[Federal Register Volume 59, Number 152 (Tuesday, August 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19247]
[[Page Unknown]]
[Federal Register: August 9, 1994]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 292
[Docket No. RM94-17-000; Order No. 569]
Interpretation and Amendment Clarifying Exemption to Qualifying
Facilities From the Federal Power Act
Issued August 2, 1994.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final Rule.
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SUMMARY: The Federal Energy Regulatory Commission is interpreting and
amending its regulations on the exemption of certain qualifying
facilities from the Federal Power Act to clarify the scope of this
provision in light of recent amendments to the Federal Power Act (FPA)
as enacted in the Energy Policy Act of 1992 (Energy Policy Act).
Specifically, the Commission is interpreting and amending the
regulations to clarify that qualifying cogeneration and small power
production facilities (QFs) are not exempt from the provisions of the
FPA added and revised by the Energy Policy Act to the extent QFs fall
within those provisions.
EFFECTIVE DATE: The final rule is effective September 8, 1994.
FOR FURTHER INFORMATION CONTACT: Kimberly D. Bose, Federal Energy
Regulatory Commission, Office of the General Counsel, 825 North Capitol
Street, N.E., Washington, D.C. 20426, (202)208-2284.
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 content of
this document during normal business hours in Room 3104, at 941 North
Capitol Street, N.E., 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 order 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, N.E., Washington, DC 20426.
I. Introduction
The Federal Energy Regulatory Commission is issuing this final rule
to clarify and amend the regulation in 18 CFR 292.601. That
regulation--Exemption to qualifying facilities from the Federal Power
Act--provides that most qualifying cogeneration and small power
production facilities (QFs)1 under the Public Utility Regulatory
Policies Act of 1978 (PURPA) are exempt from all sections of the
Federal Power Act (FPA), with the exception of certain designated
sections. That regulation was promulgated prior to enactment of the
Energy Policy Act of 1992 (Energy Policy Act), which amended the FPA in
certain respects.
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\1\The exception is for a qualifying small power production
facility with a power production capacity which exceeds 30
megawatts, if such facility uses any primary energy source other
than geothermal resources. 18 CFR 292.601(b).
However, the Solar, Wind, Waste, and Geothermal Power Production
Incentives Act of 1990, Pub. L. No. 101-575, 104 Stat. 2834 (1990),
removes all size limitations on solar, wind, waste, and geothermal
small power production facilities between 30 and 80 megawatts in
size. See, e.g., Cambria Cogen Company, 53 FERC 61,459 (1990).
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The purpose of this final rule is to clarify that QFs are not
exempt from the sections of the FPA added and revised by the Energy
Policy Act, to the extent QFs fall within those sections. Some of the
added or revised sections of the FPA (sections 3, 211, 212, and 316A)
under which QFs are not exempt from Commission regulation already are
identified (implicitly in the case of section 316A) in the list of
Sec. 292.601(c) exceptions to FPA exemptions; accordingly, no amendment
to the regulatory text is necessary to reflect the clarification
provided herein. Amendment is, however, necessary to reflect other
sections of the FPA (sections 213 and 214) added by the Energy Policy
Act which may be applicable to QFs.
II. Discussion
Subpart F of Part 292 of the Commission's regulations provides for
the exemption of certain QFs from certain federal and state laws and
regulations. Section 292.601 provides for QF exemptions from Commission
regulation under the FPA. It applies to all QFs, other than qualifying
small power production facilities (not fueled primarily by geothermal
resources) with power production capacities in excess of 30 megawatts.
Section 292.601(c) further provides that any QF to which the section
applies is exempt from all sections of the FPA, except the following:
(1) Sections 1-18, and 21-30;
(2) Sections 202(c), 210, 211, and 212;
(3) Section 305(c); and
(4) Any necessary enforcement sections of Part III of the FPA with
regard to the sections listed in (1), (2) and (3).
On October 24, 1992, the Energy Policy Act became effective and
amended the FPA in several respects that affect the exemptions in and
exceptions to Sec. 292.601. In relevant respects, the Energy Policy Act
amended section 3 of the FPA to include in section 3(23), 16 U.S.C.
796(23), a definition of a ``transmitting utility.'' The Energy Policy
Act revised section 211 of the FPA, 16 U.S.C. 824j, concerning the
conditions under which certain applicants may request that the
Commission direct a ``transmitting utility'' to provide transmission
services. The Energy Policy Act extensively revised section 212, 16
U.S.C. 824k, concerning the rates, charges, terms and conditions for
transmission services provided under section 211. The Energy Policy Act
added section 213, 16 U.S.C. 824l, concerning information reporting
requirements with respect to wholesale transmission services. The
Energy Policy Act added section 214, 16 U.S.C. 824m, concerning sales
by exempt wholesale generators. Finally, the Energy Policy Act added
section 316A, 16 U.S.C. 825o-1, concerning enforcement penalties for
violations of any of the provisions of sections 211 through 214 of the
FPA.
Each of these statutory amendments directly or indirectly affects
the application of the Commission's rules and regulations concerning
the scope of FPA exemptions for QFs.
A. Section 3 of the FPA--Transmitting Utility
The definition of a ``transmitting utility'' has been added to
section 3(23) of the FPA. It reads as follows: The term ``transmitting
utility'' means any electric utility, qualifying cogeneration facility,
qualifying small power production facility, or Federal power marketing
agency which owns or operates electric power transmission facilities
which are used for the sale of electric energy at wholesale.
This definition allows eligible applicants under amended section
211 of the FPA (discussed infra) to request wholesale transmission
service under
the conditions enumerated in section 211 from QFs that fall within the
definition of transmitting utility, i.e. which own or operate
transmission facilities used for wholesale sales.
The Commission has explained in several orders that a QF under
PURPA may own and operate a transmission line and related facilities
that are necessary to the operation of and integral to the
facility.2 Indeed, the Commission has explained that more than one
QF can own undivided interests in the same transmission line, if used
solely to transmit power from the QF owners of the facilities to the
purchasing utility.3 In these circumstances, the transmission
facilities that are necessary to allow a QF to reach a utility-
purchaser may also subject the QF to applications for wholesale
transmission services under section 211 of the FPA.
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\2\See Clarion Power Company, 39 FERC 61,317 (1987); Oxbow
Geothermal Corporation, 36 FERC 62,151 (1986).
\3\See Oxbow Geothermal Corporation, 67 FERC 61,193 (1994);
Gamma Mariah, Inc., 44 FERC 61,442 (1988).
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A recent order of the Commission is particularly instructive in
this regard. In Oxbow Geothermal Corporation (Oxbow), 67 FERC 61,193
(1994), the Commission found that a QF that owns and operates a 214-
mile transmission line and related facilities is a ``transmitting
utility'' within the meaning of section 3(23) of the FPA. The
Commission also found, in response to a request for a disclaimer of FPA
jurisdiction, that the QF operator is exempt from regulation under most
of the sections of the FPA (as enumerated in Sec. 292.601) because the
transmission line and related facilities are part of a QF. The
Commission concluded that the QF does not lose any of its FPA
exemptions, and does not become a ``public utility'' within the meaning
of section 201(e) of the FPA, 16 U.S.C. 824(e), by virtue of its lease
to another QF of an undivided interest in the transmission line and
related facilities. (The Commission did, however, reserve judgment on
whether the lessee interest of the other QF in the interconnection
facilities was sufficient to bring it within the definition of a
``transmitting utility.'')
Accordingly, it must be clarified that QFs that own or operate
transmission facilities can fall within the definition of a
transmitting utility as defined in FPA section 3(23) and become subject
to FPA regulation as specified above.
B. Section 211--Transmission Access to Entities Generating Electric
Energy for Resale
Section 211 of the FPA has been amended by the Energy Policy Act to
allow any electric utility, federal power marketing agency, or any
other person generating electric energy for sale for resale to apply to
the Commission for an order requiring a transmitting utility to provide
transmission service to the applicant. The Commission may, but is not
required to, issue such an order if it finds that the order is in the
public interest, would not impair the continued reliability of electric
systems affected by the order, would not result in the displacement of
electric energy required to be provided under contract, and meets all
of the requirements of section 212 (discussed below). Further, the
applicant must have requested transmission service from the
transmitting utility at least 60 days prior to filing its application.
As explained above, a QF may be a ``transmitting utility'' and,
accordingly, may be the recipient of a request for wholesale
transmission service under section 211. Alternatively, a QF, as a
result of the Energy Policy Act, now can apply to the Commission for
transmission services under revised section 211 to the extent it
engages in wholesale sales.
Although revised section 211 contains a broad and expanded class of
entities whom the Commission can order to provide transmission
services, it does not otherwise expand the Commission's FPA
jurisdiction over those entities. The Commission may order transmitting
utilities to provide transmission services under section 211 and must
set the rates for such services in accordance with the procedures and
conditions enumerated in section 212. However, the Commission continues
not to have jurisdiction over voluntary transmission services by
transmitting utilities that are not FPA public utilities, as well as
over sales of electricity by such entities or corporate regulation of
them.
To date, the Commission has not been presented with a section 211
application requesting transmission services by or on behalf of a QF.
C. Section 212--Rates, Charges, Terms, and Conditions for Wholesale
Transmission Services
Section 212 of the FPA, as revised by the Energy Policy Act,
governs the rates, charges, terms, and conditions for wholesale
transmission services ordered under section 211 (discussed above).
Section 212 also governs the procedures the Commission must follow
before issuing orders under section 211 or section 210 (involving
interconnections). Because, as explained above, QFs can fall within the
definition of a transmitting utility, and may be the subject of a
Commission order under section 211 of the FPA, QFs cannot be considered
exempt from the provisions of section 212.
D. Section 213--Information Requirements With Respect to Wholesale
Transmission Services
Section 213, as added by the Energy Policy Act, is an entirely new
section. Section 213(a) requires that if a transmitting utility does
not agree to provide transmission services in accordance with the
specific rates, terms and conditions of a good faith request by the
applicant, the transmitting utility must, within 60 days or other
mutually- agreed upon period, give the applicant a written explanation,
including the basis for the transmitting utility's proposed rates,
terms, and conditions and its analysis of any physical or other
constraint.4 Section 213(b) requires that the Commission issue
within one year of enactment a rule requiring transmitting utilities to
submit annual information concerning potentially available transmission
capacity and known constraints.5
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\4\See Policy Statement Regarding Good Faith Requests for
Transmission Services and Responses by Transmitting Utilities Under
Sections 211(a) and 213(a) of the Federal Power Act, as Amended and
Added by the Energy Policy Act of 1992, III FERC Stats. & Regs.
30,975 (1993).
\5\See Order No. 558, New Reporting Requirement Implementing
Section 213(b) of the Federal Power Act and Supporting Expanded
Regulatory Responsibilities Under the Energy Policy Act of 1992, and
6Conforming and Other Changes to Form No. FERC-714, III FERC Stats.
& Regs. 30,980, order on reh'g, Order No. 558-A, 65 FERC 61,324
(1993).
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Section 213, like sections 211 and 212, refers specifically to
transmitting utilities. As explained above, QFs may be transmitting
utilities, and thus may be subject to the provisions of section 213.
Accordingly, QFs cannot be exempt from the provisions of this FPA
section.
E. Section 214--Sales by Exempt Wholesale Generators
Section 214, as added by the Energy Policy Act, applies to sales by
exempt zwholesale generators (EWGs), as determined pursuant to section
32 of the Public Utility Holding Company Act of 1935 (PUHCA), as
amended. Section 214 provides that rates and charges received by an EWG
for the sale of electric energy are not lawful if they are the result
of any undue preference or advantage from an electric utility which is
an associate company or an affiliate of the EWG.
In Richmond Power Enterprise, L.P., et al., 62 FERC 61,157 (1993),
the Commission explained that an EWG may own a QF, and that a
generating facility simultaneously may be both an eligible facility
(within the meaning of section 32 of PUHCA) and a QF (under PURPA).
Because of the possibility of such dual status, a QF might become
subject to the provisions of section 214. Accordingly, QFs cannot be
exempt from the provisions of this FPA section.
F. Section 316A--Enforcement of Certain FPA Provisions
Finally, section 316A, as added by the Energy Policy Act, provides
for civil penalties in the event that any person violates any provision
of sections 211 through 214 of the FPA, or violates any rule or order
issued under any of these FPA sections. Because, as explained above,
QFs are subject to the provisions of these sections, QFs cannot be
exempt from the provisions of section 316A of the FPA.
III. Conclusion
As explained above, QFs that fall within the definition of
transmitting utility are subject to the provisions of sections 3(23),
211, 212, 213, 214, and 316A of the FPA, as amended or added by the
Energy Policy Act. Accordingly, it is necessary to clarify that QFs are
not exempt from these FPA sections, and to make necessary amendments to
Sec. 292.601 of the Commission's regulations, to the extent QFs
undertake any actions that fall within the scope of these sections. The
Commission is not assuming additional FPA jurisdiction over the
activities of QFs to the extent they operate outside the scope of these
sections.
IV. Environmental Statement
Commission regulations require that an environmental assessment or
an environmental impact statement be prepared for any Commission action
that may have a significant adverse effect on the human
environment.6 The Commission has categorically excluded certain
actions from this requirement as not having a significant effect on the
human environment. As explained above, this rule is clarifying in
nature. It interprets several amendments made to the FPA by the Energy
Policy Act, and clarifies the applicability of these FPA amendments to
QFs. Accordingly, no environmental consideration is necessary.7
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\6\Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs., Regulations Preambles 1986-90 30,783 (1987) (codified at 18
CFR Part 380).
\7\See 18 CFR Sec. 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act Certification
The Regulatory Flexibility Act8 requires rulemakings either to
contain a description and analysis of the impact the rule will have on
small entities or a certification that the rule will not have a
substantial economic impact on a substantial number of small entities.
Many, if not most, QFs to which this rule would apply do not fall
within the definition of small entities.9 Further, this rule does
not establish any new reporting requirements and merely clarifies the
applicability of certain sections of the FPA, as amended or added by
the Energy Policy Act, to QFs. Consequently, the Commission certifies
that this rule will not have ``a significant economic impact on a
substantial number of small entities.'' Accordingly, no regulatory
flexibility analysis is required.
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\8\5 U.S.C. Secs. 601-612.
\9\See 5 U.S.C. 601(3), citing to section 3 of the Small
Business Act, 15 U.S.C. 632, which defines ``small business
concern'' as a business that is independently owned and operated and
that is not dominant in its field of operation.
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VI. Information Collection Statement
The Office of Management and Budget's (OMB) regulations10
require that OMB approve certain information collection requirements
imposed by the agency's rule. However, this rule neither contains new
information collection requirements nor modifies any existing
information collection requirements in the Commission's regulations.
Therefore, this final rule is not subject to OMB approval.
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\1\05 CFR 1320.
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VII. Administrative Findings and Effective Date
The Administrative Procedure Act (APA)11 requires rulemakings
to be published in the Federal Register. The APA also mandates that an
opportunity for comment be provided when an agency promulgates
regulations. However, notice and comment are not required under the APA
when the agency for good cause finds that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the public
interest.12 The Commission finds that notice and comment are
unnecessary for this rulemaking. As explained above, the Commission
merely is clarifying the scope of certain sections of the FPA added or
amended by the Energy Policy Act to QFs and, where necessary, amending
section 292.601 of the Commission's regulations to reflect this
clarification.
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\1\15 U.S.C. Secs. 551-559.
\1\25 U.S.C. 553b(B).
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This rule is effective September 8, 1994.
List of Subjects in 18 CFR Part 292
Electric power plants, Electric Utilities.
By the Commission.
Linwood A. Watson, Jr.,
Acting Secretary.
In consideration of the foregoing, the Commission amends part
292, subpart F of chapter I, title 18 of the Code of Federal
Regulations as set forth below.
PART 292--REGULATIONS UNDER SECTIONS 201 AND 210 OF THE PUBLIC
UTILITY REGULATORY POLICIES ACT OF 1978 WITH REGARD TO SMALL POWER
PRODUCTION AND COGENERATION
1. The authority citation for Part 292 continues to read as
follows:
Authority: 16 U.S.C. 791a-824r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.
2. Section 292.601(c) is revised to read as follows:
Sec. 292.601 Exemption to quality facilities from the Federal Power
Act.
* * * * *
(c) General Rule. Any qualifying facility described in paragraph
(a) of this section shall be exempt from all sections of the Federal
Power Act, except:
(1) Section 1-18, and 21-30;
(2) Sections 202(c), 210, 211, 212, 213, and 214;
(3) Sections 305(c); and
(4) Any necessary enforcement provision of Part III with regard to
the sections listed in paragraphs (c)(1), (2) and (3) of this section.
[FR Doc. 94-19247 Filed 8-8-94; 8:45 am]
BILLING CODE 6717-01-P
