82_FR_50727 82 FR 50517 - Final Report: Review of Federal Energy Regulatory Commission Agency Actions Pursuant to Executive Order 13783, Promoting Energy Independence and Economic Growth

82 FR 50517 - Final Report: Review of Federal Energy Regulatory Commission Agency Actions Pursuant to Executive Order 13783, Promoting Energy Independence and Economic Growth

DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission

Federal Register Volume 82, Issue 210 (November 1, 2017)

Page Range50517-50523
FR Document2017-23722

This Final Report on the Review of Federal Energy Regulatory Commission Agency Actions is provided pursuant to Executive Order 13783, Promoting Energy Independence and Economic Growth.

Federal Register, Volume 82 Issue 210 (Wednesday, November 1, 2017)
[Federal Register Volume 82, Number 210 (Wednesday, November 1, 2017)]
[Rules and Regulations]
[Pages 50517-50523]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-23722]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Chapter I


Final Report: Review of Federal Energy Regulatory Commission 
Agency Actions Pursuant to Executive Order 13783, Promoting Energy 
Independence and Economic Growth

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Availability of Final Report.

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SUMMARY: This Final Report on the Review of Federal Energy Regulatory 
Commission Agency Actions is provided pursuant to Executive Order 
13783, Promoting Energy Independence and Economic Growth.

DATES: November 1, 2017.

ADDRESSES: Report available through http://www.ferc.gov.

FOR FURTHER INFORMATION CONTACT: 

Nicholas Tackett, Office of Energy Projects, Branch Chief, Division of 
Hydropower Licensing, Federal Energy Regulatory Commission, 888 First 
Street NE., Washington, DC 20426, 202-502-6783
Karin L. Larson, Office of General Counsel, Energy Projects, Federal 
Energy Regulatory Commission, 888 First Street NE., Washington, DC 
20426, 202-502-8236

SUPPLEMENTARY INFORMATION: 

FEDERAL ENERGY REGULATORY COMMISSION

Final Report

Review of Federal Energy Regulatory Commission Agency Actions Pursuant 
to Executive Order 13783, Promoting Energy Independence and Economic 
Growth

I. Executive Summary

    On March 28, 2017, the President signed Executive Order 13783, 
titled Promoting Energy Independence and Economic Growth (Executive 
Order).\1\ Pursuant to section 2(c) of the Executive Order, on May 12, 
2017, the Federal Energy Regulatory Commission (FERC, or the 
Commission) submitted to the Office of Management and Budget (OMB) its 
plan (Plan) for reviewing its existing regulations, orders, guidance 
documents, policies, and any other similar agency action (agency 
actions) that potentially burden the development or use of domestically 
produced energy resources. On July 26, 2017, pursuant to section 2(d) 
of the Executive Order, the head of the Commission submitted a draft 
final report detailing the review undertaken and the results of the 
review. Given the Commission's status as an independent regulatory 
agency, this final report is being submitted on a voluntary basis.\2\
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    \1\ Executive Order 13783, Promoting Energy Independence and 
Economic Growth, 82 Fed. Reg. 16093 (Mar. 28, 2017).
    \2\ The Commission is a multi-member, independent regulatory 
agency that must follow applicable federal laws to change its rules, 
regulations and orders. Because the Commission must ultimately 
decide what action, if any, to take in response to the Executive 
Order, this report is a Commission staff analysis of the issues 
identified for review in the Executive Order and does not 
specifically recommend actions nor indicate the timing of any 
potential action.
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    Of the agency actions reviewed, this final report identifies nine 
agency actions that potentially materially burden the development or 
use of domestic energy resources as contemplated by the Executive Order 
and clarified by OMB's May 8, 2017 Guidance Memo.\3\ In addition, these 
identified agency actions may be addressed in conjunction with the 
Commission's ongoing efforts pursuant to Executive Order 13777.
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    \3\ Memo from Dominic J. Mancini, Acting Administrator, Office 
of Information and Regulatory Affairs to Regulatory Reform Officers 
and Regulatory Policy Officers at Executive Departments and Agencies 
regarding Guidance for Section 2 of Executive Order 13783, titled 
``Promoting Energy Independence and Economic Growth.''
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II. Background

    Section 2 of the Executive Order requires the heads of federal 
agencies to immediately ``review all existing regulations, orders, 
guidance documents, policies, and any other similar agency actions 
(collectively, agency actions) that potentially burden the development 
or use of domestically produced energy resources, with particular 
attention to oil, natural gas, coal, and nuclear energy resources. Such 
review shall not include agency actions that are mandated by law, 
necessary for the public interest, and consistent with the policy set 
forth in section 1 of this order.''
    On May 8, 2017, OMB issued a Guidance Memo providing additional 
information regarding compliance with the Executive Order, in 
particular section 2. The Guidance Memo noted that the Executive Order 
does not apply to independent agencies as defined in 44 U.S.C. 3502(5), 
but encouraged independent regulatory agencies, especially those that 
directly regulate the development or use of domestically produced 
energy resources, to provide the plan and report that are called for in 
section 2 of the Executive Order. The Guidance Memo further encourages 
agencies to coordinate their compliance with Section 2 of Executive 
Order 13783 with their compliance with Executive Order 13777, which 
directs agencies to establish Regulatory Reform Task Forces to evaluate 
existing regulations generally and make recommendations to the agency 
head regarding their repeal, replacement and modification, consistent 
with applicable law.
    In the Plan, the Commission explained that it intended to review 
agency actions it has taken pursuant to legislative authority under: 
(1) the Natural Gas Act (NGA), 15 U.S.C. 717, et seq.; (2) the Federal 
Power Act (FPA), 16 U.S.C. 791a, et seq.; (3) the Interstate Commerce 
Act, 49 App. U.S.C. 1 et seq.; (4) the Public Utility Regulatory 
Policies Act of 1978 (PURPA), 16 U.S.C. 2601 et seq., and (5) other 
statutes for which the Commission's actions on LNG, natural gas 
pipeline, and hydropower projects

[[Page 50518]]

often require compliance, such as the National Environmental Policy 
Act, the Endangered Species Act, the Coastal Zone Management Act, and 
the Clean Water Act.

III. Commission Review of Agency Actions Pursuant to Section 2

A. Scope of Review

    Domestic Energy Sources: Section 2 of the Executive Order states 
that the review should place particular attention on oil, natural gas, 
coal, and nuclear energy resources. In addition, section 1 of the 
Executive Order and the Guidance Memo list renewable sources, including 
flowing water, as domestic energy sources. Therefore, this final report 
considers agency actions that potentially affect not only oil, natural 
gas, coal, and nuclear energy resources, but also hydropower and other 
renewable generation resources.
    Potentially Material Burdens: Section 2(b) of the Executive Order 
states that ``burden'' means ``to unnecessarily obstruct, delay, 
curtail, or otherwise impose significant costs on the siting, 
permitting, production, utilization, transmission, or delivery of 
energy resources.'' Based on the Executive Order's definition of 
``burden,'' as informed by the Guidance Memo which highlights agency 
actions that ``materially'' affect domestic energy production, this 
final report considers an agency action ``material'' if it could: (1) 
directly affect the development or use of domestic energy resources; or 
(2) have a primary indirect effect on the development or use of 
domestic energy resources.\4\ Given the Commission's limited 
jurisdiction, none of the Commission's agency actions would materially 
affect the design and/or location of drilling or mining of energy 
production resources.
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    \4\ The Guidance Memo indicates that agencies should review 
actions that both directly and indirectly affect domestic energy 
sources. This final report uses the term ``primary indirect effect'' 
to define the scope of indirect effects that will be considered for 
review. A primary indirect effect is an effect that is only one step 
removed from a direct effect. In other words, a primary indirect 
effect occurs when an agency action affects a factor that, in turn, 
affects a domestic energy source.
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    Agency Actions: This final report considers the following types of 
binding Commission agency actions in existence as of March 28, 2017 
(i.e., the date of issuance of Executive Order 13783): codified 
regulations published by the Commission (i.e., 18 CFR); final rules; 
public policy statements and guidance documents; and case-specific 
orders and opinions that establish policies that are broadly applied 
and not otherwise codified by the Commission.\5\
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    \5\ This report does not consider the issue of grants to third 
parties to perform agency actions because the Commission does not 
issue such grants. Commission staff's analysis included 
consideration of information collections, including those subject to 
the Paperwork Reduction Act, to the extent that such collections are 
within the scope of the agency actions reviewed under the Executive 
Order.
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B. Methodology

    This final report identifies and classifies the potentially 
relevant agency actions based on: (1) the type of action undertaken; 
(2) the energy source potentially affected by that action; and (3) 
whether the potential effects of the action are direct or indirect.
    This final report focuses on agency actions in four jurisdictional 
areas: (1) hydropower licensing; (2) LNG facility, and natural gas 
pipeline and storage facility siting; (3) centralized electric capacity 
market policies in PJM Interconnection, L.L.C. (PJM), ISO New England, 
Inc. (ISO-NE), and New York Independent System Operator, Inc. (NYISO); 
and (4) electric generator interconnection policies.
    Commission actions in these four jurisdictional areas have the 
greatest potential to materially burden domestic energy resources as 
contemplated under the Executive Order. In particular, the Commission's 
hydropower licensing program has the potential to directly affect the 
design, location, and development of hydropower resources. In addition, 
the Commission's jurisdiction over the siting of LNG terminals and 
natural gas pipelines may affect the delivery to market of natural gas, 
and have a primary indirect effect on the use of that domestically 
produced energy resource.
    Agency actions related to electric capacity market policies and 
generator interconnection policies may have a primary indirect effect 
on the development, retention, or retirement of domestic energy 
resources. As the Commission has recently recognized in its ongoing 
efforts concerning the interplay of wholesale electric markets and 
state policy, the centralized electric capacity markets in PJM, ISO-NE, 
and NYISO are intended to ensure long-term resource adequacy by sending 
accurate price signals for investment in electric capacity resources, 
when and where needed. By signaling the value of capacity, including 
the potential need for new generation resources, these markets serve a 
function in those regions that would otherwise typically be performed 
through integrated resource planning, often before a state public 
service commission. As a result, Commission actions related to electric 
capacity market policies could have a primary indirect effect on the 
development and use of generation resources.
    Finally, agency actions involving generator interconnection 
policies could have a primary indirect effect on the development of 
domestic energy resources. For example, a wind or solar generator at 
utility scale typically must interconnect to the transmission grid in 
order to deliver the electricity produced by those domestic energy 
resources to the wholesale purchaser. If Commission policies or actions 
lead to a delay in interconnection or otherwise affect the generator's 
ability to interconnect, then the project developer may not develop 
that energy resource, which would impact the development or use of 
domestic energy resources.
    This final report does not review agency actions involving oil and 
natural gas pipeline rates; electric energy and ancillary service rates 
and market policies; \6\ electric transmission rates, including return 
on equity issues; demand response resources; mergers; enforcement; 
reliability; backstop transmission siting authority; and the Public 
Utilities Regulatory Policies Act. Commission action in these areas may 
indirectly impact the design, location, development, or use of domestic 
energy resources, but would not have a primary indirect effect, as 
discussed above.
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    \6\ Commission actions on energy and ancillary service market 
rules are less directly related to the development and use of 
domestic energy resources than Commission actions on centralized 
capacity market rules. While energy and ancillary service markets 
have an effect on the economic viability and day-to-day use of 
generation resources, the market rules established by the Commission 
are intended to ensure recovery of variable costs (e.g., fuel costs) 
for marginal units, rather than to be the primary source of fixed 
cost recovery for new generation resources. That is, in regions that 
do not have capacity markets, there is an additional mechanism to 
address fixed cost recovery typically administered by the relevant 
state regulatory commission, in the case of investor-owned public 
utilities, or the management of public power utilities.
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    Pursuant to the Guidance Memo's recommendation, this effort with 
respect to Executive Order 13783, to the extent appropriate, was 
coordinated with the Commission's Regulatory Reform Task Force created 
pursuant to Executive Order 13777.\7\
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    \7\ As with Executive Order 13783, independent regulatory 
agencies like the Commission are not subject to Executive Order 
13777, but are encouraged to comply.
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    This final report discusses those agency actions that rose to the 
level of a potential material burden as contemplated by the Executive 
Order and clarified by the Guidance Memo. For hydropower licensing and 
the LNG

[[Page 50519]]

and natural gas transportation facilities siting programs, the 
Executive Order review process revealed potentially burdensome agency 
actions related to regulations promulgated by the Commission. For 
electric capacity markets and generator interconnection, the Executive 
Order review process revealed potentially burdensome agency actions 
related to Commission rulemaking orders and case-specific orders, which 
typically did not result in the promulgation of regulations. This final 
report identifies steps the Commission may consider, to the extent 
permitted by law, to alleviate or eliminate the aspects of the agency 
actions that may burden the development or use of domestically produced 
energy resources.

C. Discussion

1. Hydropower Licensing
    Under Part I of the FPA, the Commission has the exclusive authority 
to issue licenses, small capacity exemptions (up to 10 megawatts (MW)), 
and conduit exemptions for non-federal hydropower projects. The 
Commission currently regulates over 1,600 licensed or exempted 
hydroelectric projects, representing about 56,000 MW of authorized 
installed capacity, which is more than half of all developed hydropower 
in the United States.
    The Commission is responsible for coordinating and managing the 
processing of hydropower project license and exemption applications, as 
well as applications for preliminary permits (under which permittees 
study proposed projects). This includes determining the effects of 
constructing, operating, and maintaining hydropower projects on 
environmental resources, and the need for the project's power. Pursuant 
to the FPA, issues considered during the review of license applications 
include power production; fish, wildlife, recreation, and other 
environmental issues; flood control; irrigation; and other water uses. 
Various statutory requirements also give other agencies a significant 
role in project development, and several state and federal agencies 
have mandatory authorities that limit the Commission's control of the 
cost and time required for licensing.
    Following the issuance of a license or exemption, the Commission 
oversees compliance with the terms and conditions of the license/
exemption for the duration of the license. This includes processing the 
filing of plans, reports, and license amendments. Additionally, the 
Commission must determine if it has jurisdiction over proposed or 
unlicensed operating projects; determine and assess headwater benefit 
charges; approve transfers of licensed projects; resolve complaints 
alleging noncompliance with license and exemption conditions; and act 
on applications for license surrenders.
    The Commission also is responsible for ensuring that the water-
retaining features of hydropower projects are designed, constructed, 
operated, and maintained using current engineering standards and 
federal guidelines for dam safety. Commission staff inspects projects 
to investigate potential dam safety problems and, every five years, a 
Commission-approved independent consulting engineer must inspect and 
evaluate projects with dams higher than 32.8 feet or with a total 
storage capacity of more than 2,000 acre-feet. The Commission also 
requires licensees to prepare emergency action plans and conducts 
training sessions on how to develop and test these plans.
    The vast majority of agency actions relating to the Commission's 
hydropower program do not present a material burden to hydropower 
resources. Specifically, most agency actions: (1) are necessary to 
administer the Commission's hydropower program and process hydropower 
license applications in an orderly manner; and/or (2) do not negatively 
affect the development of hydropower resources. As outlined below, 
however, this final report identifies three areas where potential 
material burdens may exist: licensing processes; exemption processes; 
and determinations on deficient applications.
a. Licensing Processes
i. ILP Default Regulation
    The Commission's regulations include three hydropower licensing 
processes for applicants: the Integrated Licensing Process (ILP), the 
Traditional Licensing Process (TLP), and the Alternative Licensing 
Process (ALP). The Commission's regulations assign the ILP as the 
default process for all license requests, and an applicant must 
specifically request and justify the use of either the TLP or ALP. 
Assigning the ILP as the default process could be materially burdensome 
due to: (1) the time and costs associated with obtaining the 
Commission's approval to use the TLP or ALP; and (2) in the event the 
Commission denies the request to use the TLP/ALP, there may be 
additional time and costs associated with the ILP, due to the 
structured nature of the process. The level of burden caused by the ILP 
default regulation is largely project-specific, and may be negligible/
non-existent for complex proceedings that could benefit from a more 
structured process such as the ILP. However, any material burden could 
be alleviated by making the ILP optional, and removing the requirement 
to seek Commission authorization to use the TLP and ALP (see 18 CFR 
4.30, 5.1, 5.3, 5.8, 16.1).
ii. Pre-Filing Application Requirement
    In the final stages of the Commission's pre-filing process for 
hydropower projects, the Commission's regulations require a potential 
applicant to submit a draft license application or preliminary 
licensing proposal before submitting a final license application (18 
CFR 4.38(c)(4) and 5.16, respectively). The Commission's regulations 
include minimum filing requirements for these documents (e.g., study 
results, analyses, and environmental measures), and a stakeholder 
review process. The requirement to file the draft application and 
preliminary licensing proposal may be materially burdensome in terms of 
the cost and delay associated with the preparation of the documents and 
the stakeholder review process. To eliminate material burdens, the 
Commission could consider revising its regulations to make this aspect 
of the pre-filing process optional for license applicants.
iii. Pre-Filing Schedule
    The ILP contains comment and filing deadlines throughout the pre- 
and post-filing application process to ensure a structured approach to 
hydropower licensing. The ILP, however, may be materially burdensome in 
terms of the schedule established for the pre-filing process (3-3.5 
years total). To alleviate this burden, the Commission could consider 
certain comment and filing deadline reductions to allow for an overall 
time savings of three months: (1) reduce the time that an applicant has 
to file a proposed study plan, and the Commission has to issue a second 
scoping document, from 45 days to 30 days after receiving comments (18 
CFR 5.10 and 5.11); (2) reduce the time for entities to file comments 
on the proposed study plan, from 90 days to 60 days (18 CFR 5.12); (3) 
reduce the time an applicant has to file a revised study plan, from 30 
days to 15 days (18 CFR 5.13); and (4) reduce the time for filing 
comments on an applicant's preliminary licensing proposal, from 90 days 
to 60 days (18 CFR 5.16).

[[Page 50520]]

iv. License Term Policy
    Section 6 of the FPA provides that hydropower licenses shall be 
issued for a term not to exceed 50 years. There is no minimum license 
term for original licenses (16 U.S.C. 799). Section 15(e) of the FPA 
provides that any new license for an existing project (i.e., relicense) 
shall be for a term that the Commission determines to be in the public 
interest, but not less than 30 years or more than 50 years (16 U.S.C. 
808(e)). Current Commission policy is to set a 30-year license term 
where there is little or no authorized redevelopment, new construction, 
or environmental mitigation and enhancement; a 40-year license term for 
a license involving a moderate amount of these activities; and a 50-
year license term where there is an extensive amount of such 
activity.\8\ On November 17, 2016, the Commission issued a notice of 
inquiry in FERC Docket No. RM17-4-000 inviting comments on what 
changes, if any, should be made to the license term policy. The license 
terms provide operational certainty and govern the frequency of the 
license renewal process, which influences the overall cost of 
development. In turn, shorter license terms could burden development by 
increasing the cost of development. The Commission currently is 
considering comments on the license term policy, which it could use to 
further evaluate the need for any future changes to the license term 
policy.
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    \8\ See City of Danville, Virginia, 58 FERC ] 61,318 (1992); and 
Consumers Power Co., 68 FERC ] 61,077, (1994).
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v. Minimum Filing Requirements
    The Commission's regulations contain minimum filing requirements 
depending on the size of a project, and whether construction or 
modification of a dam is needed for project operation. Part 4 of the 
Commission's regulations includes three subparts corresponding to these 
factors: (1) Subpart E--Application for License for Major Unconstructed 
Project and Major Modified Project (18 CFR 4.40); (2) Subpart F--
Application for License for Major Project--Existing Dam (18 CFR 4.50); 
and (3) Subpart G--Application for License for Minor Water Power 
Projects and Major Water Power Projects 5 MW or Less (18 CFR 4.60). 
Subparts E and F apply to projects greater than 5 MW, and include more 
onerous filing requirements than Subpart G, which applies to projects 
less than or equal to 5 MW. The 5 MW threshold is based on section 405 
of PURPA, which mandated a simplified and expeditious licensing 
procedure for small hydroelectric power projects with an installed 
capacity of 5 MW or less (see 46 FR 55,944 at 55,947 (1981); 16 U.S.C. 
Sec.  2705). The Hydropower Regulatory Efficiency Act of 2013 has since 
amended PURPA by increasing the size of a small hydroelectric power 
project from 5 to 10 MW. Therefore, the 5 MW threshold in 18 CFR 4.40, 
4.50, and 4.60 is materially burdensome to projects between 5 and 10 
MW, in terms of the cost and time associated with the more onerous 
filing requirements of Subparts E and F. To eliminate the material 
burden, the Commission could consider revising its regulations to 
increase the threshold from 5 MW.
b. Exemption Processes
i. Increased Capacity Requirement
    To qualify for a license exemption under section 405 of PURPA, an 
applicant must propose to install/increase the total capacity of a 
project to not more than 10 MW (18 CFR 4.30(b)(31), 4.31(c), and 
4.103(a)). The regulatory requirement to add new capacity at the 
project is not specifically required by section 405 of PURPA, and it 
materially burdens existing licensees that would otherwise be eligible 
to seek an exemption at the end of the existing license term. To 
eliminate this burden, the Commission could consider revising the 
regulations to remove the requirement to install or increase the 
capacity of the facility to qualify for an exemption.
ii. Small Hydropower Conversion Restrictions
    In the event that the Commission rejects an exemption application, 
the Commission's regulations do not explicitly provide an applicant 
with the ability to convert a small hydropower exemption application to 
a license application (18 CFR 4.105). The Commission's Handbook for 
Hydroelectric Project Licensing and 5 MW Exemptions from Licensing, 
issued April 2004, explicitly states at section 6.3.2:
    If the exemption application is dismissed, the process is 
terminated. There is no opportunity to convert the exemption 
application to an application for license.\9\
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    \9\ See www.ferc.gov/industries/hydropower/gen-info/handbooks/licensing_handbook.pdf.
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    In comparison, the Commission has established a process for 
converting a small conduit exemption application to a license 
application (18 CFR 4.93). The process for small conduits allows the 
applicant to submit additional information necessary to conform the 
conduit exemption application to the relevant regulations for a license 
application, and then be accepted for filing as of the date the 
exemption application was accepted for filing. The inability of an 
applicant of a small hydropower exemption to convert its application to 
a license application is materially burdensome because the applicant 
must initiate an entirely new license process after its exemption is 
rejected, thereby causing delay to the development of the resource. To 
eliminate this burden, the Commission could consider amending its 
regulations to explicitly provide the small hydropower exemption 
applicant with the ability to convert its exemption application to a 
license application if the exemption application is rejected.
c. Prohibition on Refiling Subsequent License Applications
    Pursuant to the authority provided in section 10(i) of the FPA (16 
U.S.C. 803), the Commission routinely waives certain sections of Part I 
of the FPA when it issues a minor license. As relevant, the Commission 
routinely waives section 15 of the FPA, which governs the Commission's 
procedures for issuing a new license to an existing licensee (i.e., a 
relicense) (16 U.S.C. and 808). Yet, the Commission's regulations 
require the licensee to file an application for relicense at least 24 
months before the expiration of the existing license (18 CFR 16.20(c)). 
Moreover, if the Commission rejects the application, it cannot be 
refiled (18 CFR 16.9(b)(4)). Rejecting a relicense application, and not 
providing the applicant with the opportunity to refile, is materially 
burdensome to the use of hydropower resources. To eliminate this 
burden, the Commission could consider revising its regulations at 18 
CFR 16.20 to provide the applicant with the option of resubmitting the 
application if the deficiencies are corrected.
2. LNG Facility and Natural Gas Pipeline and Storage Facility Siting
    Under section 7 of the NGA, 15 U.S.C. 717f, the Commission 
authorizes the construction, operation, or abandonment of interstate 
natural gas pipeline and storage projects, as well as certain types of 
LNG facilities (e.g., LNG plants engaged in the storage of interstate 
natural gas volumes). Similarly, under section 3 of the NGA, 15 U.S.C. 
717b(e)(1), the Commission authorizes the siting, construction and 
operation of LNG terminals through which the commodity passes for 
export or import. As part of these responsibilities, the Commission 
conducts both a non-environmental and

[[Page 50521]]

an environmental review of the proposed facilities. The non-
environmental review focuses on the engineering design, rate, and 
tariff considerations. The Commission carries out the environmental 
review with the cooperation of numerous federal, state, and local 
agencies, and with the input of other interested parties. Under the 
NGA, the Commission also is the lead federal agency for coordinating 
all applicable federal authorizations (e.g., required permits under the 
Clean Water Act, Clean Air Act, and Coastal Zone Management Act, among 
others) and preparing environmental analyses required under the 
National Environmental Policy Act (NEPA) for all interstate natural gas 
infrastructure and LNG import/export proposals.
    There are several distinct phases to the review process for 
interstate natural gas and LNG facilities under the Commission's 
jurisdiction: pre-filing review (if applicable); application review; 
and post-authorization compliance. During the pre-filing review, 
Commission staff begins work on the environmental review and engages 
with stakeholders with the goal of resolving issues before the filing 
of an application. Throughout the pre-filing process, Commission staff 
meets with stakeholders, visits the project site, and confers with 
federal, state, and local agencies.
    Once a project sponsor files an application with the Commission 
under NGA section 3 for LNG import/export terminals or under NGA 
section 7 for interstate pipeline and storage facilities, Commission 
staff analyzes both environmental and non-environmental aspects for a 
proposed project, including for LNG terminals safety and engineering. 
An Environmental Assessment or Environmental Impact Statement typically 
is issued for public comment, and ultimately, the Commission will issue 
an order on an application after considering both environmental and 
non-environmental issues.
    During the post-authorization compliance period, Commission staff 
monitors the project sponsor's compliance with the conditions directed 
by the Commission. Ultimately, Commission approval is required before 
the facility can begin operation and provide service.
    Pursuant to Executive Order 13783, the review encompassed the 
Commission's regulations, guidance documents, and policies related to 
the certification of interstate natural gas transportation facilities, 
authorization of LNG import and export facilities, authorization of 
certain transportation by interstate and intrastate pipelines, and 
environmental review under NEPA.
    The majority of agency actions relating to the siting and 
construction of interstate natural gas transportation and LNG 
facilities do not materially burden the transportation or delivery of 
domestically produced natural gas. Specifically, most of the 
Commission's actions: (1) Are necessary for the Commission to review 
and process NGA section 3 and 7 project applications; and/or (2) do not 
negatively affect the siting or construction of natural gas pipeline 
and storage facilities or LNG import/export facilities in a manner that 
has a direct or primary indirect effect on the development or use of 
domestic energy production.
    However, the Commission's regulations require a prospective 
applicant for authorization under section 3 of the NGA to site and 
construct LNG terminals and related jurisdictional natural gas 
facilities to engage in the Commission's pre-filing process. (18 CFR 
157.21(a)). The Commission's pre-filing regulations require applicants 
to use the pre-filing process for a minimum of 180 days before the 
filing of an application for any project that is required to engage in 
pre-filing. (18 CFR 157.21(a)(2)(1) and 153.6(c)). While, in general, 
the pre-filing process is designed to expedite the processing of 
applications, the mandatory imposition of the pre-filing process on LNG 
terminals and related pipeline projects for at least 180 days before an 
application can be filed may be materially burdensome for some projects 
in terms of the potential delay and costs associated with the process. 
Although the 180 day pre-filing process is required by statute for LNG 
terminals, 15 U.S.C. 717b-1(a), the statute did not mandate that the 
Commission also require ``related jurisdictional natural gas 
facilities'' to engage in pre-filing. However, related jurisdictional 
natural gas pipeline facilities need to be evaluated concurrent with a 
proposed LNG terminal to avoid segmentation under the National 
Environmental Policy Act. Further, the pre-filing process allows 
stakeholders to become involved in the overall Project at an early 
stage, and applicants can benefit from stakeholder's early 
identification and resolution of issues that may overlap with the LNG 
terminal. Without using the pre-filing process for related 
jurisdictional natural gas facilities, delays could occur during the 
application review, when issues are first identified and need 
resolution. Thus, although this regulation may result in delays or 
additional costs to the applicant early on in a project's development, 
its overall result is a more timely application review by considering 
all issues regarding a project concurrently. As such, there is no need 
for the Commission to consider any revision to this regulation.
3. Centralized Electric Capacity Market Policies
    Three of the Regional Transmission Operator/Independent System 
Operator (RTO/ISO) markets in the eastern U.S. have adopted centralized 
capacity markets to help address resource adequacy concerns.\10\ In 
particular, PJM, ISO-NE, and NYISO have implemented centralized 
capacity markets that were designed, in part, to ensure long-term 
resource adequacy by sending accurate price signals for investment in 
capacity resources, when and where needed.\11\ As a result, agency 
actions related to capacity market policies could have a primary 
indirect effect on the development and use of generation resources, 
including renewables, natural gas, and nuclear facilities.\12\
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    \10\ The Commission has defined resource adequacy as ``the 
availability of an adequate supply of generation or demand 
responsive resources to support safe and reliable operation of the 
grid.'' Cal. Indep. Sys. Operator Corp., 122 FERC ] 61,017, at P 3 
(2008).
    \11\ ``Capacity is not actual electricity. It is a commitment to 
produce electricity or forgo consumption of electricity when 
required.'' Advanced Energy Mgmt. All. v. FERC, No. 16-1234, 2017 WL 
2636455, at *1 (D.C. Cir. Jun. 20, 2017); see Conn. Dep't of Pub. 
Util. Control v. FERC, 569 F.3d 477, 482 (D.C. Cir. 2009) 
(explaining that capacity ``amounts to a kind of call option that 
electricity transmitters purchase from parties--generally, 
generators--who can either produce more or consumer less when 
required'').
    \12\ It is important to note that the Commission has not 
required RTOs/ISOs to implement centralized capacity markets; 
rather, the determination to include such markets has been a 
voluntary decision by the stakeholders in each particular RTO/ISO. 
However, once an RTO/ISO decides to implement such a capacity 
market, the Commission must ensure that the tariff provisions 
establishing the capacity market rules are just and reasonable and 
not unduly discriminatory or preferential.
---------------------------------------------------------------------------

    The centralized capacity markets require load-serving entities to 
secure, either through self-supply \13\ or participation in the 
capacity auction, sufficient resources to meet their capacity 
obligation at a future time. All three centralized capacity markets 
allow participation by any resource that is technically qualified to 
provide the capacity product being procured and each market generally 
models locational constraints. Each conducts a capacity auction where 
eligible offers to sell capacity are compared to the demand for 
capacity resources, which is established through an administratively-

[[Page 50522]]

determined demand curve. Generally speaking, the market clears based on 
the intersection between the supply and demand curves. All cleared 
resources receive the market clearing price for capacity regardless of 
resource type.
---------------------------------------------------------------------------

    \13\ While the specific rules vary by RTO/ISO, load-serving 
entities can own or construct resources or contract bilaterally for 
capacity from resources owned by other entities.
---------------------------------------------------------------------------

    The Commission has issued multiple agency actions (i.e., Commission 
orders addressing the capacity market designs of the relevant organized 
markets) that govern the rules and design of the centralized capacity 
markets. Agency actions related to electric capacity markets were 
reviewed to determine if they impose a material burden on the 
development and use of domestic energy resources. In general, agency 
actions regarding centralized electricity capacity market design do not 
impose a material burden on the development and use of domestic energy 
resources because they generally seek to ensure adequate resources, and 
thereby facilitate the development of domestic energy resources, rather 
than create material burdens to the development and use of these 
resources. However, this final report discusses Commission actions 
regarding one aspect of centralized electricity capacity markets, 
buyer-side market power mitigation rules, due to the potentially 
material burdens Commission actions may have on the development of 
domestic energy resources.
    All three eastern RTOs/ISOs use some form of a minimum offer price 
rule (MOPR) as approved by Commission order. MOPRs as currently 
designed establish offer floors for certain new resources to protect 
against subsidized new entry that has the potential to artificially 
suppress capacity market prices. New resources that trigger this rule 
are required to submit offers into the capacity market auction at or 
above the floor. If the resource's mitigated offer price is too high to 
clear in the market, then the resource would not receive a capacity 
obligation and the associated market payments. Depending on the terms 
of any out-of-market contracts, the resource also may not be eligible 
to receive out-of-market payments if it does not clear in the capacity 
market auction. Without such compensation, the developer may conclude 
it is not economic to develop the resource. In this way, Commission 
actions on the MOPR arguably impose a burden on certain new resources.
    However, Commission actions on the MOPR do not rise to the level of 
a material burden, as the term is defined in the Executive Order and 
Guidance Memo. While application of the MOPR to a generator's bid may 
conceivably result in the developer deciding not to develop its 
generation resource, an individual generation developer's decision not 
to develop as a result of being subject to a MOPR would not in and of 
itself materially affect the use or development of oil, natural gas, 
coal, nuclear energy, or other domestic energy resources in the U.S. 
Therefore, Commission actions on MOPRs do not negatively affect the 
development and use of domestic energy resources by the electricity 
sector, despite the potential burden on those individual resources that 
are mitigated. Furthermore, from the perspective of other resources in 
the market, the MOPR can help preserve the integrity of the market 
price signals and revenue streams, thereby facilitating development and 
retention of other resources that might use domestic energy resources.
4. Generator Interconnection Policies
    Electric generators use domestic energy resources to produce 
electricity. Electric generators at utility scale must interconnect to 
the transmission system to deliver the electricity they produce to 
customers and receive benefits from the wholesale electric markets. The 
interconnection process is designed to ensure a new resource can safely 
and reliably deliver its output to end-users and to assign the costs to 
the party causing the costs of any system upgrades required to maintain 
safety and reliability. If a generator is not able to interconnect to 
the transmission system, or if it is too difficult or expensive to do 
so, the developer may decide not to pursue investment in the electric 
generation resource. Therefore, the ability of an electric generator to 
interconnect to a transmission system could affect the development or 
use of domestic energy resources.
    The Commission has issued multiple agency actions that govern and 
facilitate the interconnection of electric generators to public utility 
transmission systems. They include:
    Order No. 2003: In Order No. 2003, the Commission created standard 
large generator interconnection procedures and adopted a standard large 
generator interconnection agreement for the interconnection of electric 
generators larger than 20 MW, regardless of resource type.\14\
---------------------------------------------------------------------------

    \14\ Standardization of Generator Interconnection Agreements and 
Procedures, Order No. 2003, FERC Stats. & Regs. ] 31,146 (2003), 
order on reh'g, Order No. 2003-A, FERC Stats. & Regs. ] 31,160, 
order on reh'g, Order No. 2003-B, FERC Stats. & Regs. ] 31,171 
(2004), order on reh'g, Order No. 2003-C, FERC Stats. & Regs. ] 
31,190 (2005), aff'd sub nom. Nat'l Ass'n of Regulatory Util. 
Comm'rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007), cert. denied, 552 
U.S. 1230 (2008).
---------------------------------------------------------------------------

    Order No. 2006: In Order No. 2006, the Commission created standard 
small generator interconnection procedures and a standard small 
generator interconnection agreement for the interconnection of electric 
generators no larger than 20 MW.\15\
---------------------------------------------------------------------------

    \15\ Standardization of Small Generator Interconnection 
Agreements and Procedures, Order No. 2006, FERC Stats. & Regs. ] 
31,180, order on reh'g, Order No. 2006-A, FERC Stats. & Regs. ] 
31,196 (2005), order granting clarification, Order No. 2006-B, FERC 
Stats. & Regs. ] 31,221 (2006).
---------------------------------------------------------------------------

    Order No. 661: In Order No. 661, the Commission required public 
utilities to add standard procedures and technical requirements for the 
interconnection of large wind generation resources to their standard 
large generator interconnection procedures and large generator 
interconnection agreements in their open access transmission 
tariffs.\16\
---------------------------------------------------------------------------

    \16\ Interconnection for Wind Energy, Order No. 661, FERC Stats. 
& Regs. ] 31,186, order on reh'g, Order No. 661-A, FERC Stats. & 
Regs. ] 31,198 (2005).
---------------------------------------------------------------------------

    Order No. 827: In Order No. 827, the Commission revised the 
interconnection agreements for both large and small non-synchronous 
generators to eliminate exemptions for wind generators from providing 
reactive power.\17\
---------------------------------------------------------------------------

    \17\ Reactive Power Requirements for Non-Synchronous Generators, 
Order No. 827, FERC Stats. & Regs. ] 31,385, order on reh'g, 157 
FERC ] 61,003 (2016).
---------------------------------------------------------------------------

    Order No. 828: In Order No. 828, the Commission modified the small 
generator interconnection agreement as set forth in Order Nos. 2006 and 
792 to require newly interconnecting small generating facilities to 
ride through abnormal frequency and voltage events and not disconnect 
during such events.\18\
---------------------------------------------------------------------------

    \18\ Requirements for Frequency and Voltage Ride Through 
Capability of Small Generating Facilities, Order No. 828, 156 FERC ] 
61,062 (2016).
---------------------------------------------------------------------------

    Order No. 792: In Order No. 792, the Commission revised the 
standard small generator interconnection procedures and standard small 
generator interconnection agreement for the interconnection of electric 
generators no larger than 20 MW.\19\
---------------------------------------------------------------------------

    \19\ Small Generator Interconnection Agreements and Procedures, 
Order No. 792, 145 FERC ] 61,159 (2013), clarifying, Order No. 792-
A, 146 FERC ] 61,214 (2014).
---------------------------------------------------------------------------

    None of these orders materially burden the development or use of 
domestic energy resources. The Commission's generator interconnection 
orders establish an orderly, uniform process for all types of 
generators to interconnect to the grid safely and reliably, 
facilitating their development by providing them with the means to 
deliver the electricity they produce to the purchaser. As such, these 
requirements will not unnecessarily obstruct, delay, curtail or 
otherwise

[[Page 50523]]

impose significant costs on the siting, permitting, production, 
utilization, transmission, or delivery of energy resources and 
therefore they will not materially burden the production or use of 
---------------------------------------------------------------------------
domestic energy resources.

    Dated: October 25, 2017.
Kimberly D. Bose,
Secretary.
[FR Doc. 2017-23722 Filed 10-31-17; 8:45 am]
 BILLING CODE 6717-01-P



                                                               Federal Register / Vol. 82, No. 210 / Wednesday, November 1, 2017 / Rules and Regulations                                               50517

                                              DOCUMENT, AND DATE(S)                                    ADDRESSES:   Report available through                  and clarified by OMB’s May 8, 2017
                                              DOCUMENT IS SIGNED].                                     http://www.ferc.gov.                                   Guidance Memo.3 In addition, these
                                                Note 1 to paragraph (d)(2): When multiple              FOR FURTHER INFORMATION CONTACT:                       identified agency actions may be
                                              consignees who form a network engaged in                 Nicholas Tackett, Office of Energy                     addressed in conjunction with the
                                              a production process (or other type of                     Projects, Branch Chief, Division of                  Commission’s ongoing efforts pursuant
                                              collaborative activity, such as joint                      Hydropower Licensing, Federal                        to Executive Order 13777.
                                              development) will be receiving items under
                                                                                                         Energy Regulatory Commission, 888                    II. Background
                                              License Exception STA, a single prior
                                              consignee statement for multiple consignees                First Street NE., Washington, DC                        Section 2 of the Executive Order
                                              may be used for any item eligible for export,              20426, 202–502–6783                                  requires the heads of federal agencies to
                                              reexport, or transfer (in-country) under                 Karin L. Larson, Office of General                     immediately ‘‘review all existing
                                              License Exception STA, provided all of the                 Counsel, Energy Projects, Federal                    regulations, orders, guidance
                                              applicable requirements of License Exception               Energy Regulatory Commission, 888                    documents, policies, and any other
                                              STA are met, including those specified in                  First Street NE., Washington, DC
                                              paragraph (d)(2).
                                                                                                                                                              similar agency actions (collectively,
                                                                                                         20426, 202–502–8236                                  agency actions) that potentially burden
                                                Note 2 to paragraph (d)(2): Country Group              SUPPLEMENTARY INFORMATION:                             the development or use of domestically
                                              A:5 and A:6 government consignees are not                FEDERAL ENERGY REGULATORY                              produced energy resources, with
                                              required to sign or provide a prior consignee            COMMISSION                                             particular attention to oil, natural gas,
                                              statement.                                                                                                      coal, and nuclear energy resources.
                                                                                                       Final Report                                           Such review shall not include agency
                                                  (3) * * *
                                                                                                       Review of Federal Energy Regulatory                    actions that are mandated by law,
                                                Note 1 to paragraph (d)(3): While the
                                                                                                       Commission Agency Actions Pursuant                     necessary for the public interest, and
                                              exporter, reexporter, and transferor must
                                              furnish the applicable ECCN and obtain a                 to Executive Order 13783, Promoting                    consistent with the policy set forth in
                                              consignee statement prior to export, reexport            Energy Independence and Economic                       section 1 of this order.’’
                                              or transfer (in-country) made under License              Growth                                                    On May 8, 2017, OMB issued a
                                              Exception STA in accordance with the                                                                            Guidance Memo providing additional
                                              requirements of paragraphs (d)(1) and (d)(2)             I. Executive Summary                                   information regarding compliance with
                                              of this section, intangible (i.e., electronic or            On March 28, 2017, the President                    the Executive Order, in particular
                                              in an otherwise intangible form) exports,                signed Executive Order 13783, titled                   section 2. The Guidance Memo noted
                                              reexports, and transfers (in-country) made               Promoting Energy Independence and                      that the Executive Order does not apply
                                              under License Exception STA are not subject                                                                     to independent agencies as defined in
                                                                                                       Economic Growth (Executive Order).1
                                              to the notification requirements of paragraph
                                              (d)(3) of this section. However, any export,
                                                                                                       Pursuant to section 2(c) of the Executive              44 U.S.C. 3502(5), but encouraged
                                              reexport, or transfer (in-country) made under            Order, on May 12, 2017, the Federal                    independent regulatory agencies,
                                              STA must stay within the scope of the                    Energy Regulatory Commission (FERC,                    especially those that directly regulate
                                              original authorization.                                  or the Commission) submitted to the                    the development or use of domestically
                                                                                                       Office of Management and Budget                        produced energy resources, to provide
                                              *      *     *        *      *                           (OMB) its plan (Plan) for reviewing its                the plan and report that are called for in
                                                Dated: October 26, 2017.                               existing regulations, orders, guidance                 section 2 of the Executive Order. The
                                              Richard E. Ashooh,                                       documents, policies, and any other                     Guidance Memo further encourages
                                              Assistant Secretary for Export                           similar agency action (agency actions)                 agencies to coordinate their compliance
                                              Administration.                                          that potentially burden the development                with Section 2 of Executive Order 13783
                                              [FR Doc. 2017–23712 Filed 10–31–17; 8:45 am]             or use of domestically produced energy                 with their compliance with Executive
                                              BILLING CODE 3510–33–P
                                                                                                       resources. On July 26, 2017, pursuant to               Order 13777, which directs agencies to
                                                                                                       section 2(d) of the Executive Order, the               establish Regulatory Reform Task Forces
                                                                                                       head of the Commission submitted a                     to evaluate existing regulations
                                              DEPARTMENT OF ENERGY                                     draft final report detailing the review                generally and make recommendations to
                                                                                                       undertaken and the results of the                      the agency head regarding their repeal,
                                              Federal Energy Regulatory                                review. Given the Commission’s status                  replacement and modification,
                                              Commission                                               as an independent regulatory agency,                   consistent with applicable law.
                                                                                                       this final report is being submitted on a                 In the Plan, the Commission
                                              18 CFR Chapter I                                         voluntary basis.2                                      explained that it intended to review
                                                                                                          Of the agency actions reviewed, this                agency actions it has taken pursuant to
                                              Final Report: Review of Federal Energy                   final report identifies nine agency                    legislative authority under: (1) the
                                              Regulatory Commission Agency                             actions that potentially materially                    Natural Gas Act (NGA), 15 U.S.C. 717,
                                              Actions Pursuant to Executive Order                      burden the development or use of                       et seq.; (2) the Federal Power Act (FPA),
                                              13783, Promoting Energy                                  domestic energy resources as                           16 U.S.C. 791a, et seq.; (3) the Interstate
                                              Independence and Economic Growth                         contemplated by the Executive Order                    Commerce Act, 49 App. U.S.C. 1 et seq.;
                                                                                                                                                              (4) the Public Utility Regulatory Policies
                                              AGENCY: Federal Energy Regulatory                          1 Executive Order 13783, Promoting Energy            Act of 1978 (PURPA), 16 U.S.C. 2601 et
                                              Commission, DOE.                                         Independence and Economic Growth, 82 Fed. Reg.         seq., and (5) other statutes for which the
                                              ACTION: Availability of Final Report.                    16093 (Mar. 28, 2017).
                                                                                                         2 The Commission is a multi-member,
                                                                                                                                                              Commission’s actions on LNG, natural
                                                                                                                                                              gas pipeline, and hydropower projects
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                                              SUMMARY:  This Final Report on the                       independent regulatory agency that must follow
                                                                                                       applicable federal laws to change its rules,
                                              Review of Federal Energy Regulatory                      regulations and orders. Because the Commission           3 Memo from Dominic J. Mancini, Acting
                                              Commission Agency Actions is                             must ultimately decide what action, if any, to take    Administrator, Office of Information and Regulatory
                                              provided pursuant to Executive Order                     in response to the Executive Order, this report is a   Affairs to Regulatory Reform Officers and
                                              13783, Promoting Energy Independence                     Commission staff analysis of the issues identified     Regulatory Policy Officers at Executive Departments
                                                                                                       for review in the Executive Order and does not         and Agencies regarding Guidance for Section 2 of
                                              and Economic Growth.                                     specifically recommend actions nor indicate the        Executive Order 13783, titled ‘‘Promoting Energy
                                              DATES: November 1, 2017.                                 timing of any potential action.                        Independence and Economic Growth.’’



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                                              50518            Federal Register / Vol. 82, No. 210 / Wednesday, November 1, 2017 / Rules and Regulations

                                              often require compliance, such as the                    broadly applied and not otherwise                       Commission actions related to electric
                                              National Environmental Policy Act, the                   codified by the Commission.5                            capacity market policies could have a
                                              Endangered Species Act, the Coastal                                                                              primary indirect effect on the
                                                                                                       B. Methodology
                                              Zone Management Act, and the Clean                                                                               development and use of generation
                                              Water Act.                                                  This final report identifies and                     resources.
                                                                                                       classifies the potentially relevant agency                 Finally, agency actions involving
                                              III. Commission Review of Agency                         actions based on: (1) the type of action                generator interconnection policies could
                                              Actions Pursuant to Section 2                            undertaken; (2) the energy source                       have a primary indirect effect on the
                                              A. Scope of Review                                       potentially affected by that action; and                development of domestic energy
                                                                                                       (3) whether the potential effects of the                resources. For example, a wind or solar
                                                 Domestic Energy Sources: Section 2 of                 action are direct or indirect.                          generator at utility scale typically must
                                              the Executive Order states that the                         This final report focuses on agency                  interconnect to the transmission grid in
                                              review should place particular attention                 actions in four jurisdictional areas: (1)               order to deliver the electricity produced
                                              on oil, natural gas, coal, and nuclear                   hydropower licensing; (2) LNG facility,                 by those domestic energy resources to
                                              energy resources. In addition, section 1                 and natural gas pipeline and storage                    the wholesale purchaser. If Commission
                                              of the Executive Order and the                           facility siting; (3) centralized electric               policies or actions lead to a delay in
                                              Guidance Memo list renewable sources,                    capacity market policies in PJM                         interconnection or otherwise affect the
                                              including flowing water, as domestic                     Interconnection, L.L.C. (PJM), ISO New                  generator’s ability to interconnect, then
                                              energy sources. Therefore, this final                    England, Inc. (ISO–NE), and New York                    the project developer may not develop
                                              report considers agency actions that                     Independent System Operator, Inc.                       that energy resource, which would
                                              potentially affect not only oil, natural                 (NYISO); and (4) electric generator                     impact the development or use of
                                              gas, coal, and nuclear energy resources,                 interconnection policies.                               domestic energy resources.
                                              but also hydropower and other                               Commission actions in these four                        This final report does not review
                                              renewable generation resources.                          jurisdictional areas have the greatest                  agency actions involving oil and natural
                                                                                                       potential to materially burden domestic                 gas pipeline rates; electric energy and
                                                 Potentially Material Burdens: Section                 energy resources as contemplated under                  ancillary service rates and market
                                              2(b) of the Executive Order states that                  the Executive Order. In particular, the                 policies; 6 electric transmission rates,
                                              ‘‘burden’’ means ‘‘to unnecessarily                      Commission’s hydropower licensing                       including return on equity issues;
                                              obstruct, delay, curtail, or otherwise                   program has the potential to directly                   demand response resources; mergers;
                                              impose significant costs on the siting,                  affect the design, location, and                        enforcement; reliability; backstop
                                              permitting, production, utilization,                     development of hydropower resources.                    transmission siting authority; and the
                                              transmission, or delivery of energy                      In addition, the Commission’s                           Public Utilities Regulatory Policies Act.
                                              resources.’’ Based on the Executive                      jurisdiction over the siting of LNG                     Commission action in these areas may
                                              Order’s definition of ‘‘burden,’’ as                     terminals and natural gas pipelines may                 indirectly impact the design, location,
                                              informed by the Guidance Memo which                      affect the delivery to market of natural                development, or use of domestic energy
                                              highlights agency actions that                           gas, and have a primary indirect effect                 resources, but would not have a primary
                                              ‘‘materially’’ affect domestic energy                    on the use of that domestically                         indirect effect, as discussed above.
                                              production, this final report considers                  produced energy resource.                                  Pursuant to the Guidance Memo’s
                                              an agency action ‘‘material’’ if it could:                  Agency actions related to electric                   recommendation, this effort with
                                              (1) directly affect the development or                   capacity market policies and generator                  respect to Executive Order 13783, to the
                                              use of domestic energy resources; or (2)                 interconnection policies may have a                     extent appropriate, was coordinated
                                              have a primary indirect effect on the                    primary indirect effect on the                          with the Commission’s Regulatory
                                              development or use of domestic energy                    development, retention, or retirement of                Reform Task Force created pursuant to
                                              resources.4 Given the Commission’s                       domestic energy resources. As the                       Executive Order 13777.7
                                              limited jurisdiction, none of the                        Commission has recently recognized in                      This final report discusses those
                                              Commission’s agency actions would                        its ongoing efforts concerning the                      agency actions that rose to the level of
                                              materially affect the design and/or                      interplay of wholesale electric markets                 a potential material burden as
                                              location of drilling or mining of energy                 and state policy, the centralized electric              contemplated by the Executive Order
                                              production resources.                                    capacity markets in PJM, ISO–NE, and                    and clarified by the Guidance Memo.
                                                                                                       NYISO are intended to ensure long-term                  For hydropower licensing and the LNG
                                                 Agency Actions: This final report
                                              considers the following types of binding                 resource adequacy by sending accurate
                                                                                                                                                                 6 Commission actions on energy and ancillary
                                              Commission agency actions in existence                   price signals for investment in electric                service market rules are less directly related to the
                                              as of March 28, 2017 (i.e., the date of                  capacity resources, when and where                      development and use of domestic energy resources
                                              issuance of Executive Order 13783):                      needed. By signaling the value of                       than Commission actions on centralized capacity
                                                                                                       capacity, including the potential need                  market rules. While energy and ancillary service
                                              codified regulations published by the                                                                            markets have an effect on the economic viability
                                              Commission (i.e., 18 CFR); final rules;                  for new generation resources, these                     and day-to-day use of generation resources, the
                                              public policy statements and guidance                    markets serve a function in those                       market rules established by the Commission are
                                              documents; and case-specific orders and                  regions that would otherwise typically                  intended to ensure recovery of variable costs (e.g.,
                                                                                                       be performed through integrated                         fuel costs) for marginal units, rather than to be the
                                              opinions that establish policies that are                                                                        primary source of fixed cost recovery for new
                                                                                                       resource planning, often before a state                 generation resources. That is, in regions that do not
                                                 4 The Guidance Memo indicates that agencies           public service commission. As a result,                 have capacity markets, there is an additional
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                                              should review actions that both directly and                                                                     mechanism to address fixed cost recovery typically
                                              indirectly affect domestic energy sources. This final      5 This report does not consider the issue of grants   administered by the relevant state regulatory
                                              report uses the term ‘‘primary indirect effect’’ to      to third parties to perform agency actions because      commission, in the case of investor-owned public
                                              define the scope of indirect effects that will be        the Commission does not issue such grants.              utilities, or the management of public power
                                              considered for review. A primary indirect effect is      Commission staff’s analysis included consideration      utilities.
                                              an effect that is only one step removed from a direct    of information collections, including those subject       7 As with Executive Order 13783, independent

                                              effect. In other words, a primary indirect effect        to the Paperwork Reduction Act, to the extent that      regulatory agencies like the Commission are not
                                              occurs when an agency action affects a factor that,      such collections are within the scope of the agency     subject to Executive Order 13777, but are
                                              in turn, affects a domestic energy source.               actions reviewed under the Executive Order.             encouraged to comply.



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                                                               Federal Register / Vol. 82, No. 210 / Wednesday, November 1, 2017 / Rules and Regulations                                       50519

                                              and natural gas transportation facilities                proposed or unlicensed operating                      project-specific, and may be negligible/
                                              siting programs, the Executive Order                     projects; determine and assess                        non-existent for complex proceedings
                                              review process revealed potentially                      headwater benefit charges; approve                    that could benefit from a more
                                              burdensome agency actions related to                     transfers of licensed projects; resolve               structured process such as the ILP.
                                              regulations promulgated by the                           complaints alleging noncompliance                     However, any material burden could be
                                              Commission. For electric capacity                        with license and exemption conditions;                alleviated by making the ILP optional,
                                              markets and generator interconnection,                   and act on applications for license                   and removing the requirement to seek
                                              the Executive Order review process                       surrenders.                                           Commission authorization to use the
                                              revealed potentially burdensome agency                      The Commission also is responsible                 TLP and ALP (see 18 CFR 4.30, 5.1, 5.3,
                                              actions related to Commission                            for ensuring that the water-retaining                 5.8, 16.1).
                                              rulemaking orders and case-specific                      features of hydropower projects are
                                              orders, which typically did not result in                designed, constructed, operated, and                  ii. Pre-Filing Application Requirement
                                              the promulgation of regulations. This                    maintained using current engineering
                                              final report identifies steps the                        standards and federal guidelines for                     In the final stages of the Commission’s
                                              Commission may consider, to the extent                   dam safety. Commission staff inspects                 pre-filing process for hydropower
                                              permitted by law, to alleviate or                        projects to investigate potential dam                 projects, the Commission’s regulations
                                              eliminate the aspects of the agency                      safety problems and, every five years, a              require a potential applicant to submit
                                              actions that may burden the                              Commission-approved independent                       a draft license application or
                                              development or use of domestically                       consulting engineer must inspect and                  preliminary licensing proposal before
                                              produced energy resources.                               evaluate projects with dams higher than               submitting a final license application
                                                                                                       32.8 feet or with a total storage capacity            (18 CFR 4.38(c)(4) and 5.16,
                                              C. Discussion                                                                                                  respectively). The Commission’s
                                                                                                       of more than 2,000 acre-feet. The
                                              1. Hydropower Licensing                                  Commission also requires licensees to                 regulations include minimum filing
                                                                                                       prepare emergency action plans and                    requirements for these documents (e.g.,
                                                 Under Part I of the FPA, the
                                              Commission has the exclusive authority                   conducts training sessions on how to                  study results, analyses, and
                                              to issue licenses, small capacity                        develop and test these plans.                         environmental measures), and a
                                              exemptions (up to 10 megawatts (MW)),                       The vast majority of agency actions                stakeholder review process. The
                                              and conduit exemptions for non-federal                   relating to the Commission’s                          requirement to file the draft application
                                              hydropower projects. The Commission                      hydropower program do not present a                   and preliminary licensing proposal may
                                              currently regulates over 1,600 licensed                  material burden to hydropower                         be materially burdensome in terms of
                                              or exempted hydroelectric projects,                      resources. Specifically, most agency                  the cost and delay associated with the
                                              representing about 56,000 MW of                          actions: (1) are necessary to administer              preparation of the documents and the
                                              authorized installed capacity, which is                  the Commission’s hydropower program                   stakeholder review process. To
                                              more than half of all developed                          and process hydropower license                        eliminate material burdens, the
                                              hydropower in the United States.                         applications in an orderly manner; and/               Commission could consider revising its
                                                 The Commission is responsible for                     or (2) do not negatively affect the                   regulations to make this aspect of the
                                              coordinating and managing the                            development of hydropower resources.                  pre-filing process optional for license
                                              processing of hydropower project                         As outlined below, however, this final                applicants.
                                              license and exemption applications, as                   report identifies three areas where
                                              well as applications for preliminary                     potential material burdens may exist:                 iii. Pre-Filing Schedule
                                              permits (under which permittees study                    licensing processes; exemption
                                                                                                       processes; and determinations on                         The ILP contains comment and filing
                                              proposed projects). This includes                                                                              deadlines throughout the pre- and post-
                                              determining the effects of constructing,                 deficient applications.
                                                                                                                                                             filing application process to ensure a
                                              operating, and maintaining hydropower                    a. Licensing Processes                                structured approach to hydropower
                                              projects on environmental resources,                                                                           licensing. The ILP, however, may be
                                              and the need for the project’s power.                    i. ILP Default Regulation
                                                                                                                                                             materially burdensome in terms of the
                                              Pursuant to the FPA, issues considered                     The Commission’s regulations include
                                                                                                       three hydropower licensing processes                  schedule established for the pre-filing
                                              during the review of license
                                                                                                       for applicants: the Integrated Licensing              process (3–3.5 years total). To alleviate
                                              applications include power production;
                                                                                                       Process (ILP), the Traditional Licensing              this burden, the Commission could
                                              fish, wildlife, recreation, and other
                                              environmental issues; flood control;                     Process (TLP), and the Alternative                    consider certain comment and filing
                                              irrigation; and other water uses. Various                Licensing Process (ALP). The                          deadline reductions to allow for an
                                              statutory requirements also give other                   Commission’s regulations assign the ILP               overall time savings of three months: (1)
                                              agencies a significant role in project                   as the default process for all license                reduce the time that an applicant has to
                                              development, and several state and                       requests, and an applicant must                       file a proposed study plan, and the
                                              federal agencies have mandatory                          specifically request and justify the use              Commission has to issue a second
                                              authorities that limit the Commission’s                  of either the TLP or ALP. Assigning the               scoping document, from 45 days to 30
                                              control of the cost and time required for                ILP as the default process could be                   days after receiving comments (18 CFR
                                              licensing.                                               materially burdensome due to: (1) the                 5.10 and 5.11); (2) reduce the time for
                                                 Following the issuance of a license or                time and costs associated with obtaining              entities to file comments on the
                                              exemption, the Commission oversees                       the Commission’s approval to use the                  proposed study plan, from 90 days to 60
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                                              compliance with the terms and                            TLP or ALP; and (2) in the event the                  days (18 CFR 5.12); (3) reduce the time
                                              conditions of the license/exemption for                  Commission denies the request to use                  an applicant has to file a revised study
                                              the duration of the license. This                        the TLP/ALP, there may be additional                  plan, from 30 days to 15 days (18 CFR
                                              includes processing the filing of plans,                 time and costs associated with the ILP,               5.13); and (4) reduce the time for filing
                                              reports, and license amendments.                         due to the structured nature of the                   comments on an applicant’s preliminary
                                              Additionally, the Commission must                        process. The level of burden caused by                licensing proposal, from 90 days to 60
                                              determine if it has jurisdiction over                    the ILP default regulation is largely                 days (18 CFR 5.16).


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                                              50520            Federal Register / Vol. 82, No. 210 / Wednesday, November 1, 2017 / Rules and Regulations

                                              iv. License Term Policy                                  procedure for small hydroelectric power               conduit exemption application to the
                                                 Section 6 of the FPA provides that                    projects with an installed capacity of 5              relevant regulations for a license
                                              hydropower licenses shall be issued for                  MW or less (see 46 FR 55,944 at 55,947                application, and then be accepted for
                                              a term not to exceed 50 years. There is                  (1981); 16 U.S.C. § 2705). The                        filing as of the date the exemption
                                              no minimum license term for original                     Hydropower Regulatory Efficiency Act                  application was accepted for filing. The
                                              licenses (16 U.S.C. 799). Section 15(e) of               of 2013 has since amended PURPA by                    inability of an applicant of a small
                                              the FPA provides that any new license                    increasing the size of a small                        hydropower exemption to convert its
                                              for an existing project (i.e., relicense)                hydroelectric power project from 5 to 10              application to a license application is
                                              shall be for a term that the Commission                  MW. Therefore, the 5 MW threshold in                  materially burdensome because the
                                              determines to be in the public interest,                 18 CFR 4.40, 4.50, and 4.60 is materially             applicant must initiate an entirely new
                                              but not less than 30 years or more than                  burdensome to projects between 5 and                  license process after its exemption is
                                              50 years (16 U.S.C. 808(e)). Current                     10 MW, in terms of the cost and time                  rejected, thereby causing delay to the
                                              Commission policy is to set a 30-year                    associated with the more onerous filing               development of the resource. To
                                              license term where there is little or no                 requirements of Subparts E and F. To                  eliminate this burden, the Commission
                                              authorized redevelopment, new                            eliminate the material burden, the                    could consider amending its regulations
                                              construction, or environmental                           Commission could consider revising its                to explicitly provide the small
                                              mitigation and enhancement; a 40-year                    regulations to increase the threshold                 hydropower exemption applicant with
                                              license term for a license involving a                   from 5 MW.                                            the ability to convert its exemption
                                              moderate amount of these activities; and                                                                       application to a license application if
                                                                                                       b. Exemption Processes
                                              a 50-year license term where there is an                                                                       the exemption application is rejected.
                                              extensive amount of such activity.8 On                   i. Increased Capacity Requirement
                                                                                                                                                             c. Prohibition on Refiling Subsequent
                                              November 17, 2016, the Commission                           To qualify for a license exemption                 License Applications
                                              issued a notice of inquiry in FERC                       under section 405 of PURPA, an
                                                                                                       applicant must propose to install/                       Pursuant to the authority provided in
                                              Docket No. RM17–4–000 inviting
                                                                                                       increase the total capacity of a project to           section 10(i) of the FPA (16 U.S.C. 803),
                                              comments on what changes, if any,
                                                                                                       not more than 10 MW (18 CFR                           the Commission routinely waives
                                              should be made to the license term
                                                                                                       4.30(b)(31), 4.31(c), and 4.103(a)). The              certain sections of Part I of the FPA
                                              policy. The license terms provide
                                                                                                       regulatory requirement to add new                     when it issues a minor license. As
                                              operational certainty and govern the
                                                                                                       capacity at the project is not specifically           relevant, the Commission routinely
                                              frequency of the license renewal
                                                                                                       required by section 405 of PURPA, and                 waives section 15 of the FPA, which
                                              process, which influences the overall
                                                                                                       it materially burdens existing licensees              governs the Commission’s procedures
                                              cost of development. In turn, shorter
                                                                                                       that would otherwise be eligible to seek              for issuing a new license to an existing
                                              license terms could burden
                                                                                                       an exemption at the end of the existing               licensee (i.e., a relicense) (16 U.S.C. and
                                              development by increasing the cost of
                                                                                                       license term. To eliminate this burden,               808). Yet, the Commission’s regulations
                                              development. The Commission
                                                                                                       the Commission could consider revising                require the licensee to file an
                                              currently is considering comments on
                                                                                                       the regulations to remove the                         application for relicense at least 24
                                              the license term policy, which it could
                                                                                                       requirement to install or increase the                months before the expiration of the
                                              use to further evaluate the need for any
                                                                                                       capacity of the facility to qualify for an            existing license (18 CFR 16.20(c)).
                                              future changes to the license term
                                                                                                       exemption.                                            Moreover, if the Commission rejects the
                                              policy.
                                                                                                                                                             application, it cannot be refiled (18 CFR
                                              v. Minimum Filing Requirements                           ii. Small Hydropower Conversion                       16.9(b)(4)). Rejecting a relicense
                                                 The Commission’s regulations contain                  Restrictions                                          application, and not providing the
                                              minimum filing requirements                                 In the event that the Commission                   applicant with the opportunity to refile,
                                              depending on the size of a project, and                  rejects an exemption application, the                 is materially burdensome to the use of
                                              whether construction or modification of                  Commission’s regulations do not                       hydropower resources. To eliminate this
                                              a dam is needed for project operation.                   explicitly provide an applicant with the              burden, the Commission could consider
                                              Part 4 of the Commission’s regulations                   ability to convert a small hydropower                 revising its regulations at 18 CFR 16.20
                                              includes three subparts corresponding                    exemption application to a license                    to provide the applicant with the option
                                              to these factors: (1) Subpart E—                         application (18 CFR 4.105). The                       of resubmitting the application if the
                                              Application for License for Major                        Commission’s Handbook for                             deficiencies are corrected.
                                              Unconstructed Project and Major                          Hydroelectric Project Licensing and 5                 2. LNG Facility and Natural Gas
                                              Modified Project (18 CFR 4.40); (2)                      MW Exemptions from Licensing, issued                  Pipeline and Storage Facility Siting
                                              Subpart F—Application for License for                    April 2004, explicitly states at section
                                                                                                       6.3.2:                                                   Under section 7 of the NGA, 15 U.S.C.
                                              Major Project—Existing Dam (18 CFR
                                                                                                          If the exemption application is                    717f, the Commission authorizes the
                                              4.50); and (3) Subpart G—Application
                                                                                                       dismissed, the process is terminated.                 construction, operation, or
                                              for License for Minor Water Power
                                                                                                       There is no opportunity to convert the                abandonment of interstate natural gas
                                              Projects and Major Water Power Projects
                                                                                                       exemption application to an application               pipeline and storage projects, as well as
                                              5 MW or Less (18 CFR 4.60). Subparts
                                                                                                       for license.9                                         certain types of LNG facilities (e.g., LNG
                                              E and F apply to projects greater than 5
                                                                                                          In comparison, the Commission has                  plants engaged in the storage of
                                              MW, and include more onerous filing
                                                                                                       established a process for converting a                interstate natural gas volumes).
                                              requirements than Subpart G, which
                                                                                                       small conduit exemption application to                Similarly, under section 3 of the NGA,
                                              applies to projects less than or equal to
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                                                                                                       a license application (18 CFR 4.93). The              15 U.S.C. 717b(e)(1), the Commission
                                              5 MW. The 5 MW threshold is based on
                                                                                                       process for small conduits allows the                 authorizes the siting, construction and
                                              section 405 of PURPA, which mandated
                                                                                                       applicant to submit additional                        operation of LNG terminals through
                                              a simplified and expeditious licensing
                                                                                                       information necessary to conform the                  which the commodity passes for export
                                                8 See City of Danville, Virginia, 58 FERC ¶ 61,318                                                           or import. As part of these
                                              (1992); and Consumers Power Co., 68 FERC ¶                 9 See www.ferc.gov/industries/hydropower/gen-       responsibilities, the Commission
                                              61,077, (1994).                                          info/handbooks/licensing_handbook.pdf.                conducts both a non-environmental and


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                                                               Federal Register / Vol. 82, No. 210 / Wednesday, November 1, 2017 / Rules and Regulations                                                  50521

                                              an environmental review of the                           by interstate and intrastate pipelines,               development, its overall result is a more
                                              proposed facilities. The non-                            and environmental review under NEPA.                  timely application review by
                                              environmental review focuses on the                         The majority of agency actions                     considering all issues regarding a
                                              engineering design, rate, and tariff                     relating to the siting and construction of            project concurrently. As such, there is
                                              considerations. The Commission carries                   interstate natural gas transportation and             no need for the Commission to consider
                                              out the environmental review with the                    LNG facilities do not materially burden               any revision to this regulation.
                                              cooperation of numerous federal, state,                  the transportation or delivery of
                                                                                                       domestically produced natural gas.                    3. Centralized Electric Capacity Market
                                              and local agencies, and with the input
                                                                                                       Specifically, most of the Commission’s                Policies
                                              of other interested parties. Under the
                                              NGA, the Commission also is the lead                     actions: (1) Are necessary for the                       Three of the Regional Transmission
                                              federal agency for coordinating all                      Commission to review and process NGA                  Operator/Independent System Operator
                                              applicable federal authorizations (e.g.,                 section 3 and 7 project applications;                 (RTO/ISO) markets in the eastern U.S.
                                              required permits under the Clean Water                   and/or (2) do not negatively affect the               have adopted centralized capacity
                                              Act, Clean Air Act, and Coastal Zone                     siting or construction of natural gas                 markets to help address resource
                                              Management Act, among others) and                        pipeline and storage facilities or LNG                adequacy concerns.10 In particular, PJM,
                                              preparing environmental analyses                         import/export facilities in a manner that             ISO–NE, and NYISO have implemented
                                              required under the National                              has a direct or primary indirect effect on            centralized capacity markets that were
                                              Environmental Policy Act (NEPA) for all                  the development or use of domestic                    designed, in part, to ensure long-term
                                              interstate natural gas infrastructure and                energy production.                                    resource adequacy by sending accurate
                                              LNG import/export proposals.                                However, the Commission’s                          price signals for investment in capacity
                                                 There are several distinct phases to                  regulations require a prospective                     resources, when and where needed.11
                                              the review process for interstate natural                applicant for authorization under                     As a result, agency actions related to
                                              gas and LNG facilities under the                         section 3 of the NGA to site and                      capacity market policies could have a
                                              Commission’s jurisdiction: pre-filing                    construct LNG terminals and related                   primary indirect effect on the
                                              review (if applicable); application                      jurisdictional natural gas facilities to              development and use of generation
                                              review; and post-authorization                           engage in the Commission’s pre-filing                 resources, including renewables, natural
                                              compliance. During the pre-filing                        process. (18 CFR 157.21(a)). The                      gas, and nuclear facilities.12
                                              review, Commission staff begins work                     Commission’s pre-filing regulations                      The centralized capacity markets
                                              on the environmental review and                          require applicants to use the pre-filing              require load-serving entities to secure,
                                              engages with stakeholders with the goal                  process for a minimum of 180 days                     either through self-supply 13 or
                                              of resolving issues before the filing of an              before the filing of an application for               participation in the capacity auction,
                                              application. Throughout the pre-filing                   any project that is required to engage in             sufficient resources to meet their
                                              process, Commission staff meets with                     pre-filing. (18 CFR 157.21(a)(2)(1) and               capacity obligation at a future time. All
                                              stakeholders, visits the project site, and               153.6(c)). While, in general, the pre-                three centralized capacity markets allow
                                              confers with federal, state, and local                   filing process is designed to expedite                participation by any resource that is
                                              agencies.                                                the processing of applications, the                   technically qualified to provide the
                                                 Once a project sponsor files an                       mandatory imposition of the pre-filing                capacity product being procured and
                                              application with the Commission under                    process on LNG terminals and related                  each market generally models locational
                                              NGA section 3 for LNG import/export                      pipeline projects for at least 180 days               constraints. Each conducts a capacity
                                              terminals or under NGA section 7 for                     before an application can be filed may                auction where eligible offers to sell
                                              interstate pipeline and storage facilities,              be materially burdensome for some                     capacity are compared to the demand
                                              Commission staff analyzes both                           projects in terms of the potential delay              for capacity resources, which is
                                              environmental and non-environmental                      and costs associated with the process.                established through an administratively-
                                              aspects for a proposed project, including                Although the 180 day pre-filing process
                                              for LNG terminals safety and                             is required by statute for LNG terminals,               10 The Commission has defined resource

                                              engineering. An Environmental                            15 U.S.C. 717b–1(a), the statute did not              adequacy as ‘‘the availability of an adequate supply
                                                                                                                                                             of generation or demand responsive resources to
                                              Assessment or Environmental Impact                       mandate that the Commission also                      support safe and reliable operation of the grid.’’ Cal.
                                              Statement typically is issued for public                 require ‘‘related jurisdictional natural              Indep. Sys. Operator Corp., 122 FERC ¶ 61,017, at
                                              comment, and ultimately, the                             gas facilities’’ to engage in pre-filing.             P 3 (2008).
                                                                                                                                                               11 ‘‘Capacity is not actual electricity. It is a
                                              Commission will issue an order on an                     However, related jurisdictional natural
                                                                                                                                                             commitment to produce electricity or forgo
                                              application after considering both                       gas pipeline facilities need to be                    consumption of electricity when required.’’
                                              environmental and non-environmental                      evaluated concurrent with a proposed                  Advanced Energy Mgmt. All. v. FERC, No. 16–1234,
                                              issues.                                                  LNG terminal to avoid segmentation                    2017 WL 2636455, at *1 (D.C. Cir. Jun. 20, 2017);
                                                 During the post-authorization                         under the National Environmental                      see Conn. Dep’t of Pub. Util. Control v. FERC, 569
                                                                                                                                                             F.3d 477, 482 (D.C. Cir. 2009) (explaining that
                                              compliance period, Commission staff                      Policy Act. Further, the pre-filing                   capacity ‘‘amounts to a kind of call option that
                                              monitors the project sponsor’s                           process allows stakeholders to become                 electricity transmitters purchase from parties—
                                              compliance with the conditions directed                  involved in the overall Project at an                 generally, generators—who can either produce more
                                              by the Commission. Ultimately,                                                                                 or consumer less when required’’).
                                                                                                       early stage, and applicants can benefit                 12 It is important to note that the Commission has
                                              Commission approval is required before                   from stakeholder’s early identification               not required RTOs/ISOs to implement centralized
                                              the facility can begin operation and                     and resolution of issues that may                     capacity markets; rather, the determination to
                                              provide service.                                         overlap with the LNG terminal. Without                include such markets has been a voluntary decision
                                                 Pursuant to Executive Order 13783,                    using the pre-filing process for related              by the stakeholders in each particular RTO/ISO.
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                                                                                                                                                             However, once an RTO/ISO decides to implement
                                              the review encompassed the                               jurisdictional natural gas facilities,                such a capacity market, the Commission must
                                              Commission’s regulations, guidance                       delays could occur during the                         ensure that the tariff provisions establishing the
                                              documents, and policies related to the                   application review, when issues are first             capacity market rules are just and reasonable and
                                              certification of interstate natural gas                  identified and need resolution. Thus,                 not unduly discriminatory or preferential.
                                                                                                                                                               13 While the specific rules vary by RTO/ISO, load-
                                              transportation facilities, authorization of              although this regulation may result in                serving entities can own or construct resources or
                                              LNG import and export facilities,                        delays or additional costs to the                     contract bilaterally for capacity from resources
                                              authorization of certain transportation                  applicant early on in a project’s                     owned by other entities.



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                                              50522            Federal Register / Vol. 82, No. 210 / Wednesday, November 1, 2017 / Rules and Regulations

                                              determined demand curve. Generally                       individual generation developer’s                       generator interconnection procedures
                                              speaking, the market clears based on the                 decision not to develop as a result of                  and a standard small generator
                                              intersection between the supply and                      being subject to a MOPR would not in                    interconnection agreement for the
                                              demand curves. All cleared resources                     and of itself materially affect the use or              interconnection of electric generators no
                                              receive the market clearing price for                    development of oil, natural gas, coal,                  larger than 20 MW.15
                                              capacity regardless of resource type.                    nuclear energy, or other domestic                          Order No. 661: In Order No. 661, the
                                                 The Commission has issued multiple                    energy resources in the U.S. Therefore,                 Commission required public utilities to
                                              agency actions (i.e., Commission orders                  Commission actions on MOPRs do not                      add standard procedures and technical
                                              addressing the capacity market designs                   negatively affect the development and                   requirements for the interconnection of
                                              of the relevant organized markets) that                  use of domestic energy resources by the                 large wind generation resources to their
                                              govern the rules and design of the                       electricity sector, despite the potential               standard large generator interconnection
                                              centralized capacity markets. Agency                     burden on those individual resources                    procedures and large generator
                                              actions related to electric capacity                     that are mitigated. Furthermore, from                   interconnection agreements in their
                                              markets were reviewed to determine if                    the perspective of other resources in the               open access transmission tariffs.16
                                              they impose a material burden on the                     market, the MOPR can help preserve the                     Order No. 827: In Order No. 827, the
                                              development and use of domestic                          integrity of the market price signals and               Commission revised the interconnection
                                              energy resources. In general, agency                     revenue streams, thereby facilitating                   agreements for both large and small
                                              actions regarding centralized electricity                development and retention of other                      non-synchronous generators to
                                              capacity market design do not impose a                   resources that might use domestic                       eliminate exemptions for wind
                                              material burden on the development                       energy resources.                                       generators from providing reactive
                                              and use of domestic energy resources                                                                             power.17
                                              because they generally seek to ensure                    4. Generator Interconnection Policies
                                                                                                                                                                  Order No. 828: In Order No. 828, the
                                              adequate resources, and thereby                             Electric generators use domestic                     Commission modified the small
                                              facilitate the development of domestic                   energy resources to produce electricity.                generator interconnection agreement as
                                              energy resources, rather than create                     Electric generators at utility scale must               set forth in Order Nos. 2006 and 792 to
                                              material burdens to the development                      interconnect to the transmission system                 require newly interconnecting small
                                              and use of these resources. However,                     to deliver the electricity they produce to              generating facilities to ride through
                                              this final report discusses Commission                   customers and receive benefits from the                 abnormal frequency and voltage events
                                              actions regarding one aspect of                          wholesale electric markets. The                         and not disconnect during such
                                              centralized electricity capacity markets,                interconnection process is designed to                  events.18
                                              buyer-side market power mitigation                       ensure a new resource can safely and                       Order No. 792: In Order No. 792, the
                                              rules, due to the potentially material                   reliably deliver its output to end-users                Commission revised the standard small
                                              burdens Commission actions may have                      and to assign the costs to the party                    generator interconnection procedures
                                              on the development of domestic energy                    causing the costs of any system                         and standard small generator
                                              resources.                                               upgrades required to maintain safety                    interconnection agreement for the
                                                 All three eastern RTOs/ISOs use some                  and reliability. If a generator is not able             interconnection of electric generators no
                                              form of a minimum offer price rule                       to interconnect to the transmission                     larger than 20 MW.19
                                              (MOPR) as approved by Commission                         system, or if it is too difficult or                       None of these orders materially
                                              order. MOPRs as currently designed                       expensive to do so, the developer may                   burden the development or use of
                                              establish offer floors for certain new                   decide not to pursue investment in the                  domestic energy resources. The
                                              resources to protect against subsidized                  electric generation resource. Therefore,                Commission’s generator interconnection
                                              new entry that has the potential to                      the ability of an electric generator to                 orders establish an orderly, uniform
                                              artificially suppress capacity market                    interconnect to a transmission system                   process for all types of generators to
                                              prices. New resources that trigger this                  could affect the development or use of
                                                                                                                                                               interconnect to the grid safely and
                                              rule are required to submit offers into                  domestic energy resources.
                                                                                                                                                               reliably, facilitating their development
                                              the capacity market auction at or above                     The Commission has issued multiple
                                                                                                       agency actions that govern and facilitate               by providing them with the means to
                                              the floor. If the resource’s mitigated                                                                           deliver the electricity they produce to
                                              offer price is too high to clear in the                  the interconnection of electric
                                                                                                       generators to public utility transmission               the purchaser. As such, these
                                              market, then the resource would not
                                                                                                       systems. They include:                                  requirements will not unnecessarily
                                              receive a capacity obligation and the
                                                                                                          Order No. 2003: In Order No. 2003,                   obstruct, delay, curtail or otherwise
                                              associated market payments. Depending
                                              on the terms of any out-of-market                        the Commission created standard large                     15 Standardization of Small Generator
                                              contracts, the resource also may not be                  generator interconnection procedures                    Interconnection Agreements and Procedures, Order
                                              eligible to receive out-of-market                        and adopted a standard large generator                  No. 2006, FERC Stats. & Regs. ¶ 31,180, order on
                                              payments if it does not clear in the                     interconnection agreement for the                       reh’g, Order No. 2006–A, FERC Stats. & Regs. ¶
                                              capacity market auction. Without such                    interconnection of electric generators                  31,196 (2005), order granting clarification, Order
                                                                                                       larger than 20 MW, regardless of                        No. 2006–B, FERC Stats. & Regs. ¶ 31,221 (2006).
                                              compensation, the developer may                                                                                    16 Interconnection for Wind Energy, Order No.
                                              conclude it is not economic to develop                   resource type.14                                        661, FERC Stats. & Regs. ¶ 31,186, order on reh’g,
                                              the resource. In this way, Commission                       Order No. 2006: In Order No. 2006,                   Order No. 661–A, FERC Stats. & Regs. ¶ 31,198
                                              actions on the MOPR arguably impose a                    the Commission created standard small                   (2005).
                                                                                                                                                                 17 Reactive Power Requirements for Non-
                                              burden on certain new resources.
                                                                                                         14 Standardization of Generator Interconnection       Synchronous Generators, Order No. 827, FERC
                                                 However, Commission actions on the                                                                            Stats. & Regs. ¶ 31,385, order on reh’g, 157 FERC
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                                                                                                       Agreements and Procedures, Order No. 2003, FERC
                                              MOPR do not rise to the level of a                       Stats. & Regs. ¶ 31,146 (2003), order on reh’g, Order   ¶ 61,003 (2016).
                                              material burden, as the term is defined                  No. 2003–A, FERC Stats. & Regs. ¶ 31,160, order on        18 Requirements for Frequency and Voltage Ride

                                              in the Executive Order and Guidance                      reh’g, Order No. 2003–B, FERC Stats. & Regs.            Through Capability of Small Generating Facilities,
                                              Memo. While application of the MOPR                      ¶ 31,171 (2004), order on reh’g, Order No. 2003–C,      Order No. 828, 156 FERC ¶ 61,062 (2016).
                                                                                                       FERC Stats. & Regs. ¶ 31,190 (2005), aff’d sub nom.       19 Small Generator Interconnection Agreements
                                              to a generator’s bid may conceivably                     Nat’l Ass’n of Regulatory Util. Comm’rs v. FERC,        and Procedures, Order No. 792, 145 FERC ¶ 61,159
                                              result in the developer deciding not to                  475 F.3d 1277 (D.C. Cir. 2007), cert. denied, 552       (2013), clarifying, Order No. 792–A, 146 FERC ¶
                                              develop its generation resource, an                      U.S. 1230 (2008).                                       61,214 (2014).



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                                                               Federal Register / Vol. 82, No. 210 / Wednesday, November 1, 2017 / Rules and Regulations                                             50523

                                              impose significant costs on the siting,                  limitations to be adjusted for inflation              sufficient notice to the public of any
                                              permitting, production, utilization,                     are set forth in Appendix A and                       adjustments prior to any changes
                                              transmission, or delivery of energy                      Appendix B of part 24 in this final rule              becoming effective for each fiscal year.
                                              resources and therefore they will not                    and include the commercial vessel                        The FAST Act further requires the
                                              materially burden the production or use                  arrival fees, commercial truck arrival                Secretary to round the amount of any
                                              of domestic energy resources.                            fees, railroad car arrival fees, private              increase in the CPI to the nearest dollar.
                                                Dated: October 25, 2017.                               vessel arrival fees, private aircraft                 The rounding requirement applies to the
                                                                                                       arrival fees, commercial aircraft and                 difference in the CPI from the
                                              Kimberly D. Bose,
                                                                                                       vessel passenger arrival fees, dutiable               comparison year to the current year
                                              Secretary.                                                                                                     when determining whether an
                                                                                                       mail fees, customs broker permit user
                                              [FR Doc. 2017–23722 Filed 10–31–17; 8:45 am]             fees, barges and other bulk carriers                  adjustment is necessary. As written, the
                                              BILLING CODE 6717–01–P                                   arrival fees, and merchandise processing              rounding requirement does not apply to
                                                                                                       fees as well as the corresponding                     the fee amount resulting from any
                                                                                                       limitations. (19 U.S.C. 58c(a) and (b)).              adjustment. As noted above, if the
                                              DEPARTMENT OF HOMELAND                                   Further, the FAST Act includes a                      difference in the CPI since the last
                                              SECURITY                                                 particular measure of inflation for these             adjustment is less than one (1) percent,
                                                                                                       purposes and special rules when                       the Secretary may elect not to adjust the
                                              U.S. Customs and Border Protection                       considering adjustments.                              fees and limitations. The statute
                                                                                                          According to the FAST Act, the                     requires CBP to use the Consumer Price
                                              DEPARTMENT OF THE TREASURY                               customs COBRA user fees and                           Index—All Urban Consumers, U.S. All
                                                                                                       limitations were to be adjusted on April              items, 1982–84 (CPI–U) which can be
                                              19 CFR Parts 24 and 111                                  1, 2016, and at the beginning of each                 found on the U.S. Department of Labor,
                                              [USCBP–2017–0025; CBP Dec. 17–16]                        fiscal year to reflect the percent increase           Bureau of Labor Statistics Web site:
                                                                                                       (if any) in the Consumer Price Index                  www.bls.gov/cpi/. The proposed rule
                                              RIN 1515–AE25                                            (CPI) for the preceding 12-month period               provided that CBP’s Office of Finance
                                                                                                       compared to the CPI for fiscal year 2014.             will determine annually whether an
                                              Procedures To Adjust Customs                             The statute permits the Secretary to                  adjustment to the fees and limitations is
                                              COBRA User Fees To Reflect Inflation                     ignore any CPI increase of less than one              necessary and a notice specifying the
                                              AGENCY:  U.S. Customs and Border                         (1) percent from the time of the previous             amount of the fees and limitations will
                                              Protection, Department of Homeland                       adjustment. As a result, if the increase              be published in the Federal Register for
                                              Security; Department of the Treasury.                    in the CPI since the previous adjustment              each fiscal year at least 30 days prior to
                                              ACTION: Final rule.
                                                                                                       is less than one (1) percent, the                     the effective date of the new fees and
                                                                                                       Secretary has discretion to determine                 limitations.
                                              SUMMARY:    This document adopts as a                    whether the fees should be adjusted.
                                                                                                          On June 15, 2016, CBP published a                  Technical Corrections
                                              final rule, with changes, the
                                              amendments proposed to the U.S.                          notice in the Customs Bulletin                           In addition, CBP proposed technical
                                              Customs and Border Protection (CBP)                      announcing the April 2016                             updates to paragraph (g) of 19 CFR 24.22
                                              regulations to reflect that customs user                 determination that no adjustment to the               to reflect the elimination of the user fee
                                              fees and limitations established by the                  customs COBRA user fees and                           exemption for passengers arriving from
                                              Consolidated Omnibus Budget                              limitations was necessary based on the                Canada, Mexico or one of the adjacent
                                              Reconciliation Act (COBRA) will be                       FAST Act provision as the increase of                 islands pursuant to the United States—
                                              adjusted for inflation in accordance                     the CPI was less than one (1) percent.                Colombia Trade Promotion Agreement
                                              with the Fixing America’s Surface                        (Customs Bulletin, Vol. 50, No. 24, p.                Implementation Act. (Colombia TPA,
                                              Transportation Act (FAST Act).                           13). CBP published a second notice in                 Pub. L. 112–42, October 21, 2011).
                                                                                                       the Customs Bulletin on December 7,                   Section 601 of the Colombia TPA
                                              DATES: Effective November 1, 2017.
                                                                                                       2016, announcing that, based on a less                amended 19 U.S.C. 58c(b)(1)(A)(i) to
                                              FOR FURTHER INFORMATION CONTACT:                         than one (1) percent increase in                      limit the fee exemption exclusively to
                                              Bruce Ingalls, Director—Revenue                          inflation, no adjustment was necessary                passengers whose journey originated in
                                              Division, 317–298–1107, bruce.ingalls@                   for fiscal year 2017. (Customs Bulletin               a territory or possession of the United
                                              cbp.dhs.gov; or Tina Ghiladi, Director—                  Vol. 50, No. 49, p. 4).                               States, or originated in the United States
                                              Fee Strategy, Communications, and                                                                              and was limited to the territories and
                                              Integration, 202–344–3722,                               Proposed Rule                                         possessions of the United States. (19
                                              tina.ghiladi@cbp.dhs.gov.                                   On July 17, 2017, CBP published a                  U.S.C. 58c(b)(1)(A)(i)). Since the law
                                              SUPPLEMENTARY INFORMATION:                               notice of proposed rulemaking (NPRM)                  became effective on November 5,
                                                                                                       in the Federal Register (82 FR 32661)                 2011,CBP has been collecting only the
                                              Background                                               proposing to amend title 19 of the Code               non-exempt user fees. In accordance
                                                On December 4, 2015, the Fixing                        of Federal Regulations (19 CFR) to set                with the statute, CBP is removing the
                                              America’s Surface Transportation Act                     forth the methodology for determining                 exemption for passengers arriving from
                                              (FAST Act, Pub. L. 114–94) was signed                    the required adjustments. The FAST Act                Canada, Mexico, or one of the adjacent
                                              into law. Section 32201 of the FAST Act                  specifies that the customs COBRA user                 islands, from the regulations found in
                                              amends section 13031 of the                              fees and corresponding limitations                    paragraphs (g)(1)(i), (g)(1)(i)(A),
                                              Consolidated Omnibus Budget                              should be adjusted to reflect the                     (g)(1)(i)(B), (g)(1)(ii), (g)(1)(iii), (g)(2)(i),
sradovich on DSK3GMQ082PROD with RULES




                                              Reconciliation Act (COBRA) of 1985 (19                   percentage of the increase (if any) in the            the chart in paragraph (g)(2)(iv), and the
                                              U.S.C. 58c) by requiring certain customs                 average of the CPI for the preceding 12-              collection procedures in paragraphs
                                              COBRA user fees and corresponding                        month period compared to the CPI for                  (g)(4)(ii)(A), (g)(4)(ii)(B), (g)(4)(ii)(C),
                                              limitations to be adjusted by the                        fiscal year 2014. CBP determined that                 (g)(4)(iii)(A), (g)(4)(iii)(B), and
                                              Secretary of the Treasury (Secretary) to                 the 12-month period for comparison                    (g)(4)(iii)(C). (19 CFR 24.22(g)). CBP is
                                              reflect certain increases in inflation. The              will be June through May. This                        also removing the definition of
                                              specific fees and corresponding                          timeframe was proposed to allow for                   ‘‘adjacent islands’’ from paragraph


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Document Created: 2017-11-01 02:02:57
Document Modified: 2017-11-01 02:02:57
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionAvailability of Final Report.
DatesNovember 1, 2017.
ContactNicholas Tackett, Office of Energy Projects, Branch Chief, Division of Hydropower Licensing, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, 202-502-6783 Karin L. Larson, Office of General Counsel, Energy Projects, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, 202-502-8236
FR Citation82 FR 50517 

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