[Federal Register Volume 70, Number 94 (Tuesday, May 17, 2005)]
[Rules and Regulations]
[Pages 28204-28211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-9803]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM96-1-026]


Standards for Business Practices of Interstate Natural Gas 
Pipelines

Issued May 9, 2005.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission is amending its 
regulations governing standards for conducting business practices with 
interstate natural gas pipelines. The Commission is incorporating by 
reference the most recent version of the standards, Version 1.7, 
promulgated December 31, 2003, by the Wholesale Gas Quadrant (WGQ) of 
the North American Energy Standards Board (NAESB); the standards 
ratified by NAESB on June 25, 2004 to implement Order No. 2004; the 
standards ratified by NAESB on May 3, 2005 to implement Order No. 2004-
A; and the standards implementing gas quality reporting requirements 
ratified by NAESB on October 20, 2004. These standards can be obtained 
from NAESB at 1301 Fannin, Suite 2350, Houston, TX 77002, 713-356-0060, 
http://www.naesb.org.

EFFECTIVE DATES: The rule will become effective June 16, 2005. 
Pipelines are required to comply with this rule by making a compliance 
filing on or before July 1, 2005 with an effective date of September 1, 
2005.

FOR FURTHER INFORMATION CONTACT:
Marvin Rosenberg, Office of Markets, Tariffs, and Rates, Federal Energy

[[Page 28205]]

Regulatory Commission, 888 First Street, NE., Washington, DC 20426; 
202-502-8292.
Kay Morice, Office of Markets, Tariffs, and Rates, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426; 
202-502-6507.
Jamie Chabinsky, Office of the General Counsel, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426; 
202-502-6040.

SUPPLEMENTARY INFORMATION:
    Before Commissioners: Pat Wood, III, Chairman; Nora Mead Brownell, 
Joseph T. Kelliher, and Suedeen G. Kelly; ORDER NO. 654
    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.\1\ The Commission 
is incorporating by reference the most recent version, Version 1.7, of 
the consensus standards promulgated by the Wholesale Gas Quadrant (WGQ) 
of the North American Energy Standards Board (NAESB). The Commission is 
also incorporating by reference the standards ratified by NAESB on June 
25, 2004 to implement Order No. 2004,\2\ the standards ratified by 
NAESB on May 3, 2005 to implement Order No. 2004-A, and the standards 
to implement gas quality reporting requirements ratified by NAESB on 
October 20, 2004, in Recommendation R03035A, which NAESB intends to 
include in its next version of standards (Version 1.8). This rule is 
intended to benefit the public by adopting the most recent and up-to-
date standards governing business practices and electronic 
communication.
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    \1\ 18 CFR 284.12 (2004).
    \2\ Order No. 2004, 68 FR 69134 (Dec. 11, 2003), III FERC Stats. 
& Regs. Regulations Preambles ] 31,155 (Nov. 25, 2003); Order No. 
2004-A, 69 FR 23562 (Apr. 29, 2004), III FERC Stats. & Regs. 
Regulations Preambles ] 31,161 (Apr. 16, 2004); Order No. 2004-B, 69 
FR 48371 (Aug. 10, 2004) III FERC Stats. & Regs. Regulations and 
Preambles ] 31,166 (Aug. 2, 2004), Order No. 2004-C, 70 FR 284 (Jan. 
4, 2005), III FERC Stats. & Regs. Regulations Preambles ] 31,172 
(Dec. 21, 2004); Order No. 2004-D, FERC Stats. & Regs. Regulations 
Preambles ] 61,320 (Mar. 23, 2005).
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I. Background

    2. Since 1996, in the Order No. 587 series,\3\ 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 the WGQ (formerly the Gas Industry Standards Board or 
GISB), 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).
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    \3\ Standards For Business Practices Of Interstate Natural Gas 
Pipelines, Order No. 587, 61 FR 39053 (July 26, 1996), FERC Stats. & 
Regs. Regulations Preambles [July 1996-December 2000] ] 31,038 (July 
17, 1996), Order No. 587-B, 62 FR 5521 (Feb. 6, 1997), FERC Stats. & 
Regs. Regulations Preambles [July 1996-December 2000] ] 31,046 (Jan. 
30, 1997), Order No. 587-C, 62 FR 10684 (Mar. 10, 1997), FERC Stats. 
& Regs. Regulations Preambles [July 1996-December 2000] ] 31,050 
(Mar. 4, 1997), Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), FERC 
Stats. & Regs. Regulations Preambles [July 1996-December 2000] ] 
31,062 (Apr. 16, 1998), Order No. 587-H, 63 FR 39509 (July 23, 
1998), FERC Stats. & Regs. Regulations Preambles [July 1996-December 
2000] ] 31,063 (July 15, 1998); Order No. 587-I, 63 FR 53565 (Oct. 
6, 1998), FERC Stats. & Regs. Regulations Preambles [July 1996-
December 2000] ] 31,067 (Sept. 29, 1998), Order No. 587-K, 64 FR 
17276 (Apr. 9, 1999), FERC Stats. & Regs. Regulations Preambles 
[July 1996-December 2000] ] 31,072 (Apr. 2, 1999); Order No. 587-M, 
65 FR 77285 (Dec. 11, 2000), FERC Stats. & Regs. Regulations 
Preambles [July 1996-December 2000] ] 31,114 (Dec. 11, 2000); Order 
No. 587-N, 67 FR 11906 (Mar. 18, 2002), III FERC Stats. & Regs. 
Regulations Preambles ] 31,125 (Mar. 11, 2002), Order No. 587-O, 67 
FR 30788 (May 8, 2002), III FERC Stats. & Regs. Regulations 
Preambles ] 31,129 (May 1, 2002); Order No. 587-R, 68 FR 13813 (Mar. 
21, 2003), III FERC Stats. & Regs. Regulations Preambles ] 31,141 
(Mar. 12, 2003).
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    3. On April 14, 2004 NAESB filed with the Commission a report 
informing the Commission that the WGQ had adopted a new version of its 
standards, Version 1.7. NAESB reports that Version 1.7 includes 
standards for partial day recalls which were requested in Order No. 
587-N. The Commission previously incorporated these standards by 
reference in Order No. 587-R.\4\ Version 1.7 also contains ten 
standards regarding creditworthiness \5\ which the Commission proposed 
to adopt in a Notice of Proposed Rulemaking (NOPR) in Docket No. RM04-
4-000.\6\ Version 1.7 contains revisions that more accurately reflect 
the workings of the market including the definition of transaction 
types, charge types, Service Codes, and Reduction Reason Codes. Other 
revisions update standards that contained outmoded references, make the 
naming conventions more uniform, and permit use of proprietary entity 
codes when D-U-N-S[reg] numbers are not available. In 
addition, the Version 1.7 standards update the treatment of allocations 
as well as requests for information on scheduled quantities, 
allocations, and shipper imbalances.
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    \4\ Order No. 587-R, 68 FR 13813 (Mar. 21, 2003), III FERC 
Stats. & Regs. Regulations Preambles & 31,141 (Mar. 12, 2003).
    \5\ The credit-related standards in Version 1.7, which we are 
incorporating by reference, are designated as Standards 0.3.3 
through 0.3.10, 5.3.59 and 5.3.60. They include procedures for the 
following practices: requesting additional information for credit 
evaluation; acknowledging and responding to requests and receipt of 
information; notice regarding creditworthiness and notice regarding 
contract termination due to credit-related issues; forms of 
communication; reevaluation of determinations that a Service 
Requester is not creditworthy; and awarding capacity release offers 
only after a service requester has been determined to meet the 
creditworthiness requirements applicable to all services.
    \6\ Creditworthiness Standards for Interstate Natural Gas 
Pipeline, Notice of Proposed Rulemaking (NOPR), 69 FR 8587 (Feb. 25, 
2004), IV FERC Stats. & Regs. Proposed Regulations ] 32,573 (Feb. 
12, 2004).
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    4. On August 6, 2004, NAESB filed with the Commission a report 
informing the Commission that on June 25, 2004 the WGQ membership 
ratified a package of modifications to the Version 1.7 standards to 
implement Order No. 2004 (2004 Annual Plan Item 2 FERC Order 2004). 
These standards modify the Informational Posting requirements for 
pipeline web sites to reflect the information required to be posted 
pursuant to Order No. 2004 and will be included as part of the WGQ's 
Version 1.8 standards.
    5. On October 1, 2004, NAESB filed a report with the Commission 
informing the Commission that errata to Version 1.7 of the NAESB WGQ 
standards were adopted by the Executive Committee on August 26, 2004 
and, following a member comment period, the errata would be applied to 
Version 1.7 on October 15, 2004. The errata contain minor corrections 
which remove the table of code values for Bidder Affiliate from 
Standard 5.4.13 and correct the Transaction Status Code data element in 
the Code Values Dictionary of Standard 1.4.2.
    6. On November 1, 2004, NAESB filed a report with the Commission 
informing the Commission that on October 20, 2004 the WGQ membership 
ratified standards to implement gas quality reporting requirements 
(Recommendation R03035A).\7\ These standards require a pipeline to 
provide a link on its Informational Posting Web Site to its gas quality 
tariff provisions, or a simple reference guide to such information. In 
addition, a pipeline is required to provide on its Informational 
Postings Web site, in a downloadable format, daily average gas quality 
information for prior day(s) to the extent available for locations(s) 
that are

[[Page 28206]]

representative of mainline gas flow for the most recent three-month 
period.
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    \7\ The standards ratified October 20, 2004 modified Standard 
4.3.23 and added Principle 4.1.p1 and Standards 4.3.s1, 4.3.s2, 
4.3.s3, and 4.3.s4. On March 18, 2005, NAESB filed a report 
informing the Commission that the added Principle and Standards have 
been assigned the following permanent numbers: Principle 4.1.40 and 
Standards 4.3.89, 4.3.90, 4.3.91, and 4.3.92, respectively.
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    7. On December 21, 2004, the Commission issued a NOPR \8\ that 
proposed to adopt Version 1.7 of the consensus standards, the standards 
ratified by NAESB on June 24, 2004 to implement Order No. 2004 and the 
standards to implement gas quality reporting requirements ratified by 
NAESB in Recommendation R03035A.\9\ Five comments and one reply comment 
were filed.\10\ The comments generally support adoption of the 
standards, although some comments raise issues regarding the gas 
quality standards, creditworthiness standards, and implementation date.
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    \8\ Standards for Business Practices of Interstate Natural Gas 
Pipelines, Notice of Proposed Rulemaking, 70 FR 319 (Jan. 4, 2005), 
FERC Stats. & Regs. Proposed Regulations ] 32,578 (Dec. 21, 2004).
    \9\ Section 284.12(a)(2) also is revised to reflect NAESB's 
current address.
    \10\ Those filing comments are: American Gas Association (AGA); 
BP America Production Company and BP Energy Company (jointly 
``BP''); Florida Power and Light Company (FPL); the Interstate 
Natural Gas Association of America (INGAA); Tennessee Valley 
Authority (TVA); and Total Peaking Services, LLC (Total Peaking). On 
March 14, 2005, INGAA filed reply comments.
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    8. On April 12, 2005, NAESB notified the Commission that the 
Executive Committee adopted errata to be applied to Version 1.7 on 
April 1, 2005. The errata correct certain errors in the validation 
codes in the Code Values Dictionary of NAESB WGQ Standards 1.4.2 
(Nomination Quick Response) and 1.4.7 (Confirmation Quick 
Response).\11\
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    \11\ Additionally, the errata correct the definition of Monthly 
Allocation in 2.2.4 in the NAESB WGQ Standards Book 1 of 2. The 
correct definition was originally adopted prior to publication of 
Version 1.7, but during publication of Version 1.7 the definition 
was captured incorrectly. However, the definition is correct in the 
NAESB WGQ Flowing Gas Related Standards book.
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    9. On April 22, 2005 NAESB notified the Commission that a 
modification to Standard 4.3.23 was approved by the NAESB WGQ Executive 
Committee on April 4, 2005 and distributed for WGQ member ratification, 
with ballots due on May 3, 2005. The modification to the standard 
specifies a location for posting voluntary consent to information 
disclosure by non affiliated customers as required by Sec.  358 of the 
Commission's regulations.\12\
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    \12\ 18 CFR 358 (2004). NAESB states that it made the 
modification in response to paragraph 10 of the NOPR in this 
proceeding.
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II. Discussion

    10. The Commission is incorporating by reference Version 1.7 of the 
NAESB consensus standards; the standards to implement Order No. 2004 
ratified by NAESB on June 25, 2004 (2004 Annual Plan Item 2 FERC Order 
2004); the standards to implement Order No. 2004-A ratified by NAESB on 
May 3, 2005 (2005 Annual Plan Item 8 FERC Order 2004); and the 
standards governing gas quality reporting ratified by NAESB on October 
20, 2004 (Recommendation R03035A).\13\ Pipelines will be required to 
implement the standards by September 1, 2005, which is the first day of 
the month following 90 days after the issuance of this rule.\14\
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    \13\ Pursuant to the regulations regarding incorporation by 
reference, copies of Version 1.7 are available from NAESB. 5 U.S.C. 
552(a)(1); 1 CFR 51 (2001).
    \14\ The Commission is also revising Sec.  284.12(a)(2) to 
reflect NAESB new address.
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    11. The adoption of Version 1.7 \15\ of the NAESB WGQ standards 
will help continue the process of updating and improving the current 
standards. In adopting the Version 1.7 standards, the Commission is 
adopting the new ``Additional Standards'' implementation guide that 
contains standards generally applicable to all the business processes. 
The Additional Standards include standards governing the use of common 
codes to identify entities in transactions and the creditworthiness 
standards.
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    \15\ In Version 1.7 the NAESB WGQ made the following changes to 
its standards, including the creditworthiness standards. It revised 
Standards 1.3.32, 2.3.21, 4.3.1, 4.3.2, 5.3.2, 5.3.7, 5.3.41, and 
5.3.42, and Datasets 1.4.1 through 1.4.7, 2.4.1 through 2.4.16, 
3.4.1 through 3.4.4, and 5.4.1 through 5.4.22. It added Principles 
1.1.22, 2.1.6, 5.1.2, 5.1.3, and 5.1.4, Definitions 2.2.4, 2.2.5 and 
5.2.3, and Standards 0.3.2, 0.3.3 through 0.3.10, 2.3.51 through 
2.3.64, and 5.3.44 through 5.3.60. It deleted Principles 1.1.6, 
1.1.8, 1.1.19, and 4.1.14, and Standards 1.3.78, 2.3.24, 2.3.36 
through 2.3.39, and 5.3.6.
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    12. The Commission is also adopting the NAESB standards related to 
gas quality in WGQ Recommendation R03035A. These standards require a 
pipeline to provide a link on its Informational Posting Web Site to its 
gas quality tariff provisions, or a simple reference guide to such 
information. In addition, a pipeline is required to provide on its 
Informational Postings Web site, in a downloadable format, daily 
average gas quality information for prior day(s) to the extent 
available for location(s) that are representative of mainline gas flow 
for the most recent three-month period. Adoption of these standards 
will provide greater transparency to shippers with respect to the gas 
quality requirements of interstate pipelines and available information 
on gas quality on such pipelines' systems.
    13. The NAESB WGQ approved the standards under NAESB's consensus 
procedures.\16\ 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 section 12(d) 
of the National Technology Transfer and Advancement Act of 1995, 
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.\17\
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    \16\ This process first requires a super-majority vote of 17 out 
of 25 members of the WGQ'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 percent of the WGQ's general 
membership must ratify the standards.
    \17\ Pub. L. 104-113, Sec.  12(d), 110 Stat. 775 (1996), 15 
U.S.C. 272 note (1997).
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    14. The Comments addressing various aspects of the standards will 
be addressed below.

A. Implementation Date

    15. INGAA requests that the Commission implement the standards on 
the first day of the month following 180 days after issuance of a final 
rule. INGAA maintains that a transition to the new standards and the 
business requirements supported by those standards will be coordinated 
most effectively and seamlessly with the existing accounting, billing 
and nomination processes if such a transition is implemented at the 
beginning of a month. INGAA also states that delaying the required 
implementation date to 180 days after issuance of the final rule will 
allow time for interstate pipelines to make necessary changes in 
systems and procedures to implement the posting of gas quality criteria 
and data.
    16. The Commission agrees that requiring implementation on the 
first of the month allows for a more effective transition, and will 
therefore grant INGAA's request. However, we will not grant the 
requested 180-day delay in implementation. The pipelines have been on 
notice of the consensus standards since the standards were ratified and 
adopted. Also, the request relates principally to the gas quality 
standards, and thus does not justify a 180-day delay for implementing 
all the standards. We recognize that individual pipelines may have more 
difficulty in

[[Page 28207]]

implementing some of the standards, and the Commission has in the past 
been willing to grant extensions of time for implementation when 
pipelines have justified such requests. Accordingly, the Commission is 
requiring implementation on the first of the month, following 90 days 
after issuance of this final rule.

B. Gas Quality Standards

1. Tariff Provisions Regarding Gas Quality Standards
    17. The gas quality standards ratified by NAESB include Standard 
4.3.89 (formerly 4.3.s1), which states a pipeline should provide, on 
its Web site, a link to the natural gas quality tariff provisions or, 
where no tariff exists in the general terms and conditions, a simple 
reference guide to such information. FPL maintains that merely 
providing a link to the existing tariff provision will not necessarily 
provide clarity for end users or operational personnel unless the 
Commission encourages development of more clearly written and presented 
tariff language. FPL states that additional progress towards gas 
quality measurement standardization should be made. Specifically, FPL 
states that the absence of a consistent definition of the chemical 
characteristics of natural gas can cause problems for end users. FPL 
also states that standardized assumptions upon which chemical 
characteristics or physical properties are determined are needed.\18\ 
AGA requests that the Commission confirm the reporting standard does 
not relieve pipelines of their responsibility to ensure adherence to 
the gas quality specifications in their tariffs.
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    \18\ FPL states that the Environmental Protection Agency defines 
standard conditions as 68 degrees Fahrenheit at 1 atmosphere of 
pressure, but pipelines generally define and measure the volume of 
gas transported at 60 degrees Fahrenheit and an absolute pressure of 
14.73 pounds per square inch absolute, and variances exist from this 
measure.
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    18. These requests go beyond the scope of this rule, which 
addresses only the posting requirements for standards. Issues as to the 
clarity and substance of tariff provisions should be addressed in 
individual pipeline proceedings in which these issues are raised. The 
Commission has recognized that the issue of how to measure gas quality 
is of importance to the industry and has established a Natural Gas 
Interchangeability proceeding in Docket No. PL04-3-000 to address these 
substantive issues.\19\ The issues raised by FPL and AGA are more 
appropriately considered in that proceeding.
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    \19\ The Commission held a technical conference on these issues 
on February 18, 2004, and on March 2, 2005 issued a request for 
comment on two papers filed by the Natural Gas Council: White Paper 
on Liquid Hydrocarbon Drop Out in Natural Gas Infrastructure and 
White Paper on Natural Gas Interchangeability and Non-Combustion End 
Use. On April 13, 2005, the Commission issued a notice of a 
technical conference to be held May 17, 2005, to consider further 
comments on the NGC reports and recommendations for Commission 
action on natural gas quality and liquefied natural gas 
interchangeability issues.
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2. Information Posting
    19. Standard 4.3.90 (formerly 4.3.s2) states that pipelines should 
provide information ``to the extent available, for location(s) that are 
representative of mainline gas flow.'' BP states that this standard 
does not specify the data to be included in the operational posting, 
and the Commission's requirements in Natural \20\ are appropriate and 
should be incorporated into this rule. BP contends that the Natural 
standards include the requirement that the pipeline must post on its 
Internet Web site every receipt point dewpoint value it calculates, 
along with the method by which the dewpoint was calculated, and every 
blended dewpoint and blended BTU value it calculates for a line segment 
of its system. In Natural, the Commission required that the information 
must be posted within 24 hours of completion of the calculations.
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    \20\ Natural Gas Pipeline Co., 102 FERC ] 61,234, order on 
reh'g, 104 FERC ] 61,322 (2003) (Natural).
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    20. The Commission is incorporating the standards as developed by 
the WGQ. These standards represent a consensus of the industry as to 
the minimum posting requirements for information on gas quality that 
are applicable to all pipelines. In individual pipeline cases, such as 
in Natural, the Commission may have specified additional information be 
posted.\21\ Pipelines that are required to comply with such 
requirements must continue to do so, and the WGQ standards accommodate 
such postings. However, whether such requirements developed in 
individual cases should be extended to the entire industry is beyond 
the scope of this proceeding. Such issues can be raised in the 
proceeding in Docket No. PL04-3-000 that the Commission has instituted. 
Regarding BP's concern with the timeliness of posting, we expect that 
pipelines will promptly post their information.
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    \21\ The procedures developed in Natural were the result of 
problems Natural experienced during the winter of 2000-2001 when gas 
prices were so high that liquefiable hydrocarbons had a greater 
value to shippers as constituents of the gas stream than as 
extracted liquids. Shippers ceased their common practice of 
extracting the liquefiable hydrocarbons before tendering the gas to 
Natural, and this caused the closing of two gas processing plants 
that normally would tender processed residue gas.
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    21. Additionally, BP states that pipelines should not be able to 
avoid compliance with the data posting requirements by claiming that 
the data are not available at a specific location, and that the rule 
should provide that all pipelines must develop the means, to the extent 
they do not already have equipment in place, to measure gas quality at 
key points. TVA states that consumers should have access to documented 
information on the quality of the product being received, and that 
information should include measurements against a well-defined, 
documented formula and be publicly posted. INGAA states such a 
requirement would involve pipelines installing additional gas quality 
equipment, thus imposing on pipelines and their ratepayers millions of 
dollars of investment for new equipment. INGAA maintains the 
installation of additional equipment at each receipt point would add 
little or no value in improving safety and/or efficiency of pipeline 
operations.
    22. These standards involve only the posting of information 
obtained by the pipeline and require only that the pipeline post 
information it already has obtained. Issues relating to the development 
of additional information or other substantive questions are beyond the 
scope of this proceeding and should be addressed in individual cases or 
in the Commission's generic proceeding on gas quality.
    23. AGA states that, in adopting the NAESB gas quality standards, 
the Commission should include direction to the pipelines that in 
implementing the standards they should consult with their customers to 
determine which points are ``representative of mainline gas flow'' on 
its system. AGA states that the pipelines should provide meaningful 
indication of gas quality at all major delivery points. The Commission 
agrees that the pipelines should post information relevant to their 
shippers and consult with shippers in determining the information 
posted.
3. Exemption
    24. Total Peaking proposes an exemption from the gas quality 
posting requirements for natural gas companies that do not physically 
deliver natural gas into the facilities of an interstate pipeline. 
Total Peaking states it is a liquid natural gas storage company subject 
to Natural Gas Act jurisdiction and is required to have a tariff on 
file with the Commission. It states that the purpose of gas quality 
reporting cannot be served by imposing additional gas quality and 
measurement and reporting obligations on entities such as Total

[[Page 28208]]

Peaking, which do not physically deliver natural gas into the 
facilities of an interstate pipeline.
    25. We decline to grant a generic waiver of the standards as 
proposed by Total Peaking. The standards are intended to provide 
information regarding the quality of a particular pipeline or storage 
facility's system. Even though Total Peaking may not delivery gas to an 
interstate pipeline, the gas quality information may be useful to its 
customers. Although we decline to grant the generic exemption Total 
Peaking requests, entities such as Total Peaking may request a waiver 
of the requirements in their individual compliance filings where 
justified.

C. Creditworthiness

    26. In the NOPR, we proposed to incorporate by reference the 
creditworthiness standards adopted by NAESB that had previously been 
noticed in the creditworthiness rulemaking in Docket No. RM04-4-
000.\22\ In the NOPR in this proceeding, the Commission stated it would 
address the comments filed on these standards before the issuance of a 
final rule adopting these standards.\23\
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    \22\ Creditworthiness Standards for Interstate Natural Gas 
Pipelines, Notice of Proposed Rulemaking, 69 FR 8587 (Feb. 25, 
2004), FERC Stats. & Regs. Regulations Preambles ] 32,573 (Feb. 12, 
2004).
    \23\ We are addressing the comments filed in Docket No. RM04-4-
000 regarding creditworthiness here.
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    27. The ten WGQ standards on creditworthiness provide procedural 
rules by which pipelines should deal with their customers with respect 
to credit issues, such as providing shippers with the reasons a 
pipeline is requesting credit information, procedures for 
communications between pipelines and customers, and the timeline for 
providing responses to requests for credit reevaluation.
    28. Commenters in Docket No. RM04-4-000 generally support, or do 
not oppose, the consensus standards on creditworthiness. Many shippers 
urge the Commission to adopt the ten creditworthiness consensus 
standards.\24\ Several pipelines also support the incorporation of the 
ten NAESB standards into the Commission's regulations.\25\ Commenters, 
however, raise several issues which will be discussed below.
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    \24\ See, e.g., Northwest Industrial Gas Users at 7; Process Gas 
Consumers Group, et al. at 9-13; Calpine Corporation at 18; Encana 
Marketing (USA) Inc. at 4, 9-10.
    \25\ National Fuel at 2; Vector at 2-3; Williston Basin at 3; 
INGAA at 42.
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1. Notice to Releasing Shippers
    29. Standard 5.3.60 provides that a pipeline should provide the 
original releasing shipper with Internet E-mail notification 
``reasonably proximate in time'' of the following events: (1) Notice to 
the replacement shipper regarding the replacement shipper's past due, 
deficiency, or default status pursuant to the pipeline's tariff; (2) 
notice to the replacement shipper regarding the replacement shipper's 
suspension of service notice; (3) notice to the replacement shipper 
regarding the replacement shipper's contract termination notice due to 
default or credit-related issues; and (4) notice to the replacement 
shipper that the replacement shipper(s) is no longer creditworthy and 
has not provided credit alternative(s) pursuant to the pipeline's 
tariff.
    30. Several commenters point out that in creditworthiness orders, 
the Commission required pipelines to provide simultaneous notice to a 
releasing shipper and a replacement shipper upon determining that a 
replacement shipper is not creditworthy.\26\ Commenters argue that the 
standard of ``simultaneous notice'' is preferable to the standard of 
``reasonably proximate in time'' in Standard 5.3.60 (formerly 5.3.zF) 
given the importance of timely notice of credit-related events, since 
notice need only be sent to a small list of parties (the original 
releasing shipper(s)), since simultaneity is unambiguous, and since 
releasing shippers could be liable for unpaid reservation charges if a 
replacement shipper defaults.\27\ If the Commission retains the 
``reasonably proximate'' standard, Peoples requests a limitation in the 
rule clarifying that no more than one business day constitutes 
``reasonably proximate.'' \28\ Moreover, Peoples requests clarification 
that given the time sensitivity associated with credit related 
information, the requirement is not that the releasing shipper receive 
the notice that the pipeline sent to the replacement shipper, but only 
that the releasing shipper receive notice that such a notice was 
sent.\29\
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    \26\ See, e.g., Tennessee Gas Pipeline Co., 102 FERC ] 61,075 at 
P 78 (2003); Northern Natural Gas Co., 103 FERC ] 61,276 at P 43 
(2003).
    \27\ AGA at 10-11, Dominion at 6-7, Peoples at 6-8.
    \28\ Peoples at 6-7.
    \29\ See Peoples at 8 (suggesting revised regulatory language).
---------------------------------------------------------------------------

    31. Alliance, however, contends that requiring the pipeline to 
provide the releasing shipper with notice regarding the replacement 
shipper's financial performance could expose the pipeline to claims of 
liability, particularly where the replacement shipper has not defaulted 
on its contractual obligations, but is merely past due or deficient, or 
in situations where the replacement shipper has not authorized the 
release of confidential information to third parties.\30\ Alliance 
argues that, if the releasing shipper wants to require the replacement 
shipper to provide the releasing shipper with notice of any changes in 
its financial performance, the releasing shipper should make such a 
requirement a condition of the release. Alliance contends that the 
pipeline should not be required to keep the releasing shipper apprised 
of the replacement shipper's performance.
---------------------------------------------------------------------------

    \30\ Alliance at 15-17.
---------------------------------------------------------------------------

    32. The Commission will adopt the standard as proposed by the WEQ 
since this standard reflects the consensus of the industry. Providing 
simultaneous notice is not necessary, as long as the notice to the 
releasing shipper is provided promptly, such as on the same day as the 
notice to the replacement shipper.
    33. Nor does the Commission see a need to revise Standard 5.3.60 to 
respond to the comments filed by Peoples and Alliance. The standard 
does not require the pipeline to provide an identical notice to the 
releasing shipper, only that the releasing shipper should receive 
notice that one of the events has occurred. With respect to Alliance's 
concerns, we find that it is a reasonable default provision for the 
pipeline to notify the releasing shipper of conditions that may affect 
the replacement shipper's ability to perform under its release. Such 
information is relevant, for example, to the releasing shipper's 
decision whether to recall capacity. Further, replacement shippers that 
object to this condition can seek to obtain agreement from the 
releasing shipper that the releasing shipper will not receive such a 
notice. Alliance has not shown that liability will attach to the 
pipeline in such a case.
    34. Alliance suggests that such notice only be provided when the 
releasing shipper includes the provision in the terms and conditions of 
the release. However, given the comments by releasing shippers on the 
proposed standard and in many of the creditworthiness cases, it appears 
that, in the majority of cases, the releasing shipper will insist on 
such a provision in a release, and, therefore, we find the inclusion of 
this standard reasonable as the default provision. However, we clarify 
that if the releasing and replacement shippers agree that such

[[Page 28209]]

notice not be provided, that agreement can be included in the terms and 
conditions of the release, in which case the pipeline will not provide 
the notice.
2. Publishing the Standards in the Regulations
    35. NiSource contends the Commission should restate the ten 
consensus standards in the regulations since the standards are a 
critically important component of this rulemaking. NiSource states that 
restating the standards in the regulations will facilitate the 
interpretation and implementation of the rules.
    36. As the Commission has explained in previous orders, the Freedom 
of Information Act and implementing regulations establish that the 
proper method of adopting private sector standards is to incorporate 
those standards by reference into the agency's regulations.\31\ Because 
these standards are copyrighted, reproducing them in the regulations is 
not appropriate.\32\ However, the standards are available on compact 
disc from NAESB at the reasonable price of $100.\33\
---------------------------------------------------------------------------

    \31\ Standards for Business Practices of Interstate Natural Gas 
Pipeline, 95 FERC ] 61,127, at 61,400-01 (2001); Standards for 
Business Practices of Interstate Natural Gas Pipelines, 77 FERC ] 
61,061, at 61,232-33 (1996).
    \32\ 5 U.S.C. 553 (a)(1) (2000); 1 CFR 51.7(4) (2005). See 28 
U.S.C. 1498 (2000) (government liability for patent and copyright 
infringement).
    \33\ NAESB Home Page, http://www.naesb.org/pdf/ordrform.pdf.
---------------------------------------------------------------------------

D. 2004 Standards

    37. As the Commission stated in the NOPR, the NAESB standards with 
respect to the Order No. 2004 affiliate standards establish uniform 
posting requirements for the Commission requirements. However, the 
NAESB standards were developed prior to the issuance of Order No. 2004-
A, and revised Standard 4.3.23 did not specify a location for posting 
voluntary consent to information disclosure by non affiliated customers 
as required by Sec.  358 of the Commission's regulations.\34\ The 
Commission noted that electric utilities and pipelines have been 
posting this information as a separate category from other non-
discrimination requirements, and that posting this information as a 
separate category represents a better practice, since it will make it 
easier for the Commission as well as other parties to find and access 
this information. The Commission stated that it expects pipelines and 
electric utilities to post this information as a separate category.
---------------------------------------------------------------------------

    \34\ 18 CFR 358 (2004).
---------------------------------------------------------------------------

    38. On May 3, 2005, the NAESB membership ratified a revision to 
Standard 4.3.23 to provide for a separate category for posting 
voluntary consent information consistent with the Commission's policy, 
and the Commission will incorporate this modification into its 
regulations.

Notice of Use of Voluntary Consensus Standards

    39. 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 stating whether the adopted standard is a 
voluntary consensus standard or a government-unique standard. In this 
rulemaking, the Commission is incorporating by reference voluntary 
consensus standards developed by the WGQ.

Information Collection Statement

    40. The Office of Management and Budget's (OMB) regulations in 5 
CFR 1320.11 (2005) 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.
    41. 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 Version 1.7 of the WGQ's consensus 
standard as modified by the standards ratified by the WGQ on June 25, 
2004, to implement Order No. 2004 and the standards to implement gas 
quality reporting requirements ratified by the WGQ on October 20, 2004, 
in Recommendation R03035A. The burden estimates for the FERC-545 data 
collection are related to the tariff filings required to implement 
these 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
                 Data collection                     Number of     responses per     Hours per     Total annual
                                                    respondents     respondent       response          hours
----------------------------------------------------------------------------------------------------------------
FERC-545........................................              93               1              38           3,534
FERC-549C.......................................              93               1           2,614         243,102
----------------------------------------------------------------------------------------------------------------

    The total annual hours for collection is 246,636 hours.

------------------------------------------------------------------------
                                             FERC-549C       FERC-545
------------------------------------------------------------------------
Annualized Capital/Startup Costs........     $12,691,327        $184,495
Annualized Costs (Operations &                         0               0
 Maintenance)...........................
                                         -----------------
    Total Annualized Costs..............      12,691,327         184,495
------------------------------------------------------------------------


[[Page 28210]]

    The cost per respondent is $138,450 (rounded off).
    42. The Commission sought comments to comply with these 
requirements. Comments were received from six entities. No comments 
addressed the reporting burden imposed by these requirements. The 
substantive issues raised by the commenters are addressed in this 
preamble.
    43. 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 1.7, of the WGQ's consensus standards 
and the standards to implement Order No. 2004 and gas quality reporting 
requirements.
    44. 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.
    45. 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) 
502-8415, 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) 395-7856, or fax: (202) 395-7285.

Environmental Analysis

    46. 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.\35\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\36\ The actions adopted here 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 the requires no construction of 
facilities.\37\
---------------------------------------------------------------------------

    \35\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs. Preambles 1986-1990 ] 30,783 (1987).
    \36\ 18 CFR 380.4 (2004).
    \37\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27) 
(2004).
---------------------------------------------------------------------------

Regulatory Flexibility Act Certification

    47. The Regulatory Flexibility Act of 1980 (RFA) \38\ 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, the majority of which are not small business, and, these 
requirements are, in fact, designed to benefit all customers, including 
small business. 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.
---------------------------------------------------------------------------

    \38\ 5 U.S.C. 601-612 (2000).
---------------------------------------------------------------------------

Document Availability

    48. 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.
    49. From FERC's Home Page on the Internet, this information is 
available in eLibrary. The full text of this document is available in 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    50. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours. For assistance contact FERC Online 
Support at [email protected] or toll-free at (866) 208-3676 or 
for TTY, contact (202) 502-8659.

Implementation Dates And Procedures

    51. Pipelines are required to file tariff sheets to reflect the 
changed standards on or before July 1, 2005, with an effective date of 
September 1, 2005. Pipelines incorporating the Version 1.7 standards 
into their tariffs must include the standard number and Version 1.7. 
Pipelines incorporating by reference the gas quality standards must 
refer to the standard number (e.g. 4.3.89) and the Recommendation 
number in which the standard is adopted (R03035A). Pipelines 
incorporating the standards adopted by NAESB to implement Order No. 
2004 must refer to the standard as 2004 Annual Plan Item 2 FERC Order 
2004 and 2005 Annual Plan Item 8 (May 3, 2005) (Affiliate Order 
standards).

Effective Date

    52. These regulations are effective June 16, 2005. 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.
Magalie R. Salas,
Secretary.

0
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

0
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.


0
2. Section 284.12 is amended as follows:
0
a. In paragraph (a)(2), the reference to ``1100 Louisiana, Suite 3625'' 
is revised to read ``1301 Fannin, Suite 2350''.
0
b. Paragraphs (a)(1)(i) through (v) are revised and a new paragraph 
(a)(1)(vi) is added to read as follows:


Sec.  284.12  Standards for pipeline business operations and 
communications.

    (a) * * *
    (1) * * *
    (i) Additional Standards (General Standards and Creditworthiness 
Standards) (Version 1.7, December 31, 2003);

[[Page 28211]]

    (ii) Nominations Related Standards (Version 1.7, December 31, 2003, 
including errata, October 15, 2004 and April 1, 2005);
    (iii) Flowing Gas Related Standards (Version 1.7, December 31, 
2003);
    (iv) Invoicing Related Standards (Version 1.7, December 31, 2003);
    (v) Electronic Delivery Mechanism Related Standards (Version 1.7, 
December 31, 2003) with the exception of Standard 4.3.4, and including 
the standards contained in 2004 Annual Plan Item 2 (June 25, 2004) 
(Order No. 2004 standards) and the standard contained in 2005 Annual 
Plan Item 8 (May 3, 2005) (Affiliate Order standards), and the 
standards contained in Recommendation R03035A (October 20, 2004) (gas 
quality reporting); and
    (vi) Capacity Release Related Standards (Version 1.7, December 31, 
2003, including errata, October 15, 2004).
* * * * *
[FR Doc. 05-9803 Filed 5-16-05; 8:45 am]
BILLING CODE 6717-01-P