WSR 05-17-017

PERMANENT RULES

UTILITIES AND TRANSPORTATION

COMMISSION

[ Docket No. P-041344, General Order No. R-523 -- Filed August 4, 2005, 1:07 p.m. , effective July 1, 2006 ]

In the matter of amending WAC 480-93-240 Natural gas pipeline safety fee and 480-75-240 Hazardous liquid pipeline safety fee, to change the current pipeline safety fee methodology.

1 STATUTORY OR OTHER AUTHORITY: The Washington Utilities and Transportation Commission takes this action under Notice No. WSR 05-13-103, filed with the code reviser on June 16, 2005. The commission brings this proceeding pursuant to RCW 80.01.040, 80.04.160, 81.04.160, 80.24.060, and 81.24.090.

2 STATEMENT OF COMPLIANCE: This proceeding complies with the Administrative Procedure Act (chapter 34.05 RCW), the State Register Act (chapter 34.08 RCW), the State Environmental Policy Act of 1971 (chapter 43.21C RCW), and the Regulatory Fairness Act (chapter 19.85 RCW).

3 DATE OF ADOPTION: The commission adopts this rule on the date that this order is entered.

4 CONCISE STATEMENT OF PURPOSE AND EFFECT OF THE RULE: RCW 34.05.325(6) requires that the commission prepare and provide to commenters a concise explanatory statement about an adopted rule. The statement must include the identification of the commission's reasons for adopting the rule, a description of the differences between the version of the proposed rules published in the register and the rules as adopted (other than editing changes), a summary of the comments received regarding the proposed rule, and the commission's responses to the comments, reflecting the commission's consideration of them.

5 The commission often includes a discussion of those matters in its rule adoption order. In addition, most rule-making proceedings involve extensive work by commission staff that includes summaries in memoranda of stakeholder comments, commission decisions, and staff recommendations in each of those areas.

6 In this docket, to avoid unnecessary duplication, the commission designates the discussion in this order as its concise explanatory statement, supplemented where not inconsistent by the staff memoranda presented at the adoption hearing and at the open meetings where the commission considered whether to begin a rule making and whether to propose adoption of specific language. Together, the documents provide a complete but concise explanation of the agency actions and its reasons for taking those actions.

7 REFERENCE TO AFFECTED RULES: This order amends the following sections of the Washington Administrative Code: Amend WAC 480-75-240 Annual pipeline safety fee methodology and 480-93-240 Annual pipeline safety fee methodology.

Amendments change the method by which pipeline safety fees are allocated to regulated pipeline companies from a methodology that allocated costs to companies based on each company's percentage of the total pipeline miles located within Washington to a methodology based on effort expended on each company, using the pipeline safety program's timekeeping system.

Other revisions include clarification that the commission can set the total fee amount at less than the appropriation amount, conversion to a calendar year instead of a fiscal year for determining the effort data, and removal of incident investigations that result in a penalty issued under RCW 19.122.055 from consideration in the fee allocation.

8 PREPROPOSAL STATEMENT OF INQUIRY AND ACTIONS THEREUNDER: The commission filed a preproposal statement of inquiry (CR-101) on August 11, 2004, at WSR 04-17-056.

9 ADDITIONAL NOTICE AND ACTIVITY PURSUANT TO PREPROPOSAL STATEMENT: The statement at WSR 04-17-056 advised interested persons that the commission was considering entering a rule making to review the fee methodology established in WAC 480-75-240 and 480-93-240, and evaluate alternative methods for allocating pipeline safety program costs to pipeline operators regulated by the commission.

10 The commission also informed persons of the inquiry into these matters by providing notice of the subject and the CR-101 to all regulated gas pipeline companies and hazardous liquid pipeline companies and persons on the commission's list of persons requesting such information pursuant to RCW 34.05.320(3). The commission posted the relevant rule-making information on its Internet web site at http://www.wutc.wa.gov.

11 As part of the review of its fee methodology, the commission retained a consultant with Miller & Miller, P.S. to review the pipeline safety program's fee rules, its cost and time accounting systems, and to devise recommendations for alternative fee methodologies.

12 WORKSHOP; ORAL COMMENTS; WRITTEN COMMENTS: Pursuant to the notice, the commission held two stakeholder workshops to consider a variety of alternative fee methodologies. While no single method received universal support, most participants supported basing the program's fee on the relative program staff effort expended on each company.

13 Representatives from BP Olympic Pipe Line, Cascade Natural Gas, Chevron Texaco Pipeline, McChord Pipeline, Northwest Industrial Gas Users, Northwest Natural Gas, Puget Sound Energy, Tidewater Barge Lines, and Williams Northwest attended at least one of the workshops. Puget Sound Energy, Northwest Natural Gas, Williams Northwest, BP Olympic Pipeline, Cascade Natural Gas, McChord Pipeline and Northwest Industrial Gas users filed written comments on the draft proposed rules.

14 NOTICE OF PROPOSED RULE MAKING: The commission filed with the code reviser a notice of proposed rule making (CR-102) on April 20, 2005, at WSR 05-09-122, inviting written comments, and scheduling the matter for oral comment and adoption on June 15, 2005. Tidewater Barge Lines, Puget Sound Energy, Williams Northwest, BP Olympic Pipe Line and Northwest Industrial Gas users filed written comments on the proposed rules.

15 On June 13, 2005, the commission filed a continuance with the code reviser at WSR 05-13-070 to change the date of the hearing to receive public comment regarding adoption of the rule proposal from June 15, 2005, to July 29, 2005.

16 The commission filed a supplemental notice to WSR 05-09-122, notifying interested persons of changes to the rules proposed at WSR 05-13-103, inviting written comments on those changes, and scheduling the matter for oral comment and adoption on Friday, July 29, 2005, at 9:30 a.m., in the Commission's Hearing Room, Second Floor, Chandler Plaza Building, 1300 Evergreen Park Drive S.W., Olympia, WA.

17 COMMENTERS (WRITTEN COMMENTS): The commission received no written comments from interested persons in response to the supplemental notice of rules proposed at WSR 05-13-103.

18 RULE-MAKING HEARING: The rule proposal was considered for adoption, pursuant to the notice, at a rule-making hearing scheduled during the commission's regularly scheduled open public meeting on July 29, 2005, before Chairman Mark H. Sidran, and Commissioners Patrick J. Oshie and Philip B. Jones. The commission heard oral comments from Tim Sweeney representing commission staff. No interested persons commented.

19 COMMISSION ACTION: After considering all of the information regarding this proposal, the commission finds and concludes that it should amend and adopt the rules in the supplemental CR-102 notice at WSR 05-13-103.

20 STATEMENT OF ACTION; STATEMENT OF EFFECTIVE DATE: After reviewing the entire record, the commission determines that WAC 480-75-240 and 480-93-240 should be amended to read as set forth in Appendix A, as rules of the Washington Utilities and Transportation Commission, to take effect pursuant to RCW 34.05.380(2) on July 1, 2006. Thus, the current fee methodology will remain in effect for one more fee year and provide companies with a year to adjust to the change in the fee methodology. The new methodology would apply for the first time to the 2007 fiscal year fees, for the period commencing July 1, 2006.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 2, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.


ORDER

THE COMMISSION ORDERS:


21 (1) The commission amends and adopts the following sections to read as set forth in Appendix A, as rules of the Washington Utilities and Transportation Commission, to take effect on July 1, 2006, pursuant to RCW 34.05.380(2): WAC 480-75-240, and 480-93-240.

22 (2) This order and the rules set out below, after being recorded in the register of the Washington Utilities and Transportation Commission, shall be forwarded to the code reviser for filing pursuant to chapters 80.01 and 34.05 RCW and chapter 1-21 WAC.

DATED at Olympia, Washington, this 3rd day of August, 2005.

Washington Utilities and Transportation Commission

Mark H. Sidran

Chairman

Patrick J. Oshie

Commissioner

Philip B. Jones

Commissioner

OTS-8035.2


AMENDATORY SECTION(Amending Docket No. UG-010522, General Order No. R-497, filed 1/4/02, effective 2/4/02)

WAC 480-75-240   Annual pipeline safety fee methodology.   (1) Every hazardous liquid pipeline company subject to inspection or enforcement by the commission will pay an annual pipeline safety fee as established in the methodology set forth in section (2) below.

(2) The fee will be set by general order of the commission entered before July 1 of each year and will be collected in four equal installments payable on the first day of each calendar quarter((, beginning July 1, 2001)).

(a) The total of pipeline safety fees will be calculated to recover no more than the costs of the legislatively authorized workload represented by current appropriations, less the amount received in ((federal funds)) total base grants through the Federal Department of Transportation(('s Hazardous Liquids Pipeline Safety Program base grant)) and less any amount received from penalties collected under RCW 19.122.050. Federal grants, other than the federal base grant, received by the commission for additional activities not included or anticipated in the legislatively directed workload will not be credited against company pipeline safety fees, nor will the work supported by such grants be considered a cost for purposes of calculating such fees. To the extent that the actual base grant proceeds are different than the amount credited, the difference will be applied in the following year.

(b) Total pipeline safety fees as determined in (a) of this subsection will be ((divided between intrastate hazardous liquid pipeline companies and interstate hazardous liquid pipeline companies based on two components)) calculated in two parts:

(i) ((The first component is direct assignment of average costs associated with a company's standard inspections, including the average number of inspection days per year which will be determined annually. Standard inspections are conducted to comply with the state's participation requirement under the "Guidelines for States Participating in the Pipeline Safety Program" of the Federal Department of Transportation, Office of Pipeline Safety.

(ii) The second component is an allocation of the remaining program costs that are not directly assigned in (i). Distribution of these costs between interstate and intrastate hazardous liquid pipeline companies will be based on miles of pipeline operated within Washington state.

(b))) The commission's annual overhead charge to the pipeline safety program will be allocated among companies according to each company's share of the total of all pipeline miles within Washington as reported by the companies in their annual reports to the commission.

(ii) After deducting the commission's annual overhead charge, the remainder of the total pipeline safety fees will be allocated among companies in proportion to each company's share of the program staff hours that are directly attributable to particular companies. The commission will determine each company's share by dividing the total hours directly attributable to the company during the two preceding calendar years (as reflected in the program's timekeeping system) by the total of directly attributable hours for all companies over the same period.

(iii) Any program hours related to a staff investigation of an incident attributed to third-party damage resulting in penalties collected under RCW 19.122.055 will not be directly attributed to the operator of the damaged pipeline for fee-setting purposes.

(c) The commission general order setting fees pursuant to this rule will detail the specific calculation of each company's pipeline safety fee including the allocations ((of program costs between interstate and intrastate hazardous liquid companies and the specific calculation of each company's pipeline fee)) set forth in (b) of this subsection.

(3) ((By April 1 of each year every hazardous liquids pipeline company subject to this section must file an annual report as prescribed by the commission that is necessary to establish the annual pipeline safety fee.)) By June 1 of each year the commission staff will mail to each company ((subject to this section)) an ((annual)) invoice ((showing an estimate of the quarterly amounts)).

(4) All funds received by the commission for the pipeline safety program will be deposited to the pipeline safety account. For those companies subject to RCW 81.24.010 the portion of the company's total regulatory fee applicable to pipeline safety will be transferred from the public service revolving fund to the pipeline safety account.

(5) Any company wishing to contest the amount of the fee imposed under this section must pay the fee and, within 6 months of the due date of the fee, file a petition in writing with the commission requesting a refund. The petition shall state the name of the petitioner; the date and the amount paid, including a copy of any receipt, if available; the amount of the fee that is contested; and any reasons why the commission may not impose the fee. The commission may grant the petition administratively or may set the petition for adjudication or for brief adjudication.

[Statutory Authority: RCW 80.01.040, 80.04.160, 81.04.160 and 2001 c 238 2. 02-03-016 (Docket No. -- UG-010522, General Order No. R-497), 480-75-240, filed 1/4/02, effective 2/4/02.]

OTS-8036.2


AMENDATORY SECTION(Amending Docket No. UG-010522, General Order No. R-497, filed 1/4/02, effective 2/4/02)

WAC 480-93-240   Annual pipeline safety fee methodology.   (1) Every gas company and every interstate gas pipeline company subject to inspection or enforcement by the commission will pay an annual pipeline safety fee as established in the methodology set forth in section (2) below.

(2) The fee will be set by general order of the commission entered before July 1 of each year and will be collected in four equal installments payable on the first day of each calendar quarter((, beginning July 1, 2001)).

(a) The total of pipeline safety fees will be calculated to recover no more than the costs of the legislatively authorized workload represented by current appropriations, less the amount received in ((federal funds)) total base grants through the Federal Department of Transportation(('s Natural Gas Pipeline Safety Program base grant)) and less any amount received from penalties collected under RCW 19.122.050. Federal grants, other than the federal base grant, received by the commission for additional activities not included or anticipated in the legislatively directed workload will not be credited against company pipeline safety fees, nor will the work supported by such grants be considered a cost for purposes of calculating such fees. To the extent that the actual base grant proceeds are different than the amount credited, the difference will be applied in the following year.

(b) Total pipeline safety fees as determined in ((subsection)) (a) of this subsection will be ((divided between gas companies and interstate gas pipeline companies based on two components)) calculated in two parts:

(i) ((The first component is direct assignment of average costs associated with a company's standard inspections, including the average number of inspection days per year, which will be determined annually. Standard inspections are conducted to comply with the state's participation requirement under the "Guidelines for States Participating in the Pipeline Safety Program" of the Federal Department of Transportation, Office of Pipeline Safety.

(ii) The second component is an allocation of the remaining program costs that are not directly assigned in (i). Distribution of these costs between gas companies and interstate gas pipeline companies will be based on miles of transmission lines as defined in WAC 480-93-005(18) and miles of main as defined in WAC 480-93-005(12) operated within Washington state.)) The commission's annual overhead charge to the pipeline safety program will be allocated among companies according to each company's share of the total of all pipeline miles within Washington as reported by the companies in their annual reports to the commission.

(ii) After deducting the commission's annual overhead charge, the remainder of the total pipeline safety fee commission's annual pipeline safety program allotment will be allocated among companies in proportion to each company's share of the program staff hours that are directly attributable to particular companies. The commission will determine each company's share by dividing the total hours directly attributable to the company during the two preceding calendar years (as reflected in the program's timekeeping system) by the total of directly attributable hours for all companies over the same period.

(iii) Any program hours related to a staff investigation of an incident attributed to third-party damage resulting in penalties collected under RCW 19.122.055 will not be directly attributed to the operator of the damaged pipeline for fee-setting purposes.

(c) The commission general order setting fees pursuant to this rule will detail the specific calculation of each company's pipeline safety fee including the allocations ((of program costs between gas companies and interstate gas pipeline companies, and the specific calculation of each company's pipeline safety fee)) set forth in (b) of this subsection.

(3) ((By April 1 of each year every gas company and every interstate gas pipeline company subject to this section must file an annual report as prescribed by the commission that is necessary to establish the annual pipeline safety fee.)) By June 1 of each year the commission staff will mail to each company ((subject to this section)) an ((annual)) invoice ((showing an estimate of the quarterly amounts)).

(4) All funds received by the commission for the pipeline safety program will be deposited to the pipeline safety account. For those companies subject to RCW 80.24.010, the portion of the company's total regulatory fee applicable to pipeline safety will be transferred from the public service revolving fund to the pipeline safety account.

(5) Any company wishing to contest the amount of the fee imposed under this section must pay the fee and, within 6 months of the due date of the fee, file a petition in writing with the commission requesting a refund. The petition must state the name of the petitioner; the date and the amount paid, including a copy of any receipt, if available; the amount of the fee that is contested; and any reasons why the commission may not impose the fee. The commission may grant the petition administratively or may set the petition for adjudication or for brief adjudication.

[Statutory Authority: RCW 80.01.040, 80.04.160, 81.04.160 and 2001 c 238 2. 02-03-016 (Docket No. UG-010522, General Order No. R-497), 480-93-240, filed 1/4/02, effective 2/4/02.]

Washington State Code Reviser's Office