Revision of Regulations To Require Reporting of Damage to Natural Gas Pipeline Facilities, 51098-51104 [E6-14281]

Agencies

• DEPARTMENT OF ENERGY
• Federal Energy Regulatory Commission

[Federal Register Volume 71, Number 167 (Tuesday, August 29, 2006)]
[Rules and Regulations]
[Pages 51098-51104]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14281]



[[Page 51098]]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 260

[Docket No. RM06-18-000; Order No. 682]


Revision of Regulations To Require Reporting of Damage to Natural 
Gas Pipeline Facilities

Issued August 23, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission is amending its 
regulations to require that jurisdictional natural gas companies report 
damage to facilities as the result of a natural disaster or terrorist 
activity that results in a reduction in pipeline throughput or storage 
deliverability. The Commission is issuing this Final Rule based on its 
experience following Hurricanes Rita and Katrina under the existing 
reporting requirements which only require pipeline companies to report 
service interruptions and therefore did not require natural gas 
companies to report significant hurricane damage to facilities in 
instances where service interruptions were avoided by rerouting gas 
supplies or other means. The Commission has determined that the 
additional reporting requirements are necessary in order to effectively 
monitor the nation's natural gas infrastructure in crisis situations.

EFFECTIVE DATE: The rule will become effective August 29, 2006.

FOR FURTHER INFORMATION CONTACT: 

Berne Mosley, Office of Energy Projects, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. (202) 502-
8625.
Howard Wheeler, Office of Energy Projects, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. (202) 502-
8688.
William Blome, Office of the General Counsel, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. (202) 502-
8462.

SUPPLEMENTARY INFORMATION: Before Commissioners: Joseph T. Kelliher, 
Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon 
Wellinghoff.

I. Introduction

    1. On June 9, 2006, the Federal Energy Regulatory Commission 
(Commission) issued a Notice of Proposed Rulemaking (NOPR) in this 
proceeding.\1\ In that NOPR, we proposed to revise Sec.  260.9 of our 
regulations,\2\ which requires the reporting of serious service 
interruptions on interstate natural gas pipeline facilities operated 
under authority granted by the Commission under the Natural Gas Act.\3\ 
This Final Rule revises Sec.  260.9 largely in the manner described in 
the NOPR, with certain modifications to clarify and limit the scope of 
the new reporting requirements in response to the comments that have 
been filed. The revisions to Sec.  260.9 will ensure that the 
Commission has adequate and timely information concerning damage to 
jurisdictional pipeline and storage facilities as the result of natural 
disasters or terrorist activity.
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    \1\ 71 FR 35226 (June 19, 2006); FERC Stats. & Regs. ] 32,604 
(2006).
    \2\ 18 CFR 260.9 (2006).
    \3\ 15 U.S.C. 717-717z (2006).
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II. Background

    2. In the NOPR, the Commission explained that the severe hurricanes 
during the summer of 2005 did serious and widespread damage to the 
energy production and delivery systems of the United States, 
particularly in the Gulf Coast region. We noted that as of May 3, 2006, 
shut-in natural gas production in the Gulf of Mexico from Hurricanes 
Katrina and Rita was equivalent to 12.95 percent of current daily gas 
production.\4\ The Commission also explained that it had participated 
in the Federal effort, led by the U.S. Department of Energy, to collect 
post-hurricane information on damage to the nation's energy 
infrastructure.\5\ The Commission learned that, although it had been 
kept informed of serious service interruptions as the regulations 
required, it lacked vital information regarding the physical condition 
of facilities affecting operation of the pipeline grid.
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    \4\ Hurricane Katrina/Hurricane Rita Evacuation and Production 
Shut-in Statistics Report as of Wednesday, May 3, 2006 [Final 
Report], U.S. Department of the Interior, Minerals Management 
Service (May 3, 2006).
    \5\ See Homeland Security Presidential Directive (HSPD)-5 
(February 28, 2003), directing the Secretary of Homeland Security to 
develop a National Response Plan.
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    3. The deficiency in reporting following the 2005 hurricanes 
resulted because the current reporting requirements of Sec.  260.9 
apply only in the event of service interruptions. In instances where 
service interruptions were avoided by adjusting nomination schedules, 
rerouting gas flows over alternate facilities, or drawing down storage 
supplies, Sec.  260.9 did not require that companies report damage to 
gas facilities. Therefore, it was necessary for our staff to informally 
gather information regarding damage to facilities from pipeline 
companies and industry groups by telephone calls and other means. While 
we took steps based on available information to encourage rapid repair 
of facilities and restoration of service, including the granting of 
waivers of various regulations where necessary,\6\ the informal 
information gathering process was not adequate to ensure timely and 
accurate monitoring of gas infrastructure.
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    \6\ See NOPR, at P. 4.
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    4. As the result of our experience during and following the 2005 
hurricane season, we concluded that additional reporting requirements 
are necessary to ensure that the Commission has enough information to 
assess the status of the nation's natural gas pipeline infrastructure 
at any given time and share this information with other agencies, such 
as the U.S. Department of Energy and the U.S. Department of 
Transportation. Therefore, the Commission's June 9 NOPR proposed 
modifications to Sec.  260.9 of the regulations to add a requirement 
that pipelines report damage to certificated facilities that results in 
loss of or reduction in service through such facilities and also report 
when service through such facilities has been restored. The Commission 
proposed to expand the informational requirements of Sec.  260.9 to 
require reports including specific information concerning the location 
and cause of damage to facilities and service interruptions, the time 
of occurrence, emergency actions taken to maintain service, and other 
matters. The revised Sec.  260.9 would also require that a company send 
copies of damage reports to state commissions, as is already required 
for reports of serious service interruptions. We also proposed to allow 
filing by e-mail and to eliminate the reference to filing by telegraph.
    5. The NOPR was published in the Federal Register on June 19, 
2006,\7\ with July 19, 2006 being the deadline for comments. We 
received nine sets of comments on the NOPR. Comments were filed by 
American Gas Association (AGA),\8\ American Public Gas

[[Page 51099]]

Association (APGA),\9\ Boardwalk Pipeline Partners, LP (Boardwalk 
Pipelines), Duke Energy Gas Transmission, LLC (Duke Energy),\10\ 
Interstate Natural Gas Association of America (INGAA), National Fuel 
Gas Distribution Corporation (National Fuel Gas),\11\ NiSource, Inc. 
(NiSource),\12\ Paiute Pipeline Company (Paiute), and Williston Basin 
Interstate Pipeline Company (Williston Basin). The comments are 
described and addressed below.
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    \7\ 71 FR 35226.
    \8\ AGA represents 197 local energy utility companies delivering 
gas to more than 56 million homes, business and industries in the 
United States. AGA states that its members account for about 83 
percent of all natural gas delivered by local distribution 
companies.
    \9\ APGA is an association of approximately 650 municipal and 
other publicly-owned local distribution systems in 36 states.
    \10\ Duke Energy owns Texas Eastern Transmission, LP; Egan Hub 
Storage, LLC; Algonquin Gas Transmission, LLC; Saltville Gas 
Storage, LLC; and East Tennessee Natural Gas, LLC. It is a part-
owner of Maritimes & Northeast Pipeline, L.L.C., and Gulfstream 
Natural Gas System, L.L.C.
    \11\ National Fuel Gas is a local distribution company subject 
to the jurisdiction of the New York Public Service Commission and 
the Pennsylvania Public Utility Commission. It is a member of AGA 
and supports AGA's comments.
    \12\ NiSource owns and operates five interstate pipelines, ten 
local distribution companies and a joint venture storage company.
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III. Comments

    6. The commenters representing local distribution companies express 
strong support for the Commission's effort to ensure timely reporting 
of damage to the natural gas infrastructure. These commenters emphasize 
that information on the operating status of the pipelines' facilities 
is a critical component of price formation, particularly during periods 
of infrastructure distress such as that experienced as the result of 
Hurricanes Katrina and Rita. They believe the proposed reporting 
requirements are needed to help consumers assess the supply and 
transportation situation following such damaging events.
    7. The other commenters represent the interstate pipeline industry 
and are potential respondents to the new reporting requirements. These 
commenters generally acknowledge the need for this expedited rulemaking 
proceeding to remedy the current gap in reporting requirements so that 
the Commission is able to quickly identify significant infrastructure 
problems in the event this season produces hurricanes as damaging as 
last year's.
    8. However, the pipeline companies strongly urge the Commission to 
work toward the long-term goal of minimizing duplicative Federal 
reporting requirements by engaging in cooperative efforts with the U.S. 
Department of Transportation's Pipeline and Hazardous Materials Safety 
Administration (DOT/Pipeline Safety) \13\ and the National Response 
Center. Some commenters believe the Commission and these other agencies 
ultimately should be able to develop a single, comprehensive form that 
could be filed in one place and made available to any agency needing 
the information.\14\
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    \13\ DOT/Pipeline Safety's reporting requirements are part of 
its administration of the Natural Gas Pipeline Safety Act of 1968, 
49 U.S.C. 60101 et seq.
    \14\ Additional discussion pertaining to reporting burden is 
included below in this Final Rule's Information Collection 
Statement.
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    9. In the interim, the pipeline companies request that the 
Commission clarify and narrow the definition of ``damage'' in Sec.  
260.9 so that pipeline companies will not be required to file reports 
unnecessary to fulfill the Commission's objective in this rulemaking of 
ensuring that it has adequate and timely information to identify 
significant problems with the nation's natural gas infrastructure. The 
pipeline companies emphasize that, as proposed, the new reporting 
requirements would cause the agency to be inundated with reports of 
trivial damage from routine or unimportant occurrences which could 
result in important matters being obscured.
    10. These commenters also state that their employees' efforts to 
locate and repair more serious areas of damage could suffer if they are 
busy completing and filing forms on less serious matters in the middle 
of an emergency. Thus, they urge the Commission to limit the damage 
reporting requirement to situations where there is severe damage 
causing serious disruption of service, and to exclude minor damage 
resulting from occasional third-party activities and disruptions 
resulting from routine maintenance.
    11. The pipeline companies emphasize that, absent clarification and 
revision of the proposed regulations, the required reporting of damage 
to facilities could capture many events irrelevant to the Commission's 
objective in this rulemaking proceeding which, they believe, is to 
ensure timely identification of damage resulting from serious events 
that have the potential for impacts which, in the aggregate, may 
significantly undermine the integrity of the nation's gas 
infrastructure.
    12. As examples of incidents for which immediate reporting 
generally is not necessary to achieve this objective, the pipeline 
companies note accidental backhoe damage from construction, a farmer's 
plow hitting a farm tap valve, compressor engine faults resulting in 
short periods of service disruption or reduction of throughput 
capability, corrosion and other damage revealed by regular inspections 
and requiring a temporary reduction in pressure until repairs can be 
made, and maintenance to replace equipment at the end of its useful 
life or worn out from wear and tear. The pipeline companies also 
discuss how much customer load is seasonal, so that a compressor 
failure or even a line break, on a looped line, may have no effect on 
customer service at all, depending upon when it happens.
    13. In sum, the pipeline companies stress that, while minor 
incidents and accidents and routine maintenance may temporarily reduce 
available service or capacity through particular facilities, such 
incidents generally have no serious effect on the affected pipeline 
system's ability to meet its service obligations or on the national 
pipeline grid. These commenters believe that for these types of routine 
occurrences, which number in thousands each year for the pipeline 
industry as a whole, existing reporting requirements are 
sufficient.\15\ Thus, these commenters request that the Final Rule's 
expansion of current reporting requirements be limited to significant 
damage from terrorism or natural disasters or other serious events 
significantly affecting operation of the affected pipeline system or 
the interstate pipeline grid. These commenters believe the Commission 
should focus on damage resulting in a loss of or reduction in a 
significant amount of firm service capacity--e.g., firm service 
capacity of one million Dekatherms per day--for an extended period of 
time which, depending on the commenter, should be between three and 15 
days. If the pipeline company believes a damaged facility can be fully 
restored to service within such time period, the commenters do not 
believe the new reporting requirements should apply unless, in the 
judgment of the pipeline company, the loss of or reduction in capacity 
of the damaged facilities is

[[Page 51100]]

significantly impairing its ability to meet its customers' needs for 
natural gas service.
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    \15\ As discussed in the NOPR (at n. 9) and referenced by 
commenters, pipeline companies are required to submit reports of 
replacement facilities pursuant to 18 CFR 2.55(b) and annual reports 
of construction activities under the automatic provisions of the 
blanket certificate regulations in Part 157, Subpart F. Since these 
reports are annual reports due on or before May 1 of each year and 
hurricanes frequently occur in July, nine months can pass before a 
pipeline is required to report construction activities. Further, the 
information in these annual reports is not sufficient to determine 
whether a particular construction activity was undertaken due to 
damage to facilities resulting from a hurricane or other cause. In 
addition, while the emergency regulations in Part 284, Subpart I, 
require that the commencement of an emergency transaction be 
reported within 48 hours, the emergency regulations do not require 
the reporting of damage to facilities that may have made the 
emergency transaction necessary or reporting regarding facilities 
constructed to address the emergency.
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    14. Paiute Pipeline Company (Paiute), which operates a liquefied 
natural gas (LNG) peak shaving plant in Nevada, requests that all 
jurisdictional LNG storage facilities be exempted from the proposed new 
reporting requirements. Paiute believes LNG storage operators already 
are subject to adequate reporting requirements that were imposed as 
conditions of the original authorizations for their LNG storage 
facilities. Paiute also notes that a June 23, 2006 letter from the 
Director of the Commission's Office of Energy Projects (OEP Director) 
to LNG storage operators clarified the Commission's applicable 
reporting conditions, which are similar to the reporting requirements 
prescribed by the U. S. Department of Transportation pursuant to 49 CFR 
Part 191 for LNG storage facilities.

IV. Commission Response

    15. On July 31, 2006, the U.S. Department of Energy (DOE) released 
a report titled ``Impact of the 2005 Hurricanes on the Natural Gas 
Industry in the Gulf of Mexico Region.'' The report summarizes findings 
from Federal monitoring of the impact of Hurricanes Katrina and Rita on 
the natural gas industry in the Gulf of Mexico region from late August 
2005 through early March 2006. It details the coordination of Federal 
agencies, including the Commission, and various natural gas industry 
personnel to track storm recovery efforts on a daily basis and identify 
disrupted natural gas flows and possible bypasses.
    16. The July 31 report establishes insights into the complex supply 
delivery operation associated with offshore natural gas production and 
highlights the importance of accurate, timely information during 
supply-related emergencies. The report finds that 3,050 of the Gulf's 
4,000 platforms and 22,000 of the 33,000 miles of Gulf pipelines were 
in the direct path of either Katrina or Rita, which caused destruction 
and substantial damage to offshore production platforms and pipelines, 
onshore production wells and pipelines, and other infrastructure 
supporting the Gulf production and delivery system. When active Federal 
monitoring of storm recovery efforts ended on March 8, 2006, production 
had returned to about 9 Bcf per day, with an estimated 9.4 percent of 
daily gas production remaining shut in as of June 19, 2006.
    17. DOE's report illustrates and confirms the need for additional 
reporting requirements to ensure the Commission's timely gathering of 
information to monitor the status of the nation's gas infrastructure in 
emergency situations. Therefore, the Commission will adopt its proposal 
to revise Sec.  260.9 of the regulations to require that natural gas 
companies report damage to jurisdictional facilities as the result of 
hurricanes and other natural disasters, such as earthquakes and floods, 
or terrorist activity.
    18. The Commission recognizes that in many instances reporting by 
pipeline companies pursuant to the existing and new reporting 
requirements of Sec.  260.9 will duplicate aspects of the initial 
telephonic and subsequent written pipeline incident reports required by 
DOT/Pipeline Safety. However, in view of the timing and format in which 
such reports are submitted to DOT/Pipeline Safety, the Commission 
cannot at the present time rely on those reports to meet its goals in 
monitoring emerging problems with gas infrastructure during and 
immediately following natural disasters or terrorist events. Further, 
while the Commission has already initiated consultation with DOT/
Pipeline Safety regarding the possible development of a unified 
reporting system to meet the needs of the Commission, DOT/Pipeline 
Safety, the National Resource Center and other Federal agencies, such 
an initiative does not offer an immediate solution to the problem of 
duplicative reporting requirements, as the commenters acknowledge.
    19. However, the Commission is revising the proposed regulations to 
narrow the scope of the new reporting requirements, since it was not 
our intention in the June 9 NOPR to require that pipeline companies 
immediately report incidents involving equipment failure, accidents and 
other situations which neither result in serious service interruptions 
(which are already subject to reporting under Sec.  260.9) nor threaten 
a pipeline company's ability to meet its service obligations or 
otherwise significantly affect the integrity of the nation's gas 
infrastructure. While the commenters are correct that information 
relating to many such incidents is reflected in the annual construction 
reports pipeline companies are required to file,\16\ our reason here 
for not requiring that these incidents be reported under Sec.  260.9 is 
because immediate reporting in such instances is not crucial to our 
objective in this rulemaking proceeding of ensuring that our reporting 
requirements are adequate for timely gathering of information to 
monitor gas infrastructure in crisis situations that present serious 
threats to such infrastructure. Therefore, we will revise the proposed 
regulations to make clear that Sec.  260.9 does not require the 
reporting of such incidents.
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    \16\ Id.
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    20. We do not agree, however, that our objectives can be met if we 
limit reporting under Sec.  260.9 to damage to facilities only used for 
firm service or only in instances where throughput or capacity is 
reduced by more than a certain amount or the pipeline expects the 
facilities to be compromised for more than a few days. Since the new 
reporting requirements will be triggered by natural disasters or 
terrorist activity, the Commission will need all relevant information 
regarding damage to facilities and all affected pipeline systems. While 
a particular pipeline system may be able to take measures so that 
damage to its facilities does not cause that pipeline system to 
experience any immediate service interruptions, the damage on that 
pipeline system contributes to cumulative impacts that may 
significantly strain the gas infrastructure. Further, following a 
natural disaster or terrorist event, the Commission needs information 
on the status of all affected facilities, including facilities 
experiencing minimal damage, to facilitate the identification of 
possible paths for rerouting gas around more seriously damaged 
facilities.
    21. In view of these considerations, the Commission is adopting new 
reporting requirements but is revising its proposal in the NOPR so that 
the additional reporting will be limited to requiring that pipeline 
companies report any damage to pipeline or storage facilities from a 
natural disaster or terrorist activity if such damage reduces pipeline 
throughput or storage deliverability. These limited new reporting 
requirements will ensure that the Commission has adequate, timely 
information to assess the status of gas infrastructure immediately 
following a natural disaster or terrorist event. However, as some 
commenters recognize, there may be other situations in which damage to 
pipeline and storage facilities creates the potential for 
destabilization of the gas infrastructure. Therefore, as a means of 
obtaining information regarding such occurrences without imposing 
overly inclusive reporting requirements that would unduly burden 
respondents, revised Sec.  260.9 also will include a provision, as 
recommended by some commenters, to encourage pipeline companies to 
report any other damage which the pipeline companies, in their 
judgment, think creates the potential for serious delivery problems on 
their own systems or the pipeline grid. We are providing for this

[[Page 51101]]

additional reporting in pipeline companies' discretion in recognition 
of their systems' wide variations in size, configuration, and levels 
and types of service. Incorporating a further level of discretion into 
the reporting provisions of Sec.  260.9 is appropriate, since pipeline 
companies know their own systems and the nuances of their operations, 
and therefore can judge what other instances involving damage to 
facilities present the potential for significant problems on their own 
systems or the pipeline grid.
    22. We also agree with Paiute's position that existing reporting 
requirements applicable to LNG storage operators are adequate, and that 
it is therefore appropriate to exclude damage to such facilities from 
the new reporting requirements in Sec.  260.9. As emphasized by Paiute, 
when the Commission authorizes new LNG storage facilities under either 
section 3 of the NGA for imported LNG supplies or under section 7 of 
the NGA for liquefied domestic natural gas facilities, the Commission 
makes such authorization subject to specific reporting conditions.\17\ 
These conditions require that an LNG storage operator report to 
Commission staff within 48 hours any significant non-scheduled 
event.\18\ In the event an abnormality is of significant magnitude to 
threaten public or employee safety, cause significant property damage, 
or interrupt service, notification is required to be made immediately, 
provided that making such notification shall not unduly interfere with 
any necessary or appropriate emergency repair, alarm, or other 
emergency procedure. Further, on June 23, 2006, as noted by Paiute in 
its comments, the OEP Director sent all LNG storage operators a letter 
providing guidance and instructions for reporting significant incidents 
and reiterating and reinforcing the reporting conditions applicable to 
LNG storage operators.
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    \17\ See, e.g., Sabine Pass LNG, L.P. and Cheniere Sabine Pass 
Pipeline Company, 109 FERC ] 61,324 (2004) at Appendix B, 
Environmental Condition 44.
    \18\ Examples of reportable LNG-related incidents set forth in 
the conditions include, but are not limited to, fires; explosions; 
free flow of LNG for five minutes or more that results in pooling; 
unintended movement or abnormal loading by environmental causes, 
such as an earthquake, landslide or flood, that impairs the 
serviceability, structural integrity, or reliability of an LNG 
facility; any crack or other material defect that impairs an LNG 
facility's structural integrity or reliability; any malfunction or 
operating error that causes a dangerous rise in the pressure of an 
LNG facility; any leak that constitutes an emergency; or any safety-
related condition that could lead to an imminent hazard and cause a 
20 percent reduction in operating pressure or shutdown of operation 
of an LNG facility.
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    23. In view of the above-described reporting requirements already 
applicable to LNG facilities, the Commission agrees that it is not 
necessary to make the new reporting requirements of Sec.  260.9 
applicable to such facilities. Therefore, revised Sec.  260.9 will 
specifically exclude the reporting of damage to LNG facilities.
    24. However, Paiute's comments have caused the Commission to 
identify wording in existing and proposed Sec.  260.9 which needs to be 
revised in order to avoid the potential for a significant gap in 
reporting. Specifically, the current and proposed wording of Sec.  
260.9 provide for the reporting of damage and service interruptions 
only with respect to natural gas facilities operated under 
``certificate'' authorization from the Commission. Since import and 
export facilities authorized under section 3 of the NGA are not 
certificated facilities, Sec.  260.9 does not explicitly address these 
facilities. In particular, the Commission is concerned that the 
reporting requirements of Sec.  260.9 do not presently specifically 
apply to border crossing facilities authorized under NGA section 3. 
Such facilities, which are used to import or export gas between the 
United States and Canada or Mexico, are of national security interest, 
as evidenced by the requirement, pursuant to Executive Order Nos. 10485 
and 12038, dated September 3, 1953, and February 3, 1978, respectively, 
and the Secretary of Energy's Delegation Order No. 00-004.00A, 
effective May 16, 2006, that applicants for such facilities must accept 
Presidential Permits granted by the Commission after consultation with 
the Secretary of State and the Secretary of Defense.\19\ Under the 
conditions of a Presidential Permit, the President of the United States 
may determine that the safety of the United States demands that the 
United States take possession and control of any facilities operated 
under the Presidential Permit.\20\ Section 260.9 is revised to ensure 
that NGA section 3 non-LNG facilities are subject to the reporting 
requirements.
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    \19\ See, e.g., Clark Fork & Blackfoot, L.L.C. and EnCana Border 
Pipelines Limited, 115 FERC ] 61,131 (2006).
    \20\ Id., at Appendix, Presidential Permit, Article 10.
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V. Summary of Final Rule's Regulations

    25. Section 260.9(a) currently requires that natural gas companies 
report serious service interruptions. The amended regulations add a new 
requirement to Sec.  260.9 in revised subparagraph (a)(1) that natural 
gas companies report (i) damage to natural gas facilities from a 
hurricane or other natural disaster or terrorist activity that results 
in loss of or reduction in pipeline throughput or storage 
deliverability, and (ii) when the damaged facilities' pipeline 
throughput or storage deliverability has been fully restored. Section 
260.9 also is amended, as reflected in revised subparagraph (a)(2), to 
provide that, in the event of damage to a natural gas company's 
jurisdictional natural gas facilities by reason other than hurricane, 
earthquake or other natural disaster or terrorist activity, the natural 
gas company should report such damage if, in the natural gas company's 
judgment, such damage creates the potential for serious delivery 
problems on its own system or the pipeline grid.
    26. Section 260.9(b) is amended to remove the reference to 
``telegraph'' and to require that natural gas companies make required 
reports of interruptions to service or damage to facilities by e-mail 
or, as currently provided for in Sec.  260.9(b), facsimile 
transmission. All reports shall be due at the earliest feasible time 
after an interruption of service or damage to pipeline facilities for 
which a report is required pursuant to subparagraph (a)(1) or provided 
for in subparagraph (a)(2).
    27. The information required by Sec.  260.9(b) is revised to 
reflect the addition of the proposed new requirement that natural gas 
companies report damage to facilities and subsequently report when the 
damaged facilities have been repaired. Revised Sec.  260.9(b) requires 
that a report of service interruption or damage to natural gas 
facilities state:
    (1) The location of the service interruption or damage to natural 
gas pipeline or storage facilities;
    (2) The nature of any damage to pipeline or storage facilities;
    (3) Specific identification of the facilities damaged;
    (4) The time the service interruption or damage to the facilities 
occurred;
    (5) The customers affected by the service interruption or damage to 
the facilities;
    (6) Emergency actions taken to maintain service; and
    (7) Company contact and telephone number.
    28. Section 260.9(b) also is revised to require that a company make 
a subsequent report stating when pipeline throughput or storage 
deliverability has been restored.
    29. Section 260.9(d) is revised to change, from 20 days to 30 days 
following a service interruption or damage to facilities, the time 
within which a natural gas pipeline company must furnish to the 
Commission a copy of any incident report required to be made to the 
U.S. Department of

[[Page 51102]]

Transportation under the Natural Gas Pipeline Safety Act of 1968.
    30. Section 260.9(e) currently requires that a company send copies 
of reports of service interruptions to state commissions. Section 
260.9(e) is revised by adding a new requirement that a company also 
must send state commissions copies of reports of damage to facilities 
required by revised subparagraph (a)(1)(i) and (ii).

VI. Environmental Analysis

    31. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\21\ As 
stated in the NOPR, no environmental consideration is raised by 
promulgation of a rule that is procedural in nature or that does not 
substantially change the effect of legislation or regulations being 
amended.\22\ The regulations adopted herein make changes to the type of 
information to be provided to the Commission by pipeline companies and 
the way it is provided, and slightly alter the timeframe (giving the 
companies more time) to file with the Commission a copy of the incident 
report required to be filed with the U.S. Department of Transportation. 
The modified procedures will not substantially change the regulatory 
requirements to which pipeline companies are currently subject. 
Accordingly, the preparation of an environmental document is not 
required.
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    \21\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs. Preambles 1986-1990 ] 30,783 (1987).
    \22\ 18 CFR 380.4(a)(2)(ii) (2006).
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VII. Regulatory Flexibility Act Certification

    32. The Regulatory Flexibility Act of 1980 (RFA) \23\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The Commission is not required to make such an analysis if proposed 
regulations would not have such an effect. Under the industry standards 
used for the RFA, a natural gas pipeline company qualifies as a ``small 
entity'' if it has annual receipts of $6.5 million or less.
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    \23\ 5 U.S.C. 601-612.
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    33. Most companies regulated by the Commission do not fall within 
the RFA's definition of a small entity.\24\ Approximately 114 natural 
gas companies are potential respondents subject to the additional 
reporting requirements adopted by this rule. For the year 2004 (the 
most recent year for which information is available), 32 companies had 
annual revenues of less than $6.5 million.
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    \24\ 5 U.S.C. 601(3), citing section 3 of the Small Business 
Act, 15 U.S.C. 623. Section 3 of the SBA defines a ``small business 
concern'' as a business which is independently owned and operated 
and which is not dominant in its field of operation. The Small 
Business Size Standards component of the North American Industry 
Classification System (NAICS) defines a small natural gas pipeline 
company as one that transports natural gas and whose annual receipts 
(total income plus cost of goods sold) did not exceed $6.5 million 
for the previous year.
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    34. Section 260.9 of the regulations already requires natural gas 
companies to report serious service interruptions. Thus, the new 
reporting requirements will only increase the number of reports that a 
company must file to the extent that damage to facilities is the result 
of a natural disaster or terrorist action and does not result in a loss 
of or reduction in service. Further, the required information will 
already be known and identified by companies and can be submitted 
either by e-mail or facsimile. While the revised provisions of Sec.  
260.9 also encourage natural gas companies to report damage to 
jurisdictional facilities as the result of occurrences other than 
natural disasters and terrorist activity if, in the natural gas 
company's judgment, such damage may create the potential for serious 
delivery problems on its system on the pipeline grid, such reporting is 
in the respondent's discretion. In view of these considerations, the 
Commission hereby certifies that this Final Rule's amendments to the 
regulations will not have a significant impact on a substantial number 
of small entities.

VIII. Information Collection Statement

    35. Office of Management and Budget (OMB) regulations require that 
OMB approve certain reporting, record keeping, and public disclosure 
(collections of information) requirements imposed by agency rules.\25\ 
Pursuant to OMB regulations, the Commission is submitting these 
reporting requirements to OMB for its review and approval under section 
3507(d) of the Paperwork Reduction Act of 1995 (PRA).\26\ Upon approval 
of a collection of information OMB will assign an OMB control number 
and an expiration date. Respondents subject to the filing requirements 
of this rule will not be penalized for failing to respond to these 
collections of information unless the collections of information 
display a valid OMB control number.
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    \25\ 5 CFR 1320.11 (2005).
    \26\ 44 U.S.C. 3507(d) (2005).
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    36. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426 [Attention: Michael Miller, 
Office of the Executive Director, Phone: (202) 502-8415, fax: (202) 
273-0873, e-mail: michael.miller@ferc.gov].
    37. As discussed above, Sec.  260.9 of the Commission's regulations 
already requires natural gas companies to report serious service 
interruptions. The new requirements will only increase the number of 
reports that a pipeline company is required to file to the extent that 
damage to facilities is the result of a natural disaster or terrorist 
activity and does not cause an interruption of service. Since these 
reports are event-driven, it is possible that there will be no 
additional reports filed at all if the pipelines do not experience any 
hurricane, other act of nature, or act of terrorism in a year. While 
the revised provisions of Sec.  260.9 also encourage natural gas 
companies to report damage to jurisdictional facilities as the result 
of occurrences other than natural disasters and terrorist activity if, 
in the natural gas company's judgment, such damage may create the 
potential for serious delivery problems on its system on the pipeline 
grid, such reporting is in the respondent's discretion.
    38. Information regarding damage to facilities will be readily 
ascertainable by companies and may be submitted either by e-mail or 
facsimile. Such electronic submission of reports will reduce the number 
of data entry errors, permit Commission staff to analyze data in a 
timely manner, and provide for storage of data on digital storage 
media. The new rule eliminates the no longer feasible option of filing 
by telegraph. It is expected that electronic filing will save time and 
resources since electronic filings require fewer personnel than are 
needed for paper processing and mailing. The integrity of the data 
should be improved because the Commission and companies subject to its 
jurisdiction will be able to correct errors more promptly. The 
Commission has initiated consultation with DOT/Pipeline Safety to 
pursue the commenters' recommendation that the Commission and other 
Federal agencies cooperate to develop a unified reporting system that 
would minimize duplicative filing requirements.
    39. FERC-576, ``Report of Service Interruptions,'' identifies the 
Commission's information collection relating to Part 260, ``Statements 
and Reports (Schedules),'' of the regulations which apply to natural 
gas pipeline companies having facilities subject to

[[Page 51103]]

the Commission's jurisdiction under the Natural Gas Act. This Final 
Rule establishes a new requirement that natural gas pipeline companies 
report damage to jurisdictional facilities as the result of natural 
disasters and terrorist activity and report when damaged facilities are 
fully restored to service. The regulations maintain the existing 
requirement that natural gas companies report serious interruptions of 
service and report restoration of service. The regulations also require 
natural gas pipeline companies to submit copies of required damage 
reports to relevant state agencies and maintain the requirement that 
copies of serious service interruptions be submitted to the relevant 
state agencies. The rule provides an additional 10 days for the 
pipeline company to file with the Commission a copy of any incident 
reporting form required to be filed within 30 days of the incident with 
the U.S. Department of Transportation pursuant to the Natural Gas 
Pipeline Safety Act of 1968.
    40. Public Reporting Burden: Three commenters stated that the 
Commission's burden estimates in the NOPR were too low,\27\ and five 
commenters felt that the requirements were overly broad and 
burdensome.\28\ Further, six commenters stated their concerns about the 
duplication of the information that is provided to the Commission and 
to the Department of Transportation.\29\ As discussed above, it was not 
the Commission's intention to require that natural gas companies report 
accidents, equipment failures or other occurrences having minimal 
effect on normal operations. Rather, the Commission's limited objective 
in adopting additional reporting requirements is to ensure that natural 
gas companies report damage as the result of hurricanes or other 
natural disasters or terrorist activities since these events present 
the potential for serious destabilization of the nations' gas 
infrastructure, as demonstrated following Hurricanes Katrina and Rita. 
Therefore, the Final Rule revises the proposed regulations to limit the 
scope of the new reporting requirements accordingly. Further, the Final 
Rule revises the proposed regulations to exclude LNG facilities from 
the scope of the reporting requirements under Sec.  260.9, as 
recommended in the comments. Finally, while the Final Rule clarifies 
that the Sec.  260.9 reporting requirements cover non-LNG facilities 
authorized under section 3 of the NGA, we have explained that there are 
few such facilities and they generally are limited to a few hundred 
feet of pipeline extending from the international borders. In view of 
these revisions and clarifications in this Final Rule, we find that the 
NOPR's estimates of reporting burden remain appropriate and believe 
that commenters' concerns should be assuaged. While the provisions of 
revised Sec.  260.9 encourage natural gas companies to also report 
damage to jurisdictional facilities as the result of causes other than 
natural disasters and terrorist activity, if the natural gas company 
believes such damage presents the potential for causing serious 
delivery problems on its system or the pipeline grid, such additional 
reporting is not mandatory.
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    \27\ Boardwalk Pipeline, Williston Basin, and NiSource.
    \28\ Duke Energy, Boardwalk Pipeline, Williston Basin, INGAA, 
and NiSource.
    \29\ AGA, INGAA, Duke Energy, Boardwalk Pipeline, Williston 
Basin, and NiSource.
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    41. In light of the above discussion, the burden estimates for 
complying with the additional filing requirements of this rule pursuant 
to the procedures in the amended Sec.  260.9 of the Commission's 
regulations are the same as estimated in the NOPR issued in this 
proceeding on June 9, 2006, as set forth below:

----------------------------------------------------------------------------------------------------------------
                                                 Number of        Number of        Hours per
               Data collection                  respondents       responses         response       Total  hours
----------------------------------------------------------------------------------------------------------------
FERC-576....................................              15               35                2               70
----------------------------------------------------------------------------------------------------------------

    Total Annual Hours for Collection: 70.
    These are mandatory information collection requirements.
    Information Collection Costs: The Commission sought comments about 
the time and corresponding costs needed to comply with this 
requirement. No comments were received. Because of the regional 
differences and the various staffing levels that will be involved in 
preparing the documentation (legal, technical and support) the 
Commission is using an hourly rate of $150 to estimate the costs for 
filing and other administrative processes (reviewing instructions, 
searching data sources, completing and transmitting the collection of 
information). The estimated annual cost is anticipated to be $10,500 
(70 hours x $150).
    Title: FERC 576 ``Report of Service Interruptions.''
    Action: Information Collection.
    OMB Control No.: 1902-0004.
    Respondents: Natural gas companies/business or other for-profit.
    Frequency of Responses: On occasion.
    Necessity of Information: The amended regulation revises the 
reporting requirements for service interruptions and damage to 
facilities subject to the Federal Energy Regulatory Commission's 
jurisdiction. The information filed with the Commission apprises it of 
serious pipeline service interruptions and also of serious damage to 
the nation's natural gas pipeline infrastructure. The amendment 
enhances this information by requiring filers to describe specifically 
which facilities have been damaged and how the damage occurred.
    42. Comments on the Final Rule may also be sent to the Office of 
Management and Budget. For information on the requirements, submitting 
comments on the collection of information and the associated burden 
estimates including suggestions for reducing this burden, please send 
your comments to the Federal Energy Regulatory Commission, 888 First 
Street, NE., Washington, DC 20426 (Attention: Michael Miller, Office of 
the Executive Director, (202) 502-8415; or send comments to the Office 
of Management and Budget (Attention: Desk Officer for the Federal 
Energy Regulatory Commission, fax: 202-395-7285, e-mail: oria_
submission@omb.eop.gov, and reference this rulemaking Docket No. RM06-
18-000 in your submission.

IX. Document Availability

    43. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and print the contents of this document via the 
Internet through FERC's Home Page (https://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington DC 20426. 
From FERC's Home Page on the Internet, this information is available in 
the Commission's document management system, eLibrary. The full text of 
this document is available in eLibrary in PDF and Microsoft Word format 
for viewing, printing, and

[[Page 51104]]

downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    44. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours. For assistance, please contact 
Online Support at 1-866-208-3676 (toll free) or (202) 502-6652 (e-mail 
at FERCOnlineSupport@FERC.gov), or the Public Reference Room at (202) 
502-8371, TTY (202) 502-8659 (e-mail at public.referenceroom@ferc.gov).

X. Effective Date

    45. These regulations are effective August 29, 2006. Section 553(d) 
of the APA \30\ generally requires a rule to be effective not less than 
30 days after publication in the Federal Register unless good cause is 
found to shorten the time period. The need for this rule to fill a gap 
in the Commission's reporting requirements was identified as the result 
of the Hurricanes Rita and Katrina. Another hurricane season is in 
progress. Therefore, it is crucial that this rule's reporting 
requirements be in effect immediately to ensure that the Commission has 
adequate information to monitor the nation's natural gas infrastructure 
and identify any gas supply delivery problems and possible paths to 
reroute gas supplies around facilities damaged by a hurricane. 
Accordingly, the Commission finds good cause to make this rule 
effective immediately upon publication in the Federal Register.
---------------------------------------------------------------------------

    \30\ 5 U.S.C. 553(d) (2006).
---------------------------------------------------------------------------

XI. Congressional Notification

    46. The Commission has determined, with the concurrence of the 
Administrator of the Office of Information and Regulatory Affairs of 
the Office of Management and Budget, that this rule is not a major rule 
within the meaning of section 351 of the Small Business Regulatory 
Enforcement Fairness Act of 1996.\31\ The Commission will submit the 
Final Rule to both houses of Congress and the Government Accountability 
Office.\32\
---------------------------------------------------------------------------

    \31\ 5 U.S.C. 804(2) (2000).
    \32\ 5 U.S.C. 801(a)(1)(A) (2000).
---------------------------------------------------------------------------

List of Subjects in 18 CFR Part 260

    Natural gas, Reporting and recordkeeping requirements.

    By the Commission.
Magalie R. Salas,
Secretary.

0
In consideration of the foregoing, the Commission amends Part 260 of 
Chapter I, Title 18, Code of Federal Regulations, as follows.

PART 260--STATEMENTS AND REPORTS (SCHEDULES)

0
1. The authority citation for part 260 continues to read as follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.


0
2. Section 260.9 is amended by revising the section heading and 
paragraphs (a), (b), (d) and (e) to read as follows:


Sec.  260.9  Reports by natural gas pipeline companies on service 
interruptions and damage to facilities.

    (a)(1) Every natural gas company must report to the Director, 
Division of Pipeline Certificates, at the earliest feasible time:
    (i) Damage to any jurisdictional natural gas facilities other than 
liquefied natural gas facilities caused by a hurricane, earthquake or 
other natural disaster or terrorist activity that results in a loss of 
or reduction in pipeline throughput or storage deliverability; and
    (ii) Serious interruptions of service to any shipper involving 
jurisdictional natural gas facilities other than liquefied natural gas 
facilities. Such serious interruptions of service shall include 
interruptions of service to communities, major government installations 
and large industrial plants outside of communities or any other 
interruptions which are significant in the judgment of the pipeline 
company. Interruptible service interrupted in accordance with the 
provisions of filed tariffs, interruptions of service resulting from 
planned maintenance or construction and interruptions of service of 
less than three hours duration need not be reported.
    (2) In the event of damage to a natural gas company's 
jurisdictional natural gas facilities other than liquefied natural gas 
facilities by reason other than hurricane, earthquake or other natural 
disaster or terrorist activity, the natural gas company should report 
such damage if, in the natural gas company's judgment, such damage 
creates the potential for serious delivery problems on its own system 
or the pipeline grid.
    (b) Any report of damage to facilities required by paragraph 
(a)(1)(i) of this section, any report of service interruption required 
by paragraph (a)(1)(ii) of this section and any report made pursuant to 
paragraph (a)(2) of this section in a natural gas company's discretion 
must be submitted by the natural gas company by e-mail to 
pipelineoutage@ferc.gov or by facsimile transmission to the Director, 
Division of Pipeline Certificates, Office of Energy Projects at FAX 
number (202) 208-2853.
    (1) Reports required by paragraph (a)(1)(i) or (ii) or made in a 
natural gas company's discretion pursuant to paragraph (a)(2) shall be 
made at the earliest feasible time and must state:
    (i) The location and cause of the service interruption or damage to 
natural gas pipeline or storage facilities;
    (ii) The nature of any damage to pipeline or storage facilities;
    (iii) Specific identification of any facilities damaged;
    (iv) The time the service interruption or damage to facilities 
occurred;
    (v) The customers affected by the interruption of service or damage 
to facilities;
    (vi) Emergency actions taken to maintain service; and
    (vii) Company contact and telephone number.
    (2) Following a report required by paragraph (a)(1)(i) of this 
section of damage to natural gas facilities resulting in loss of 
pipeline throughput or storage deliverability or a report pursuant to 
paragraph (a)(2) of this section in a natural gas company's discretion, 
the natural gas company shall report to the Director, Division of 
Pipeline Certificates, at the earliest feasible time when pipeline 
throughput or storage deliverability has been restored.
* * * * *
    (d) In any instance in which an incident or damage report involving 
jurisdictional natural gas facilities is required by Department of 
Transportation reporting requirements under the Natural Gas Pipeline 
Safety Act of 1968, a copy of such report shall be submitted to the 
Director, Division of Pipeline Certificates, within 30 days of the 
reportable incident.
    (e) When a report of damage to facilities is required by paragraph 
(a)(1)(i) of this section or a report of service interruption is 
required by paragraph (a)(1)(ii) of this section, a copy of the e-mail 
or facsimile report required pursuant to paragraph (b) of this section 
must be sent to each State commissions for the States in which the 
reported service interruptions or damage has occurred.

 [FR Doc. E6-14281 Filed 8-28-06; 8:45 am]
BILLING CODE 6717-01-P