81 FR 78261 - Pipeline Safety: Underground Natural Gas Storage Facility User Fee

DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials Safety Administration

Federal Register Volume 81, Issue 215 (November 7, 2016)

This notice is to advise all underground natural gas storage facility operators of a proposed PHMSA pipeline user fee assessment and rate structure.

[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)]
[Notices]
[Pages 78261-78263]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26854]


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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2016-0092]


Pipeline Safety: Underground Natural Gas Storage Facility User 
Fee

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 
Department of Transportation (DOT).

ACTION: Notice of agency action and request for comment.

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SUMMARY: This notice is to advise all underground natural gas storage 
facility operators of a proposed PHMSA pipeline user fee assessment and 
rate structure.

FOR FURTHER INFORMATION CONTACT: Roger Little by telephone at 202-366-
4569, by fax at 202-366-4566, by email at [email protected], or by 
mail at U.S. Department of Transportation, PHMSA, 1200 New Jersey 
Avenue SE., PHP-2, Washington, DC 20590-0001.
    Comments: PHMSA invites interested persons to comment on the 
underground natural gas storage facility user fee assessment procedures 
described in this notice by January 6, 2017. Comments should reference 
Docket No. PHMSA-2016-0092. Comments may be submitted in the following 
ways:
     E-Gov Web site: http://www.regulations.gov. This site 
allows the public to enter comments on any Federal Register notice 
issued by any agency. Follow the instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management System, U.S. Department of 
Transportation

[[Page 78262]]

(DOT), 1200 New Jersey Avenue SE., Room W12-140, Washington, DC 20590.
    Hand Delivery: DOT Docket Management System, Room W12-140, on the 
ground floor of the West Building, 1200 New Jersey Avenue SE., 
Washington, DC, between 9:00 a.m. and 5:00 p.m. Monday through Friday, 
except federal holidays.
    Instructions: Identify the docket number (PHMSA-2016-0092) at the 
beginning of your comments. If you submit your comments by mail, submit 
two copies. If you wish to receive confirmation that PHMSA has received 
your comments, include a self-addressed stamped postcard. Internet 
users may submit comments at http://www.regulations.gov.

    Note: Comments will be posted without changes or edits to http://www.regulations.gov, including any personal information provided. 
Please see the Privacy Act Statement below for additional 
information.

Privacy Act Statement

    Anyone may search the electronic form of all comments received for 
any of our dockets. You may review the DOT's complete Privacy Act 
Statement in the Federal Register published April 11, 2000 (65 FR 
19476), or visit http://dms.dot.gov.

SUPPLEMENTARY INFORMATION: 

Background

    The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) 
(Pub. L. 99-272, sec. 7005), codified at Section 60301 of Title 49, 
United States Code, authorizes the assessment and collection of user 
fees to fund the pipeline safety activities conducted under Chapter 601 
of Title 49. COBRA requires that the Secretary of Transportation 
establish a schedule of fees for pipeline usage, bearing a reasonable 
relationship to miles of pipeline, volume-miles, revenues, or an 
appropriate combination thereof. In particular, the Secretary must take 
into account the allocation of departmental resources in establishing 
the schedule.\1\ In accordance with COBRA, PHMSA also assesses user 
fees on operators of liquefied natural gas (LNG) facilities as defined 
in 49 CFR part 193.
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    \1\ Pipeline user fee assessments under COBRA were upheld by the 
U.S. Supreme Court in Skinner v. Mid-America Pipeline Co., 490 U.S. 
212 (1989).
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    On June 22, 2016, President Obama signed into law the Protecting 
our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (Pub. 
L. 114-183) (PIPES Act of 2016). Section 12 of the PIPES Act of 2016 
mandates PHMSA to issue regulations for underground natural gas storage 
facilities, impose user fees on operators of these facilities, and 
prescribe procedures to collect those fees. Section 2 of the PIPES Act 
of 2016 authorizes $8 million per year to be appropriated from those 
fees for each of fiscal years 2017-2019 for the newly established 
Underground Natural Gas Storage Facility Safety Account in the Pipeline 
Safety Fund. PHMSA is prohibited from collecting a user fee unless the 
expenditure of such fee is provided in advance in an appropriations 
act. If Congress appropriates funds to this account for fiscal years 
2017-2019, PHMSA will collect these fees from the operators of the 
facilities.
    According to the Energy Information Agency (EIA), there are 400 
interstate and intrastate underground natural gas storage facilities 
currently in operation in the United States, with more than four 
trillion cubic feet of natural gas working capacity. EIA data is 
collected on form EIA-191, Field Level Storage Data (Annual), and can 
be accessed from the Related Links section on http://www.eia.gov/naturalgas/storagecapacity/. Three hundred twenty-six of those 
facilities store natural gas in depleted hydrocarbon reservoirs, while 
31 facilities store natural gas in salt caverns and 43 store it in 
depleted aquifers. Of the 400 underground natural gas storage 
facilities in the U.S., approximately half (197) are interstate 
facilities.
    PHMSA is currently developing an Interim Final Rule (IFR) that will 
fulfill the requirement in Section 12 of the PIPES Act of 2016 to 
establish minimum Federal safety standards for underground natural gas 
storage facilities. The Agency expects this IFR will be issued later 
this year, but PHMSA has already been preparing to assume regulatory 
oversight of these facilities. PHMSA is designing a training program 
for both Federal and State inspectors to enable thorough and effective 
oversight of all underground storage facilities. Inspection protocols 
are being developed and will be made publicly available. The protocols 
will inform all stakeholders of PHMSA's expectations for demonstrating 
compliance with the minimum safety regulations. PHMSA also plans to 
deploy Web sites with frequently asked questions and additional 
guidance on the safe operation of underground natural gas storage 
facilities.
    Once new regulations are in place, PHMSA will directly regulate 
interstate facilities and will provide grants to State agencies that 
are or become certified to regulate intrastate facilities. If no State 
agency is certified in a given state, PHMSA will also directly regulate 
any intrastate facilities. While the surface piping at underground gas 
storage facilities is currently subject to the 49 CFR part 192 
regulations, extending Federal regulation to the wells and well bore 
tubing connecting the surface with the underground reservoirs is a 
regulatory activity not previously conducted by PHMSA that will involve 
substantial employment of agency resources. This will include, among 
other things, conducting field inspections of facility operations 
including reviewing operating, maintenance, integrity and emergency 
plans and procedures, making compliance determinations and conducting 
enforcement actions, and accident investigations. PHMSA estimates $2 
million of the potential appropriation would fund the preparations 
mentioned above and direct PHMSA inspection and enforcement. The 
remaining $6 million of the proposed appropriation would fund grants to 
State agencies certified by PHMSA to regulate intrastate facilities.
    PHMSA invites comments on the following proposed approach to 
determining the user fee assessment for underground natural gas storage 
facility operators. This is a tiered approach that is similar to the 
liquefied natural gas (LNG) plant user fee rate structure, which was 
modified for FY 2015 billing. The LNG user fee rate structure uses the 
storage capacity, in barrels of LNG, as the basis for the rate 
structure. The storage capacity for each operator is determined and 
operators are placed in tiers. Each tier represents a greater storage 
capacity and a higher user fee obligation. The storage capacity of an 
underground natural gas storage facility is referred to as the working 
gas capacity. PHMSA proposes to use the working gas capacity, in 
million standard cubic feet, for each operator, and a tiered approach 
to establish the underground natural gas storage facility user fee 
structure. The tiered approach places a larger portion of the user fee 
assessment on operators of larger facilities. PHMSA also considered 
using the number of active wells per facility as the basis for the 
tiers as it would also be a reasonable indicator of the expected 
regulatory efforts needed. PHMSA has not found a publicly available 
data source for the number of active wells at each facility, but may 
reassess the user fee rate structure in the future if this or other 
methods become feasible and are shown to appropriately reflect the 
allocation of departmental resources to these regulatory activities.
    In the spring of 2017, PHMSA will use calendar year 2015 data from 
the

[[Page 78263]]

EIA Web site to develop the underground natural gas storage facility 
user fee rate structure. When PHMSA promulgates regulations for 
operators of underground natural gas storage facilities, we plan to 
include the collection of annual reports to incorporate both the 
capacity and number of wells per facility in the annual report. If 
PHMSA were to collect data directly from the operators, PHMSA would 
discontinue the use of EIA data.
    PHMSA proposes the following steps for developing the user fee rate 
structure. PHMSA will sum the working gas capacity for active fields 
for each operator. The operator working gas capacity values will be 
parsed into 10 tiers. The lowest values will be in tier 1 and the 
highest values in tier 10. The minimum and maximum Working Gas 
Capacities for each tier will be selected to place an equal number of 
operators in each tier. Each tier will have a user fee assessment to be 
paid by each operator in the tier. Based on a preliminary analysis of 
the EIA data, the tiers and assessment per tier to collect $8,000,000 
would be:

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                      Tier                         Assessment per operator     Working gas capacity (Mcf) range
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1..............................................                      $12,308  Less than 1,550,000.
2..............................................                       24,615  More than 1,550,000 and less than
                                                                               3,500,000.
3..............................................                       30,769  More than 3,500,000 and less than
                                                                               6,500,000.
4..............................................                       36,923  More than 6,500,000 and less than
                                                                               11,500,000.
5..............................................                       49,231  More than 11,500,000 and less than
                                                                               15,500,000.
6..............................................                       61,538  More than 15,500,000 and less than
                                                                               22,000,000.
7..............................................                       73,846  More than 22,000,000 and less than
                                                                               30,000,000.
8..............................................                       80,000  More than 30,000,000 and less than
                                                                               50,000,000.
9..............................................                       92,308  More than 50,000,000 and less than
                                                                               85,000,000.
10.............................................                      142,857  More than 85,000,000.
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    If less than $8 million is appropriated to the Underground Natural 
Gas Storage Facility Safety Account, PHMSA will proportionally reduce 
the assessment for each tier to collect the appropriated amount. 
Regardless of the appropriated amount, PHMSA expects that 25% would 
fund PHMSA actions and 75% would fund grants to certified State 
agencies. PHMSA would continue this user fee assessment in each year 
funds are provided in advance in an appropriations act and these 
regulatory activities are carried out.

    Issued in Washington, DC, on November 2, 2016, under authority 
delegated in 49 CFR 1.97.
Alan K. Mayberry,
Acting Associate Administrator for Pipeline Safety.
[FR Doc. 2016-26854 Filed 11-4-16; 8:45 am]
 BILLING CODE 4910-60-P