In an attempt to bring more uniformity to its certificatepolicy, FERC has issued a final rule abandoning itsoptional-certificate (OC) regulations that offered speedierprocessing of pipeline applications for sponsors who were willingto assume all of the risks.

The Commission took this action because while its OC regulationsdovetailed in one respect with its new policy statement oncertification of pipe construction — both placed the financialrisk for a new project on the pipe sponsor and the customers to beserved by the project — they diverged in another respect —FERC generally wasn’t required to weigh the benefits of OC projectsagainst their adverse effects to existing customers, competingpipelines and affected landowners and other community interests.

That’s because pipeline projects seeking approval under the OCprocedures, which were established in 1985 under Order 436,routinely were awarded a “rebuttable presumption” that they were inthe public interest. The Commission would weigh the benefits of aproject only in cases where the presumption was challenged by athird party.

Given the OC regulations “conflict with a significant goal underthe policy statement” that requires a benefits’ review for new pipeconstruction, “we will remove them as an alternative means ofcertificating a project,” the final rule said [RM00-5]. In thefuture, all certificate applications will be considered “under thebroader 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 wouldhave enabled sponsors to circumvent the public-interest balancingtest by seeking OC approval of their projects. FERC omitted OCprojects from the requirements of its new policy statement. Thatoversight, pipelines argued then, bestowed on OC pipe projects anunfair advantage over proposed pipelines that were seeking Section7(c) approval.

For OC applications filed before the final rule, FERC said itwould continue to apply the presumption of public interest toprojects that aren’t dependent on subsidies from existing shippers,”but that it would consider the presumption successfullyrebutted…..if the adverse effects from the project outweigh thepublic benefits.” This approach would apply only to those OCprojects filed at FERC before the final rule goes into effect,which is 60 days from July 14.

Susan Parker

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