[Federal Register Volume 63, Number 96 (Tuesday, May 19, 1998)]
[Proposed Rules]
[Pages 27526-27529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13293]



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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 161

[Docket No. RM98-7-000]


Reporting Interstate Natural Gas Pipeline Marketing Affiliates on 
the Internet

May 13, 1998.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
proposing to amend its Standards of Conduct regulations to require that 
interstate natural gas pipelines identify the names and addresses of 
their marketing affiliates on their web sites on the Internet and 
update the information within three business days of any change. 
Pipelines would also be required to state the dates the information was 
last updated.

DATES: Written comments must be received by the Commission by June 19, 
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: Stuart Fischer, Office of General 
Counsel, Federal Energy Regulatory Commission 888 First Street, NE., 
Washington, DC 20426. Telephone: (202) 208-1033.

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 the Public Reference Room 
at 888 First Street, NE., Room 2A, Washington, DC 20426.
    The Commission Issuance Posting System (CIPS) provides access to 
the texts of formal documents issued by the 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 on diskette in WordPerfect format may be 
purchased from the Commission's copy contractor, La Dorn System 
Corporation. La Dorn Systems Corporation is located in the Public 
Reference Room at 888 First Street, NE., Washington, DC 20426.

Notice of Proposed Rulemaking

May 13, 1998.
    The Federal Energy Regulatory Commission (Commission) is proposing 
to amend its regulations in Part 161.3 to require that interstate 
natural gas pipelines identify the names and addresses of their 
marketing affiliates on their web sites on the Internet. By doing so, 
the Commission will make it easier for the public to identify each 
interstate gas pipeline's current marketing affiliates. The Commission 
believes that the new regulation is necessary to further assist its 
oversight efforts as well as to permit shippers to effectively monitor 
transportation transactions between pipelines and their affiliated 
marketers.

I. Background

    The Commission, in Order Nos. 497 et seq. \1\ and Order Nos. 566 et 
seq. \2\ established rules intended to prevent interstate natural gas 
pipelines from providing preferential treatment to their marketing or 
brokering affiliates. Specifically, the Commission adopted Standards of 
Conduct (codified at Part 161 of the Commission's regulations) \3\ and 
reporting requirements (codified in sections 161.3(h)(2) and 
250.16).\4\
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    \1\ Order No. 497, 53 FR 22139 (June 14, 1988), FERC Stats. & 
Regs. 1986-1990 para. 30,820 (1988); Order No. 497-A, order on 
rehearing, 54 FR 52781 (December 22, 1989), FERC Stats. & Regs. 
1986-1990 para. 30,868 (1989); Order No. 497-B, order extending 
sunset date, 55 FR 53291 (December 28, 1990), FERC Stats. & Regs. 
1986-1990 para. 30,908 (1990); Order No. 497-C, order extending 
sunset date, 57 FR 9 (January 2, 1992), FERC Stats. & Regs. 1991-
1996 para. 30,934 (1991), rehearing denied, 57 FR 5815 (February 18, 
1992), 58 FERC para. 61,139 (1992); Tenneco Gas v. FERC (affirmed in 
part and remanded in part), 969 F.2d 1187 (D.C. Cir. 1992); Order 
No. 497-D, order on remand and extending sunset date, FERC Stats. & 
Regs. 1991-1996 para. 30,958 (December 4, 1992), 57 FR 58978 
(December 14, 1992); Order No. 497-E, order on rehearing and 
extending sunset date, 59 FR 243 (January 4, 1994), 65 FERC para. 
61,381 (December 23, 1993); Order No. 497-F, order denying rehearing 
and granting clarification, 59 FR 15336 (April 1, 1994), 66 FERC 
para. 61,347 (March 24, 1994); and Order No. 497-G, order extending 
sunset date, 59 FR 32884 (June 27, 1994), FERC Stats. & Regs. 1991-
1996 para. 30,996 (June 17, 1994).
    \2\ Standards of Conduct and Reporting Requirements for 
Transportation and Affiliate Transactions, Order No. 566, 59 FR 
32885 (June 27, 1994), FERC Stats. & Regs. 1991-1996 para. 30,997 
(June 17, 1994); Order No. 566-A, order on rehearing, 59 FR 52896 
(October 20, 1994), 69 FERC para. 61,044 (October 14, 1994); Order 
No. 566-B, order on rehearing, 59 FR 65707 (December 21, 1994), 69 
FERC para. 61,334 (December 14, 1994).
    \3\ 18 CFR 161.3 (1997).
    \4\ 18 CFR 161.3(h)(2) and 250.16 (1997).
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    The Standards of Conduct govern the relationships between pipelines 
and their marketing affiliates. In general, they provide that pipelines 
and their marketing affiliates must function independently of each 
other. Pipelines cannot favor their marketing affiliates in providing 
transportation services or in providing transportation information or 
transportation discounts not available to non-affiliates.
    Currently, there is no requirement in the Commission's regulations 
for pipelines to report the names of their marketing affiliates or 
changes in the status of marketing affiliates through, for example, 
acquisitions of new affiliates, or divestitures, consolidations, or 
name changes of prior affiliates. While pipelines are required to list 
all of their affiliated entities, including marketing entities, in 
their annual Form No. 2 filings, annual data cannot keep abreast of 
changes, and the Form No. 2 does not require pipelines to identify 
which entities are ``marketing'' or ``brokering''

[[Page 27527]]

affiliates as defined under section 161.2(c) of the Commission's 
regulations.\5\
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    \5\ 18 CFR 161.2(c) (1997).
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    Despite the absence of a specific regulatory requirement to 
identify marketing affiliates, several pipelines have identified the 
names of their marketing affiliates in their tariffs and/or standards 
of conduct and filed updates whenever there were changes in identity. 
However, two pipelines recently decided to stop listing the names of 
their marketing affiliates in their standards of conduct because of the 
administrative burden of filing the information.\6\ As discussed below, 
by requiring the affiliate information to be posted on the Internet, 
pipelines will be able to provide up-to-date information with minimal 
administrative burden.
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    \6\ In El Paso Natural Gas Pipeline Company, 79 FERC para. 
61,086 (1997) (El Paso), the pipeline stated that it had revised its 
standards of conduct three times in the previous year to reflect 
changes to corporate structure or names of marketing affiliates and 
believed that such filings were unnecessary. The Commission ruled 
that El Paso did not have to revise its standards of conduct each 
time the identity of a marketing affiliate changed. More recently, 
in Texas Gas Transmission Corp., 83 FERC para. 61,048 (1998) (Texas 
Gas), the Commission accepted a pipeline's request to delete the 
names of its marketing affiliates from its standards of conduct. In 
El Paso, the pipeline stated that the names of its marketing 
affiliates were publicly available through the capacity allocation 
log on its electronic bulletin board. In Texas Gas, the pipeline 
stated that it would post on its electronic bulletin board a list of 
its marketing affiliates.
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II. Proposed Changes to Regulations

    The Commission proposes to add section 161.3(l), which would 
require pipelines to post on their web sites on the Internet, the names 
and addresses of their marketing affiliates and to update this 
information within three business days of any change. A pipeline would 
also be required to state the date the information was last updated. In 
Order No. 587 et seq., the Commission began phasing out the use of 
electronic bulletin boards in favor of posting information on pipeline 
web sites on the Internet.\7\ The standards for Internet posting are 
set out in section 284.10 of the Commission's regulations, as amended 
in Order No. 587-G.\8\
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    \7\ Standards For Business Practices Of Interstate Natural Gas 
Pipelines, Order No. 587, 61 FR 39053 (Jul. 26, 1996), III FERC 
Stats. & Regs. Regulations Preambles para. 31,038 (Jul. 17, 1996); 
Order No. 587-B, 62 FR 5521 (Feb. 6, 1997), III FERC Stats. & Regs. 
Regulations Preambles para. 31,046 (Jan. 30, 1997); Order No. 587-C, 
62 FR 10684 (Mar. 10, 1997), III FERC Stats. & Regs. Regulations 
Preambles para. 31,050 (Mar. 4, 1997). In Order No. 587-G, the 
Commission issued regulations requiring that pipelines conduct all 
transportation transactions over the Internet, rather than over 
electronic bulletin boards, by June 1, 1999. 63 FR 20072 (April 23, 
1998).
    \8\ Id. (to be codified at 18 CFR 284.10).
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III. Discussion

    The Commission believes that the new regulation is necessary to 
further assist its oversight efforts as well as to enable the public to 
monitor pipeline-affiliate transactions. It is important for the public 
and the Commission to have an updated picture of the pipelines' 
marketing affiliates to determine if pipelines are complying with the 
regulatory requirements. Marketing affiliations change rapidly in 
today's business climate. In El Paso and Texas Gas, the pipelines 
stated that they had made three changes to the lists of their marketing 
affiliates in the previous year. Moreover, the recent trend of mergers 
of large pipelines makes it imperative to determine which marketing 
entities are affiliated with which pipelines.9 The proposed 
requirements would ensure that the Commission and the public can 
identify pipelines' marketing affiliates.
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    \9\ Recent examples include Natural Gas Pipeline Company of 
America's merger with KN Energy, and El Paso Natural Gas Company's 
merger with Tennessee Gas Pipeline Company and its affiliated 
pipelines.
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    To minimize the burden on pipelines and the Commission's 
administrative resources, we propose that each pipeline post the names 
and addresses of its marketing affiliates on the pipeline's web site on 
the Internet. In this way, the burden on pipelines would be slight, as 
pipelines already are required to have web sites under Order No. 587-C 
and would only have to add the affiliate information.

IV. Regulatory Flexibility Act Certification

    The Regulatory Flexibility Act of 1980 (RFA) 10 
generally requires a description and analysis of rules that will have 
significant economic impact on a substantial number of small entities. 
Pursuant to section 605(b) of the RFA, the Commission hereby certifies 
that the regulations proposed herein will not have a significant 
adverse impact on a substantial number of small entities. The proposed 
rules will benefit small entities by making it easier for small 
customers to monitor pipelines' transactions with their marketing 
affiliates.
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    \10\ 5 U.S.C. 601-612 (1996).
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V. Environmental Analysis

    The Commission is required to prepare an Environmental Assessment 
or an Environmental Impact Statement for any action that may have a 
significant adverse effect on the human environment.11 The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.12 This proposed rule falls within the 
categorical exclusion which specifies that information gathering, 
analysis, and dissemination are not major federal actions that have a 
significant effect on the human environment.13 The proposed 
rule also falls under the categorical exclusion for rules concerning 
the sale, exchange, and transportation of natural gas that requires no 
construction of facilities.14 Thus, neither an environmental 
impact statement nor an environmental assessment is required.
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    \11\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Statutes 
and Regulations, Regulations Preambles 1986-1990 para. 30,783 
(1987).
    \12\ 18 CFR 380.4 (1997).
    \13\ 18 CFR 380.4(a)(5) (1997).
    \14\ 18 CFR 380.4(a)(27) (1997).
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VI. Information Collection Statement

    The following collection of information contained in this proposed 
rule has been submitted to the Office of Management and Budget for 
review under Section 3507(d) of the Paperwork Reduction Act of 1995, 44 
U.S.C. 3507(d). Comments are solicited on the Commission's need for 
this information, whether the information will have practical utility, 
the accuracy of the provided burden estimates, ways to enhance the 
quality, utility, and clarity of the information to be collected, and 
any suggested methods for minimizing respondents' burden, including the 
use of automated information techniques.
    Estimated Annual Burden:

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                                                   No. of           No. of         Hours per       Total annual 
               Data collection                  respondents       responses         response          hours     
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FERC-592....................................              74                1                5              370 
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    Total Annual Hours for Collection (Reporting + Recordkeeping, (if 
appropriate))=370.
    Information Collection costs: The Commission seeks comments on the 
costs to comply with these requirements. It has projected the average 
annualized cost per respondent to be the following:

------------------------------------------------------------------------
                                                                        
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Annualized Capital/Startup Costs...........................  ...........
Annualized Costs (Operations & Maintenance)................      $19,492
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      Total Annualized Costs...............................      $19,492
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    All pipelines are currently required to maintain web sites and so 
the Commission estimates that the burden to post the information will 
be minimal once it has been assembled.
    The Office of Management and Budget's (OMB's) regulations require 
OMB to approve certain information collection requirements imposed by 
agency rule. The Commission is submitting notification of this proposed 
rule to OMB.
    Title: FERC-592, Marketing Affiliates of Interstate Pipelines.
    Action: Proposed collections.
    OMB Control No: 1902-0157.
    Respondents: Business or other for profit, including small 
business.
    Frequency of Responses: On occasion.
    Necessity of the information: The proposed rule revises the 
requirements contained in 18 CFR 161.3. Pipelines will be required to 
post their affiliates' names and addresses on the Internet, update this 
information within three business days of whenever a change takes 
place, and state the date the information was last updated. These 
proposed revisions will not change the format of what is currently 
reported to the Commission. However, the revisions of Sec. 161.3 will 
require additional information that must be posted on the Internet.
    The posting of affiliate information on the Internet meets the 
Commission's need for access to up-to-date information to monitor self-
implementing activities of the pipelines to ensure that transportation 
services are being carried out in non-discriminatory manner and can 
also respond to the increased pace of changes in the energy marketplace 
without unduly burdening market participants. The information is 
maintained by natural gas pipeline companies involved in transactions 
with marketing affiliates and their functional equivalents. The 
Commission through its monitoring activities, collects and analyzes 
data for use in making decisions. The monitoring activities focus on 
areas affecting competition such as: preferential treatment to 
affiliates; cross-subsidization and cost shifting between customers and 
affiliates; fair access to information; unfair activities and 
noncompliance with the Commission's regulations.
    Additionally, the information is also used by nonaffiliated 
shippers or others (such as state commissions) to determine whether 
they have been harmed by affiliate preference and, in some cases, to 
prepare evidence for formal proceedings following the filing of a 
complaint.
    These data are required to carry out the Commission's policies in 
accordance with the general authority in Sections 311, 501, and 504 of 
the Natural Gas Policy Act of 1978 (NGPA) (15 U.S.C. 3301-3432) and 
Sections 4, 5, 7, 8, 10, 14, 16 and 20 of the Natural Gas Act (NGA) (15 
U.S.C. 717-717w). The information required is mandatory.
    Internal Review: The Commission has reviewed the requirements 
pertaining to the standards of conduct for interstate natural gas 
pipeline companies and their marketing affiliates or brokering 
companies and determined that the proposed revisions are necessary to 
ensure nondiscriminatory access to the national pipeline grid through 
the investigation of complaints and allegations of abuses. Requiring 
such information assists the Commission to protect customers from 
excessive transportation rates and service discrimination. As pipelines 
are permitted to implement more nontraditional forms of pricing and 
service, the Commission will monitor the industry to ensure the 
pipelines are not being preferential or unduly discriminatory, charging 
unjust and unreasonable rates, or providing services that are 
inadequate or undesirable.
    These requirements conform to the Commission's plan for efficient 
information collection, communication, and management through the 
advancement of information technology within the natural gas industry. 
The Commission has assured itself, by means of its internal review, 
that there is specific, objective support for the burden estimate 
associated with the information requirement.
    Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 88 First Street, NE, Washington, DC 20426 [Attention: 
Michael Miller, Division of Information Services, Phone: (202) 208-
1415, fax: (202) 273-0873, email:[email protected]]
    For submitting comments concerning the collection of information(s) 
and the associated burden estimate(s), please send your comments to the 
contact listed above and to the Office of Management and Budget, Office 
of Information and Regulatory Affairs, Washington, DC 20503 [Attention: 
Desk Officer for the Federal Energy Regulatory Commission, phone: (202) 
395-3087, fax: (202) 395-7285]

VII. Comment Procedures

    The Commission invites interested persons to submit written 
comments or other information concerning this proposed rulemaking. All 
comments in response to this notice must be filed with the Office of 
the Secretary, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426, and should refer to Docket No. RM98-7-000. 
An original and fourteen (14) copies of such comments should be filed 
with the Commission on or before June 18, 1998. All 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 First 
Street, NE, Washington, DC, 20426, during business hours. Additionally, 
comments can be viewed and printed remotely via the 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].

List of Subjects in 18 CFR Part 161

    Natural gas, Reporting and recordkeeping requirements.

    By direction of the Commission. Commissioner Massey concurred 
with a separate statement attached.
Linwood A. Watson, Jr.,
Acting Secretary.
    In consideration of the foregoing, the Commission proposes to amend 
Part 161, Chapter I, Title 18 of the 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. In Section 161.3, paragraph (l) is added to read as follows:


Sec. 161.3  Standards of conduct.

* * * * *

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    (1) A pipeline must post the names and addresses of its marketing 
affiliates on its web site on the public Internet and update the 
information within three business days of any change. A pipeline must 
also state the date the information was last updated. Postings must 
conform with the requirements of Sec. 284.10 of this chapter.
(Issued May 13, 1998)
    MASSEY, Commissioner, concurring:
    The general proposal in today's Notice of Proposed Rulemaking has 
my full support. A requirement that pipelines report on their Internet 
websites the names of their marketing affiliates or changes in the 
status of their marketing affiliates is necessary to provide the 
Commission and the industry with information that may otherwise be 
unavailable in today's rapidly changing market environment.
    The proposal raises one question, however, which I believe should 
be pursued further. Is the proposed requirement that pipelines update 
information about their affiliates within three business days of a 
change in status sufficient to meet the needs of the Commission and the 
industry at large?
    I would prefer a requirement for reporting within 24 hours, and 
want to make three points related to this issue. First, the NOPR offers 
no justification for the three day time period. Second, it is widely 
known that with today's technology, updating information of this nature 
on a pipeline website is not burdensome. Therefore, the ability to add 
vital information in a shorter time frame would not be problematic. 
Finally, the Commission has required companies in the other industries 
we regulate to make similar updates in a 24-hour time period. For 
example, the Commission's regulations require electric transmission 
providers to report to the Commission and on the OASIS each emergency 
that results in any deviation from the Commission's standards of 
conduct within 24 hours of the deviation.\1\ Pipelines are required to 
post discounts given to their affiliates within 24 hours of the time at 
which gas first flows.\2\ Hydroelectric power licensees have agreed to 
reporting deviations from state water quality standards within 24 
hours.\3\ As the industry contemplates the Commission's proposal, I 
would welcome comment on this issue.
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    \1\ 18 CFR 37.4(a)(2) (1997).
    \2\ 18 CFR 161.3(h)(2) (1997).
    \3\ Wisconsin Electric Power Company, 80 FERC para. 62,215 
(1997).
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William L. Massey,
Commissioner.
[FR Doc. 98-13293 Filed 5-18-98; 8:45 am]
BILLING CODE 6717-01-P