[Federal Register Volume 67, Number 75 (Thursday, April 18, 2002)]
[Proposed Rules]
[Pages 19136-19138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9251]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM01-6-000]


Assignment of Firm Capacity on Upstream Interstate Pipelines; 
Notice of Proposed Rulemaking

April 10, 2002.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission is proposing to 
remove from its regulations the Order No. 636 requirement that 
pipelines assign their upstream capacity to their firm shippers. This 
requirement was a necessary part of the unbundling of interstate 
pipelines' gas sales from their gas transportation service required in 
Order No. 636. On December 14, 2000, the Commission announced a new 
policy allowing unbundled open access pipelines to acquire and hold 
capacity on other pipelines without prior Commission approval. Since 
the unbundling of interstate gas sales from transportation has largely 
been accomplished, and since the Commission has developed a new policy 
allowing pipelines to acquire capacity on other pipelines, Subpart H is 
no longer relevant.

DATES: Written comments are due on or before June 3, 2002.

ADDRESSES: Send comments to: Office of the Secretary, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT: Cecilia Desmond, Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 208-2280.

[[Page 19137]]


SUPPLEMENTARY INFORMATION:   

I. Introduction

    The Federal Energy Regulatory Commission (Commission) is proposing 
to remove from its regulations the requirement in subpart H of part 284 
of the Commission's regulations (18 CFR 284.241 and 284.242) that 
pipelines assign their upstream capacity to their firm shippers. The 
Commission promulgated subpart H in Order No. 636 \1\ as a necessary 
part of the unbundling of interstate pipelines' gas sales from their 
gas transportation service required in Order No. 636. Since the 
unbundling of interstate gas sales from transportation has largely been 
accomplished, and since the Commission has developed a new policy 
allowing unbundled open access pipelines to acquire capacity on other 
pipelines, subpart H is no longer relevant. The Commission therefore 
proposes to remove subpart H from its regulations.
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    \1\ Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation Under Part 284 of the 
Commission's Regulations, Order No. 636, 57 FR 13267 (Apr. 16, 
1992), FERC Stats & Regs., Regulations Preambles January 1991-June 
1996 para. 30,939 (Apr. 8, 1992).
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II. Discussion

    In Order No. 636, the Commission required interstate gas pipelines 
to unbundle the sale of gas from the sale of transportation and to 
assign their upstream capacity to their firm shippers.\2\ The 
Commission found that pipelines' access to upstream capacity needed to 
provide bundled gas sales gave them an undue competitive advantage over 
other gas merchants since the upstream capacity gave pipelines access 
to more gas suppliers. The Commission also found that a pipeline's 
holding upstream capacity inhibited the goal of a competitive national 
market because the downstream gas purchasers would not be able to 
access the production areas and gas merchants reached by the downstream 
pipeline through its upstream capacity.
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    \2\ The Commission allowed pipelines to retain upstream capacity 
for operational management and balancing purposes and no-notice 
transportation service.
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    The Commission adhered to that policy for several years during the 
individual pipelines' Order No. 636 restructuring proceedings. Then, in 
Texas Eastern Transmission Corporation (Texas Eastern), the Commission 
determined that Order No. 636 did not create a per se rule precluding 
restructured pipelines from entering into contracts for transportation 
or storage capacity on other pipelines (offsystem capacity).\3\ The 
Commission reasoned that pipelines had completed the unbundling of gas 
sales and transportation service required by Order No. 636 and that the 
market had become sufficiently competitive to allow pipelines to hold 
capacity on other pipelines. Therefore, the Commission said it would 
decide whether to allow pipelines to acquire offsystem capacity on a 
case-by-case basis.
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    \3\ 74 FERC para. 61,074 (1996); 78 FERC para. 61,277 (1997); 
order on remand, 93 FERC para. 61,273 (2000); reh'g denied, 94 FERC 
para. 61,139; reh'g denied, 95 FERC para. 61,056 (2001).
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    Two pipelines appealed the Texas Eastern requirement for case-
specific approval, claiming that it discriminated against pipelines 
because non-pipeline shippers could acquire capacity without prior 
approval.\4\ They also argued that the Commission's blanket certificate 
and capacity release regulations, which require pipelines to make 
transportation services available on a nondiscriminatory basis under 
Commission-approved open access tariffs, were sufficient to control 
unduly discriminatory or anticompetitive actions that might arise when 
a pipeline acquires offsystem capacity. The court agreed and remanded 
the case.
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    \4\ See Colorado Interstate Gas Co. v. FERC, 146 F.3d 889 (D.C. 
Cir. 1998).
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    On December 14, 2000, the Commission issued its Order on Remand in 
the Texas Eastern proceeding.\5\ In that order, the Commission 
announced a new policy that unbundled open access pipelines will no 
longer be required to seek Commission approval before acquiring 
offsystem capacity, that existing safeguards provide the necessary 
protection against discriminatory and anticompetitive actions with 
respect to acquired offsystem capacity, and that pipelines will be at-
risk for the costs of any such capacity. Before transporting gas for 
others on any acquired offsystem capacity, the Commission required a 
pipeline to seek a blanket waiver of the shipper-must-hold-title policy 
by amending its tariff to include a general statement that it will only 
transport for others on offsystem capacity pursuant to its existing 
open access tariff and rates.\6\
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    \5\ Texas Eastern Transmission Corp., 93 FERC para. 61,273 
(2000); reh'g denied, 94 FERC para. 61,139; reh'g denied, 95 FERC 
para. 61056 (2001).
    \6\ See Texas Eastern, 95 FERC para. 61056 (2001).
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    As the Commission has noted numerous times, the natural gas 
marketplace has fundamentally changed since the issuance of Order No. 
636. In the Texas Eastern series of orders, the Commission developed 
and modified its policy with respect to pipelines' acquiring capacity 
on other pipelines in light of these changes. Since the requirement to 
assign upstream capacity contained in Sec. 284.242 was specific to the 
implementation of Order No. 636, the restructuring of the natural gas 
industry under Order No. 636 has been accomplished, and the Commission 
now allows pipelines to acquire capacity on other pipelines as can any 
other shipper without seeking Commission, subpart H is no longer 
necessary. However, we reiterate that the removal of the regulation 
will not modify our Texas Eastern policy under which the 
appropriateness of a pipeline's acquisitions of capacity on other 
pipelines is subject to review in a subsequent general section 4 rate 
proceeding or the Commission's requirement that the shipper must hold 
title to any gas being shipped through the acquired capacity.

III. Environmental Analysis

    Commission regulations describe the circumstances where preparation 
of an environmental assessment or an environmental impact statement 
will be required.\7\ The Commission has categorically excluded certain 
actions from this requirement as not having a significant effect on the 
human environment.\8\ No environmental consideration is necessary since 
the proposed action is clarifying, corrective, or procedural and 
affects transportation of natural gas that requires no construction of 
facilities.\9\
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    \7\ Regulations Implementing National Environmental Policy Act, 
52 FR 47897 (Dec. 17, 1987), codified at 18 CFR Part 380.
    \8\ 18 CFR 380.4.
    \9\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(27).
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IV. Regulatory Flexibility Impact Statement

    The Regulatory Flexibility Act of 1980 (RFA)\10\ generally requires 
a description and analysis of proposed rules that will, if promulgated, 
have a significant economic impact on a substantial number of small 
entities. The Commission is not required to make such analysis if a 
rule would not have such an effect.\11\
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    \10\ 5 U.S.C. 601-612.
    \11\ 5 U.S.C. 605(b).
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    The Commission does not believe that the proposed rule removal 
would have such an impact on small entities. The proposed removal of 
regulations would have an impact only on interstate pipelines, which 
generally do not fall within the RFA's definition of small entity.\12\ 
Accordingly, pursuant to

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section 605(b) of the RFA, the Commission proposes to certify that the 
removal of regulations proposed here will not have a significant 
economic impact on a substantial number of small entities.
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    \12\ 5 U.S.C. 601(3), citing to section 3 of the Small Business 
Act, 15 U.S.C. 632. Section 3 of the Small Business Act defines a 
``small business concern'' as a business which is independently 
owned and operated and which is not dominant in its field of 
operations.
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V. Information Collection Statement

    The Office of Management and Budget's (OMB) regulations require 
that OMB approve certain information collection requirements imposed by 
agency rules.\13\ However, this proposed rule contains no information 
reporting requirements, and therefore is not subject to OMB approval.
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    \13\ 5 CFR Part 1320.
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VI. Comment Procedures

    The Commission invites interested persons to submit comments, data, 
views and other information concerning matters set out in this notice.
    To facilitate the Commission's review of the comments, commenters 
are requested to provide an executive summary of their position on the 
issues raised in the notice. Commenters are requested to identify each 
specific issue that their discussion addresses and to use appropriate 
headings. Additional issues the commenters wish to raise should be 
identified separately. The commenters should double space their 
comments.
    Comments may be filed on paper or electronically via the Internet 
and must be received by the Commission within 45 days after publication 
in the Federal Register. Those filing electronically do not need to 
make a paper filing. For paper filings, the original and 14 copies of 
such comments should be submitted to the Office of the Secretary, 
Federal Energy Regulatory Commission, 888 First Street, NE, Washington 
DC 20426 and should refer to Docket No. RM01-6-000.
    Comments filed via the Internet must be prepared in WordPerfect, MS 
Word, Portable Document Format, or ASCII format. To file the document, 
access the Commission's website at www.ferc.gov and click on ``e-
Filing,'' and then follow the instructions for each screen. First time 
users will have to establish a user name and password. The Commission 
will send an automatic acknowledgment to the sender's E-Mail address 
upon receipt of comments.
    User assistance for electronic filing is available at 202-208-0258 
or by E-Mail to [email protected]. Comments should not be submitted to 
the E-Mail address. 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 D.C. 20426, 
during regular business hours. Additionally, all comments may be 
viewed, printed, or downloaded remotely via the Internet through FERC's 
Homepage using the RIMS link.
    User assistance for RIMS is available at 202-208-2222, or by E-mail 
to [email protected].

VII. Document Availability

    In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE, Room 2A, Washington, DC 20426.
    From FERC's Home Page on the Internet, this information is 
available in both the Commission Issuance Posting System (CIPS) and the 
Records and Information Management System (RIMS).

--CIPS provides access to the texts of formal documents issued by the 
Commission since November 14, 1994.
--CIPS can be accessed using the CIPS link or the Energy Information 
Online icon. The full text of this document is available on CIPS in 
ASCII and WordPerfect 8.0 format for viewing, printing, and/or 
downloading.
---RIMS contains images 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 from FERC's Home Page using the RIMS 
link or the Energy Information Online icon. Descriptions of documents 
back to November 16, 1981, are also available from RIMS-on-the-Web; 
requests for copies of these and other older documents should be 
submitted to the Public Reference Room.
    User assistance is available for RIMS, CIPS, and the Website during 
normal business hours from our Help line at (202) 208-2222 (E-Mail to 
[email protected]) or the Public Reference at (202) 208-1371 (E-Mail 
to [email protected]).
    During normal business hours, documents can also be viewed and/or 
printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC 
Website are available. User assistance is also available.

List of Subjects in 18 CFR Part 284

    Continental shelf, Natural gas, Reporting and recordkeeping 
requirements, Incorporation by reference.

    By direction of the Commission.
Magalie R. Salas,
Secretary.
    In consideration of the foregoing, the Commission proposes to amend 
part 284, Chapter I, Title 18, Code of Federal Regulations, as follows.

PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE 
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES

    1. The authority citation for part 284 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 1331-1356.


Secs. 284.241 and 284.242  (Subpart H) [Removed and reserved]

    2. In part 284, remove and reserve subpart H, consisting of 
Secs. 284.241 and 284.242.
[FR Doc. 02-9251 Filed 4-17-02; 8:45 am]
BILLING CODE 6717-01-P