[Federal Register Volume 59, Number 202 (Thursday, October 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25994]


[[Page Unknown]]

[Federal Register: October 20, 1994]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 161 and 250

[Docket No. RM94-6-001; Order No. 566-A]

 

Standards of Conduct and Reporting Requirements for 
Transportation and Affiliate Transactions

Issued October 14, 1994.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule; Order on rehearing.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
issuing an order on the requests for rehearing of Order No. 566, the 
final rule establishing revised standards of conduct and reporting 
requirements for transportation and affiliate transactions. The order 
grants rehearing on Standards H and K and makes a non-substantive 
revision to the definition of marketing to reflect the elimination of 
cross-referenced section of the regulations.

DATES: The revised regulations will become effective November 21, 1994.

ADDRESSES: Federal Energy Regulatory Commission, 825 North Capitol 
Street, N.E., Washington, D.C. 20426.

FOR FURTHER INFORMATION CONTACT: Michael Goldenberg, Federal Energy 
Regulatory Commission, 825 North Capitol Street, N.E., Washington, D.C. 
20426. (202) 208-2294.

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 copy the contents of 
this document during normal business hours in Room 3104, 941 North 
Capitol Street N.E., Washington D.C. 20426.
    The Commission Issuance Posting System (CIPS), an electronic 
bulletin board service, provides access to the texts of formal 
documents issued by the Commission. CIPS is available at no charge to 
the user and may be accessed using a personal computer with a modem by 
dialing (202) 208-1397. To access CIPS, set your communications 
software to use 300, 1200 or 2400 bps, full duplex, no parity, 8 data 
bits, and 1 stop bit. CIPS can also be accessed at 9600 bps by dialing 
(202) 208-1781. The full text of this notice will be available on CIPS 
for 30 days from the date of issuance. The complete text on diskette in 
WordPerfect format may also be purchased from the Commission's copy 
contractor, La Dorn Systems Corporation, also located in Room 3104, 941 
North Capitol Street, N.E. , Washington D.C. 20426.

Table of Contents

I. Introduction
II. Background and Summary of Order No. 566
III. Consideration of the Affiliate Regulations taken as a Whole
IV. Standard F
V. Standard H
    A. Revisions To The Standard
    B. Specific Issues
    1. Affiliate's Role in a Transportation Transaction
    2. Posting Period
    3. Posting of the Transportation Path
    4. Posting of Discounts on Firm Transportation
VI. Capacity Allocation Log
VII. Requirement to Maintain Affiliate and Non-Affiliate Discount 
Information
VIII. Tariff Waivers and Complaints
IX. Coordination of the Affiliate Requirements with Part 284 
Requirements
X. Applicability of the Regulations
XI. Effective Date

    Before Commissioners: Elizabeth Anne Moler, Chair; Vicky A. 
Bailey, James J. Hoecker, William L. Massey, and Donald F. Santa, 
Jr.

Order on Rehearing

I. Introduction

    In Order No. 566,\1\ the Commission adopted a final rule amending 
its regulations governing the Standards of Conduct applicable to 
pipeline interactions with their marketing affiliates and the reporting 
requirements for transportation and affiliate transactions. The final 
rule retained the existing Standards of Conduct, with one exception. 
The rule made significant changes in the reporting requirements to 
reduce or consolidate maintenance and reporting burdens based on the 
changes in the way pipelines are allocating capacity under Order No. 
636\2\ and the requirement of Order No. 636 that pipelines develop 
Electronic Bulletin Boards (EBBs) to provide customers with access to 
important information. Thirteen parties, most of whom are pipelines, 
have sought rehearing or clarification of the proposed rule.\3\
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    \1\Standards of Conduct and Reporting Requirements for 
Transportation and Affiliate Transactions, Order No. 566, 59 FR 
32885 (June 27, 1994), III FERC Stats. & Regs. Preambles 30,997 
(June 17, 1994).
    \2\Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation; and Regulation of 
Natural Gas Pipelines After Partial Wellhead Decontrol, 57 FR 13267 
(Apr. 16, 1992), III FERC Stats. & Regs. Preambles 30,939 (Apr. 8, 
1992), order on reh'g, Order No. 636-A, 57 FR 36128 (Aug. 12, 1992), 
III FERC Stats. & Regs. Preambles 30,950 (Aug. 3, 1992), order on 
reh'g, Order No. 636-B, 57 FR 57911 (Dec. 8, 1992), 61 FERC 61,272 
(1992), appeal re-docketed sub nom., Atlanta Gas Light Company and 
Chattanooga Gas Company, et al. v. FERC, No. 94-1171 (D.C. Cir. May 
27, 1994).
    \3\The parties seeking rehearing and clarification are listed on 
Appendix A.
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    One of the principal issues raised in the rehearing petitions is 
the timing of the requirement for posting affiliate discount 
information on the pipelines' EBBs. Current Standard H requires posting 
when a discount offer is made. After considering all the interests 
involved, the Commission is revising Standard H to require posting 
within 24 hours of the time at which gas flows under the discount. The 
Commission is leaving undisturbed the requirement of Standard H that a 
pipeline making a discount offer to an affiliate must make a comparable 
offer contemporaneously available to similarly situated non-
affiliates.\4\
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    \4\The Commission also is changing the posting period from 90 to 
30 days and is making other minor changes to make the posting more 
informative and easier to use.
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    The other substantive change the Commission is making is to revise 
Standard K to ensure that shippers have reasonable access to tariff 
waivers. The revised Standard will require pipelines to provide their 
log of tariff waivers within 24 hours of a request.
    In addition, the Commission is making some non-substantive 
revisions. The definition of marketing in Sec. 161.2(c) has been 
revised, because the definition cross-referenced a section of the 
Commission's producer regulations that recently was removed by the 
Commission in an order that eliminated all of the producer regulations 
at Part 270.\5\ The Commission is revising other regulations to clarify 
that they apply only to marketing affiliates and not other affiliates 
of pipelines.
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    \5\Removal of Outdated Regulations Pertaining To The Sales of 
Natural Gas Production, 59 FR 40240 (Aug. 8, 1994), III FERC Stats. 
& Regs. Preambles 30,909 (July 28, 1994).
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II. Background and Summary of Order No. 566

    The Commission, in Order No. 497,\6\ issued a rule intended to 
prevent pipelines from providing preferential treatment to their 
marketing or brokering affiliates. The rule adopted Standards of 
Conduct (codified at Part 161 of the Commission's regulations)\7\ and 
tariff and reporting requirements (codified in Sec. 250.16).\8\ The 
Standards of Conduct established the principles applicable to 
relationships between pipelines and their affiliates. In general, the 
Standards sought to prevent pipelines from favoring affiliates with 
information or transportation discounts not available to non-
affiliates. The tariff provisions required pipelines to include a 
variety of information in their tariffs, such as a list of operating 
personnel shared with affiliates, the information required in 
transportation service requests, and the procedures used for complaint 
resolution and for informing shippers about the availability and 
pricing of transportation services. The reporting requirements required 
pipelines to file information relating to transportation transactions 
with affiliates and to maintain the same information for non-affiliated 
shippers.
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    \6\Inquiry Into Alleged Anticompetitive Practices Related to 
Marketing Affiliates of Interstate Pipelines, Order No. 497, 53 FR 
22139 (June 14, 1988), FERC Stats. & Regs. [Regulations Preambles 
1986-1990] 30,820 (1988), order on rehearing, Order No. 497-A, 54 
FR 52781 (Dec. 22, 1989), FERC Stats. & Regs. [Regulations Preambles 
1986-1990] 30,868 (1989), order extending sunset date, Order No. 
497-B, 55 FR 53291 (Dec. 28, 1990), FERC Stats. & Regs. [Regulations 
Preambles 1986-1990] 30,908 (1990), order extending sunset date and 
amending final rule, Order No. 497-C, 57 FR 9 (Jan. 2, 1992), III 
FERC Stats. & Regs 30,934 (1991), reh'g denied, 57 FR 5815, 58 FERC 
61,139 (1992), aff'd in part and remanded in part, Tenneco Gas v. 
Federal Energy Regulatory Commission, 969 F.2d 1187 (D.C. Cir. 
1992), order on remand, Order No. 497-D, 57 FR 58978 (Dec. 14, 
1992), III FERC Stats. & Regs. 30,958 (1992), order on reh'g and 
extending sunset date, Order No. 497-E, 59 FR 243 (Jan. 4, 1994), 
III FERC Stats. & Regs. 30,987 (Dec. 23, 1994), order on reh'g, 
Order No. 497-F, 59 FR 15336 (Apr. 1, 1994), 66 FERC 61,347 (1994), 
order extending sunset date, Order No. 497-G, 59 FR 32884 (June 27, 
1994), III FERC Stats. & Regs. Preambles 30,996 (June 17, 1994).
    \7\18 CFR Part 161.
    \8\18 CFR 250.16.
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    In Order No. 636, the Commission created a new operating 
environment for interstate pipelines and shippers by requiring 
pipelines to unbundle their sale of gas from their transportation 
service and by implementing changes in the terms and conditions for 
providing transportation service. For example, the Commission required 
that pipelines establish EBBs to provide information about available 
firm and interruptible capacity on the pipeline, including the firm 
capacity available through the newly established capacity release 
mechanism.\9\
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    \9\Sections 284.8(b)(4); 284.9(b)(4). The Commission also has 
issued Order No. 563 promulgating standards governing the methods by 
which pipelines will provide information about available capacity 
through their EBBs. Standards For Electronic Bulletin Boards 
Required Under Part 284 of the Commission's Regulations, Order No. 
563, 59 FR 516 (Jan. 5, 1994), III FERC Stats. & Regs. Preambles 
30,988 (Dec. 23, 1993), order on reh'g, Order No. 563-A, 59 FR 
23624 (May 6, 1994), III FERC Stats. & Regs. Preambles 30,994 (May 
2, 1994), reh'g denied, 68 FERC 61,002 (1994).
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    In light of the changes effected by Order No. 636 and by the 
Commission's review of its existing Order No. 497 requirements, the 
Commission in Order No. 566 made significant changes in the Standards 
of Conduct and the tariff and reporting requirements. The Commission 
eliminated the Standard of Conduct dealing with gas subject to take-or-
pay relief, because the Commission had established procedures in Order 
No. 636 for dealing with gas supply realignment costs. The Commission 
revised its Standard of Conduct H (prior Standard of Conduct I) to 
coordinate its posting requirements relating to affiliate discounts and 
thereby eliminate duplicative EBB postings. Former Standard I required 
pipelines offering discounts to affiliates to make comparable discounts 
contemporaneously available to similarly situated shippers. The 
Commission retained this requirement, but modified the regulation to 
codify its policy that pipelines use their EBBs to provide non-
affiliates with the contemporaneous notice required by the Standard. 
This modification further enabled the Commission to eliminate a 
duplicative reporting requirement, in Sec. 250.16, under which 
pipelines had to post similar discount information on their EBBs. The 
Commission eliminated a number of the tariff requirements, retaining 
only the requirements that tariffs must include a list of operating 
personnel and facilities shared by the pipeline and its marketing 
affiliates and a provision establishing the procedures used to address 
complaints.
    The major change to the reporting requirements was to reduce the 
pipelines' reporting burden by eliminating maintenance and posting 
requirements relating to requests for transportation service and 
replacing them with more limited requirements that better comport with 
pipeline operations under Order No. 636. The revised regulations were 
designed to better capture the information used by pipelines to 
allocate capacity among shippers when available capacity is not 
sufficient for the pipelines to honor all requests for service. For 
those pipelines whose tariffs rely upon contract information or other 
data to allocate capacity, the pipelines will be required to maintain a 
log (for both affiliates and non-affiliates) of contract dates or other 
relevant information used to allocate capacity. The affiliate log must 
be posted on the pipelines' EBBs, while the full log (for both 
affiliates and non-affiliates) must be provided to the Commission, 
within a reasonable time, upon request. However, pipelines that 
allocate capacity on a pro rata basis will not have to maintain the 
log.
    Because Standard H was modified to codify Commission policy 
requiring EBB posting of discount offers, the Commission eliminated the 
provision, under Sec. 250.16, requiring pipelines to post information 
relating to affiliate discounts on their EBBs. Under the revised 
regulations, pipelines must only maintain the relevant discount 
information for both affiliates and non-affiliates and provide that 
information to the Commission upon request.
    Several of the rehearing requests challenge the Commission's 
decision not to rescind the Standards of Conduct and reporting 
requirements in their entirety. They then focus on the Commission's 
decisions on individual requirements. The Commission will first address 
the considerations relating to the affiliate requirements as a whole 
and will then address the contentions made with respect to specific 
items.

III. Consideration of the Affiliate Regulations Taken as a Whole

    In the Notice of Proposed Rulemaking (NOPR),10 the Commission 
stated that, as part of its continuing assessment of the Order No. 497 
regulations, it would consider comments on the need to retain these 
requirements as a whole. Many pipeline commenters contended that all 
the Order No. 497 requirements should be removed, because they were 
duplicative of existing prohibitions on undue discrimination and 
because the changes created by Order No. 636 made these requirements 
unnecessary. In Order No. 566, the Commission determined that the 
changes effected by Order No. 636 had not reduced the pipelines' 
incentive or ability to favor affiliates significantly enough to 
warrant complete rescission of the regulations at this point. The 
Commission, however, committed to reviewing these requirements as the 
industry obtains more experience operating in the restructured 
environment brought about by Order No. 636.
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    \1\0Standards of Conduct and Reporting Requirements for 
Transportation and Affiliate Transactions, Notice of Proposed 
Rulemaking, 59 FR 268 (Jan. 4, 1994), IV FERC Stats. & Regs. 
Proposed Regulations 32,504 (Dec. 23, 1993).
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    Several pipelines contend the Commission erred in not rescinding 
all of the Order No. 497 regulations.11 They make five arguments. 
First, they contend that the requirements cannot be substantiated 
because during the six years they have been in effect, the evidence 
does not show that pipelines have acted to favor affiliates.
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    \1\1Enron, INGAA, MGS/Natural, Panhandle Pipelines.
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    Second, they argue that Order No. 636 has introduced added 
competition to the marketplace by unbundling the sale of gas from the 
transportation of gas and by permitting firm shippers to release their 
capacity. They assert this added competition has eviscerated the 
pipelines' monopoly over transportation and hence their ability to 
discriminate unfairly in favor of their marketing affiliates.
    Third, they maintain that the conduct sought to be prevented by the 
affiliate regulations is already covered by the regulations under Part 
284 that prohibit pipelines from engaging in undue discrimination.
    Fourth, they maintain that whatever benefits may be derived from 
the regulations do not warrant the reduction in competition the 
regulations create. For example, INGAA maintains that pipeline 
affiliates are placed at a competitive disadvantage because affiliate 
discounts are posted, while non-affiliates can conduct their business 
without such disclosure.
    Fifth, they maintain that given the limited benefits from the 
requirements, the burdens and costs on the pipelines of complying with 
the posting and record maintenance requirements are not justified. The 
Panhandle Pipelines, for instance, maintain that few in the industry 
are interested in the information posted on EBBs, stating that shippers 
have accessed the affiliate EBBs on their four pipelines only a limited 
number of times.
    If the regulations are maintained, many pipelines12 contend 
the Commission should include a sunset date on which the regulations 
will expire. They point out a sunset date had been a feature of the 
prior Order No. 497 reporting requirements and the Commission 
acknowledged in Order No. 566 that developments in the industry may 
well make continued enforcement of the rules unnecessary. They point 
out that the Commission has committed to reviewing these requirements 
and argue that a sunset date will make that commitment tangible.13
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    \1\2Enron, INGAA K N Energy, MGS/Natural, Panhandle Pipelines, 
Tenneco.
    \1\3If the Commission does not have sufficient evidence within 
the sunset period to make its determination, they assert the 
Commission can extend the requirements as it has in the past.
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    In contrast, Hadson contends that the rules have not had a 
significant adverse effect on the ability of marketing affiliates to 
compete given the phenomenal success that affiliate marketers have 
enjoyed. Hadson maintains that the success of the regulations is shown 
by the reduced number of complaints from state governments, producers, 
and competing marketers, and it argues that this success is sufficient 
grounds to make the Order No. 497 rules a part of the permanent 
regulatory framework.
    The Commission denies the requests for rehearing. Even with the 
changes created by Order No. 636, the pipelines still retain an 
economic incentive to favor their affiliates, since such preferences 
may increase the overall profitability of the parent corporation. 
Although the unbundling of pipeline gas sales from transportation 
service has created a more competitive gas market, this competition has 
not eliminated the pipelines' incentives to favor their affiliates. 
Pipelines can still provide their affiliates with competitive 
advantages by giving them preferential access to transportation 
information or to discounts or other transportation benefits. 
Similarly, while the capacity release mechanism has created competition 
between released capacity and the pipelines' firm and interruptible 
capacity, the industry has not even had a year's experience with 
capacity release, so evidence of how it will affect the pipeline's 
control over transportation service is still unknown.
    The pipelines assert that the regulations are unnecessary because 
the Commission's Part 284 regulations already prohibit undue 
discrimination and that the Standards of Conduct and reporting 
requirements are therefore duplicative. Although the Part 284 
regulations do prohibit undue discrimination, these regulations do not 
establish the mechanisms, included in the affiliate regulations, to 
help ensure that non-affiliates are treated equally with affiliates and 
to provide for public and Commission monitoring of affiliate 
transactions. Given the special relationship between pipelines and 
their marketing affiliates and the pipelines' incentive to favor 
affiliates, the additional protection provided by the affiliate 
regulations is necessary.
    In addition, the pipelines claim that the regulations should be 
removed since there has been little evidence of favoritism to 
affiliates so the regulations place unnecessary burdens on the ability 
of affiliates to compete and create needless reporting burdens. Even 
with the current regulations, the Commission has received complaints of 
affiliates abuses. Using the number of complaints is an uncertain 
indicator of whether the regulations need to be continued, since the 
presence of the Standards of Conduct and the public scrutiny created by 
the reporting requirements may have had the desired prophylactic effect 
and decreased the extent of potential problems which otherwise might 
have occurred.
    In the final rule, the Commission significantly reduced the burdens 
created by the tariff and reporting requirements. The regulations that 
remain do not create such undue burdens on the pipelines or their 
affiliates that rescission is warranted, given the pipelines' 
continuing incentives to favor affiliates. These regulations strike a 
reasonable balance between prevention of pipeline favoritism towards 
affiliates and the competitive and reporting burdens claimed by the 
pipelines and affiliates. For example, the Standards of Conduct do 
nothing more than require the pipelines to provide to non-affiliates 
the same information and discounts the pipelines provide to affiliates 
by posting such information on EBBs. Such disclosure does not prevent 
the affiliates from competing; it merely ensures that all relevant 
transportation information is provided in a public forum so competition 
between affiliates and non-affiliates can take place on an even basis. 
Moreover, since pipelines are required to operate EBBs by Sec. 284.8 
(b)(4) and (5), the additional burden of posting affiliate information 
is not great.
    The Commission will not impose a sunset date for the reporting 
requirements. The Commission's review of the Order No. 497 requirements 
in this rule resulted in a significant reduction in the reporting 
requirements: pipelines now are required to post and maintain a simple 
log of contract data used to allocate capacity only if they use such 
data, and to maintain a limited amount of information concerning 
transportation discounts provided to affiliates and non-affiliates. 
Given this reduction in burden, the Commission does not find that the 
administrative burdens created by establishment of a sunset date are 
now appropriate, especially since the Commission is unable to determine 
when it will have sufficient information to reevaluate its reporting 
requirements. The Commission, however, is committed to undertaking such 
a reevaluation when the industry has obtained sufficient experience 
operating in the restructured environment.

IV. Standard F

    Standard F requires the pipelines to disclose contemporaneously to 
all shippers transportation information provided to affiliates. The 
Panhandle Pipelines argue that this Standard is no longer needed, 
because, due to the capacity release and flexible receipt and delivery 
point authority created by Order No. 636, customers control access to 
capacity, not the pipelines. The Commission, however, fails to discern 
how the ability of customers to exercise greater control over the use 
of their capacity would lessen the effect of a pipeline providing 
important transportation information to an affiliate, but withholding 
the information from the rest of the market. As an example, a 
pipeline's advance notice of curtailment plans could permit an 
affiliate to make alternate transportation arrangements so that it can 
continue to provide uninterrupted service, while shippers without 
advance notice may be at a disadvantage in attempting to make such 
alternate plans.14
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    \1\4The affiliate, for instance, could lock-up alternate receipt 
or delivery points before other shippers are aware of the need to 
change points.
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V. Standard H

    The predecessor to Standard H required pipelines offering a 
transportation discount to an affiliate to make a comparable discount 
contemporaneously available to all similarly situated non-affiliates. 
In Order No. 566, the Commission retained this requirement. It modified 
the Standard, however, to codify the interpretation developed through 
case-by-case decision-making that pipelines were required to post 
certain information about affiliate discounts on the pipelines' 
EBBs.15 Under Standard H, pipelines are required to post, for a 90 
day period, notice of each offer to an affiliate, providing the date of 
the offer, the discount rate, the quantity of gas scheduled to be moved 
at the discount rate, the delivery points in the offer, any conditions 
applicable to the offer, and the procedures by which a non-affiliated 
shipper can request a comparable offer. The Commission found that this 
modification of the Standard did not add a new posting requirement, 
because the Commission eliminated the comparable requirement under 
Sec. 250.16 that pipelines post affiliate discount information on their 
EBBs.
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    \1\5See Colorado Interstate Gas Company, 64 FERC  61,277 at 
62,960 (1993) (citing Sunrise Energy v. FERC, 62 FERC  61,087 at 
61,622-23 (1993)), reh'g denied, 65 FERC  61,264 at 62,224-25 
(1993).
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A. Revisions to the Standard

    Pipelines16 challenge the Commission's modification of the 
Standard first by contending that the Commission failed to abide by the 
Administrative Procedure Act (APA), because the proposal to require 
posting of affiliate offers on EBBs was not included in the NOPR in 
this proceeding.17 They assert that the addition of the posting 
requirement to Standard H, without proper notice, violated the APA, 
because it was not in character with the prior regulations or the 
original scheme proposed in the NOPR and was not a logical outgrowth of 
the NOPR. In particular, they assert that the modification to Standard 
H was not in character with the previous regulations, because, under 
prior Sec. 250.16, pipelines were required to post affiliate discount 
information after the discount was provided, while the revision to 
Standard H requires such posting when the discount offer is made.
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    \1\6ANR/CIG, Enron, INGAA, MGS/Natural, Panhandle Pipelines.
    \1\75 U.S.C. 553(a).
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    The pipelines also make a number of substantive challenges to the 
Standard. They contend Standard H in its entirety is unnecessary 
because no evidence demonstrates that pipelines engage in abusive 
discounting practices.18 They further maintain that any potential 
problems are adequately covered by Commission regulations under Part 
284 which prevent undue discrimination and require, under 
Sec. 284.7(d)(5)(iv), that the pipelines provide notice of 
discounts.19
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    \1\8Enron, MGS/Natural.
    \1\9Enron, INGAA.
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    The pipelines further contend that the required posting of discount 
information when offers are made will disclose confidential competitive 
information and will permit non-affiliates to steal deals being 
negotiated by affiliates.20 Enron argues that contemporaneous 
posting of the discounted rate, volume, and delivery points will enable 
competitors to discern the identity of the affiliate's customer and 
determine the type of offer that will enable the non-affiliate to 
undercut the affiliate's deal.21 Enron requests that if the 
Commission retains the posting requirement, it eliminate the disclosure 
of competitively sensitive information, requiring only the posting of a 
notice of a discount. MGS/Natural contend that the revision to the 
regulation is based on the incorrect premise that non-affiliated 
shippers will request discounts only if they are made aware of the 
discount offered to the affiliate. They maintain that all shippers know 
how to request and bargain for discounts so that after-the-fact posting 
of discounts is all that is necessary to ensure that discrimination has 
not occurred.
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    \2\0ANR/CIG, Enron, MGS/Natural, Panhandle Pipelines.
    \2\1TGPL requests deletion of the requirement to post the volume 
of gas scheduled since the pipeline will not know this information 
when offering the discount.
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    Along the same lines, K N Energy and Panhandle Pipelines request 
clarification of when pipelines are obligated to post offers under the 
regulation. They argue that pipelines should not be required to post 
affiliate discount information during negotiations, but should post 
only the final offer on the day it is offered to the affiliate. K N 
Energy states that affiliates will be unduly disadvantaged by posting 
of offers during the negotiation process and cites to the Commission's 
decision in Sunrise Energy Company v. Transwestern Pipeline 
Company,22 in support of this interpretation. In contrast, 
Indicated Companies contend that the Commission should require the 
posting of all offers made during negotiations in addition to posting 
the final offer, citing to the Commission's decision in Colorado 
Interstate Gas Company.23
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    \2\262 FERC  61,087 at 61,623 (1993), aff'd, 66 FERC  61,170 
(1994).
    \2\365 FERC  61,264 at 62,224-25 (1993).
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    The Commission rejects the pipelines' contention that Standard H in 
its entirety is unnecessary due to an absence of complaints about 
abusive discounting practices and the existing requirements of Part 
284. As discussed earlier, the Commission has received complaints of 
affiliate abuses, and the need to prevent preferential discounting is a 
fundamental premise of the regulations. Given the pipelines' incentive 
to favor marketing affiliates, a separate requirement that pipelines 
contemporaneously make the same discounts available to non-affiliates 
as to affiliates is necessary and not unduly burdensome. Public 
disclosure of affiliate discount information also is still necessary to 
inform non-affiliates of available discounts and to permit the market 
to monitor affiliate transactions. As discussed below, the Commission 
rejects the pipelines' contention that the current Part 284 discount 
reports are sufficient to replace the posting requirements under 
Standard H.
    The Commission, however, is persuaded by the rehearing petitions 
that its posting requirements under Standard H did not strike the 
proper balance between the interests at issue here. The Commission, 
therefore, will grant rehearing and revise the posting requirement so 
that the information about affiliate discount transactions will not 
have to be posted until 24 hours after gas flows under the discount 
transaction.24 The change to the posting requirement will not 
affect the pipelines' obligation contemporaneously to provide non-
affiliates with the same discounts provided to affiliates. Any pipeline 
offering a discount to an affiliate will be required to make a 
comparable discount contemporaneously available to all similarly 
situated non-affiliated shippers.
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    \2\4The Commission also is making some minor changes to make the 
posting easier for shippers to use. The Commission is requiring 
posting of the time period for which the discount applies and the 
maximum rate applicable to the transaction. These two data elements 
previously had been included in the posting requirement under former 
Sec. 250.16.
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    As the parties point out, the Commission's prior orders were not 
clear as to when posting should be required. In Sunrise Energy, the 
Commission interpreted the prior regulations as not requiring pipelines 
to provide notice of discount negotiations with affiliates. On the 
other hand, in Colorado Interstate, the Commission held that to comply 
with the prior regulations, pipelines had to post offers made during 
negotiations on their EBBs in addition to posting the final offer. In 
Order No. 566, the Commission followed Colorado Interstate and required 
posting of discount information when an offer to an affiliate was made.
    The Commission has decided that this requirement does not strike 
the appropriate balance between the need to provide information about 
affiliate discounts and the need to ensure that affiliates can compete 
on a relatively equal basis with non-affiliates. Pipeline marketing 
affiliates should be able to compete in the market on the same terms as 
non-affiliates to the maximum extent possible. The Commission is 
concerned that if information about affiliate discounts is provided 
during the negotiating process, such information could provide non-
affiliates with a competitive advantage over affiliates. As the 
pipelines contend, non-affiliates could use the posted affiliate 
information to try to interfere with an affiliate's negotiations with a 
customer. Non-affiliates are not subject to a similar risk, because 
they are not required to disclose information about the deals they 
negotiate.
    On the other hand, the Commission is not persuaded by the 
pipelines' contention that posting is adequate if it is delayed until 
the month after the affiliate has transported gas under the discount 
transaction, as is the case under the current Part 284 reporting 
requirements.25 Posting the month after the transaction is too 
late to permit the market to monitor current affiliate transactions or 
to enable non-affiliates to obtain discounts during the same time 
period as affiliates.
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    \2\5Section 284.7(d)(5)(iv) (filing required 15 days after close 
of the next billing period). In addition to finding that the Part 
284 reports are not filed timely enough, the Commission finds other 
reasons for concluding that these reports cannot substitute for the 
Standard H EBB postings. The Part 284 reports do not provide some of 
the data required by Standard H, such as delivery points and terms 
and conditions of the discount, information which is needed for non-
affiliated shippers to determine whether potential discrimination 
has occurred. And, the Part 284 reports are not posted on pipeline 
EBBs so shippers cannot obtain easy access to this information.
---------------------------------------------------------------------------

    The time that gas flows appears to establish an appropriate posting 
trigger. It ensures that affiliates will not be competitively 
disadvantaged during the period when deals are being negotiated. At the 
same time, it permits the market to actively monitor current affiliate 
transactions to quickly ensure that undue discrimination has not 
occurred. And, the posting is early enough so a similarly situated non-
affiliate still has the time to request and obtain a discount for its 
transportation during essentially the same time period as the 
affiliate. While alternative posting times also might achieve these 
goals, the point at which gas flows is a reasonable choice because it 
is a concrete event that can be easily verified.
    The Commission recognizes that posting when gas flows means that 
non-affiliates will be negotiating deals with potential customers 
without knowledge of discount offers to affiliates for which the non-
affiliates may be eligible. But the Commission finds that this result 
is necessary to strike the proper balance between providing for 
disclosure of affiliate discount information and the preservation of 
competition between affiliates and non-affiliates. The primary purpose 
for requiring posting of affiliate information is not to provide non-
affiliates with information that may be competitively useful, but to 
protect against undue discrimination against non-affiliates. Posting at 
the time gas flows achieves that purpose without the potential for 
providing non-affiliates with competitive advantages over affiliates.
    Moreover, non-affiliates will not be without protection in the 
period prior to the posting. Pipelines still will be under an 
obligation to make discounts offered to affiliates contemporaneously 
available to similarly situated non-affiliates. The non-affiliates also 
will know the level of discounts provided to affiliates during the 
prior month, and they can use this information, along with other market 
information, to negotiate discounts with the pipelines. If a pipeline 
fails to provide a non-affiliate with a discount, the posting 
requirement will enable the non-affiliate to examine almost immediately 
whether a denial of a discount amounts to discrimination.
    The grant of rehearing makes resolution of the pipelines' arguments 
concerning the APA's notice and comment provisions unnecessary. Posting 
will be required only after the discount transaction is consummated, 
which is the posting time the pipelines contend was the requirement 
under the previous regulations and the NOPR.

B. Specific Issues

1. Affiliate's Role in a Transportation Transaction
    In the final rule, the Commission required pipelines to post 
discount offers when affiliates are involved in a transaction, even if 
they are not the shipper. The Commission reasoned that if a pipeline 
knows of an affiliate's involvement in a deal, it may offer a discount 
to the actual shipper to benefit the affiliate. The offer of a discount 
in this situation would be no different than providing the discount 
directly to the affiliate.
    MGS/Natural and Tenneco contend this provision is anticompetitive 
because shippers will be loathe to deal with affiliates if the details 
of their deals are disclosed. They contend that maintenance of the 
discount information under Sec. 250.16 is all that should be required. 
TGPL requests clarification that posting is required only if the 
pipeline knows of the affiliate's involvement when granting the 
discount; it asserts subsequently acquired knowledge of involvement 
should not trigger a posting requirement or an obligation to make the 
discount available to other shippers. Panhandle Pipelines request 
clarification that knowledge of the discount refers only to knowledge 
by those granting the discount and does not apply to general corporate 
knowledge held by others in the company, but not communicated to those 
negotiating discounts.
    The Commission will retain the obligation to post discounts when an 
affiliate is involved in the transaction, but is not the shipper. Such 
disclosure should have no different effect than disclosure of the same 
deal when the affiliate is acting as the shipper, and MGS/Natural and 
Tenneco do not explain why the effect should be any different. The 
Commission, however, will clarify that in posting such offers, the 
pipelines need not disclose the name of the actual shipper. They must 
only report that a discount has been offered in an affiliate 
transaction.
    The Commission grants TGPL's request that discounts need to be 
posted only when the pipeline knows of the affiliate's involvement at 
the time the discount is made. Only if the pipeline has current 
knowledge of the affiliate's involvement could the role of the 
affiliate be a basis for offering the discount. With respect to 
Panhandle Pipelines' request, the Commission agrees in principle that 
discounts need to be disclosed only when the officials involved in 
granting the discount are aware of the affiliate involvement. 
Pipelines, however, are responsible for establishing organizational 
procedures in order to dispel questions about whether the responsible 
officials have learned of information about affiliate involvement that 
may be held by others in the organization.
2. Posting Period
    The final rule required affiliate discounts to be posted for a 90 
day period. Several pipelines contend that the 90 day period is longer 
than necessary to effectuate the purposes of the rule, because 
discounts are often available only for a short time and become stale. 
They further contend that posting for 90 days will clutter EBBs with 
unnecessary information. The range of alternatives they propose extends 
from 7 to 30 days.
    The Commission will modify the posting requirement to require that 
the discount information be posted for 30 days from the date of first 
posting. 30 days of posting is sufficient time for shippers to monitor 
affiliate discounts. Since many discounts last for only a month, a 30 
day posting requirement will help ensure that the posted information is 
current.
3. Posting of the Transportation Path
    The National Registry requests clarification that if discount 
offers are dependent on the use of more than one receipt point, all 
such points must be disclosed. Indicated Companies contend that 
Standard H should be amended to require disclosure of the full 
transportation path of the affiliate discount.
    The Commission will clarify that Standard H requires the posting of 
all conditions of an affiliate discount. Thus, if the discount is based 
on the use of a particular transportation path or one or more receipt 
points, that information must be posted.
    The Commission is not sure whether Indicated Companies is 
requesting that the pipeline post the full transportation path even 
when the path is not a condition of the discount. If that is the 
request, it is denied. Pipelines must post the delivery points for 
every affiliate transaction. Requiring the posting of receipt points 
could be voluminous and is unnecessary unless the use of certain 
receipt points is a condition of the discount, in which case the 
information would need to be posted.
4. Posting of Discounts on Firm Transportation
    Indicated Companies request clarification that the posting 
requirement applies to firm, as well as interruptible discounts. The 
regulation refers to transportation discounts, which includes both firm 
and interruptible discounts.

VI. Capacity Allocation Log

    In Order No. 566, the Commission eliminated a number of 
requirements for pipelines to post information about requests for 
transportation service. The Commission replaced these requirements with 
a more limited requirement that was better tailored to the methods used 
by pipelines to allocate capacity under Order No. 636 during periods 
when demand exceeds supply. Those pipelines relying on contract data or 
other data for allocating capacity must maintain a log showing for each 
shipper, the applicable contract dates or other data used to allocate 
capacity. The log for pipeline affiliates must be posted on the 
pipelines' EBBs, while the log for both affiliates and non-affiliates 
must be maintained by the pipelines and provided to the Commission upon 
request.
    MGS/Natural contend that the capacity allocation log should be 
removed because the industry has no need for or interest in the data. 
ANR/CIG maintain that if the primary basis for capacity allocation is 
rate paid, the capacity allocation log is not needed. They maintain 
undue discrimination cannot take place when contract data is only the 
secondary basis for allocation and that the burden of maintaining the 
log, therefore, is not warranted. Columbia/Columbia Gulf request a 
waiver of the allocation log requirement, contending that on their 
system, the only information other than the rate used to allocate 
capacity is the date nominations for interruptible transportation are 
received.
    The Commission finds that the capacity allocation log is necessary. 
When demand for interruptible service exceeds available supply, 
Commission policy and pipeline tariffs require that the interruptible 
capacity first be allocated on the basis of the rate bid. However, if 
the rate bid is not sufficient, some pipelines assign priority based on 
contract data, such as contract execution date, the date service is 
requested, or the date gas is first shipped under a contract. Even 
though contract data are the secondary basis for allocating capacity, 
such information can be very important during a constraint situation 
when many shippers are willing to bid the highest rate necessary to 
retain capacity. The capacity allocation log provides a reasonable 
means for non-affiliated shippers and the Commission to ensure that 
pipelines do not unfairly favor their affiliates during periods when 
capacity is at a premium. The allocation log provides this important 
information with only minimal burdens on the pipelines. It consists of 
only five data elements and will not have to be updated frequently, 
because the contract data used for allocating capacity generally remain 
the same.
    Implicit in Columbia/Columbia Gulf's waiver request is an 
assumption that the rule requires posting of the dates on which 
nominations are received. The rule generally was designed to reduce the 
burden on pipelines and, therefore, the Commission did not intend for 
pipelines to have to maintain and post data that varies every day, such 
as nomination dates and times. The capacity log is designed to capture 
information that remains stable over time, such as the date a contract 
is executed or the service request date, or other similar data relating 
to service under a contract.
    This rehearing order is not the appropriate forum for acting on 
Columbia/Columbia Gulf's waiver request. Columbia/Columbia Gulf should 
file a separate waiver request setting forth the burden imposed by the 
rule and suggesting means for reducing the compliance burden.

VII. Requirement To Maintain Affiliate and Non-Affiliate Discount 
Information

    In Order No. 566, the Commission amended Sec. 250.16 to require 
pipelines to maintain certain information about both affiliate and non-
affiliate discounts.26 The regulations required pipelines to 
provide this information to the Commission upon request and also 
provided that it would be made available through the Commission's 
discovery procedures.27 Indicated Companies contend that the 
information also should be made available to the public upon request. 
The Commission denies the request for rehearing.
---------------------------------------------------------------------------

    \2\6This information includes the name of the shipper being 
provided the discount, the affiliate relationship between the 
pipeline and the shipper, the affiliate's role in the transportation 
transaction (i.e., shipper, marketer, supplier, seller), the 
duration of the discount, the maximum rate or fee, the rate or fee 
actually charged during the billing period, and the quantity of gas 
scheduled at the discounted rate during the billing period for each 
delivery point.
    \2\718 CFR Part 385, Subpart D.
---------------------------------------------------------------------------

    Prior to Order No. 566, the Commission required pipelines to post 
affiliate discount information on their EBBs and to maintain the same 
information for non-affiliate transactions. The non-affiliate 
information was available only to the Commission and to others pursuant 
to the Commission's discovery provisions. The non-affiliate information 
was not made generally available to the public because it might be 
competitively sensitive and non-affiliate information was not needed to 
detect discrimination in favor of affiliates.28
---------------------------------------------------------------------------

    \2\8Order No. 497, FERC Stats. & Regs. [Regulations Preambles 
1986-1990] at 31,148.
---------------------------------------------------------------------------

    In Order No. 566, the Commission eliminated the previous 
requirement, under Sec. 250.16, to post affiliate discount information 
because the relevant discount information was posted under Standard H. 
The Commission concluded that the discount information posted under 
Standard H is sufficient for non-affiliated shippers to monitor 
affiliate discounts to determine whether discrimination has occurred 
and thus found that a duplicative posting requirement under Sec. 250.16 
was not needed.
    The Commission, however, maintained the requirement that disclosure 
of the affiliated and non-affiliated data would be limited to the 
Commission and to parties demonstrating a need for such information in 
discovery. Indicated Companies has not provided any justification for 
now requiring general public disclosure of the detailed non-affiliate 
information. Moreover, Indicated Companies already has access to less 
detailed information about both affiliate and non-affiliate discounts 
through the Part 284 requirement that pipelines file discount reports 
with the Commission showing the name of the shipper receiving a 
discount, the maximum rate or fee, the rate or fee charged, and any 
affiliation between the pipeline and the shipper.29
---------------------------------------------------------------------------

    \2\918 CFR 284.7(d)(5)(iv).
---------------------------------------------------------------------------

VIII. Tariff Waivers and Complaints

    In Order No. 566, the Commission eliminated the requirements that 
pipelines post tariff waivers and complaints related to affiliate 
transactions on the pipelines' EBBs. The Commission concluded that if 
shippers had questions about tariff waivers, they could obtain such 
information under Standard K, which requires pipelines to maintain and 
make available for copying a log of tariff waivers. The Commission 
found that complaints are matters between the complainant and the 
pipeline and that the complainant, if it is dissatisfied with the 
pipeline's response, can bring the matter to the Commission's attention 
either through the Commission's Enforcement Task Force hotline or the 
Commission's formal complaint procedure.
    Indicated Companies and Hadson contend that posting of tariff 
waivers should be continued. They argue that tariff waivers can provide 
competitive benefits to affiliates as significant as discounts and that 
viewing such waivers at the pipelines' offices is unduly burdensome. 
Hadson contends that requiring shippers to travel to pipeline offices 
to view waivers is an anachronism in an age when computer technology 
can provide such data instantaneously. Hadson contends that complaints 
should continue to be posted because they may help shippers detect 
patterns of abuse.
    The Commission will not reinstate the requirements to post tariff 
waivers and complaints on EBBs. Complaints are individual concerns 
between the pipeline and their customers and complaints that are 
resolved amicably would not generally provide indications of abuse. 
Complaints which are not resolved can be referred to the Commission, 
and the Commission will be able to discern any patterns of abuse.
    With respect to tariff waivers, the potential benefits from EBB 
postings may be outweighed by the programming and other computer and 
administrative costs of placing such waivers on pipeline EBBs. The 
Commission, however, agrees that shippers should have reasonable access 
to such waiver information without having to travel to pipeline offices 
to copy the waivers. The Commission, therefore, will amend Standard K 
to require pipelines to provide a copy of the log of tariff waivers to 
anyone requesting it within 24 hours of the request. The pipelines can 
then choose the most expedient method of complying, whether that may be 
posting the tariff waivers on their EBBs or providing them using 
facsimile machines.

IX. Coordination of the Affiliate Requirements With Part 284 
Requirements

    Pipelines have requested that the Commission coordinate its 
affiliate regulations with some of its Part 284 regulations to 
eliminate duplicative requirements and make these requirements 
consistent. ANR/CIG contends that the Commission should eliminate the 
requirement to include in the initial reports required by 
Sec. 284.106(a)(3) the points between which natural gas is to be 
transported and the state of the source of gas, because the Commission, 
in Order No. 566, removed similar maintenance requirements relating to 
source and destination of gas. Columbia/Columbia Gulf and Tenneco 
contend that the requirements for pipelines to file discount 
information under Sec. 284.7(d)(5)(iv) is unnecessary since pipelines 
must maintain even more extensive discount information under 
Sec. 250.16(d). Tenneco further argues that the semi-annual storage 
reports required by Secs. 284.106(g) and 284.126(g) require information 
also required by the affiliate regulations and only one requirement 
should be retained.
    The Commission will not make piecemeal changes in its Part 284 
requirements in this proceeding. For example, the Part 284 discount 
reporting requirements are not identical with the requirements of 
Sec. 250.16(d): the Part 284 reports are publicly available while the 
more extensive Sec. 250.16 information is not. Similarly, in the EBB 
proceedings in Docket No. RM93-4-000, the Commission has been 
considering industry proposals to replace the initial reports with an 
electronic Index of Purchasers.30 The Commission already is 
examining its regulations in light of the changes caused by Order No. 
636 and revisions to these requirements will be made at the appropriate 
time when all the regulations can be considered as a whole.
---------------------------------------------------------------------------

    \3\0Order No. 563-A, III FERC Stats. & Regs. Preambles, at 
31,047-49.
---------------------------------------------------------------------------

X. Applicability of the Regulations

    The Commission is revising the definition of marketing in 
Sec. 161.2(c) as a result of the Commission's recent order31 
eliminating all of its producer regulations at Part 270 due to the 
passage of the Natural Gas Wellhead Decontrol Act (Decontrol 
Act).32 Section 161.2(c) currently defines marketing, in relevant 
part, as ``a first sale of natural gas as that term is defined in 
Sec. 270.203 of this chapter, or a sale of natural gas in interstate 
commerce for resale* * *.'' Since Sec. 270.203 has been removed, the 
Commission is revising the definition so as to maintain the same 
coverage as the previous definition.
---------------------------------------------------------------------------

    \3\1Removal of Outdated Regulations Pertaining To The Sales of 
Natural Gas Production, 59 FR 40240 (Aug. 8, 1994), III FERC Stats. 
& Regs. Preambles 30,909 (July 28, 1994).
    \32\Pub. L. No. 101-60; 103 Stat. 157.
---------------------------------------------------------------------------

    Section 270.203(c) used the Commission's authority under the 
Natural Gas Policy Act (NGPA) to define any sale by an affiliate of an 
interstate pipeline as that affiliate's first sale of natural 
gas.33 Under the NGPA, first sales include sales to interstate and 
intrastate pipelines, sales to local distribution companies, sales to 
any person for use by that person, as well as any sale preceding the 
enumerated sales.34 If first sale status for marketing affiliates 
were removed (without the revision made here) a substantive change in 
coverage would occur, because the definition would not apply to certain 
direct sales by pipeline marketing affiliates that were previously 
covered by the definition of marketing. Accordingly, the definition of 
marketing will be revised to ensure that no substantive change occurs. 
The revised regulation will read as follows:

    \3\3Under the NGPA, sales by pipeline marketing affiliates 
generally would not be first sales. The Commission used its 
authority to define pipeline affiliates as making first sales to 
prevent possible circumvention by pipeline affiliates of the maximum 
lawful price provisions of the NGPA. 15 U.S.C. 3301(21)(A)(v).
    \3\415 U.S.C. 3301(21)(A)(i)-(iv). Thus, the prior definition of 
marketing in Sec. 161.2 applied both to sales for resale and direct 
sales made by pipeline marketing affiliates.
---------------------------------------------------------------------------

    Marketing or brokering as used in this part and Sec. 250.16 of 
this chapter means a sale of natural gas to any person or entity by 
a seller that is not an interstate pipeline, except when:
    (1) the seller is selling gas solely from its own production;
    (2) the seller is selling gas solely from its own gathering or 
processing facilities; or
    (3) the seller is an intrastate natural gas pipeline or a local 
distribution company making an on-system sale.

    This definition effects no change in substantive coverage under the 
regulations. The regulations continue to apply only to pipeline 
affiliates that are engaging in gas sales activities that would compete 
with independent marketers. The definition does not apply to producers, 
gatherers, and processors, acting in their traditional roles of selling 
gas from their own production, gathering, or processing facilities, or 
to intrastate pipelines and local distribution companies acting in 
their traditional roles of making on-system sales of gas.35 These 
entities will be included as marketers only to the extent that their 
activities go beyond their traditional roles and they make sales for 
which an independent marketer could compete. Because the revision has 
no substantive effect on the rights of any party, the Commission 
determines that good cause exists under the APA for finding that notice 
and public comment on these revisions is unnecessary and contrary to 
the public interest.36
---------------------------------------------------------------------------

    \3\5Order No. 497-A, 54 FR 52781 (Dec. 22, 1989), FERC Stats. & 
Regs. [Regulations Preambles 1986-1990] 30,868, at 31,592 (1989).
    \3\65 U.S.C. 553(b). See National Helium Corporation v. Federal 
Energy Administration, 569 F.2d 1137, 1145-46 (Emer. Ct. App. 1978).
---------------------------------------------------------------------------

    Columbia/Columbia Gulf, INGAA, and Enron point out that the 
applicability sections of Sec. 161.1 and Sec. 250.16 and Standards E 
and H refer to affiliates rather than marketing affiliates. They assert 
that the regulations have only applied to marketing affiliates in the 
past and request the Commission to revise these regulations to make 
this clear. The Commission will revise the regulations to make clear 
that they apply only to marketing affiliates.

XI. Effective Date

    The amendments to the Commission's regulations adopted in this 
order will become effective November 21, 1994.

List of Subjects

18 CFR Part 161

    Natural gas, Reporting and recordkeeping requirements.

18 CFR Part 250

    Natural gas, Reporting and recordkeeping requirements.

    By the Commission. Commissioner Hoecker concurred in part and 
dissented in part with a separate statement attached.

Lois D. Cashell,
Secretary.

    In consideration of the foregoing, the Commission amends Parts 161 
and 250, Chapter I, Title 18, Code of Federal Regulations, as set forth 
below.

PART 161--STANDARDS OF CONDUCT FOR INTERSTATE PIPELINES WITH 
MARKETING AFFILIATES

    1. The authority citation for Part 161 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.

    2. Section 161.1 is revised to read as follows:


Sec. 161.1  Applicability.

    This part applies to any interstate natural gas pipeline that 
transports gas for others pursuant to subpart A of part 157, and 
subparts B or G of part 284 and is affiliated in any way with a natural 
gas marketing or brokering entity and conducts transportation 
transactions with its marketing or brokering affiliate. The 
requirements of this part also apply to pipeline sales operating units 
to the extent provided in Sec. 284.286 of this chapter.
    3. In Sec. 161.2, paragraph (c) is revised to read as follows:


Sec. 161.2  Definitions.

* * * * *
    (c) Marketing or brokering as used in this part and Sec. 250.16 of 
this chapter means a sale of natural gas to any person or entity by a 
seller that is not an interstate pipeline, except when:
    (1) The seller is selling gas solely from its own production;
    (2) The seller is selling gas solely from its own gathering or 
processing facilities; or
    (3) The seller is an intrastate natural gas pipeline or a local 
distribution company making an on-system sale.
* * * * *
    4. In Sec. 161.3, paragraphs (e), (h), and (k) are revised to read 
as follows:


Sec. 161.3  Standards of conduct.

* * * * *
    (e) It may not disclose to its marketing affiliate any information 
the pipeline receives from a nonaffiliated shipper or potential 
nonaffiliated shipper.
* * * * *
    (h)(1) If a pipeline offers a transportation discount to an 
affiliated marketer, or offers a transportation discount for a 
transaction in which an affiliated marketer is involved, the pipeline 
must make a comparable discount contemporaneously available to all 
similarly situated non-affiliated shippers.
    (2) Within 24 hours of the time at which gas first flows under a 
transportation transaction in which an affiliated marketer receives a 
discounted rate or a transportation transaction at a discounted rate in 
which an affiliated marketer is involved, the pipeline must post a 
notice on its Electronic Bulletin Board, operated pursuant to 
Sec. 284.8(b)(4) of this chapter, providing the name of the affiliate 
involved in the discounted transportation transaction, the rate 
charged, the maximum rate, the time period for which the discount 
applies, the quantity of gas scheduled to be moved, the delivery points 
under the transaction, any conditions or requirements applicable to the 
discount, and the procedures by which a non-affiliated shipper can 
request a comparable offer. The posting must remain on the EBB for 30 
days from the date of posting. The posting must conform with the 
requirements of Sec. 284.8(b)(4) of this chapter and the pipeline's 
tariff requirements relating to Electronic Bulletin Boards. Access to 
the information must be provided using the same protocols and 
procedures used for the pipeline's Electronic Bulletin Board.
* * * * *
    (k) A pipeline must maintain a written log of waivers that the 
pipeline grants with respect to tariff provisions that provide for such 
discretionary waivers and provide the log to any person requesting it 
within 24 hours of the request.

PART 250--FORMS

    1. The authority citation for Part 250 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.

    2. In Sec. 250.16, paragraph (a) is revised to read as follows:


Sec. 250.16  Format of compliance plan for transportation services and 
affiliate transactions.

    (a) Who must comply. An interstate natural gas pipeline that 
transports natural gas for others pursuant to Subparts B or G of Part 
284 of this chapter and is affiliated, as that term is defined in 
Sec. 161.2 of this chapter, in any way with a natural gas marketing or 
brokering entity and conducts transportation transactions with its 
marketing or brokering affiliate must comply with the requirements of 
this section. The requirements of this section also apply to pipeline 
sales operating units to the extent provided in Sec. 284.286 of this 
chapter.
* * * * *
    Note.--The following appendix will not appear in the Code of 
Federal Regulations.

                                 Appendix A.--Parties Filing Rehearing Requests                                 
                                             [Docket No. RM94-6-001]                                            
----------------------------------------------------------------------------------------------------------------
                             Commenter                                               Abbreviation               
----------------------------------------------------------------------------------------------------------------
ANR Pipeline Company and Colorado Interstate Gas Company...........  ANR/CIG.                                   
Columbia Gas Transmission Corporation and Columbia Gulf              Columbia/Columbia Gulf.                    
 Transmission Company.                                                                                          
Northern Natural Gas Company, Transwestern Pipeline Company,         Enron.                                     
 Florida Gas Transmission Company, Black Marlin Pipeline Company,                                               
 and Enron Gas Services, Inc.                                                                                   
Hadson Gas Systems, Inc............................................  Hadson.                                    
Indicated Companies37..............................................  Indicated Companies.                       
Interstate Natural Gas Association of America......................  INGAA.                                     
K N Energy, Inc....................................................  K N Energy.                                
MidCon Gas Services, Corporation and Natural Gas Pipeline Company    MGS/Natural.                               
 of America.                                                                                                    
National Registry of Capacity Rights...............................  National Registry.                         
NorAm Gas Transmission Company and Mississippi River Transmission    NGT/MRT.                                   
 Corporation.                                                                                                   
Algonquin Gas Transmission Company, Panhandle Eastern Pipe Line      Panhandle Pipelines.                       
 Company, Texas Eastern Transmission Corporation, and Trunkline Gas                                             
 Company.                                                                                                       
Tenneco Gas........................................................  Tenneco.                                   
Transcontinental Gas Pipe Line Corporation.........................  TGPL.                                      
----------------------------------------------------------------------------------------------------------------
\37\Conoco, Inc., Amoco Production Company, Anadarko Petroleum Corporation, GPM Gas Corporation, Marathon Oil   
  Company, Meridian Oil, Inc., Mobil Natural Gas, Inc., Natural Gas Clearinghouse, Pennzoil Exploration and     
  Production Company, Pennzoil Petroleum Company, Pennzoil Gas Marketing Company, Phillips Petroleum Company,   
  Shell Gas Trading Company, Union Pacific Fuels, Inc., Vastar Resources, Inc., and Vastar Gas Marketing, Inc.  

Standards of Conduct and Reporting Requirements for Transportation 
and Affiliate Transactions

[Docket No. RM94-6-001]

    Issued October 14, 1994.

Hoecker, Commissioner, concurring in part and dissenting in part:
    I concur with the additional modifications and clarifications to 
the Commission's rules that are made in this order. However, for the 
reasons stated in my prior dissent in this proceeding, I believe 
retention of the reporting and records maintenance requirements for 
affiliated natural gas marketers is excessive and unnecessary, 
especially given the detailed standards of conduct to which they are 
subject.\1\
---------------------------------------------------------------------------

    \1\III FERC Stats. and Regs. 30,997 (1994) at pp. 31,082-83.
---------------------------------------------------------------------------

    In particular, I previously expressed the concern I now see 
reflected in a number of the rehearing requests that elimination of 
a date to ``sunset'' these requirements ensures that they will 
continue in effect by sheer regulatory inertia. The original sunset 
date was a codification of a prior Commission's skepticism about the 
need for extensive regulation in this area. Elimination of that 
provision evinces a degree of comfort about the need to police 
affiliated gas marketers that I do not share.\2\
---------------------------------------------------------------------------

    \2\The range of regulatory burdens retained in this docket 
appears doubly peculiar when compared to the less onerous reporting 
requirements the Commission has employed for the power marketing 
affiliates despite the absence of the kind of organizational 
separation or mandatory information-sharing requirements that we 
impose on gas pipeline marketing affiliates. See, e.g., Enron Power 
Marketing, Inc., 65 FERC 61,305 (1993), order on clarification and 
reh'g, 66 FERC 61,244 (1994), Heartland Energy Services, Inc., et 
al., 68 FERC 61,223 (1994) and Intercoast Power Marketing Company, 
68 FERC 61,248 (1994). In addition, whereas power marketers are 
still in an early stage in their development where the potential for 
affiliate abuse is not generally understood, there have been few 
demonstrable problems with affiliated gas marketers over a 
significant period of time.
---------------------------------------------------------------------------

    I, therefore, continue to dissent in part.

James J. Hoecker,
Commissioner.
[FR Doc. 94-25994 Filed 10-19-94; 8:45 am]
BILLING CODE 6717-01-P