[Federal Register Volume 73, Number 4 (Monday, January 7, 2008)]
[Proposed Rules]
[Pages 1116-1131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-25435]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 73, No. 4 / Monday, January 7, 2008 / 
Proposed Rules  

[[Page 1116]]



DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM08-2-000]


Pipeline Posting Requirements Under Section 23 of the Natural Gas 
Act

December 21, 2007.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this Notice of Proposed Rulemaking, the Commission proposes 
to require both interstate and certain major non-interstate pipelines 
to post capacity, daily scheduled flow information and daily actual 
flow information. This proposal incorporates one contained in an 
earlier Notice of Proposed Rulemaking to require the posting of 
capacity and daily actual flow information by some intrastate 
pipelines, with some changes. Under this proposal, interstate pipelines 
would be required to post daily actual flow information in addition to 
their currently required posting of capacity and daily scheduling 
information. Non-interstate pipelines would be required to post daily 
scheduled flow information in addition to the earlier Notice of 
Proposed Rulemaking proposal to require posting capacity and daily 
actual flow information. The posting proposal would facilitate price 
transparency in markets for the sale or transportation of physical 
natural gas in interstate commerce to implement section 23 of the 
Natural Gas Act.

DATES: Comments are due February 21, 2008. Reply comments are due March 
24, 2008.

ADDRESSES: You may submit comments, identified by docket number by any 
of the following methods:
     Agency Web Site: http://ferc.gov Follow the instructions 
for submitting comments via the eFiling link found in the Comment 
Procedures section of the preamble. Documents created electronically 
using word processing software should be filed in native applications 
or print-to-PDF format and not in a scanned format.
     Mail/Hand Delivery: Commenters unable to file comments 
electronically must mail or hand deliver an original and 14 copies of 
their comments to: Federal Energy Regulatory Commission, Secretary of 
the Commission, 888 First Street, NE., Washington, DC 20426. Please 
refer to the Comment Procedures section of the preamble for additional 
information on how to file paper comments.

FOR FURTHER INFORMATION CONTACT:
    Stephen J. Harvey (Technical), Office of Enforcement, Federal 
Energy Regulatory Commission, 888 First Street NE., Washington, DC 
20426, (202) 502-6372, [email protected].
    Charles Whitmore (Technical), Office of Enforcement, Federal Energy 
Regulatory Commission, 888 First Street NE., Washington, DC 20426, 
(202) 502-6256, [email protected].
    Eric Ciccoretti (Legal), Office of Enforcement, Federal Energy 
Regulatory Commission, 888 First Street NE., Washington, DC 20426, 
(202) 502-8493, [email protected].

SUPPLEMENTARY INFORMATION:

I. Introduction and Summary of Proposal

    1. On April 19, 2007, the Commission issued a Notice of Proposed 
Rulemaking (Initial NOPR) to implement section 23 of the Natural Gas 
Act, which was added to the act by the Energy Policy Act of 2005 (EPAct 
2005).\1\ In the Initial NOPR, the Commission proposed an annual 
reporting requirement for certain natural gas sellers and buyers and a 
daily posting requirement for intrastate pipelines.\2\ The Commission 
also asked in the Initial NOPR whether posting requirements for 
interstate pipeline should be changed.\3\
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    \1\ Transparency Provisions of Section 23 of the Natural Gas 
Act, 72 FR 20791 (Apr. 26, 2007), FERC Stats. and Regs. ] 32,614 
(2007). Congress enacted section 23 of the Natural Gas Act as part 
of the Energy Policy Act of 2005. Energy Policy Act of 2005, Pub. L. 
No. 109-58, 119 Stat. 594 (2005).
    \2\ Initial NOPR at P 1-2.
    \3\ Initial NOPR at P 43.
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    2. Concurrently, the Commission is issuing a Final Rule with 
respect to the annual reporting requirement. With respect to the 
pipeline posting proposal, based on Staff experience as well as the 
comments received, the Commission has determined to issue the instant 
notice of proposed rulemaking (NOPR) to develop the record more fully 
with respect to the posting proposal. The Initial NOPR may not have 
given sufficient notice to interstate pipelines of changes that seem 
necessary to implement adequately section 23 of the Natural Gas Act. In 
addition, the Commission believes that more information regarding the 
technical implementation of daily posting of actual flow information by 
interstate pipelines is required in order to consider the costs and 
benefits of such a regulatory change. For those purposes, the 
Commission incorporates by reference the Initial NOPR and all comments 
filed in response to the Initial NOPR in Docket No. RM07-10-000 with 
respect to the pipeline posting proposal.
    3. The Commission intends the instant proposal to make available 
the information needed to track daily flows of natural gas adequately 
throughout the United States. Specifically, the Commission proposes to 
require both interstate pipelines and major non-interstate pipelines 
\4\ to post daily information regarding their capacity, scheduled flow 
volumes, and actual flow volumes at major points and mainline segments. 
The proposal would result in both interstate and non-interstate 
pipelines posting the same types of information.
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    \4\ In the Initial NOPR, the Commission used the term 
``intrastate pipeline;'' herein, the Commission uses the term ``non-
interstate pipeline''--a point explained further below.
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    4. For interstate pipelines, this proposal would add to the 
existing posting requirements in Sec.  284.13(d) a requirement to post 
daily actual flow volume.\5\ To bring the requirements for major non-
interstate pipelines into alignment with the existing and proposed 
posting requirements for interstate pipelines, this proposal adds to 
the proposal in the Initial NOPR a requirement that major non-
interstate pipelines post daily scheduled flow volumes.\6\ For the 
purposes of this NOPR, a ``major non-interstate pipeline'' is defined 
as one that is not a ``natural gas company'' under section 1 of the 
Natural Gas Act \7\ and that flows greater

[[Page 1117]]

than 10 million (10,000,000) MMBtus of natural gas per year, with two 
exceptions.\8\ The first exception is non-interstate pipelines that 
fall entirely upstream of a processing plant.\9\ The second exception 
is non-interstate pipelines that deliver more than ninety-five percent 
(95%) of the natural gas volumes they flow directly to end-users.\10\
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    \5\ Proposed 18 CFR 284.13(d).
    \6\ Proposed 18 CFR 284.14(a).
    \7\ 15 U.S.C. 717.
    \8\ Proposed 18 CFR 284.1.
    \9\ Proposed 18 CFR 284.14(b)(1).
    \10\ Proposed 18 CFR 284.14(b)(2).
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    5. With these proposed additions of flow information from major 
non-interstate pipelines to the information already available from 
interstate pipelines, market observers, such as the Commission, state 
commissions and market participants, could develop a better 
understanding of the supply and demand conditions that directly affect 
the U.S. wholesale natural gas markets. Market participants would have 
a better basis for evaluating the prices at which they transact. 
Consequently, this proposal to increase information from non-interstate 
pipelines and from interstate pipelines would directly ``facilitate 
price transparency for the sale * * * of physical natural gas in 
interstate commerce'' as authorized in the natural gas transparency 
provisions.\11\
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    \11\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
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    6. The Commission's proposal would apply to major non-interstate 
pipelines even though section 1 of the Natural Gas Act \12\ excludes 
them from the Commission's ratemaking authority under sections 4 and 5 
of the Natural Gas Act \13\ and the Commission's certificate authority 
under section 7 of the Natural Gas Act.\14\ As discussed below, 
Congress placed market participants, which include non-interstate 
pipelines, within the Commission's transparency authority under section 
23 of the Natural Gas Act to ensure ``the dissemination, on a timely 
basis, of information about the availability and prices of natural gas 
sold at wholesale and in interstate commerce.'' \15\ Aware that the 
pre-EPAct 2005 limits on the Commission's authority would have left 
gaps in the transparency of the wholesale, physical natural gas 
markets, Congress did not restrict the Commission's transparency 
authority to those same limits in enacting section 23 of the Natural 
Gas Act. As we stated in the Initial NOPR: ``While distinctions between 
intrastate and interstate natural gas markets may be meaningful from a 
legal perspective, they are not meaningful from the perspective of 
market price formation.'' \16\ Congress was aware of the legal 
distinctions between natural gas markets in enacting EPAct 2005 and, in 
choosing to use the term ``any market participant'' indicated that 
these distinctions should not apply to the Commission's transparency 
authority. At the same time, by not amending section 1 of the Natural 
Gas Act, Congress retained the legal distinctions between intrastate 
and interstate pipelines for the purposes of delineating the entities 
subject to the Commission's authority over ratemaking in sections 4 and 
5 and over certification of construction and sales of new facilities 
and transportation services in section 7 of the act.
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    \12\ 15 U.S.C. 717.
    \13\ 15 U.S.C. 717c; 15 U.S.C. 717d.
    \14\ 15 U.S.C. 717f.
    \15\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(2) (2000 & Supp. V 2005).
    \16\ Initial NOPR at P 20.
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    7. The Commission issues this NOPR in order to solicit further 
comment on requiring actual flow information from both interstate and 
non-interstate pipelines and to consider whether the posting 
requirements for both interstate and non-interstate pipelines should be 
similar. In the Initial NOPR, the Commission did not propose to require 
the posting of actual flow information by interstate pipelines, but it 
did seek comment on such posting.\17\ Further comment in response to 
the instant NOPR will allow the Commission to give more consideration 
to requiring actual flow information on interstate pipelines, in 
particular the technical issues associated with quick posting of that 
information. In addition, the Commission seeks further comment 
regarding how the posting requirements should apply to storage 
facilities and regarding its daily pipeline posting proposal for major 
non-interstate pipelines.
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    \17\ Initial NOPR at P 43.
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    8. To address implementation issues associated with the posting 
proposal, such as obtaining and posting actual flow information and 
obtaining and posting information from storage facilities, the 
Commission directs Staff to conduct a technical conference before 
comments on this NOPR are due.

II. The Commission's Transparency Authority Over Non-Interstate 
Pipelines Under Section 23 of the Natural Gas Act

    9. At the outset, the Commission addresses the jurisdictional 
issues raised by its proposal in the Initial NOPR. In the Initial NOPR, 
the Commission explained how section 23 of the Natural Gas Act 
authorizes the Commission to require an intrastate pipeline to post 
information regarding its transportation of natural gas, even though 
section 1 of the Natural Gas Act excludes such companies from the 
Commission's authority to regulate transportation of natural gas under 
sections 4, 5, and 7 of the Natural Gas Act.\18\
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    \18\ Initial NOPR at P 11-18, 21-24, & 37.
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A. Comments

1. Comments: Section 23 of the Natural Gas Act
    10. The Texas Pipeline Association (TPA) \19\ argued that, contrary 
to the Commission's explanation, the plain language of section 23 of 
the Natural Gas Act shows that the term ``market participant'' is 
limited to those entities that participate in wholesale interstate 
natural gas markets and does not include intrastate pipelines.\20\ TPA 
concluded that the plain language of section 23 of the Natural Gas Act 
does not support the Commission's assertion of authority to collect 
information from intrastate pipelines because they do not participate 
in markets for the sale or transportation of natural gas in interstate 
commerce.\21\
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    \19\ Eight entities expressed support for the Texas Pipeline 
Association's comments: Atmos Energy Corporation, Copano Energy, 
L.L.C., Crosstex Energy Services, LP, DCP Midstream, LLC, Enbridge 
Energy Co., Inc., Gas Processors Association, Kinder Morgan Texas 
Intrastate Pipeline Group, Targa Resources, Inc.
    \20\ Comments of TPA at 16-17.
    \21\ Id.
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    11. Enterprise Products Partners L.P. (Enterprise) also asserted 
that an entity must be participating in the interstate market to be a 
``market participant'' under section 23 of the Natural Gas Act. 
Enterprise reasoned that an entity subject to the Commission's 
authority under section 23 but not to its authority under other 
sections of the Natural Gas Act is an entity that ``participat[es] in 
the interstate market (whether by buying, selling, shipping or trading 
physical natural gas) but not already subject to [Natural Gas Act] 
jurisdiction as natural gas companies.'' \22\ According to Enterprise, 
the Commission's proposal to impose posting requirements on intrastate 
pipelines bears no relation to Congress's intention to restrict the 
Commission's jurisdiction to entities participating in the interstate 
market.\23\
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    \22\ Comments of Enterprise at 13.
    \23\ Id.
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    12. Similarly, the Railroad Commission of Texas argued that the 
term ``market participant'' does not indicate that Congress 
contemplated the expansion of Commission authority to

[[Page 1118]]

include intrastate pipelines as asserted by the Commission.\24\ The 
Railroad Commission of Texas explained that there is no reference at 
all in the relevant statutory provisions or legislative history of 
EPAct 2005 to intrastate pipelines, the intrastate natural gas market 
or intrastate gas flows and no express indication that the Commission's 
authority was being extended in any manner over ``intrastate'' market 
participants.\25\
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    \24\ Comments of Railroad Commission of Texas at 6-7; see also 
Comments of Atmos Pipeline-Texas at 6-7.
    \25\ Comments of Railroad Commission of Texas at 7.
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    13. One commenter, Enterprise, contended that the Commission does 
not have the authority to require posting of information by intrastate 
pipelines because Congress limited the information that may be 
collected from market participants to ``information about natural gas 
sold at wholesale and in interstate commerce.'' \26\ Enterprise 
interpreted Congress's use of the word ``about'' as limiting language 
and asserted that Congress deliberately chose the word ``about'' as 
opposed to ``affect'' or ``at least impacts'' in order to stress that 
the Commission does not have the authority to compel reporting for any 
activity that might have some impact on the interstate wholesale 
natural gas markets.\27\
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    \26\ Comments of Enterprise Products Partners, L.P. at 11 
(emphasis in original).
    \27\ Id. at 11-12.
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2. Comments: Section 1(b) of the Natural Gas Act
    14. TPA argued that section 1(b) of the Natural Gas Act precludes 
the Commission from prescribing rules under its section 23 authority 
that apply to intrastate transportation or sale of natural gas.\28\ TPA 
asserted that Congress has consistently respected the distinction 
between interstate and intrastate pipelines which first appeared in 
section 1(b) of the Natural Gas Act and was recognized by Congress in 
amendments to the Natural Gas Act and in the Natural Gas Policy Act of 
1978.\29\ TPA referred to numerous appellate court decisions that 
recognized this distinction in reviewing the Commission's 
jurisdiction.\30\
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    \28\ Comments of TPA at 7; see also Comments of Louisiana Office 
of Conservation at 5.
    \29\ Comments of TPA at 9.
    \30\ Id. at 11 (citations omitted).
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    15. Several commenters argued that if Congress intended the 
transparency provisions to cover intrastate pipelines, it would have 
amended section 1 of the Natural Gas Act.\31\ TPA argued that if 
Congress intended to expand the Commission's authority over intrastate 
transportation of natural gas, it would have amended section 1(b) to 
include new posting obligations for intrastate pipelines for all daily 
flows and capacity at major points.\32\ TPA explained that, in EPAct 
2005, Congress amended section 1(b) of the Natural Gas Act to include 
application to the importation or exportation of natural gas in foreign 
commerce and to persons engaged in such importation or exportation.\33\ 
TPA contended that without a similar amendment to section 1(b) to 
provide for the posting of information Congress cannot ``cross the 
jurisdictional line'' by imposing a posting requirement on intrastate 
pipelines.\34\
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    \31\ Comments of TPA at 10-11; Comments of Enterprise at 15; 
Comments of Louisiana Office of Conservation at 5; Comments of 
Railroad Commission of Texas at 6-7.
    \32\ Comments of TPA at 10-11.
    \33\ Id. (citing EPAct 2005 section 311 (amending section 1(b) 
of the Natural Gas Act)).
    \34\ Comments of TPA at 11.
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3. Comments: Section 1(c) of the Natural Gas Act
    16. Several commenters, such as the Railroad Commission of Texas, 
asserted that the Commission's proposal to require intrastate pipelines 
to post information impermissibly intrudes on states' regulation of 
natural gas transportation.\35\ Cranberry Pipeline Corporation argued 
that the Commission cannot have jurisdiction over intrastate 
transactions when those transactions are already subject to the 
jurisdiction of the state regulatory commission.\36\ Similarly, DCP 
argued that the Commission ignored section 1(c) of the Natural Gas Act 
which exempts intrastate transportation because it is viewed as a 
matter of local concern subject to regulation by the states.\37\
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    \35\ Comments of Railroad Commission of Texas at 8-9; see also 
Reply Comments of the RRC of Texas at 8; Reply Comments of the Texas 
Pipeline Association at 12.
    \36\ Comments of Cranberry Pipeline Corporation at 8 (internal 
citations omitted).
    \37\ Comments of DCP Midstream, LLC at 7 (internal citations 
omitted).
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4. Comments: Other
    17. TPA argued that there is no indication in the legislative 
history of section 23 that Congress intended to modify the Commission's 
jurisdiction to include intrastate transportation.\38\ Atmos Energy 
Corporation (Atmos) and the Railroad Commission of Texas similarly 
stated that there is no reference at all in the relevant statutory 
provisions or legislative history of EPAct 2005 to intrastate 
pipelines, the intrastate natural gas market or intrastate gas flows 
and certainly no express indication that the FERC's authority was being 
extended in any manner over ``intrastate'' market participants.\39\
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    \38\ Comments of TPA at 21.
    \39\ Comments of Atmos at 12 (internal citations omitted); 
Comments of the Railroad Commission of Texas at 6-7 (internal 
citations omitted).
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    18. DCP Midstream, LLC argued that intrastate pipelines should not 
be held to the same reporting burden as interstate pipelines because 
intrastate pipelines have not submitted to the jurisdiction of the 
Commission. The burdens that an interstate pipeline assumes, DCP 
contended, accompany a certificate of public convenience and necessity 
and should not be imposed on an intrastate pipeline. DCP asserted that 
the Commission's policy historically has been that only gas pipelines 
that affirmatively accepted a jurisdictional certificate to provide 
transportation in interstate commerce would be subject to Commission 
regulation, such as daily scheduled volume or pipeline capacity 
reporting.\40\
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    \40\ Comments of DCP Midstream, LLC at 9-10.
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    19. Atmos argued that the Commission's interpretation of Natural 
Gas Act section 23 is inconsistent with the Commission's prior analysis 
of its own jurisdiction in Order No. 670 \41\ and Order No. 636.\42\ 
Atmos pointed to Order No. 670, in which the Commission interpreted the 
phrase ``any entity'' from section 4A of the Natural Gas Act to 
encompass any person or form of organization, regardless of its legal 
status, function or activities, and further concluded that this 
language did not specifically exclude entities engaged in non-
jurisdictional activities.\43\ Atmos also described the Commission 
interpreting the phrase ``in connection with'' from section 4A so as to 
conclude that not every common-law fraud that touches a jurisdictional 
transaction would constitute market manipulation.\44\ According to 
Atmos, in Order No. 670, the Commission further determined, that had 
Congress intended to expand the Commission's jurisdiction

[[Page 1119]]

so significantly as to give it anti-manipulation authority over non-
jurisdictional transactions such as first sales of natural gas, sales 
of imported natural gas, sales of imported liquefied natural gas, or 
sales and transportation by entities exempt from Commission regulation 
under Natural Gas Act section 1(b), then it would have done so 
explicitly.\45\
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    \41\ Prohibition of Energy Market Manipulation, Order No. 670, 
71 FR 4244 (Jan. 26, 2006), FERC Stats. & Regs. ] 31,202 (2006) 
(Order No. 670).
    \42\ Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation; and Regulation of 
Natural Gas Pipelines After Partial Wellhead Decontrol, Order No. 
636, 57 FR 13267 (Apr. 16, 1992), FERC Stats. & Regs. ] 30,939 
(1992), order on reh'g, Order No. 636-A, 57 FR 36128 (Aug. 12, 
1992), FERC Stats. & Regs. ] 30,950 (1992), order on reh'g, Order 
No. 636-B, 61 FERC ] 61,272 (1992), order on reh'g, 62 FERC ] 61,007 
(1993), aff'd in part and remanded in part sub nom, United 
Distribution Cos. v. FERC, 88 F.3d 1105 (D.C. Cir. 1996), order on 
remand, Order No. 636-C, 78 FERC ] 61,186 (1997) (Order No. 636).
    \43\ Comments of Atmos at 9.
    \44\ Id. at 9-10.
    \45\ Id. at 9 (internal citations omitted).
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    20. As to Order No. 636, Atmos argued that the Commission's 
assertion of transparency authority over intrastate pipelines is 
contrary to its holdings in that order, in which the Commission held 
that a non-interstate pipeline ``providing service under section 311 of 
the [Natural Gas Policy Act of 1978] is not required to meet the 
service requirements of the Commission's Order No. 636 such as offering 
firm service, having a capacity release program, posting available 
capacity electronically, offering flexible receipt and delivery points, 
or unbundling distinct services.'' \46\ By contrast, the pipeline 
posting proposal, asserted Atmos, would not only extend daily posting 
requirements to section 311 transportation by intrastate pipelines, but 
also to transportation that is purely intrastate in nature.\47\
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    \46\ Id. at 15 (emphasis in original).
    \47\ Id. at 12 (internal citations omitted). Atmos stated that 
it would not object if the Commission limits the posting 
requirements applicable to intrastate pipelines to section 311 
transportation or other activity regulated under the Natural Gas 
Policy Act of 1978. Id.
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    21. Some commenters, such as the Railroad Commission of Texas, 
expressed concern that a requirement for intrastate pipelines to post 
information would lead to further regulation of those intrastate 
pipelines.\48\
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    \48\ Comments of the Railroad Commission of Texas at 8-9.
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B. Discussion

    22. The Commission proposes here to require major non-interstate 
pipelines to post information regarding capacity, scheduled flow 
volumes, and actual flow volumes.\49\ This proposal would impose 
posting requirements on major non-interstate pipelines in a limited 
way. The Commission does not intend to regulate the intrastate 
operations of those non-interstate pipelines; nor do we intend to 
regulate the rates or terms and conditions of intrastate service for 
those non-interstate pipelines. The Commission proposes to require 
those non-interstate pipelines only to post information.
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    \49\ Proposed 18 CFR 284.14(a).
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    23. In the Initial NOPR, the Commission used the term ``intrastate 
pipeline.'' In this proposal, the Commission uses the term ``non-
interstate pipeline.'' The latter term more accurately describes the 
scope of the proposed rule, which is issued pursuant to section 23 of 
the Natural Gas Act.\50\ This section applies to both interstate and 
non-interstate pipelines, a point explained further below, and does not 
use the term ``intrastate pipeline.'' In this NOPR, the Commission 
proposes to collect important information about the physical, natural 
gas market from certain pipelines in the continental United States 
regardless of whether the pipeline is an intrastate pipeline, a Hinshaw 
pipeline, or any other type of pipeline that is not an interstate 
pipeline under the Natural Gas Act. The subjects of the posting 
requirement proposed herein are set by their participation in the 
physical, natural gas market not by their legal status under section 1 
of the Natural Gas Act.\51\
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    \50\ 15 U.S.C. 717t-2 (2000 & Supp. V 2005).
    \51\ 15 U.S.C. 717.
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    24. The proposed posting requirements for non-interstate pipelines 
are consistent with Congress's intent as expressed in section 23 of the 
Natural Gas Act. There, Congress permitted the Commission to impose on 
a broad set of market participants requirements for a limited purpose, 
i.e., to obtain and disseminate ``information about the availability 
and prices of natural gas at wholesale and in interstate commerce.'' 
\52\ At the same time, as the Commission explicitly acknowledges, 
Congress did not expand the Commission's authority to impose on the 
same set of market participants requirements related to the 
Commission's traditional regulatory activities, e.g., ratemaking under 
sections 4 and 5 of the Natural Gas Act and certification of 
construction and sales and transportation services under section 7 of 
the Natural Gas Act.
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    \52\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(2) (2000 & Supp. V 2005).
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    25. Congress placed non-interstate pipelines within the 
Commission's transparency authority under section 23 of the Natural Gas 
Act in order to ensure--for the entirety of the wholesale, physical 
natural gas market--transparency of price and availability, including 
transparency of market price formation. Aware that the pre-EPAct 2005 
limits on the Commission's authority would have left gaps in the 
transparency of the wholesale, physical natural gas markets, Congress 
did not restrict the Commission's transparency authority to those same 
limits in enacting section 23 of the Natural Gas Act. As we stated in 
the Initial NOPR, ``While distinctions between intrastate and 
interstate markets may be meaningful from a legal perspective, they are 
not meaningful from the perspective of market price formation.'' \53\ 
Congress was aware of the legal distinctions between non-interstate and 
interstate natural gas markets in enacting EPAct 2005. In choosing to 
use the term ``any market participant'' and focusing section 23 on 
``information about the availability and prices of natural gas at 
wholesale and in interstate commerce,'' Congress indicated that these 
distinctions should not apply to the Commission's transparency 
authority. At the same time, by not amending section 1, Congress 
retained the legal distinctions between intrastate and interstate 
markets for the purposes of delineating the entities subject to the 
Commission's authority over ratemaking in sections 4 and 5 and over 
construction of natural gas facilities in section 7 of the Natural Gas 
Act.
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    \53\ Initial NOPR at P 20.
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1. Discussion: Section 23 of the Natural Gas Act
    26. The language in section 23 of the Natural Gas Act supports the 
Commission's authority to require non-interstate pipelines to post 
information about capacity, scheduled flow volumes and actual flow 
volumes. In section 23(a)(1), Congress directed the Commission to 
``facilitate price transparency in markets for the sale or 
transportation of physical natural gas in interstate commerce * * *.'' 
\54\ In section 23(a)(2), Congress authorized the Commission to 
``provide for the dissemination, on a timely basis, of information 
about the availability and prices of natural gas sold at wholesale and 
in interstate commerce * * *.'' \55\ Congress expressly delegated to 
the Commission the task of adopting rules to give life to this 
provision \56\ and, in section 23(a)(3), provided that the Commission 
may ``obtain the information'' about the availability and prices of 
natural gas sold at wholesale and in interstate commerce from ``any 
market participant.'' \57\
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    \54\ 15 U.S.C. 717t-2(a)(1) (2000 & Supp. V 2005).
    \55\ 15 U.S.C. 717t-2(a)(2) (2000 & Supp. V 2005).
    \56\ Id.
    \57\ 15 U.S.C. 717t-2(a)(3) (2000 & Supp. V 2005).
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    27. Congress could have limited the Commission's transparency 
authority to obtaining information from any ``natural gas company'' 
subject to the Commission's traditional regulatory authority. It did 
not do so. Instead, in using the broad new term ``any market 
participant,'' Congress deliberately

[[Page 1120]]

expanded the universe subject to the Commission's transparency 
authority beyond ``natural gas compan[ies].'' \58\ The term ``any 
market participant'' is not defined in the Natural Gas Act; however, it 
is not on its face limited to entities made subject to the Natural Gas 
Act under section 1.\59\ Indeed, the language of section 23 indicates 
that entities excluded from the Commission's authority under section 1 
of the Natural Gas Act would be included in section 23. First, in 
section 23, Congress did not reference the limitations of section 1 
explicitly (discussed further below).
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    \58\ Contrary to the assertions of Bridgeline Holdings, L.P. 
(Bridgeline), Comments of Bridgeline at 6, this grant of 
transparency authority is not an implied grant.
    \59\ Initial NOPR at P 12.
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    Second, in section 23, Congress did not use the term ``natural gas 
company'' from section 2(6), which is defined as ``a person engaged in 
the transportation of natural gas in interstate commerce, or the sale 
in interstate commerce of such gas for resale.'' \60\ This limiting 
term is used in section 1 of the Natural Gas Act to limit the 
Commission's authority, for instance, under sections 4, 5, and 7 of the 
Natural Gas Act.\61\ These approaches would have been the simplest ways 
for Congress to have indicated an intent to limit the Commission's 
transparency authority in the same manner it limited the Commission's 
comprehensive regulatory authority in other sections of the Natural Gas 
Act. Thus, commenters' arguments that the Commission has authority to 
obtain information only from those subject to the Commission's 
authority under section 1 of the Natural Gas Act are inconsistent with 
the language of the statute.
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    \60\ 15 U.S.C. 717a(6).
    \61\ 15 U.S.C. 717c, 717d & 717f.
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    28. In granting the Commission broad authority to obtain 
information, the Congress not only used the new term ``market 
participant'' but it also specifically referred to ``any'' market 
participant, instead of limiting the Commission's authority to obtain 
information from market participants subject to the Commission's 
traditional Natural Gas Act jurisdiction. The word ``any'' gives the 
term it modifies (in this case, ``market participant'') an expansive 
meaning.\62\
---------------------------------------------------------------------------

    \62\ Norfolk S. Rwy. Co. v. Kirby, 543 U.S. 14, 31-32 (2004) 
(the word ``any'' gives the word it modifies an expansive reading); 
Department of Housing and Urban Dev. v. Rucker, 535 U.S. 125, 130-31 
(2002); TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (one must give 
effect to each word in a statute so that none is rendered 
superfluous); United States v. Gonzales, 520 U.S. 1, 5 (1997) 
(``any'' is an expansive term, meaning ``one or some 
indiscriminately of whatever kind,''); New York v. EPA, 443 F.3d 
880, 885-87 (D.C. Cir. 2006) (the word ``any'' is broadly construed 
to reflect Congress' intent that all types of physical changes are 
subject to the Clean Air Act's New Source Review program).
---------------------------------------------------------------------------

    29. In addition, in section 23(d)(2), Congress created a de minimis 
exception to the other provisions in section 23. Specifically, Congress 
instructed the Commission to create a de minimis exception for 
gatherers and producers, which section 1(b) of the Natural Gas Act 
explicitly excludes from Commission's traditional regulation. If, as 
some commenters asserted, Congress did not intend to give the 
Commission authority over any entity excluded by section 1(b) of the 
Natural Gas Act, a de minimis exception would have been unnecessary; in 
other words, section 23(d)(2) would have been surplusage. Congress is 
not presumed to enact surplus language.\63\ To avoid this improper 
result, the Commission interprets section 23 of the Natural Gas Act to 
give effect to the de minimis language by interpreting the term ``any 
market participant'' to include those entities otherwise excluded from 
the Commission's Natural Gas Act jurisdiction by section 1(b) of the 
act.
---------------------------------------------------------------------------

    \63\ City of Roseville v. Norton, 348 F.3d 1020, 1028 (D.C. Cir. 
2003) (citing Babbitt v. Sweet Home Chapter of Community for a Great 
Oregon, 515 U.S. 687, 698 (1995)).
---------------------------------------------------------------------------

    30. The Commission disagrees that the term ``about'' in section 23 
is a limiting term as asserted by Enterprise. In the Initial NOPR, the 
Commission described the information proposed to be collected from 
intrastate pipelines as information ``about'' interstate, wholesale 
natural gas markets because the flows on intrastate pipelines affect 
interstate, wholesale natural gas markets.\64\ The Commission used the 
term ``pertains'' as a synonym for ``about.'' Indeed, contrary to 
Enterprise's reading, we read the term ``about'' as broader than the 
terms ``affect'' or ``impacts.'' Information may be ``about'' a subject 
without ``affecting'' it; hence, flow information may be ``about 
natural gas sold at wholesale and in interstate commerce'' even if it 
does not ``affect'' such natural gas (even though it normally does).
---------------------------------------------------------------------------

    \64\ Initial NOPR at P 15.
---------------------------------------------------------------------------

    31. More specifically, as explained below, the information that 
would be posted by major non-interstate pipelines is ``information 
about the availability and prices of natural gas sold at wholesale and 
in interstate commerce.'' \65\ There is a relationship between capacity 
and flow information on non-interstate pipelines and the interstate, 
natural gas market because non-interstate flows affect the supply and 
demand fundamentals that underlie the market. As explained below, 
posted flow information from only interstate pipelines cannot provide a 
complete picture of natural gas flows in the United States--or even of 
those flows directly relevant to the pricing of natural gas flowing in 
interstate commerce.\66\ To avoid such incompleteness, the Commission 
sets forth the proposal to require major non-interstate pipelines to 
post flow information. This proposal would provide a complete picture 
of natural gas supply and demand fundamentals without the gaps that 
would appear were the non-interstate pipelines excluded by section 1 of 
the Natural Gas Act also excluded by section 23 of the Natural Gas Act. 
In enacting section 23 of the Natural Gas Act, Congress sought to avoid 
any such gaps in the transparency of the physical natural gas markets 
by avoiding the legal distinctions set forth in section 1 of the 
Natural Gas Act.
---------------------------------------------------------------------------

    \65\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(2) (2000 & Supp. V 2005).
    \66\ See below at P 50-59.
---------------------------------------------------------------------------

2. Discussion: Section 1(b) of the Natural Gas Act
    32. The Commission disagrees with commenters who argued that 
section 1(b) of the Natural Gas Act precludes the Commission from 
imposing the daily posting requirement on intrastate pipelines. Section 
1(b) of the Natural Gas Act provides that the ``provisions of this 
chapter * * * shall apply to the transportation of natural gas in 
interstate commerce, to the sale in interstate commerce of natural gas 
for resale * * *'' and that such provisions ``shall not apply to any 
other transportation or sale of natural gas.'' \67\ These arguments 
ignore the fact that, in section 23, Congress provided the Commission a 
new and broad grant of authority that goes beyond prior Commission 
jurisdiction over natural gas companies to facilitate transparency in 
the wholesale natural gas markets.
---------------------------------------------------------------------------

    \67\ Section 1(b) of the Natural Gas Act, 15 U.S.C. 717(b).
---------------------------------------------------------------------------

    33. In stating that the Commission may obtain information from 
``any market participant,'' \68\ Congress contemplated that the 
transparency provisions would differ from other provisions of the 
Natural Gas Act as to the entities covered by the Commission's 
authority. Commenters' reliance on section 1 of the Natural Gas Act, 
therefore, improperly ignores the intent of Congress to subject a 
different set of entities to the Commission's

[[Page 1121]]

transparency authority as evidenced by Congress's use of the term ``any 
market participant.'' In light of this intent, commenters' reliance on 
case law setting forth the limits on the Commission's authority under 
section 1 of the Natural Gas Act is misplaced.
---------------------------------------------------------------------------

    \68\ Section 23(a)(3) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(3) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

    34. The Commission does not find persuasive the argument that 
Congress could have expressed its intent to subject intrastate 
pipelines to the Commission's transparency authority only by amending 
section 1 of the Natural Gas Act. First, altering the exceptions in 
section 1, as commenters suggested, is not the only way to alter the 
statute to give the Commission transparency authority. Indeed, it would 
have been more cumbersome for the Congress to take that approach. 
Instead of that approach, the Commission interprets the addition of 
section 23 as providing the Commission transparency authority over non-
interstate pipelines. This latter interpretation is the more reasonable 
interpretation of section 23 and reflects Congress's intent to subject 
non-interstate pipelines to only the Commission's transparency 
authority. Second, it could be stated equally that if Congress intended 
to exclude intrastate (or non-interstate) pipelines from the 
Commission's authority under section 23 of the Natural Gas Act, it 
would have used the term ``natural gas company'' in section 23, instead 
of the term ``any market participant.''
    35. Commenters' arguments that section 23 should be interpreted 
consistent with pre-EPAct 2005 case law are likewise misplaced. Those 
cases apply the jurisdictional limits set forth in section 1 of the 
Natural Gas Act. These arguments run afoul of the principle of 
statutory construction that ``Congress is presumed to be aware of an 
administrative or judicial interpretation of a statute.'' \69\ Thus, 
Congress was presumably aware that prior to the enactment of section 
23, the Natural Gas Act, as explained by TPA, ``limit[ed] the gathering 
of intrastate data to gathering it from companies falling under the 
Commission's jurisdiction.'' \70\ In using the term ``any market 
participant,'' Congress signaled its intent to expand the Commission's 
transparency authority beyond the universe of natural gas companies to 
which it would otherwise be limited.\71\
---------------------------------------------------------------------------

    \69\Lorillard v. Pons, 434 U.S. 575, 580 (1978) (internal 
citations omitted); accord 2A Norman J. Singer, Sutherland Statutory 
Construction sec. 45.12 (5th ed. 1992) (``legislative language will 
be interpreted on the assumption that the legislature was aware of * 
* * judicial decisions'').
    \70\ Comments of Texas Pipeline Association at 13 (citing Union 
Oil v. FPC, 542 F.2d 1036, 1039 (9th Cir. 1976)).
    \71\ TPA observed that courts have held that the Commission 
cannot exceed its statutory authority. Reply Comments of TPA at 16-
17 (citing Transmission Agency of Northern California v. FERC, 495 
F.3d 663 (D.C. Cir. 2007) and United Distribution Cos. v. FERC, 88 
F.3d 1105 (D.C. Cir. 1996)). This is an unremarkable and 
unassailable conclusion, but one that provides no guidance where the 
issue is not whether the Commission may exceed its statutory 
authority but what is the extent of the Commission's transparency 
authority.
---------------------------------------------------------------------------

3. Discussion: Section 1(c) of the Natural Gas Act
    36. Several commenters, including a state commission, contended 
that the pipeline posting proposal as applied to intrastate pipelines 
would improperly interfere with states' regulation of intrastate 
pipelines as set forth in section 1(c) of the Natural Gas Act, commonly 
known as the Hinshaw amendment. Section 1(c) of the Natural Gas Act 
reads:

    The provisions of this chapter shall not apply to any person 
engaged in or legally authorized to engage in the transportation in 
interstate commerce or the sale in interstate commerce for resale, 
of natural gas received by such person from another person within or 
at the boundary of a State if all the natural gas so received is 
ultimately consumed within such State, or to any facilities used by 
such person for such transportation or sale, provided that the rates 
and service of such person and facilities be subject to regulation 
by a State commission.\72\
---------------------------------------------------------------------------

    \72\ 15 U.S.C. 717(c).

    The Commission's proposal does not impermissibly interfere with 
states' regulation of Hinshaw pipelines. Under the Commission's 
proposal, states will continue to regulate the rates and services of 
those companies. As stated, section 23 of the Natural Gas Act does not 
authorize the Commission to undertake such comprehensive regulation and 
the Commission does not propose to do so. The Commission would require 
only that non-interstate pipelines, including Hinshaw pipelines, post 
information regarding their flows. Section 1(c) of the Natural Gas Act, 
in light of the later enacted EPAct 2005, does not preclude such a 
posting requirement.
4. Discussion: Other
    37. The Commission disagrees with DCP's argument that the burden of 
a posting requirement is related to the Commission's grant of a 
certificate of convenience and necessity under section 7 of the Natural 
Gas Act. DCP's argument ignores the mandate Congress set forth in the 
transparency provisions for the Commission to facilitate transparency. 
Nothing in section 23 indicates or even implies that the Commission's 
transparency authority depends on whether a market participant has a 
certificate of public convenience and necessity. Indeed, the use of the 
modifier ``any,'' as discussed above, demonstrates that Congress had no 
intention to limit the Commission authority to disseminate adequate 
information about the natural gas market.
    38. Contrary to commenters' assertions, the Commission's 
interpretation of section 23 is consistent with the Commission's 
interpretation of section 4A of the Natural Gas Act, which Congress 
also enacted in EPAct 2005. In Order No. 670, the Commission stated 
that Congress chose the undefined term ``any entity'' in section 4A as 
a broader term than the existing defined term of ``natural gas 
company.'' \73\ Similarly, in interpreting section 23, Congress chose 
the undefined term ``any market participant'' in section 23 as a 
broader term than the existing defined term ``natural gas company.'' 
Also, in Order No. 670, to determine the transactions subject to the 
Commission's market manipulation authority, the Commission interpreted 
the section 4A phrase ``in connection with'' broadly.\74\ To delineate 
what type of information the Commission could obtain and disseminate, 
in section 23 of the Natural Gas Act, Congress used the term ``about,'' 
which is a concept similarly as broad as the concept described by the 
phrase ``in connection with.''
---------------------------------------------------------------------------

    \73\ Order No. 670 at P 18.
    \74\ Section 4A of the Natural Gas Act reads:
    It shall be unlawful for any entity, directly or indirectly, to 
use or employ, in connection with the purchase or sale of natural 
gas or the purchase or sale of transportation services subject to 
the jurisdiction of the Commission, any manipulative or deceptive 
device or contrivance * * * in contravention of [Commission] rules 
and regulations.
    15 U.S.C. 717t-2c-1 (2000 & Supp. V 2005). In Order No. 670, the 
Commission observed that the Supreme Court interpreted the phrase 
``in connection with'' broadly in interpreting section 10(b) of the 
Securities Exchange Act. As noted in that order, section 4A 
``closely track[s] the prohibited conduct language in section 10(b) 
of the Securities Exchange Act of 1934, Securities Exchange Act of 
1934, 15 U.S.C. 78j(b), and specifically dictate[s] that the terms 
`manipulative or deceptive device or contrivance' '' are to be used 
``as those terms are used in section 10(b) of the Securities 
Exchange Act of 1934.'' Order No. 670 at P 6.
---------------------------------------------------------------------------

    39. The Commission's interpretation of section 23 is also 
consistent with its holdings in Order No. 636.\75\ As described in 
subsequent orders, the Commission has not ``requir[ed] intrastate 
pipelines to introduce all the

[[Page 1122]]

features of open-access service that we have required of interstate 
pipelines'' because requiring intrastate pipelines to do so ``could 
make it unduly burdensome to participate in interstate markets, 
contrary to the intent of the [Natural Gas Policy Act of 1978].'' \76\ 
Here, the Commission proposes to impose only a posting burden on non-
interstate pipelines that is equivalent to the posting requirements of 
interstate pipelines. In other respects, the burden on non-interstate 
pipelines remains far less than that on interstate pipelines in keeping 
with the Natural Gas Policy Act of 1978. While in the past, the 
Commission exempted intrastate pipelines from open-access requirements, 
such as electronic bulletin boards,\77\ any change in that exemption 
would be justified in order to further the Commission's transparency 
goals as set forth in section 23 of the Natural Gas Act.
---------------------------------------------------------------------------

    \75\ See, e.g., Order No. 636, FERC Stats. & Regs. ] 30,939, at 
30,406 (permitting, but not requiring intrastate pipelines, to offer 
open-access, contract storage).
    \76\ EPGT Texas Pipeline, L.P., 99 FERC ] 61,295, at 62,252 
(2002).
    \77\ Order No. 636-B, 61 FERC ] 61,272, at 61,992, n.26.
---------------------------------------------------------------------------

    40. Finally, the Commission recognizes commenters' concern that the 
Commission's proposal could appear to lead to further regulation. As 
explained above, however, the Commission's transparency authority over 
non-interstate pipelines is limited to obtaining and disseminating 
information. The Commission has no interest in comprehensive regulation 
of non-interstate pipelines. The Commission reiterates, section 1 of 
the Natural Gas Act continues to exclude non-interstate pipelines from 
such comprehensive regulation.\78\
---------------------------------------------------------------------------

    \78\ 15 U.S.C. 717.
---------------------------------------------------------------------------



III. Interstate Pipeline Posting Requirements

    41. In the Initial NOPR, the Commission sought comment on whether 
it should revise its posting requirements applicable to interstate 
pipelines to require posting actual flow information.\79\ The 
Commission raised the question because we proposed to require 
intrastate pipelines to post actual flow information, a requirement 
beyond that applied to interstate pipelines under Sec.  284.13(d)(1) of 
the Commission's regulations, and because posting of actual flow 
information could provide useful information regarding actual capacity 
use, for instance, by giving insight into the use of no-notice 
service.\80\ In this regard, Commission Staff observed that its ability 
to monitor flows in the interstate pipeline system is limited in 
certain locations, by the lack of actual flow information. In the case 
of ``no-notice'' service,\81\ specifically, interstate pipeline 
schedules do not reflect actual flows. Consequently, information about 
interstate flows in areas using no-notice service is less useful. In 
its comments on the Initial NOPR, the Natural Gas Supply Association 
(NGSA) observed that, ``[o]n heating season peak days or days with wide 
intra-day weather swings, no-notice volumes can be significant; 
therefore, scheduled flow volumes are not a proxy for physical flow 
and, thus, do not necessarily provide an accurate picture of underlying 
market fundamentals.'' \82\ Similarly, Commission Staff observed that 
the gap between scheduled and actual flows occurs most commonly in the 
northern tier of the country, particularly where a pipeline serves a 
local distribution company with significant space heating demand. In 
such circumstances, market observers find it more difficult to ascribe 
price behavior to physical changes in flows.
---------------------------------------------------------------------------

    \79\ Initial NOPR at P 43.
    \80\ Initial NOPR at P 43.
    \81\ See 18 CFR 284.7(a)(4).
    \82\ NGSA Comments at 10.
---------------------------------------------------------------------------

    42. Public posting of information reflecting no-notice service 
could also prevent other forms of misconduct with direct effects on 
natural gas in interstate commerce. Commission investigations of 
interstate and intrastate pipeline activity resulted in two settlements 
in which the settling party admitted it sought to obtain and exploit 
non-public storage inventory information to gain a competitive 
advantage in wholesale gas markets.\83\ Though this proposal would make 
public flow information, not storage information, the importance of the 
non-public information is analogous. These admissions indicate that the 
lack of public flow information provides the opportunity for parties to 
engage in manipulative or unduly discriminatory behavior. By making 
major non-interstate pipeline flow information public, such 
transparency could discourage market participants from engaging in such 
manipulative or unduly discriminatory activity.
---------------------------------------------------------------------------

    \83\ Dominion Resources, Inc., 108 FERC ] 61,110 (2004) 
(Dominion Resources, DTI and DEC admit that DTI violated section 
161.3(f) of the Commission's regulations, former 18 CFR 161.3(f) 
(2003)); The Williams Companies, Inc., 111 FERC ] 61,392 (2005) 
(Transco admits that it violated section 161.3(f) of the 
Commission's regulations, former 18 CFR 161.3(f) (2002)).
---------------------------------------------------------------------------

    43. In this NOPR, the Commission proposes to require interstate 
pipelines to post actual flow information in addition to the capacity 
and scheduled flow information that interstate pipelines are currently 
required to post. Accordingly, the Commission proposes adding to Sec.  
284.13(d) this requirement: ``An interstate pipeline must also provide 
in the same manner [as other information is provided] access to 
information on actual flowing volumes at receipt points, on the 
mainline, at delivery points, and in storage fields.'' \84\
---------------------------------------------------------------------------

    \84\ Proposed 18 CFR 284.13(d).
---------------------------------------------------------------------------

    44. In response to the Initial NOPR, several commenters supported 
requiring interstate pipelines to post actual flow volumes.\85\ The 
NGSA asserted that posting of actual flow data ``could lead to even 
more accurate and near real-time indication of underlying market supply 
and demand fundamentals'' \86\ The National Association of Royalty 
Owners (NARO) contended that requiring interstate pipelines to post 
actual flow volumes would allow an ``apples to apples'' comparison with 
the postings of intrastate pipelines.\87\
---------------------------------------------------------------------------

    \85\ See, e.g., NGSA at 10; and Apache Corp. at 8-9.
    \86\ NGSA Comments at 10.
    \87\ NARO Comments at 4.
---------------------------------------------------------------------------

    45. The Interstate Natural Gas Association of America (INGAA) 
opposed any proposal for interstate pipelines to post actual flows. 
INGAA contended that: (1) Scheduled flows are adequate for market 
participants to estimate demand and supply conditions in order to price 
market transactions; (2) actual flows include operational data that is 
not relevant and may be counterproductive, such as flows reflecting 
maintenance activities, storage injection and withdrawal schedules, 
line pack management, balancing at interconnects, and blending to meet 
quality specifications not related to commercial flows and (3) the no-
notice activity that would be captured by posting actual flows does not 
reflect trading activity, but rather reflects storage withdrawals.\88\ 
Williston Basin Interstate Pipeline Company (Williston) indicated that 
scheduled flow volumes were adequate and actual volumes not 
necessary.\89\
---------------------------------------------------------------------------

    \88\ INGAA Comments at 3-4.
    \89\ Williston Reply Comments at 4.
---------------------------------------------------------------------------

    46. In order to effectively balance the benefits of the additional 
flow information with the costs of such a requirement, the Commission 
seeks further information regarding both the benefits of the additional 
information available if actual flow volumes were posted by interstate 
pipelines, and the costs imposed on interstate pipelines to develop and 
post that information. In providing comments on this proposal, the 
Commission encourages

[[Page 1123]]

commenters to support their comments by providing specific examples.
    47. Regarding benefits, is information lost by not providing actual 
flows? What is the extent of any such lost information? How extensive 
is the use of no-notice service? Is information regarding operational 
flows, such as flows reflecting maintenance activities, storage 
injection and withdrawal schedules, line pack management, balancing at 
interconnects, and blending to meet quality specifications, useful to 
understand supply and demand fundamentals? Does the no-notice activity 
that would be captured by posting actual flows reflect trading activity 
or does it reflect storage withdrawals? Can trading activity and 
storage withdrawals be considered as separate activities? How?
    48. Regarding costs, how is actual flow information collected today 
for operational, balancing, billing or other purposes? What process 
changes, if any, would be required for interstate pipelines to post 
actual flow information? How much time after flow would be required 
before such information would be available for posting? Would posting 
actual volumes reveal any information that might be harmful to any 
competitive interests? How could it be harmful?

IV. Postings by Non-Interstate Pipelines

    49. In the Initial NOPR, the Commission proposed to require certain 
intrastate pipelines to post daily information regarding the capacity 
and actual flows at major receipt and delivery points and mainline 
segments. In the instant NOPR, the Commission proposes to require non-
interstate pipelines to post scheduled flow information in addition to 
capacity and actual flow information.\90\ Only a ``major non-interstate 
pipeline'' would be required to post information. For the purposes of 
this NOPR, a ``major non-interstate pipeline'' is defined as one that 
is not a ``natural gas company'' under section 1 of the Natural Gas Act 
and that flows greater than 10 billion cubic feet of natural gas per 
year, with two exceptions.\91\ The first exception is non-interstate 
pipelines that fall entirely upstream of a processing plant.\92\ The 
second exception is non-interstate pipelines that deliver more than 
ninety-five percent (95%) of the natural gas volumes they flow directly 
to end-users.\93\
---------------------------------------------------------------------------

    \90\ Proposed 18 CFR 284.14(a).
    \91\ Proposed 18 CFR 284.1.
    \92\ Proposed 18 CFR 284.14(b)(1).
    \93\ Proposed 18 CFR 284.14(b)(2).
---------------------------------------------------------------------------

A. Rationale

    50. Through the information that would be obtained from the daily 
posting requirement on major non-interstate pipelines, the Commission, 
market participants, and the public could obtain a picture of daily 
supply and demand conditions that directly affect U.S. wholesale 
natural gas markets--a picture that is currently incomplete without 
information from major non-interstate pipelines.\94\ Consequently, this 
proposal to increase information from certain major non-interstate 
pipelines would directly ``facilitate price transparency for the sale * 
* * of physical natural gas in interstate commerce'' as authorized in 
the natural gas transparency provisions.\95\
---------------------------------------------------------------------------

    \94\ In this section, the Commission reiterates its discussion 
from the Initial NOPR.
    \95\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

    51. The posted information from major non-interstate pipelines 
would qualify as, in the words of the transparency provisions, 
``information about the availability and prices of natural gas sold at 
wholesale and in interstate commerce.'' \96\ Notwithstanding their 
status under section 1 of the Natural Gas Act, most major non-
interstate pipelines today transport or buy and sell wholesale natural 
gas that eventually enters or at least impacts the interstate natural 
gas market. Further, supply and demand in non-interstate markets have a 
direct effect on prices of gas destined for interstate markets because 
both intrastate and interstate consumers draw on the same sources of 
supply. This is the case because of the statutory, regulatory and 
market changes that have taken place in the last three decades.
---------------------------------------------------------------------------

    \96\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C.A. 717t-
2(a)(2) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

    52. In the Natural Gas Policy Act of 1978, Congress allowed an 
intrastate pipeline to transport natural gas in interstate commerce on 
behalf of any interstate pipeline or local distribution company served 
by an interstate pipeline, without losing its intrastate status.\97\ 
Congress likewise permitted an intrastate pipeline to sell natural gas 
to any interstate pipeline or any local distribution company served by 
any interstate pipeline, without losing its intrastate status.\98\ In 
addition, at the same time that the Commission issued Order No. 636 in 
1992, it promulgated a new subpart of Part 284 (revised several times 
in the past 15 years) that provides blanket authority to any person who 
is not an interstate pipeline (including intrastate pipelines) to make 
sales for resale of natural gas in interstate commerce.\99\ This 
authorization is a limited jurisdiction sales certificate, which means 
that the holder does not become subject to the panoply of Natural Gas 
Act regulation by exercising its rights under the certificate.\100\
---------------------------------------------------------------------------

    \97\ See section 311(a)(2) of the Natural Gas Policy Act of 
1978, 15 U.S.C. 3371(a)(2); see also 18 CFR part 284, subpart C 
(Certain Transportation by Intrastate Pipelines).
    \98\ See section 311(b) of the Natural Gas Policy Act of 1978, 
15 U.S.C. 3371(b); see also 18 CFR part 284, subpart D (Certain 
Sales by Intrastate Pipelines).
    \99\ Order No. 636 FERC Stats. & Regs. ] 30,939, at 30,391.
    \100\ See 18 CFR part 284, subpart L (Certain Sales for Resale 
by Non-interstate Pipelines).
---------------------------------------------------------------------------

    53. The market understandably reacted to these statutory and 
regulatory changes since 1978. As relevant here, natural gas sold at or 
destined to be sold at wholesale in the interstate market is frequently 
exchanged or the transactions consummated at market hubs where 
interstate and non-interstate pipelines interconnect (e.g., Waha, Katy, 
Houston Ship Channel, and Carthage in Texas and at Henry Hub in 
Louisiana). Prices formed at these hubs are, in effect, prices for 
wholesale transactions in interstate commerce, even if a portion of the 
gas priced at each market hub is consumed intrastate. In addition, 
transfer of natural gas can take place directly between parties who 
ship gas on both interstate and non-interstate pipelines at any 
pipeline interconnection.
    54. Currently, through the availability of information regarding 
daily scheduled flows of natural gas through interstate pipelines, 
market participants have an increased, daily understanding of natural 
gas markets, including regional conditions and the pipeline capacity 
available to resolve different geographic supply/demand balances. This 
is due in part to Order No. 637, where the Commission required posting 
of capacity and scheduled volume information on interstate pipelines 
with the direct intention of allowing shippers to monitor capacity 
availability.\101\ Accordingly, interstate pipelines must

[[Page 1124]]

post available capacity information, specifically:

    The availability of capacity at receipt points, on the mainline, 
at delivery points, and in storage fields, whether the capacity is 
available directly from the pipeline or through capacity release, 
the total design capacity of each point or segment on the system; 
the amount scheduled at each point or segment whenever capacity is 
scheduled, and all planned and actual service outages or reductions 
in service capacity.\102\
---------------------------------------------------------------------------

    \101\ Regulation of Short-Term Natural Gas Transportation 
Services, and Regulation of Interstate Natural Gas Transportation 
Services, Order No. 637, 65 FR 10156, at 10204-10205, (Feb. 25, 
2000), FERC Stats. & Regs. ] 31,091, at 31,320-31,321 (2000); order 
on reh'g, Order No. 637-A, 65 FR 35706 (June 5, 2000), FERC Stats. & 
Regs. ] 31,099 (2000); order on reh'g, Order No. 637-B, 65 FR 47284 
(Aug. 2, 2000), affirmed in relevant part, Interstate Natural Gas 
Ass'n of America v. FERC, 285 F.3d 18 (D.C. Cir. 2002), order on 
remand, 101 FERC ] 61,127 (2002), order on reh'g, 106 FERC ] 61,088 
(2004), aff'd sub nom., American Gas Ass'n v. FERC, 428 F.3d 255 
(D.C. Cir. 2005) (Order No. 637).
    \102\ 18 CFR 284.13(d).

In Order No. 637, the Commission anticipated that such postings would 
provide useful information regarding supply and demand fundamentals: 
The changes to the Commission's reporting requirements will enhance the 
reliability of information about capacity availability and price that 
shippers need to make informed decisions in a competitive market as 
well as improve shippers' and the Commission's ability to monitor 
marketplace behavior to detect, and remedy anticompetitive 
behavior.\103\
---------------------------------------------------------------------------

    \103\ Order No. 637, 65 FR at 10169.
---------------------------------------------------------------------------

    55. Today, interested market participants as well as commercial 
vendors retrieve this information from the Web sites of interstate 
pipelines to obtain schedule information that is then used to estimate 
a variety of supply and demand conditions including geographic and 
industrial sector consumption, storage injections and withdrawals and 
regional production in almost real-time.\104\ Market participants have 
come to rely on this information to help price transactions. Commission 
Staff has also come to rely on this information to perform its 
oversight and enforcement functions. In fact, market observers believe 
that posting of this information contributes to market transparency by 
revealing the underlying volumetric (or availability) drivers behind 
price movements.\105\
---------------------------------------------------------------------------

    \104\ See, e.g., Comments of Bentek Energy, LLC., Docket No. 
AD06-11-000 (filed Oct. 10, 2006).
    \105\ See, e.g., Comments of Platt's, at 11-13, Docket No. AD06-
11-000 (information regarding the supply and demand of natural gas 
explains prices and such information is available from interstate 
pipelines, but not intrastate pipelines).
---------------------------------------------------------------------------

    56. Notwithstanding the contribution of posted interstate schedule 
information to the transparency of price and availability of natural 
gas, this information cannot provide a complete picture of natural gas 
flows in the United States--or even those flows directly relevant to 
the pricing of natural gas flowing in interstate commerce. Several 
major U.S. natural gas pricing points sit at the confluence of multiple 
interstate and non-interstate pipelines. A recent study by the U.S. 
Department of Energy's Energy Information Administration (EIA) 
identified twenty-eight national market centers or pricing hubs, of 
which thirteen are served by a combination of interstate and non-
interstate pipelines.\106\ The table below shows the capacity of 
interstate and non-interstate pipelines connected to each of these 
thirteen hubs.
---------------------------------------------------------------------------

    \106\ Department Of Energy, Energy Information Administration, 
Natural Gas Market Centers And Hubs: A 2003 Update, Oct. 2003, 
http://www.eia.doe.gov/pub/ oil--gas/natural--gas/feature--articles/
2003/market--hubs/mkthubs03.pdf

 Table 1.--Inter- and Intrastate Pipeline Delivery Capacity at Selected
                     U.S. Natural Gas Pricing Points
------------------------------------------------------------------------
                                                  Receipt and delivery
                                                        capacity
                                               -------------------------
               Hub name                 State                    Non-
                                                 Interstate   interstate
                                                 pipelines    pipelines
                                                  (MMcfd)      (MMcfd)
------------------------------------------------------------------------
 Carthage............................       TX        1,120        1,355
Henry Hub............................       LA        2,770        1,215
Katy--Enstor.........................       TX        1,370        3,815
Katy--DEFS...........................       TX          260        2,360
Mid Continent........................       KS        1,112          627
Moss Bluff...........................       TX        1,050        1,800
Nautilus.............................       LA        1,200        1,350
Perryville...........................       LA        3,652          350
Aqua Dulce...........................       TX          855          835
Waha--Lone Star......................       TX          810        1,140
Waha--Encina.........................       TX          525          800
Waha--El Paso........................       TX        1,165        1,660
Waha--DEFS...........................       TX          300       1,850
------------------------------------------------------------------------
Source: Unpublished Energy Information Administration update to March
  2005 of information presented in Natural Gas Market Centers and Hubs:
  A 2003 Update, October 2003.

    57. Many of these pricing points are closely connected to other 
regions of the United States, influencing prices across the country. 
The figure below shows the location and flow patterns of natural gas 
moving between interstate and non-interstate markets through several of 
these pricing points.

[[Page 1125]]

[GRAPHIC] [TIFF OMITTED] TP07JA08.000

    58. One pricing point directly connected to both interstate and 
non-interstate pipelines is Henry Hub, Louisiana, the location for 
delivery of natural gas under the New York Mercantile Exchange's 
(NYMEX) futures contract. Monthly settlement of NYMEX's Henry Hub 
natural gas future contract has become important in determining a 
variety of monthly index prices used to set natural gas prices in a 
variety of transactions, some in interstate commerce, particularly 
along the East Coast and Gulf Coast of the United States. The nature of 
this influence is detailed in Commission Staff's 2006 State of the 
Markets Report.\107\
---------------------------------------------------------------------------

    \107\ Federal Energy Regulatory Commission, 2006 State of the 
Markets Report at 48-50 (Jan. 2007), http://www.ferc.gov/market-oversight/market-oversight.asp (follow link to the State of the 
Markets Full Report).
---------------------------------------------------------------------------

    59. Further, purchasers of natural gas in interstate commerce draw 
on the same sources of supply as users and buyers of natural gas in 
intrastate commerce. For example, much of the recent Barnett Shale 
development in the Fort Worth basin flows into intrastate systems 
before moving into interstate markets. In total, slightly more than 
forty percent of total on-shore production in Texas is connected to 
interstate pipelines, less than sixty percent in Louisiana and less 
than eighty percent in Oklahoma.\108\ Though daily volume flowing from 
non-interstate into interstate pipelines can be estimated, the supply 
dynamics that make these volumes available cannot.
---------------------------------------------------------------------------

    \108\ Bentek Energy, LLC analysis of supply scheduled into 
interstate pipelines compared with EIA data from its table Natural 
Gas Gross Withdrawals and Production for Texas and Oklahoma 
available at http://tonto.eia.doe.gov/dnav/ng/ng_prod_sum_dcu_NUS_m.htm.
---------------------------------------------------------------------------

    60. The daily posting of flow information by major non-interstate 
pipelines would provide several benefits to the functioning of natural 
gas markets in ways that would protect the integrity of physical, 
interstate natural gas markets, protect fair competition in those 
markets and consequently serve the public interest by better protecting 
consumers. First, by providing a more complete picture of supply and 
demand fundamentals, these postings would improve market participants' 
ability to assess supply and demand and to price physical natural gas 
transactions. Second, during periods when the U.S. natural gas delivery 
system is disturbed, for instance due to hurricane damage to facilities 
in the Gulf of Mexico, these postings would provide market participants 
a clearer view of the effects on infrastructure, the industry, and the 
economy as a whole. Finallly, these postings would allow the Commission 
and other market observers to identify and remedy potentially 
manipulative activity. we discuss each of these points in turn.
    61. First, the proposed daily capacity and volume postings by major 
non-interstate pipelines would improve market participants' ability to 
assess supply and demand and price physical natural gas transactions by 
providing a more complete picture of supply and demand 
fundamentals.\109\ As discussed

[[Page 1126]]

above and noted in comments filed in these proceedings, interstate 
pipeline information does not provide a complete picture of the supply 
and demand fundamentals that apply to interstate commerce because much 
of the natural gas in the U.S. is moved through the non-interstate 
pipeline system.\110\
---------------------------------------------------------------------------

    \109\ See, e.g., Comments of Platt's at 11, Docket No. AD06-11-
000 (filed Nov. 1, 2006) (explaining that, to understand prices, 
``the marketplace must look to * * * information on [the] 
availability of and demand for natural gas * * *'').
    \110\ See Comments of Platt's at 13, Docket No. AD06-11-000 
(filed Nov. 1, 2006) (stating that much of the fundaamental supply 
and demand data is missing from natural gas markets and advocating 
for reporting by intrastate pipelines).
---------------------------------------------------------------------------

    62. Second, the proposed daily non-interstate pipeline capacity and 
volume postings would provide market participants--and the Commission 
in its market oversight efforts--a clearer view of the effects on 
infrastructure, the industry, and the economy as a whole during periods 
when the U.S. natural gas delivery system is disturbed. For example, 
after landfall of hurricanes Katrina and Rita in late 2005, even the 
most interested of governmental and commercial market observers were 
not able to obtain complete information regarding the output by 
potentially-damaged production facilities.\111\ By monitoring receipt 
and delivery points for production facilities on interstate pipelines, 
market observers were able to obtain only a limited sense of production 
facility output.\112\ Similarly, market participants, state commissions 
and other market observers were unable to assess effects on natural gas 
consumption in the Gulf Coast, including consumption by the 
petrochemical industry, for some period. The significance and duration 
of these effects on this industry--vulnerable to energy price and 
availability disruptions--remain unclear. This proposal would allow 
interested governmental and private parties to gain a much better 
picture of disruptions in natural gas flows in the case of future 
hurricanes in the Gulf region.\113\
---------------------------------------------------------------------------

    \111\ See, e.g., Comments of Public Service Commission of New 
York (NYPSC) at 2; Comments of Bentek Energy LLC at 15-16 21-22; 
Comments of APGA at 3-4; Comments of NARO at 2; Transcript of the 
Oct. 13, 2006 Technical Conference (Tr.), at 25, Transparency 
Provisions of the Energy Policy Act of 2005, Docket No. AD06-11-000 
(Comments of Sheila Rappazzo, Chief of Policy Section of the Office 
of Gas and Water of the New York State Department of Public 
Service).
    \112\ Tr. 25 (Comments of Sheila Rappazzo) (describing how after 
the 2005 hurricanes data availability differed widely).
    \113\ Along these lines, this proposal is consistent with a 
recent Commission final rule and a proposed survey by EIA. On August 
23, 2006, the Commission revised its reporting regulations to 
require jurisdictional natural gas companies to report damage to 
facilities due to a natural disaster or terrorist activity that 
results in a reduction in pipeline throughput or storage 
deliverability. Revision of Regulations to Require Reporting of 
Damage to Natural Gas Pipeline Facilities, Order No. 682, 71 FR 
51098 (Aug. 29, 2006), FERC Stats. and Regs. ] 31,227 (2006), order 
on reh'g, 118 FERC ] 61,118 (2007). On January 30, 2007, EIA 
proposed to survey natural gas processing plants ``to monitor their 
operational status and assess operations of processing plants during 
a period when natural gas supplies are disrupted.'' Agency 
Information Collection Activities, 72 FR 4248 (Jan. 30, 2007). The 
purpose of the survey would be to ``inform the public, industry, and 
the government about the status of supply and delivery activities in 
the area affected by the disruption.'' Id.
---------------------------------------------------------------------------

    63. Third, the proposed daily non-interstate pipeline capacity and 
volume postings would allow the Commission and other market observers 
to identify and remedy potentially manipulative activity more actively 
by tracking price movement in the context of natural gas flows.\114\ In 
particular, information regarding availability on non-interstate 
pipelines could be used to track manipulative or unduly discriminatory 
behavior intended to cause harm to consumers by distorting market 
prices in interstate commerce. For example, Commission Staff overseeing 
markets routinely check for unused interstate pipeline capacity between 
geographically distinct markets with substantially different prices as 
a sign that flows may be managed to manipulate prices. Given the 
importance of non-interstate pipeline connections to thirteen major 
pricing hubs, including Henry Hub, as discussed above, the lack of flow 
information on non-interstate pipelines hinders the Commission's market 
oversight and enforcement efforts.
---------------------------------------------------------------------------

    \114\ See Comments of NGSA at 8-10.
---------------------------------------------------------------------------

    64. This benefit comports with EPAct 2005, in which Congress 
directed the Commission to facilitate price transparency in physical, 
interstate natural gas markets ``with due regard for the public 
interest, the integrity of those markets, fair competition, and the 
protection of consumers.'' \115\ By this language, Congress intended 
that the improvement of Commission market oversight activities is a 
legitimate justification for proposing rules under the natural gas 
transparency provisions. Monitoring and preventing manipulative or 
unduly discriminatory activity would meet the Commission's 
responsibility for ensuring the integrity of the physical interstate 
natural gas markets. The proposal to make non-interstate pipeline 
information available to the public would assist the Commission in 
fulfilling that responsibility.
---------------------------------------------------------------------------

    \115\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

B. Revisions to the Proposal Set Forth in the Initial NOPR

    65. The Commission has developed a more particular definition of 
the types of non-interstate pipelines that would be required to post. 
The Commission is not interested in burdening smaller non-interstate 
pipelines like gathering systems, or individual consumers to post daily 
information regarding capacity, scheduled flow volumes, and actual flow 
volumes at major points and mainline segments. Consequently, the 
Commission has altered its proposal from the initial NOPR that used the 
term ``intrastate pipeline'' to the current proposal which defines 
``major non-interstate pipeline'' to capture directly U.S. wholesale 
natural gas transportation systems of significant size and contribution 
to overall wholesale gas flows across the United States. The Commission 
seeks comment on this proposal. In providing comments, again, the 
Commission encourages commenters to support their comments by providing 
specific examples.
    66. The Commission also proposes to limit the daily posting 
requirement by limiting the definition of ``major non-interstate 
pipeline'' based on whether the non-interstate pipeline flows more than 
10 million MMBtus of natural gas per year. The intention is to focus on 
non-interstate pipelines of significant size and that consequently make 
a significant contribution to wholesale U.S. natural gas flows. Too low 
a limit would pick up non-interstate pipelines too small to contribute 
to wholesale market flows of natural gas. Too high a limit would lose 
information about flows that affect wholesale pricing, either directly 
by losing information at major hubs, or less directly by missing 
important components of wholesale demand or supply not attached to 
interstate pipelines. By way of contrast, Platts reports that total 
reporting for its next-month indices at all geographical locations 
across the country over the past 12 months (November 2006 through 
October 2007) totaled only a little more than 8 billion cubic feet last 
year.\116\ Thus, by rough comparison, movements of that size on a 
pipeline could easily affect wholesale prices in any particular 
location. According to EIA statistics from its 2005 Form 176 filings by 
companies that do business (at least in part) as intrastate pipelines, 
the 10 million MMBtu threshold would

[[Page 1127]]

capture 102 pipelines.\117\ The number of these non-interstate 
pipelines qualifying as major non-interstate pipelines required to post 
information would be further reduced by the other criteria, such as 
excluding non-interstate pipelines that fall entirely upstream of 
processing plants and those that deliver more than ninety-five percent 
(95%) of the natural gas volumes they flow directly to end-users.
---------------------------------------------------------------------------

    \116\ As reported on the natural gas.org informational Web site, 
maintained by the Natural Gas Supply Association, http://www.naturalgas.org/business/marketactivity.asp (as of November 29, 
2007).
    \117\ See Comments of Bentek Energy, LLC, Attachment A, Docket 
Nos. RM07-10-000 and AD06-11-000 (filed Aug. 21, 2006).
---------------------------------------------------------------------------

    67. The Commission seeks comment on these criteria. For the volume 
criterion, are average flows of 10 billion cubic feet of natural gas 
per year too low a threshold for non-interstate pipelines to require 
posting at major points and mainline segments? Too high?
    68. The Commission would exempt from the daily posting requirement 
two types of non-interstate pipelines that meet the volume criterion. 
First, a major non-interstate pipeline that lies entirely upstream of a 
processing plant would be exempt.\118\ The Commission seeks comment on 
its proposed exemption of a non-interstate pipeline that lies entirely 
upstream of processing plants. If these non-interstate pipelines were 
excluded from the pipeline posting requirement, would significant 
information useful for determining price and availability of natural 
gas likely be lost?
---------------------------------------------------------------------------

    \118\ Proposed 18 CFR 284.214(b)(1).
---------------------------------------------------------------------------

    69. Second, the Commission proposes to exempt any major non-
interstate pipeline that makes greater than ninety-five percent (95%) 
of its deliveries directly to end-users. The Commission seeks comment 
on this exemption.\119\ If these non-interstate pipelines were excluded 
from the pipeline posting requirement, would significant information 
useful for determining price and availability of natural gas likely be 
lost? Overall, are there any other categories of major non-interstate 
pipelines that should be exempt from the daily posting requirements?
---------------------------------------------------------------------------

    \119\ Proposed 18 CFR 284.214(b)(2).
---------------------------------------------------------------------------

    70. The comments on the Initial NOPR inform the Commission's 
revised proposal to limit posting to major non-interstate pipelines. In 
its comments on the Initial NOPR, affiliates Agave Energy Corp. and 
Yates Petroleum Corp. (Agave-Yates) urged the Commission to limit the 
requirement for daily posting of flow data to those intrastate 
pipelines with receipt or delivery points connected to the 13 major 
market hubs served by both interstate and intrastate pipelines.\120\ 
Bentek Energy LLC (Bentek) proposed determining on a case by case basis 
which intrastate pipelines should post.\121\ As for this approach, 
Bentek observed that it ``would solve the issue of small regional 
pipelines being too small to meet a threshold applied nationally, but 
would require considerable analysis by the Commission to implement 
[including] ongoing analysis as pricing points change periodically.'' 
\122\ The Commission seeks further comment on which non-interstate 
pipelines should be subject to the daily posting proposal.
---------------------------------------------------------------------------

    \120\ Comments of Agave-Yates at 9-10; Reply Comments of Agave-
Yates at 1-2.
    \121\ Reply Comments of Bentek Energy LLC at 6.
    \122\ Reply Comments of Bentek Energy LLC at 6.
---------------------------------------------------------------------------

    71. The Commission seeks comment on whether this proposal would 
meet the three purposes discussed above. Specifically, would the 
proposal: (1) Provide a more complete picture of supply and demand 
fundamentals and improve market participants' ability to assess supply 
and demand and to price physical natural gas transactions; (2) provide, 
during periods when the U.S. natural gas delivery system is disturbed, 
for instance due to hurricane damage to facilities in the Gulf of 
Mexico, a clearer view of the effects on infrastructure, the industry, 
and the economy as a whole; and (3) allow the Commission and other 
market observers to identify and remedy potentially manipulative 
activity? \123\ Alternatively, would these three purposes be met if the 
Commission limited the pipeline posting proposal to those non-
interstate pipelines with receipt or delivery points connected to the 
13 major market hubs served by both interstate and intrastate 
pipelines?
---------------------------------------------------------------------------

    \123\ See, supra, at P 61-64.
---------------------------------------------------------------------------

    72. In the Initial NOPR, the Commission sought comment on how to 
define ``major'' receipt and delivery points and mainline segments on 
intrastate pipelines for the purpose of any posting requirement. 
Developing an operational definition of ``major'' receipt and delivery 
points and mainline segments on major non-interstate pipelines is 
crucial to making the proposal work effectively and reasonably. The 
Commission stated that it ``does not wish to include extremely small 
points connected to one or a few customers, which it would consider 
burdensome and possibly even anti-competitive in certain cases.'' \124\
---------------------------------------------------------------------------

    \124\ Initial NOPR at P 39.
---------------------------------------------------------------------------

    73. Commenters provided suggestions for which receipt and delivery 
points on non-interstate pipelines should be subject to the posting 
requirement. The NARO commented that it would like to see as many 
points posted as possible explaining that more than ninety percent of 
flows in Texas occur in pipelines that move more than 5,000 MMBtu/
day.\125\ The Texas Alliance of Energy Producers (Texas Alliance) said 
that the definition of ``major points'' should capture flows at 
locations used to establish market prices (i.e., index points), with 
the definition crafted to capture enough points to reduce the 
opportunity for market manipulation.\126\ The Petroleum Association of 
Wyoming (PAW) said the definition of ``major points'' should be limited 
to those on interstate pipelines.\127\ Copano Energy LLC, in its reply 
comments, said that (at most) the posting requirement should apply to 
major market hubs and centers identified by the Energy Information 
Administration and other current market hubs or centers for which a 
daily price is published by a nationally recognized industry 
publication.\128\ Crosstex Energy Services stated that the Commission 
should, at most, require the posting of available capacity and 
scheduled flow volumes (not actual flow information) at receipt and 
delivery points (not segments) at the 13 major interstate/intrastate 
pricing hubs identified in the NOPR as directly affecting interstate 
pricing.\129\ The Kinder Morgan Texas Intrastate Pipeline Group (Kinder 
Morgan) stated that posting of scheduled quantities at major hub points 
where index prices are published would be less burdensome than the NOPR 
proposal.\130\
---------------------------------------------------------------------------

    \125\ NARO Comments at 2-3.
    \126\ Texas Alliance Comments at 12.
    \127\ PAW Comments at 2.
    \128\ Copano Reply Comments at 3.
    \129\ Crosstex Reply Comments at 8.
    \130\ Kinder Morgan Reply Comments at 12.
---------------------------------------------------------------------------

    74. Comments on the Initial NOPR on how to define ``major'' receipt 
and delivery points and mainline segments, in many cases, focused less 
on developing effective operational definitions than they did on 
jurisdictional and burden issues. The goal of the pipeline posting 
proposal is to allow the development of a more complete and more 
immediate picture of wholesale natural gas flows across the United 
States, regardless of the traditional regulatory authority under which 
a particular pipeline operates, at a reasonable cost. To accomplish 
this task, the Commission needs to develop a stronger record about the 
possible measurement points on major non-interstate pipelines that 
could contribute valuable information at a reasonable trade-off with 
costs of implementation. Consequently, the Commission seeks further 
comment on which points should be posted by major non-interstate 
pipelines. In order to effectively balance the benefits of a

[[Page 1128]]

better understanding of national natural gas flows based on more 
detailed flow information against the costs of the equipment and 
systems necessary to deliver that information, the Commission seeks 
comment regarding how to determine the points at which it should 
require posting of flow information. Again, the Commission encourages 
commenters to support their assertions with specific examples.
    75. In particular, related to Kinder Morgan's comments, could 
sufficient information be developed with posting only of flows in and 
out of major pipeline hubs? In that case, how should those hubs be 
determined? Should they be limited only to those hubs for which index 
prices are produced? By looking only at flows into and out of major 
pipeline hubs for which index prices are produced, would market 
participants lose information important to the assessment of national 
supply and demand balances lost? What other criteria could be used to 
make the determination of points to be posted? Is a volumetric limit 
sufficient? If a line sees flows in both directions during the day, is 
a net directional flow for the day valuable, or confusing?

V. Storage Information and Non-Public Postings

    76. Prompted by comments of storage providers in response to the 
Initial NOPR, the Commission seeks comment on how its posting proposal 
herein would affect storage providers. By way of background, in its 
comments, Enstor Operating Company (Enstor), an independent gas storage 
service provider with market-based rates, said it should not be 
required to post information regarding scheduled flows because gas 
storage information is readily available.\131\ If required to post 
information, the Commission should provide for non-public reporting and 
analysis of flow data and disseminate such information to the public 
only in aggregated form.\132\ Enstor stated that if its flow 
information were public, it would lose negotiating strength in the 
marketplace because its customers with multiple service options would 
know storage capacity available at its facility, even though it would 
have no knowledge of such customers' needs and limited knowledge about 
capacity levels at competing, regulated storage facilities.\133\ Enstor 
cautioned that release of flow data from individual storage facilities 
would lead to the practice of reading other market participants' 
movements and buying or selling in front of anticipated future 
movements to take advantage of resulting price swings, which would 
raise prices.\134\ Without non-public treatment of its flow data, 
Enstor contended that its margins would be squeezed and it would make 
less money.\135\ Enstor added that aggregated information disseminated 
by the Commission would be more useful to end-users than disaggregated 
data.\136\
---------------------------------------------------------------------------

    \131\ Comments of Enstor at 4.
    \132\ Comments of Enstor at 9.
    \133\ Comments of Enstor at 8; Reply Comments of Enstor at 5.
    \134\ Reply Comments of Enstor at 6.
    \135\ Reply Comments of Enstor at 8.
    \136\ Reply Comments of Enstor at 10.
---------------------------------------------------------------------------

    77. In order to assess the concerns expressed by Enstor (notably 
the only storage provider to raise this concern), the Commission seeks 
comments on the following questions. Regarding flows of gas in the 
United States, does existing gas storage information provide the same 
value of the information that would be collected in the Commission's 
proposal? Interested commenters should compare the benefits of 
requiring storage providers to post flow information publicly with the 
benefits and costs of providing information to the public only in 
aggregated form. Those who address this issue should address whether 
non-public reporting to the Commission would support the goals of the 
natural gas transparency provisions to ``facilitate price transparency 
for the sale * * * of physical natural gas in interstate commerce''? 
\137\ Further, commenters addressing the application of the pipeline 
posting proposal to storage facility should answer the following 
questions: Can individual storage facilities lose negotiating strength 
when its customers know the supply of available storage capacity? Would 
release of flow data from individual storage facilities lead to 
increased prices? How many storage facilities would likely face this 
situation if required to post flow information? Would fewer storage 
facilities face this situation if the pipeline posting proposal were 
modified to reduce the number of points to be posted, for example, by 
limiting posting to lines running into or out of major pipeline hubs?
---------------------------------------------------------------------------

    \137\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

VI. Information Collection Statement

    78. The Office of Management and Budget (OMB) regulations require 
it to approve certain reporting and recordkeeping (information 
collection) requirements imposed by an agency.\138\ In this NOPR, the 
Commission makes two proposals that would require the posting or 
collection of information, one for interstate and one for major non-
interstate pipelines.\139\ The Commission is submitting notification of 
these proposed information collection requirements to OMB for its 
review and approval under section 3507(d) of the Paperwork Reduction 
Act of 1995.\140\
---------------------------------------------------------------------------

    \138\ 5 CFR 1320.11.
    \139\ The OMB regulations cover both the collection of 
information and the posting of information. 5 CFR 1320.3(c). Thus, 
the proposal to post information would create an information 
collection burden.
    \140\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    79. One proposal, to require interstate pipelines to post actual 
flow information, would impose an additional information collection 
burden on interstate pipelines. The other proposal, to require major 
non-interstate pipelines to post actual flow information, would impose 
an additional information collection burden on major non-interstate 
pipelines. Interstate and major non-interstate pipelines already 
collect flow information for major receipt and delivery points. Certain 
non-interstate pipelines have asserted in the Initial NOPR that costs 
would be quite high if additional equipment was needed to meet quick 
posting deadlines. However, given that this information is used in 
their business within fairly quick periods, the Commission still 
believes that the burden that would be imposed by this proposed 
requirement is largely for the collection and posting of this 
information in the required format.\141\
---------------------------------------------------------------------------

    \141\ See 5 CFR 1320.3(b)(2) (``The time, effort, and financial 
resources necessary to comply with a collection of information that 
would be incurred by persons in the normal course of their 
activities (e.g., in compiling and maintaining business records) 
will be excluded from the ``burden'' if the agency demonstrates that 
the reporting, recordkeeping, or disclosure activities needed to 
comply are usual and customary.'')
---------------------------------------------------------------------------

    80. OMB regulations require OMB to approve certain information 
collection requirements imposed by agency rule. The Commission is 
submitting notification of this proposed rule to OMB.
    Public Reporting Burden:
    The start-up and annual burden estimates for complying with this 
proposed rule are as follows:

[[Page 1129]]



----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated
                                     Number of       Number of       Estimated     Total annual      start-up
         Data collection            respondents   daily postings   annual burden   hours for all    burden per
                                        142       per respondent     hours per      respondents     respondent
                                                                    respondent                        (hours)
----------------------------------------------------------------------------------------------------------------
        Part 284 FERC-551
Major Non-Interstate Pipeline                102             365             365          37,230           2,080
 Postings.......................
Additional Interstate Pipeline               109             365             365          39,785             520
 Postings.......................
                                 -------------------------------------------------------------------------------
    Total.......................             211  ..............  ..............          77,015  ..............
----------------------------------------------------------------------------------------------------------------

    The total annual hours for collection (including recordkeeping) for 
all respondents is estimated to be 77,015 hours.
---------------------------------------------------------------------------

    \142\ The Commission estimated the number of respondents for 
major non-interstate pipelines from EIA information. See Department 
of Energy, Energy Information Administration, U.S. Intrastate 
Natural Gas Pipeline Systems, http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/PIPEintra.xls. The 
Commission estimated the number of respondents that would be 
interstate pipelines also from EIA information. See Department of 
Energy, Energy Information Administration, Thirty Largest U.S. 
Interstate Natural Gas Pipeline Systems, 2005, http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/MajorInterstatesTable.html (Listing thirty largest 
interstate pipelines and referencing seventy-nine other interstate 
pipelines).
---------------------------------------------------------------------------

    Information Posting Costs: The average annualized cost for each 
respondent is projected to be the following (savings in parenthesis):

----------------------------------------------------------------------------------------------------------------
                                                                    Annualized
                                                                     capital/
                                                                   startup costs   Annual costs     Annualized
                                                                     (10 year                       costs total
                                                                   amortization)
----------------------------------------------------------------------------------------------------------------
                            FERC-551
Major Non-Interstate Pipeline Postings..........................         $20,800         $36,500         $57,300
Additional Interstate Pipeline Postings.........................           5,200          36,500          41,700
----------------------------------------------------------------------------------------------------------------

    Title: FERC-551.
    Action: Proposed Information Posting and Information Filing.
    OMB Control No: 1902-0243.
    Respondents: Business or other for profit.
    Frequency of Responses: Daily posting requirements and annual 
filing requirements.
    Necessity of the Information: The daily posting of additional flow 
information by interstate and major non-interstate pipelines is 
necessary to provide information regarding the price and availability 
of natural gas to market participants, state commissions, the FERC and 
the public. The posting would contribute to market transparency by 
aiding the understanding of the volumetric/availability drivers behind 
price movements; it would provide a better picture of disruptions in 
natural gas flows in the case of disturbances to the pipeline system; 
and it would allow the monitoring of potentially manipulative or unduly 
discriminatory activity.
    Internal Review: The Commission has reviewed the requirements 
pertaining to natural gas pipelines and determined they are necessary 
to provide price and availability information regarding the sale of 
natural gas in interstate markets.
    81. These requirements conform to the Commission's plan for 
efficient information collection, communication, and management within 
the natural gas industry. The Commission has assured itself, by means 
of internal review, that there is specific, objective support for the 
burden estimates associated with the information posting requirements. 
The Commission seeks comment on these estimates.
    82. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426, [Attention: Michael Miller, 
Office of the Chief Information Officer], phone: (202) 502-8415, fax: 
(202) 208-2425, e-mail: [email protected]. Comments on the 
requirements of the proposed rule also may be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington, DC 20503, [Attention: Desk Officer for the Federal Energy 
Regulatory Commission].
    83. Comments on the requirements of the proposed rule may also be 
sent to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, Washington, DC 20503 [Attention: Desk Officer 
for the Federal Energy Regulatory Commission] (202)395-4650 or [email protected].

VII. Environmental Analysis

    84. 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.\143\ The 
actions taken here fall within categorical exclusions in the 
Commission's regulations for information gathering, analysis, and 
dissemination, and for sales, exchange, and transportation of natural 
gas that require no construction of facilities.\144 \Therefore, an 
environmental assessment is unnecessary and has not been prepared in 
this rulemaking.
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    \143\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \144\ 18 CFR 380.4(a)(5) and (a)(27).
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VIII. Regulatory Flexibility Act

    85. The Regulatory Flexibility Act of 1980 (RFA) \145\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA requires consideration of regulatory alternatives that 
accomplish the stated objectives of a proposed rule and that minimize 
any significant economic impact on such entities. The RFA does not, 
however,

[[Page 1130]]

mandate any particular outcome in a rulemaking. At a minimum, agencies 
are to consider the following alternatives: establishment of different 
compliance or reporting requirements for small entities or timetables 
that take into account the resources available to small entities; 
clarification, consolidation, or simplification of compliance and 
reporting requirements for small entities; use of performance rather 
than design standards; and exemption for certain or all small entities 
from coverage of the rule, in whole or in part. The proposal to require 
daily postings by interstate and non-interstate pipelines will not 
impact small entities. Natural gas pipelines are classified under NAICS 
code, 486210, Pipeline Transportation of Natural Gas.\146\ A natural 
gas pipeline is considered a small entity for the purposes of the 
Regulatory Flexibility Act if its average annual receipts are less than 
$6.5 million.\147\ The Commission does not believe that any pipeline 
that would be required to post under the proposal in this NOPR has 
receipts less than $6.5 million. Thus, the daily posting proposal will 
not impact small entities.
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    \145\ 5 U.S.C. 601-612.
    \146\ This industry comprises establishments primarily engaged 
in the pipeline transportation of natural gas from processing plants 
to local distribution systems. 2002 North American Industry 
Classification System (NAICS) Definitions, http://www.census.gov/epcd/naics02/def/ND486210.HTM.
    \147\ See U.S. Small Business Administration, Table of Small 
Business Size Standards, http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf (effective July 31, 
2006).
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IX. Comment Procedures

    86. The Commission incorporates by reference the comments filed in 
Docket No. RM07-10-000 into the instant docket and will consider them 
in this proceeding. In addition, the Commission invites interested 
persons to submit comments on the matters and issues proposed in this 
notice to be adopted, including any related matters or alternative 
proposals that commenters may wish to discuss. Comments are due 
February 21, 2008. Reply comments are due March 24, 2008. Comments must 
refer to Docket No. RM08-2-000, and must include the commenter's name, 
the organization they represent, if applicable, and their address in 
their comments. Comments may be filed either in electronic or paper 
format.
    87. Comments may be filed electronically via the eFiling link on 
the Commission's Web site at http://www.ferc.gov. The Commission 
accepts most standard word processing formats. Documents created 
electronically using word processing software should be filed in native 
applications or print-to-PDF format and not in a scanned format. 
Commenters filing electronically do not need to make a paper filing. 
Commenters that are not able to file comments electronically must send 
an original and 14 copies of their comments to: Federal Energy 
Regulatory Commission, Secretary of the Commission, 888 First Street, 
NE., Washington, DC 20426.
    88. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

X. Document Availability

    89. 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.
    90. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
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.
    91. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at 202-502-
6652 (toll free at 1-866-208-3676) or e-mail at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
[email protected].

List of Subjects in 18 CFR Part 284

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

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
    For the reasons discussed in the preamble, the Federal Energy 
Regulatory Commission proposes to amend 18 CFR chapter I 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.

    2. In Sec.  284.1, paragraph (d) is added to read as follows:


Sec.  284.1  Definitions.

* * * * *
    (d) Major non-interstate pipeline means a pipeline that fits the 
following criteria:
    (1) It is not a ``natural gas company'' under section 1 of the 
Natural Gas Act; and
    (2) It flows annually more than 10 million (10,000,000) MMBtus of 
natural gas measured in average receipts or in deliveries for the past 
3 years.
    3. In Sec.  284.13, the heading of paragraph (d) is revised and two 
sentences are added to the end of paragraph (d)(1) to read as follows:


Sec.  284.13  Reporting requirements for interstate pipelines.

* * * * *
    (d) Capacity and flow information. (1) * * * An interstate pipeline 
must also provide in the same manner access to information on actual 
flowing volumes at receipt points, on the mainline, at delivery points, 
and in storage fields. This information must be posted within 24 hours 
from the close of the gas day on which gas flows, i.e., on or before 
9:00 a.m. central clock time for flows occurring on the gas day that 
ended 24 hours before.
* * * * *
    4. Section 284.14 is added to read as follows:


Sec.  284.14  Flow information of major non-interstate pipelines.

    (a) Daily posting requirement. A major non-interstate pipeline must 
provide on a daily basis on an Internet Web site and in downloadable 
file formats, in conformity with Sec.  284.12 of this chapter, equal 
and timely access to information relevant to the capacity of major 
points and mainline segments and the amount scheduled at each such 
major point or mainline segment whenever capacity is scheduled. A major 
non-interstate pipeline must also provide in the same manner access to 
information on actual flowing volumes at major points and mainline 
segments. This information must be posted within 24 hours from the 
close of the gas day on which gas

[[Page 1131]]

flows, i.e., on or before 9:00 a.m. central clock time for flows 
occurring on the gas day that ended 24 hours before.
    (b) Exemptions to daily posting requirement. The following 
categories of major non-interstate pipelines are exempt from the 
reporting requirement of paragraph (a) of this section:
    (1) Those that fall entirely upstream of a processing plant; and
    (2) Those that deliver more than ninety-five percent (95%) of the 
natural gas volumes they flow directly to end-users.
    (3) To determine eligibility for the exemption in paragraph (b)(2) 
of this section, a major non-interstate pipeline must measure volumes 
by average deliveries over the preceding three calendar years.

 [FR Doc. E7-25435 Filed 1-4-08; 8:45 am]
BILLING CODE 6717-01-P