On October 18, 2012, FERC issued two Notices of Proposed Rulemaking (“NOPR”) that FERC believes can significantly decrease the regulatory burden for natural gas pipelines. The first NOPR proposes to eliminate the annual filing made by Natural Gas Act (“NGA”) pipelines that file an annual charge assessment (“ACA”) unit surcharge (“ACA NOPR”). The second NOPR proposes a way in which Hinshaw certificate holders and intrastate pipelines that provide service under section 311 of the Natural Gas Policy Act of 1978 (“NGPA”) may revise rates or change their Statements of Operating Conditions without a Commission order (“Optional Notice Procedure NOPR”). The second NOPR provides that when section 311 pipelines and Hinshaw pipelines make their rate filings, if no party protests, or if filed protests are eventually resolved during a reconciliation period, the filing is deemed approved without a Commission order after a specified notice period.

In regard to the ACA NOPR, the Commission traditionally sets the ACA unit charge for the natural gas program in July of every year. Currently, pipelines that wish to recover that charge through an ACA clause file revised tariff sheets reflecting the ACA charge by September 1 of each year (“ACA Filing”). If the Commission determines that the pipeline has paid its annual charge, then the Commission will accept the tariff record, effective October 1. The ACA NOPR proposes to eliminate the ACA Filing if the pipeline makes a one-time tariff filing that incorporates the FERC-approved ACA rate into its tariff by reference to the rate published on the Commission’s website.

In regard to the Optional Notice Procedure NOPR, Commission policy for Hinshaw and section 311 pipelines requires rate review every five years. Under the Optional Notice Procedure NOPR, FERC would allow for these periodic rate filings to be submitted on or before the 5 year anniversary of the pipeline’s last approved rate filing. If a Hinshaw certificate holder or section 311 pipeline elects to follow the Commission’s proposed “optional notice procedure,” the Commission would issue a notice in the Federal Register. If no protest is filed within the allotted time, the filing is deemed approved.

Alternatively, if a protest is filed, the Commission would create a “reconciliation period” of thirty days. If the protests are withdrawn by the end of the reconciliation period, then the filing is deemed approved. If the filing or tariff is modified to resolve the protest, then the filing is tolled. The Commission will then issue a new notice for the amended filing. If no protests are filed in response to the amended filing, then the filing is deemed approved. If the filing is still contested after the amended notice period has expired, the Commission will establish procedures to resolve the proceeding according to the Optional Notice Procedure NOPR.

The Commission did note that most rate filings for Hinshaw and section 311 pipelines are not protested. Finally, in an effort to streamline the process, the Optional Notice Procedure NOPR states that the Director of the Office of Energy Market Regulation or his designee is required to reject any filing that “patently fails to comply” with the regulations without prejudice. Any required filings that are rejected, must be re-filed within fourteen days of the rejection.

Comments on both NOPRs are due 30 days after publication in the Federal Register.

A link to the Commission’s Optional Notice Procedure NOPR is available here, and a link to the ACA NOPR is available here.