Some of the comments received in response to the proposed rules expressed the concern that the importance of the SEI would be diminished if it were incorporated into another document. While this may be true if the SEI were made part of studies prepared under NEPA, we do not believe that the same problem would result from including the SEI in the decisional document. In preparing the SEI, the Commission will have to scrutinize carefully the record to make an independent finding on the scope of the energy impacts. By requiring energy findings to be placed in the decisional document along with the traditional determinants of the public interest, reasonableness, or public convenience and necessity, we are striving to make it clear that energy considerations are entitled to be given considerable weight in the decisional process.

Consultation with the Section of Energy and Environment during the preparation of the SEI will be encouraged. This section has developed methodologies and energy data through its years of experience in analyzing energy issues under NEPA. Its role under EPACA will be to continue to develop guidelines for analyzing energy impacts and to provide technical assistance to the Commission as appropriate.

Other Issues. We have retained with minor changes the six factors which, in the proposed rules, were to be considered in determining whether an action constituted a major regulatory action. These criteria will now be applied to those actions which have not been identified as major regulatory actions under rule 1106.5(a). In order to avoid confusion with NEPA standards, the word “significant” has been deleted from the rule 1106.5(c) criteria. However, the requirement that the energy impacts be fairly extensive before an SEI will be prepared has not been clianged.

While consideration was given to establishing threshold levels of impact in lieu of the general criteria employed, this approach was rejected as being too inflexible. Changes in fuel consumption or energy efficiency are often not easily quantifiable and the validity of a particular threshold level may change depending on the existing energy supply. Thus, during a time of severe fuel shortage, threshold levels may be too high to describe adequately the seriousness of an action's energy impact. A percentage formula (e.g., whether an action would increase existing energy consumption by a certain percent) was also rejected on the ground that it would probably result in preparation of a disproportionate number of SEI's for relatively minor actions where existing energy use is quite low, while ignoring potentially major actions where the increase in energy consumption may be fairly substantial but below the percentage threshold due to high levels of existing energy usage.

Both FEA and ATA pointed out the need for further development of data bases and methodologies to assess more accurately the energy impacts of Commission actions. While beyond the scope of these regulations, these suggestions have merit and will be pursued in the future. In addition, generic studies alson the lines of the recent empty mileage study conducted by the Bureau of Economics will be conducted from time to time to gain greater insight into how the Commission's regulatory policies and programs affect energy consumption and energy efficiency.

In conclusion, it should be noted that the Commission will monitor the effect of these rules and modify or clarify them if circumstances and experience so dictate. This is particularly true with respect to the classification of proceedings as major regulatory actions. It is expected that the rules will engender a heightened awareness of the energy implications of all Commission actions and it is possible that this awareness may lead to changes in our initial assumptions regarding energy impacts.

FINDINGS

We find that adoption of the procedures set forth in the appendix of this interim report would enable the Commission to adequately consider energy impacts in its proceedings in accordance with the congressional intent expressed by section 382(b) of the Energy Policy and Conservation Act of 1975. We further find that these rules are just and reasonable, and that the principles they contain should be adopted, subject to consideration of further comments in this proceeding.

An appropriate order will be entered.

APPENDIX

1106.1 Purpose and Scope

(a) The Energy Policy and Conservation Act (42 U.S.C. 6201 et seq., hereinafter referred to as EPACA) directs and authorizes that certain steps be taken by the Federal and State Governments to reduce demand for energy, increase domestic energy supplies, and conserve existing energy supplies through energy conservation programs and improvements in the energy efficiencies of motor vehicles and other consumer products. Efforts should also be made to increase the energy efficiency of all modes of surface transportation subject to Commission regulation.

(b) These regulations establish procedures under which the Commission discharges its duties under the Energy Policy and Conservation Act of 1975. They apply to all proceedings before the Commission.

1106.2 Authority

(a) Section 382 of EPACA requires the Commission to examine its policies and programs in order to institute measures to reduce energy consumption by persons subject to its regulation. Section 382(b) of the EPACA directs the Commission to include in any major regulatory action, where practicable and consistent with the exercise of its authority under other law, a statement of the probable impact of the major regulatory action on energy efficiency and energy conservation. The statute directs the Commission to define the term "major regulatory action" by rule.

(b) Sections 17(3), 204(a)(6), 304(a), and 403(a) of the Interstate Commerce Act authorize the Commission, consistent with the purpose of the act, to establish rules and procedures which are necessary to the exercise of its functions. 1106.3 Definitions

(a) "Act" means the Interstate Commerce Act, as amended.

(b) "Application" includes a request by an applicant, complainant, or proponent for the granting of any right, privilege, authority, or relief under or from any provision of the act, any regulation or requirement made pursuant to a power granted by the act, or any other statute conferring jurisdiction upon the Commission.

(c) "Commission" means the Interstate Commerce Commission or decisional unit within the Interstate Commerce Commission.

(d) “EPACA" means the Energy Policy and Conservation Act of 1975. (e) "Major regulatory action" is any action listed in rule 1106.5(a) below or any other activity undertaken, approved, or licensed by the Commission which has the potential for a major impact on the conservation of energy resources or upon energy efficiency or which may have a broad effect on the operations of the surface transportation industry.

(f) "Statement of Energy Impact" (SEI) is a statement included in Commission decisions which describes the probable impact of a major regulatory action on energy conservation or energy efficiency.

1106.4 Policy

(a) It is the policy of the Commission to implement EPACA to the fullest extent possible consistent with its existing statutory authority. The goals of furthering energy conservation and energy efficiency are integral parts of the Commission's overall regulatory mandate. Energy considerations are weighed with other relevant considerations in determining whether a proposal is consistent with the public interest or required by the public convenience and necessity.

(b) Energy findings and conclusions are integrated into decisions, opinions, or orders in proceedings involving a major regulatory action as defined in this part. The Commission interprets the provisions of EPACA as supplemental to its existing authority and as a mandate to view traditional policies and missions in the light of national energy objectives and, if necessary, to change these policies to promote greater energy conservation and efficiency among the carriers subject to Commission jurisdiction.

(c) These procedures apply only to proceedings instituted after the effective date of these regulations.

1106.5 Indentification of Major Regulatory Actions

(a) The following classes of actions are major regulatory actions and require preparation of an SEI:

(1) construction of rail lines (except for connecting tracks);

(2) merger, control, or consolidations involving two or more class I railroads; (3) commuter fare adjustments filed under 49 CFR 1105.1;

(4) intercity bus fare adjustments filed under 49 CFR 1104.20;

(5) passenger train discontinuance;

(6) revocation or substantial modification of motor carrier regular-route passenger service;

(7) abandonment of rail lines;

(8) certification of water carrier service;

(9) rulemaking and legislative proposals affecting carrier operations; and (10) general rate adjustments filed under 49 CFR 1102.1 and 1104.1.

(b) While other Commission proceedings may have some energy impact, these impacts are generally not considered to be major. However, if the Commission on its own initiative identifies energy issues of consequence in a proposed action not listed in subparagraph (a) of this section, or if evidence is presented to the Commission indicating that this action may have important energy impacts, an SEI may be prepared.

(c) In determining whether a proposed action not listed in subparagraph (a) of this section constitutes a major regulatory action consideration will be given to whether the action will:

(1) substantially increase or decrease energy consumption in comparison with existing energy consumption in the affected area;

(2) result in substantial diversion of traffic from one mode of transportation to another;

(3) result in materially more efficient or less efficient use of existing modes of transportation;

(4) be consistent with Federal, State, and local plans regarding energy conservation; (5) result in material desruption of existing patterns of energy distribution; or (6) provide or remove necessary transportation access for the substantial development of energy resources.

1106.6 Preparation of Statements of Energy Impact

(a) The Commission will prepare the SEI for all major regulatory actions and include it in the initial decision.

(b) If a proceeding is not investigated by the Commission, a statement of energy impact will not be prepared.

(c) A determination that a proceeding is a major regulatory action within the meaning of EPACA and this part is independent from any determination that the proceeding is a “major Federal action significantly affecting the quality of the human environment" within the meaning of the National Environmental Policy Act of 1969, and vice versa.

1106.7 Reporting Requirements

(a) Every application within rule 1106.5(a) shall include information specifically addressing the six factors listed in rule 1106.5(c) and shall provide supporting data to the extent practicable.

(b) For other proceedings before the Commission, the information required in subparagraph (a) of this section shall be provided as follows:

(1) in proceedings involving oral hearings, at such hearings, at the control of the presiding officer; and

(2) in proceedings not involving oral hearings, at the time verified statements or other materials in justification of an application are filed.

(c) These reporting requirements shall not apply to applications for temporary or emergency temporary authority or to other emergency situations where compliance would be impracticable.

(d) Persons filing a protest or other pleading in a proceeding before the Commission may include a statement indicating the probable impact of the proposed action on energy conservation and energy efficiency. A statement alleging that a proposal is a major regulatory action under EPACA and this part shall be accompanied by supporting data, to the extent practicable, indicating the nature and degree of the anticipated energy impact.

1106.8 Initial and Final Decisions

In addition to the SEI the initial decision in a major regulatory action will include findings and conclusions indicating how the energy impacts identified in the SEI were considered in the decision.

357 I.C.C.

specific amount of product stored in commingled tanks, which contain products from several different shippers.

The record indicates that six tenants lease segregated storage space in the Setauket terminal. One of these tenants, the Long Island Lighting Company (Lilco), moves it product through the pipeline to Holtsville, where it also leases segregated storage space. Generally, tenants order ex-water shipments of petroleum products to respondents' facility at Port Jeffereson, where it is offloaded and piped to the Setauket storage area. Once in Setauket, the product is allowed to settle for at least 24 hours, in order to remove any impurities which may have mixed with the petroleum during the tanker voyage, and to perform any necessary product testing.

Petroleum products are removed from the Setauket facility on shippers' instructions by truck, barge, or pipeline. The place of removal may vary for many of the commingled shippers depending on where the demand exists at a given time. However, Lilco, in the time it has been a tenant has consistently drawn all its product from the Holtsville facility. Lilco itself consumes all the product it moves through the pipeline, and the ultimate destination of its product is always known to be Holtsville.

The Administrative Law Judge found that no part of the pipline operation was engaged in interstate commerce, and that the pipeline, therefore, is not subject to regulation by this Commission. He reasoned that few of the factors which traditionally have been. considered indicators of interstate commerce are present, citing Petroleum Products Transported Within a Single State, 71 M.C.C. 17 (1957), and Iron and Steel Articles, Wilmington to Points in N.C., 323 I.C.C. 740 (1965). He specifically pointed to the fact that shipments to Port Jefferson are not made pursuant to specific orders for specific customers, that there are no through arrangements on the part of most shippers beyond Port Jefferson, that product for most shippers is commingled at the terminal facilities, that there is a required 24-hour storage period in order to allow impurities to settle and to facilitate testing for specifications, and that the Setauket terminal facility also serves as a marketing facility for bulk sales by some shippers. The Administrative Law Judge concluded from these facts that no shippers showed "fixed and persisting transportation intent" to move their product through the pipeline from out of State, and that the total facts indicate that the essential nature of the commerce is intrastate. He also found that shippers had an economic self interest in maintaining inventory levels at the Setauket terminal sufficient to break the stream of commerce. The