FERC Says Good-Bye to Optional Certificate Regs
In an attempt to bring more uniformity to its certificate
policy, FERC has issued a final rule abandoning its
optional-certificate (OC) regulations that offered speedier
processing of pipeline applications for sponsors who were willing
to assume all of the risks.
The Commission took this action because while its OC regulations
dovetailed in one respect with its new policy statement on
certification of pipe construction --- both placed the financial
risk for a new project on the pipe sponsor and the customers to be
served by the project --- they diverged in another respect ---
FERC generally wasn't required to weigh the benefits of OC projects
against their adverse effects to existing customers, competing
pipelines and affected landowners and other community interests.
That's because pipeline projects seeking approval under the OC
procedures, which were established in 1985 under Order 436,
routinely were awarded a "rebuttable presumption" that they were in
the public interest. The Commission would weigh the benefits of a
project only in cases where the presumption was challenged by a
Given the OC regulations "conflict with a significant goal under
the policy statement" that requires a benefits' review for new pipe
construction, "we will remove them as an alternative means of
certificating a project," the final rule said [RM00-5]. In the
future, all certificate applications will be considered "under the
broader balancing criteria articulated in the policy statement"
that was issued last September (See NGI, Sept. 6).
With this action, the Commission closed a "loophole" that would
have enabled sponsors to circumvent the public-interest balancing
test by seeking OC approval of their projects. FERC omitted OC
projects from the requirements of its new policy statement. That
oversight, pipelines argued then, bestowed on OC pipe projects an
unfair advantage over proposed pipelines that were seeking Section
For OC applications filed before the final rule, FERC said it
would continue to apply the presumption of public interest to
projects that aren't dependent on subsidies from existing shippers,
"but that it would consider the presumption successfully
rebutted.....if the adverse effects from the project outweigh the
public benefits." This approach would apply only to those OC
projects filed at FERC before the final rule goes into effect,
which is 60 days from July 14.
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