[Federal Register Volume 59, Number 150 (Friday, August 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18872]
[[Page Unknown]]
[Federal Register: August 5, 1994]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 348
[Docket No. RM94-1-000]
Market-Based Ratemaking for Oil Pipelines; Notice of Proposed
Rulemaking
July 28, 1994.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Energy Regulatory Commission is proposing to amend
its regulations to adopt filing requirements and procedures with
respect to an application by an oil pipeline for a determination that
it lacks significant market power in the markets in which it proposes
to charge market-based rates.
DATES: Comments are due no later than September 6, 1994.
ADDRESSES: An original and 14 copies of written comments must be filed.
All filings should refer to Docket No. RM94-1-000 and should be
addressed to Office of the Secretary, Federal Energy Regulatory
Commission, 825 North Capitol Street, NE., Washington, DC 20426.
FOR FURTHER INFORMATION CONTACT: Jeffrey A. Braunstein, Office of the
General Counsel, Federal Energy Regulatory Commission, 825 North
Capitol Street, NE., Washington, DC 20426, (202) 208-2114.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 3104, 941 North
Capitol Street, NE., Washington, DC 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (202) 208-1397. To access CIPS, set your communications
software to use 300, 1200, or 2400 bps, full duplex, no parity, 8 data
bits and 1 stop bit. CIPS can also be accessed at 9600 bps by dialing
(202) 208-1781. The full text of this proposed rule will be available
on CIPS for 30 days from the date of issuance. The complete text on
diskette in Wordperfect format may also be purchased from the
Commission's copy contractor, La Dorn Systems Corporation, also located
in Room 3104, 941 North Capitol Street, NE., Washington, DC 20426.
I. Introduction
On October 22, 1993, the Federal Energy Regulatory Commission
(Commission) issued Order No. 5611 in which the Commission
promulgated regulations pertaining to its jurisdiction over oil
pipelines under the Interstate Commerce Act (ICA)2 to fulfill the
requirements of Title XVIII of the Energy Policy Act of 1992 (Act of
1992).3
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\1\Revisions to Oil Pipeline Regulations pursuant to Energy
Policy Act, Order No. 561, 58 FR 58,753 (November 4, 1993), III FERC
Stats. & Regs. 30,985 (1993), order on reh'g and clarification,
Order No. 561-A, issued contemporaneously with this Notice of
Proposed Rulemaking.
\2\49 U.S.C. app. 1 (1988).
\3\42 U.S.C.A. 7172 note (West Supp. 1993).
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In Order No. 561, the Commission adopted a simplified and generally
applicable ratemaking methodology for oil pipelines. This methodology
is an indexing system to establish ceilings on oil pipeline rates. The
Commission, however, will also permit, under defined circumstances, the
use of two alternative methodologies. Those are the use of a cost-of-
service methodology and the use of settlement rates. In addition, in
Order No. 561, the Commission continued its policy of allowing an oil
pipeline ``to attempt to show that it lacks significant market power in
the market in which it proposes to charge market-based rates.''4
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\4\18 CFR 342.4(b), to be effective January 1, 1995.
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Also, on October 22, 1993, the Commission issued a Notice of
Inquiry (NOI) about market-based rates for oil pipelines.5 In the
NOI, the Commission first inquired whether it should continue to permit
oil pipelines to seek market-based rates on a showing that they do not
have significant market power in the relevant markets. The Commission
also inquired about how it should make a market power determination
and, in that connection, raised a number of substantive and procedural
issues. The Commission's intent was to adopt standards to be used in
determining whether an oil pipeline lacks significant market power in
the relevant markets, if consensus existed as to the standards. The
Commission received comments from fifteen commenters listed in the
Appendix.6 The present Notice of Proposed Rulemaking (NOPR) as set
forth and discussed below is the Commission's response to the NOI. In
brief, the Commission is proposing to adopt procedural rules governing
an oil pipeline's application for a Commission finding that the oil
pipeline lacks significant market power in the relevant markets. The
Commission is not proposing to adopt any substantive rules governing
the making of that finding.
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\5\Market-Based Ratemaking for Oil Pipelines, Notice of Inquiry,
58 FR 58,814 (November 4, 1993), IV FERC Stats. & Regs. Notices
35,527 (October 22, 1993).
\6\The motions to file comments and reply comments in the NOI
out-of-time are granted.
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II. Public Reporting Requirement
The Commission estimates the public reporting burden for this
collection of information under the proposed rule will increase the
existing reporting burden associated with FERC-550 by an estimated 500
hours annually,--an average of 250 hours per response based on an
estimated 2 responses. The information filed by the oil pipelines will
be collected by the Commission under FERC-550 ``Oil Pipeline Rates:
Tariff Filings''. FERC-550 is a designation covering oil pipeline
tariff filings made to the Commission. The estimates include the time
for reviewing instructions, researching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information. The current annual reporting burden is
5,350 hours based on an estimated 535 responses from approximately 140
respondents.
Interested persons may send comments regarding these burden
estimates or any other aspect of this information collection, including
suggestions for reducing this burden, to the Federal Energy Regulatory
Commission, 941 North Capitol Street, N.E., Washington, D.C. 20426
[Attention: Michael Miller, Information Services Division, (202) 208-
1415]; and to the Office of Information and Regulatory Affairs of OMB
(Attention: Desk Officer for Federal Energy Regulatory Commission).
III. Conclusions From the NOI
The oil pipeline industry commenters7 and the United States
Department of Justice (Justice) maintain that the Commission should
continue to allow market-based rates for oil pipelines without any
constraints on prices or duration. Several shippers or shipper
groups8 and the Alberta Petroleum Marketing Commission (Alberta)
support or do not oppose the continuation of market-based rates for oil
pipelines, but with qualifications, such as price constraints or limits
on duration.9 Other shippers or shipper groups oppose the
continuation of market-based rates for oil pipelines as inappropriate
under the cost-based, just and reasonable standard or as unnecessary in
light of Order No. 561's methodologies.10
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\7\The Association of Oil Pipe Lines, Williams Pipe Line
Company, Marathon Pipe Line Company, ARCO Pipe Line Company, Four
Corners Pipeline Company, and Buckeye Pipe Line Company, L.P.
\8\Total Petroleum, Inc. (Total), the Petrochemical Energy Group
(PetroChemical), and The City of Long Beach (Long Beach).
\9\Total, Long Beach, Petrochemical, and Alberta would subject
the market based rates to price constraints and Petrochemical and
Total would require that market-based rates exist for a limited
duration. The Canadian Association of Petroleum Producers support
market-based rates, but only if the ratepayer requests them or the
pipeline requires the flexibility to lower the price of its services
to meet competition.
\1\0Sinclair Oil Corporation, Chevron U.S.A. Products Company,
and the National Council of Farmer Cooperatives.
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Upon consideration of the comments to the NOI, the Commission
concludes that oil pipelines may continue to seek market-based rates on
a showing that they do not have significant market power in the
relevant markets. The Commission believes that this approach comports
with the spirit of the Act of 1992 by retaining a light-handed
regulatory method as a complement to the Commission's generally
applicable indexing approach. In addition, as the Commission stated in
Order No. 561, a market-based approach ``is clearly within the
Commission's authority under the ICA, as the Commission held in
Buckeye.''11 Further, market-based pricing has been found by the
United States Court of Appeals for the District of Columbia Circuit to
comport with the just and reasonable standard of the Natural Gas
Act,12 which is the standard under the ICA.13 The Commission
will consider the need for any constraints in individual cases.
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\1\1Order No. 561, III FERC Stats. & Regs. 30,985 at p. 30,958,
citing Buckeye Pipe Line Co., 44 FERC 61,068 (1988) (Order Granting
Interluctory Appeals); 53 FERC 61,473 (1990) (opinion and Order on
Initial Decision).
\1\2Elizabethtown Gas Co. v. FERC, 10 F.3d 866 (D.C. Cir. 1993).
(``[W]hen there is a competitive market the FERC may rely upon
market-based prices in lieu of cost-of-service regulation to assure
a `just and reasonable' result.'' Id. at 870).
\1\349 U.S.C. 1(5) (``All charges ... shall be just and
reasonable''); Farmers Union Central Exchange v. FERC, 734 F.2d
1486, 1500 (D.C. Cir. 1984).
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However, there is no consensus now on the substantive standards to
be used in determining whether an oil pipeline lacks significant market
power in the relevant markets. This lack of consensus is shown by the
divergent views expressed by the commenters on key issues such as the
appropriate geographic market and the use of screens and rebuttable
presumptions. For example, the oil pipeline industry supports the use
of BEAs (see infra) as the appropriate geographic markets, while some
shippers14 oppose the use of BEAs, and Justice states that it can
no longer recommend the use of BEAs. In addition, while there is a
consensus in support of the use of the Herfindahl-Hirschman Index (HHI)
(see infra) as an appropriate market concentration measure, there is no
consensus with respect to details about the HHI15 or about the
threshold for creating a rebuttable presumption.16 This lack of
consensus about those and other issues has convinced the Commission
that the appropriate course of action is to develop oil pipeline
precedents on a case-by-case basis. Accordingly, the Commission
concludes that it should not go forward with a rulemaking to establish
substantive standards determining whether a pipeline lacks significant
market power.
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\1\4E.g., Alberta, Petrochemical, and Total.
\1\5For example, whether the HHI should be based on capacity
(the pipeline industry except for Marathon) or delivery shares of
the market (Marathon, Total, and Sinclair).
\1\6That is, the level at which the concentration screen for a
rebuttable presumption should be set.
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While the Commission believes it is not the time to propose
substantive rules about market power determinations, it concludes that
it is appropriate to propose procedural rules to govern applications by
oil pipelines for market-based rates. The Commission's analysis of the
comments to the NOI indicates that a sufficient consensus exists about
the issues that are germane to a market-based rate proceeding. It is in
the public interest to establish by rule the information that must be
filed by an oil pipeline seeking a determination that it lacks
significant market power, enabling it to charge market-based rates.
This should streamline the process of resolving market power issues and
thereby minimize unnecessary regulatory costs and delays as
contemplated by Section 1802(a) the Act of 1992.
IV. The Proposed Rule--Summary
The Commission is proposing to amend subchapter P of its
regulations, Regulations Under the Interstate Commerce Act, by adding a
new Part 348 to those regulations. In this new part, the Commission
will establish the kind of information that an oil pipeline must
include in its application for a market power determination, along with
procedural requirements applicable to the filing of and responses to
the application. In Parts V and VI below, the Commission will discuss
the information requirements. In brief, an oil pipeline would be
required to file a statement of position in support of its application
for a market power determination, along with information that supports
its statement of position, and additional information that will be
desirable in a market power proceeding in order to minimize the need
for discovery. In Part VII below, the Commission will discuss the
procedural requirements applicable to applications for market power
determinations.
The Commission is not proposing at this time to implement generic
proceedings or to make market determinations that would apply to
pipelines other than the specific pipeline seeking such a
determination. The necessity to examine both origin and destination
markets in analyzing the market power of any given pipeline may make
such generic determinations difficult. Also, some pipelines may lack
market power in a specified market, whereas others may not. However,
the Commission is still interested in ways it could more efficiently
process market-power cases that may be filed. For example, should
pipelines be able to join together to pursue market-power
determinations in order to share the costs of such a proceeding? Should
pipelines be able to unilaterally ``join'' a proceeding that is
established by a competing pipeline in a given market? What would be
the benefits and drawbacks to such joinder? Are there other ways in
which the Commission could facilitate market power determinations in
this regard?
V. The Statement of Position
Section 348.1(a) of the proposed regulations requires the oil
pipeline seeking a market power determination to include with its
application a statement of position as to its market power. Section
348.1(b) of the proposed regulations provides that the oil pipeline's
statement of position must include a summary and a statement of
material facts. The latter must include citation to the supporting
statements, exhibits, affidavits, and prepared testimony. In its
statement of position, the oil pipeline would be expected to present
its arguments in favor of its position that it lacks significant market
power in the relevant markets.
VI. The Supporting Statements
Section 348.1(a) of the proposed regulations requires the oil
pipeline seeking a market power determination to include with its
application the information required by proposed section 348.1(c).
Under that proposed regulation, the oil pipeline must include certain
designated information. The information required is mostly factual and
is relevant to measuring the oil pipeline's ability to exercise market
power in the relevant markets. That measurement will enable the
Commission to determine whether the oil pipeline can exercise
significant market power by profitably maintaining its prices
significantly above competitive levels for a significant period. If a
record has been established in an oil pipeline proceeding, another oil
pipeline may make use of all or part of that record in satisfying its
burden to present information to the extent the other record contains
relevant public information which is not out-of-date.17 The
Commission is proposing the information to be provided in Statements A
through I, which are discussed below.
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\1\7See 18 CFR 385.508 (c).
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A. Statement A--Geographic Market
In Statement A, the Commission is proposing that the oil pipeline
describe the geographic markets in which it seeks to make a showing
that it lacks significant market power. The oil pipeline would have to
explain why its method for selecting the geographic markets is
appropriate.
The Commission is proposing to require the oil pipeline to include
both relevant origin and destination markets in its evidentiary
presentation. This will provide interested parties with complete
information about competition at the supply and delivery ends of the
pipeline system. The Commission is not requiring the oil pipeline to
file a market analysis of each point-to-point corridor. In light of the
significant point-to-point traffic in the oil pipeline industry, this
would be too onerous a requirement at the filing stage.18 In
addition, a point-to-point corridor analysis may exclude competitive
alternatives to the relevant service and, in some instances, it could
provide an inaccurate picture of market concentration.
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\1\8A protestant may, as part of its response to the oil
pipeline's application, seek to prove that in its circumstances a
point-to-point corridor approach should be used to determine the
appropriate geographic market.
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The Commission is not proposing to require a pipeline to file
pursuant to any particular geographic market definition. The Commission
expects that oil pipelines will propose to use BEAs as their geographic
markets.19 In the past, the Commission itself has used BEAs as the
appropriate geographic markets.20 However, as indicated above,
Justice stated that it could no longer recommend the use of arbitrary
markets such as BEAs because there may not be a high degree of
correlation between the size of the relevant markets and BEAs. The
burden will be on the oil pipeline to explain why its use of BEAs or
any other definition of the geographic market is appropriate. If a
pipeline uses BEAs, it must show that each BEA represents an
appropriate geographic market.
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\1\9The term BEA refers to United States Department of Commerce,
Bureau of Economic Analysis Economic Areas. BEAs are geographic
regions surrounding major cities that are intended to represent
areas of actual economic activity.
\2\0See Buckeye Pipe Line Co., 53 FERC 61,473 (1990).
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The information provided in the various statements should help the
protestants assess whether a particular BEA does in fact represent an
appropriate market. Of course, the oil pipeline may choose to define
its relevant geographic markets at a sub-BEA level, such as by a given
radius around its terminals. As with BEAs, the oil pipeline must
explain why this geographic market definition is appropriate.
B. Statement B--Product Market
In Statement B, the Commission is proposing that the oil pipeline
identify the product market or markets for which it seeks to establish
that it lacks significant market power. The oil pipeline would have to
explain why the particular product definition is appropriate.
Under the ICA, the Commission regulates the transportation of oil
by pipeline.21 In a market power analysis, the Commission must
determine the oil pipeline's ability to exercise market power over this
transportation service. However, a market power analysis in general
cannot be made solely in the context of transportation rates.22
Where competing alternatives constrain the applicant's ability to raise
transport prices, the effect of such constraints are ultimately
reflected in the price of the commodity being transported. Hence, the
delivered commodity price (relevant product price plus transportation
charges) generally will be the relevant price to be analyzed for making
a comparison of the alternatives to a pipeline's services.
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\2\149 U.S.C. 1(1)(b).
\2\2In some instances, such as for origin markets or crude oil
pipelines, it may be appropriate to make a case based only on
transportation rates. The pipeline may elect to file such a case.
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The Commission is not proposing a specific way to define the
product markets. The relevant product market first would be
distinguished between the transportation of crude oil and the
transportation of refined products. Crude oil transportation could
further be divided to include transportation of natural gas liquids
while products transportation could be delineated by type, such as
motor gasoline, distillates, or jet fuel. The oil pipeline should, in
the first instance, select its product market. The information provided
in the various statements should help the protestants assess whether
the oil pipeline's definition of the product market is appropriate. The
burden is on the oil pipeline to justify its choice.
C. Statement C--The Oil Pipeline's Facilities and Services
In Statement C, the Commission is proposing that the oil pipeline
describe its own facilities and services in the relevant markets.
Statement C would have to include all pertinent data about the
pipeline's facilities and services in those markets. For example,
without limitation, the oil pipeline would have to include data on the
capacity of its facilities, on its throughput, on its receipts in its
origin markets, on its deliveries in its destination markets and to its
major consuming markets, and the mileage between its terminals and its
major consuming markets. Data should be supplied for each commodity
carried, such as jet fuel, gasoline, etc.
D. Statement D--Competitive Alternatives
In Statement D, the Commission is proposing that the oil pipeline
describe available transportation alternatives in competition with the
oil pipeline in the relevant markets and other competition constraining
the oil pipeline's rates in those markets. Statement D would have to
include all pertinent data about transportation alternatives and other
constraining competition.23 For example, without limitation, the
oil pipeline would have to include data similar to that provided for
its own facilities and services in Statement C, including cost and
mileage data in specific reference to the oil pipeline's terminals and
major consuming markets.
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\2\3If the oil pipeline seeks to include competitive
alternatives from outside a BEA, it would have to show that any such
alternative is a competitive factor.
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The NOI listed the following forms of transport and other
competition that might be included in a market power
calculation:24 other pipelines, including private pipelines and
those passing through the geographic market but without terminals,
pipelines passing near the geographic market, barges, trucks, and
refineries within the geographic market.25 The Commission does not
propose to exclude any alternative form of transport or other
competition, including, for example, local consumption in origin
markets. However, the burden is on the oil pipeline to justify its
inclusion of transportation alternatives and other competition in its
market power analysis.
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\2\4E.g., in calculating its Herfindahl-Hirschman Index,
discussed infra.
\2\5Potential Competition included in the list is discussed
infra.
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E. Statement E--Potential Competition
In Statement E, the Commission is proposing that the oil pipeline
describe potential competition in the relevant markets. Statement E
would have to include data about the potential competitors such as a
potential entrant's costs and mileage in reference to the oil
pipeline's terminals and major consuming markets.
F. Statement F--Maps
Statement F would consist of a map or maps showing the principal
oil pipeline facilities and the points at which service is rendered
under its tariff, the direction of flow of each line, the location of
each of the oil pipeline's terminals, the location of each of its major
consuming markets (cities, airports, and the like, as appropriate), and
the location of alternatives to the oil pipeline, including their
distance in miles from the oil pipeline's terminals and major consuming
markets. The map may be on separate pages and must include a general
system map and maps by geographic markets.
G. Statement G--Market Power Measures
In Statement G, the Commission is proposing that the oil pipeline
set forth the calculation of the HHI26 and its market share with
respect to the relevant markets and the calculation of other market
power measures relied on by the oil pipeline, along with complete
particulars about those calculations.
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\2\6The HHI calculates market concentration by summing the
squares of individual market shares of all the firms included in the
market. For example, if each of four firms has a 25 percent share of
the market, the HHI for the market would be .2500 ((.25x.25)4) or
2500 in 12 nontechnical terms.
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The Commission believes that it is useful to obtain a showing of
market concentration using the HHI. The HHI would include the oil
pipeline and the competitive alternatives set forth in Statements D and
E. The burden is on the oil pipeline to justify the individual market
shares used in calculating the HHIs. In addition, the Commission is not
proposing any particular HHI level, such as 1800 or 2500, as a screen
or presumption, rebuttable or otherwise. All factors must be considered
in determining whether an oil pipeline lacks significant market power.
The Commission also is proposing to require the oil pipeline to
submit a market share calculation based on its receipts in its origin
markets and its deliveries in its destination markets, if the HHIs are
not based on those factors. For example, if the destination HHIs are
based on capacity determined market shares, the oil pipeline would have
to submit a market share calculation for itself based on deliveries in
the respective destination markets. The Commission is not proposing any
screen or presumption, rebuttable or otherwise, about particular market
share levels. All factors must be considered in determining whether an
oil pipeline lacks significant market power.
The oil pipeline may also include other indicators of the lack of
significant market power. For example, it could present evidence about
water transportation as an indication that the oil pipeline lacks
significant market power.
H. Statement H--Other Factors
In Statement H, the oil pipeline would describe any other factors
that bear on the issue of whether it lacks significant market power in
the relevant markets. The oil pipeline would have to explain why those
other factors are pertinent.
The NOI listed the following possible other factors: Exchanges,
Excess Capacity, Competition with vertically integrated companies,
buyer power, and profitability.\27\ The Commission is not excluding any
factor. The Commission is not limiting the factors to those listed in
the NOI. For example, an oil pipeline might want to show that it has
been losing markets over a period of years or that the relevant market
is expanding. However, the burden is on the oil pipeline to show the
relevance of any factor to its lack of significant market power.
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\27\Market share and potential entry included in the list are
referred to supra.
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I. Statement I--Proposed Testimony
In Statement I, the oil pipeline would present the proposed
testimony in support of its application. This would serve as its case-
in-chief, if the Commission sets the application for hearing.
VII. Procedural Requirements
The Commission is proposing in section 348.2 several procedural
requirements in connection with applications for a market power
determination. These new procedural requirements are necessary because
the applications are not rate filings. Under Order No. 561, an oil
pipeline must show that ``it lacks significant market power in the
relevant market in which it proposes to charge market-based
rates.''\28\ Only after the Commission concludes that the oil pipeline
lacks significant market power in the relevant markets may the pipeline
charge market-based rates. Until that time, the pipeline's rates are
determined by the Commission's indexing or cost-of-service provisions.
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\2\818 CFR 342.4(b), to be effective January 1, 1995.
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The first proposal is that the oil pipeline would not have to
initially provide its entire application to its shippers and
subscribers. Rather, it would only have to provide its letter of
transmittal to its shippers and subscribers. The letter of transmittal
would describe the application for a market power determination and
identify each rate that would be market-based, if the oil pipeline
shows that it lacks significant market power in the relevant market.
This will enable persons to determine if they want to examine the
complete application. Under the proposed regulations, a person must
make a written request to the pipeline for a copy of the complete
application within 15 days after the filing of the application with the
Commission. The oil pipeline would have to provide that person with a
copy of its complete application within seven days after receipt of the
written request. This will enable a person to determine if it wants to
protest the oil pipeline's application for a market power
determination. A protestant must file its protest to the application
within 60 days after the filing of the application. At that time, the
protestant must set forth in detail its grounds for opposing the oil
pipeline's application, including responding to its statement of
position and information, and, if the protestants desires, presenting
information of its own pursuant to Statements A-I. The Commission,
after examination of the oil pipeline's application and any protests,
would issue an order in which it would rule summarily on the
application or, if appropriate, establish future procedures and the
scope of the investigation. Future procedures may or may not involve a
hearing before an administrative law judge.
The Commission is not proposing any regulations with respect to
complaints against market-based rates under Section 13(1) of the ICA.
However, the Commission would expect a complainant to allege and to
present evidence that the pipeline has developed significant market
power. In particular, the Commission would expect a complainant to
describe any circumstances that have changed since the Commission made
the determination that the oil pipeline lacks significant market power
and could charge market-based rates.
Last, the Commission is proposing to require the oil pipelines to
file their applications with the Commission on an electronic medium in
addition to the paper filing. The formats for the electronic filing and
the paper copy will be obtainable at the Federal Energy Regulatory
Commission, Public Reference and Files Maintenance Branch, 941 North
Capitol Street, N.E., Washington, D.C. 20426. The Commission intends to
establish the formats in cooperation with the oil pipeline industry.
VIII. Environmental Analysis
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.\29\ The Commission
has categorically excluded certain actions from these requirements as
not having a significant effect on the human environment.\30\ The
action proposed here is procedural in nature and therefore falls within
the categorical exclusions provided in the Commission's
regulations.\31\ Therefore, neither an environmental impact statement
nor an environmental assessment is necessary and will not be prepared
in this rulemaking.
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\29\Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47,897 (Dec. 17, 1987), FERC
Statutes and Regulations, Regulations Preambles 1986-1990 30,783
(1987).
\30\18 CFR 380.4.
\31\See 18 CFR 380.4(a)(2)(ii).
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IX. Reporting Flexibility Certification
The Regulatory Flexibility Act (RFA)\32\ generally requires the
Commission to describe the impact that a proposed rule would have on
small entities or to certify that the rule will not have a significant
economic impact on a substantial number of small entities. An analysis
is not required if a proposed rule will not have such an impact.\33\
Most oil pipelines to whom the proposed rule would apply do not fall
within the definition of small entity.\34\ Consequently, pursuant to
section 605(b) of the RFA, the Commission certifies that the proposed
regulations, if promulgated, will not have a significant impact on a
substantial number of small entities.
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\32\5 U.S.C. 601-612.
\33\5 U.S.C. 605(b).
\34\Section 601(c) of the RFA defines a ``small entity'' as a
small business, a small not-for-profit enterprise, or a small
governmental jurisdiction. A ``small business'' is defined by
reference to section 3 of the Small Business Act as an enterprise
which is ``independently owned and operated and which is not
dominant in its field of operation.'' 15 U.S.C. 632(a).
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X. Information Collection Requirements
The Office of Management and Budget's (OMB) regulations\35\ require
that OMB approve certain information and recordkeeping requirements
imposed by an agency. The information collection requirements in this
proposed rule are contained in FERC-550 ``Oil Pipeline Rates: Tariff
Filings'' (1902-0089).
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\35\5 CFR 1320.14.
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The Commission's Office of Pipeline Regulation uses the data
collected in these information requirements to investigate the rates
charged by oil pipeline companies subject to its jurisdiction, to
determine the reasonableness of rates, and when appropriate prescribe
just and reasonable rates. In addition, the information to be required
by the proposed rule would allow the Commission to determine if an oil
pipeline lacks significant power in the relevant markets when it
proposes to charge market-based rates.
Because the adoption of the proposed procedural rules would create
an expected increase in the public reporting burden under FERC-550, the
Commission is submitting a copy of the proposed rule to OMB for its
review and approval. Interested persons may obtain information on these
reporting requirements by contacting the Federal Energy Regulatory
Commission, 941 North Capitol Street, N.E., Washington, D.C. 20426
[Attention: Michael Miller, Information Services Division, (202) 208-
1415], Comments on the requirements of this rule can be sent to the
Office of Information and Regulatory Affairs of OMB (Attention: Desk
Officer for Federal Energy Regulatory Commission).
XI. Comment Procedures
The Commission invites interested persons to submit written
comments on the proposals of this NOPR. As much as possible, the
comments should be keyed to the topic headings of this NOPR. An
original and 14 copies of the written comments must be filed with the
Commission no later than 30 days after the date of publication in the
Federal Register. Comments should be submitted to the Office of the
Secretary, Federal Energy Regulation Commission, 825 North Capitol
Street, N.E., Washington, D.C., 20426, and should refer to Docket No.
RM94-1-000.
All written comments will be placed in the Commission's public
files and will be available for inspection in the Commission's Public
Reference Room at 941 North Capitol Street, N.E., Washington, D.C.,
20426, during regular business hours.
List of Subjects in 18 CFR Part 348
Pipelines, Reporting and recordkeeping requirements.
By direction of the Commission.
Lois D. Cashell,
Secretary.
In consideration of the foregoing, the Commission proposes to add
Part 348, Chapter I, Title 18, Code of Federal Regulations, as set
forth below.
PART 348--OIL PIPELINE APPLICATIONS FOR MARKET POWER DETERMINATIONS
Sec.
348.1 Content of Application for a Market Power Determination
348.2 Procedures
Authority: 42 U.S.C. 7101-7352; 49 U.S.C. 1-27.
Sec. 348.1 Content of application for a market power determination.
(a) If, under Sec. 342.4(b) of this chapter, a carrier seeks to
establish that it lacks significant market power in the market in which
it proposes to charge market-based rates, it must file and provide an
application for such a determination. An application must include a
statement of position and the information required by paragraph (c) of
this section.
(b) The carrier's statement of position required by paragraph (a)
of this section must include a summary and a statement of material
facts. The statement of material facts must include citation to the
supporting statements, exhibits, affidavits, and prepared testimony.
(c) The carrier must include with its application the following
information:
(1) Statement A--geographic market. This statement must describe
the geographic markets in which the carrier seeks to establish that it
lacks significant market power. The carrier must include the origin
market and the destination market related to the service for which it
proposes to charge market-based rates. The statement must explain why
the carrier's method for selecting the geographic markets is
appropriate.
(2) Statement B--product market. This statement must identify the
product market or markets for which the carrier seeks to establish that
it lacks significant market power. The statement must explain why the
particular product definition is appropriate.
(3) Statement C--the carrier's facilities and services. This
statement must describe the carrier's own facilities and services in
the relevant markets. This statement must include all pertinent data
about the pipeline's facilities and services.
(4) Statement D--competitive alternatives. This statement must
describe available transportation alternatives in competition with the
carrier in the relevant markets and other competition constraining the
carrier's rates in those markets. The statement must include all
pertinent data about transportation alternatives and other constraining
competition.
(5) Statement E--potential competition. This statement must
describe potential competition in the relevant markets. The statement
must include data about the potential competitors, including costs, and
mileage in reference to the carrier's terminals and to major consuming
markets.
(6) Statement F--maps. This statement must consist of a map or maps
showing the carrier's principal carrier facilities, the points at which
service is rendered under its tariff, the direction of flow of each
line, the location of each of its terminals, the location of each of
its major consuming markets, and the location of the alternatives to
the carrier, including their distance in miles from the carrier's
terminals and major consuming markets. The map may be on separate pages
and must include a general system map and maps by geographic markets.
(7) Statement G--market power measures. This statement must set
forth for the relevant markets the calculation of the Herfindahl-
Hirschman Index; the carrier's market share based on receipts in its
origin markets and deliveries in its destination markets, if the
Herfindahl-Hirschman Index is not based on those factors; and the
calculation of other market power measures relied on by the carrier;
along with complete particulars about its calculations.
(8) Statement H--other factors. This statement must describe any
other factors that bear on the issue of whether the carrier lacks
significant market power in the relevant markets. The description must
explain why those other factors are pertinent.
(9) Statement I--prepared testimony. This statement must include
the proposed testimony in support of the application and will serve as
the carrier's case-in-chief, if the Commission sets the application for
hearing.
Sec. 348.2 Procedures.
(a) A carrier must file, as provided in Sec. 341.1 of this chapter,
fourteen copies of its application, including its statement of
position, statements, and related material, and a letter of transmittal
and must submit its application on an electronic medium. The formats
for the electronic filing and the paper copy can be obtained at the
Federal Energy Regulatory Commission, Division of Public Information,
825 North Capitol Street, N.E., Washington, D.C. 20426.
(b) A carrier must provide a copy of its letter of transmittal to
each shipper and subscriber on or before the day the material is
transmitted to the Commission for filing.
(c) A letter of transmittal must describe the market-based rate
filing, including an identification of each rate that would be market-
based, and the pertinent tariffs or supplement numbers, state if a
waiver is being requested and specify the statute, section, subsection,
regulation, policy or order requested to be waived. Letters of
transmittal must be certified pursuant to Sec. 341.2(c)(2) of this
chapter and acknowledgement must be requested pursuant to
Sec. 341.2(c)(3) of this chapter.
(d) A person must make a written request to the carrier for a copy
of the carrier's complete application within 15 days after the filing
of the application.
(e) The carrier must provide a copy of the complete application to
the requesting person within 7 days after receipt of the written
request.
(f) A carrier must provide copies as required by paragraph (b) and
(e) by first-class mail or by other means of transmission agreed upon
in writing.
(g) Any intervention or protest to the application must be filed
within 60 days after the filing of the application and must be filed
pursuant to Secs. 343.2(a) and (b) of this chapter. A protest must also
be telefaxed if required by Sec. 343.3(a) of this chapter.
(h) A protest filed against an application for a market power
determination must set forth in detail the grounds for opposing the
carrier's application, including responding to its position and
information and, if desired, presenting information pursuant to section
348.1(c) of this part.
[FR Doc. 94-18872 Filed 8-4-94; 8:45 am]
BILLING CODE 6717-01-P
