[Federal Register Volume 67, Number 89 (Wednesday, May 8, 2002)]
[Rules and Regulations]
[Pages 30788-30794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11346]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM96-1-020; Order No. 587-O]


Standards for Business Practices of Interstate Natural Gas 
Pipelines

Issued: May 1, 2002.
AGENCY: Federal Energy Regulatory Commission, DOT.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
amending its open access regulations governing standards for conducting 
business practices and electronic communications with interstate 
natural gas pipelines. The Commission is adopting the most recent 
version, Version 1.5, of the consensus industry standards, promulgated 
by the Wholesale Gas Quadrant of the North American Energy Standards 
Board (NAESB), formerly the Gas Industry Standards Board. The 
Commission also is removing its regulations dealing with pipeline 
Electronic Bulletin Boards (EBBs), since all pipelines are required 
under Commission regulations to provide all electronic communications 
and conduct all electronic transactions using the public Internet.

DATES: The rule will become effective June 7, 2002. Pipelines are 
required to make filings to comply with the regulations adopted in this 
rule by August 1, 2002, with an effective date of October 1, 2002.

FOR FURTHER INFORMATION CONTACT: Michael Goldenberg, Office of the 
General Counsel, Federal Energy Regulatory Commission, 888 First 
Street, NE, Washington, DC 20426, (202) 208-2294.
    Marvin Rosenberg, Office of Markets, Tariffs, and Rates, Federal 
Energy Regulatory Commission, 888 First Street, N.E., Washington, DC 
20426, (202) 208-1283.
    Kay Morice, Office of Markets, Tariffs, and Rates, Federal Energy 
Regulatory Commission, 888 First Street, N.E., Washington, DC 20426, 
(202) 208-0507.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Pat Wood, III, Chairman; William L. Massey, 
Linda Breathitt, and Nora Mead Brownell

    1. The Federal Energy Regulatory Commission (Commission) is 
amending Sec. 284.12 of its open access regulations governing standards 
for conducting business practices and electronic communications with 
interstate natural gas pipelines. The Commission is adopting the most 
recent version, Version 1.5, of the consensus industry standards, 
promulgated by the Wholesale Gas Quadrant of the North American Energy 
Standards Board (NAESB), formerly the Gas Industry Standards Board. The 
Commission also is removing Sec. 284.12(a) of its regulations dealing 
with pipeline Electronic Bulletin Boards (EBBs),\1\ since all pipelines 
are required under

[[Page 30789]]

Commission regulations to provide all electronic communications and 
conduct all electronic transactions using the public Internet.\2\ The 
rule is intended to benefit the public by adopting the most recent and 
up-to-date standards governing business practices and electronic 
communication that includes new shipper options such as title transfer 
tracking, as well as standards for imbalance netting and trading and 
uniform procedures for implementation of aspects of Order No. 637.\3\
---------------------------------------------------------------------------

    \1\ Citations to Sec. 284.12 refer to the section as 
redesignated after removal of Sec. 284.12(a).
    \2\ New 18 CFR 284.12(b)(3)(i)(A).
    \3\ Regulation of Short-Term Natural Gas Transportation 
Services, Order No. 637, 65 FR 10156 (Feb. 25, 2000), FERC Stats. & 
Regs. Regulations Preambles [July 1996-December 2000] para. 31,091 
(Feb. 9, 2000).
---------------------------------------------------------------------------

I. Background

    2. Since 1996, in the Order No. 587 series,\4\ the Commission has 
adopted regulations to standardize the business practices and 
communication methodologies of interstate pipelines in order to create 
a more integrated and efficient pipeline grid. In this series of 
orders, the Commission incorporated by reference consensus standards 
developed by NAESB, a private consensus standards developer composed of 
members from all segments of the natural gas industry. NAESB is an 
accredited standards organization under the auspices of the American 
National Standards Institute (ANSI).
---------------------------------------------------------------------------

    \4\ Standards For Business Practices Of Interstate Natural Gas 
Pipelines, Order No. 587, 61 FR 39053 (Jul. 26, 1996), FERC Stats. & 
Regs. Regulations Preambles [July 1996-December 2000] para. 31,038 
(Jul. 17, 1996), Order No. 587-B, 62 FR 5521 (Feb. 6, 1997), FERC 
Stats. & Regs. Regulations Preambles [July 1996-December 2000] para. 
31,046 (Jan. 30, 1997), Order No. 587-C, 62 FR 10684 (Mar. 10, 
1997), FERC Stats. & Regs. Regulations Preambles [July 1996-December 
2000] para. 31,050 (Mar. 4, 1997), Order No. 587-G, 63 FR 20072 
(Apr. 23, 1998), FERC Stats. & Regs. Regulations Preambles [July 
1996-December 2000] para. 31,062 (Apr. 16, 1998), Order No. 587-H, 
63 FR 39509 (July 23, 1998), FERC Stats. & Regs. Regulations 
Preambles [July 1996-December 2000] para. 31,063 (July 15, 1998); 
Order No. 587-I, 63 FR 53565 (Oct. 6, 1998), FERC Stats. & Regs. 
Regulations Preambles [July 1996-December 2000] para. 31,067 (Sept. 
29, 1998), Order No. 587-K, 64 FR 17276 (Apr. 9, 1999), FERC Stats. 
& Regs. Regulations Preambles [July 1996-December 2000] para. 31,072 
(Apr. 2, 1999); Order No. 587-M, 65 FR 77285 (Dec. 11, 2000), FERC 
Stats. & Regs. Regulations Preambles [July 1996-December 2000] para. 
31,114 (Nov. 30, 2000); Order No. 587-N, 67 FR 11906 (Mar. 18, 
2002), III FERC Stats. & Regs. Regulations Preambles, para. 31,125 
(Mar. 11, 2002).
---------------------------------------------------------------------------

    3. On October 19, 2001, NAESB filed with the Commission a report 
informing the Commission that it had adopted a new version of its 
standards, Version 1.5. On December 3, 2001, NAESB filed with the 
Commission a report listing errata to the Version 1.5 standards.
    4. NAESB reported that its newest version contains some of the 
following highlights: modifications to the data set, data element, and 
code value tables to support Internet web page standards and the 
transition of EBBs to the Internet; business practice standards and 
data sets governing imbalance netting and trading (although standards 
for electronic data interchange of the imbalance netting and trading 
are still in process); standards for title transfer tracking (TTT), 
with a recommendation from the NAESB Executive Committee that these 
standards be implemented no earlier than eight months from publication 
of these standards on August 18, 2001; and standards to support the 
implementation of Order No. 637 (additional standards are still being 
considered at the subcommittee level). NAESB also reported that its 
electronic delivery mechanism standards include modifications related 
to the surety assessment performed by Sandia National Laboratories on 
the NAESB Electronic Delivery Mechanism (EDM) standards.
    5. On December 20, 2001, the Commission issued a Notice of Proposed 
Rulemaking (NOPR) proposing to incorporate Version 1.5 of the NAESB 
standards into the Commission's regulations.\5\ The Commission 
specifically requested comment on whether it should adopt NAESB 
standard 5.3.2 dealing with the timeline for capacity release 
transactions. In pertinent part, standard 5.3.2 provides that shippers 
consummating pre-arranged non-biddable capacity release transactions 
must notify the pipeline one hour prior to the time at which the 
replacement shipper would nominate under the release transaction. The 
Commission requested comment on whether it should adopt the one-hour 
prior notice requirement since in orders implementing Order No. 637, 
the Commission required pipelines to permit notice of the capacity 
release transaction coincident with the nomination timeline.
---------------------------------------------------------------------------

    \5\ Standards For Business Practices Of Interstate Natural Gas 
Pipelines, Notice of Proposed Rulemaking, 67 FR 44 (Jan. 2, 2002), 
IV FERC Stats. & Regs. Proposed Regulations, para. 32,557 (Dec. 20, 
2001).
---------------------------------------------------------------------------

    6. Thirteen comments were filed on the NOPR.\6\ All the comments 
supported adoption of Version 1.5 of the NAESB standards, and only 
comment challenged any of the provisions.
---------------------------------------------------------------------------

    \6\ The commenters and the abbreviations used in this order are 
listed on the appendix.
---------------------------------------------------------------------------

II. Discussion

    7. The Commission is adopting Version 1.5 \7\ of NAESB's consensus 
standards by incorporating these standards into its regulations.\8\ 
Pipelines are required to make filings to comply with the regulations 
adopted in this rule by August 1, 2002, with an effective date of 
October 1, 2002.\9\
---------------------------------------------------------------------------

    \7\ The incorporation includes the errata sheets published by 
NAESB.
    \8\ Pursuant to the regulations regarding incorporation by 
reference, copies of Version 1.5 of the standards are available from 
NAESB, and the standards can be viewed, but not copied, at the 
Office of the Federal Register and at the Commission's Public 
Reference Room. 5 U.S.C. 552 (a)(1); 1 CFR 51 (2001).
    \9\ NAESB standard 1.3.78 provides that implementation of TTT 
not take place until eight months after publication of the TTT 
standards in the NAESB standards manual (which took place on August 
18, 2001). Since the Commission's implementation date of October 1, 
2002, falls after April 18, 2002, pipelines will be required to 
implement the TTT standards at the same time as the other standards.
---------------------------------------------------------------------------

    8. Version 1.5 of the NAESB standards includes standards 
implementing provisions of Order No. 637, provides added flexibility to 
shippers, standardizes additional business practices, and updates and 
improves the current standards.\10\ The principal changes occur in the 
areas of capacity release scheduling, title transfer tracking, 
imbalance netting and trading, and improvement of the standards for 
conducting business transactions electronically over the Internet. 
Version 1.5 (Standard 5.3.2) revises the capacity release bidding and 
scheduling standard to provide for nomination equality as required by 
the Commission in Order No. 637.\11\ Version 1.5 incorporates a series 
of standards (Standards 1.3.64 through 1.3.78) that provides for title 
transfer tracking at pooling points. These standards will provide 
shippers with greater flexibility in structuring business transactions, 
and will enhance the liquidity of the natural gas market by providing 
for accurate accounting of gas purchase and sale transactions and 
integrating such transactions into the pipeline scheduling process. 
Version 1.5 includes new standards (standards

[[Page 30790]]

2.3.36 through 2.3.50) for transmitting statements of allocation and 
implementing imbalance netting and trading as required by the 
Commission's regulations.\12\ Version 1.5 also updates and improves the 
standards by modifying the electronic communication standards to better 
support Internet web page standards and the transition of EBBs to the 
Internet and by effectuating changes related to the assessment provided 
by Sandia National Laboratories. Commission adoption of these standards 
will keep the Commission regulations current.\13\
---------------------------------------------------------------------------

    \10\ In Version 1.5, NAESB made the following changes to its 
standards. It added Principles 1.1.20, 1.1.21 and 2.1.5; Definitions 
1.2.13 through 1.2.19, 2.2.2, 2.2.3, and 4.2.20; Standards 1.3.64 
through 1.3.78, 2.3.36 through 2.3.50, 3.3.26, 4.3.86, 4.3.87, and 
5.3.43; and Data Sets 2.4.7 through 2.4.16. It revised Standards 
1.3.2, 1.3.54, 1.3.61, 1.3.63, 2.3.30, 2.3.32, 2.3.34, 4.3.16, 
4.3.23, 4.3.35, 5.3.2, 5.3.22, 5.3.24, 5.3.31, 5.3.32, and 5.3.33, 
and Data Sets 1.4.1 through 1.4.7, 2.4.1, 2.4.3 through 2.4.6, 
3.4.1, 3.4.2, 3.4.4, 5.4.1 through 5.4.10, 5.4.12, 5.4.13, and 
5.4.16 through 5.4.19. It deleted Principles 4.1.5 and 4.1.8, and 
Standard 4.3.77.
    \11\ New 18 CFR 284.12 (b)(1)(ii) (2001); Order No. 637, 65 FR 
at 10191, FERC Stats. & Regs. Regulations Preambles [July 1996-
December 2000] para. 31,091, at 31,297.
    \12\ New 18 CFR 284.12(b)(2)(ii) (2001).
    \13\ The Commission also is continuing its previous practice of 
excluding standards 2.3.29 dealing with operational balancing 
agreements (OBAs), 2.3.30 dealing with netting and trading of 
imbalances, and 4.3.4 dealing with retention of electronic data. The 
Commission has issued its own regulations in these areas (New 18 CFR 
284.12(b)(2)(i) (OBAs), (c)(2)(ii) (netting and trading of 
imbalances), and (c)(3)(v) (record retention)), so that 
incorporation of the NAESB standards is unnecessary and may cause 
confusion as to the applicable Commission requirements.
---------------------------------------------------------------------------

    9. NAESB approved the standards under its consensus procedures.\14\ 
As the Commission found in Order No. 587, adoption of consensus 
standards is appropriate because the consensus process helps ensure the 
reasonableness of the standards by requiring that the standards draw 
support from a broad spectrum of all segments of the industry. 
Moreover, since the industry itself has to conduct business under these 
standards, the Commission's regulations should reflect those standards 
that have the widest possible support. In Sec. 12(d) of the National 
Technology Transfer and Advancement Act of 1995 (NTT&AA), Congress 
affirmatively requires federal agencies to use technical standards 
developed by voluntary consensus standards organizations, like NAESB, 
as means to carry out policy objectives or activities.\15\
---------------------------------------------------------------------------

    \14\ This process first requires a super-majority vote of 17 out 
of 25 members of NAESB's Executive Committee with support from at 
least two members from each of the five industry segments--
interstate pipelines, local distribution companies, gas producers, 
end-users, and services (including marketers and computer service 
providers). For final approval, 67% of NAESB's general membership 
must ratify the standards.
    \15\ Pub L. No. 104-113, Sec. 12(d), 110 Stat. 775 (1996), 15 
U.S.C. 272 note (1997).
---------------------------------------------------------------------------

    10. The Commission will address the comments on the NOPR below.

A. Capacity Release Timeline

    11. In the NOPR, the Commission requested comment on whether to 
adopt in full Standard 5.3.2 of the NAESB standards which provides a 
timeline for pipelines to process capacity release transactions 
(biddable and non-biddable pre-arranged deals), and the resulting 
nominations submitted by replacement shippers. The NAESB standards 
provide for four nomination cycles.\16\
---------------------------------------------------------------------------

    \16\ New 18 CFR 284.12(a)(1)(i) (2001), Nominations Related 
Standard 1.3.2.

------------------------------------------------------------------------
                                    Time nomination     Time nomination
        Nomination cycle            due (CCT) \17\    takes effect (CCT)
------------------------------------------------------------------------
Timely Nomination...............  11:30 a.m.........  9 a.m. next gas
                                                       day
Evening Nomination..............  6 p.m.............  9 a.m. next gas
                                                       day
Intra-Day 1.....................  10 a.m............  5 p.m. same gas
                                                       day
Intra-Day 2.....................  5 p.m.............  9 p.m. same gas
                                                       day
------------------------------------------------------------------------
\17\ CCT refers to Central Clock Time, which includes an adjustment for
  day light savings time. See New 18 CFR 284.12(a)(1)(i), Nominations
  Related Standards 1.3.1 (2001). Under the NAESB standards, a gas day
  runs from 9 a.m. central clock time (CCT) on Day 1 to 9 a.m. CCT the
  next day (Day 2). New 18 CFR 284.12(a)(1)(i), Nominations Related
  Standards 1.3.1 (2001).

    The pertinent section of Standard 5.3.2 provides that for pre-
arranged non-biddable capacity release transactions the pipeline must 
be informed of the transaction one hour prior to each of the nomination 
opportunities in order for the replacement shipper to nominate at that 
opportunity.\18\
---------------------------------------------------------------------------

    \18\ For example, for the Timely Nomination cycle, the pipeline 
must be informed of the capacity release transaction by 10:30 a.m. 
CCT, one hour prior to the nomination deadline at 11:30 a.m.
---------------------------------------------------------------------------

    12. In Order No. 637, the Commission adopted new 
Sec. 284.12(b)(1)(ii) of its regulations in order to provide scheduling 
equality between capacity release transactions and pipeline 
transportation services.\19\ In implementing this provision of Order 
No. 637, the Commission had required pipelines to provide that notice 
of the capacity release transaction could be provided coincident with 
nomination by the replacement shipper.\20\ In the NOPR, the Commission 
requested comment on whether it should adopt the NAESB one-hour 
notification period or continue to require pipelines to permit 
notification coincident with nomination.
---------------------------------------------------------------------------

    \19\ New 18 CFR 284.12(b)(1)(ii). This regulation provides that 
pipelines ``must permit shippers acquiring released capacity to 
submit a nomination at the earliest available nomination opportunity 
after the acquisition of capacity. If the pipeline requires the 
replacement shipper to enter into a contract, the contract must be 
issued within one hour after the pipeline has been notified of the 
release, but the requirement for contracting must not inhibit the 
ability of the replacement shipper to submit a nomination at the 
earliest available nomination opportunity.''
    \20\ See Colorado Interstate Gas Company, 95 FERC para. 61,321, 
at 62,111-12 (2001), 97 FERC para. 61,011 (2001).
---------------------------------------------------------------------------

    13. The comments (except for Atmos) support adoption of the NAESB 
one-hour notification standard. Those supporting the standard maintain 
that the one-hour standard was a product of NAESB's consensus process, 
and that the Commission should defer to the consensus of the industry. 
The pipelines contend that the one-hour notification requirement is 
necessary for them to complete internal verification of contract data, 
such as updating their contract data base to reflect the assignment of 
capacity rights, so that nominations can be validated and the 
nomination process can proceed seamlessly. Without accurate data bases, 
the pipelines assert that nominations may be incorrectly rejected, 
because the contract data base does not reflect the assignment of 
capacity rights. While supporting the NAESB standard, AGA states that 
NAESB standards are minimums and that pipelines should be encouraged to 
exceed the minimum standard. In this regard, AGA contends the 
Commission should not disturb individual Order No. 637 compliance 
proceedings in which pipelines have already implemented scheduling 
systems with less than the one-hour notice.
    14. Atmos maintains the Commission should reject the one-hour 
notice requirement as contrary to Commission policy. It argues that 
NAESB has failed to provide any justification for the departure from 
the Order No. 637 scheduling policy, and maintains pipelines that 
cannot meet the requirement for coincident notification and nomination 
should seek waivers.
    15. The Commission is incorporating Standard 5.3.2 into its 
regulation and finds that compliance with this standard satisfies the 
scheduling equality requirements of new Sec. 284.12(b)(1)(ii) of its 
regulations.\21\ Standard 5.3.2 reflects the consensus of all facets of 
the natural gas industry. The Commission's general policy has been to 
accept such standards when they reflect the broad consensus of the 
industry.\22\ The industry has determined that the one-hour 
notification requirement reflects a balance between the need for speed 
in consummating capacity release transactions and the need to update 
and verify contract data bases to ensure that

[[Page 30791]]

nominations are accurate and can be processed efficiently, and the 
Commission finds the standard has struck a reasonable balance between 
the interests of all parties.
---------------------------------------------------------------------------

    \21\ Some pipelines will be required to implement Standard 5.3.2 
(Version 1.5) as part of their Order No. 637 compliance proceedings. 
But, in any event, a pipeline must file to comply with this standard 
by no later than August 1, 2002.
    \22\ Order No. 587, 61 FR at 39056-57, FERC Stats. & Regs. 
Regulations Preambles [July 1996-December 2000] para. 31,038, at 
30,059-60.
---------------------------------------------------------------------------

    16. As AGA points out, the NAESB standards are generally considered 
minimum requirements that do not preclude pipelines from offering 
enhanced services, so long as the enhancement provides increased 
flexibility, does not compromise the uniformity sought to be achieved 
through standardization, does not affect shippers' ability to utilize 
the standard procedure, and does not adversely affect the rights of 
other parties.\23\ In this case, the Commission agrees with AGA that 
pipelines can provide for shorter prior notice periods for prearranged, 
non-biddable deals without having adverse effects on shippers or 
limiting the benefits sought to be achieved by standardization. In 
order to provide shippers with the utmost flexibility in scheduling, 
the Commission encourages pipelines to reduce or eliminate prior notice 
provisions for pre-arranged non-biddable deals, as their scheduling 
systems currently permit or as these systems are improved in the 
future.
---------------------------------------------------------------------------

    \23\ Order No. 587, 61 FR at 39062, FERC Stats. & Regs. 
Regulations Preambles [July 1996-December 2000] para. 31,038, at 
30,069-70.
---------------------------------------------------------------------------

    17. With respect to Atmos's comment that NAESB failed to justify 
the one-hour prior notice requirement, the comments in this proceeding 
have shown that this time period is a reasonable period for pipelines 
to update their contract data bases and provide for accurate 
verification of nominations. Atmos's suggestion to adopt a more 
stringent notification requirement and require pipelines to seek 
individual waivers would unnecessarily involve the Commission in 
attempting to evaluate the capabilities of individual pipeline computer 
operations. Given the industry consensus supporting the NAESB standard, 
the Commission finds little to be gained from entering into such an 
inquiry on an individual pipeline basis.

B. Title Transfer Tracking Standards

    18. EPPG seeks clarification that the Version 1.5 NAESB standards 
do not require pipelines to provide title transfer tracking (TTT), and 
that pipelines need not provide TTT services beyond those contemplated 
by the Version 1.5 NAESB standards.
    19. To ensure consistent implementation, the Commission will 
provide its interpretation of the pipelines' responsibilities with 
respect to TTT. Title transfer, under the standards, is defined as 
``the change of title to gas between parties at a location.'' \24\ 
Title Transfer Tracking (TTT) is defined as ``the process of accounting 
for the progression of title changes from party to party that does not 
effect a physical transfer of the gas.'' \25\ The two standards 
defining the pipelines' responsibility are Standards 1.3.64 and 1.3.65. 
In pertinent part, Standard 1.3.64 provides: ``At a minimum, the 
Transportation Service Providers (TSP) should be responsible for 
accommodating Title Transfer Tracking (TTT) services at all points 
identified by the TSP as pooling points, where TTT services are 
requested.'' Standard 1.3.65 provides that ``the Title Transfer 
Tracking services should be supported by means of the nominations, 
quick responses and scheduled quantities processes.''
---------------------------------------------------------------------------

    \24\ Standard 1.2.14 (Version 1.5).
    \25\ Standard 1.2.15 (Version 1.5).
---------------------------------------------------------------------------

    20. The Commission interprets these standards as requiring 
pipelines to permit and process, on a non-discriminatory basis, 
transportation nominations (along with required responsive scheduling 
information) effecting transfers of title at pooling points by any 
party including shippers, poolers, or third party account 
administrators.\26\ As a simple example, Producer A aggregates 1000 Dth 
of gas from three receipt points at its pool at Pool 1, sells 1000 Dth 
to Marketer B at Marketer B's pool at Pool 1, and Marketer B sells 1000 
Dth to Shipper C at the pooling point for transportation to Shipper C's 
delivery point under Shipper C's firm transportation contract.
---------------------------------------------------------------------------

    \26\ A Third Party Account Administrator is defined as a Title 
Transfer Tracking Service Provider other than the Transportation 
Service Provider. Standard 1.2.17 (Version 1.5).
---------------------------------------------------------------------------

    Under the NAESB standards, the pipeline would have to process a 
transportation nomination from Producer A, including provision of the 
required scheduling responses, to reflect the transfer of gas from 
Producer A's pool to Marketer B's pool. Other than processing the 
transportation nomination to reflect the in-place transfer of gas, the 
pipeline would be required to provide no other ``accounting services'' 
\27\ respecting the transfer of title. If EPPG requires more specific 
clarification as to its specific responsibilities for processing such 
nominations, it should request such a clarification from NAESB pursuant 
to NAESB's procedures for seeking interpretations of standards.\28\
---------------------------------------------------------------------------

    \27\ Standard 1.2.15 defines title transfer tracking as the 
``process of accounting for the progression of title changes from 
party to party.''
    \28\ NAESB PROCEDURES FOR ADOPTING STANDARDS, Sec. 5.1 (http://www.naesb.org/gov.htm).

---------------------------------------------------------------------------

[[Page 30792]]

[GRAPHIC] [TIFF OMITTED] TR08MY02.000

    21. Williston maintains that it does not anticipate receiving 
requests for title transfer services and that it would take three 
months for it to implement a request for such services. It requests an 
extension of time to implement the TTT standards until three months 
after receiving a request to accommodate such services.
    22. Such a specific request will not be granted in a rulemaking 
proceeding where potentially affected parties do not have the 
opportunity to protest the request. Further, since the NAESB standards 
envision that the pipelines are to accommodate title transfers using 
their existing nomination and scheduling processes, it is not clear why 
additional time is needed to permit title transfers.\29\ Williston is 
free to file for an individual waiver of compliance with the regulation 
if it can show good cause.
---------------------------------------------------------------------------

    \29\ Standard 1.3.65 (title transfer tracking services should be 
supported by means of the nominations, quick responses and scheduled 
quantities processes); Standard 1.3.70 (title transfer tracking 
should be conducted using existing applicable data sets).
---------------------------------------------------------------------------

C. Implementation

    23. A number of comments request that the Commission implement the 
standards on the first day of the month falling 90 days after the 
issuance of the final rule, because first-of-the-month implementation 
facilitates administration. They further request that the TTT standards 
be implemented at the same time.\30\ The Commission is granting these 
requests by providing for implementation on October 1, 2002, which is 
more than three months from adoption of the regulations, and is 
requiring implementation of the TTT standards at the same time.
---------------------------------------------------------------------------

    \30\ Comments by INGAA, Dominion, EIP, Gulf South, Northern 
Natural, Williston.
---------------------------------------------------------------------------

    24. KM Pipelines and Williston request that for those pipelines 
that have not yet implemented Order No. 637, implementation of the 
standards should be delayed until 90 days after the pipeline's 
implementation of Order No. 637. They maintain that such a delay is 
needed because of the extensive changes required by Order No. 637 and 
because implementation of the standards before implementation of Order 
No. 637 might result in conflicting tariff language.
    25. The Commission denies the requests to delay implementation. The 
pipelines have not demonstrated that the changes in the NAESB standards 
relating to Order No. 637 create any conflict with requirements of 
Order No. 637 or will significantly delay the ability of a pipeline to 
comply with Order No. 637.
    26. Nisource Pipelines requests a waiver of the requirement to 
implement the Electronic Data Interchange (EDI) requirements in the 
standards if a pipeline has no electronic trading partners or, in the 
alternative, requests a longer amount of time in which to implement 
such standards. Nisource Pipelines maintains that three months is not 
sufficient time to implement the EDI requirements. The Commission will 
not grant a generic waiver of EDI requirements in this rulemaking. 
Requests for waiver or extension of time to implement the EDI 
requirements must be handled on an individual basis depending on the 
circumstances facing the pipeline.

D. Sandia National Laboratories Recommendations

    27. In its transmittal letter, NAESB reported that its electronic 
delivery mechanism standards include modifications related to the 
surety assessment performed by Sandia National Laboratories on the 
NAESB Electronic Delivery Mechanism (EDM) standards. Dominion and INGAA 
request clarification that the Commission is not adopting or endorsing 
the Sandia National Laboratories recommendations. INGAA maintains the 
Executive Committee sent the Sandia recommendations to a NAESB 
subcommittee for further review. The Commission clarifies that it is 
adopting here only the standards

[[Page 30793]]

adopted by NAESB (to the extent these standards reflect the Sandia 
recommendations), and is not independently adopting or endorsing the 
Sandia report.

III. Notice of Use of Voluntary Consensus Standards

    28. Office of Management and Budget Circular A-119 (Sec. 11) 
(February 10, 1998) provides that when a federal agency issues or 
revises a regulation containing a standard, the agency should publish a 
statement in the final rule identifying whether a voluntary consensus 
standard or a government-unique standard is being adopted. In this 
rulemaking, the Commission is incorporating by reference standards 
issued by the North American Energy Standards Board.

IV. Information Collection Statement

    29. The Office of Management and Budget's (OMB) regulations in 5 
CFR 1320.11 require that it approve certain reporting and recordkeeping 
requirements (collections of information) imposed by an agency. Upon 
approval of a collection of information, OMB will assign an OMB control 
number and an expiration date. Respondents subject to the filing 
requirements of this Rule will not be penalized for failing to respond 
to these collections of information unless the collections of 
information display a valid OMB control number.
    30. The final rule will affect the following existing data 
collections: FERC-545 ``Gas Pipeline Rates: Rate Change (Non-Formal)'' 
(OMB Control No. 1902-0154) and FERC-549C ``Standards for Business 
Practices of Interstate Natural Gas Pipelines'' (OMB Control No. 1902-
0174). The following burden estimates are related only to this rule and 
include the costs of complying with NAESB's version 1.5 standards. The 
burden estimates for the FERC-545 data collection are related to the 
tariff filings required to implement NAESB's version 1.5 standards. The 
burden estimates for the FERC-549C data collection are related to 
implementing the latest version of the business practice standards and 
related data sets. The costs for both of these data collections are 
primarily related to start-up and will not be on-going costs.

----------------------------------------------------------------------------------------------------------------
                                                                                Number of
                                                                   Number of    responses    Hours      Total
                         Data collection                          respondents      per        per       annual
                                                                               respondent  response     hours
----------------------------------------------------------------------------------------------------------------
FERC-545........................................................        93           1           38        3,534
FERC-549C.......................................................        93           1        4,526      420,918
----------------------------------------------------------------------------------------------------------------

    The total annual hours for collection is 424,452 hours.

------------------------------------------------------------------------
                                              FERC-545      FERC-549C
------------------------------------------------------------------------
Annualized capital/startup costs..........     $198,857      $23,684,934
Annualized costs (operations &                        0                0
 maintenance).............................
Total annualized costs....................      198,857       23,684,934
------------------------------------------------------------------------

    The cost per respondent is $256,815 (rounded off).
    31. The Commission sought comments to comply with these 
requirements. Comments were received from thirteen entities. No 
comments addressed the reporting burden imposed by these requirements. 
The substantive issues raised by the commenters are addressed in this 
preamble.
    32. The Commission's regulations adopted in this rule are necessary 
to further the process begun in Order No. 587 of creating a more 
efficient and integrated pipeline grid by standardizing the business 
practices and electronic communication of interstate pipelines. 
Adoption of these regulations will update the Commission's regulations 
relating to business practices and communication protocols to conform 
to the latest version, Version 1.5, approved by NAESB.
    33. The Commission has assured itself, by means of its internal 
review, that there is specific, objective support for the burden 
estimates associated with the information requirements. The information 
required in this Final Rule will help the Commission carry out its 
responsibilities under the Natural Gas Act and conforms to the 
Commission's plan for efficient information collection, communication, 
and management within the natural gas industry.
    34. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426 [Attention: 
Michael Miller, Office of the Chief Information Officer, CI-1, (202) 
208-1415, or [email protected]] or the Office of Management and 
Budget, Office of Information and Regulatory Affairs, Attention: Desk 
Officer for the Federal Energy Regulatory Commission, 725 17th Street, 
NW, Washington, DC 20503. The Desk Officer can also be reached at (202) 
395-7318, or fax: (202) 395-7285.

V. Environmental Analysis

    35. 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.\31\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\32\ The regulations adopted in this rule fall within 
categorical exclusions in the Commission's regulations for rules that 
are clarifying, corrective, or procedural, for information gathering, 
analysis, and dissemination, and for sales, exchange, and 
transportation of natural gas that requires no construction of 
facilities.\33\ Therefore, an environmental assessment

[[Page 30794]]

is unnecessary and has not been prepared.
---------------------------------------------------------------------------

    \31\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs. Preambles 1986-1990 para. 30,783 (1987).
    \32\ 18 CFR 380.4.
    \33\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act Certification

    36. The Regulatory Flexibility Act of 1980 (RFA) \34\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The regulations adopted here impose requirements only on interstate 
pipelines, which are not small businesses, and, these requirements are, 
in fact, designed to benefit all customers, including small businesses. 
Accordingly, pursuant to Sec. 605(b) of the RFA, the Commission hereby 
certifies that the regulations adopted herein will not have a 
significant adverse impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \34\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

VII. Document Availability

    37. 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 5:00 
p.m. Eastern time) at 888 First Street, N.E., Room 2A, Washington, DC 
20426.
    38. 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 Documents & Filing 
link. 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 Documents & Filing link. 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.
    39. 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]).
    40. 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.

VIII. Implementation Dates

    Pipelines are required to make filings to comply with the 
regulations adopted in this rule by August 1, 2002, with an effective 
date of October 1, 2002. Pipelines must file revised tariff sheets to 
incorporate Version 1.5 of the standards into their tariffs since their 
tariffs incorporate by reference an older version number.\35\ To the 
extent pipelines have individual tariff provisions based on these 
standards, pipelines also will have to conform their tariffs to the new 
standards.\36\
---------------------------------------------------------------------------

    \35\ See Texas Eastern Transmission Corporation, 77 FERC para. 
61,175, at 61,646 (1996) (pipelines incorporating standards by 
reference in their tariffs must include number and version).
    \36\ In filing to implement Version 1.5 of the NAESB standards, 
pipelines need to change all references to the standards in their 
tariffs to Version 1.5. The version number applies to all standards 
contained in NAESB's Version 1.5 Standards Manuals, including 
standards that have not changed from prior versions.
---------------------------------------------------------------------------

IX. Effective Date

    41. These regulations are effective June 7, 2002. The Commission 
has determined, with the concurrence of the Administrator of the Office 
of Information and Regulatory Affairs of OMB, that this rule is not a 
``major rule'' as defined in Section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 284

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

    By the Commission.
Linwood A. Watson, Jr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission amends 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. 7101-7352; 
43 U.S.C. 1331-1356.


Sec. 284.12  [Amended]

    2. Section 284.12 is amended as follows:
    a. Paragraph 284.12(a) is removed and paragraphs 284.12(b) and (c) 
are redesignated 284.12(a) and (b) respectively.
    b. In newly redesignated paragraphs (a)(1)(i), (ii), (iii), and 
(v), revise all references to ``Version 1.4, August 31, 1999'' to read 
``Version 1.5, August 18, 2001, including errata dated October 1, 2001, 
and November 30, 2001.''
    c. In newly redesignated paragraph (a)(1)(iv), revise all 
references to ``Version 1.4, November 15, 1999'' to read ``Version 1.5, 
August 18, 2001, including errata dated October 1, 2001, and November 
30, 2001.''

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix

Comments Filed

Docket No. RM96-1-020

------------------------------------------------------------------------
                Commenter                          Abbreviation
------------------------------------------------------------------------
American Gas Association................  AGA.
Atmos Energy Corporation................  Atmos.
Columbia Gas Transmission Corporation,    Nisource Pipelines.
 Columbia Gulf Transmission Company,
 Crossroads Pipeline Company, and
 Granite State Gas Transmission, Inc.
Dominion Transmission, Inc..............  Dominion.
El Paso Pipeline Group..................  EPPG.
Enron Interstate Pipelines..............  EIP.
Great Lakes Gas Transmission Limited      Great Lakes.
 Partnership.
Gulf South Pipeline Company, LP.........  Gulf South.
Interstate Natural Gas Association of     INGAA.
 America.
Natural Gas Pipeline Company of America,  KM Pipelines.
 Kinder Morgan Interstate Gas
 Transmission LLC.
Northern Natural Gas Company............  Northern Natural.
Williams Gas Pipeline Company...........  Williams.
Williston Basin Interstate Pipeline       Williston.
 Company.
------------------------------------------------------------------------

[FR Doc. 02-11346 Filed 5-7-02; 8:45 am]
BILLING CODE 6717-01-P