Document ID: PHMSA-2014-0051-0001
Agency: phmsa
Document Type: Notice
Title: Liquefied Natural Gas Facility User Fee Rate Increase
Posted Date: 2014-07-03T04:00Z

[Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]
[Notices]
[Pages 38124-38125]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15599]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2014-0051]

Pipeline Safety: Liquefied Natural Gas Facility User Fee Rate 
Increase

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

ACTION: Notice of agency action.

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SUMMARY: This notice is to advise all liquefied natural gas facility 
(LNG) operators subject to PHMSA user fee billing of a change in the 
LNG user fee rates to align these rates with the actual allocation of 
PHMSA resources to LNG program costs. Specifically, the LNG user fee 
rates will increase to 5 percent of the total gas program costs. This 
percentage represents the approximate ratio between the allocation of 
resources to LNG facilities and the total allocation of resources to 
all gas facilities. To reduce the financial impact on LNG operators, 
PHMSA will implement this increase incrementally over a three-year 
period.

DATES: Written comments should be received on or before September 2, 
2014.
    Comments: PHMSA invites interested persons to comment on the user 
fee assessment process described in this notice. Although the policies 
and practices described in this notice are final for purposes of fiscal 
year 2014 assessments, any comments received will be considered in 
determining whether the fiscal year 2015 and later policies and 
practices should be continued or modified. Interested persons should 
submit comments to the docket in writing, identifying the title and 
docket number of this notice.
    Comments should reference Docket No. PHMSA-2014-0051. Comments may 
be submitted in the following ways:
     E-Gov Web site: http://www.regulations.gov. This site 
allows the public to enter comments on any Federal Register notice 
issued by any agency. Follow the instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management System, U.S. Department of 
Transportation (DOT), 1200 New Jersey Avenue SE., Room W12-140, 
Washington, DC 20590.
    Hand Delivery: DOT Docket Management System, Room W12-140, on the 
ground floor of the West Building, 1200 New Jersey Avenue SE., 
Washington, DC between 9:00 a.m. and 5:00 p.m., Monday through Friday, 
except Federal holidays.
    Instructions: Identify the docket number at the beginning of your 
comments. If you submit your comments by mail, submit two copies. If 
you wish to receive confirmation that PHMSA has received your comments, 
include a self-addressed stamped postcard. Internet users may submit 
comments at http://www.regulations.gov.

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

Privacy Act Statement

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

FOR FURTHER INFORMATION CONTACT: Roger Little by telephone at 202-366-
4569, by fax at 202-366-4566, by email at Roger.Little@dot.gov, or by 
mail at U.S. Department of Transportation, PHMSA, 1200 New Jersey 
Avenue SE., PHP-2, Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION: 

Background

    The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 
(Pub. L. 99-272, Sec. 7005) codified at Section 60301 of Title 49, 
United States Code, authorizes the assessment and collection of user 
fees to fund the pipeline safety activities conducted under Chapter 601 
of Title 49. PHMSA assesses each operator of interstate and intrastate 
gas transmission pipelines (as defined in 49 CFR Part 192) and 
hazardous liquid pipelines carrying crude oil, refined petroleum 
products, highly volatile liquids, biofuel, and carbon dioxide (as 
defined in 49 CFR Part 195) a share of the total Federal pipeline 
safety program costs in proportion to the number of miles of pipeline 
for each operator. In accordance with COBRA, PHMSA also assesses user 
fees on LNG facilities (as defined in 49 CFR Part 193).

Fee Schedules

    COBRA requires that the Secretary of Transportation establish a 
schedule of fees for pipeline usage, bearing a reasonable relationship 
to miles of pipeline, volume-miles, revenues, or an appropriate 
combination thereof. In particular, the Secretary must take into 
account the allocation of Departmental resources in establishing the 
schedule. Following consultations with the pipeline industry's major 
trade associations, including the American Petroleum Institute, the 
American Gas Association, the Interstate Natural Gas Association of 
America, and the Association of Oil Pipe Lines on the appropriate basis 
for determining fees, the Research and Special Programs Administration 
(RSPA), PHMSA's predecessor agency, determined that pipeline mileage 
provides the most reasonable basis for determining fees to be paid by 
operators of gas transmission lines and hazardous liquid pipeline 
facilities.\1\
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    \1\ Pipeline user fee assessments under COBRA were upheld by the 
U.S. Supreme Court in Skinner v. Mid-America Pipeline Co., 490 U.S. 
212 (1989).
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    On July 16, 1986, RSPA published in the Federal Register a notice 
for pipeline safety user fees to describe the agency's implementation 
of the requirements set forth in the COBRA Act (51 FR 25782) (the User 
Fee Notice). The User Fee Notice adopted pipeline mileage as the fee 
basis for natural gas transmission and hazardous liquid pipelines. 
Pipeline mileage data for each operator are available from the annual 
reports which operators are required to file with PHMSA. Each report 
provides the miles of pipeline each operator has at the end of the 
calendar year for which the report is filed.
    With respect to the LNG facility portion of the gas program costs, 
a fee basis other than mileage was needed. For these facilities, RSPA 
determined that storage capacity was the most readily measurable 
indicator of usage. The storage capacity of each LNG facility that is 
subject to the user fee provisions of the Act was initially based on 
those published in a periodic report by the Liquefied Natural Gas 
Committee of the American Gas Association. With storage capacity as the 
basis, a five step

[[Page 38125]]

fee schedule was developed for LNG facilities which provided a means of 
relating the fees to usage and resource allocation, taking into account 
the wide spread (approximately 900:1) in facility storage capacities. 
Since 2010, LNG facility operators have been required to submit an LNG 
annual report to PHMSA. PHMSA now uses data from these annual reports 
for the LNG facility user fee assessments.
    The ratio of costs apportioned to gas and liquid activities varies 
by year, typically ranging between 40/60 and 60/40 gas/liquid. For each 
budget year user fee collection, PHMSA estimates the proportion of its 
resources for that billing year between natural gas and hazardous 
liquid pipeline initiatives and resource requirements costs. The 
percentages reflect the allocation of our efforts and resources for the 
billing year. For example, in recent years we considered anticipated 
program costs for new initiatives that were required by Congressional 
and other mandates. In 2011 and 2012, we used a 65 percent gas and 35 
percent hazardous liquid split across the total budget. The hazardous 
liquid cost portion is offset by annual funding for the Oil Spill 
Liability Trust Fund (OSLTF) ($18.547 million for fiscal year 2012). In 
fiscal year 2013, the gas/liquid split went to 67/33 partially 
resulting from the state grant for gas programs increase in 2013 over 
2012 and the fact that the OSLTF did not proportionally cover the same 
percent in 2013 (36% of liquid costs) as it did in 2012 (48% of liquid 
costs).

Change in LNG Facility User Fee Assessments

    In the 1986 User Fee Notice, RSPA stated that the total LNG user 
fee assessment would be ``5 percent of the total gas program costs.'' 
More specifically, the notice stated:

    Each operator of an LNG facility in service at the beginning of 
fiscal year 1986 will to [sic] be assessed a designated share of the 
LNG program costs based on the storage capacity of the facility. For 
FY-86 these costs are estimated to be approximately 5 percent of the 
total gas program costs. This percentage represents the approximate 
ratio between the allocation of resources to LNG facilities and the 
total allocation of resources to all gas facilities.
    The total user fees for LNG facilities will be calculated as 
follows:
    Total LNG user fees equal approximately (105%) (5%) (Total gas 
program cost)
    For FY-86 LNG operator assessments will be as follows:
    LNG Facility storage capacity Operator assessment

Less than 10,000 bbl.......................................    $1,250.00
10,000 bbl. but less than 100,000 bbl......................     2,500.00
100,000 bbl. but less than 250,000 bbl.....................     3,750.00
250,000 bbl. but less than 500,000 bbl.....................     5,000.00
500,000 bbl. or more.......................................     7,500.00
 

    Since the inception of the pipeline user fee billing, PHMSA has 
assessed LNG facilities based on the above rate table. The amount of 
money collected using this LNG facility fee structure has increased 
slightly over the years as more facilities were placed in service, but 
the gas program costs have increased at a far greater rate. The LNG 
rates have not been adjusted to reflect the increase in gas program 
costs since 1986. During the 2014 billing cycle, the LNG facility rate 
structure resulted in a collection of $467,500 which is a mere 0.62% of 
gas program costs. Five percent of the gas program cost for the 2014 
billing cycle would have been $3,774,405.

Notice of LNG Facility Obligation Increase

    In order to ensure that user fees assessed for each type of 
pipeline facility have a reasonable relationship to the allocation of 
departmental resources and to achieve the 5 percent of total gas 
program cost level set forth in the User Fee Notice, PHMSA has 
determined that certain changes to the calculation table are necessary. 
Specifically, the rate for each of the five tiers in the table will be 
updated to arrive at 5 percent of total gas program costs when the 
tiers are added together. PHMSA plans to implement the increase in the 
LNG facility user fee rates in three equal increments starting in 2015. 
In 2015, if the gas program costs remained steady at 2014 levels, the 
total LNG industry obligation would increase to $1,256,667; in 2016, 
the LNG obligation would increase to $2,513,333; and in 2017, the LNG 
obligation would increase to $3,774,405. The actual annual rate for a 
particular LNG facility of a given capacity billed each year will 
depend on the annual gas program cost and the total number of LNG 
facilities. As the LNG rates increase over the three year period, PHMSA 
will maintain the current ratio of rates based on storage capacity 
reflected in the five tiers. For example, an LNG facility with over 
500,000 barrels of storage capacity has a user fee rate that is six 
times the rate for a facility with less than 10,000 barrels of storage. 
In 2017, when the LNG rates result in a collection of 5 percent of the 
gas program cost, an LNG facility with over 500,000 barrels of storage 
will still have a rate six times the rate for a facility with less than 
10,000 barrels of storage. After 2017, PHMSA plans to continue this 
framework for assessing operators of LNG facilities for 5 percent of 
the gas program costs. PHMSA has been excluding mobile/temporary LNG 
facilities from user fee assessment since these facilities typically 
have very low storage volume, and will continue to exclude the mobile/
temporary LNG facilities from user fee assessment.
    Therefore, to account for the increase in total gas program costs 
since 1986 and achieve the 5 percent of total gas program cost level 
set forth in the User Fee Notice to reflect resource allocation, PHMSA 
is notifying LNG facility operators that in 2015, if the gas program 
costs remained steady at 2014 levels, the LNG obligation can be 
expected to increase to $1,256,667. In 2016, the LNG obligation would 
increase to $2,513,333, and in 2017, the LNG obligation would increase 
to $3,774,405. LNG operators should expect their individual user fee 
assessments to reflect these levels and that the amounts in their user 
fee billing statements will continue to be proportional to other LNG 
operators of differing capacities depending on the tiers they are in. 
Procedures for paying the fees can be found in the annual statement and 
include instructions for electronic funds transfer.
    PHMSA invites interested persons to comment on the user fee 
assessment process described in this notice. Although the policies and 
practices described in this notice are final for purposes of fiscal 
year 2014 assessments, any comments received will be considered in 
determining whether the fiscal year 2015 and later policies and 
practices should be continued or modified. Interested persons should 
submit comments to the docket in writing, identifying the title and 
docket number of this notice by September 2, 2014.

    Authority: 49 U.S.C. 60301; 49 CFR 1.97.

    Issued in Washington, DC, on June 27, 2014.
Jeffrey D. Wiese,
Associate Administrator for Pipeline Safety.
[FR Doc. 2014-15599 Filed 7-2-14; 8:45 am]
BILLING CODE 4910-60-P