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FERC Seeks Comments on Industry Petition to Change Blanket Construction Rules

Comments are being sought on an energy industry petition that calls on FERC to initiate a rulemaking to make a series of permanent regulatory and policy changes aimed at spurring the construction of interstate natural gas pipeline expansions, new storage capacity and takeaway facilities related to liquefied natural gas (LNG) import projects. The agency's action is procedurally somewhat unusual, given that FERC is seeking comments ahead of its decision on whether to conduct the requested rulemaking proceeding

"The Commission has not yet determined whether the public interest would be served by conducting the rulemaking proposed by the petitioners and, in its discretion, brings this petition to the attention of the public," said the order noticing the petition for rulemaking [RM06-7]. "This notice is not a notice of proposed rulemaking, but merely provides the public with an opportunity to comment in writing on the question of whether the Commission should take further action on the petition."

The comments are being requested on a joint proposal of the Interstate Natural Gas Association of America (INGAA) and Natural Gas Supply Association (NGSA) that seeks permanent changes in the blanket authorization rules for the construction of certain mainline pipeline expansions, underground storage improvements and takeaway facilities for LNG projects (see Daily GPI, Nov. 23). The comments are due at the agency Jan. 17.

The two industry groups urged the Federal Energy Regulatory Commission to begin an inquiry and rulemaking process to permanently raise the dollar limits for blanket construction facilities beyond the inflation levels recognized by the agency in its existing regulations With respect to larger, non-blanket projects, they asked the Commission to issue a policy statement or rule "clearly [stating] that it will not be construed as undue discrimination under the Natural Gas Act to provide favorable rate treatment for the shippers who make a project financially possible."

The joint INGAA-NGSA request came on the heels of an order in which FERC waived regulations on a temporary basis to raise the cost limitations for projects that gas pipelines can construct without prior specific authorization from FERC under Part 157 blanket certificates [EM06-5]. The order raised the cost limit of projects that can be built under the automatic provisions of blanket certificates by two-fold to $16 million, and raised the cost limit for projects that can be built under the prior-notice provisions of blanket certificates to $50 million from $22 million (see Daily GPI, Nov. 18).

The order further expanded the definition of eligible projects to include mainline facilities. The increased dollar limits and expanded eligibility definition applies to any project that provides increased or alternative access to natural gas supply, provided the facilities are constructed and placed into service by Oct. 31, 2006.

INGAA and the NGSA are seeking to make these changes permanent and apply to gas-related projects nationwide.

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