Federal Register / Vol. 70, No. 225 / Wednesday, November 23, 2005 / Notices 70801 

1Pub. L. No. 109–58, 119 Stat. 594 (2005). 

2 15 U.S.C. 717n (2000). 

3NGA section 3 applies to projects designed to 

import or export natural gas; NGA section 7 applies 

to projects designed to transport or sell natural gas 

in interstate commerce. 

4 42 U.S.C. 4321, et seq. (2000). 

5 42 U.S.C. 4332(2)(A) (2000). 

6 33 U.S.C. 1341 (2000). 

Hydrogen Program.) The selection team 

will consider many criteria, including 

and not limited to: (a) Scientific or 

technical expertise, knowledge, and 

experience; (b) stakeholder 

representation as described in the Act; 

(c) availability and willingness to serve; 

and (d) skills working in committees, 

subcommittees and advisory panels. 

Structured interviews with some 

candidates may also occur. 

The selection team will make 

recommendations regarding 

membership to the Assistant Secretary 

for Energy Efficiency and Renewable 

Energy (EERE). The Assistant Secretary 

for EERE will submit a list of 

recommended candidates to the 

Secretary for review and selection of 

Committee members. 

Candidates selected by the Secretary 

of Energy to serve as SGEs will be 

required to fill out the Confidential 

Financial Disclosure Form for Special 

Government Employees Serving on 

Federal Advisory Committees at the 

U.S. Department of Energy and other 

forms incidental to Federal 

appointment. The confidential financial 

disclosure form allows government 

officials to determine whether there is a 

conflict between the special 

Government employee’s public 

responsibilities and private interests 

and activities, or the appearance of a 

lack of impartiality, as defined by 

statute and regulation. The form may be 

viewed from the following URL address: 

http://www.hydrogen.energy.gov/ 

advisory_panels.html. 

Issued in Washington, DC, on November 

17, 2005. 

Douglas L. Faulkner, 

Acting Assistant Secretary, Energy Efficiency 

and Renewable Energy. 

[FR Doc. 05–23174 Filed 11–22–05; 8:45 am] 

BILLING CODE 6450–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

[Docket No. PL06–2–000] 

Coordinated Processing of NGA 

Section 3 and 7 Proceedings; Order 

Delegating Authority 

Issued November 17, 2005. 

Before Commissioners: Joseph T. Kelliher, 

Chairman; Nora Mead Brownell, and 

Suedeen G. Kelly. 

1. Section 313 of the Energy Policy 

Act of 2005 (EPAct 2005) 1 amends 

section 15 of the Natural Gas Act 

(NGA) 2 to provide the Commission with 

additional authority to ensure the 

expeditious processing of natural gas 

project proposals. The Commission 

anticipates initiating a rulemaking 

proceeding in the near future to 

promulgate regulations in response to 

the EPAct 2005 amendments. In the 

interim, this order delegates to staff the 

authority to execute certain of the 

responsibilities vested with the 

Commission by EPAct 2005 section 313. 

Introduction 

2. EPAct 2005 section 313(c)(1) 

directs the Commission to establish a 

schedule for all federal permits, 

authorizations, certificates, opinions, or 

other approvals required for an NGA 

section 3 or 7 proposal.3 Section 

313(b)(2) then declares that ‘‘[e]ach 

Federal and State agency considering an 

aspect of an application for Federal 

authorization shall cooperate with the 

Commission and comply with the 

deadlines established by the 

Commission.’’ In addition, section 

313(b)(1) designates the Commission ‘‘as 

the lead agency for the purposes of 

coordinating all applicable Federal 

authorizations and for the purposes of 

complying with the National 

Environmental Policy Act of 1969’’

(NEPA).4

3. Pending issuance of regulations 

implementing these provisions of EPAct 

2005, the Commission is delegating to 

the Director of the Office of Energy 

Projects (OEP) the authority to establish 

deadlines for all federal authorizations 

necessary for NGA section 3 and 7 

proposals. 

Background 

4. Under NGA sections 3 and 7, the 

Commission grants or denies 

applications for proposed natural gas 

projects. The construction or operation 

of natural gas projects typically require 

additional permits, authorizations, 

certificates, opinions, and approvals 

issued by other federal agencies and by 

state agencies acting pursuant to 

delegated federal authority. Approval by 

the Commission to proceed with a 

proposal is contingent on favorable 

findings by these other agencies. EPAct 

2005 section 313(c)(1) directs the 

Commission to establish a schedule for 

all federal authorizations required with 

respect to an application under NGA 

section 3 or 7. 

5. In this role, EPAct 2005 section 

313(c)(1)(A) compels the Commission to 

‘‘ensure expeditious completion’’ of 

NGA section 3 and 7 proceedings, while 

section 313(c) (1)(B) directs the 

Commission to ‘‘comply with applicable 

schedules established by Federal law.’’

Thus, the Commission is responsible for 

(1) coordinating the actions of those 

federal and state agencies with authority 

to issue federal authorizations for an 

NGA section 3 or 7 proposal, and (2) 

setting deadlines for decisions on 

federal authorizations which will 

‘‘comply with applicable schedules 

established by Federal law.’’

6. Commission authorizations under 

NGA sections 3 and 7 normally trigger 

NEPA. NEPA aspires to ‘‘utilize a 

systematic, interdisciplinary approach 

which will insure the integrated use of 

the natural and social sciences and the 

environmental design arts in planning 

and in decisionmaking which may have 

an impact on man’s environment.’’ 5

EPAct 2005 section 313(b) clarifies the 

Commission’s role in this collective, 

multi-agency effort, by designating the 

Commission as lead agency for the 

purpose of NEPA compliance for NGA 

section 3 and 7 proposals. 

Commission Response to EPAct 2005 

Amendments to NGA Section 15 

7. As noted, the Commission 

anticipates initiating a rulemaking to 

implement the EPAct 2005 section 313 

amendments to NGA section 15. 

However, the Commission believes that 

the processing of section 3 and 7 project 

proposals filed prior to the effective date 

of a final rule, including proposals filed 

prior to the enactment of EPAct 2005, 

may benefit by the immediate 

application of the additional authority 

conferred by EPAct 2005. Therefore, by 

this order, the Commission delegates the 

authority described below to the 

Director of OEP. 

8. The Director of OEP is granted the 

authority to coordinate with federal and 

state agencies for the purpose of 

scheduling the completion of the 

analyses and decisionmaking necessary 

for federal authorization of section 3 

and 7 proposals. Deadlines shall be no 

shorter than any applicable schedules 

established by federal law. For example, 

under section 401 of the Clean Water 

Act (CWA),6 an applicant for federal 

authorization for any activity that may 

result in a discharge to navigable waters 

must obtain certification from the state 

in which the discharge originates that 

the discharge will comply with the 

CWA. The CWA provides the state up 

70802 Federal Register / Vol. 70, No. 225 / Wednesday, November 23, 2005 / Notices 

1 111 FERC ¶ 61,309 (2005). 

2 109 FERC ¶ 61,202 at P 2–10; 111 FERC ¶ 61,309 

at P3–8. 

3 824 F.2d 981, 1010–12 (D.C. Cir. 1987). 

4 Id. at 1012. 

5 Id. 

6 Interstate Natural Gas Pipeline Rate Design, 47 

FERC ¶ 61,295, reh’g granted, 48 FERC ¶ 61,122 

(1989). 

7 IMGA raised this issue in a petition for 

rulemaking in Docket No. RM97–7–000. In the NOI, 

the Commission stated that it would consider all 

comments on this issue in Docket No. RM05–2–000 

and terminated the proceeding in Docket No. 

RM97–7–000. The Commission explained that the 

issues included in Docket No. RM05–2–000 include 

all the issues raised in the Docket No. RM97–7–000 

proceeding. IMGA did not seek rehearing of the 

Commission’s decision to terminate Docket No. 

RM97–7–000 proceeding and did not in its 

comments object to the procedural forum offered to 

it in Docket No. RM05–2–000. 

to a year to act on a request for 

certification. Consequently, this time 

frame will be recognized in any 

schedule that the Director of OEP may 

set. 

9. With respect to the revisions to 

NGA section 15, we expect to request 

public comments on rules of general 

applicability on how best to coordinate 

and schedule agencies’ efforts in 

processing requests for federal 

authorizations. In the meantime, the 

Commission expects the Director of OEP 

to exercise the authority delegated 

herein on a flexible, case-by-case basis, 

to section 3 and 7 proposals filed prior 

to the effective date of a final rule, 

including proposals filed prior to the 

enactment of EPAct 2005. The Director 

of OEP need not intervene to establish 

deadlines for federal authorizations in 

every pending proceeding. For example, 

the Director of OEP may find it serves 

no purpose to establish deadlines in 

proceedings that are relatively close to 

completion. Agencies or parties to a 

proceeding that object to decisions of 

the Director of OEP under the authority 

delegated herein may request 

Commission review of the Director’s 

actions. 

The Commission orders: 

The Commission delegates to the 

Director of OEP the authority provided 

by EPAct 2005 to establish a schedule 

for all federal authorizations necessary 

for NGA section 3 and 7 proposals. 

By the Commission. 

Magalie R. Salas, 

Secretary. 

[FR Doc. 05–23139 Filed 11–22–05; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

[Docket No. RM05–2–001] 

Policy for Selective Discounting by 

Natural Gas Pipelines; Order Denying 

Rehearing 

November 17, 2005. 

Before Commissioners: Joseph T. Kelliher, 

Chairman; Nora Mead Brownell, and 

Suedeen G. Kelly. 

1. On May 31, 2005, the Commission 

issued an order (May 31 Order)1 in this 

proceeding reaffirming the 

Commission’s current policy on 

selective discounting. Timely requests 

for rehearing of that order were filed by 

the Illinois Municipal Gas Agency 

(IMGA) and, jointly by Northern 

Municipal Distributor Group and the 

Midwest Region Gas Agency (Northern 

Municipals). For the reasons discussed 

below, the requests for rehearing are 

denied. 

Background 

2. The prior orders in this proceeding 

set forth the background and 

development of the Commission’s 

selective discounting policy.2 Generally, 

as explained in those orders, the 

Commission’s regulations permit 

pipelines to discount their rates, on a 

nondiscriminatory basis, in order to 

meet competition. For example, if a 

fuel-switchable shipper were able to 

obtain an alternate fuel at a cost less 

than the cost of gas including the 

transportation rate, the Commission’s 

regulations permit the pipeline to 

discount its rates to compete with the 

alternate fuel, and thus obtain 

throughput that would otherwise be lost 

to the pipeline. As the Commission has 

explained, these discounts benefit all 

customers, including customers that do 

not receive the discounts, because the 

discounts allow the pipeline to 

maximize throughput and thus spread 

fixed costs across more units of service. 

Further, as the Commission has 

explained, selective discounting 

protects captive customers from rate 

increases that would otherwise occur if 

pipelines lost volumes through the 

inability to respond to competition. The 

Commission’s regulations permitting 

selective discounting were upheld by 

the court in Associated Gas Distributors 

v. FERC (AGD I).3

3. The prior orders also explained the 

rationale behind the Commission’s 

policy of allowing a discount 

adjustment and stated that the adoption 

of the discount adjustment resulted 

from the court’s discussion in AGD I. In 

AGD I, the court addressed arguments 

raised by pipelines that the selective 

discounting regulations might lead to 

the pipelines under-recovering their 

costs. The court set forth a numerical 

example showing that the pipeline 

could under-recover its costs, if, in the 

next rate case after a pipeline obtained 

throughput by giving discounts, the 

Commission nevertheless designed the 

pipeline’s rates based on the full 

amount of the discounted throughput, 

without any adjustment.4 However, the 

court found no reason to fear that the 

Commission would employ this 

‘‘dubious procedure,’’ 5 and accordingly 

rejected the pipelines’’ contention. 

4. In response to the court’s concern, 

the Commission, in the 1989 Rate 

Design Policy Statement,6 held that if a 

pipeline grants a discount in order to 

meet competition, the pipeline is not 

required in its next rate case to design 

its rates based on the assumption that 

the discounted volumes would flow at 

the maximum rate, but may reduce the 

discounted volumes so that the pipeline 

will be able to recover its cost of service. 

The Commission explained that if a 

pipeline must assume that the 

previously discounted service will be 

priced at the maximum rate when it 

files a new rate case, there may be a 

disincentive to pipelines discounting 

their services in the future to capture 

marginal firm and interruptible 

business. 

5. Since AGD I and the Rate Design 

Policy Statement, the issue of ‘‘gas-ongas’’ competition, i.e., where the 

competition for the business is between 

pipelines as opposed to competition 

between gas and other fuels, has been 

raised in several Commission 

proceedings.7 In these proceedings, 

certain parties have questioned the 

Commission’s rationale for permitting 

discount adjustments, i.e., that it 

benefits captive customers by allowing 

fixed costs to be spread over more units 

of service. These parties have contended 

that, while this may be true where a 

discount is given to obtain a customer 

who would otherwise use an alternative 

fuel and not ship gas at all, it is not true 

where discounts are given to meet 

competition from other gas pipelines. In 

the latter situation, these parties have 

argued, gas-on-gas competition permits 

a customer who must use gas, but has 

access to more than one pipeline, to 

obtain a discount. But, if the two 

pipelines were prohibited from giving 

discounts when competing with one 

another, the customer would have to 

pay the maximum rate to one of the 

pipelines in order to obtain the gas it 

needs. This would reduce any discount