Regulations Governing Off-the-Record Communications

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 385

[Docket No. RM98-1-000]

Regulations Governing Off-the-Record Communications

September 16, 1998.

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is

proposing to revise its rules concerning communications between persons

outside the Commission and the Commission and its employees. The

proposed regulations are designed to clarify ambiguities in the

existing ex parte rules and to provide better guidance on what

communications to and from the Commission are permissible and what

communications are prohibited.

DATES: Written comments are due on or before December 24, 1998.

ADDRESSES: File comments with the Office of the Secretary, Federal

Energy Regulatory Commission, 888 First Street, N.E., Washington, DC

20426.

FOR FURTHER INFORMATION CONTACT: David R. Dickey, Office of the General

Counsel, Federal Energy Regulatory Commission, 888 First Street, N.E.,

Washington, DC 20426, (202) 208-2140.

SUPPLEMENTARY INFORMATION: In addition to publishing the full text of

this document in the Federal Register, the Commission also provides all

interested persons an opportunity to inspect or -1a -copy the contents

of this document during normal business hours in the Public Reference

Room at 888 First Street, N.E., Room 2A, Washington, DC 20426.

The Commission Issuance Posting System (CIPS) provides access to

the texts of formal documents issued by the

[[Page 51313]]

Commission. CIPS can be accessed via Internet through FERC's Homepage

(http://www.ferc.fed.us) using the CIPS Link or the Energy Information

Online icon. The full text of this document will be available on CIPS

in ASCII and WordPerfect 6.1 format. CIPS is also available through the

Commission's electronic bulletin board service at no charge to the user

and may be accessed using a personal computer with a modem by dialing

(202) 208-1397, if dialing locally, or 1-800-856-3920, if dialing long

distance. To access CIPS, set your communications software to 19200,

14400, 12000, 9600, 7200, 4800, 2400, or 1200 bps, full duplex, no

parity, 8 data bits and 1 stop bit. User assistance is available at

(202) 208-2474 or by E-Mail to [email protected]

This document is also available through the Commission's Records

and Information Management System (RIMS), an electronic storage and

retrieval system of documents submitted to and issued by the Commission

after November 16, 1981. Documents from November 1995 to the present

can be viewed and printed. RIMS is available in the Public Reference

Room or remotely via Internet through FERC's Homepage using the RIMS

link or the Energy Information Online icon. User assistance is

available at (202) 208-2222, or by E-Mail to [email protected]

Finally, the complete text in WordPerfect format may be purchased

from the Commission's copy contractor, RVJ International, Inc. RVJ

International, Inc. is located in the Public Reference Room at 888

First Street, N.E., Washington D.C. 20426.

I. Introduction

The Federal Energy Regulatory Commission (Commission or FERC)

proposes to revise its rules governing communications with

Commissioners and Commission employees. The proposed revisions are

designed to permit fully informed decision making while at the same

time ensuring the integrity of the Commission's decision making

process. The proposed revisions are intended specifically to provide

clearer direction both to the Commission and its staff and persons

outside the Commission on the ground rules for communication. In

keeping with the Commission's outreach goals, specific changes are

proposed to enhance the ability of the Commission to interact with

other regulatory agencies and the public.

II. Background

The amendments added to the Administrative Procedure Act (APA) in

1976 by the Government in the Sunshine Act provided a general statement

as to the limitations and procedures governing ex parte communications

in matters that statutorily require an on the record

hearing.1 Except as otherwise authorized by law, the APA

prohibits ex parte communications relevant to the merits of a

proceeding between employees involved in the decisional process of a

proceeding and interested persons outside the agency.2 The

prohibitions on ex parte communications have two primary underlying

premises: (1) a hearing is not fair when one party has private access

to the decision maker and can present evidence or argument that other

parties have no opportunity to rebut; 3 and (2) reliance on

``secret'' evidence may foreclose meaningful judicial

review.4 The 1976 Act instructed agencies to issue

regulations necessary to implement the APA's requirements.5

Shortly thereafter, the Federal Power Commission implemented ex parte

regulations based on the APA's guidance.6 This rule, Rule

2201, applies to all covered proceedings before the Commission except

those involving oil pipelines.7 The Commission has a second

ex parte rule, Rule 1415, which was originally developed by the

Interstate Commerce Commission (ICC) and which applies only to oil

pipeline proceedings.8/ Although directed to the same end--

both prohibit certain ex parte communications and both describe methods

for public disclosure of such communications--they differ in

significant details.

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\1\ 5 U.S.C. 551-557. Section 557 applies ``according to the

provisions thereof, when a hearing is required to be conducted in

accordance with section 556 of this title.'' Section 556 applies to

hearings required by sections 553 and 554.

\2\ See 5 U.S.C. 557(d)(1).

\3\ WKAT, Inc. v. FCC, 296 F.2d 375 (D.C. Cir.), cert. denied,

360 U.S. 841 (1961).

\4\ Home Box Office, Inc. v. FCC, 567 F.2d 9, 54 (D.C. Cir.),

cert. denied, 434 U.S. 829 (1977); U.S. Lines v. Federal Maritime

Commission, 584 F.2d 519, 541-542 (D.C. Cir. 1978).

\5\ 5 USC 559.

\6\ FPC Order No. 562, 42 FR 14701, (March 16, 1977).

\7\ Proposed 18 CFR 385.2201.

\8\ 18 CFR 385.1415.

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III. Discussion

The problems with the existing regulations were recognized by the

participants in the Commission's 1992 Public Conference on ex parte

issues, where a general consensus developed favoring a revised rule

that would provide the Commission, the industry, and the public with a

clearer statement of what communications are prohibited and when the

prohibitions apply.9 In sum, the current regulations have

been viewed as needlessly complex and confusing, and therefore provide

inadequate guidance to Commission officials and the public. For

example, as noted above, the Commission currently has two ex parte

rules while it clearly has need for only one. Accordingly, the proposed

rule would eliminate Rule 1415 in its entirety and provide that revised

Rule 2201 will apply to oil pipeline cases in addition to other

proceedings.

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\9\ See, e.g., the comments filed by Interstate Natural Gas

Association, the Industrial Groups, Pacific Gas Transmission

Company, and Environmental Action in Docket No. RM91-10-000. Notice

of Public Conference, 57 FR 10622 (Mar. 27, 1992); 58 FERC para.

61,320 (Mar. 20, 1992).

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Moreover, the current regulations fail to reflect adequately the

APA ex parte prohibitions. For example, current Rule 2201 covers

communications from someone outside the Commission to a Commissioner,

Administrative Law Judge, or advisory staff, while the APA prohibitions

cover communications in both directions.

Finally, the Commission staff recently undertook an initiative,

known as ``FERC First,'' to study the Commission's current and

anticipated future missions and functions, identify the internal and

external obstacles to carrying out those missions and functions

efficiently and effectively, and, to the extent practicable, design

processes enhancing the effectiveness of the Commission's operations.

The FERC First team recognized the need to strengthen the Commission's

relationships with Congress, federal and state agencies and other

interested persons. Discussions undertaken as part of Commission

staff's reengineering effort, indicated that many people feel that

changes to the current ex parte rule could enhance the Commission's

operations.

For all of the above reasons, we believe that the existing ex parte

rule should be revised to help achieve our goals of improving

communications while at the same time ensuring the integrity of the

Commission's decision making.

The significant proposed revisions are discussed below. The

proposed text for Rule 2201 is set out in full at the end of this

notice.

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A. Prohibitions on Communications Relevant to the Merits of a Contested

Proceeding.

Under the proposed regulations, the prohibitions would apply to

``proceedings involving a party or parties'',10 defined as

all docketed 11 Commission matters except investigations

under Part 1b of the Commission's regulations. Non-covered proceedings

would include informal (i.e., notice and comment) rulemaking

proceedings, and any other proceeding not having a party or parties,

and public technical, policy, and other conferences intended to inform

the public or solicit their comments on issues of interest to the

Commission and the industry.

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\10\ The definition of ``party'' may be found at 18 CFR 385.102.

\11\ ``Docketed'' matters include those bearing a ``docket''

number and those bearing a ``project'' number.

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The proposed regulations would continue to prohibit ``off-the-

record communications relevant to the merits of a Commission

proceeding'' in covered proceedings. The term ``relevant to the

merits'' is taken directly from the APA provisions and its definition

is drawn in substantial part from the legislative history of those

provisions.12 The proposed regulations would define

``relevant to the merits'' to mean capable of affecting the outcome of

a proceeding, or of influencing, or providing an opportunity to

influence, a decision on any substantive issue. Purely procedural

inquiries or status requests generally will not have an effect on the

outcome of a case or on the decision on any substantive issue. Under

the proposed rule, communications would not be characterized as status

requests, however, where the request states or implies a preference for

a particular party or position, advocates expedited action or action by

a certain date, or ``is otherwise intended, directly or indirectly, to

address the merits or influence the outcome of a proceeding.''

13

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\12\ See H.R. Rep. No. 880 (Part I), 94th Cong., 2d Sess. at 20,

reprinted in 1976 U.S.C.C.A.N. at 2202: The [statute] prohibits an

ex parte communication only when it is ``relative to the merits of

the proceeding.'' This phrase is intended to be construed broadly

and to include more than the phrase ``fact in issue'' currently used

in the Administrative Procedure Act. The phrase excludes procedural

inquiries, such as requests for status reports, which will not have

an effect on the way the case is decided. It excludes general

background discussions about an entire industry which do not

directly relate to specific agency adjudication involving a member

of that industry, or to formal rulemaking involving the industry as

a whole. It is not the intent of this provision to cut an agency off

from general information about an industry that an agency needs to

exercise its regulatory responsibilities. So long as the

communication containing such data does not discuss the specific

merits of a pending adjudication it is not affected by this section.

\13\ See Proposed 18 CFR 2201((c)(6).

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Communications relating to purely procedural inquiries, such as how

to intervene in a proceeding, the number of days before a responsive

filing is due, or the number of copies that must be provided for a

required filing are permitted. However, even some communications that

appear to be procedural, in that they relate to how a proceeding is

conducted, also may be capable of influencing the result on the

substantive issues. These include communications about whether to hold

a hearing and, if so, what type of hearing, and communications

regarding the admissibility of evidence or the timing of a decision,

since when the Commission acts can be highly relevant to the merits of

the proceeding.14 Requests and advocacy of positions

concerning such matters, especially by parties in a proceeding, should

be presented on the record and in compliance with the Commission's

procedural rules governing the format and service of pleadings.

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\14\ But c.f., Gulf Oil Corp. v. Federal Power Commission, 563

F.2d 588, 611 (3rd Cir. 1977) cert. denied, 434 U.S. 1062 (1978)

(where Congressional communications are directed not at the agency's

decision on the merits but at accelerating the disposition and

enforcement of pertinent regulations, such legislative conduct does

not affect the fairness of the agency's proceedings).

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The proposed regulations are intended to apply to communications

between decisional employees and persons outside the Commission without

regard to who initiated the communication. Thus, for example, if a

decisional Commission employee initiates a covered communication with a

person outside the Commission, the employee may thereby be providing

that person the opportunity to influence a decision on any substantive

issue. The prohibitions apply both to oral and to written

communications. The term ``written communications'' as used in the

proposed rule extends to electronic communications (e.g., e-mail).

Additionally, the APA ex parte prohibitions apply essentially to

adjudications and similar cases required by statute to be decided on

the record after an opportunity for hearing. Courts generally have

treated rules barring private communications as a basic element of a

fair hearing--whether an APA-type oral evidentiary hearing or one

involving ``paper'' exhibits and pleadings--in any case involving

competing private claims to a valuable privilege or

benefit.15 The Commission's existing Rule 2201, and the

proposed rule, extends the prohibitions to ``contested on-the-record''

proceedings required to be decided on the record of a Commission

hearing, regardless of whether the hearing is required by statute, the

Constitution, a Commission regulation, or an order in a particular

case. Rule 1415 (applicable to oil pipeline cases) specifies that the

rule covers both oral hearings and the ``taking of evidence by modified

procedure,'' a reference to a ``paper hearing'' procedure, and this

clarification is made in the proposed revisions to Rule

2201.16

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\15\ Sangamon Valley Television Corp. v. United States, 269 F.2d

221 (D.C. Cir. 1959); and Sierra Club v. Costle, 657 F.2d 298, 400

(D.C. Cir. 1981).

\16\ See proposed Rule 18 CFR 385.2201(c)(4).

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The existing rule further defines a proceeding as contested if a

petition or notice to intervene in opposition has been filed. The

explicit requirement that the proceeding be ``contested'' before ex

parte rules attach reflects the notion that procedural requirements and

constraints originally developed to preserve the rights of parties in

an adjudication have no place in an administrative proceeding in which

there is no ``contest'' comparable to the controversy in a judicial

case. Accordingly, as discussed below, the proposed rule retains the

triggering date of the existing rule, and off-the-record communications

will not be prohibited until such time as a protest or intervention in

opposition to an application has been filed.

B. When Communications Are Prohibited

The proposed regulations would provide a clear-cut time frame for

beginning and ending the prohibitions. The restrictions on

communications would be inapplicable to off-the-record communications

before the commencement of a proceeding. When there is no pending

proceeding, there can be no barred communications pertaining to a

proceeding. Accordingly, the prohibitions would take effect at the time

of the filing with the Commission of a complaint, or a protest or

intervention in opposition to a proceeding initiated by a person

outside the Commission. (The prohibitions on off-the-record

communications would not be triggered by a premature filing.)

We note that the Commission often receives filings that do not

specify whether a filed intervention is actually protesting or opposing

a requested Commission action, or was filed merely to support the

applicant or to allow the filer to be placed on a service list. The

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Commission will consider interventions as opposing an application, and

triggering the proposed rule's prohibitions, when they are expressly

styled as such. Additionally, based on arguments or issues raised in

the document, the Commission may consider a filing not styled as an

intervention in opposition as nonetheless opposing the application,

thus triggering the prohibitions contained in this proposed rule.

However, the Commission will not treat as opposing an application those

interventions that appear to have been filed solely to request that the

filer be placed on the service list, or to preserve the opportunity to

present oral argument should the Commission order a hearing to be held.

The prohibitions would remain in force until final disposition of

the proceeding by the Commission, or until the opposition, complaint or

protest is withdrawn. Final disposition refers to the final Commission

decision and the rehearing of that decision, where applicable. This

means the prohibitions would continue until the Commission has acted on

petitions for rehearing, rehearing has been denied by operation of law,

the time for petitions for rehearing has passed and none has been

filed, an application is withdrawn, or, in matters where there is no

right to rehearing (e.g., DOE remedial order cases), when the

Commission issues its final decision. Where an administrative law

judge's initial decision becomes final by operation of law because no

party has filed exceptions, and the Commission has taken no action to

stay the effectiveness of an initial decision under section 375.712 of

our regulations,17 final disposition of the case will be

assumed to have occurred at that point. If a rehearing petition is

filed, notwithstanding a party's failure to file exceptions, the

prohibitions would apply to the rehearing process.18

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\17\ 18 CFR 375.712.

\18\ See 18 CFR 385.709(d). Where a document initiating a

proceeding is filed but subsequently rejected (see 18 CFR 4.32 and

385.2001), the document is deemed not to have been filed with the

Commission. Accordingly, until the document has been resubmitted, no

proceeding is pending before the Commission and the proposed Rule

2201 prohibitions would not apply.

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After final Commission disposition, the constraints on

communication would cease to apply even if judicial review of the case

has been sought. If a court remands the proceeding to the Commission

following judicial review, the prohibitions would attach once more at

the time the Court issues its mandate.

C. Who Is Covered

The proposed regulations would prohibit off-the-record

communications between a person outside the Commission and a

``decisional employee.'' The definition of ``person'' as presently

defined in Rule 102(d) arguably includes Commission staff.19

Accordingly, for the purposes of this proposed Rule 2201, ``person''

would be defined as any person, other than an employee of the

Commission. ``Decisional employee'' would be defined, as under existing

Rule 2201, to mean a Commissioner, a member of his or her personal

staff, an administrative law judge, or any other employee of the

Commission who is or may be reasonably expected to be involved in the

decisional process of a particular Commission proceeding. The revised

definition is intended to clarify that the term does not include: (1)

members of the Commission's trial staff, (2) a settlement judge

appointed under existing Rule 603 (who is not also the presiding judge

in the proceeding) 20, (3) a neutral (other than an

arbitrator) in an alternative dispute resolution proceeding, and (4) an

employee designated as non-decisional for a particular case. The

revised definition, however, has been expanded to clarify that the term

includes contractors involved in the Commission's decisional

process.21

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\19\ 18 CFR 385.102(d).

\20\ 18 CFR 385.603.

\21\ For purposes of the proposed rule, ``contractor'' means a

direct Commission contractor or a third-party contractor subject to

Commission supervision and control.

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Members of the trial staff (or their supervisors in the conduct of

the trial) are not decisional employees because they are barred by the

separation of functions requirements from serving as advisors to the

Commission in the same proceeding.22 For the same reason,

any employee designated by the Commission to be non-decisional for a

particular case is subject to similar separation of functions

requirements and would not be involved in the Commission's decisional

process. The prohibitions also would be inapplicable to communications

with a settlement judge because settlement judges are not decisional

employees and communications relating solely to settlement are not

viewed as relating to the merits for purposes of restrictions on off-

the-record communications.23

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\22\ See 18 CFR 385.2202.

\23\ Louisiana Ass'n of Independent Producers and Royalty Owners

v. FERC, 958 F.2d 1101, 1113 (D.C. Cir. 1992) (In a settlement or in

a purely procedural proceeding there are no issues to be decided

upon an open record and, therefore, in communicating with a

settlement judge, the parties do not engage in ``surreptitious

efforts'' to influence an official charged with the duty of deciding

contested issues).

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D. Non-Covered Proceedings

1. Enforcement Investigations Not Covered

Under the terms of part 1b of the Commission's regulations,

enforcement investigations do not adjudicate any person's rights and

have no parties.24 Moreover, section 385.101(b)(1) of the

Commission's regulations provides that the Commission's Rules of

Practice and Procedure, including existing Rule 2201, do not apply to

part 1b investigations. The proposed regulations would clarify that the

prohibitions will continue to be inapplicable to such

investigations.25 The Commission recently proposed

amendments to part 1b and to its Rule 206 complaints procedures

26 that added provisions allowing, inter alia, non-public,

anonymous communications between the Commission's Enforcement Hotline

Staff. We note that these communications are permitted because there

are no parties to such investigations. However, once a matter being

investigated is set for hearing, the prohibitions against off-the-

record communications would apply to that proceeding.

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\24\ 18 CFR Part 385.101(b)(1).

\25\ 18 CFR Part 1(b).

\26\ See Complaint Procedures, 63 FR 41,982 (Aug. 6, 1998),

(Notice of Proposed Rulemaking).

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2. Rulemaking Proceedings Not Covered

Similarly, neither the APA ex parte prohibitions nor the

Commission's existing ex parte regulations apply to informal, notice

and comment, rulemaking proceedings. Communications with outside

sources of information are proper and often necessary to the full

development of a rulemaking.27

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\27\ We note, however, that the information available to support

a final rule upon judicial review is generally limited to that found

in the final rule itself and material that has been placed in the

associated rulemaking record.

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E. Exempt Communications

The proposed rule sets out ten exemptions from the general

prohibitions against off-the-record communications. These exemptions

are intended to be independent of one another. Accordingly, if any

individual exemption applies to the circumstances of a particular

proceeding, off-the-record communications will be permitted subject to

any disclosure requirements. For example, under proposed exemption 18

CFR 385.2201(d)(8), a Federal agency with concurrent jurisdiction that

is a party to a

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proceeding may not participate in off-the-record communications

relating to that proceeding. Yet, that party agency may freely

participate in the development of an environmental assessment or

environmental impact statement in accordance with proposed exemption 18

CFR 385.2201(d)(9).

We note that while the proposed rule seeks to establish clear

boundaries between prohibited and permitted communications, the

Commission and Commission staff would, of course, retain the discretion

not to engage in permitted discussions if in their judgment such

communications would create the appearance of an impropriety or

otherwise seem inconsistent with the best interests of the

Commission.28

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\28\ Proposed Rule 18 CFR 385.2201(i)(2).

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1. Communications Expressly Permitted by Rule or Order

As a general principle the APA recognizes that its prohibitions

against off-the-record communications do not include those ``required

for the disposition of ex parte matters as authorized by law.''

29 Existing 18 CFR 385.2201(b)(1) also allows the

Commission, by rule or order, to modify any of the provisions of Rule

2201, or Rule 1415, as they apply to all or part of a proceeding, to

the extent permitted by law. The proposed rule contains a similar

provision without the reference to Rule 1415.

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\29\ 5 U.S.C. 557(d)(1). The legislative history of this section

indicates that it was envisioned as allowing ex parte requests for

subpoenas and other matters that might be resolved by the decisional

authority on an ex parte basis. See 1977 U.S.C.C.A.N. at 2201.

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The proposed regulations track the legislative history in

permitting general background or broad policy discussions about an

industry or a segment of an industry where these discussions do not

relate to the specific merits of a particular pending case. General

discussions about industry conditions or broad policies provide useful

information important to effective regulation. Restrictions on off-the-

record communications were not intended to cut an agency off from the

general information it needs to carry out its regulatory

responsibilities.30 Such general discussions are permitted

even where they may touch on an issue that also happens to be before

the Commission in the specific factual context of an individual case.

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\30\ H.R. Rep. No. 880 (Part 1), 94th Cong., 2d Sess. at 20,

reprinted in 1976 U.S.C.C.A.N. at 2202.

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However, where the discussion is carried on in the context of a

particular case, the prohibitions extend to policy and legal issues as

well as to issues of fact. Moreover, where a general discussion relates

to the specific merits of a pending case (where, for example, the

discussion turns on the specific facts of the case), the prohibitions

would apply even if the case is not mentioned by name during the

discussion.

2. Communications Related to Emergencies

Subject to a disclosure requirement, the proposed rule would allow

the Commission to engage in off-the-record communications with regard

to emergencies. This provision would allow the Commission to respond to

emergencies such as earthquakes, floods, severe weather conditions,

fires, or explosions that damage or threaten to damage FERC-regulated

facilities, or significant market anomalies that undermine the ability

of FERC-regulated entities to deliver energy. Written communications,

or summaries of oral communications, taking place during an emergency

would be delivered to the Secretary to be noticed and placed in the

public file of the proceeding(s) most readily identifiable with

facilities affected by the emergency. The Commission invites comments

on this proposal. The Commission is particularly interested in comments

on whether, for example, a significant but temporary economic impact on

regional markets may properly constitute an emergency that, subject to

the disclosure requirements described above, would appropriately permit

the Commission to conduct off-the-record communications to address

those issues expeditiously.

3. Communications Concerning Published or Widely Disseminated Public

Information Permitted

The Commission is free to take official notice of its own decisions

as well as the published decisions of judicial and other administrative

tribunals. In addition, since the basic concern of the prohibitions is

with private communications and ``secret'' evidence, Commissioners and

Commission staff may freely consult legal, economic, engineering and

other technical or scholarly journals. Material appearing in the trade

press, the general news media, and on publicly available Internet sites

is also not subject to the prohibitions.31 Similarly,

speeches and statements made to a large audience at a public forum will

rarely raise the types of concerns that the proposed rule is intended

to address.

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\31\ While materials in scholarly journals, the news media, and

on the Internet are not communications prohibited by the proposed

rule, this does not necessarily mean that they are accurate, valid

or persuasive in all circumstances. Under Commission regulations,

even officially noticeable facts are subject to rebuttal at the

request of any participant. 18 CFR 385.508(d).

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Communications relating to such published or other widely

disseminated public information would be permitted to the extent that

they do not seek to determine how precedent might apply to fact-

specific issues in a pending proceeding. Thus, the Commission and the

staff would be permitted to explain events such as actions that courts

or the Commission have already taken, and to describe objectively

issues before the Commission or the positions of the parties regarding

those issues.

4. Pre-filing Consultations Permitted

Pre-filing communications would be permitted under the proposed

rule. Pre-filing consultations are often useful in educating applicants

as to the appropriate format, content, and form that an application or

other filing should take. Such consultations can therefore improve the

chances that filings, once made, will be ready for evaluation on the

merits. The value of pre-filing consultations is explicitly recognized

in Commission regulations, which permit such informal consultations in

connection with pipeline certificate applications 32 as well

as public utility and natural gas rate schedules and tariff

filings.33 Other specific examples of permitted pre-filing

communications would include consultations under sections 4.34(i),

4.38, and 16.8 of our regulations taking place before the filing with

the Commission of an application for certain hydropower licenses,

exemptions or license amendments.34

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\32\ 18 CFR 157.14(a).

\33\ 18 CFR 35.6 and 154.25.

\34\ See 18 CFR 4.34, 4.38 and 16.8.

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Our alternative hydropower licensing procedures permit establishing

pre-filing communications protocols.35 Under these

procedures, an applicant must demonstrate that it has made an effort to

contact all resource agencies, citizens groups and others that may be

affected by the project, and that a consensus exists for the

participants to communicate off-the-record under a communications

protocol. The alternative procedures may be used only upon Commission

approval and must include a disclosure requirement providing that

information specified in the protocol will be placed in the public

record. The Commission invites comments on whether off-the-record

communications, occurring under

[[Page 51317]]

protocols entered into under the alternative procedures during the pre-

filing stages, should be permitted to continue after the application is

formally filed with the Secretary. Is there a need to renew the

consensus in order for the communications protocol to survive? Should

the protocol remain in effect following an application absent formal

opposition by a party (whether an existing or new participant)?

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\35\ See Docket No. RM95-16, Order No. 596, Regulations for the

Licensing of Hydroelectric Projects, 62 FR 59802 (Nov. 5, 1997), 81

FERC para. 61,103 (October 29, 1997).

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5. Communications Agreed to by the Parties Permitted

Proposed 18 CFR 385.2201(b)(5) would retain the existing provision

in 18 CFR 385.2201(b)(6) permitting communications which all the

parties agree may be made without regard to communications constraints.

The proposed regulations would retain the current policy of imposing no

prohibition on communications during a meeting or conference noticed

and open to all parties in a proceeding. The fundamental concern posed

by off-the-record communications is with private or secret

communications. The right to a fair hearing is denied when one party or

interest has private access to the decision maker and can present

evidence or argument that other parties have no opportunity to

rebut.36 This concern is not present in meetings which all

parties have an opportunity to attend.

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\36\ WKAT, Inc. v. FCC, 296 F.2d at 383.

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6. Written Communications with Non-party Elected Officials Permitted

Proposed 18 CFR 385.2201(d)(6) would permit written communications

from non-party elected officials acting in their official

representative capacities. The Commission receives numerous letters

from Federal and state elected officials requesting expedition or

forwarding correspondence from constituents.37 This proposal

would treat such letters as permitted communications, subject to a

disclosure requirement under which the communications would be placed

in the public record and noticed, providing an opportunity for review

and comment, thus mitigating any potential due process concerns.

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\37\ The legislative history of the APA makes clear that members

of Congress are ``interested persons'' subject to the APA

restrictions on communications. It also indicates, however, that

this prohibition is not intended to prohibit routine inquiries or

referrals of constituent correspondence. See H.R. Rep. No. 880 (Part

1), 94th Cong., 2d Sess at 21-22, reprinted in 1976 U.S.C.C.A.N. at

2203.

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7. Certain Staff Communications Concerning Compliance Matters Permitted

We are concerned with the fact that Commission staff frequently is

restrained from being able to communicate with regulated entities and

others regarding compliance with the requirements of Commission orders

pending on rehearing. Such situations can lead to regulatory delay in

compliance.

Most post-licensing compliance takes place after all the underlying

issues have been resolved. Therefore, the proposed restrictions would

not apply to conversations or exchanges of information during

Commission staff safety inspections, post-licensing or post-

certification environmental monitoring or compliance, or routine staff

audits of company books or records when the inspections, monitoring, or

audits are not undertaken in connection with an ongoing licensing or

certificate case or other specific pending proceeding. Proposed 18 CFR

385.2201(d)(7) would make clear that limited off-the-record

communications also would be permitted where, for example, a licensee

is undertaking a good faith compliance effort, while pursuing rehearing

on the underlying order. Only discussions concerning the mechanics of

compliance, as opposed to the merits of the underlying order, would be

permitted.

For example, in a hydropower licensing context, we do not believe

that post-licensing communications on compliance with dam safety

matters should be encumbered by the fact that a party has sought

rehearing on the underlying licensing order.

8. Communications with Other Federal, State and Local Agencies

Existing 18 CFR 385.2201(b)(1) does not prohibit communications

from interceders who are Federal, state or local agencies that have no

official interest in and whose official duties are not affected by the

outcome of a covered proceeding to which the communication relates.

Because many of the outside agencies with which the Commission works do

have an official interest in the proceeding to which interagency

communications relate, the proposed rule would permit some

communications with Federal, state, or local agencies that are not

parties in the relevant Commission proceeding. This exemption would

apply to communications involving: (1) a request for information by the

Commission or Commission staff; or (2) a matter over which the other

Federal, state, or local agency and the Commission share regulatory

jurisdiction, including authority to impose or recommend licensing

conditions.

The partial exemption recognizes that, except where the other

Federal, state, or local agency is directly involved in a Commission

case as a party, the public interest favors a free flow of information

between government agencies with shared jurisdiction. Where agencies

are charged with shared jurisdiction and regulatory responsibilities, a

cohesive government policy can best be developed and implemented

through communication, cooperation and collaboration between agencies

and their staff that sometimes can take place most effectively off-the-

record.38 To ensure that such communications do not

compromise the procedural rights of the parties or the integrity of the

Commission's decisional record, proposed 18 CFR 385.2201(g)(1)(ii)

would require that actual information obtained through off-the-record

communications with Federal, state or local agencies, and relied upon

by the Commission in reaching its decision, be placed in the public

record to allow the public to discern the basis of the Commission's

decision.

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\38\ Similar exclusions appear in the Federal Communications

Commission's ex parte regulations. See 47 CFR 1.1204(b)(5), (7) and

(8).

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9. Communications Relating to Environmental Documentation

The Commission is interested in establishing rules that will permit

more effective cooperation with other agencies, applicants, and the

public in developing documentation, consistent with the National

Environmental Policy Act of 1969 (NEPA),39 that supports

decisions made by the Commission. Accordingly, the Commission proposes

to exclude from the coverage of the rule all off-the-record

communications required to comply with the NEPA and implementing

regulations issued by the Council on Environmental Quality (CEQ)

40 and the Commission.41

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\39\ National Environmental Policy Act of 1969, as amended, 42

U.S.C. 4321 et seq.

\40\ 40 CFR 1500-1508.

\41\ 18 CFR Part 380.

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The CEQ's regulations describe an open and public NEPA process

leading up to the issuance of an environmental document that includes

opportunity for public comment and participation, and record

development akin to the procedures used in informal rulemaking. For

example, in cases necessitating the preparation of an Environmental

Impact Statement (EIS), CEQ rules describe a public scoping requirement

that may include noticed,

[[Page 51318]]

public, on-the-record meetings,42 and requirements that all

substantive comments (whether written or oral) received on the draft

statement (or summaries thereof where the response has been especially

voluminous) should be addressed in the final statement whether or not

they are relied upon by the agency.43 Comments or

communications received after issuance of the final EIS should be made

on-the-record or else they will be considered as prohibited

communications, unless they are exempt under another provision of this

rule.

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\42\ Scoping meetings convened by the Commission are frequently

transcribed by a court reporter. In the absence of a stenographic

report, the substance of significant communications taking place in

such meetings is memorialized, in writing, by Commission staff.

These documents are made available to the parties and placed in the

public record of the proceeding.

\43\ 40 CFR 1503.4(b).

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Just as with the development of an EIS, CEQ regulations provide

that, to the extent practicable, environmental agencies, the applicant,

environmental interest groups, and the public should be involved in the

process of crafting an environmental assessment (EA).44

However, the CEQ's regulations for preparation of an EA do not require

the same procedures to further public participation as those related

solely to EIS preparation.

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\44\ 40 CFR 1501.4.

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Based on our experience, a substantial majority of applications

requiring preparation of an EA are uncontested. Because the rule does

not apply to uncontested proceedings, communications undertaken in the

environmental review process for these proceedings may take place off-

the-record. However, this rule must address how off-the-record

communications should be handled in those cases where an application

requiring preparation of an EA is contested.

Accordingly, the Commission proposes, in cases that are contested,

to exempt from the coverage of the proposed rule those communications

relating to the preparation of an EA in cases where the Commission has

determined to solicit and address public comment. In this manner, we

believe that the Commission will have access to the information it

needs to make an informed decision, and the public will have the

requisite opportunity to participate in the process leading up to

issuance of an environmental assessment. We note that the ``final''

environmental assessment may in fact be incorporated in the

Commission's final order on the underlying action.

CEQ regulations require, to the fullest extent possible, that

Federal agencies integrate related surveys, required by other relevant

environmental review laws, into an EIS. Therefore, communications

necessary to assure compliance with all relevant statutes protecting

environmental, cultural and historic preservation concerns

45 also would be considered as excluded from the rule, if

they occur prior to the issuance of a completed EA or EIS. Thus, to the

extent that an applicant's compliance with these statutes is addressed

in a final EA or EIS associated with a particular proceeding, the

integrity of decisions arising under these statutes is protected by the

EIS process. Any communications taking place after the Commission's

issuance of the final environmental document would have to take place

on-the-record.46

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\45\ Such statutes include, but are not limited to, the Coastal

Zone Management Act of 1972, 16 U.S.C. 1451 et seq.; National

Historic Preservation Act of 1966, 16 U.S.C. 470 et seq.; Endangered

Species Act, 16 U.S.C. 1532 et seq.; and section 401 the Clean Water

Act, 33 U.S.C. 1341.

\46\ The Commission believes that it is not required to disclose

the specific details of communications with some cultural,

historical, and environmental protection agencies. Rather, in order

to protect the location or specific nature of an endangered

resource, a general description of the problem encountered and

proposed mitigative action, should be sufficient disclosure. This

rationale would apply whether the communication is addressed in an

environmental document, or as a separate part of the decisional

record.

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The Commission is mindful that other Federal and state resource

agencies with which we share jurisdiction may choose to intervene in

the same Commission proceeding in which they have been serving as a

cooperating agency 47 in the preparation of NEPA

documentation, and thus may have been made privy to non-public

predecisional information. The Commission invites comments on whether

cooperating agencies who are also parties should have access to

materials to which other parties lack access.

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\47\ The term ``cooperating agency'' is defined in the CEQ

regulations as an agency invited by the lead agency to participate

in the preparation of an environmental document. See 40 CFR 1501.6.

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10. Communications With Individual, Non-Party Landowners Permitted

Communications involving individual, non-party landowners, whose

property may be directly affected by a pending proceeding, would be

permitted, subject to a disclosure requirement. This exemption would

apply even after the issuance of a completed NEPA document. Consistent

with fundamental fairness, such individual landowners should be

permitted to comment without the need to incur the expense of formally

intervening in a proceeding. Any possible bias to the parties would be

mitigated by a requirement that communications with affected landowners

be placed in the record of the proceeding. This exception would not

apply, however, in the case of communications with a landowner

organization, or if an individual landowner is a party to the

proceeding.

F. Handling of Off-the-Record Communications

1. Prohibited Off-the-Record Communications

The proposed regulations differentiate between two types of off-

the-record communications: those prohibited by the regulations and

those permitted by the regulations. Commission decisional employees who

make or receive a prohibited communication would remain obligated to

deliver a copy of the communication, if written, or a summary of the

substance of any oral communication to the Secretary for submission

into the public record associated with, but separated from, the

decisional record in the proceeding. The Secretary will acknowledge

receipt of the prohibited communication by periodically issuing a

public notice that the agency has received a prohibited communication.

Such notice will list the author of the communication, date of receipt

by the Commission, and the docket number to which the communication

relates. Parties may seek an opportunity to respond on the record to

any facts or contentions made in a communication placed in the non-

decisional associated file. The Commission will grant such requests

only where it determines that the dictates of fairness so require. When

the request is granted, a copy of the off-the-record communication and

the permitted response will be made a part of the decisional record.

The proposed regulations depart from existing Rule 2201 (but not

the APA) in dropping the requirement that submissions in the public

file revealing barred communications must also be routinely served on

the parties to the relevant proceeding. The substitution of ``public''

notice is modeled on the approach used in the FCC's ex parte rule with

regard to permitted off-the-record communications.48 Given

that these prohibited communications are not part of the Commission's

decisional record, we believe there is no justification for imposing on

the Commission a burdensome requirement of service on the parties. We

note that the FCC's requirement is that its

[[Page 51319]]

Secretary publicly notice receipt of the off-the-record contact. Such

notice apparently is accomplished by a regular posting on the public

bulletin board, without resort to more formal Federal Register notice.

Considering that the communications in question are prohibited, we

believe the FCC's approach is valid and therefore propose that the

Commission adopt it.

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\48\ 47 CFR 1.1206(b).

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The Commission specifically invites comments on the use of public

notice in lieu of service.49 We also invite comments on

whether the Secretary should retain the prohibited communication and

response thereto in a file separate from the decisional file (i.e., the

associated file) or whether the incoming communication should be

immediately placed in the decisional file and noticed (in the Federal

Register) by the Secretary for public comment, and whether the latter

approach would provide adequate incentive to comply with the ex parte

rules.

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\49\ The Commission may also notice prohibited communications on

its Homepage (http://www.ferc.fed.us) and/or its official bulletin

board.

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The proposed regulations also would drop the requirement that

appears in existing Rule 2201, but not in Rule 1415 or the APA, for

``sworn'' statements summarizing oral communications. While sworn

statements may be appropriate in certain specific circumstances, the

proposed regulations follow the practice of most Federal agencies in

not imposing a general requirement of sworn statements.

2. Permitted Off-the-Record Communications

The due process principles underlying ex parte relate to preserving

the actual and apparent integrity of administrative processes and

creation of an agency decision-making record capable of judicial

review. Consistent with these principles, the Commission proposes to

permit certain off-the-record communications, but require that

documentation of such communications be placed in the decisional record

with public notice that the communication has been placed in the

record. This disclosure requirement may, however, create some

incremental burden on FERC staff relating to drafting memoranda or

notes on oral communications, and may chill communications that outside

parties would prefer not to disclose. The Commission invites comments

on whether the proposed rule attains an appropriate balance of these

interests.50/

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\50\ For communications under five exceptions we propose a

disclosure and notice requirement. These five exceptions--relating

to emergencies, communications by non-party public officials, agency

communications, the NEPA process, and landowner interests--might

otherwise be viewed as violative of the ex parte principles designed

to ensure the integrity of the Commission's proceedings if they were

not accompanied by alternative procedural assurances that the

Commission's records will be complete and that others will have a

fair opportunity to respond. Thus, we propose to require that

communications under these five areas be placed in the public

record.

In total, the Commission proposes to exempt ten categories of

communications from coverage under the proposed rule. The other

proposed exemptions relate to communications that may be viewed as

falling outside the penumbra of ex parte communications recognized

by the APA. Therefore, we do not require notice and a record of

their occurrences. These include communications permitted by law,

prefiling communications, communications that all parties agree may

take place off the record, procedural inquiries, communications

taking place in public fora, and communications relating to

compliance with Commission orders.

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The proposed rule would require the Secretary periodically to

notice receipt of these permitted communications, thereby notifying the

parties, in lieu of direct service, that the communications are in the

decisional record (or environmental record), and that they have the

right to file a response.

We propose that notice be accomplished through publicly posting

receipt of these communications. In addition, the notice might be

accessible through the Commission's Internet homepage. We request

comments on the sufficiency of this type of notice for publicizing

permitted off-the-record communications.

G. Sanctions

The proposed regulations expand the sanctions provision in existing

Rule 2201 in one respect. Added as a possible sanction for violations

of the proposed regulations is disqualification or suspension from

practice or appearance before the Commission. This sanction is already

available under Rule 2102 to deal with misconduct by those appearing

before the Commission.51/ It is included in the proposed

regulations to clarify that persons who engage in barred communications

are among those who may be subject to disqualification or suspension in

the appropriate circumstances. One purpose of the proposed rule is to

assure that the Commission's decisions are based only on information

available to all parties. Accordingly, this sanctions portion of the

rule would apply notwithstanding that the prohibited off-the-record

communication would be made publicly available under proposed 18 CFR

385.2201(f). As under existing Commission regulations, the proposed

sanctions provision would apply only to persons outside the Commission.

Commission employees who violate the proposed Rule 2201 prohibitions

would be subject to administrative disciplinary measures applicable to

Federal employees.

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\51\ 18 CFR 385.2102.

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IV. Regulatory Flexibility Certification Statement

The Regulatory Flexibility Act 52/ requires rulemakings

either to contain a description and analysis of the impact the rule

would have on small entities, or to certify that the rule will not have

a significant economic impact on a substantial number of small

entities. An analysis is not required if a proposed rule will not have

such an impact.53/

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\52\ 5 U.S.C. 601-612.

\53\ 5 U.S.C. 605(b).

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The regulations proposed in this rulemaking would revise the

Commission's Rules of Practice and Procedure dealing with certain off-

the-record communications. The Commission certifies that this proposed

rule will not have a significant economic impact on small entities.

V. Environmental Statement

Commission regulations require that an environmental assessment or

an environmental impact statement be prepared for any Commission action

that may have a significant adverse effect on the human

environment.54/ The Commission has categorically excluded

certain actions from this requirement as not having a significant

effect on the human environment. Among these are proposals for rules

that are clarifying, corrective, or procedural, or that do not

substantively change the effect of the regulations being

amended.55/ The proposed rule falls under this exception;

consequently, no environmental consideration is necessary.

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\54\ Order No. 486, Regulations Implementing National

Environmental Policy Act, 52 FR 47897 (Dec. 17, 1997), FERC Stats. &

Regs., Regulations Preambles 1986-90 para. 30,783 (1997).

\55\ 18 CFR 380.4(a)(2)ii).

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VI. Information Collection Statement

The Office of Management and Budget's (OMB's) regulations require

that OMB approve certain information collection requirements imposed by

agency rules.56/ However, this proposed rule contains no

information collection requirements and therefore is not subject to OMB

approval.

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\56\ 5 CFR Part 1320.

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VII. Public Comment Procedures.

The Commission invites interested persons to submit written

comments on

[[Page 51320]]

this Notice of Proposed Rulemaking. An original and 14 copies of the

comments must be filed with the Commission no later than December 24,

1998.

Comments should be submitted to the Office of the Secretary,

Federal Energy Regulatory Commission, 888 1st Street, N.E., Washington,

DC 20426 and should refer to Docket No. RM98-1-000.

All written comments will be placed in the Commission's public

files and will be available for inspection in the Commission's Public

Reference Room at 888 1st Street, N.E., Washington, DC 20426, during

regular business hours.

List of Subjects in 18 CFR Part 385

Administrative practice and procedure, Electric power, Penalties,

Pipelines, and Reporting and recordkeeping requirements.

By direction of the Commission.

Linwood A. Watson, Jr.,

Acting Secretary.

In consideration of the foregoing, the Commission proposes to amend

Part 385, Chapter I, Title 18, Code of Federal Regulations, as set

forth below.

PART 385--RULES OF PRACTICE AND PROCEDURE

1. The authority citation for Part 385 continues to read as

follows:

Authority: 5 U.S.C. 551-557; 15 U.S.C. 717-717w, 3301-3432; 16

U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352; 49

U.S.C. 60502; 49 App. U.S.C. 1-85.

2. Section 385.101(b)(4) is revised to read as follows:

Sec. 385.101 Applicability (Rule 101).

* * * * *

* * *

(4) With respect to any oil pipeline filing or proceeding, the

modified procedures set forth in Rules 1404 and 1414 will apply.

* * * * *

3. Section 385.915 is revised to read as follows:

Sec. 385.915 Off-the-record communications (Rule 915).

The provisions of Rule 2201 (prohibited communications and other

communications requiring disclosure) apply to proceedings pursuant to

this subpart, commencing at the time the Secretary issues a proposed

remedial order under 10 CFR 205.192, an interim remedial order for

immediate compliance under 10 CFR 205.199D, or a proposed order of

disallowance under 10 CFR 205.199E.

4. Section 385.1012 is revised to read as follows:

Sec. 385.1012 Off-the-record communications (Rule 1012).

The provisions of Rule 2201 (prohibited communications and other

communications requiring disclosure) apply to proceedings pursuant to

this subpart, commencing at the time a petitioner files a petition for

review under Rule 1004 (commencement of proceedings).

Sec. 385.1415 [Removed]

5. Section 385.1415 is removed.

6. The Subpart V heading and Sec. 385.2201 are revised to read as

follows:

Subpart V--Prohibited Communications and Other Communications

Requiring Disclosure; Separation of Functions

Sec. 385.2201 Prohibited communications and other communications

requiring disclosure (Rule 2201).

(a) Purpose and scope. The purpose of this section is to govern

communications with the Commission in a manner that permits fully

informed decision making by the Commission while ensuring the integrity

and fairness of the Commission's decisional process. This rule shall

apply to all contested on-the-record proceedings except that the

Commission may, by rule or order, modify any provision of this subpart,

as it applies to all or part of a proceeding, to the extent permitted

by law.

(b) Prohibited off-the-record communications in proceedings

involving a party or parties. (1) Except as permitted in paragraph (d)

of this section, no person shall make or knowingly cause to be made to

any decisional employee an off-the-record communication relevant to the

merits of a contested on-the-record proceeding involving a party or

parties; and

(2) Except as permitted in paragraph (d) of this section, no

decisional employee shall make or knowingly cause to be made to any

person an off-the-record communication relevant to the merits of a

contested on-the-record proceeding involving a party or parties.

(c) Definitions. For purposes of this section:

(1) Off-the-record communication means a communication which, if

written, is not served on the parties to the proceeding, and if oral,

is made without reasonable prior notice to the parties to a proceeding.

Note: Written communications includes a communication

transmitted by electronic means such as ``e-mail.''

(2) Contested on-the-record proceeding means any complaint, action

initiated by the Commission, or other proceeding involving a party or

parties in which an intervenor opposes a proposed action.

Note: The Commission will consider an intervention as contesting

the proposed action, and triggering the prohibitions on off-the-

record communications, when the intervenor expressly styles its

petition as being in opposition. Additionally, the Commission will

consider an intervention as being in opposition, even when not so

styled, if the arguments contained therein reasonably establish the

filer's opposition to the application. However, the Commission will

not treat an intervention as being in opposition to the applicant

when it appears to have been made solely for the purpose of being

placed on the service list or to seek permission to participate in a

hearing, should the Commission order that a hearing be held.

(3) Decisional employee means a Commissioner or member of his or

her personal staff, an administrative law judge, or any other employee

or contractor of the Commission who is or may reasonably be expected to

be involved in the decisional process of a particular proceeding, but

does not include an employee designated as part of the Commission's

trial staff in a proceeding, a settlement judge appointed under Rule

603 (settlement of negotiations before a settlement judge), a neutral

(other than an arbitrator) in an alternative dispute resolution

proceeding, or an employee designated as non-decisional in a particular

proceeding subject to the separation of functions requirements

applicable to trial staff under Rule 2202 (separation of functions of

staff).

Note: For purposes of this paragraph, ``contractor'' means a

direct Commission contractor or a third-party contractor subject to

Commission supervision and control.

(4) Person means any person outside the Commission.

(5) Proceeding involving a party or parties means any docketed

Commission proceeding other than an investigation under part 1b of this

chapter, an informal rulemaking under the procedures of 5 U.S.C. 553 or

exempted from those procedures under 5 U.S.C. 553(a)(1) and (a)(2), or

any other proceeding not having a party or parties.

Note: An on-the-record proceeding includes both proceedings set

for oral hearings and those hearings disposed of on evidence taken

by modified procedures, that is a ``paper hearing.''

(6) Relevant to the merits means capable of affecting the outcome

of a proceeding, or influencing a decision, or providing an opportunity

to influence a decision, on any substantive issue in the proceeding,

but does not include:

[[Page 51321]]

(i) A request for information relating solely to the status of a

proceeding, unless the request states or implies a preference for a

particular party or position, advocates expedited action or action by a

certain date or time, or is otherwise intended, directly or indirectly,

to address the merits or influence the outcome of a proceeding; or

(ii) A general background or broad policy discussion involving an

industry or a substantial segment of an industry, where the discussion

occurs outside the context of any particular proceeding involving a

party or parties and does not address the specific merits of the

proceeding.

Note: Although the Administrative Procedure Act permits off-the-

record communications concerning general background or policy

discussions about an industry or segment of an industry, discussions

of how such background or policy information might apply to the

specific merits of a pending proceeding are not permitted.

(d) Exempt communications. The general prohibitions in paragraph

(b) of this section do not apply to the following:

(1) A communication specifically authorized by law, or permitted by

Commission rule or order in a particular proceeding;

(2) Subject to the disclosure requirements of paragraph (g) of this

section, a communication related to an emergency;

(3) Communications of published or broadly disseminated public

information;

Note: Communications taking place in public fora, and material

appearing in the public domain, are not subject to the general

prohibitions on off-the-record communications.

(4) Pre-filing communications, including communications under

Secs. 4.34(i), 4.38, and 16.8 of this chapter, to take place before the

filing with the Commission of an application for an original, new,

nonpower, or subsequent hydropower license or exemption or a license

amendment;

Note: Application of this section is not limited to the above

listed hydropower regulations. Other examples of permitted pre-

filing communications would include, but are not limited to,

submitting draft rate schedules for the purpose of receiving staff

suggestions under Sec. 35.6 of this chapter, and certain informal

pipeline certificate consultations pursuant to Sec. 157.14(a) of

this chapter.

(5) A communication that all parties to a proceeding agree may be

made without regard to the prohibitions in paragraph (b) of this

section;

Note: Absent formal opposition by a party, this exemption allows

pre-filing communications protocols to remain in effect after an

application is filed with the Commission.

(6) Subject to the disclosure requirements of paragraph (g) of this

section, a written communication from a non-party elected official;

Note: This exemption covers written communications requesting

expedition or forwarding constituent correspondence; oral

communications would be subject to the prohibitions of this subpart.

(7) Where an order is pending rehearing, communications on issues

relating to compliance with order conditions;

Note: Communications related to the basis for, or seeking

changes in, the underlying order for which rehearing is being sought

would not be permitted.

(8) Subject to the requirements of paragraph (g) of this section, a

communication to or from another Federal, state or local agency that is

not a party in the Commission proceeding where the communication

involves:

(i) A verbal or written request for information made by the

Commission or Commission staff; or

(ii) A matter over which the other Federal, state, or local agency

and the Commission share jurisdiction, including authority to impose or

recommend conditions in connection with a Commission license,

certificate, or exemption;

(9) Subject to the disclosure requirements of paragraph (g) of this

section, and without regard to party status, any communication that

relates to:

(i) The preparation of an environmental impact statement, if such

communications occur prior to the issuance of the final environmental

document; or

(ii) The preparation of an environmental assessment in those cases

where the Commission has determined to solicit public comment in the

preparation of an environmental assessment, if such communications

occur prior to the issuance of the final environmental document.

Note: This exemption applies to discussions with Federal, state,

or local agencies, applicants, landowners, and non-governmental

entities engaged in preparation of an environmental document. Once

the final environmental document is issued, further communications

with parties would be subject to the general prohibitions described

in this section unless another exemption applies.

(10) Subject to the disclosure requirements of paragraph (g) of

this section, any communications involving individual, non-party

landowners whose property may be affected by a pending proceeding.

Note: This exemption applies even after the National

Environmental Policy Act process has been completed, but is

inapplicable to landowner organizations and individual landowners

who are parties to the underlying proceeding.

(e) When the prohibitions apply. (1) The prohibitions in paragraph

(b) of this section will apply:

(i) For proceedings initiated by the Commission--from the time an

order initiating the proceeding is issued;

(ii) For proceedings returned to the Commission on judicial

remand--from the date the Court issues its mandate;

(iii) For complaints initiated pursuant to Rule 206 (complaints)--

from the date of the filing of the complaint with the Commission, or

the date the Commission initiates an investigation on its own motion;

and

(iv) For all other matters--from the time of the filing, in

accordance with Sec. 385.2001(a)(2), of any protest or intervention in

opposition to an application, petition, tariff or rate filing, or other

matter that is, or will be, the subject of the proceeding, including a

petition for rehearing of an administrative law judge's decision that

becomes a final decision under Rule 708(d).

Note: Prematurely filed interventions would not trigger the

prohibitions on off-the-record communications.

(2) The prohibitions will remain in force until final disposition

of the proceeding by the Commission, including a decision on rehearing

where applicable. The prohibitions will also remain in effect until the

time period for seeking rehearing has expired. In the case of an

initial decision by an administrative law judge, the prohibitions will

remain in force until it becomes final pursuant to Rule 708(d).

(f) Handling of prohibited off-the-record communications. A

prohibited communication in violation of paragraph (b) of this section

will not be considered part of the record for decision in the

applicable Commission proceeding except to the extent that the

Commission by order determines otherwise.

(1) Disclosure requirement. Any decisional employee who makes or

receives a communication prohibited by paragraph (b) of this section

will submit to the Secretary the communication, if written, or a

summary of the substance of any oral communication. The Secretary will

place the communication or summary in the public file associated

[[Page 51322]]

with, but not part of, the decisional record of the proceeding.

(2) Public notice requirement. The Secretary shall periodically

issue a public notice listing any prohibited off-the-record

communications or summaries thereof received by his or her office

relating to a proceeding. Such notice shall identify the author of the

communication, the date the communication was received, and the docket

number to which it relates.

(3) Responses to prohibited off-the-record communications. Any

party may file a response to a communication placed in the non-

decisional public record under paragraph (f)(1) of this section. A

party may also file a written request for an opportunity to respond,

on-the-record, to any facts or contentions made in an off-the-record

communication placed in the non-decisional public file. The Commission

will grant such request only where it determines that the dictates of

fairness so require. When the request is granted, a copy of both the

off-the-record communication, and the permitted response, will be made

a part of the decisional record.

(g) Handling of permitted off-the-record communications.--(1)

Disclosure requirement. (i) Any written information, and a summary of

the substance of any significant oral information, not already in the

record, obtained through a permitted communication in response to an

emergency covered by paragraph (d)(2) of this section, will be

submitted to the Secretary and placed in the decisional record of the

underlying Commission proceeding.

(ii) Any permitted written information obtained through a permitted

communication with a non-party elected public official under paragraph

(d)(6) of this section will be submitted to the Secretary and placed in

the decisional record of the proceeding.

(iii) Except for information of which official notice may be taken,

any written information, and a summary of the substance of any

significant oral information, not already in the record, obtained

through a permitted communication with a Federal, state, or local

agency under paragraph (d)(8) of this section, will be submitted to the

Secretary and placed in the decisional record of the Commission

proceeding.

(iv) Any written information, and a summary of the substance of any

significant oral information, not already in the environmental

documentation of a proceeding, obtained through a permitted

communication to or from any person under paragraph (d)(9) of this

section, will be submitted to the Secretary, placed in the public

record of the proceeding, and addressed in the final environmental

document issued by the Commission.

(v) Any written information, and a summary of the substance of any

significant oral information, not already in the record, obtained

through a permitted communication involving an individual non-party

landowner under paragraph (d)(10) of this section will be submitted to

the Secretary, and placed in the decisional record of the Commission

proceeding.

(2) Public notice requirement and response. For each communication

required to be disclosed under paragraph (g)(1) of this section, the

Secretary shall periodically issue a public notice listing any

permitted off-the-record communications or summaries thereof received

by his or her office relating to a proceeding. Any party may file a

response on the record.

(h) Sanctions. (1) If a person knowingly makes or causes to be made

a communication in violation of paragraph (b) of this section, the

Commission may disqualify and deny the person, temporarily or

permanently, the privilege of practicing or appearing before it, in

accordance with Rule 2101 (appearances); and

(2) If a party or its agent or representative knowingly makes or

causes to be made a communication in violation of paragraph (b) of this

section, the Commission may require the party, agent, or representative

to show cause why the party's claim or interest in the proceeding

should not be dismissed, denied, disregarded, or otherwise adversely

affected because of the prohibited off-the-record communication.

(i) Section not exclusive. (1) The Commission may, by rule or

order, modify any provision of this section as it applies to all or

part of a proceeding, to the extent permitted by law.

(2) The provisions of this section are not intended to limit the

authority of a decisional employee to decline to engage in permitted

off-the-record communication, or where not required by the rule, to

make a public disclosure of a permitted off-the-record communication,

in circumstances where the employee determines that such action is

appropriate.

7. The heading of Sec. 385.2202 is revised to read as follows:

Sec. 385.2202 Separaton of functions (Rule 2202).

[FR Doc. 98-25373 Filed 9-24-98; 8:45 am]

BILLING CODE 6717-01-P