82 FR 16874 - Pipeline Safety: Underground Natural Gas Storage Facility User Fee

DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials Safety Administration

Federal Register Volume 82, Issue 65 (April 6, 2017)

On November 7, 2016, PHMSA published a notice and request for comments in the Federal Register, titled ``Pipeline Safety: Underground Natural Gas Storage Facility User Fee'' (November 2016 Notice), seeking comments from underground natural gas storage facility operators on a proposed PHMSA pipeline user-fee assessment and rate structure. PHMSA received nine comments in the docket. We are publishing this notice of agency action to address the comments received and to announce the rate structure PHMSA will implement in fiscal year (FY) 2017 if Congress appropriates FY 2017 funds for the Pipeline Safety Fund's Underground Natural Gas Storage Facility Safety Account.

[Federal Register Volume 82, Number 65 (Thursday, April 6, 2017)]
[Notices]
[Pages 16874-16876]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-06803]


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

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), 
DOT.

ACTION: Notice of agency action.

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

SUMMARY: On November 7, 2016, PHMSA published a notice and request for 
comments in the Federal Register, titled ``Pipeline Safety: Underground 
Natural Gas Storage Facility User Fee'' (November 2016 Notice), seeking 
comments from underground natural gas storage facility operators on a 
proposed PHMSA pipeline user-fee assessment and rate structure. PHMSA 
received nine comments in the docket. We are publishing this notice of 
agency action to address the comments received and to announce the rate 
structure PHMSA will implement in fiscal year (FY) 2017 if Congress 
appropriates FY 2017 funds for the Pipeline Safety Fund's Underground 
Natural Gas Storage Facility Safety Account.

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.

SUPPLEMENTARY INFORMATION:

Background

    The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) 
(Pub. L. 99-272, sec. 7005), codified in part 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. 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 that PHMSA issue regulations for underground 
natural gas storage facilities, authorizes user fees on operators of 
these facilities, and directs PHMSA to prescribe procedures to collect 
those fees upon appropriation. Section 2 of the PIPES Act of 2016 
authorizes $8 million per year to be appropriated from those fees for 
each of FY 2017-2019 for the newly established Underground Natural Gas 
Storage Facility Safety Account in the Pipeline Safety Fund. 
Accordingly, if Congress appropriates funds to this account for FY 2017 
and beyond, PHMSA will collect user fees from the operators of the 
facilities.

Summary of Comments on the November 7, 2016 Notice

    The November 2016 Notice advised all underground natural gas 
storage facility operators of a proposed PHMSA pipeline user fee 
assessment and rate structure. 81 FR 78261. During the two-month 
response period, PHMSA received comments on the proposed underground 
natural gas storage user-fee billing methodology from nine commenters: 
David Reitz; the Louisiana Mid-Continent Oil and Gas Association; 
ENSTOR Operating Company; Consumers Energy; Cook Inlet Natural Gas 
Storage Alaska; Atmos Energy Corporation; Pacific Gas and Electric 
Company; the Texas Pipeline Association; and the Interstate Natural Gas 
Association of America (INGAA). The comments may be found at http://www.regulations.gov in Docket Number PHMSA-2016-0092. Consumers Energy, 
Atmos Energy Corporation, the Texas Pipeline Association, and INGAA 
submitted comments generally supporting the rate structure proposed by 
PHMSA in the November 2016 Notice. The remaining comments are 
summarized below with PHMSA's response:
    Comment: The Louisiana Mid-Continent Oil and Gas Association and 
Cook Inlet Natural Gas Storage Alaska questioned whether working-gas 
capacity was the most appropriate basis for the rate structure and 
expressed the view that using the number of wells at a facility may be 
a more suitable basis for the user-fee structure.
    Response: PHMSA agrees that the number of wells would be an 
appropriate basis for the user-fee rate structure. However, the PHMSA 
information collection results that will include the number of wells 
will not be available for fiscal year 2017 billing. PHMSA is aware of 
an underground natural gas storage facility survey recently conducted 
by the American Gas Association (AGA). The survey results, however, are 
not publicly available. PHMSA also has no way to assess the accuracy of 
the AGA survey results and in several cases they appear to be 
inconsistent with information reported to the Energy Information 
Administration (EIA). In the absence of available, reliable data for 
another suitable metric, PHMSA's only viable option for an equitable 
allocation of fees among facility operators in the first year is 
working-gas capacity. After PHMSA's annual reporting is in place and 
PHMSA collects information regarding the number of wells, well count is 
likely to become the basis of the user-fee rate structure for these 
facilities in future fiscal years.
    Comment: David Reitz suggested PHMSA base the tier determination on 
the working gas an operator has available to serve its customers rather 
than total working-gas capacity because doing so would facilitate a 
more precise determination of the appropriate tier in cases where 
storage fields are jointly owned.
    Response: PHMSA's source for working-gas capacity data is the EIA. 
PHMSA currently lacks data to determine to which customers gas in

[[Page 16875]]

storage is available. Therefore, PHMSA will need to use the total 
working-gas capacity of the field, but appreciates the comment and may 
revisit this issue in the future if a reliable data source becomes 
available that breaks working gas down by owner for jointly-owned 
storage fields and the joint owners are not able to apportion the fee 
among themselves.
    Comment: Pacific Gas and Electric Company recommended that PHMSA 
use the number of wells collected on the new PHMSA annual report as the 
basis for the user-fee rate structure.
    Response: As stated above, PHMSA agrees that the number of wells 
would be an appropriate basis for the fee structure. With respect to FY 
2017, however, PHMSA does not expect to collect annual report data from 
facility operators before the FY 2017 billing.
    Comment: The Louisiana Mid-Continent Oil and Gas Association 
requested clarification as to how PHMSA proposes to regulate Louisiana 
facilities and specifically how regulatory activity will be funded.
    Response: PHMSA is supportive of state oversight activities and 
expects the appropriate Louisiana state agency to become certified to 
regulate Louisiana's intrastate facilities in accordance with 49 U.S.C. 
60141(c). User fees collected by PHMSA from operators of intrastate 
underground natural gas storage facilities regulated by Louisiana would 
be granted to the certified Louisiana agency. PHMSA would regulate any 
interstate facilities in Louisiana. If a Louisiana agency does not 
become certified, PHMSA will be responsible for regulating both the 
interstate and intrastate facilities in Louisiana.
    Comment: ENSTOR Operating Company asked if PHMSA will sum the 
working-gas capacity of facilities for the operator and its affiliates.
    Response: PHMSA will sum the working-gas capacity for all fields 
operated by each holder of a PHMSA-issued operator identification 
number. For the past several months, PHMSA has been contacting 
operators of storage facilities to determine the appropriate operator 
identification number for each facility reported to the EIA.
    Comment: ENSTOR Operating Company, LLC, asked if PHMSA has a 
different definition of working-gas capacity than the EIA.
    Response: PHMSA does not have a different definition of working-gas 
capacity. PHMSA will use the working-gas capacity reported to the EIA.
    Comment: ENSTOR Operating Company, LLC, requested that PHMSA 
provide further analysis supporting the proposed user-fee assessment 
tier structure to ensure the regulated community can fully comment.
    Response: PHMSA provided a full description of the analysis in the 
November 2016 Notice. PHMSA will also place a spreadsheet in the docket 
with this notice to provide a more detailed breakdown of the data 
behind the analysis.

Revised Underground Natural Gas Storage Facility User-Fee Plan

    As discussed above in the comment responses, in the absence of 
available, reliable data for another suitable metric, PHMSA's only 
viable option for an equitable allocation of fees among facility 
operators in the first year is working-gas capacity. Accordingly, for 
FY 2017 billing, PHMSA will use working-gas capacity as the basis for 
the user-fee rate structure. PHMSA will use the working-gas capacity 
values from the most recent Form EIA-191 Monthly Underground Natural 
Gas Storage Report. PHMSA will sum the working-gas capacity for all 
fields operated by the holder of a PHMSA-issued operator identification 
number. For fields where PHMSA is unable to determine the operator 
identification number, working-gas capacities will be summed based on 
the company name in the Form EIA-191 data. If a company receives a bill 
that it believes to be in error in some way, it should contact PHMSA 
for further information, using the Web site http://www.phmsa.dot.gov/pipeline/operator-resources/pay-user-fee-assessments.
    The operator working-gas capacity values will be divided 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.
    In the November 2016 Notice, PHMSA used Form EIA-191 annual data 
from 2015 to determine the published assessment per tier and tier 
ranges. Based on Form EIA-191 monthly data available through the EIA's 
Natural Gas Annual Respondent Query System,\1\ and summing working-gas 
capacity using the EIA company name, the tiers and assessment per tier 
to collect $8,000,000 would be:
---------------------------------------------------------------------------

    \1\ http://www.eia.gov/cfapps/ngqs/ngqs.cfm?f_report=RP8&f_sortby=&f_items=&f_year_start=&f_year_end=&f_show_compid=&f_fullscreen=.

------------------------------------------------------------------------
                                   Assessment      Working-gas capacity
              Tier                per operator         (Mcf) range
------------------------------------------------------------------------
1..............................         $11,799  Less than 930,000.
2..............................          23,599  More than 930,000 and
                                                  less than 3,000,000.
3..............................          29,499  More than 3,000,000 and
                                                  less than 5,800,000.
4..............................          35,398  More than 5,800,000 and
                                                  less than 11,000,000.
5..............................          47,198  11,000,000 or more and
                                                  less than 13,700,000.
6..............................          58,997  More than 13,700,000
                                                  and less than
                                                  21,000,000.
7..............................          70,796  More than 21,000,000
                                                  and less than
                                                  32,100,000.
8..............................          76,696  More than 32,100,000
                                                  and less than
                                                  48,000,000.
9..............................          88,496  More than 47,000,000
                                                  and less than
                                                  91,500,000.
10.............................         147,493  More than 91,500,000.
------------------------------------------------------------------------

    PHMSA placed a spreadsheet in the docket showing the EIA company 
names in each tier, as well as the methodology used to determine the 
assessment per tier and tier ranges. If Congress appropriates less than 
$8 million 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 approximately 25% will fund PHMSA actions 
and 75% will fund grants to certified state agencies.
    Finally, in the November 2016 Notice, we expressed an intent to 
assess user fees on operators of active fields on the

[[Page 16876]]

EIA list. Since then, PHMSA has learned that the EIA includes inactive 
fields in the Form EIA-191 data because inactive fields could be 
restored to service at any time. The EIA removes a field from the Form 
EIA-191 list only after the company reports that all wells connected to 
the field have been abandoned. Essentially, inactive fields on the Form 
EIA-191 list are idle, but not abandoned. Therefore, at least for 
fiscal year 2017 billing, PHMSA will use the EIA-191 form data, which 
includes inactive wells.
    This approach is also consistent with PHMSA's exercise of 
regulatory jurisdiction over pipelines and with its assessment of user 
fees on such pipelines. In an Advisory Bulletin published on August 16, 
2016, titled: ``Clarifications of Terms Relating to Pipeline 
Operational Status,'' PHMSA emphasized that idle pipelines are subject 
to the same regulatory requirements as active pipelines. 81 FR 54512. 
This same regulatory approach applies to underground natural gas 
storage fields. Because inactive fields could be restored to service, 
PHMSA will exercise regulatory authority over inactive fields. 
Accordingly, PHMSA will bill both inactive and active fields appearing 
in the Form EIA-191 data.

    Issued in Washington, DC, on March 31, 2017, under authority 
delegated in 49 CFR 1.97.
Alan K. Mayberry,
Associate Administrator for Pipeline Safety.
[FR Doc. 2017-06803 Filed 4-5-17; 8:45 am]
 BILLING CODE 4910-60-P