Document ID: FERC-2023-1398-0001
Agency: ferc
Document Type: Notice
Title: Project-Area Wage Standards in the Labor Cost Component of Cost-of-Service Rates
Posted Date: 2023-10-27T04:00Z

[Federal Register Volume 88, Number 207 (Friday, October 27, 2023)]
[Notices]
[Pages 73833-73836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23590]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. PL24-1-000]

Project-Area Wage Standards in the Labor Cost Component of Cost-
of-Service Rates

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Proposed policy statement.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes 
to clarify how the Commission will treat the use of project-area wage 
standards in calculating the labor cost component of jurisdictional 
cost-of-service rates.

DATES: Comments on this proposed policy statement are due on or before 
December 26, 2023.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways. Electronic filing through https://www.ferc.gov, is 
preferred.
     Electronic Filing: Documents must be filed in acceptable 
native applications and print-to-PDF, but not in scanned or picture 
format.
     For those unable to file electronically, comments may be 
filed by USPS mail or by hand (including courier) delivery.
    [cir] Mail via U.S. Postal Service Only: Addressed to: Federal 
Energy Regulatory Commission, Secretary of the Commission, 888 First 
Street, NE, Washington, DC 20426.
    [cir] Hand (including courier) delivery: Deliver to: Federal Energy 
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
    The Comment Procedures Section of this document contains more 
detailed filing procedures.

FOR FURTHER INFORMATION CONTACT: 
    Heidi Nielsen (Legal Information), Office of the General Counsel, 
(202) 502-8435, [email protected].
    Adam Pollock (Technical Information), Office of Energy Market 
Regulation, (202) 502-8458, [email protected].
    James Sarikas (Technical Information), Office of Energy Market 
Regulation, (202) 502-6831, [email protected].

SUPPLEMENTARY INFORMATION:

I. Proposal

    1. In this proposed policy statement, we clarify how the Commission 
will treat the use of project-area wage standards in calculating the 
labor cost component of cost-of-service rates, including under Natural 
Gas Act (NGA) sections 4, 5, and 7, 15 U.S.C. 717c-d, 717f; the 
Interstate Commerce Act (ICA), 49 U.S.C. app. 1(5)(a); and Federal 
Power Act (FPA) sections 205 and 206, 16 U.S.C. 824d-e.\1\
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    \1\ While most interstate oil pipelines have market-based or 
indexed rates, some jurisdictional pipelines have cost-of-service 
rates on file with the Commission.
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    2. Project-area wage standards are the prevailing wages set by 
labor markets in the locale where the associated project work (e.g., 
construction, capital repairs, decommissioning) is performed. They can 
be found in data sources that indicate the basic hourly wage rates and 
fringe benefit rates for labor, direct employees and/or contract 
personnel that prevail in a predetermined geographic area. For example, 
under the Davis-Bacon Act, the U.S. Department of Labor issues 
prevailing wage determinations based on periodic surveys of union and 
non-union wages paid in a particular location, which serve as the 
minimum wage that must be paid by contractors and subcontractors 
performing under certain federally funded or assisted construction 
contracts.\2\ A number of states have enacted their own prevailing wage 
laws, sometimes referred to as ``Little Davis-Bacon'' laws.\3\
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    \2\ ``By requiring the payment of minimum prevailing wages, 
Congress sought to `ensure that Government construction and 
federally assisted construction would not be conducted at the 
expense of depressing local wage standards.' '' Dep't of Labor, 
Updating the Davis-Bacon & Related Acts Reguls., 88 FR 57526, 57526 
(Aug. 23, 2023) (citing Determination of Wage Rates Under the Davis-
Bacon & Serv. Cont. Acts 5 Op. O.LC. 174, 176 (1981)) (Final Rule).
    \3\ Dep't of Labor, Dollar Threshold Amount for Contract 
Coverage under State Prevailing Wage Laws (Jan. 1, 2023), https://www.dol.gov/agencies/whd/state/prevailing-wages.

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[[Page 73834]]

    3. The Commission addressed the treatment of project-area wage 
rates in the cost component of natural gas pipeline cost-of-service 
rates in Opinion Nos. 510 and 524.\4\ In Opinion No. 510, the 
Commission rejected a pipeline operator's proposal to use union-only 
wage rates from a single proxy location to estimate the labor cost of 
decommissioning its pipeline that spanned four states,\5\ finding that 
the pipeline operator had not carried its burden under section 4 of the 
NGA to show that it would use union labor and that, based on the 
evidence in that proceeding, it was accordingly reasonable to estimate 
labor costs using a ``blended'' mix of average union and non-union wage 
rates in the general private construction industry in the states where 
the pipeline was located, ``weighted'' by the length of pipe in each 
state.\6\ The Commission subsequently applied the same approach in 
Opinion No. 524, finding that the same operator had again failed to 
present sufficient supporting evidence for its proposal to use union-
only wage rates in its estimate of decommissioning labor costs.\7\
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    \4\ Portland Nat. Gas Transmission Sys., Opinion No. 510, 134 
FERC ] 61,129 (2011), reh'g in part, 142 FERC ] 61,198 (2013), reh'g 
dismissed, 150 FERC ] 61,106 (2015); Portland Nat. Gas Transmission 
Sys., Opinion No. 524, 142 FERC ] 61,197 (2013), reh'g denied, 150 
FERC ] 61,107 (2015). Among other things, these proceedings involved 
estimating the expected costs for future pipeline retirements, 
specifically, determining the labor component for decommissioning 
costs to be recovered by a pipeline operator, Portland Natural Gas 
Transmission System.
    \5\ Opinion No. 510, 134 FERC ] 61,129 at P 124.
    \6\ Id.
    \7\ Opinion No. 524, 142 FERC ] 61,197 at PP 162-64.
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    4. In this proposed policy statement, we clarify that those 
decisions were based on the record evidence before the Commission in 
those proceedings and do not reflect a heightened standard of review 
with respect to project-area wage rates. Under this proposal, 
jurisdictional entities may include wages consistent with project-area 
wage standards in cost-of-service rates filed with the Commission where 
the record supports that outcome, as discussed below.
    5. Specifically, we propose that, when a Commission-jurisdictional 
entity presents evidence that it: (1) pays project-area wage standards, 
or (2) is contractually obligated to pay project-area wage standards, 
or (3) commits via affidavit \8\ filed in the rate proceeding that it 
will pay project-area wage standards, the Commission will presume, 
absent contrary evidence, that such project-area wage standards are 
just and reasonable for the relevant labor-cost component.\9\ 
Furthermore, we propose that the Commission will reject the inclusion 
of labor wages consistent with project-area wage standards in cost-of-
service rates when the evidence demonstrates that the jurisdictional 
entity has not paid or will not be paying labor wages consistent with 
project-area wage standards.
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    \8\ We remind filers that all information submitted in cost-of-
service filings must be truthful and accurate, see 18 CFR 
35.13(d)(6) (``A utility shall include in its filing an attestation 
. . . that . . . the cost of service statements and supporting data 
submitted . . . are true, accurate, and current representations of 
the utility's books, budgets, or other corporate documents.''), 
154.308 (``The filing must include a statement . . . representing 
that the cost statements, supporting data, and workpapers, that 
purport to reflect the books of the company do, in fact, set forth 
the results shown by such books.''), 341.1(b)(1) (``The signature on 
a filing constitutes a certification that the contents are true to 
the best knowledge and belief of the signer . . . .''), and that 
failure to meet this requirement may result in a referral to the 
Office of Enforcement for further investigation and action, as 
appropriate.
    \9\ Consistent with 48 CFR 22.401, this proposed policy 
statement applies to employee or contract labor whose duties are 
primarily manual or physical in nature, as distinguished from mental 
or managerial, and does not apply to employees or contractors whose 
duties are primarily executive, supervisory, administrative, or 
clerical. For purposes of this proposed policy statement, ``wages'' 
means the basic hourly pay rate including fringe benefits, as more 
fully defined in 48 CFR 22.401.
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    6. We propose that the Commission will accept as sources of 
project-area wage standards: (1) Davis-Bacon Act local prevailing wage 
determinations; \10\ (2) state prevailing wage determinations; \11\ (3) 
applicable collective-bargaining agreements or Project Labor 
Agreements; \12\ or (4) other evidence demonstrating the prevailing 
wages paid in the relevant locale(s), such as an industry-accepted 
database used in construction cost estimates. The Commission seeks 
comment on the appropriateness of the four proposed sources of project-
area wage standards. In particular, we seek comment on the 
appropriateness of using industry databases with construction cost 
estimates as a source of project-area wage standards as well as whether 
any project-area wage standards might not be captured in the first 
three listed categories.
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    \10\ Pursuant to the Davis-Bacon Act, as amended and codified at 
40 U.S.C. 3141(2), the term ``prevailing wages'' includes the basic 
hourly rate of pay and fringe benefits, as determined by the 
Department of Labor. See Final Rule, 88 FR at 57526 (citing 40 
U.S.C. 3142, 3145), 57531, 57546, 57699, 57722-724.
    \11\ The applicable state prevailing wage determination should 
meet or exceed the Davis-Bacon Act local prevailing wage 
determinations.
    \12\ Project Labor Agreements are agreements between building 
trade unions and contractors. They govern terms and conditions of 
employment (including wage-related issues) on a construction project 
for all craft workers--union and nonunion. Dep't of Labor, Project 
Labor Agreement Res. Guide, Project Labor, Cmty. Workforce, & Cmty. 
Benefits Agreements Res. Guide, ] 1, https://www.dol.gov/general/good-jobs/project-labor-agreement-resource-guide.
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    7. We further propose that jurisdictional entities seeking to 
include project-area wage standards in cost-of-service rates should 
maintain and preserve records, including books of account or records 
for work performed by employees, contractors or subcontractors, 
sufficient to demonstrate that claimed project-area wages were actually 
paid.\13\
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    \13\ See supra note 8.
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II. Comment Procedures

    8. The Commission invites comments on this proposed policy 
statement on or before December 26, 2023. Comments must refer to Docket 
No. PL24-1-000 and must include the commenter's name, the organization 
they represent, if applicable, and their address in their comments. All 
comments will be placed in the Commission's public files and may be 
viewed, printed, or downloaded remotely as described in the Document 
Availability section below. Commenters on this proposal are not 
required to serve copies of their comments on other commenters.
    9. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's website at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software must be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    10. Commenters that are not able to file comments electronically 
may file an original of their comment by USPS mail or by courier-or 
other delivery services. For submission sent via USPS only, filings 
should be mailed to: Federal Energy Regulatory Commission, Office of 
the Secretary, 888 First Street NE, Washington, DC 20426. Submission of 
filings other than by USPS should be delivered to: Federal Energy 
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.

III. Information Collection Statement

    11. The Paperwork Reduction Act and the implementing regulations of 
the Office of Management and Budget (OMB) \14\ require approval of 
certain information collection requirements imposed by an agency. Upon 
approval

[[Page 73835]]

of a collection of information, OMB will assign an OMB Control Number 
and an expiration date. Respondents subject to the filing requirements 
will not be penalized for failing to respond to the collection of 
information unless the collection of information displays a valid OMB 
control number.
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    \14\ 5 CFR 1320.
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    12. This proposed policy statement clarifies how the Commission 
will treat the use of project-area wage standards in calculating the 
labor cost component of jurisdictional cost-of-service rates filed by a 
natural-gas company, interstate oil pipeline, or public utility, 
pursuant to NGA sections 4, 5 and 7, 15 U.S.C. 717c-d, 717f; ICA, 49 
U.S.C. app. 1(5)(a); and FPA sections 205 and 206, 16 U.S.C. 824d-e, 
respectively.
    13. The Commission is submitting these reporting requirements to 
OMB for its review and approval under section 3507(d) of the Paperwork 
Reduction Act. Comments are solicited on whether the information will 
have practical utility, the accuracy of provided burden estimates, ways 
to enhance the quality, utility, and clarity of the information to be 
collected, and any suggested methods for minimizing the respondent's 
burden, including the use of automated information techniques.
    14. Please submit your comments (identified by Docket No. PL24-1-
000) by either of the following methods: (1) eFiling at Commission's 
website: https://www.ferc.gov/docs-filing/efiling.asp or (2) Mail/Hand 
Delivery/Courier: Federal Energy Regulatory Commission, Secretary of 
the Commission, at Health and Human Services, 12225 Wilkins Avenue, 
Rockville, Maryland 20852. All submissions must be formatted and filed 
in accordance with submission guidelines at: https://www.ferc.gov/help/submission-guide.asp. For user assistance, contact FERC Online Support 
by email at [email protected], or by phone at: (866) 208-3676 
(toll-free).
    15. Collection Nos., Titles and OMB Control Nos.: FERC-516 
(Electric Rate Schedules and Tariff Filings, OMB Control No. 1902-
0096); FERC-537 (Gas Pipeline Certificates: Construction, Acquisition 
and Abandonment; OMB Control No. 1902-0060); FERC-538 (Gas Pipeline 
Certificates: Section 7(a) Mandatory Initial Service, OMB Control No. 
1902-0061); FERC-545 (Gas Pipeline Rates: Rate Change (Non-formal), OMB 
Control No. 1902-0154); FERC-546 (Certificated Rate Filings: Gas 
Pipeline Rates, OMB Control No. 1902-0155); FERC-550 (Oil Pipeline 
Rates--Tariff Filings and Depreciation Studies, OMB Control No. 1902-
0089); FERC-555 (Preservation of Records for Public Utilities and 
Licensees, Natural Gas and Oil Pipeline Companies, OMB Control No. 
1902-0098).
    16. Action: Proposed modifications to collections of information in 
accordance with the proposed policy statement.
    17. Respondents: The estimate of the number of respondents that may 
elect to use project-area wage standards in calculating the labor cost 
component of cost-of-service rates is based upon the existing burden 
inventory currently approved by OMB for filing rates cases, 
depreciation studies and certificate filings, include initial rates or 
seeking approval to charge existing rates for natural gas companies, 
public utilities and oil pipelines. This burden estimate is based upon 
one-third of the filings electing to include an additional burden by 
the filer to incorporate labor costs based upon paying wages that at 
minimum meet project-area wage standards.
    18. Frequency of Information Collection: Utilities, when including 
elements in rates reflecting future capital costs, may elect to make 
the above showings in support of wages that are at or above project-
area wage standards. Such proceedings may include but are not limited 
to certificates for new natural gas pipelines, general natural gas 
pipeline and electric utility rate cases, proposed new or modified 
depreciation rates, and proposed inclusion of asset retirement 
obligation in rates. In total, utilities may make such a showing one 
time per year.
    19. Necessity of Information: The information would be necessary 
for the utility to receive the presumption that wages for capital 
projects that are at or above project-area wage standards are not just 
and reasonable.
    20. Internal Review: The Commission has reviewed the proposed 
changes and has determined that such changes are necessary. These 
requirements conform to the Commission's need for efficient information 
collection, communication, and management within the energy industry in 
support of the Commission's ensuring just and reasonable rates. The 
Commission has specific, objective support for the burden estimates 
associated with the information collection requirements. However, we 
request comments with supporting background information on the 
estimates for burden and cost.
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    \15\ ``Burden'' is the total time, effort, or financial 
resources expended by persons to generate, maintain, retain, or 
disclose or provide information to or for a Federal agency. For 
further explanation of what is included in the estimated burden, 
refer to 5 CFR 1320.3.
    \16\ Commission staff estimates that the respondents' skill set 
(and wages and benefits) for this docket are comparable to those of 
Commission employees. Based on the Commission's Fiscal Year 2023 
average cost of $199,867/year (for wages plus benefits, for one 
full-time employee), $96.00/hour is used.
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    21. The Commission estimates the effect of the proposed policy 
statement on burden \15\ and cost \16\ as follows:

[[Page 73836]]

                                 Estimates of the Effects Due to the Proposed Policy Statement in Docket No. PL24-1-000
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                                                                          D. Total
                                                          C. Annual       number of                                F. Total annual hr.      G. Cost per
      A. Information collection         B. Number of      number of       responses     E. Average  burden hrs.  burdens & total  annual    respondent
                                         respondents    responses per    (column B x     & cost per  response    cost (column D x column    (column F /
                                                         respondent       column C)                                         E)               column B)
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                                                                     FERC-1006 \17\
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FERC-537.............................              22               1              22  15 hrs. $1,440..........  330 hrs. $31,680.......          $1,440
FERC 516.............................               6               1               6  15 hrs. $1,440..........  90 hrs. $8,640.........           1,440
FERC 545.............................              11               1              11  15 hrs. $1,440..........  165 hrs. $15,840.......           1,440
FERC 555.............................             170               1             170  1 hr. $96...............  170 hrs. $16,320.......              96
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                                                               Other Affected Collections
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FERC-538.............................               1               1               1  15 hrs. $1,440..........  15 hrs. $1,440.........           1,440
FERC-546.............................              16               1              16  15 hrs. $1,440..........  240 hrs. $23,040.......           1,440
FERC-550.............................               7               1               7  15 hrs. $1,440..........  105 hrs. $10,080.......           1,440
                                      ------------------------------------------------------------------------------------------------------------------
    Total Effect of the Proposed       ..............  ..............             233  ........................  1,115 hrs. $107,040....  ..............
     Policy Statement.
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IV. Document Availability

    22. 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/or print the contents of this document via the 
internet through the Commission's Home Page (http://www.ferc.gov).
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    \17\ The FERC 1006 is a new temporary collection number that 
includes the burden changes due to the proposed policy statement in 
the FERC-545, -537, -516, and -555, which are pending at OMB for 
unrelated purposes.
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    23. From the Commission's Home Page on the internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    24. User assistance is available for eLibrary and the Commission's 
website during normal business hours from the Commission's Online 
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

    By direction of the Commission.
    Issued: October 19, 2023.
Kimberly D. Bose,
Secretary.
[FR Doc. 2023-23590 Filed 10-26-23; 8:45 am]
BILLING CODE 6717-01-P