○ <E T="03">Hand (including courier) delivery:</E> Deliver to: Federal Energy Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852. The Comment Procedures Section of this document contains more detailed filing procedures. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> <FP SOURCE="FP-1">Danielle Elefritz (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502-8767</FP> <FP SOURCE="FP-1">Nicole Huang (Technical Information), Office of Energy Projects, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502-8410</FP> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> In this notice of inquiry, the Commission seeks information and stakeholder perspectives to help the Commission explore whether, and if so how, it should revise its Part 157, Subpart F blanket certificate regulations  <SU>1</SU> <FTREF/> to adjust the cost limitations for projects that interstate natural gas pipelines may construct without a case-specific authorization order. <FTNT> <SU>1</SU>  18 CFR pt. 157, subpt. F. </FTNT> <HD SOURCE="HD1">I. Background</HD> 1. Interstate pipelines that hold a certificate of public convenience and necessity pursuant to section 7(c) of the Natural Gas Act (NGA)  <SU>2</SU> <FTREF/> may obtain a blanket certificate under Part 157, Subpart F of the Commission's regulations to undertake, without a case-specific authorization order, certain activities automatically and certain other activities after prior notice. Currently, blanket certificate activities are limited to a maximum cost of $14,500,000 per project undertaken without prior notice (also referred to as automatic authorization projects) and $41,100,000 per project undertaken subject to prior notice. <SU>3</SU> <FTREF/> Additionally, a certificate holder may undertake certain natural gas storage activities without prior notice for the testing or development of underground storage reservoirs if the total cost during the calendar year does not exceed $7,900,000. <SU>4</SU> <FTREF/> The cost limitations are adjusted each year to reflect the “GDP implicit price deflator” published by the Department of Commerce for the previous calendar year. <SU>5</SU> <FTREF/> <FTNT> <SU>2</SU>  15 U.S.C. 717f(c). </FTNT> <FTNT> <SU>3</SU>  18 CFR 157.208(d). </FTNT> <FTNT> <SU>4</SU>   <E T="03">Id.</E> § 157.215(a)(5). </FTNT> <FTNT> <SU>5</SU>   <E T="03">Id.</E> § 157.208(d). </FTNT> 2. The blanket certificate program was designed “provide streamlined procedures which increase flexibility and reduce regulatory burden” for a generic class of routine activities with constraints for consistency with the Commission's statutory obligations under the NGA and environmental statutes. <SU>6</SU> <FTREF/> In 1982, in instituting the blanket certificate program, the Commission explained the new program as follows: <FTNT> <SU>6</SU>   <E T="03">Interstate Pipeline Certificates for Routine Transactions,</E> Order No. 234, 47 FR 24254, at 24256, 24263 (June 4, 1982), FERC Stats. & Regs. ¶ 30,368, at 30,201 (1982) (cross-referenced at 19 FERC ¶ 61,216); <E T="03">see also Revisions to the Blanket Certificate Reguls. & Clarification Regarding Rates,</E> Order No. 686, 71 FR 63680 (Oct. 31, 2006), 117 FERC ¶ 61,074, at P 7 (2006) (“The blanket certificate program was designed to provide an administratively efficient means to authorize a generic class of routine activities, without subjecting each minor project to a full, case-specific NGA section 7 certificate proceeding.”). </FTNT> <EXTRACT> [T]he final regulations divide the various actions that the Commission certificates into several categories. The first category applies to certain activities performed by interstate pipelines that either have relatively little impact on ratepayers, or little effect on pipeline operations. This first category also includes minor investments in facilities which are so well understood as an established industry practice that little scrutiny is required to determine their compatibility with the public convenience and necessity. The second category of activities provides for a notice and protest procedure and comprises certain activities in which various interested parties might have a concern. In such cases there is a need to provide an opportunity for a greater degree of review and to provide for possible adjudication of controversial aspects. Activities not authorized under the blanket certificate are those activities which may have a major potential impact on ratepayers, or which propose such important considerations that close scrutiny and case-specific deliberation by the Commission is warranted prior to the issuance of a certificate. <SU>7</SU> <FTREF/> <FTNT> <SU>7</SU>  Order No. 234, FERC Stats. & Regs. ¶ 30,368 at 30,200. </FTNT> </EXTRACT> 3. Since the 1982 rulemaking, the Commission has relied on the Department of Commerce's gross domestic product (GDP) implicit price deflator as a measure to make annual adjustments to the blanket cost limits. <SU>8</SU> <FTREF/> In that rulemaking, the Commission declined to base annual adjustments on the Handy-Whitman Index, an alternative price tracker that is focused more narrowly on gas utility construction costs, finding the GDP implicit price deflator to be preferable to “an index based on a private collection of data not easily susceptible to governmental verification.”  <SU>9</SU> <FTREF/> In 2006, the Commission revised its regulations to increase the cost limitations above the then-inflation adjusted cost cap to address concerns that construction costs had risen faster than the overall rate of inflation. <SU>10</SU> <FTREF/> To do so, the Commission compared the rate of cost increase derived from the Handy-Whitman Index to that resulting from the GDP implicit price deflator and raised the cost limitations on a one-time basis from $8,200,000 to $9,600,000 for automatic authorization projects and from $22,700,000 to $27,400,000 for prior notice projects to account for the discrepancy between the two different inflation indicators. <SU>11</SU> <FTREF/> The Commission did not otherwise revise its cost limitation regulations, thus the annual inflation adjustment is based on the Department of Commerce's GDP implicit price deflator. <FTNT> <SU>8</SU>   <E T="03">Id.</E> at 30,206. </FTNT> <FTNT> <SU>9</SU>   <E T="03">Id.</E> </FTNT> <FTNT> <SU>10</SU>  Order No. 686, 117 FERC ¶ 61,074 at P 33. The 2006 rulemaking also expanded the scope of blanket certificate activities to include certain mainline, liquified natural gas and synthetic gas, and storage facilities, subject to the prior notice provisions of our regulations regardless of their estimated costs to protect from adverse impacts to existing customers' rates and services and environmental, safety, and security concerns. <E T="03">Id.</E> P 11. </FTNT> <FTNT> <SU>11</SU>   <E T="03">Id.</E> P 34. </FTNT> 4. Services using capacity constructed under blanket certificate authorization are provided at a certificate holder's existing Part 284 rates, and blanket project costs are afforded the presumption that they will qualify for rolled-in rate treatment in a future NGA section 4 proceeding. The 1982 rulemaking explained that the rates that would be charged for service over blanket facilities would already have been approved in a previous rate proceeding. <SU>12</SU> <FTREF/> The Commission has applied a presumption in favor of rolled-in rate treatment for the costs of blanket certificate projects because of the expected <E T="03">de minimis</E> impact on a pipeline system's overall rates, <E T="03">i.e.,</E> the expectation that blanket certificate projects will not be subsidized by existing customers. <SU>13</SU> <FTREF/> The Commission specifically adopted this presumption in its 1995 Pricing Policy Statement, <SU>14</SU> <FTREF/> and continued the approach in its 1999 Certificate Policy Statement. <SU>15</SU> <FTREF/> In the 2006 rulemaking, which in part raised the bases from which the cost ceilings for blanket certificate projects are increased on an annual basis to reflect inflation, the Commission declined to allow project sponsors to request incremental ra ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 20k characters. 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